As filed with the Securities and Exchange Commission on December 28, 2001
File No. 333-64177
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 4 ON
FORM S-2
TO
REGISTRATION STATEMENT ON FORM SB-2
Under
The Securities Act of 1933
INTERVEST BANCSHARES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
__________________
DELAWARE 13-3699013
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
__________________
10 Rockefeller Plaza
Suite 1015
New York, New York 10020-1903
(212)218-2800
(Address, Including Zip Code, and Telephone Number, Including Area Code of
Registrant's Principal Executive Offices)
__________________
Copy to:
Lawrence G. Bergman Thomas E. Willett Esq.
Vice President Harris Beach LLP
Intervest Bancshares Corporation 99 Garnsey Road
10 Rockefeller Plaza (Suite 1015) Pittsford, New York 14534
New York, New York 10020-1903 (716) 419-8800
(212-218-2800)
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
__________________
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [x]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this form check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ x ] 333-64177
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
__________________
PRIOR REGISTRATION - RULE 429
* As permitted by Rule 429, the Prospectus included herein also relates to: a
Registration Statement on Form SB-2 (No. 333-5013) with respect to shares
of Class A Common Stock issuable upon conversion of debentures; a
Registration Statement on Form SB-2 (No. 333-82246) with respect to 675,000
Warrants and 675,000 shares of Class A Common Stock; a Registration
Statement on Form SB-2 (No. 333-3522) with respect to 613,500 Warrants and
613,500 shares of Class A Common Stock; a Registration Statement on Form
SB-2 (No. 333-26583) with respect to 240,165 Warrants, 240,165 shares of
Class A Common Stock and 150,000 shares of Class B Common Stock; and a
Registration Statement on Form SB-2 (No. 333-33419) related to 965,683
Warrants and 965,683 shares of Class A Common Stock.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until this Registration Statement shall become effective on
such date as the Commission, acting pursuant to Section 8 (a), may determine.
The information in this Prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer is not permitted.
Subject to Completion Dated December 28, 2001
Prospectus
INTERVEST BANCSHARES CORPORATION
(A Bank Holding Company for Intervest National Bank)
This prospectus covers shares of our Class A Common Stock and Class B
Common Stock that we may issue whenever someone exercises warrants that we
previously issued. We have issued warrants which currently entitle the holders
to purchase up to 2,455,218 shares of Class A Common Stock and up to 195,000
shares of Class B Common Stock. This prospectus also covers shares of Class A
Common Stock that we may issue upon conversion of debentures. We have issued
convertible debentures which allow the holders to currently convert them into up
to 692,308 shares of our Class A Common Stock.
Our Class A Common Stock is listed on the Nasdaq SmallCap Market under
the symbol "IBCA".
Please see "Risk Factors" beginning on page 5 to read about certain
factors you should consider.
_________________
THE SECURITIES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------- ----------------------------- ----------------------------- ------------------------------
Underwriting
Discounts and Proceeds to
Price to Public Commissions(1) Company(2)
- -------------------------------- ----------------------------- ----------------------------- ------------------------------
Per Share(2) (3) $0 (3)
- -------------------------------- ----------------------------- ----------------------------- ------------------------------
Per Warrant(2)(4) --- $0 ---
- -------------------------------- ----------------------------- ----------------------------- ------------------------------
Total(2) $24,592,294 $0 $24,592,524
- -------------------------------- ----------------------------- ----------------------------- ------------------------------
<FN>
(1) The Company will not use brokers or dealers in connection with this
offering.
(2) Before deducting expenses estimated at $6,000. The Company will not
receive any proceeds in connection with the conversion of its
debentures.
(3) Warrants related to 1,370,815 shares of Class A Common Stock are at an
exercise price of $6.67 per share; Warrants related to 1,084,403 shares
of Class A Common Stock are at an exercise price of $10.01 per share.
Warrants related to 145,000 shares of Class B Common Stock are at an
exercise price of $6.67 per share and Warrants related to 50,000 shares
of Class B Common Stock are at an exercise price of $10.00 per share.
(4) The Company has attributed no value to the Warrants.
</FN>
The date of this Prospectus is , 2001
TABLE OF CONTENTS
Page
----
Prospectus Summary............................................................3
Risk Factors..................................................................4
Ratio of Earnings to Fixed Charges and Preferred Dividends....................8
Where You Can Find More Information...........................................9
Forward-Looking Information..................................................10
Use of Proceeds..............................................................10
Determination of Offering Price..............................................10
Plan of Distribution.........................................................11
Business of Intervest........................................................11
Subsequent Events............................................................17
Description of Intervest Securities..........................................18
Legal Matters................................................................21
Experts......................................................................21
ABOUT THIS PROSPECTUS
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus or incorporated by reference in this
prospectus. We are not making offers to sell the securities covered by this
prospectus or soliciting offers to purchase the securities covered by this
prospectus in any jurisdiction in which such an offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation. The information in this prospectus is accurate as of the date on
the front cover. You should not assume that the information contained in this
prospectus is accurate as of any other date.
2
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding Intervest Bancshares and the securities being sold in this
offering and our audited consolidated financial statements contained in our Form
10-K for the fiscal year ended December 31, 2000, and our unaudited consolidated
financial statements contained in our Form 10-Q for the quarter ended September
30, 2001, which are incorporated by reference in this prospectus.
The Company
Intervest Bancshares Corporation is a bank holding company (the
"Holding Company") incorporated under the laws of the State of Delaware whose
wholly-owned subsidiaries at September 30, 2001 were Intervest National Bank, a
a nationally-chartered bank, and Intervest Corporation of New York, a New York
corporation investing in real estate mortgage loans.
Intervest National Bank, which opened for operations on April 1, 1999,
is a full-service commercial bank with its office in Rockefeller Plaza in New
York City and with five full-service banking offices in Clearwater and Pinellas
County, Florida. Intervest Corporation of New York is located in Rockefeller
Plaza in New York City and is in the business of investing in commercial and
multifamily residential mortgage loans. The Company completed its acquisition of
Intervest Corporation of New York in March of 2000. Unless the context otherwise
requires, references in this prospectus to the "Company" include Intervest
Bancshares Corporation and its subsidiaries. Intervest National Bank is
sometimes referred to as the "Bank."
The principal business of the Bank is to attract deposits and to loan
or invest those deposits on profitable terms. The Bank offers a variety of
deposit accounts which are insured by the Federal Deposit Insurance Corporation
("FDIC") up to $100,000 per depositor. The lending of the Bank consists
primarily of real estate loans, commercial loans and consumer loans. The Bank is
one of several providers of funds for such purposes in its market areas, and its
lending policies, deposit products and related services are intended to meet the
needs of individuals and businesses in those market areas. The principal
business of Intervest Corporation of New York is investing in real estate
mortgage loans secured by income-producing real property.
The Offering
Securities Offered..................... 2,455,218 shares of Class A Common
Stock issuable upon exercise of
Warrants and 195,000 shares of Class
B Common Stock issuable upon
exercise of Warrants, and 692,308
shares of Class A Common Stock
currently issuable upon conversion
of Debentures. See "Description of
Capital Stock" and "Description of
Debentures."
Shares of Class A Common
Stock currently outstanding............ 3,544,629(1)
Shares of Class A Common
Stock outstanding after
Exercise of Class A Warrants
and conversion of Debentures........... 6,692,155
Shares of Class B Common
Stock currently outstanding............ 355,000
Shares of Class B Common
Stock outstanding after
Exercise of Class B Warrants........... 550,000
Class A Common Stock................... The Class A Common Stock is listed
on the Nasdaq Stock Market's
SmallCap Market under the symbol
"IBCA."
3
Use of Proceeds........................ We intend to apply the net proceeds
of this Offering to our capital
for general corporate purposes,
including the financing of the
expansion of our operations through
the infusion of capital to our
subsidiaries. See "Use of Proceeds."
Investment Considerations.............. Investors should consider the
information discussed under the
heading "Risk Factors."
(1) Does not include: (i) 355,000 shares of Class A Common stock issuable upon
the conversion of issued and outstanding shares of Class B Common Stock;
(ii) 2,455,218 shares of Class A Common Stock issuable upon exercise of
Warrants for Class A Common Stock; (iii) 195,000 shares of Class A Common
Stock issuable upon conversion of Class B Common Stock issuable upon
exercise of Warrants for Class B Common Stock; and (iv) 692,308 shares of
Class A Common Stock issuable upon conversion of the Company's Convertible
Subordinated Debentures.
The Company and Its Subsidiaries
Intervest Bancshares Corporation
- --------------------------------
Intervest Bancshares Corporation (the "Holding Company"), is a Delaware
corporation organized in 1993 as a bank holding company registered under the
Bank Holding Company Act of 1956, as amended (the "BHCA"). The principal
executive offices of the Holding Company are located at 10 Rockefeller Plaza
(Suite 1015), New York, New York 10020, and its telephone number is (212)
218-2800. The Holding Company's primary business is the ownership and operation
of Intervest National Bank and Intervest Corporation of New York. Unless the
context otherwise requires, references in this prospectus to the Company include
Intervest Bancshares Corporation and its subsidiaries. The Holding Company,
through its ownership of the Bank, is engaged in the commercial banking business
and its primary source of earnings is derived from income generated by its
ownership and operation of the Bank. In March of 2000, the Holding Company
completed the acquisition of Intervest Corporation of New York.
The Holding Company is a legal entity separate and distinct from the Bank
and Intervest Corporation of New York. There are various legal limitations with
respect to the Bank's financing or otherwise supplying funds to the Holding
Company. In particular, under federal banking law, the Banks may not declare a
dividend that exceeds undivided profits. In addition, federal banking laws
prohibit or restrict the Bank from extending credit to the Holding Company under
certain circumstances.
Intervest National Bank, has its headquarters and a full-service banking
office at One Rockefeller Plaza in New York City and has a total of five
full-service banking offices in Pinellas County, Florida.
Intervest National Bank
- -----------------------
Intervest National Bank is a national bank which received its charter from
the Office of the Comptroller of the Currency ("OCC") and opened for operations
on April 1, 1999. Intervest National Bank is a full-service commercial bank and
is subject to the supervision of and examination by the OCC. The principal
executive office of Intervest National Bank is located at One Rockefeller Plaza,
Suite 300, New York, New York 10020 and its telephone number is (212) 218-8383.
Effective July 20, 2001, Intervest Bank, which was also a subsidiary of the
Company, merged into Intervest National Bank.
The Bank primarily focuses on providing personalized banking services to
businesses and individuals within its market areas. The Bank originates
commercial loans to businesses, collateralized and uncollateralized consumer
loans, and real estate loans (primarily commercial and multifamily real estate
loans). The Bank's income is derived principally from interest and fees earned
in connection with their lending activities, interest and dividends on
securities, short-term investments and other services. Provisions for loan loss
reserves also affect the Bank's income. Its principal expenses are interest paid
on deposits and operating expenses. The Bank's operations are also significantly
affected by local economic and competitive conditions in their market areas.
Changes in market interest rates, government legislation and policies concerning
monetary and fiscal affairs, and the attendant actions of the regulatory
authorities all have an impact on the Bank's operations.
4
The Bank is subject to examination and comprehensive regulation by the OCC
and its deposits are insured by the Federal Deposit Insurance Corporation (the
"FDIC") to the extent permitted by law.
Intervest Corporation of New York
Intervest Corporation of New York is a New York corporation engaged in the
business of investing in commercial and multi-family mortgage loans on
income-producing property. The principal executive office of Intervest
Corporation of New York is located at 10 Rockefeller Plaza, Suite 1015, New
York, New York 10020, and its telephone number is (212) 218-2800.
RISK FACTORS
Before you invest in our securities, you should be aware that there are
various risks, including those described below. You should carefully consider
these risks together with all of the other information included in this
prospectus, incorporated by reference in this prospectus, and filed as exhibits
to our registration statement before you decide to purchase shares of our Class
A common stock.
A prospective investor should review and consider carefully the following
risk factors, together with the other information contained in this prospectus
in evaluating an investment. The prospectus contains certain forward-looking
statements and actual results could differ materially from those projected in
the forward-looking statements as a result of numerous factors, including those
set forth below and elsewhere in the prospectus.
Management's Broad Discretion Over Proceeds
- -------------------------------------------
None of the proceeds of the Offering have yet been committed to specific
applications. All determinations concerning the use and investment of the
proceeds will be made by management of the Company. See "Use of Proceeds."
Dividends
- ---------
Since its inception, the Holding Company has not paid any dividends on its
common stock and there is no immediate prospect or contemplation of the payment
of such dividends.
Dividends paid by the Holding Company are subject to the financial
conditions of both the Holding Company and its subsidiaries as well as other
business considerations. In addition, banking regulations limit the amount of
dividends that may be paid by the Bank to the Holding Company without prior
regulatory approval. The amount of allowable dividends which could be payable by
the Holding Company are in substance limited to net profits earned by the
Holding Company, less any earnings retention consistent with the Holding
Company's capital needs, asset quality and overall financial condition.
Distributions paid by the Holding Company to shareholders will be taxable to the
shareholders as dividends, to the extent of the Holding Company's accumulated
current earnings and profits.
The payment of dividends by the Bank to the Holding Company is regulated by
various state and federal laws and by regulations promulgated by the the OCC,
which restrict the payment of dividends under certain circumstances. In
addition, such regulations also impose certain minimum capital requirements
which affect the amount of cash available for the payment of dividends by
regulated banking institutions such as the Bank. Even if the Bank is able to
generate sufficient earnings to pay dividends, there is no assurance that the
Board of Directors might not decide or be required to retain a greater portion
of the Bank's earnings in order to maintain or achieve the capital deemed
necessary or appropriate. The occurrence of any of these events would decrease
the amount of funds potentially available for the payment of dividends by the
Bank to the Holding Company. In addition, in some cases, the Bank's regulators
could take the position that it has the power to prevent the Bank from paying
dividends if, in its view, such payments would constitute unsafe or unsound
banking practices. Further, the determination of whether dividends are paid and
their frequency and amount will depend upon the financial condition and
performance of the Bank and the Company, and other factors deemed appropriate by
the Boards of Directors of the Bank and of the Holding Company. Accordingly,
there can be no assurance that any dividends will be paid in the future by the
Bank or the Holding Company.
5
Adequacy of Allowance For Loan Losses
- -------------------------------------
There is a risk that losses may be experienced in the Company's loan
portfolio. The risk of loss will vary with, among other things, general economic
conditions, the type of loan being made, the creditworthiness of the borrower
over the term of the loan and, in the case of a collateralized loan, the quality
of the collateral for the loan. Management maintains an allowance for loan
losses which is established through a provision for loan losses charged to
operations. Loans are charged against the allowance for loan losses when
management believes that the collectability of the principal is unlikely.
Subsequent recoveries are added to the allowance. The allowance is an amount
that management believes will be adequate to absorb possible losses inherent in
existing loans and loan commitments, based on evaluations of collectability and
prior loss experience. Management evaluates the adequacy of the allowance
monthly, or more frequently if considered necessary. The evaluation takes into
consideration such factors as changes in the nature and volume of the loan
portfolio, overall portfolio quality, loan concentrations, specific problem
loans and commitments and current and anticipated economic conditions that may
affect the borrower's ability to repay.
Intervest Corporation of New York does not have an allowance for loan
losses. At September 30, 2001, there were no non-performing assets. The Bank
actively manages its nonperforming loans in an effort to minimize credit losses
and monitors its asset quality to maintain an adequate loan loss allowance.
Although management believes that its allowance for loan losses is adequate,
there can be no assurance that the allowance will prove sufficient to cover
future loan losses. Further, although management uses the best information
available to make determinations with respect to the allowance for loan losses,
future adjustments may be necessary if economic conditions differ substantially
from the assumptions used or adverse developments arise with respect to the
Bank's nonperforming or performing loans. Material additions to the Bank's
allowances for loan losses would result in a decrease of the Company's net
income, and possibly its capital, and could result in the inability to pay
dividends, among other adverse consequences.
Supervision and Regulation
- --------------------------
Bank holding companies and banks operate in a highly regulated environment
and are subject to the supervision and examination by several federal and state
regulatory agencies. The Company is subject to the BHCA and to regulation and
supervision by the FRB. Intervest National Bank is subject to the regulation and
supervision of the OCC. Federal and state laws and regulations govern matters
ranging from the regulation of certain debt obligations, changes in control of
bank holding companies, and the maintenance of adequate capital for the general
business operations and financial condition of the Bank, including permissible
types, amounts and terms of loans and investments, the amount of reserves
against deposits, restrictions on dividends, establishment of branch offices,
and the maximum rate of interest that may be charged by law. The FRB also
possesses cease and desist powers over bank holding companies to prevent or
remedy unsafe or unsound practices or violations of law. These and other
restrictions limit the manner by which the Bank and the Company may conduct
their business and obtain financing. Furthermore, the commercial banking
business is affected not only by general economic conditions, but also by the
monetary policies of the FRB. These monetary policies have had and/or are
expected to continue to have significant effects on the operating results of
commercial banks. Although the Company believes that it is in compliance in all
material respects with applicable state and federal laws, rules and regulations,
there can be no assurance that more restrictive laws, rules and regulations will
not be adopted in the future which could make compliance more difficult or
expensive, or otherwise affect the ability of the Bank to attract deposits and
make loans.
Competition
- -----------
Competition in the banking and financial services industry is intense. In
its primary market areas, the Bank competes with other commercial banks, savings
and loan associations, credit unions, finance companies, mutual funds, insurance
companies, brokerage and investment banking firms, and other lenders and
investors operating locally and elsewhere. Most of these competitors have
substantially greater resources and lending limits than the Bank and may offer
certain services that the Bank does not provide at this time. In making its
investments, Intervest Corporation of New York also faces significant
competition from banks, insurance companies, savings and loan associations,
mortgage bankers, pension funds, real estate investment trusts, limited
partnerships, and other lenders and investors with the same or similar
investment objectives. The profitability of the Company depends upon the ability
of the Bank and Intervest Corporation of New York to compete in their market
areas.
6
Local Economic Conditions
- -------------------------
The success of the Company and its subsidiaries is dependent to a certain
extent upon the general economic conditions in geographic markets served by its
subsidiaries. The Bank focuses on the New York metropolitan region and Pinellas
County, Florida and the immediate surrounding areas. Although the Company
expects economic conditions will continue to improve in these market areas,
there is no assurance that favorable economic development will occur or that the
Bank's expectation of corresponding growth will be achieved. Adverse changes in
their geographic markets would likely impair the Bank's and Intervest
Corporation of New York's ability to collect loans and could otherwise have a
negative effect on the financial condition of the Company. While none of the
properties underlying the Company's mortgages were directly impacted by the
terrorist acts of September 11, 2001, it is unclear what impact those events may
have on properties in the New York metropolitan area.
Lack of Diversification
- -----------------------
The primary business activity of the Holding Company consists of its
ownership and control of the capital stock of the Bank and Intervest Corporation
of New York. As a result, the Company presently lacks diversification as to
business activities and market areas, and any event affecting the Bank or
Intervest Corporation of New York will have a direct impact on the Company.
Dependence on Key Personnel
The Company and its subsidiaries are dependent upon the services of their
principal officers. If the services of any of these persons were to become
unavailable for any reason, the operation of the Company and its subsidiaries
might be adversely affected in a material manner. The Bank presently has a
written employment agreement with its President, and Intervest Corporation of
New York has an employment agreement with its Chairman. Neither the Company nor
any of its subsidiaries maintains key man life insurance policies on executives
and do not have any immediate plans to obtain such policies. The successful
development of the Company's business will depend, in part, on its and the
Banks' ability to attract or retain qualified officers and employees.
Voting Control
- --------------
As of the date of this Prospectus, the three original shareholders of the
Company and a related party own 2,221,000 shares of Class A Common Stock or
approximately 63% of the issued and outstanding shares of Class A Common Stock
of the Company. These same persons own all of the issued and outstanding shares
of Class B Common Stock. See "Management -- Security Ownership of Certain
Beneficial Owners and Management." The shares of Class B Common Stock, as a
separate class, are entitled to elect two-thirds of the directors of the
Company. As a result, voting control will continue to rest with the three
persons.
Interest Rates
- --------------
The principal source of income for the Company is its net interest income,
which is affected by movements in interest rates. Although the Bank monitors its
interest rate sensitivity and attempts to reduce the risk of the significant
decrease in net interest income caused by a change in interest rates, rising
interest rates could nevertheless adversely affect the Bank's results of
operations.
7
RATIO OF EARNINGS TO FIXED CHARGES
Nine Months Ended Fiscal Years Ended
---------------------------------------------------------------
September 30, December 31, December 31, December 31,
2001 2000 1999 1998
------------- ------------ ------------ ------------
Ratio of earnings to fixed charges(1)
Excluding interest on deposits 1.71 1.53 1.31 1.42
Including interest on deposits 1.22 1.19 1.16 1.23
- ----------
<FN>
(1) The ratio of earnings to fixed charges has been computed by dividing
earnings (before the provision for income taxes and fixed charges) by
fixed charges. Fixed charges consist of interest expense incurred during
the period and amortization of deferred debenture offering costs.
</FN>
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission ("SEC") a
registration statement on Form S-2 under the Securities Act of 1933 registering
Class A common stock. This prospectus, which is part of the registration
statement, does not contain all of the information included in the registration
statement. Also, any statement made in this prospectus concerning the contents
of any contract, agreement or other document is not necessarily complete. If we
have filed any contract, agreement or other document as an exhibit to the
registration statement, you should read the exhibit for a more complete
understanding of the document or matter involved. We are also required to file
periodic reports and other information with the SEC under the Securities
Exchange Act. Accordingly, we file reports, including our annual reports on Form
10-K, our quarterly reports on Form 10-Q, and current reports on Form 8-K, and
other information with the Commission.
You may read and copy the registration statement, including the
attached exhibits, and any reports, statements or other information that we may
file, at the SEC's Public Reference Room at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549-1004, and at the SEC`s Midwest Regional Office located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. You can request copies of these documents, upon payment of the
duplicating fee, by writing to the SEC at its principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549-1004. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the Public Reference Room. Our SEC
filings are also available to the public on the SEC's Internet site
(http://www.sec.gov).
The SEC allows us to "incorporate by reference" information we have
filed with it, which means that we can disclose important information to you by
referring you to those previously filed documents. These incorporated documents
contain important business and financial information about us that is not
included in or delivered with this prospectus. The information incorporated by
reference is considered to be part of this prospectus. We incorporate by
reference the documents listed below.
* Our Annual Report on Form 10-K for the year ended December 31, 2000.
* Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2001, June 30, 2001 and September 30, 2001.
A copy of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 and our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001 are being delivered with this prospectus. The above filings
are also available at the SEC's offices and Internet site described above. We
will also provide you, and any beneficial owner, with a copy free of charge, of
any of the documents identified above that we incorporate by reference into this
prospectus, but do not deliver with this prospectus. You may request a copy of
the filings by writing or telephoning us at the following address: Intervest
Bancshares Corporation, 10 Rockefeller Plaza (Suite 1015), New York, New York
10020, Attention: Secretary; telephone (212) 218-2800.
8
FORWARD-LOOKING INFORMATION
This prospectus, together with the documents incorporated by reference
into this prospectus, contains forward-looking statements, which are not
statements of historical facts. We have based these forward-looking statements
on our current expectations and projections about future events, based on the
information currently available to us. The forward-looking statements include,
among other things, our expectations and estimates about business operations,
strategies and future financial performance.
The forward-looking statements are subject to risks, uncertainties and
assumptions about us, and about the future, and could prove to be wrong.
Important factors that could cause actual results to differ materially from our
expectations are discussed in this prospectus, including the forward-looking
statements included in this prospectus and under "Risk Factors." Among the
factors that could impact our ability to achieve our goals are: changes in
economic conditions in the Company's market areas; changes in policies by
regulatory agencies; fluctuations in interest rates; demand for loans; and
competition.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this prospectus may not occur.
USE OF PROCEEDS
The net proceeds to the Company will depend upon the number of Warrants
actually exercised and cannot be determined at this time. However, assuming all
of the Warrants were to be exercised, the net proceeds to the Company would be
approximately $24.6 million.
The net proceeds of the Offering will become a part of the Company's
capital funds to be used for general corporate purposes, including, without
limitation, the financing of the expansion of the Company, the Bank's or
Intervest Corporation of New York's business through acquisitions, the
establishment of new branches or subsidiaries, and the infusion of capital to
the Bank and Intervest Corporation of New York and any future subsidiaries of
the Company. Neither the Company nor any of its subsidiaries currently has any
plans, understandings, arrangements or agreements, written or oral, with respect
to the establishment of any branches or with respect to any specific acquisition
prospect, and none of them is presently negotiating with any party with respect
thereto.
The actual application of the net proceeds will depend on the capital
needs of the Holding Company's subsidiaries, the Company's own financial
requirements and available business opportunities. None of the uses described
herein constitute a commitment by the Company to expend the proceeds in a
particular manner. The Company reserves the right to make shifts in the
allocation of the proceeds from this offering if future events, including
changes in the economic climate or the Company's planned operations, make such
shifts necessary or desirable. In such events, proceeds may be applied to the
working capital requirements of the Company, the Bank or Intervest Corporation
of New York. Pending their ultimate application, the net proceeds will be
invested in such relatively short-term investments or otherwise applied as
management may determine.
DETERMINATION OF OFFERING PRICE
Although the Company's Class A Common Stock is presently traded over
the counter and quoted on the NASDAQ Small Cap Market under the symbol IBCA, at
the time of original issuance of the warrants, there was no established trading
market for any of the Company's securities. The exercise prices for the Warrants
and the conversion prices for the debentures were established based upon a
number of factors, including the following: (i) the financial condition of the
Company and its subsidiaries; (ii) the experience of management; and (iii) the
general status of the securities markets and other relevant factors. The Company
has reviewed the exercise and conversion prices from time to time and recently
approved certain reductions in the exercise price of warrants and the conversion
prices of debentures, which revised prices are described in this prospectus.
9
PLAN OF DISTRIBUTION
The Company's Warrants are not exercisable and its Debentures are not
convertible unless the Company has a current prospectus covering the shares
issuable upon exercise of the Warrants or conversion of the Debentures and this
prospectus covers those shares.
With respect to the shares of Class A Common Stock and Class B Common
Stock issuable upon exercise of the Warrants, those shares shall be issued by
the Company, from time to time, upon exercise by the holders thereof of the
Warrants. Shares of Class A Common Stock or Class B Common Stock may be
purchased by the holders of Warrants only by mailing or delivering a completed
and duly executed Election to Purchase Form which is on the reverse side of the
Warrant Certificate, together with payment of the then applicable exercise price
per share for each warrant surrendered to the Bank of New York, the Company's
warrant agent, prior to expiration of the warrant. Payment may be made in
certified funds, cashier check, bank draft or bank check, payable to the order
of the Warrant Agent. All funds received by the Warrant Agent from the exercise
of warrants will be forwarded to the Company.
With respect to the shares of Class A Common Stock issuable upon
conversion of the Debentures, those shares will be issued upon written notice to
the Company at the office maintained for that purpose and delivery of the
certificate representing the Debentures to be converted.
BUSINESS OF INTERVEST
General
Intervest Bancshares Corporation
- --------------------------------
Intervest Bancshares Corporation is a registered bank holding company
(the "Holding Company") incorporated in 1993 under the laws of the State of
Delaware. Its principal office is located at 10 Rockefeller Plaza, Suite 1015,
New York, New York 10020, and its telephone number is 212-218-2800. The Holding
Company's Class A common stock was approved for listing on the NASDAQ SmallCap
Market (Symbol: IBCA) in November 1997. Prior to then, there had been no
established trading market for the securities of the Holding Company. The
Holding Company owns 100% of the outstanding capital stock of Intervest National
Bank and Intervest Corporation of New York. Hereinafter, the Holding Company,
Intervest National Bank and Intervest Corporation of New York are referred to as
the "Company," on a consolidated basis. Intervest National Bank may be referred
to as the "Bank."
The Holding Company's primary business is the operation of the Bank and
Intervest Corporation. It does not engage in any other substantial business
activities other than a limited amount of mortgage lending. In 1998 and February
2001, the Holding Company also sold convertible subordinated debentures in the
aggregate principal amounts of $7,000,000 and $3,500,000, respectively, for
working capital purposes.
Intervest National Bank
- -----------------------
Intervest National Bank is a nationally chartered commercial bank that
opened for business on April 1, 1999. It is located at One Rockefeller Plaza in
New York City and provides full commercial banking services, including Internet
banking through its Web Site: www.intervestnatbank.com.
The Holding Company and is subject to examination and regulation by the
Federal Reserve Board (the "FRB") and the Bank's deposits are insured by the
Federal Deposit Insurance Corporation (the "FDIC") to the extent permitted by
law. Intervest National Bank is subject to the supervision and regulation of the
Office of the Comptroller of the Currency (the "OCC").
The Bank conducts a personalized commercial and consumer banking
business, which consists of attracting deposits from the areas served by their
banking offices. Intervest National Bank also uses the Internet for attracting
its deposits, which can attract deposit customers from within as well as outside
its primary market area. The deposits, together with funds derived from other
sources, are used to originate a variety of real estate, commercial and consumer
loans and to purchase investment securities. The Bank emphasizes multifamily and
commercial residential real estate lending and also offers commercial and
consumer loans.
As is the case with banking institutions generally, the Bank's
operations are significantly influenced by general economic conditions and by
related monetary and fiscal policies of banking regulatory agencies, including
the FRB, FDIC, and the OCC. Deposit flows and the rates paid thereon are
10
influenced by interest rates on competing investments and general market rates
of interest. Lending activities are affected by the demand for financing of real
estate and other types of loans, which in turn is affected by the interest rates
at which such financing may be offered and other factors affecting local demand
and availability of funds. The Bank faces strong competition in the attraction
of deposits and in the origination of loans.
The revenues of the Bank are primarily derived from interest on and
fees received in connection with loans, and from interest and dividends from
securities and other short-term investments. The principal sources of funds for
the Banks' lending activities are deposits, repayment of loans, maturities and
calls of securities, and cash flow generated from operating activities. The
Banks' principal expenses are interest paid on deposits and operating and
general and administrative expenses.
Intervest Corporation of New York
- ---------------------------------
Intervest Corporation of New York is in the business of investing
primarily in commercial and multifamily real estate mortgage loans or income
producing properties, such as office and commercial properties and multifamily
residential apartment buildings. It also makes loans on other types of
properties and may resell mortgages. Intervest Corporation of New York is
located at 10 Rockefeller Plaza in New York City.
Intervest Corporation of New York was acquired on March 10, 2000 by the
Holding Company. In the acquisition, all the outstanding capital stock of
Intervest Corporation of New York was acquired in exchange for 1,250,000 shares
of the Holding Company's Class A common stock. Former shareholders of Intervest
Corporation of New York are officers and directors of Intervest Corporation of
New York and the Holding Company. 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 financial information in this
prospectus has been adjusted to include the accounts of Intervest Corporation of
New York. All material intercompany accounts and transactions have been
eliminated in consolidation.
Intervest Corporation of New York's operations are significantly
influenced by movement of interest rates and by general economic conditions,
particularly those in the New York City metropolitan area, where most of the
properties that secure its mortgage loans are concentrated.
Market Area
The Bank's facilities are located in Rockefeller Center in New York
City and in Pinellas County, Florida. Pinellas County is the most populous
county in the Tampa Bay area of Florida (with an estimated resident population
of over 800,000 people). The area has many more seasonal residents. The Tampa
Bay area is located on the West Coast of Florida, midway up the Florida
peninsula. The major cities in the area are Tampa (Hillsborough County) and St.
Petersburg and Clearwater (Pinellas County). The Bank's deposit gathering and
lending markets are concentrated in the communities surrounding its offices in
Clearwater and South Pasadena, Florida. Management believes that its offices are
located in an area serving small and mid-sized businesses and serving middle and
upper income residential communities.
Its deposit gathering market also includes its Web Site on the
Internet: www.intervestnatbank.com, which attracts deposit customers from both
within and outside the Bank's primary market area.
Intervest Corporation of New York's lending activities have been
concentrated in the New York City metropolitan area. It also makes loans in
other states, including Connecticut, Florida, New Jersey, North Carolina,
Pennsylvania, Virginia and Washington D.C.
During the last three years, the economy of the New York City
metropolitan area has shown increased growth as evidenced by local employment
growth statistics. Improvement can also be seen in the local real estate market
as reflected in increased existing home sales and real estate values during the
past few years. It is presently unclear, moreover, what impact the terrorist
acts of September 11, 2001 will have on real estate in the City of New York.
Competition
The deregulation of the banking industry and the widespread enactment
of state laws that permit multi-bank holding companies, as well as an increasing
level of interstate banking, have created a highly competitive environment for
commercial banking. In one or more aspects of their business, the Bank competes
with other commercial banks, savings and loan associations, credit unions,
finance companies, mutual funds, insurance companies, brokerage and investment
banking companies, and other financial intermediaries. Most of these
competitors, some of which are affiliated with large bank holding companies,
have substantially greater resources and lending limits, and may offer services
that the Bank does not currently provide. In addition, many of the Bank's
11
non-bank competitors are not subject to the same extensive Federal regulations
that govern bank holding companies and Federally insured banks.
Competition among financial institutions is based upon interest rates
offered on deposit accounts, interest rates charged on loans and other credit
and service charges, other credit terms (including origination fees and
restrictive covenants) the quality and scope of the services rendered, the
convenience of banking facilities and, in the case of loans to commercial
borrowers, relative lending limits. Management believes that a community bank is
better positioned to establish personalized banking relationships with both
commercial customers and individual households. The Bank's community commitment
and involvement in its primary market areas, as well as their commitment to
quality and personalized banking services are factors that contribute to each
Bank's competitiveness. Management believes a locally-based bank is often
perceived by the local business community as possessing a clearer understanding
of local commerce and their needs. Consequently, management believes that the
Bank can compete successfully in its primary market areas by making prudent
lending decisions quickly and more efficiently than their competitors, without
compromising asset quality or profitability, although no assurances can be given
that such factors will assure success. In addition, management believes a
personalized service approach enables the Bank to attract and retain core
deposits.
In making its investments, Intervest Corporation of New York also
experiences significant competition from banks, insurance companies, savings and
loan associations, mortgage bankers, pension funds, real estate investment
trusts, limited partnerships, and other lenders and investors engaged in
purchasing mortgages or making real property investments with investment
objectives similar in whole or in part to its own. An increase in the general
availability of funds may increase competition in the making of investments in
mortgages and real property, and may reduce the yields available therefrom.
Asset Quality
The Bank seeks to maintain a high level of asset quality when
considering investments in securities and the originations of loans. In
originating loans, the Bank places emphasis on the borrower's ability to
generate cash flow to support its debt obligations and other cash related
expenses. The Bank's lending activities are conducted pursuant to written
policies and defined lending limits. Depending on their type and size, certain
loans must be reviewed and approved by a Loan Committee comprised of certain
members of the Board of Directors prior to being originated. As part of its loan
portfolio management strategy, loan-to-value ratios (the ratio that the original
principal amount of the loan bears to the lower of the purchase price or
appraised value of the property securing the loan at the time of origination) on
new loans originated by the Bank typically do not exceed 80%. In addition,
physical inspections of properties being considered for mortgage loans are made
as part of the approval process.
The Bank's Loan Committee, as well as its senior management and lending
officers, concentrate their efforts and resources on loan review and
underwriting procedures. Internal controls include ongoing reviews of loans made
to monitor documentation and ensure the existence and valuations of collateral.
The Bank also has in place a review process with the objective of quickly
identifying, evaluating and initiating necessary corrective actions for any
problem loans.
Intervest Corporation of New York's current investment policy related
to mortgages emphasizes investments in short-term real estate mortgages secured
by income producing real property. The properties to be mortgaged are personally
inspected by management, and mortgage loans are made only on those properties
where management is knowledgeable as to operating income and expense. Intervest
Corporation of New York generally relies upon its management in connection with
the valuation of properties. From time to time, however, it may engage
independent appraisers and other agents to assist in determining the value of
income producing properties underlying mortgages, in which case the costs
associated with such services are generally paid by the mortgagor.
Intervest Corporation of New York does not have formal policies
regarding the percentage of its assets that may be invested in any single
mortgage, the type of mortgage loans and investments it can make, the geographic
location of properties collateralizing those mortgages, limits as to
loan-to-value ratios, or the loan approval process.
There can be no assurance that a downturn in real estate values, as
well as other economic factors, would not have an adverse impact on the
Company's profitability.
12
Lending Activities
The Company's lending activities include real estate loans and
commercial and consumer loans. Real estate loans include primarily the
origination of loans for commercial and multifamily properties. While the
Company's lending activities include single-family residential mortgages, such
lending has not been emphasized. Commercial loans are originated for working
capital funding. Consumer loans include those for the purchase of automobiles,
boats, home improvements and investments.
Commercial and Multifamily Real Estate Mortgage Lending
- -------------------------------------------------------
Almost all of the Company's loan portfolio is comprised of loans
secured by commercial and multifamily real estate, including rental and
cooperative apartment buildings, office buildings and shopping centers.
Commercial and multifamily mortgage lending generally involves greater risk than
1-4 family residential lending. Such lending typically involves larger loan
balances to single borrowers and repayment of loans secured by income producing
properties is typically dependent upon the successful operation of the
underlying real estate.
Mortgage loans on commercial real estate and multifamily properties are
normally originated for terms of no more than 20 years, many with variable
interest rates that are based on the prime rate. Additionally, many loans have
an interest rate floor which resets upward along with any increase in the loan's
interest rate. This feature reduces the loan's interest rate exposure to periods
of declining interest rates.
Mortgage loans on commercial and multifamily properties typically
provide for periodic payments of interest and principal during the term of the
mortgage, with the remaining principal balance and any accrued interest due at
the maturity date. The majority of the mortgages owned by the Company provide
for balloon payments at maturity, which means that a substantial part or the
entire original principal amount is due in one lump sum payment at maturity. If
the net revenue from the property is not sufficient to make all debt service
payments due on the mortgage or, if at maturity or the due date of any balloon
payment, the owner of the property fails to raise the funds (by financing, sale
or otherwise) to make the lump sum payment, the Company could sustain a loss on
its investment in the mortgage loan. The Company's mortgage loans are generally
not personal obligations of the borrower and are not insured or guaranteed by
governmental agencies or otherwise.
Commercial Lending
- ------------------
The Bank offers a variety of commercial loan services including term
loans, lines of credit and equipment financing. Short-to-medium term commercial
loans, both collateralized and uncollateralized, are made available to
businesses for working capital needs (including those secured by inventory,
receivables and other assets), business expansion (including acquisitions of
real estate and improvements), and the purchase of equipment and machinery. The
Bank's commercial loans are typically underwritten on the basis of the
borrower's ability to make repayment from the cash flow of its business and are
generally collateralized as discussed above. As a result, the availability of
funds for the repayment of commercial loans may be substantially dependent on
the success of the business itself. Further, the collateral underlying the loans
may depreciate over time, cannot be appraised with as much precision as
residential real estate, and may fluctuate in value based on the success of the
business.
Consumer Lending
- ----------------
The Bank offers consumer loans including loans for: the purchase of
automobiles, recreation vehicles and boats; second mortgages; home improvements;
home equity lines of credit; and personal loans (both collateralized and
uncollateralized). Consumer loans typically have a short term and carry higher
interest rates than other types of loans. In addition, consumer loans pose
additional risks of collectability when compared to traditional types of loans
granted by commercial banks such as residential mortgage loans. In many
instances, the Bank is required to rely on the borrower's ability to repay the
loan from personal income sources, since the collateral may be of reduced value
at the time of collection.
Loan Solicitation and Processing
- --------------------------------
Loan originations are derived from the following: advertising in
newspapers; referrals from mortgage brokers; existing customers and borrowers;
13
walk-in customers; and through direct solicitation by the Company's officers.
The Company's underwriting procedures normally require the following: l
inspections by management of properties being considered for mortgage loans;
mortgage title insurance and hazard insurance; and an appraisal of the property
securing the loan to determine the property's adequacy as security, performed by
an appraiser approved by the Company. In addition, the Company analyzes relevant
real property and financial factors, which in certain cases may include: the
condition and use of the subject property; the property's income-producing
capacity; and the quality, experience and creditworthiness of the property's
owner.
For commercial and consumer loans, upon receipt of a loan application
from a prospective borrower, a credit report and other verifications are
obtained to substantiate specific information relating to the applicant's
employment income and credit standing. An appraisal, where required, of any real
estate intended to collateralize the proposed loan is undertaken by an appraiser
approved by the Company.
Real Estate Investing Activities
The Company, from time to time, may purchase equity interests in real
property or it may acquire such an equity interest pursuant to a foreclosure
upon a mortgage in the normal course of business. With respect to such equity
interests in real estate, the Company may acquire and retain title to properties
either directly or through a subsidiary. While no such transactions are
presently pending, the Company would consider the expansion of its business
through investments in or acquisitions of other companies engaged in real estate
or mortgage business activities. While the Company has not previously made
acquisitions of real property or managed income producing property, its
management has had substantial experience in the acquisition and management of
properties and, in particular, multifamily residential properties.
Investment Activities
The Bank's investment policies and strategies are reviewed and approved
by the Board of Directors. The Company has historically purchased securities
that are issued directly by the U.S. government or one of its agencies.
Accordingly, the Company's investments in securities carry a significantly lower
credit risk than its loan portfolio. To manage interest rate risk, the Company
normally purchases securities that have adjustable rates or securities with
fixed rates that have short- to intermediate-maturity terms. From time to time,
a securities available-for-sale portfolio may be maintained to provide
flexibility for implementing asset and liability management strategies. The
Company does not engage in trading activities.
The Company also invests in various money-market instruments, including
overnight and term federal funds, short-term bank commercial paper, and
certificates of deposit. These investments are used to temporarily invest
available funds resulting from deposit-gathering operations and normal cash flow
from operations.
Deposit-Gathering Activities
The Bank's primary sources of funds consist of the following: retail
deposits obtained through their branch offices and through the mail;
amortization, satisfactions and repayments of loans; the maturities and calls of
securities; and cash provided by operating activities.
Deposit accounts are solicited from individuals, small businesses and
professional firms located throughout the Banks' primary market areas through
the offering of a broad variety of deposit services. Intervest National Bank
also uses its Web site on the Internet: www.intervestnatbank.com, which attracts
deposit customers from both within and outside its primary market area. Deposit
services include the following: certificates of deposit (including denominations
of $100,000 or more); individual retirement accounts (IRAs); other time
deposits; checking and other demand deposit accounts; negotiable order of
withdrawal (NOW) accounts; savings accounts; and money-market accounts. Interest
rates offered by the Bank on deposit accounts are normally competitive with
those in the principal market areas of the Bank. In addition, the determination
of rates and terms also considers the Banks' liquidity requirements, growth
goals, capital levels and federal regulations. Maturity terms, service fees and
withdrawal penalties on deposit products are reviewed and established by the
Bank on a periodic basis.
14
The Bank also offers ATM services with access to local, state and
national networks, wire transfers, direct deposit of payroll and social security
checks and automated drafts for various accounts. In addition, the Bank offers
safe deposit boxes to its customers, as well as Internet banking services. The
Bank periodically reviews the scope of the banking products and services it
offers in order to determine whether to add to or modify them, consistent with
market opportunities and available resources.
Other Sources of Funds
From time to time, the Bank purchases federal funds to manage liquidity
needs.
The Bank has agreements with correspondent banks whereby it may borrow
up to $6,000,000 on an unsecured basis. There were no outstanding borrowings
under these agreements at December 31, 2000, 1999 or 1998. In December of 2001,
the Company sold $15 million of trust preferred securities, the proceeds of
which were contributed to the capital of Intervest National Bank.
Intervest Corporation of New York's principal sources of funds consist
of borrowings (through the sale of its debentures), mortgage repayments and cash
flow generated from operations.
Supervision and Regulation
Bank holding companies and banks are extensively regulated under both
federal and state laws and regulations that are intended to protect depositors.
To the extent that the following information describes statutory and regulatory
provisions, it is qualified in its entirety by reference to the particular
statutory and regulatory provisions. Any change in the applicable law or
regulation may have a material effect on the business and prospects of the
Holding Company and its subsidiaries.
Bank Holding Company Regulation
- -------------------------------
As a bank holding company registered under the Bank Holding Company Act
of 1956 (BHCA), the Holding Company is subject to the regulation and supervision
of the FRB. The Holding Company is required to file with the FRB periodic
reports and other information regarding its business operations and those of its
subsidiaries. Under the BHCA, the Holding Company's activities and those of its
subsidiaries are limited to banking, managing or controlling banks, furnishing
services to or performing services for its subsidiaries or engaging in any other
activity which the FRB determines to be so closely related to banking or
managing or controlling banks as to be properly incident thereto.
As a bank holding company, the Holding Company is required to obtain
the prior approval of the FRB before acquiring direct or indirect ownership or
control of more than 5% of the voting shares of a bank or bank holding company.
The FRB will not approve any acquisition, merger or consolidation that would
have a substantial anticompetitive result, unless the anti-competitive effects
of the proposed transaction are outweighed by a greater public interest in
meeting the needs and convenience of the public. The FRB also considers
managerial, capital and other financial factors in acting on acquisition or
merger applications. A bank holding company may not engage in, or acquire direct
or indirect control of more than 5% of the voting shares of any company engaged
in any non-banking activity, unless such activity has been determined by the FRB
to be closely related to banking or managing banks. The FRB has identified by
regulation various non-banking activities in which a bank holding company may
engage with notice to, or prior approval by, the FRB.
The FRB monitors the capital adequacy of bank holding companies and
uses risk-based capital adequacy guidelines to evaluate bank holding companies
on a consolidated basis. The guidelines require a ratio of "Tier 1" or Core
Capital, as defined in the guidelines, to total risk-weighted assets of at least
4% and a ratio of total capital to risk-weighted assets of at least 8%.
The federal banking agencies' risk-based and leverage ratios are
minimum supervisory ratios generally applicable to banking organizations that
meet certain specified criteria, assuming that they have the highest regulatory
rating. Banking organizations not meeting these criteria are expected to operate
with capital positions well above the minimum ratios. The FRB guidelines also
provide that banking organizations experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
15
above the minimum supervisory levels, without significant reliance on intangible
assets. In addition, the regulations of the FRB provide that concentration of
credit risk and certain risk arising from nontraditional activities, as well as
an institution's ability to manage these risks, are important factors to be
taken into account by regulatory agencies in assessing an organization's overall
capital adequacy.
The FRB and the other federal banking agencies have adopted amendments
to their risk-based capital regulations to provide for the consideration of
interest rate risk in the agency's determination of a banking institution's
capital adequacy. The amendments require such institutions to effectively
measure and monitor their interest rate risk and to maintain capital adequate
for that risk.
Bank Regulation
- ---------------
Intervest National Bank, as a national banking association, is subject
to primary supervision, examination and regulation by the OCC, FRB and FDIC.
These regulators have the power to: enjoin "unsafe or unsound practices";
require affirmative action to correct any conditions resulting from any
violation or practice; issue an administrative order that can be judicially
enforced; direct an increase in capital; restrict the growth of a bank; assess
civil monetary penalties; and remove officers and directors.
The operations of the Bank are subject to numerous statutes and
regulations. Such statutes and regulations relate to required reserves against
deposits, investments, loans, mergers and consolidations, issuance of
securities, payment of dividends, establishment of branches, and other aspects
of the Banks' operations. Various consumer laws and regulations also affect the
operations of the Banks, including state usury laws, laws relating to
fiduciaries, consumer credit and equal credit, and fair credit reporting.
The Bank is also subject to Sections 23A and 23B of the Federal Reserve
Act, which governs certain transactions, such as loans, extensions of credit,
investments and purchases of assets between member banks and their affiliates,
including their parent holding companies. These restrictions limit the transfer
of funds to the Holding Company in the form of loans, extensions of credit,
investment or purchases of assets ("Transfers"), and they require that the
Bank's transactions with the Holding Company be on terms no less favorable to
the Bank than comparable transaction between the Bank and unrelated third
parties. Transfers by the Bank to the Holding Company are limited in amount to
10% of the Bank's capital and surplus, and transfers to all affiliates are
limited in the aggregate to 20% of the Bank's capital and surplus. Furthermore,
such loans and extensions of credit are also subject to various collateral
requirements. These regulations and restrictions may limit the Holding Company's
ability to obtain funds from the Bank for its cash needs, including funds for
acquisitions, and the payment of dividends, interest and operating expenses.
The Bank is prohibited from engaging in certain tying arrangements in
connection with any extension of credit, lease or sale of property or furnishing
of services. For example, the Bank may not generally require a customer to
obtain other services from the Bank or the Holding Company, and may not require
the customer to promise not to obtain other services from a competitor as a
condition to an extension of credit. The Bank is also subject to certain
restrictions imposed by the Federal Reserve Act on extensions of credit to
executive officers, directors, principal stockholders or any related interest of
such persons. Extensions of credit (i) must be made on substantially the same
terms (including interest rates and collateral) as, and following credit
underwriting procedures that are not less stringent than those prevailing at the
time for, comparable transactions with persons not covered above and who are not
employees and (ii) must not involve more than the normal risk of repayment or
present other unfavorable features. In addition, extensions of credit to such
persons beyond limits set by FRB regulations must be approved by the Board of
Directors. The Bank is also subject to certain lending limits and restrictions
on overdrafts to such persons. A violation of these restrictions may result in
the assessment of substantial civil monetary penalties on the Bank or any
officer, director, employee, agent or other person participating in the conduct
of the affairs of the Bank or the imposition of a cease and desist order.
Applicable law provides the Federal banking agencies with broad powers
to take prompt corrective action to resolve problems of insured depository
institutions. The extent of those powers depends upon whether the institution in
question is "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," or "critically undercapitalized." Under
federal regulations, a bank is considered "well capitalized" if it has (i) a
total risk-based capital ratio of 10% or greater, (ii) a Tier 1 risk-based
capital ratio of 6% or greater, (iii) a leverage ratio of 5% or greater and (iv)
is not subject to any order or written directive to meet and maintain a specific
capital level for any capital measure. An "adequately capitalized" bank is
defined as one that has (i) a total risk-based capital ratio of 8% or greater,
(ii) a Tier 1 risk-based capital ratio of 4% or greater, and (iii) a leverage
ratio of 4% or greater (or 3% or greater in the case of a bank with a composite
CAMELS rating of 1). A bank is considered (a) "undercapitalized" if it has (i) a
total risk-based capital ratio of less than 8%, (ii) a Tier 1 risk-based
capitalized ratio of less than 4%, or (iii) a leverage ratio of less than 4% (or
3% in the case of a bank with a composite CAMELS rating of 1); (b)
"significantly undercapitalized" if a bank has (i) a total risk-based capital
16
ratio of less than 6%. (ii) a Tier 1 risk-based Capital ratio of less than 3% or
(iii) a leverage ratio of less than 3%, and (c) "critically undercapitalized" if
a bank has a ratio of tangible equity to total assets equal to or less than 2%.
At September 30, 2001, December 31, 2000 and 1999, the Bank met the definition
of a well-capitalized institution.
The deposits of the Bank are insured by the FDIC through the Bank
Insurance Fund (the "BIF") to the extent provided by law. Under the FDIC's
risk-based insurance system, BIF-insured institutions are currently assessed
premiums of between zero and $0.27 per $100 of eligible deposits, depending upon
the institution's capital position and other supervisory factors. Congress has
enacted legislation that, among other things, provides for assessments against
BIF insured institutions that will be used to pay certain financing corporation
("FICO") obligations. In addition to any BIF insurance assessments, BIF-insured
banks are expected to make payments for the FICO obligations based upon eligible
deposits each year.
SUBSEQUENT EVENTS
In December, 2001, the Company issued $15million in trust preferred
securities, the proceeds of which were contributed to the capital of Intervest
National Bank.
DESCRIPTION OF SECURITIES
This description summarizes some of the provisions of our restated
certificate of incorporation, a copy of which has been included as an exhibit to
our registration statement. If you want more complete information, you should
read the provisions of our restated certificate of incorporation.
Description of Capital Stock
General
- -------
The Company's Certificate of Incorporation provides for two classes of
common capital stock consisting of 9,500,000 shares of Class A Common Stock, par
value $1.00 per share, and 700,000 shares of Class B Common Stock, par value
$1.00 per share. In addition, the Company's Certificate of Incorporation
provides for 300,000 shares of preferred stock, par value $1.00 per share
("Preferred Stock"). The Company's Certificate of Incorporation authorizes the
Board of Directors, without shareholder approval, to fix the preferences,
limitations and relative rights of the Preferred Stock, to establish one or more
series or classes of Preferred Stock, and to determine the variations between
each such series or class. No shares of Preferred Stock are issued or
outstanding.
As of the date of this Prospectus, there were issued and outstanding
3,544,629 shares of Class A Common Stock, 2,221,000 of which are held by the
initial stockholders of the Company and a related party and 355,000 shares of
Class B Common Stock were held by the same initial stockholders.
Common Stock
- ------------
Both classes of common stock have equal voting rights as to all
matters, except that, so long as at least 50,000 shares of Class B Common Stock
remain issued and outstanding, the holders of the outstanding shares of Class B
Common Stock are entitled to vote for the election of two-thirds of the
directors (rounded up to the nearest whole number) and the holders of the
outstanding shares of Class A Common Stock are entitled to vote for the
remaining directors of the Company. Under Delaware law, the holders of Class A
and Class B Common Stock would be entitled to vote as separate classes upon
certain matters which would adversely affect or subordinate the rights of a
class.
17
Subject to preferences that may be applicable to any outstanding shares
of Preferred Stock (none of which are presently outstanding), holders of Class A
Common Stock are entitled to share ratably in dividends when and as declared by
the Company's Board of Directors out of funds legally available therefor. See
"Dividends."
The holders of Class A Common Stock and Class B Common Stock share
ratably in dividends when and as declared by the Board of Directors.
The shares of Class B Common Stock are convertible, on a share for
share basis, into Class A Common Stock, at any time and from time to time after
January 1, 2000. Neither Class A nor Class B Common Stock holders have any
preemptive rights as to additional issues of common stock. Shareholders are
subject to no assessments and, upon liquidation, both Class A and Class B common
shareholders would be entitled to participate equally per share in the assets of
the Company available to common shareholders.
Class A Warrants
- ----------------
As of the date of this prospectus, 2,455,218 warrants were outstanding
to purchase the Company's Class A Common Stock as follows:
Warrants totaling 1,370,815 entitle the registered holders thereof to
purchase one share of Class A Common Stock at a price of $6.67 per share. These
warrants expire on December 31, 2002, (provided that the Company may establish
an earlier expiration date on not less than 30 nor more than 90 days' notice)
except for 501,465, which expire on January 31, 2007;
Warrants totaling 962,403 entitle the registered holders thereof to
purchase one share of Class A Common Stock at a price of $10.01 per share from
January 1, 2002 to December 31, 2002. These warrants expire on December 31, 2002
(provided that the Company may establish an earlier expiration date on not less
than 30 nor more than 90 days' notice); and
Warrants totaling 122,000 entitle the registered holders thereof to
purchase one share of Class A common stock at a price of $16.00 per share in
2001 and $10.01 per share in 2002. These warrants also expire on December 31,
2002.
Except for the exercise price, the expiration dates and the redemption
provisions, all of the outstanding warrants related to Class A Shares are alike
in all respects and the following discussions apply to all of the warrants for
Class A Common Stock.
The exercise price is subject to adjustment in accordance with the
anti-dilution and other provisions referred to below. The holder of any Warrant
may exercise such Warrant or any portion thereof by surrendering the certificate
representing the Warrant to the Company's transfer and warrant agent, with the
subscription on the reverse side of such certificate properly completed and
executed, together with payment of the exercise price. The Warrant may be
exercised at any time until expiration of the Warrant. No fractional shares will
be issued upon the exercise of the Warrants. Warrants may not be exercised as to
fewer than 100 shares unless exercised as to all Warrants held by the holder
thereof. The exercise prices of the Warrants have been arbitrarily determined by
the Company and are not necessarily related to the Company's book value, net
worth or other established criteria of value. The exercise price should in no
event be regarded as an indication of any future market price of the securities
offered hereby. The Warrants are not exercisable unless, at the time of
exercise, the Company has a current prospectus covering the shares of common
stock issuable upon exercise of such Warrants and such shares have been
registered, qualified or deemed to be exempt under the securities law of the
state of residence of the holders of such Warrants. Although the Company will
use its best efforts to have all such shares so registered or qualified on or
before the exercise date and to maintain a current prospectus relating thereto
until the expiration of such Warrants, there can be no assurance that it will be
able to do so.
The exercise price and the number of shares of Class A Common Stock
purchasable upon the exercise of the Warrants are subject to adjustment upon the
occurrence of certain events, including stock dividends, stock splits,
combinations or reclassifications on or of the Class A Common Stock or sales by
the Company of shares of its Class A Common Stock at a price below the then
18
applicable exercise price of the Warrants. Additionally, an adjustment will be
made in the case of a reclassification or exchange of Class A Common Stock,
consolidation or merger of the Company with or into another corporation or sale
of all or substantially all of the assets of the Company in order to enable
warrant holders to acquire the kind and number of shares of stock or other
securities or property receivable in such event by a holder of the number of
shares of Class A Common Stock that might otherwise have been purchased upon the
exercise of the Warrant. In most cases, no adjustment will be made until the
number of shares issued by the Company exceeds 5% of the number of shares
outstanding after the offering and thereafter no adjustments will be made until
the cumulative adjustments and exercise price per share amount to $.05 or more.
No adjustment to the exercise price of the shares subject to the Warrants will
be made for dividends (other than stock dividends), if any paid on the Class A
Common Stock or for securities issued pursuant to a company stock option plan,
if any, or other employee benefit plans of the Company.
The Board of Directors also has the authority to make certain revisions
in the terms and conditions of the Warrants and it has exercised that authority
by extending the term for exercise of certain of the warrants and by decreasing
the price at which certain of the Warrants may be exercised.
The Warrants are fully registered and may be presented to the transfer
and warrant agent for transfer, exchange or exercise at any time at or prior to
the close of business on the expiration date for such Warrant, at which time the
Warrant becomes wholly void and of no value. If a market for the Warrants
develops, the holder may sell the Warrants instead of exercising them. There can
be no assurance, however, that a market for the Warrants will develop or
continue.
The Warrants do not confer upon holders any voting or any other rights
as a shareholder of the Company.
Class B Warrants
- ----------------
As of the date of this prospectus, there were outstanding warrants to
purchase up to 195,000 shares of Class B Common Stock, of which 145,000 allow
the purchase at any time prior to January 31, 2008 (provided that the Company
may, at its election, establish an earlier expiration date to occur after
February 1, 2007 and before January 31, 2008 by giving not less than 30 nor more
than 90 days notice), at a purchase price of $6.67 per share, and 50,000 that
allow the purchase at any time prior to January 31, 2008, at a purchase price of
$10.00 per share. The warrant contains terms and conditions substantially in
conformity with the Warrants related to shares of Class A Common Stock. In
addition, the Warrant provides for an adjustment in the number of shares of
Class B Common Stock purchasable upon the exercise of the Warrant and the
exercise price per share in accordance with anti-dilution and other provisions
which are in substantial conformity with those described above, but which relate
to share issuances and recapitalizations for both Class A and Class B Common
Stock.
Transfer Agent and Warrant Agent
- --------------------------------
The registrar and transfer agent for the Common Stock and the Warrant
Agent for the Warrants is The Bank of New York.
Preferred Stock
- ---------------
The Company's Certificate of Incorporation authorizes the Board of
Directors, without further shareholder approval, to issue shares of Preferred
Stock in one or more series with powers, preferences, rights, restrictions,
limitations, and other qualifications that could adversely affect the voting and
other rights of the holders of Common Stock.
The Board of Directors has the authority to issue up to 300,000 shares
of the Preferred Stock of the Company in any number of series (to designate the
rights and preferences of such series) which could operate to render more
difficult the accomplishment of mergers or other business combinations. The
Board of Directors of the Company has no present intent to issue any Preferred
Stock at this time. Under certain circumstances, and when, in the judgment of
the Board of Directors, the action will be in the best interest of the
stockholders and the Company, such shares could be used to create voting
impediments or to frustrate persons seeking to gain control of the Company. Such
19
shares could be privately placed with purchasers friendly to the Board of
Directors in opposing a hostile takeover bid. In addition, the Board of
Directors could authorize holders of a series of Preferred Stock to vote either
separately as a class or with the holders of the Company's Common Stock on any
merger, sale or exchange of assets by the Company or any other extraordinary
corporate transaction. The existence of the additional authorized shares could
have the effect of discouraging unsolicited takeover attempts or delaying,
deferring or preventing a change in control of the Company. Such an occurrence,
in the event of a hostile takeover attempt, may have an adverse impact on
stockholders who may wish to participate in such offer. The issuance of new
shares could be used to dilute the stock ownership of a person or entity seeking
to obtain control of the Company should the Board of Directors consider the
action of such entity or person not to be in the best interest of the
stockholders and the Company. The Board of Directors is not aware of any present
attempt or effort by any person to accumulate the Company's securities or obtain
control of the Company.
Restrictions on Changes in Control
- ----------------------------------
Under the Federal Change in Bank Control Act (the "Control Act"), a
notice must be submitted to the FRB if any person, or group acting in concert,
seeks to acquire 10% or more of any class of outstanding voting securities of
the Company, unless the FRB determines that the acquisition will not result in a
change of control of the Company. Both the Class A Common Stock and the Warrants
are deemed to be voting securities for these purposes. Under the Control Act,
the FRB has 60 days within which to act on such notice, taking into
consideration certain factors, including the financial and managerial resources
of the acquiror, the convenience and needs of the community served by the bank
holding company and its subsidiary banks, and the antitrust effects of the
acquisition. Under the BHCA a company is generally required to obtain prior
approval of the FRB before it may obtain control of a bank holding company.
Control is generally described to mean the beneficial ownership of 25% or more
of all outstanding voting securities of a company.
Description of the Series 5/14/98 Convertible Subordinated Debentures
General
The Debentures are unsecured subordinated obligations of the Company,
limited to an aggregate principal amount of $6,930,000 and mature on July 1,
2008. The Debentures were issued pursuant to an Indenture dated as of June 1,
1998 (the "Indenture") between the Company and the Bank of New York, as trustee
(the "Trustee"). Interest on the Debentures accrues each calendar quarter at the
rate of 8% per annum. In addition, interest accrues each calendar quarter on the
balance of the accrued interest as of the last day of the preceding calendar
quarter at the same interest rate. All accrued interest on the Debentures is
payable at the maturity of the Debentures, whether by acceleration, redemption
or otherwise.
Any debenture holder may, on or before July 1 of each year, commencing
July 1, 2003, elect to be paid all accrued interest on the Debentures and to
thereafter receive payments of quarterly interest. The election must be made
after April 1 and before May 31 and the holder will receive a payment of accrued
interest on July 1 and will thereafter receive quarterly payments of interest on
the first day of each January, April, July and October until the maturity date.
Once made, an election to receive interest is irrevocable. Quarterly interest is
payable to holders of record on the first day of the month preceding the
interest payment date.
Subordination of Debentures
The Debentures are general unsecured obligations of the Company limited
to $6,930,000 principal amount. The Debentures are subordinated in payment of
principal and interest to all Senior Indebtedness. The term Senior Indebtedness
is defined in the Indenture to mean all indebtedness of the Company, whether
outstanding on the date of the Indenture or thereafter created, which (i) is
secured, in whole or in part, by any asset or assets owned by the Company or by
a corporation, a majority of whose voting stock is owned by the Company or a
subsidiary of the Company ("Subsidiary"), or (ii) arises from unsecured
borrowings by the Company from commercial banks, savings banks, savings and loan
associations, insurance companies, companies whose securities are traded in a
national securities market, or any majority-owned subsidiary of any of the
foregoing, or (iii) arises from unsecured borrowings by the Company from any
pension plan (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended), or (iv) arises from borrowings by the Company
which are evidenced by commercial paper, or (v) other unsecured borrowings by
20
the Company which are subordinate to indebtedness of a type described in clauses
(i), (ii) or (iv) above, or (vi) is a guaranty or other liability of the Company
of, or with respect to any indebtedness of, the subsidiary of the type described
in clauses (ii), (iii) or (iv) above. As of December 31, 1997, the Company had
no senior indebtedness. There is no limitation or restriction in the Debentures
or the Indenture on the creation of senior indebtedness by the Company on the
amount of such senior indebtedness to which the Debentures may be subordinated.
There is also no limitation on the creation or amount of indebtedness which is
pari passu with (i.e. having no priority of payment over and not subordinated in
right of payment to) the Debentures.
Upon any distributions of any assets of the Company in connection with
any dissolution, winding-up, liquidation or reorganization of the Company, the
holders of all senior indebtedness will first be entitled to receive payment in
full of the principal and premium, if any, thereof and any interest due thereof,
before the holders of the Debentures are entitled to receive any payment upon
the principal of or interest on the Debentures, and thereafter payments to the
debenture holders will be pro rata with payments to holders of pari passu
indebtedness. In the absence of any such events, the Company is obligated to pay
principal of and interest on the Debentures in accordance with their terms. The
Company will not maintain any sinking fun for the retirement of any of the
Debentures.
Conversion Rights
The Debentures are convertible, at the option of the holder, into
shares of Class A Common Stock of the Company at any time prior to April 1, 2008
(subject to prior redemption by the Company on not less than 30 days notice and
not more than 90 days notice), at a current conversion price of $10.01 per share
through December 31, 2003, which conversion price increases annually thereafter
on January 1 of each year. The Company reserves the right, from time to time in
its discretion to establish conversion prices per share which are less than the
conversion prices set forth above, which lower prices shall remain in effect for
such periods as the Company may determine and as shall be set forth in a written
notice to the holders of Debentures. The Company has, on two occasions, reduced
the price at which the Debentures may be converted during specified periods.
The conversion price is subject to adjustment in certain events,
including (i) dividends (and other distributions) payable in Class A Common
Stock on any class of capital stock of the Company, (ii) the issuance to all
holders of common stock of rights or warrants entitling them to subscribe for or
purchase Class A Common Stock at less than the current market price (as
defined), (iii) subdivisions, combinations and reclassifications of common
stock, (iv) distributions to all holders of Class A Common Stock of evidence of
indebtedness of the Company or assets (including securities, but excluding those
dividends, rights, warrants and distributions referred to above and any dividend
or distribution paid exclusively in cash.
Fractional shares of Class A Common Stock will not be issued upon
conversion, but, in lieu thereof, the Company will pay cash adjustment equal to
the portion of the principal and/or interest not converted into whole shares.
Transfers
The Debentures are transferable on the books of the Company by the
registered holders thereof upon surrender of the Debentures to the Registrar
appointed by the Company and, if requested by the Registrar, shall be
accompanied by a written instrument of transfer in form satisfactory to the
registrar. The Company has appointed The Bank of New York as the "Registrar" for
the Debentures. The person in whose name any Debenture is registered shall be
treated as the absolute owner of the Debenture for all purposes, and shall not
be affected by any notice to the contrary. Upon transfer, the Debentures will be
canceled, and one or more new registered Debentures, in the same aggregate
principal amount, of the same maturity and with the same terms, will be issued
to the transferee in exchange therefor. (Art. 2, Sec. 2.07(a)).
Duties of the Trustee
The Indenture provides that in case an Event of Default (as defined)
shall occur and continue, the Trustee will be required to use the same degree of
care and skill as a prudent person would exercise or use under the circumstances
21
in the conduct of his own affairs in the exercise of its power. While the
Trustee may pursue any available remedies to enforce any provision of the
Indenture or the Debentures, the holders of a majority in principal amount of
all outstanding Debentures may direct the time, method, and place of conducting
any proceeding for exercising any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee. Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of any of the Debenture holders, unless they
shall have offered to the Trustee security and indemnity satisfactory to it.
Redemption
The Company may, at its option, at any time call all or any part of the
Debentures for payment, and redeem the same at any time prior to the maturity
thereof. The redemption price for any redemption of Debentures is the face
amount. In all cases, the Debenture Holder will also receive interest accrued to
the date of redemption. Notice of redemption must be sent by first class mail,
postage prepaid, to the registered holders of the Debentures not less than 30
days nor more than 90 days prior to the date the redemption is to be made. In
the event of a call for redemption, no further interest shall accrue after the
redemption date on any Debentures called for redemption. (Art. 3, Section 3.03,
Paragraph 5). Since the payment of principal of, interest on, or any other
amounts due on the Debentures is subordinate in right of payment to the prior
payment in full of all Senior Indebtedness upon the dissolution, winding up,
liquidation or reorganization of the Company, no redemption will be permitted
upon the happening of such an event.
Limitation On Dividends and Other Payments
The Indenture provides that the Company will not declare or pay any
dividend or make any distribution on its Capital Stock (i.e. any and all shares,
interests, participations, rights or other equivalents of the Company's stock)
or to its shareholders (other than dividends or distributions payable in Capital
Stock), or purchase, redeem or otherwise acquire or retire for value, or permit
any Subsidiary to purchase or otherwise acquire for value, Capital Stock of the
Company, if at the time of such payment, or after giving effect thereto, an
Event of Default, as hereinafter defined, shall have occurred and be continuing
or a default shall occur as a result thereof; provided, however, that the
foregoing limitation shall not prevent (A) the payment of any dividend within 60
days after the date of declaration thereof, if at said date of declaration such
payment complied with the provisions of such limitation, or (B) the acquisition
or retirement of any shares of the Company's Capital Stock by exchange for, or
out of the proceeds of the sale of shares of, its Capital Stock. (Art. 4,
Section 4.04).
Discharge Prior to Redemption or Maturity
If the Company at any time deposits with the Trustee money or U.S.
Government Obligations sufficient to pay principal and interest on the
Debentures prior to their redemption or maturity, the Company will be discharged
from the Indenture, provided certain other conditions specified in the Indenture
are satisfied. In the event of such deposit, which is irrevocable, Debenture
Holders must look only to the deposited money and securities for payment. U.S.
Government Obligations are securities backed by the full faith and credit of the
United States. (Art. 8, Section 8.01(2)).
Access of Information to Security Holders
Debenture Holders may obtain from the Trustee information necessary to
communicate with other Debenture Holders. Upon written application to the
Trustee by any three or more Debenture Holders stating that such Debenture
Holders desire to communicate with other Debenture Holders with respect to their
rights under the Indenture or under the Debentures, and upon providing the
Trustee with the form of proxy or other communication which the Debenture
Holders propose to transmit, and upon receipt by the Trustee from the Debenture
Holders of reasonable proof that each such Debenture Holder has owned a
Debenture for a period of at least six months preceding the date of such
application, the Trustee shall, within five business days after the receipt of
such information, either (a) provide the applicant Debenture Holders access to
all information in the Trustee's possession with respect to the names and
addresses of the Debenture Holders; or (b) provide the applicant Debenture
Holders with information as to the number of Debenture Holders and the
approximate cost of mailing to such Debenture Holders the form of proxy or other
communication, if any, specified in the applicant Debenture Holders'
application, and upon written request from such applicant Debenture Holders and
22
receipt of the material to be mailed and of payment, the Trustee shall mail to
all the Debenture Holders copies of the from of proxy or other communication so
specified in the request. (Art. 2, Section 2.08).
Compliance with Conditions and Covenants
Upon any request by the Company to the Trustee to take any action under
the Indenture, the Company is required to furnish to the Trustee (i) an
officers' certificate of the Company stating that all conditions and covenants
in the Indenture relating to the proposed action have been complied with and
(ii) an opinion of counsel stating that, in the opinion of such counsel, all
such conditions and covenants have been complied with. (Art. 11, Sec. 11.03).
Amendment, Supplement and Waiver
Subject to certain exceptions, the Indenture or the Debentures may be
amended or supplemented, and compliance by the Company with any provision of the
Indenture or the Debentures may be waived, with the consent of the holders of a
majority in principal amount of the Debentures outstanding. Without notice to or
consent of any holders of Debentures, the Company may amend or supplement the
Indenture or the Debentures to cure any ambiguity, omission, defect or
inconsistency, or to make any change that does not adversely affect the rights
of any holders of Debentures. However, without the consent of each holder of
Debentures affected, an amendment, supplement or waiver may not reduce the
amount of Debentures whose holders must consent to an amendment, supplement or
waiver, reduce the rate or extend the time for payment of interest on any
Debentures (except that the payment of interest on Debentures may be postponed
for a period not exceeding three years from its due date with the consent of
holders of not less than 75% in principal amount of Debentures at the time
outstanding, which consent shall be binding upon all holders), reduce the
principal of or extend the fixed maturity of any Debentures, make any Debentures
payable in money other than that stated in the Indenture, make any change in the
subordination provisions of the Indenture that adversely affects the rights of
any holder of Debentures or waive a default in the payment of principal of or
interest on, or other redemption payment on any Debentures. (Art. 9, Sec. 9.02).
Defaults and Remedies
Each of the following is an "Event of Default" under the Indenture: (a)
failure by the Company to pay any principal on the Debentures when due; (b)
failure by the Company to pay any interest installment on the Debentures within
thirty days after the due date; (c) failure to perform any other covenant or
agreement of the Company made in the Indenture or the Debentures, continued for
sixty days after receipt of notice thereof from the Trustee or the holders of at
least 25% in principal amount of the Debentures; and (d) certain events of
bankruptcy, insolvency or reorganization. (Art. 6, Sec. 6.01). If an Event of
Default (other than those described in clause (d) above) occurs and is
continuing, the Trustee or the holders of at least 25% in principal amount of
the Debentures, by notice to the Company, may declare the principal of and
accrued interest on all of the Debentures to be due and payable immediately. If
an Event of Default of the type described in clause (d) above occurs, all unpaid
principal and accrued interest on the Debentures shall automatically become due
and payable without any declaration or other act on the part of the Trustee or
any holder. (Art. 6, Sec. 6.02). Holders of Debentures may not enforce the
Indenture or the Debentures except as provided in the Indenture. The Trustee may
refuse to enforce the Indenture or the Debentures unless it receives indemnity
and security satisfactory to it. Subject to certain limitations, the holders of
a majority in principal amount of the Debentures may direct the Trustee in its
exercise of any trust or power conferred on the Trustee, and may rescind an
acceleration of the Debentures. The Trustee may withhold from holders of
Debentures notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interest. (Art. 6, Secs. 6.05 and 6.06).
The Indenture requires the Company to furnish to the Trustee an annual
statement, signed by specified officers of the Company, stating whether or not
such officers have knowledge of any Default under the Indenture, and, if so,
specifying each such Default and the nature thereof. (Art. 4, Sec. 4.03).
23
Federal Income Tax Consequences
Holders of the Debentures are required to include in their income for
federal income tax purposes all of the accrued but unpaid interest for each
taxable year, since such amounts constitute interest income within the meaning
of the applicable provisions of the Internal Revenue Code of 1986, as amended to
date (the "Code"). As a result, such debenture holders are required to pay taxes
on interest which has accrued, although such interest will not be paid until
maturity of the Debenture.
Interest payments received by holders of Debentures who have elected to
received quarterly payments of interest will be includable in the income of such
holders for federal income tax purposes for the taxable year in which the
interest was received, except with respect to the payment of accrued interest
that has been included in their income in prior years.
Holders who hold the Debentures for investment purposes should treat
all reportable interest (whether actually received or accrued) as portfolio
income under applicable code provisions.
The Company's deposit of funds with the Trustee to effect the discharge
of the Company's obligations under the Debentures and the Indenture prior to
redemption or maturity of the Debentures, will have no effect on the amount of
income realized or recognized (gain or loss) by the Debenture Holders or the
timing of recognition of gain or loss for federal income tax purposes.
LEGAL MATTERS
Harris Beach LLP, Rochester, New York will pass on certain legal
matters in connection with the offering, including the validity of the issuance
of securities being offered hereby.
EXPERTS
The consolidated balance sheets of Intervest Bancshares Corporation and
Subsidiaries as of December 31, 2000 and 1999 and the related consolidated
statements of earnings, comprehensive income, changes in stockholders' equity
and cash flows for the three-year period ended December 31, 2000 appearing in
Intervest Bancshares Corporation's Annual Report (Form 10-K) for the year ended
December 30, 2000, have been incorporated herein by reference in reliance on the
reports of Hacker, Johnson & Smith PA, Tampa, Florida, independent auditors, as
set forth in their report thereon included therein and incorporated by reference
herein, which is based in part on the report of Richard A. Eisner & Company,
LLP, New York, New York, independent auditors included therein and incorporated
herein by reference. The financial statements referred to above are incorporated
herein by reference. in reliance upon such reports, given on the authority of
those firms as experts in accounting and auditing.
24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth expenses in connection with the issuance
and distribution of the securities being registered. All amounts except the
registration fee payable to the Securities and Exchange Commission are
estimates.
SEC Registration Fee..................................... $ None
Legal Fees and Expenses..................................* $ 2,000
Accountants Fees and Expenses............................* $ 3,000
Printing and Engraving Fees..............................* $ 1,000
Blue Sky Fees and Expenses...............................* $ 1,000
Transfer Agent and Registration Fee and Expenses......... None
Miscellaneous............................................* $ 1,000
Total Issuance and Distribution Expenses............... $ 6,000
*Estimated
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of Delaware provides that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any action, suit or proceeding, by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interest of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. No indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
The Company's bylaws provide that the Company will indemnify the
officers and directors of the Company to the fullest extent permitted under the
laws of the State of Delaware. In that regard, the Company is obligated to
indemnify officers and directors of the Company from and against any and all
judgments, fines, amounts paid in settlement, and reasonable expenses, including
attorneys' fees, actually and necessarily incurred by an officer or director as
a result of any action or proceeding, or any appeal therein, to the extent such
amounts may be indemnified under the laws of Delaware; and to pay any officer or
director of the Company in advance of the final disposition of any civil or
criminal proceeding, the expenses incurred by such officer or director in
defending such action or proceeding. The Company's obligation to indemnify its
officers and directors continues to individuals who have ceased to be officers
or directors of the Company and to the heirs and personal representatives of
former officers and directors of the Company.
25
Item 16. Exhibits.
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
5.1 Opinion of Harris Beach LLP
24.1 Consent of Harris Beach LLP is
included in the Opinion of Harris
Beach LLP, filed as Exhibit 5.1
24.2 Consent of Hacker, Johnson &
Smith PA
24.3 Consent of Richard A. Eisner &
Company, LLP
26
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
(2) That, for purposes of determining liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed a new
registration statement relating to the securities offering therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act as part of this Registration Statement as of the
time the Commission declared it effective.
(2) For purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus as
a new registration statement for the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 27th day of December, 2001.
INTERVEST BANCSHARES CORPORATION
(Registrant)
By: /s/ Lowell S. Dansker
---------------------
Lowell S. Dansker, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.
Title Date
----- ----
/s/ Lawrence G. Bergman Vice President, Secretary December 27, 2001
- ----------------------- and Director
(Lawrence G. Bergman)
Director December 27, 2001
- -----------------------
(Michael A. Callen)
/s/ Jerome Dansker Chairman of the Board, December 27, 2001
- ------------------ Executive Vice President,
(Jerome Dansker) Director
/s/ Lowell S. Dansker President, Treasurer, and December 27, 2001
- --------------------- Director (Principal Executive,
(Lowell S. Dansker) Financial and Accounting Officer)
/s/ Wayne F. Holly Director December 27, 2001
- ------------------
/s/ Edward J. Merz Director December 27, 2001
- ------------------
(Edward J. Merz)
/s/ Lawton Swan, III Director December 27, 2001
- --------------------
(Lawton Swan, III)
/s/ Thomas E. Willett Director December 27, 2001
- ---------------------
(Thomas E. Willett)
/s/ David J. Wilmott Director December 27, 2001
- --------------------
(David J. Wilmott)
/s/ Wesley T. Wood Director December 27, 2001
- ------------------
(Wesley T. Wood)
28
EXHIBIT INDEX
Exhibit Number Description of Exhibit
5.1 Opinion of Harris Beach LLP
24.1 Consent of Harris Beach LLP is
included in the Opinion of Harris
Beach LLP, filed as Exhibit 5.1
24.2 Consent of Hacker, Johnson &
Smith PA
24.3 Consent of Richard A. Eisner &
Company, LLP
29