Intervest Bancshares Corporation (NASDAQ-GS: IBCA) (the "Company") today reported that its wholly-owned subsidiaries, Intervest National Bank (the "Bank") and Intervest Mortgage Corporation ("IMC"), completed the sale of certain non-performing and underperforming assets to affiliates of Värde Partners, Inc. ("Värde") and FirstCity Financial Corporation ("FirstCity") (Nasdaq: FCFC). In addition, the Bank also agreed to sell to the purchasers an additional property located in Ohio which is expected to close in approximately two weeks.
The total amount of assets sold or to be sold aggregated to approximately $207 million and consisted of $187 million of loans and $14.4 million of real estate owned by the Bank and $5.6 million of loans owned by IMC. The assets are comprised mainly of non-performing and underperforming loans on commercial real estate and multi-family properties and real estate owned in New York and Florida. As a result of the transaction, the Company will record a net charge after taxes of approximately $44 million in the second quarter of 2010. The Company will also record a deferred tax asset related to this transaction of approximately $33 million, which will be available to reduce income taxes payable on the Company's future earnings.
Also on May 25, 2010, the Company sold in a private placement a total of 850,000 shares of its Class A Common Stock to affiliates of Värde and FirstCity, for an aggregate purchase price of $4,250,000. Those shares represent 9.9% of the issued and outstanding shares of the Class A Common Stock of the Company. Contemporaneously with these transactions, the Company contributed working capital to the Bank. Both before and after these transactions, the Bank had capital ratios in excess of the regulatory requirements to be designated as well capitalized.
"We are very pleased that we were able to complete these transactions in the current economic environment and believe that the combination of the loan sales and the capital investment is beneficial to Intervest and its shareholders," stated Lowell Dansker, Chairman and Chief Executive Officer of Intervest. "It allows us to reduce our total non-performing and underperforming assets by 75%, a substantial decline that will enable our management team to continue to provide outstanding service to our loyal customer base for which Intervest is known. The removal of these assets also eliminates the uncertainty surrounding any additional credit costs associated with these assets. Our commitment to our shareholders during this credit cycle has been to work through problem assets expeditiously in a manner that makes sound business sense for our shareholders. This transaction meets these goals. In addition, the receipt of additional capital from Värde and FirstCity, coupled with the asset sale, will allow us to refocus our efforts towards the pursuit of earnings strategies in our market areas of expertise."