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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 2000
Commission File No. 000-23377
INTERVEST BANCSHARES CORPORATION
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3699013
----------------------------------- ----------------------------------------
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation)
10 Rockefeller Plaza, Suite 1015
New York, New York 10020-1903
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(Address of principal executive offices)
(212) 218-2800
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
YES XX NO
--- ---
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
Title of Each Class: Shares Outstanding:
-------------------- -------------------
Class A Common Stock, 3,544,629 Outstanding at
$1.00 par value per share November 1,2000
------------------------- -------------------------
Class B Common Stock, 355,000 Outstanding at
$1.00 par value per share November 1, 2000
------------------------- -------------------------
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<PAGE>
INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
FORM 10-Q
September 30, 2000
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of September 30, 2000 (Unaudited) and December 31, 1999 .........2
Condensed Consolidated Statements of Earnings (Unaudited)
for the Quarters and Nine-Months Ended September 30, 2000 and 1999..3
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) for the Nine-Months Ended September 30,
2000 and 1999 ..................................................... 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Nine-Months Ended September 30, 2000 and 1999...............5
Notes to Condensed Consolidated Financial Statements (Unaudited) ......6
Review by Independent Certified Public Accountants ...................14
Report on Review by Independent Certified Public Accountants .........15
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................16
Item 3. Quantitative and Qualitative Disclosures about Market Risk....25
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................25
Item 2. Changes in Securities and Use of Proceeds.....................25
Item 3. Defaults Upon Senior Securities...............................25
Item 4. Submission of Matters to a Vote of Security Holders...........25
Item 5. Other Information.............................................25
Item 6. Exhibits and Reports on Form 8-K .............................25
Signatures...................................................................25
Private Securities Litigation Reform Act Safe Harbor Statement
The Company is making this statement in order to satisfy the "Safe Harbor"
provision contained in the Private Securities Litigation Reform Act of 1995. The
statements contained in this report on Form 10-Q that are not statements of
historical fact may include forward-looking statements that involve a number of
risks and uncertainties. Such forward-looking statements are made based on
management's expectations and beliefs concerning future events impacting the
Company and are subject to uncertainties and factors relating to the Company's
operations and economic environment, all of which are difficult to predict and
many of which are beyond the control of the Company, that could cause actual
results of the Company to differ materially from those matters expressed in or
implied by forward-looking statements. The following factors are among those
that could cause actual results to differ materially from the forward-looking
statements: changes in general economic, market and regulatory conditions, the
development of an interest rate environment that may adversely affect the
Company's interest rate spread, other income or cash flow anticipated from the
Company's operations, investment and lending activities; and changes in laws and
regulations affecting banks and bank holding companies.
1
<PAGE>
PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements
Intervest Bancshares Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
<TABLE>
(Unaudited)
September 30, December 31,
($ in thousands, except par value) 2000 1999
---------------------------------------------------------------------------------------------------- ----------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 6,040 $ 4,663
Federal funds sold 13,169 3,900
Short-term investments 8,151 23,532
-----------------------------------
Total cash and cash equivalents 27,360 32,095
Interest-earning time deposits with banks 2,050 -
Securities held to maturity, net
(estimated fair value of $89,467 and $79,882, respectively) 91,377 83,132
Federal Reserve Bank stock, at cost 596 508
Loans receivable
(net of allowance for loan loss reserves of $2,785 and $2,493, respectively) 258,995 210,444
Accrued interest receivable 2,811 1,995
Premises and equipment, net 5,656 5,863
Deferred income tax asset 979 936
Deferred debenture offering costs 2,757 3,721
Other assets 1,455 1,787
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Total assets $394,036 $340,481
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LIABILITIES
Deposits:
Noninterest-bearing demand deposit accounts $ 4,718 $ 4,337
Interest-bearing deposit accounts:
Checking (NOW) accounts 8,312 6,636
Savings accounts 16,786 18,722
Money-market accounts 49,568 48,591
Certificate of deposit accounts 202,350 122,794
-----------------------------------
Total deposits 281,734 201,080
Federal funds purchased - 6,955
Subordinated debentures payable (note 5) 60,330 84,330
Accrued interest payable on debentures (note 5) 6,957 8,092
Mortgage escrow funds payable 6,132 3,375
Official checks outstanding 1,357 1,821
Other liabilities 1,908 1,224
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Total liabilities 358,418 306,877
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STOCKHOLDERS' EQUITY
Preferred stock (300,000 shares authorized, none issued) - -
Class A common stock ($1.00 par value, 9,500,000 shares authorized,
3,544,629 and 3,531,879 shares issued and outstanding, respectively) 3,545 3,532
Class B common stock ($1.00 par value, 700,000 shares authorized,
355,000 and 305,000 shares issued and outstanding, respectively) 355 305
Additional paid-in-capital 18,971 18,770
Retained earnings 12,747 10,997
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Total stockholders' equity 35,618 33,604
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Total liabilities and stockholders' equity $394,036 $340,481
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See accompanying notes to condensed consolidated financial statements.
2
</TABLE>
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Condensed Consolidated Statements of Earnings
(Unaudited)
<TABLE>
Quarter Ended Nine-Months Ended
September 30, September 30,
----------------------------------------------------
<S> <C> <C> <C> <C>
($ in thousands, except per share data) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME
Loans receivable $6,538 $4,775 $18,214 $13,772
Securities 1,462 1,548 4,413 4,560
Other interest-earning assets 324 164 611 435
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Total interest and dividend income 8,324 6,487 23,238 18,767
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INTEREST EXPENSE
Deposits 4,074 2,148 10,387 6,132
Federal funds purchased - 3 146 9
Subordinated debentures 1,869 2,430 6,374 7,272
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Total interest expense 5,943 4,581 16,907 13,413
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Net interest and dividend income 2,381 1,906 6,331 5,354
Provision for loan loss reserves 47 270 292 605
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Net interest and dividend income after provision for loan loss 2,334 1,636 6,039 4,749
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NONINTEREST INCOME
Customer service fees 38 34 104 100
Income from mortgage lending activities 268 185 541 675
All other 32 - 33 1
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Total noninterest income 338 219 678 776
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NONINTEREST EXPENSES
Salaries and employee benefits 491 465 1,675 1,449
Occupancy and equipment, net 286 276 835 687
Advertising and promotion 6 30 31 110
Professional fees and services 100 71 320 184
Stationery, printing and supplies 31 27 104 119
All other 167 134 497 447
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Total noninterest expenses 1,081 1,003 3,462 2,996
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Earnings before taxes, extraordinary item
and change in accounting principle 1,591 852 3,255 2,529
Provision for income taxes 662 344 1,299 1,060
----------------------------------------------------
Earnings before extraordinary item
and change in accounting principle 929 508 1,956 1,469
Extraordinary item, net of tax (note 5) - - (206) -
Cumulative effect of change in accounting principle, net of tax (note 6) - - - (128)
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Net earnings $ 929 $508 $ 1,750 $ 1,341
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Basic earnings per share:
Earnings before extraordinary item and change in accounting principle $ 0.24 $0.14 $ 0.50 $ 0.39
Extraordinary item - - (0.05) -
Cumulative effect of change in accounting principle - - - (0.03)
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Net earnings per share $ 0.24 $0.14 $ 0. 45 $ 0.36
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Diluted earnings per share:
Earnings before extraordinary item and change in accounting principle $ 0.24 $0.13 $ 0.50 $ 0.35
Extraordinary item - - (0.05) -
Cumulative effect of change in accounting principle - - - (0.03)
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Net earnings per share $ 0.24 $0.13 $ 0.45 $ 0.32
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See accompanying notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
Nine-Months Ended
September 30,
-----------------------------
<S> <C> <C>
($ in thousands) 2000 1999
-----------------------------------------------------------------------------------------------------------------------
CLASS A COMMON STOCK
Balance at beginning of period $ 3,532 $ 3,434
Issuance of 510 shares in exchange for common stock of minority
stockholders of Intervest Bank - 1
Issuance of 7,554 shares upon the conversion of debentures - 7
Issuance of 12,750 and 1,800 shares, respectively, upon exercise of warrants 13 2
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Balance at end of period 3,545 3,444
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CLASS B COMMON STOCK
Balance at beginning of period 305 300
Issuance of 5,000 shares upon the exercise of warrants - 5
Issuance of 50,000 shares of restricted stock compensation (note 2) 50 -
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Balance at end of period 355 305
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ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of period 18,770 18,148
Issuance of 510 shares in exchange for common stock of minority
stockholders of Intervest Bank - 6
Issuance of 7,554 shares upon the conversion of debentures, net of
issuance costs - 56
Compensation related to issuance of Class B common stock warrants 19 19
Issuance of 5,000 shares upon exercise of Class B stock warrants - 28
Issuance of 50,000 shares of restricted Class B stock (note 2) 109 -
Issuance of 12,750 and 1,800 shares, respectively, upon
exercise of Class A stock warrants 73 11
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Balance at end of period 18,971 18,268
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RETAINED EARNINGS
Balance at beginning of period 10,997 9,230
Comprehensive income - net earnings for the period 1,750 1,341
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Balance at end of period 12,747 10,571
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-----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity at end of period $35,618 $32,588
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See accompanying notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
Nine-Months Ended
September 30,
----------------------------------
<S> <C> <C>
($ in thousands) 2000 1999
--------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings $1,750 $1,341
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization 334 303
Provision for loan loss reserves 292 605
Deferred income tax benefit (43) (139)
Amortization of deferred debenture offering costs 964 711
Compensation expense from awards of common stock and warrants 178 19
Amortization of premiums, fees and discounts, net (1,171) (817)
(Decrease) increase in accrued interest payable on debentures (1,135) 1,549
Decrease in official checks outstanding (464) (464)
Change in all other assets and liabilities, net 1,196 1,074
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Net cash provided by operating activities 1,901 4,182
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INVESTING ACTIVITIES
(Increase) decrease in interest-earning time deposits with banks (2,050) 99
Maturities and calls of securities held to maturity 19,841 27,556
Purchases of securities held to maturity (27,608) (25,427)
Originations of loans receivable, net of principal repayments (49,146) (10,521)
Purchases of Federal Reserve Bank stock, net (88) (275)
Purchases of premises and equipment, net (127) (1,143)
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Net cash used by investing activities (59,178) (9,711)
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FINANCING ACTIVITIES
Net increase in demand, savings, NOW and money-market deposits 1,098 15,392
Net increase in certificates of deposit accounts 79,556 5,733
Net increase in mortgage escrow funds payable 2,757 1,564
Repayments of federal funds purchased, net (6,955) -
Repayments of debentures (24,000) (10,000)
Proceeds from issuance of debentures, net of debenture offering costs - 6,606
Proceeds from issuance of common stock 86 47
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Net cash provided by financing activities 52,542 19,342
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Net (decrease) increase in cash and cash equivalents (4,735) 13,813
Cash and cash equivalents at beginning of period 32,095 40,977
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Cash and cash equivalents at end of period $ 27,360 $ 54,790
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SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest $17,207 $ 11,166
Income taxes 451 1,443
Noncash financing activities:
Issuance of common stock to minority stockholders of Intervest Bank - 70
Conversion of convertible debentures into common stock - 7
--------------------------------------------------------------------------------------------------------------------
See accompanying notes to condensed consolidated financial statements.
</TABLE>
5
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 1 - General
The condensed consolidated financial statements of Intervest Bancshares
Corporation and Subsidiaries in this report have not been audited except for the
information derived from the audited Consolidated Balance Sheet as of December
31, 1999. The financial statements in this report should be read in conjunction
with the consolidated financial statements and related notes thereto included in
the Company's Annual Report to Stockholders on Form 10-KSB for the year ended
December 31, 1999.
The condensed consolidated financial statements include the accounts of
Intervest Bancshares Corporation (a bank holding company referred to by itself
as the "Holding Company") and its wholly owned subsidiaries, Intervest National
Bank, Intervest Bank and Intervest Corporation of New York. The banks are
referred to together as the "Banks." The Holding Company and its subsidiaries
are referred to as the "Company" on a consolidated basis. The Holding Company's
primary business activity is the ownership of the aforementioned subsidiaries.
Intervest National Bank is a nationally chartered commercial bank located in
Rockefeller Plaza in New York City. It opened for business on April 1, 1999.
Intervest Bank is a Florida state chartered commercial bank with four banking
offices in Clearwater, Florida and one in South Pasadena, Florida. The Banks
conduct a full-service commercial banking business, which consists of attracting
deposits from the general public and investing those funds, together with other
sources of funds, primarily through the origination of commercial and
multifamily real estate loans, and through the purchase of security investments.
Intervest National Bank also provides Internet banking services at its Web Site:
www.intervestnatbank.com.
Intervest Corporation of New York is located in Rockefeller Plaza in New York
City and is in the business of originating and acquiring commercial and
multifamily residential loans. As discussed in note 2, Intervest Corporation of
New York was acquired by the Holding Company effective March 10, 2000. The
acquisition was accounted for at historical cost similar to the
pooling-of-interests method of accounting. Under this method of accounting, the
recorded assets, liabilities, shareholders' equity, income and expenses of both
companies are combined and recorded at their historical cost amounts.
Accordingly, all prior period financial information in this report has been
adjusted to include the accounts of Intervest Corporation of New York. All
material intercompany accounts and transactions have been eliminated in
consolidation.
In the opinion of management, all material adjustments necessary for a fair
presentation of financial condition and results of operations for the interim
periods presented in this report have been made. These adjustments are of a
normal recurring nature. The results of operations for the interim periods are
not necessarily indicative of results that may be expected for the entire year
or any other interim period. In preparing the condensed consolidated financial
statements, management is required to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses. Actual
results could differ from those estimates. Certain reclassifications have been
made to prior period amounts to conform to the current periods' presentation.
Note 2 - Acquisition of Intervest Corporation of New York
On March 10, 2000, Intervest Bancshares Corporation completed the acquisition of
Intervest Corporation of New York. The two entities are related in that the same
persons serve on their boards and the former holders of all of the shares of
Intervest Corporation of New York also owned approximately 48% of the voting
shares of Intervest Bancshares Corporation prior to the merger. Both Boards of
Directors, the shareholders of both the Holding Company and Intervest
Corporation of New York, and the Federal Reserve Bank of Atlanta approved the
merger. In the merger, Intervest Corporation of New York shareholders received
an aggregate of 1,250,000 shares of the Holding Company's Class A common stock
in exchange for all of Intervest Corporation of New York's capital stock.
6
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 2 - Acquisition of Intervest Corporation of New York, Continued
In connection with the merger, the Holding Company incurred approximately
$210,000 in expenses related to attorney and consulting fees, printing and stock
compensation expense. The Board of Directors and the Holding Company's
shareholders approved a grant of 50,000 shares of Class B common stock to the
Chairman of the Holding Company for his services with respect to the
development, structuring and other activities associated with the merger. This
resulted in $159,000 of compensation expense being recorded, which is included
in the consolidated statements of earnings for the nine-months ended September
30, 2000.
Certain pro forma consolidated balance sheet information follows as of December
31, 1999:
<TABLE>
Originally Historical Pro Forma
($ in thousands) Reported ICNY Adjustments Adjusted
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 7,429 $30,754 $(6,088)(1) $ 32,095
Securities held to maturity 83,132 - - 83,132
Federal Reserve Bank stock 508 - - 508
Loans receivable, net of unearned fees
and loan loss reserves 147,154 63,290 - 210,444
Accrued interest receivable 1,349 646 - 1,995
Premises and equipment, net 5,767 96 - 5,863
Deferred income tax asset 912 24 - 936
Deferred debenture offering costs 479 3,242 - 3,721
All other assets 1,099 688 - 1,787
-------------------------------------------------------------------------------------------------------------------------------
Total assets $247,829 $98,740 $(6,088) $340,481
-------------------------------------------------------------------------------------------------------------------------------
Deposit liabilities $207,168 $ - $(6,088)(1) $201,080
Federal funds purchased 6,955 - - 6,955
Debentures payable 6,930 77,400 - 84,330
Accrued interest on debentures payable 892 7,200 - 8,092
Mortgage escrow funds payable 1,521 1,854 - 3,375
Official checks outstanding 1,821 - - 1,821
All other liabilities 1,078 146 - 1,224
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities 226,365 86,600 (6,088) 306,877
-------------------------------------------------------------------------------------------------------------------------------
Common stock and paid-in capital 16,998 5,609 - 22,607
Retained earnings 4,466 6,531 - 10,997
-------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 21,464 12,140 - 33,604
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $247,829 $98,740 $(6,088) $340,481
-------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Represents the elimination of certain intercompany deposit accounts.
Certain reclassifications were also made to the historical amounts of
Intervest Corporation of New York and the Company to conform to the current
period's presentation.
</FN>
</TABLE>
7
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 2 - Acquisition of Intervest Corporation of New York, Continued
A pro forma summary of the Company's consolidated statement of earnings for the
quarter ended September 30, 1999 follows:
<TABLE>
Originally Historical Pro Forma
($ in thousands) Reported ICNY Adjustments Adjusted
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest and dividend income $3,739 $2,792 $ (44)(a) $6,487
Interest expense 2,355 2,270 (44)(a) 4,581
------------------------------------------------------
Net interest and dividend income 1,384 522 - 1,906
Provision for loan loss reserves 270 - - 270
------------------------------------------------------
Net interest and dividend income after provision for loan loss reserves 1,114 522 - 1,636
Noninterest income 128 91 - 219
Noninterest expenses 815 188 - 1,003
------------------------------------------------------
Earnings before taxes 427 425 - 852
Provision for income taxes 149 195 - 344
-------------------------------------------------------------------------------------------------------------------------------
Net earnings $ 278 $ 230 $ - $508
-------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share $0.11 - - $ 0.14
Diluted earnings per share $0.10 - - $ 0.13
Average number of common shares outstanding - Basic 2,498,734 - 1,250,000 3,748,734
Average number of common shares outstanding - Diluted 2,718,594 - 1,250,000 3,968,594
-------------------------------------------------------------------------------------------------------------------------------
A pro forma summary of the Company's consolidated statement of earnings for the
nine-months ended September 30, 1999 follows:
Originally Historical Pro Forma
($ in thousands) Reported ICNY Adjustments Adjusted
--------------------------------------------------------------------------------------------------------------------------------
Interest and dividend income $10,604 $8,212 $ (49)(a) $18,767
Interest expense 6,663 6,799 (49)(a) 13,413
-------------------------------------------------------
Net interest and dividend income 3,941 1,413 - 5,354
Provision for loan loss reserves 605 - - 605
-------------------------------------------------------
Net interest and dividend income after provision for loan loss reserves 3,336 1,413 - 4,749
Noninterest income 351 425 - 776
Noninterest expenses 2,285 711 - 2,996
-------------------------------------------------------
Earnings before taxes and change in accounting principle 1,402 1,127 - 2,529
Provision for income taxes 544 516 - 1,060
Cumulative effect of change in accounting principle (128) - - (128)
--------------------------------------------------------------------------------------------------------------------------------
Net earnings $730 $ 611 $ - $ 1,341
--------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share $0.29 - - $ 0.36
Diluted earnings per share $0.25 - - $ 0.32
Average number of common shares outstanding - Basic 2,494,410 - 1,250,000 3,744,410
Average number of common shares outstanding - Diluted 2,949,445 - 1,250,000 4,199,445
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Represents the elimination of certain intercompany interest expense.
</FN>
</TABLE>
8
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 2 - Acquisition of Intervest Corporation of New York, Continued
A summary of the Company's consolidated statements of earnings for the quarter
and nine-months ended September 30, 2000 follows:
<TABLE>
For the Quarter Ended For the Nine-Months Ended
September 30, 2000 September 30, 2000
-------------------------- ---------------------------
Excluding As Excluding As
($ in thousands) ICNY Reported ICNY Reported
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest and dividend income $6,309 $8,324 $16,697 $23,238
Interest expense 4,247 5,943 11,042 16,907
-------------------------------------------------------
Net interest and dividend income 2,062 2,381 5,655 6,331
Provision for loan loss reserves 47 47 292 292
-------------------------------------------------------
Net interest and dividend income
after provision for loan loss reserves 2,015 2,334 5,363 6,039
Noninterest income 134 338 390 678
Noninterest expenses 942 1,081 2,918 3,462
-------------------------------------------------------
Earnings before taxes and extraordinary item 1,207 1,591 2,835 3,255
Provision for income taxes 485 662 1,107 1,299
Extraordinary item - - - (206)
-------------------------------------------------------------------------------------------------------------------------------
Net earnings $ 722 $ 929 $ 1,728 $ 1,750
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The amounts reported in the table above are after elimination of intercompany
revenue and expense.
Note 3 - Allowance for Loan Loss Reserves
The Company monitors its loan portfolio to determine the appropriate level of
the allowance for loan loss reserves based on various factors. These factors
include: the type and level of loans outstanding, volume of loan originations;
overall portfolio quality; loan concentrations; specific problem loans,
historical chargeoffs and recoveries; adverse situations which may affect the
borrowers' ability to repay; and management's assessment of the current and
anticipated economic conditions in the Company's lending regions.
No loans were classified as nonaccrual or impaired during the 2000 and 1999
reporting periods in this report.
Activity in the allowance for loan loss reserves is summarized as follows:
<TABLE>
For the Quarter Ended For the Nine-Months Ended
September 30, September 30,
---------------------------- -----------------------------
<S> <C> <C> <C> <C>
($ in thousands) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------
Balance at beginning of period $2,738 $1,997 $2,493 $1,662
Provision charged to operations 47 270 292 605
Recoveries - 1 - 1
------------------------------------------------------------------------------------------------------------------------------
Balance at end of period $2,785 $2,268 $2,785 $2,268
------------------------------------------------------------------------------------------------ ------------- ---------------
</TABLE>
Note 4 - Earnings Per Share (EPS)
Basic EPS is calculated by dividing net earnings by the weighted-average number
of shares of common stock outstanding. Diluted EPS is calculated by dividing
adjusted net earnings by the weighted-average number of shares of common stock
outstanding and dilutive potential common stock shares that may be outstanding
in the future. Potential common stock shares may arise from outstanding dilutive
common stock warrants (as computed by the "treasury stock method") and
convertible debentures (as computed by the "if converted method").
9
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 4 - Earnings Per Share (EPS), Continued
Diluted EPS considers the potential dilution that could occur if the Company's
outstanding stock warrants and convertible debentures were converted into common
stock that then shared in the Company's adjusted earnings (as adjusted for
interest expense, net of taxes, that would no longer occur if the debentures
were converted into common stock).
EPS computations for the 1999 periods have been adjusted to include the results
of operations of Intervest Corporation of New York as well as the 1,250,000
Class A common shares issued in the merger.
Net earnings applicable to common stock and the weighted-average number of
shares used for basic and diluted earnings per share computations are summarized
in the tables that follows:
<TABLE>
For the Quarter Ended For the Nine-Months Ended
September 30, September 30,
---------------------------------------------------------
<S> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------------------------
Net earnings:
Earnings before extraordinary item and change in accounting principle $929,000 $508,000 $1,956,000 $1,469,000
Extraordinary item (1) - - (206,000) -
Cumulative effect of change in accounting principle (2) - - - (128,000)
-----------------------------------------------------------------------------------------------------------------------------------
Net earnings $929,000 $508,000 $1,750,000 $1,341,000
-----------------------------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding 3,896,365 3,748,734 3,879,500 3,744,410
Per share amounts:
Earnings before extraordinary item and change in accounting principle $0.24 $0.14 $0.50 $0.39
Extraordinary item (1) - - (0.05) -
Cumulative effect of change in accounting principle (2) - - - (0.03)
-----------------------------------------------------------------------------------------------------------------------------------
Basic net earnings per share $0.24 $0.14 $0.45 $0.36
-----------------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE
Average number of common shares outstanding for dilution:
Common shares outstanding per above 3,896,365 3,748,734 3,879,500 3,744,410
Potential dilutive shares resulting from exercise of warrants (3) - 219,860 - 455,035
Potential dilutive shares resulting from conversion of debentures (3) - - - -
---------------------------------------------------------
Total average number of common shares outstanding 3,896,365 3,968,594 3,879,500 4,199,445
---------------------------------------------------------
Per share amounts:
Earnings before extraordinary item and change in accounting principle $0.24 $0.13 $0.50 $0.35
Extraordinary item (1) - - (0.05) -
Cumulative effect of change in accounting principle (2) - - - (0.03)
-----------------------------------------------------------------------------------------------------------------------------------
Diluted net earnings per share $0.24 $0.13 $0.45 $0.32
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Represents a charge, net of taxes, from the early retirement of debentures.
(2) Represents a charge, net of taxes, from the adoption of Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities."
(3) A total of 2,650,000 of common stock warrants with exercise prices ranging
from $6.67 to $15.00 were not considered in the computations of diluted EPS
for 2000 because they were not dilutive. A total of 1,133,000 common stock
warrants with exercise prices ranging from $10.00 to $14.00 were not
considered in the computations of diluted EPS for 1999 because they were
not dilutive. Additionally, convertible debentures totaling $6,930,000 and
convertible at $12.50 per share into Class A common stock were excluded
from all diluted EPS computations because they were not dilutive, and as a
result, adjusted net earnings for diluted EPS is the same as net earnings
for basic EPS.
</FN>
</TABLE>
10
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 5 - Subordinated Debentures Payable and Extraordinary Item
Debentures outstanding are summarized as follows:
<TABLE>
At September 30, At December 31,
($ in thousands) 2000 1999
--------------------------------------------------------------------------------------------------------------
INTERVEST CORPORATION OF NEW YORK:
<S> <C> <C>
Series 06/29/92 - interest at 2% above prime - due April 1, 2000 $ - $7,000
Series 09/13/93 - interest at 2% above prime - due October 1, 2001 - 8,000
Series 01/28/94 - interest at 2% above prime - due April 1, 2002 - 4,500
Series 10/28/94 - interest at 2% above prime - due April 1, 2003 - 4,500
Series 05/12/95 - interest at 2% above prime - due April 1, 2004 9,000 9,000
Series 10/19/95 - interest at 2% above prime - due October 1, 2004 9,000 9,000
Series 05/10/96 - interest at 2% above prime - due April 1, 2005 10,000 10,000
Series 10/15/96 - interest at 2% above prime - due October 1, 2005 5,500 5,500
Series 04/30/97 - interest at 1% above prime - due October 1, 2005 8,000 8,000
Series 11/10/98 - interest at 8% fixed - due January 1, 2001 1,400 1,400
Series 11/10/98 - interest at 81/2% fixed - due January 1, 2003 1,400 1,400
Series 11/10/98 - interest at 9% fixed - due January 1, 2005 2,600 2,600
Series 06/28/99 - interest at 8% fixed - due July 1, 2002 2,500 2,500
Series 06/28/99 - interest at 81/2% fixed - due July 1, 2004 2,000 2,000
Series 06/28/99 - interest at 9% fixed - due July 1, 2006 2,000 2,000
--------------------------------------
53,400 77,400
INTERVEST BANCSHARES CORPORATION:
Series 05/14/98 - interest at 8% fixed - due July 1, 2008 6,930 6,930
--------------------------------------------------------------------------------------------------------------
$60,330 $84,330
--------------------------------------------------------------------------------------------------------------
</TABLE>
The "Prime" in the preceding table refers to the prime rate of Chase Manhattan
Bank, which was 9.5% on September 30 and June 30, 2000, 9.0% on March 31, 2000
and 8.50% at December 31, 1999.
In the first half of 2000, Intervest Corporation of New York's Series 6/29/92,
9/13/93, 1/28/94 and 10/28/94 debentures totaling $24,000,000 in principal were
redeemed prior to maturity for the outstanding principal amount plus accrued
interest aggregating $3,970,000. In connection with these early redemptions,
$382,000 of unamortized deferred debenture offering costs was charged to expense
in the second quarter of 2000 and reported as an extraordinary charge, net of a
tax benefit of $176,000, in the condensed consolidated statement of earnings
for the nine-months ended September 30, 2000.
Intervest Corporation of New York's floating-rate Series 5/12/95, 10/19/95,
5/10/96, 10/15/96 and 4/30/97 debentures have a maximum interest rate of 12%.
The payment of interest on an aggregate of $18,440,000 of these debentures,
which interest is compounded, is deferred until maturity. The payment of
interest on the remaining debentures is made quarterly. Any debenture holder in
the aforementioned Series who has deferred receipt of interest may at any time
elect to receive the deferred interest and subsequently receive regular payments
of interest.
Intervest Corporation of New York's Series 11/10/98 and Series 6/28/99
debentures accrue and compound interest quarterly. The holders of these
debentures can require the Company to repurchase the debentures for face amount
plus accrued interest each year beginning on July 1, 2001 and July 1, 2002,
respectively, provided, however that in no calendar year will the Company be
required to purchase more than $100,000 in principal amount of each maturity of
debentures, on a non-cumulative basis.
All the debentures may be redeemed, in whole or in part, at any time at the
option of the Intervest Corporation of New York, for face value, except for
certain for Series 11/10/98 debentures due January 1, 2003 and 2005, which would
be at a premium of 1% if the redemption is prior to January 1, 2001. All the
debentures are unsecured and subordinate to all present and future senior
indebtedness, as defined.
11
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 5 - Subordinated Debentures Payable and Extraordinary Item, Continued
The Holding Company's Series 05/14/98 subordinated debentures are due July 1,
2008 and are convertible at the option of the holders at any time prior to April
1, 2008, unless previously redeemed by the Holding Company, into shares of Class
A common stock of the Holding Company at the following conversion prices per
share: $12.50 in 2000; $14.00 in 2001; $15.00 in 2002; $16.00 in 2003; $18.00 in
2004; $21.00 in 2005; $24.00 in 2006; $27.00 in 2007 and $30.00 from January 1,
2008 through April 1, 2008. The Holding Company has the right to establish
conversion prices that are less than those set forth above for such periods as
it may determine. The Holding Company also has the option at any time to call
all or any part of the convertible debentures for payment and redeem the same at
any time prior to maturity thereof for face amount. Interest accrues and
compounds each calendar quarter at 8%. All accrued interest is payable at
maturity whether by acceleration, redemption or otherwise. Any convertible
debenture holder may, on or before July 1 of each year commencing July 1, 2003,
elect to be paid all accrued interest and to thereafter receive payments of
interest quarterly.
Scheduled contractual maturities of all debentures as of September 30, 2000 are
summarized as follows:
($ in thousands) Principal Accrued Interest
-----------------------------------------------------------------------------
For the three-months ended December 31, 2000 $ - $ -
For the year ended December 31, 2001 1,400 216
For the year ended December 31, 2002 2,500 240
For the year ended December 31, 2003 1,400 230
For the year ended December 31, 2004 20,000 3,155
Thereafter 35,030 3,116
-----------------------------------------------------------------------------
$60,330 $6,957
-----------------------------------------------------------------------------
Note 6 - Cumulative Effect of Change in Accounting Principle
On January 1, 1999, the Company adopted as required the AICPA's Statement of
Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities." The SOP
requires that all start-up costs (except for those that are capitalizable under
other generally accepted accounting principles) be expensed as incurred for
financial statement purposes effective January 1, 1999. Previously, a portion of
start-up costs were generally capitalized and amortized over a period of time.
The adoption of this statement resulted in the immediate expensing on January 1,
1999 of $193,000 in start-up costs incurred through December 31, 1998 in
connection with organizing Intervest National Bank. A deferred tax benefit of
$65,000 was recorded in conjunction with this charge.
Note 7 - Regulatory Matters
The Company (on a consolidated basis) and the Banks are subject to various
regulatory capital requirements administered by the federal banking agencies.
Failure to meet capital requirements can initiate certain mandatory and possibly
discretionary actions by the regulators that, if undertaken, could have a direct
material effect on the Company's and the Banks' financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Company and the Banks must meet specific capital guidelines that
involve quantitative measures of their assets, liabilities and certain
off-balance sheet items as calculated under regulatory accounting practices.
These capital amounts are also subject to qualitative judgement by the
regulators about components, risk weighting and other factors. Prompt corrective
action provisions are not applicable to bank holding companies.
Quantitative measures established by the regulations to ensure capital adequacy
require the Company and the Banks to maintain minimum amounts and ratios of
total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to
average assets, as defined by the regulations. Management believes, as of
September 30, 2000, that the Company, Intervest Bank and Intervest National Bank
met all capital adequacy requirements to which they are subject.
12
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 7 - Regulatory Matters, Continued
As of September 30, 2000, the most recent notification from the regulators
categorized the Banks as well-capitalized institutions under regulatory
framework for prompt corrective action. Management believes that there are no
current conditions or events outstanding that would change the designations from
well capitalized.
The tables below present information regarding the Company's (consolidated) and
the Banks' capital adequacy.
<TABLE>
Actual Minimum To Be Considered
Ratios Requirement Well Capitalized
------ ----------- ----------------
Consolidated
------------
<S> <C> <C>
Total capital to risk-weighted assets 12.72% 8.00% NA
Tier 1 capital to risk-weighted assets 11.78% 4.00% NA
Tier 1 capital to total average assets -
leverage ratio 8.97% 4.00% NA
Intervest Bank
--------------
Total capital to risk-weighted assets 11.00% 8.00% 10.00%
Tier 1 capital to risk-weighted assets 9.74% 4.00% 6.00%
Tier 1 capital to total average assets - 6.62% 4.00% 5.00%
leverage ratio
Intervest National Bank
-----------------------
Total capital to risk-weighted assets 14.24% 8.00% 10.00%
Tier 1 capital to risk-weighted assets 13.34% 4.00% 6.00%
Tier 1 capital to total average assets - 11.01% 4.00% 5.00%
leverage ratio
</TABLE>
On June 15, 2000, Intervest National Bank and its primary regulator, the Office
of the Comptroller of the Currency of the United States of America entered into
a Memorandum of Understanding ("MOU"). The MOU is a formal written agreement
whereby, among other things, Intervest National Bank shall review, revise,
develop and implement various policies and procedures with respect to its
lending and credit underwriting. Management has implemented various actions
towards bringing Intervest National Bank into full compliance with the MOU.
13
<PAGE>
Intervest Bancshares Corporation and Subsidiaries
Review by Independent Certified Public Accountants
Hacker, Johnson & Smith PA, the Company's independent certified public
accountants, have made a limited review of the financial data as of September
30, 2000, and for the three- and nine-month periods then ended presented in this
document, in accordance with standards established by the American Institute of
Certified Public Accountants.
Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.
14
<PAGE>
Report on Review by Independent Certified Public Accountants
The Board of Directors
Intervest Bancshares Corporation and Subsidiaries
New York, New York:
We have reviewed the condensed consolidated balance sheet of Intervest
Bancshares Corporation and Subsidiaries (the "Company") as of September 30,
2000, and the related condensed consolidated statements of earnings for the
three- and nine-month periods then ended and the related condensed consolidated
statements of changes in stockholders' equity and cash flows for the nine-month
period then ended included in this report. These financial statements are the
responsibility of the Company's management.
We were furnished with the report of other accountants on their review
of the interim financial information of Intervest Corporation of New York, whose
total assets as of September 30, 2000, constituted 17.7% of the related
consolidated total, and whose interest income, noninterest income and net income
for the three- and nine-month periods then ended constituted 24.2%, 60.4% and
22.3%; and 28.1%, 42.5% and 1.3%, respectively, of the related consolidated
totals for each period.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review and the report of other accountants, we are not
aware of any material modifications that should be made to the condensed
consolidated financial statements referred to above for them to be in conformity
with generally accepted accounting principles.
HACKER, JOHNSON & SMITH PA
Tampa, Florida
November 10, 2000
15
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
Intervest Bancshares Corporation is the Holding Company for Intervest National
Bank in New York City, Intervest Bank in Clearwater, Florida, and Intervest
Corporation of New York in New York City. Hereafter, all the entities are
referred to as the "Company" on a consolidated basis. Intervest National Bank
and Intervest Bank may be referred to together as the "Banks."
All financial information in this report has been adjusted to include the
accounts of Intervest Corporation of New York, which was acquired by the Company
through a merger completed on March 10, 2000. Intervest Corporation of New York
engages in the business of originating and acquiring commercial and multifamily
residential loans. The merger has been accounted for at historical cost similar
to the pooling-of-interests method of accounting. See note 2 to the condensed
consolidated financial statements for a further discussion of the merger.
The Company reported that its net earnings increased 83% to $929,000, or $0.24
per fully diluted share, in the third quarter of 2000, from $508,000, or $0.13
per fully diluted share, in the third quarter of 1999. Higher earnings were
primarily due to a $475,000 increase in net interest income and a $223,000
decline in the provision for loan loss reserves, partially offset by a $318,000
increase in the provision for income taxes.
Earnings from Intervest National Bank and Intervest Bank, the Company's banking
subsidiaries, increased from the same period a year ago. Intervest National
Bank's net earnings increased to $182,000 in the third quarter of 2000, from a
net loss of $126,000 in the same quarter of 1999 (Intervest National Bank opened
for business on April 1, 1999). Intervest Bank's net earnings increased to
$529,000 in the third quarter of 2000, from $421,000 in the same quarter of
1999. At September 30, 2000, Intervest National Bank's total assets were
$112,727,000 and Intervest Bank's total assets were $205,492,000.
For the nine-months ended September 30, 2000, net earnings increased to
$1,750,000, or $0.45 per fully diluted share, from $1,341,000, or $0.32 per
fully diluted share, for the same period of 1999. The improvement was due to a
$977,000 increase in net interest income and a $313,000 decline in the provision
for loan loss reserves. These items were partially offset by approximately
$210,000 of nonrecurring expenses associated with the acquisition of Intervest
Corporation of New York, increased operating expenses resulting from a full
nine-months of operations of Intervest National Bank and a $239,000 increase in
the provision for income taxes.
Selected information about the Holding Company and its subsidiaries at September
30, 2000 and for the quarter and nine-months ended September 30, 2000, follows
in the table below:
<TABLE>
Intervest
Intervest Corporation
Holding Intervest National of Consolidated
($ in thousands) Company Bank Bank New York Amounts (1)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total assets $44,068 $205,492 $112,727 $69,639 $394,036
Total cash and cash equivalents 2,456 2,760 13,796 10,952 27,360
Total securities, net - 75,446 16,527 - 91,377
Total loans, net of unearned fees and loan loss reserves 5,697 119,551 78,283 55,464 258,995
Total deposit liabilities - 186,530 98,048 - 281,734
Total debentures payable and related accrued interest 8,300 - - 58,987 67,287
Total stockholders' equity 35,618 14,241 11,874 9,162 35,618
Net earnings for the quarter ended 11 529 182 207 929
Net earnings (loss) for the nine-months ended (148) 1,495 381 22 1,750
Number of full-service banking offices - 5 1 - 6
-----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Consolidated amounts exclude intercompany balances and therefore the
individual amounts may not total.
</FN>
</TABLE>
16
<PAGE>
Comparison of Financial Condition at September 30, 2000 and December 31, 1999
Overview
--------
Total assets at September 30, 2000 increased to $394,036,000, from $340,481,000
at December 31, 1999. The increase reflected new mortgage loans originated and
purchases of new security investments. These increases were funded by growth in
certificate of deposit accounts.
Total liabilities at September 30, 2000 increased to $358,418,000, from
$306,877,000 at December 31, 1999, due to growth in certificate of deposit
accounts. The increase in deposits was partially offset by the retirement of
certain debentures payable and the repayment of federal funds purchased.
Stockholders' equity increased to $35,618,000 at September 30, 2000, from
$33,604,000 at year-end 1999. The increase reflected earnings for the
nine-months ended September 30, 2000 and the issuance of common stock in
connection with a stock award and the exercise of warrants. Book value per
common share increased to $9.13 per share at September 30, 2000, from $8.76 at
December 31, 1999.
The Company's balance sheet was comprised of the following:
<TABLE>
At September 30, 2000 At December 31, 1999
------------------------------- -----------------------------------
Carrying % of Carrying % of
($ in thousands) Value Total Assets Value Total Assets
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 27,360 7.0% $32,095 9.4%
Interest-earning time deposits with banks 2,050 0.5 - -
Securities, net 91,973 23.3 83,640 24.6
Loans receivable, net 258,995 65.7 210,444 61.8
All other assets 13,658 3.5 14,302 4.2
------------------------------------------------------------------------------------------------------------------------------
Total assets $394,036 100.0% $340,481 100.0%
------------------------------------------------------------------------------------------------------------------------------
Deposits $281,734 71.5 $201,080 59.1%
Federal funds purchased - - 6,955 2.0
Debentures payable 60,330 15.3 84,330 24.8
Accrued interest payable on debentures 6,957 1.8 8,092 2.3
All other liabilities 9,397 2.4 6,420 1.9
------------------------------------------------------------------------------------------------------------------------------
Total liabilities 358,418 91.0 306,877 90.1
------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity 35,618 9.0 33,604 9.9
------------------------------------------------ -----------------------------------------------------------------------------
Total liabilities and stockholders' equity $394,036 100.0% $340,481 100.0%
------------------------------------------------ -----------------------------------------------------------------------------
</TABLE>
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents include interest-bearing and noninterest-bearing cash
balances, investments in overnight federal funds and other short-term
investments that have original maturities of three months or less. Short-term
investments are normally comprised of commercial paper issued by large
commercial banks, certificates of deposit and U.S. government securities. The
level of cash and cash equivalents fluctuates based on various factors,
including liquidity needs, loan demand, deposit flows, repayments of borrowed
funds and alternative security investment opportunities.
Securities
----------
Securities which the Company has the intent and ability to hold to maturity are
classified as held to maturity and carried at amortized cost. Securities held to
maturity totaled $91,377,000 at September 30, 2000, compared to $83,132,000 at
December 31, 1999. The increase reflected additional purchases. The portfolio
consists of fixed-rate debt obligations of the Federal Home Loan Bank, Federal
Farm Credit Bank, Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation. Most of the securities have terms that allow the
issuer the right to call or prepay its obligation without prepayment penalty.
17
<PAGE>
In order for the Banks to be members of the Federal Reserve Banking System, the
Banks maintain an investment in the capital stock of the Federal Reserve Bank,
which pays a dividend that is currently 6%. The amount of the investment, which
amounted to $596,000 at September 30, 2000 and $508,000 at year-end 1999,
fluctuates based on each Bank's capital level.
Loans Receivable
----------------
Loans receivable, before the allowance for loan loss reserves, increased to
$261,780,000 at September 30, 2000, from $212,937,000 at December 31, 1999. The
increase was due to new commercial and multifamily real estate loan
originations, partially offset by principal repayments. Commercial real estate
and multifamily real estate properties collateralized almost all of the loans in
the Company's loan portfolio.
At September 30, 2000 and December 31, 1999, the Company did not have any loans
on a nonaccrual status or classified as impaired.
Allowance for Loan Loss Reserves
--------------------------------
The Company monitors its loan portfolio to determine the appropriate level of
the allowance for loan loss reserves based on various factors. These factors
include: the type and level of loans outstanding, volume of loan originations;
overall portfolio quality; loan concentrations; specific problem loans,
historical chargeoffs and recoveries; adverse situations which may affect the
borrowers' ability to repay; and management's assessment of the current and
anticipated economic conditions in the Company's lending regions.
At September 30, 2000, the allowance amounted to $2,785,000, compared to
$2,493,000 at year-end 1999. The increase in the allowance was due to new loan
originations. The allowance represented 1.06% of total loans outstanding at
September 30, 2000, compared to 1.17% at December 31, 1999.
All Other Assets
----------------
The following table shows the composition of all other assets:
At Sept 30, At Dec 31,
($ in thousands) 2000 1999
----------------------------------------------------------------------------
Accrued interest receivable $ 2,811 $ 1,995
Loan fees receivable 1,181 839
Premises and equipment, net 5,656 5,863
Deferred income tax asset 979 936
Deferred debenture offering costs 2,757 3,721
All other 274 948
----------------------------------------------------------------------------
$ 13,658 $14,302
----------------------------------------------------------------------------
Accrued interest receivable fluctuates based on the amount of loans, investments
and other interest-earning assets outstanding.
Loan fees receivable are fees due to the Company in accordance with the terms of
mortgage loans. Such amounts are generally due upon the full repayment of the
loan. This fee is recorded as deferred income at the time a loan is originated
and is then amortized to interest income over the life of the loan.
Deferred debenture offering costs consist primarily of underwriters' commissions
and are amortized over the terms of the debentures. The decline was due to
normal amortization as well as the accelerated amortization of $382,000 in
connection with the early retirement of debentures in the second quarter of
2000. See note 5 to the condensed consolidated financial statements for a
further discussion.
Deposit Liabilities
-------------------
Deposit liabilities increased to $281,734,000 at September 30, 2000, from
$201,080,000 at December 31, 1999, due to growth in certificate of deposit
accounts. At September 30, 2000, certificate of deposit accounts totaled
$202,350,000 and demand deposit, savings, NOW and money-market accounts
aggregated $79,384,000. The same categories of deposit accounts totaled
$122,794,000 and $78,286,000, respectively, at December 31, 1999. Certificate of
deposit accounts represented 72% of total deposits at September 30, 2000,
compared to 61% at year-end 1999.
18
<PAGE>
Federal Funds Purchased
-----------------------
From time to time, the Banks purchase Federal funds to manage their liquidity
needs. At September 30, 2000, there were no outstanding funds, compared to
$6,955,000 outstanding at December 31, 1999.
Debentures Payable and Accrued Interest Payable on Debentures
-------------------------------------------------------------
At September 30, 2000, debentures payable amounted to $60,330,000, compared to
$84,330,000 at year-end 1999. In the first half of 2000, Intervest Corporation
of New York's Series 6/29/92, 9/13/93, 1/28/94 and 10/28/94 debentures totaling
$24,000,000 in principal amount were redeemed prior to maturity for the
outstanding principal amount plus accrued interest aggregating $3,970,000.
At September 30, 2000, debentures payable consisted of $53,400,000 of Intervest
Corporation of New York's registered floating and fixed-rate subordinated
debentures and $6,930,000 of the Holding Company's fixed-rate convertible
subordinated debentures. From time to time, Intervest Corporation of New York
has issued debentures and the proceeds were used for the origination and
purchase of commercial and multifamily mortgage loans. The Holding Company has
issued debentures to raise funds for working capital purposes.
At September 30, 2000, accrued interest payable on debentures amounted to
$6,957,000, compared to $8,092,000 at year-end 1999. The decline reflected the
early retirement of the debentures discussed above, partially offset by
additional accruals. The accrued interest at September 30, 2000 is payable at
the maturity of various debentures. For a further discussion of the debentures,
including conversion prices and redemption premiums, see note 5 to the condensed
consolidated financial statements.
All Other Liabilities
---------------------
The following table shows the composition of all other liabilities:
At At
September 30, December 31,
($ in thousands) 2000 1999
---------------------------------------------- --------------- ----------------
Mortgage escrow funds payable $6,132 $3,375
Accrued interest payable on deposits 712 461
Official checks outstanding 1,357 1,821
All other 1,196 763
---------------------------------------------- --------------- ----------------
$9,397 $6,420
---------------------------------------------- --------------- ----------------
Mortgage escrow funds payable represent advance payments made by borrowers for
real estate taxes and insurance that are remitted by the Company to third
parties. The increase reflects the timing of payments to taxing authorities as
well as the growth in the loan portfolio. The level of official checks
outstanding varies and fluctuates based on banking activity.
Stockholders' Equity and Regulatory Capital
-------------------------------------------
Stockholders' equity increased to $35,618,000 at September 30, 2000, from
$33,604,000 at December 31, 1999. The increase was almost entirely due to net
earnings of $1,750,000 and the issuance of 62,750 shares of common stock. The
issuance of common stock resulted, net of issuance costs, in a $245,000
aggregate increase in stockholders' equity. The shares were issued as follows:
12,750 shares of Class A common stock upon the exercise of Class A warrants; and
50,000 shares of Class B common stock issued in connection with the merger. (See
note 2 to the condensed consolidated financial statements for a further
discussion of the stock issued in connection with the merger.)
Intervest Bank and Intervest National Bank are both well-capitalized
institutions as defined by FDIC regulations. (See note 7 to the condensed
consolidated financial statements for capital ratios.) On June 15, 2000,
Intervest National Bank and its primary regulator, the Office of the Comptroller
of the Currency of the United States of America entered into a Memorandum of
Understanding ("MOU"). The MOU is a formal written agreement whereby, among
other things, Intervest National Bank shall review, revise, develop and
implement various policies and procedures with respect to its lending and credit
underwriting. Management has implemented various actions towards bringing
Intervest National Bank into full compliance with the MOU.
19
<PAGE>
Liquidity and Capital Resources
-------------------------------
The Company manages its liquidity position on a daily basis to assure that funds
are available to meet requirements for operations, loan commitments, deposit
withdrawals and the repayment of borrowed funds. The Company's primary sources
of funds consist of: retail deposits obtained through the Banks' offices;
satisfactions and repayments of loans; the maturities and calls of securities;
and cash provided by operating activities. From time to time, the Banks may also
utilize the Federal funds market.
From time to time, Intervest Corporation of New York has issued debentures and
the proceeds have been used for the origination and purchase of commercial and
multifamily mortgage loans. The Holding Company has also issued debentures to
raise funds for working capital purposes. In the first half of 2000, Intervest
Corporation of New York repaid $24,000,000 of debentures plus accrued interest
of $3,970,000 to debenture holders. Adequate funds were maintained to retire
these debentures.
At September 30, 2000, the Company's total commitment to lend aggregated
approximately $14,922,000. Based on its cash flow projections, the Company
believes that it can fund all of its outstanding lending commitments and
maturing liabilities from the aforementioned sources of funds. For information
about the cash flows from the Company's operating, investing and financing
activities, see the condensed consolidated statements of cash flows in this
report.
Interest Rate Risk
------------------
Interest rate risk arises from differences in the repricing of assets and
liabilities within a given time period. The primary objective of the Company's
asset/liability management strategy is to limit, within established guidelines,
the adverse impact of changes in interest rates on the Company's net interest
income and capital. The Company uses "gap analysis," which measures the
difference between interest-earning assets and interest-bearing liabilities that
mature or reprice within a given time period, to monitor its interest rate
sensitivity. At September 30, 2000, the Company's one-year negative
interest-rate sensitivity gap was $31,503,000, or 8% of total assets, compared
to $80,693,000, or 23.7%, at December 31, 1999. The decline in the negative gap
was largely due to the retirement of debentures as well as new variable-rate
loan originations.
In computing the gap, the Company treats interest checking, money market and
savings deposit accounts as immediately repricing. For a further discussion of
interest rate risk and gap analysis, including the assumptions used in
developing the one-year gap position, see the Company's 1999 Annual Report on
Form 10-KSB, pages 28 and 29.
Comparison of Results of Operations for the Quarters Ended September 30, 2000
and 1999
--------------------------------------------------------------------------------
Overview
--------
Net earnings for the third quarter of 2000 increased to $929,000, or $0.24 per
fully diluted share, from $508,000, or $0.13 per fully diluted share, for the
third quarter of 1999. The improvement was primarily due to a $475,000 increase
in net interest and dividend income and a $223,000 decline in the provision for
loan loss reserves, partially offset by a $318,000 increase in the provision for
income taxes.
Net Interest and Dividend Income
--------------------------------
Net interest and dividend income is the Company's primary source of earnings and
is influenced primarily by the amount, distribution and repricing
characteristics of its interest-earning assets and interest-bearing liabilities,
as well as by the relative levels and movements of interest rates. The table
that follows sets forth information on average assets, liabilities and
stockholders' equity; yields earned on interest-earning assets; and rates paid
on interest-bearing liabilities for the periods indicated. The yields and rates
shown are based on a computation of annualized income/expense for each period
divided by average interest-earning assets/interest-bearing liabilities during
each period. Certain yields and rates shown are adjusted for related fee income
or expense. Average balances are derived mainly from daily balances. Net
interest margin is computed by dividing annualized net interest and dividend
income by the average of total interest-earning assets during each period.
20
<PAGE>
<TABLE>
For the Quarter Ended
----------------------------------------------------------------------------
September 30, 2000 September 30, 1999
----------------------------------------------------------------------------
Average Interest Yield/ Average Interest Yield/
($ in thousands) Balance Inc./Exp. Rate Balance Inc./Exp. Rate
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Loans $257,592 $6,538 10.10% $171,578 $4,775 11.04%
Securities 97,514 1,462 5.96 107,193 1,548 5.73
Other interest-earning assets 19,671 324 6.55 14,627 164 4.45
------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 374,777 $8,324 8.84% 293,398 $6,487 8.77%
------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets 13,378 13,647
------------------------------------------------------------------------------------------------------------------------------
Total assets $388,155 $307,045
------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Checking deposits $ 7,714 $ 58 2.99% $ 7,380 $ 56 3.01%
Savings deposits 17,341 233 5.35 23,113 242 4.15
Money-market deposits 51,294 701 5.44 46,795 525 4.45
Certificates of deposit 193,640 3,082 6.33 95,864 1,325 5.48
----------------------------------------------------------------------------
Total deposit accounts 269,989 4,074 6.00 173,152 2,148 4.92
Federal funds purchased - - - 214 3 5.56
Debentures and accrued interest payable 67,336 1,869 11.04 91,331 2,430 10.56
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 337,325 $5,943 7.01% 264,697 $4,581 6.87%
------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits 6,766 3,685
Noninterest-bearing liabilities 8,940 6,302
Stockholders' equity 35,124 32,361
------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $388,155 $307,045
------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread $2,381 1.83% $1,906 1.90%
------------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin $37,452 2.53% $28,701 2.58%
------------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
to total interest-bearing liabilities 1.11x 1.11x
------------------------------------------------------------------------------------------------------------------------------
Other Ratios:
Return on average assets (1) 0.96% 0.66%
Return on average equity (1) 10.58% 6.28%
Noninterest expense to average assets (1) 1.11% 1.31%
Efficiency ratio 39.76% 47.20%
Average stockholders' equity to average assets 9.05% 10.54%
-------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Annualized
</FN>
</TABLE>
Net interest and dividend income increased to $2,381,000 in the third quarter of
2000, from $1,906,000 in the 1999 third quarter. The improvement was
attributable to a $86,014,000 increase in the average loan portfolio, partially
offset by a decline in the interest rate spread from 1.90% to 1.83%. The growth
in the loan portfolio was funded by a $97,776,000 increase in average
certificates of deposit.
The Company's cost of funds increased 14 basis points to 7.01% due to the rising
interest rate environment, as evidenced by the Federal Reserve Board increasing
the Federal Funds target rate on six occasions between June 1999 and June 2000,
for a total increase of 175 basis points. The higher rate environment resulted
in higher rates paid by the Company on its deposit accounts and floating-rate
debentures, as well as an increase in depositors' preference for certificate of
deposit accounts. Such accounts normally pay a higher rate than savings and
money-market accounts.
The Company's yield on earning assets increased 7 basis points to 8.84%. This
increase was a function of increased loan originations and higher yields earned
on investment securities and other short-term investments, partially offset by a
decline in the average yield earned on the loan portfolio. Despite the higher
interest rate environment, the average yield on the loan portfolio declined due
to competitive lending conditions. The competitive lending conditions resulted
in originations of new loans with lower interest rates than the average yield of
the existing portfolio, as well as prepayments of higher-yielding loans. The
effect of loan prepayments as well as new loans with lower rates was offset to
some degree by rate increases on floating-rate loans.
21
<PAGE>
Provision for Loan Loss Reserves
--------------------------------
The provision is based on management's ongoing assessment of the adequacy of the
allowance for loan loss reserves, which takes into consideration a number of
factors that are discussed in note 3 to the condensed consolidated financial
statements. The provision amounted to $47,000 in the third quarter of 2000,
compared to $270,000 in the third quarter of 1999.
Noninterest Income
------------------
Noninterest income was $338,000 in the third quarter of 2000, compared to
$219,000 in the third quarter of 1999, or a $119,000 increase. Noninterest
income includes fees from customer service charges and income from mortgage
lending activities, which are comprised of loan prepayment fees, fees earned on
expired loan commitments, and loan service, inspection and maintenance charges.
The increase from the prior year quarter was primarily due to higher loan
prepayment fee income.
Noninterest Expenses
--------------------
Noninterest expenses were $1,081,000 in the third quarter of 2000, compared to
$1,003,000 in the third quarter of 1999, or a $78,000 increase. The increase was
primarily due to normal salary increases and a higher level of professional fees
and services.
Provision for Income Taxes
--------------------------
The provision for income taxes increased to $662,000 in the third quarter of
2000, from $344,000 in the same period of 1999, primarily due to higher pre-tax
earnings. The Company's effective tax rate (inclusive of state and local taxes)
amounted to 41.6% in the 2000 period, compared to 40.4% in the 1999 period.
Comparison of Results of Operations for the Nine-Months Ended September 30, 2000
and 1999
--------------------------------------------------------------------------------
Overview
--------
For the first nine months of 2000, net earnings increased to $1,750,000, or
$0.45 per fully diluted share, from $1,341,000, or $0.32 per fully diluted
share, for the same period of 1999. The improvement was due to a $977,000
increase in net interest and dividend income and a $313,000 decline in the
provision for loan loss reserves. These items were partially offset by a
$466,000 increase in noninterest expenses and a $239,000 increase in the
provision for income taxes.
Net Interest and Dividend Income
--------------------------------
Net interest and dividend income is the Company's primary source of earnings and
is influenced primarily by the amount, distribution and repricing
characteristics of its interest-earning assets and interest-bearing liabilities
as well as by the relative levels and movements of interest rates.
The table that follows sets forth information on average assets, liabilities and
stockholders' equity; yields earned on interest-earning assets; and rates paid
on interest-bearing liabilities for the periods indicated. The yields and rates
shown are based on a computation of annualized income/expense for each period
divided by average interest-earning assets/interest-bearing liabilities during
each period. Certain yields and rates shown are adjusted for related fee income
or expense. Average balances are derived mainly from daily balances. Net
interest margin is computed by dividing annualized net interest and dividend
income by the average of total interest-earning assets during each period.
22
<PAGE>
<TABLE>
For the Nine-Months Ended
-----------------------------------------------------------------------------
September 30, 2000 September 30, 1999
-----------------------------------------------------------------------------
Average Interest Yield/ Average Interest Yield/
($ in thousands) Balance Inc./Exp. Rate Balance Inc./Exp. Rate
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Loans $244,990 $18,214 9.93% $166,830 $13,772 11.04%
Securities 99,442 4,413 5.93 108,429 4,560 5.62
Other interest-earning assets 13,209 611 6.18 13,467 435 4.32
-------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 357,641 $23,238 8.68% 288,726 $18,767 8.69%
-------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets 13,787 12,694
-------------------------------------------------------------------------------------------------------------------------------
Total assets $371,428 $301,420
-------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Checking deposits $ 7,589 $ 172 3.03% $ 7,516 $ 174 3.10%
Savings deposits 17,545 678 5.16 25,296 785 4.15
Money-market deposits 51,900 2,074 5.34 40,021 1,318 4.40
Certificates of deposit 163,823 7,463 6.09 93,408 3,855 5.52
-----------------------------------------------------------------------------
Total deposit accounts 240,857 10,387 5.76 166,241 6,132 4.93
Federal funds purchased 3,321 146 5.87 218 9 5.52
Debentures and accrued interest payable 78,514 6,374 10.84 92,977 7,272 10.46
------------------------------------------------- -----------------------------------------------------------------------------
Total interest-bearing liabilities 322,692 $16,907 7.00% 259,436 $13,413 6.91%
------------------------------------------------- -----------------------------------------------------------------------------
Noninterest-bearing deposits 5,980 4,023
Noninterest-bearing liabilities 8,297 6,069
Stockholders' equity 34,459 31,892
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $371,428 $301,420
-------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread $6,331 1.68% $5,354 1.78%
-------------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin $34,949 2.36% $29,290 2.48%
-------------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
to total interest-bearing liabilities 1.11x 1.11x
-------------------------------------------------------------------------------------------------------------------------------
Other Ratios:
Return on average assets (1) 0.63% 0.59%
Return on average equity (1) 6.77% 5.61%
Noninterest expense to average assets (1) 1.24% 1.33%
Efficiency ratio 49.39% 48.87%
Average stockholders' equity to average assets 9.28% 10.58%
-------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Annualized
</FN>
</TABLE>
Net interest and dividend income increased to $6,331,000 in the first nine
months of 2000, from $5,354,000 in the same period of 1999. The improvement was
attributable to a $78,160,000 increase in the average loan portfolio, partially
offset by a decline in the interest rate spread from 1.78% to 1.68%. The growth
in the loan portfolio was funded primarily by a $74,616,000 increase in average
deposits.
The Company's cost of funds increased 9 basis points to 7.00% due to the rising
interest rate environment, as evidenced by the Federal Reserve Board increasing
the Federal Funds target rate on six occasions between June 1999 and June 2000,
for a total of 175 basis points. The higher rate environment resulted in higher
rates paid by the Company on its deposit accounts and floating-rate debentures,
as well as an increase in depositors' preference for certificate of deposit
accounts. Such accounts normally pay a higher rate than savings and money-market
accounts.
The Company's yield on earning assets declined 1 basis point to 8.68% due to a
decline in the overall yield on the loan portfolio. Despite the higher interest
rate environment, the average yield on the loan portfolio declined due to
competitive lending conditions. The competitive lending conditions resulted in
originations of new loans with lower interest rates than the average yield of
the existing portfolio, as well as prepayments of higher-yielding loans. The
effect of loan prepayments as well as new loans with lower rates was partially
offset by rate increases on floating-rate loans and higher yields earned on
investment securities and other short-term investments.
23
<PAGE>
Provision for Loan Loss Reserves
--------------------------------
The provision is based on management's ongoing assessment of the adequacy of the
allowance for loan loss reserves, which takes into consideration a number of
factors that are discussed in note 3 to the condensed consolidated financial
statements in this report. The provision amounted to $292,000 in the first nine
months of 2000, compared to $605,000 in the first nine months of 1999.
Noninterest Income
------------------
Noninterest income declined to $678,000 in the first nine months of 2000, from
$776,000 in the first nine months of 1999, primarily due to lower income from
mortgage lending activities. Noninterest income includes fees from customer
service charges and income from mortgage lending activities, which are comprised
of loan prepayment fees, fees earned on expired loan commitments, and loan
service, inspection and maintenance charges.
Noninterest Expenses
--------------------
Noninterest expenses increased to $3,462,000 in the first nine months of 2000,
from $2,996,000 in the first nine months of 1999. The increase was due to
approximately $210,000 of nonrecurring expenses associated with the acquisition
of Intervest Corporation of New York and increased operating expenses of
Intervest National Bank, which was in business for the full nine months of 2000
versus six months for the 1999 period (Intervest National Bank opened on April
1, 1999). The increase in operating expenses reflected higher compensation and
occupancy and equipment expenses. The nonrecurring expenses related to attorney
fees, consulting fees, printing costs, and stock compensation expense (see note
2 to the condensed consolidated financial statements).
Provision for Income Taxes
--------------------------
The provision for income taxes amounted to $1,299,000 in the first nine months
of 2000, compared to $1,060,000 in the same period of 1999, due to higher
pre-tax income. The Company's effective tax rate (inclusive of state and local
taxes) amounted to 39.9% in the 2000 period, compared to 41.9% in the 1999
period. The decline in the effective tax rate reflects lower New York State and
City taxes generated from Intervest Corporation of New York's and the Holding
Company's operations.
Extraordinary Item
------------------
In the second quarter of 2000, Intervest Corporation of New York redeemed its
Series 9/13/93, 1/28/94 and 10/28/94 debentures aggregating $17,000,000 in
principal amount prior to maturity for the outstanding principal plus accrued
interest. In connection with these early redemptions, $382,000 of unamortized
deferred debenture offering costs was charged to expense in the second quarter
of 2000 and reported as an extraordinary charge, net of a tax benefit of
$176,000, in the condensed consolidated statement of earnings for the
nine-months ended September 30, 2000.
Cumulative Effect of Change in Accounting Principle
---------------------------------------------------
The change in accounting principle represents the required adoption of the
AICPA's Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities," which applies to all companies except as provided for therein. The
SOP requires that all start-up costs (except for those that are capitalizable
under other generally accepted accounting principles) be expensed as incurred
for financial statement purposes effective January 1, 1999. Previously, a
portion of start-up costs were generally capitalized and amortized over a period
of time. The adoption of this statement resulted in the immediate expensing on
January 1, 1999 of $193,000 in start-up costs incurred through December 31, 1998
in connection with organizing Intervest National Bank. A deferred tax benefit of
$65,000 was recorded in conjunction with this charge.
Year 2000 Issue
---------------
The Year 2000 issue is the result of computer programs that were written using
two digits rather than four digits to define the applicable year. As a result,
such programs may recognize a date using "00" as the year 1900 instead of the
year 2000, which could result in system failures or miscalculations. Prior to
January 1, 2000, the Company had completed all upgrades necessary to ensure that
its operating and financial systems were Year 2000 compliant. To date, the
Company has not experienced any problems as a result of the Year 2000 issue, nor
does management expect it will. Expenses incurred by the Company related to the
Year 2000 issue have not been material.
24
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Market risk is the risk of loss from adverse changes in market prices and
interest rates. The Company's market risk arises primarily from interest rate
risk inherent in its lending and deposit-taking activities. The Company has no
risk related to trading accounts, commodities or foreign exchange.
Management actively monitors and manages the Company's interest rate risk
exposure. The primary objective in managing interest rate risk is to limit,
within established guidelines, the adverse impact of changes in interest rates
on the Company's net interest income and capital. The Company uses "gap
analysis," which measures the difference between interest-earning assets and
interest-bearing liabilities that mature or reprice within a given time period,
to monitor its interest rate sensitivity. However, a sudden and substantial
increase in interest rates could adversely impact the Company's earnings, to the
extent that the interest rates borne by assets and liabilities do not change at
the same speed, to the same extent, or on the same basis. Management believes
that there have been no significant changes in the Company's market risk
exposure since December 31, 1999.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Not Applicable
ITEM 2. Changes in Securities and Use of Proceeds
(a) Not Applicable (b) Not Applicable
(c) Not Applicable (d) Not Applicable
ITEM 3. Defaults Upon Senior Securities
Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) Not Applicable (b) Not Applicable
(c) Not Applicable (d) Not Applicable
ITEM 5. Other Information
Not Applicable
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index (numbered in accordance with Item 601 of Regulation S-B)
27 - Financial Data Schedule (For SEC Purposes only)
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 2000.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
Date: November 10, 2000 By: /s/ Lowell S. Dansker
--------------------------------------------------
Lowell S. Dansker, President and Treasurer
(CFO)
Date: November 10, 2000 By: /s/ Lawrence G. Bergman
--------------------------------------------------
Lawrence G. Bergman, Vice President and
Secretary
