================================================================================



                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

            (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999


                          Commission File No. 000-23377

                        INTERVEST BANCSHARES CORPORATION
         -----------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)


        Delaware                                       13-3699013
----------------------------               ------------------------------------
(State or other jurisdiction               (I.R.S. employer identification no.)
    of incorporation

                        10 Rockefeller Plaza, Suite 1015
                         New York, New York 10020-1903
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (212) 218-2800
                ------------------------------------------------
                (Issuer's telephone number, including area code)



Check whether the issuer:  (1) filed all reports required to be filed by Section
12, 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months
(or for such  shorter  period  that the  registrant  was  required  to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days: YES XX NO .

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

Title of Each Class:                                        Shares Outstanding:
--------------------                                        -------------------

Class A Common Stock,                                     2,271,879 Outstanding
$1.00 par value per share                                   at October 31, 1999
-------------------------                                   -------------------


Class B Common Stock,                                       305,000 Outstanding
$1.00 par value per share                                   at October 31, 1999
-------------------------                                   -------------------

================================================================================

<PAGE>

<TABLE>
<CAPTION>

                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

                                   FORM 10-QSB
                               September 30, 1999

                                TABLE OF CONTENTS
<S>                                                                                                                   <C>
         PART I. FINANCIAL INFORMATION                                                                                 Page

              Item 1.      Financial Statements

                  Condensed Consolidated Balance Sheets
                     as of September 30, 1999 (Unaudited) and December 31, 1998 .............................          1

                  Condensed Consolidated Statements of Earnings (Unaudited)
                     for the Quarter and Nine-Months Ended September 30, 1999 and 1998 ......................          2

                  Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
                     for the Nine-Months Ended September 30, 1999 and 1998..................................           3

                  Condensed Consolidated Statements of Cash Flows (Unaudited)
                     for the Nine-Months Ended September 30, 1999 and 1998..................................           4

                  Notes to Condensed Consolidated Financial Statements (Unaudited) .........................           5


              Item 2.      Management's Discussion and Analysis or Plan of Operation .......................           9


           PART II. OTHER INFORMATION

              Item 1.      Legal Proceedings................................................................         18

              Item 2.      Changes in Securities and Use of Proceeds........................................         18

              Item 3.      Defaults Upon Senior Securities..................................................         18

              Item 4.      Submission of Matters to a Vote of Security Holders..............................         18

              Item 5.      Other  Information...............................................................         18

              Item 6.      Exhibits and Reports on Form 8-K.................................................         18


               Signatures...................................................................................         18
</TABLE>






<PAGE>






PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. Financial Statements
----------------------------
<TABLE>
<CAPTION>

                Intervest Bancshares Corporation and Subsidiaries
                      Condensed Consolidated Balance Sheets

                                                                                              (Unaudited)
                                                                                             September 30,      December 31,
        ($ in thousands, except par value)                                                        1999              1998
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>                <C>
        ASSETS
        Cash and due from banks                                                              $    3,210         $    2,876
        Federal funds sold                                                                       15,343              6,473
        Short-term investments                                                                      288              4,123
                                                                                             ----------         ----------
            Total cash and cash equivalents                                                      18,841             13,472
        Interest-bearing deposits with banks                                                        100                199
        Securities held to maturity, net
          (estimated fair value of $78,744 and $82,173 respectively)                             80,168             82,338
        Restricted security, Federal Reserve Bank stock, at cost                                    508                233
        Loans receivable  (net of allowance for loan loss reserves of
          ($2,268 and $1,662, respectively)                                                     121,067             96,074
        Accrued interest receivable                                                               1,801              1,800
        Premises and equipment, net                                                               5,698              4,917
        Deferred income tax asset                                                                   721                579
        Other assets                                                                              1,252                910
--------------------------------------------------------------------------------------------------------------------------
        Total assets                                                                           $230,156           $200,522
--------------------------------------------------------------------------------------------------------------------------
        LIABILITIES
        Deposits:
           Demand deposits                                                                   $    3,464         $    3,027
           NOW deposits                                                                           7,943              7,955
           Savings deposits                                                                      21,951             26,823
           Money-market deposits                                                                 59,227             33,629
           Time deposits                                                                        104,766             99,033
                                                                                             ----------         ----------
        Total deposits                                                                          197,351            170,467
        Convertible debentures                                                                    6,930              7,000
        Accrued interest on convertible debentures                                                  738                299
        Mortgage escrow funds                                                                     2,491                870
        Official checks outstanding                                                               1,108              1,572
        Other liabilities                                                                         1,111                747
--------------------------------------------------------------------------------------------------------------------------
        Total liabilities                                                                       209,729            180,955
--------------------------------------------------------------------------------------------------------------------------

        Minority interest                                                                            18                 23

        STOCKHOLDERS' EQUITY
        Preferred stock (300,000 shares authorized, none issued)                                      -                  -
        Class A common stock ($1.00 par value, 7,500,000 shares authorized,
          (2,194,379 and 2,184,515 shares issued and outstanding respectively)                    2,194              2,184
        Class B common stock ($1.00 par value, 700,000 shares authorized,
          (305,000 and 300,000 shares issued and outstanding respectively)                          305                300
        Additional paid-in-capital, common                                                       13,909             13,789
        Retained earnings                                                                         4,001              3,271
--------------------------------------------------------------------------------------------------------------------------
        Total stockholders' equity                                                               20,409             19,544
--------------------------------------------------------------------------------------------------------------------------
        Total liabilities, minority interest and stockholders' equity                          $230,156           $200,522
--------------------------------------------------------------------------------------------------------------------------
         See accompanying notes to condensed consolidated financial statements.
</TABLE>
                                       1
<PAGE>
<TABLE>
<CAPTION>

                Intervest Bancshares Corporation and Subsidiaries
                  Condensed Consolidated Statements of Earnings
                                   (Unaudited)

                                                                               For the                    For the
                                                                           Quarter Ended             Nine-Months Ended
                                                                            September 30,             September 30,
                                                                           ----------------          -----------------
($ in thousands, except per share data)                                    1999        1998          1999         1998
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>         <C>            <C>
INTEREST AND DIVIDEND INCOME
Loans receivable                                                           $2,396        $2,260      $  6,580       $6,010
Securities                                                                  1,193         1,037         3,674        3,075
Other interest-earning assets                                                 150           123           350          302
--------------------------------------------------------------------------------------------------------------------------
Total interest and dividend income                                          3,739         3,420        10,604        9,387
--------------------------------------------------------------------------------------------------------------------------

INTEREST EXPENSE
Deposits                                                                    2,192         2,042         6,181        5,838
Convertible debentures and federal funds purchased                            163           150           482          167
--------------------------------------------------------------------------------------------------------------------------
Total interest expense                                                      2,355         2,192         6,663        6,005
--------------------------------------------------------------------------------------------------------------------------

Net interest and dividend income                                            1,384         1,228         3,941        3,382
Provision for loan loss reserves                                              270           127           605          357
--------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income
   after provision for loan loss reserves                                   1,114         1,101         3,336        3,025
--------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Customer service fees                                                          34            44           100          100
Income from mortgage activities                                                94            24           250          115
All other                                                                       -             3             1            6
--------------------------------------------------------------------------------------------------------------------------
Total noninterest income                                                      128            71           351          221
--------------------------------------------------------------------------------------------------------------------------

NONINTEREST EXPENSES
Salaries and employee benefits                                                395           264         1,114          784
Occupancy and equipment, net                                                  231           120           552          324
Advertising and promotion                                                       6            10            17           22
Professional fees and services                                                 60            43           163          164
Stationery, printing and supplies                                              25            21           107           77
All other                                                                      98            60           332          183
--------------------------------------------------------------------------------------------------------------------------
Total noninterest expenses                                                    815           518         2,285        1,554
--------------------------------------------------------------------------------------------------------------------------

Earnings before income taxes & change in accounting principle                 427           654         1,402        1,692
Provision for income taxes                                                    149           261           544          666
Cumulative effect of change in accounting principle (note 6)                    -             -         (128)            -
--------------------------------------------------------------------------------------------------------------------------
Net earnings                                                              $   278        $  393       $   730       $1,026
--------------------------------------------------------------------------------------------------------------------------

Basic earnings per share:
   Earnings before change in accounting principle                          $ 0.11        $ 0.16       $  0.34      $  0.42
   Cumulative effect of change in accounting principle                          -             -        (0.05)            -
--------------------------------------------------------------------------------------------------------------------------
   Net earnings per share                                                  $ 0.11        $ 0.16       $  0.29      $  0.42
--------------------------------------------------------------------------------------------------------------------------

Diluted earnings per share:
   Earnings before change in accounting principle                          $ 0.10        $ 0.13       $  0.29      $  0.32
   Cumulative effect of change in accounting principle                          -             -        (0.04)            -
--------------------------------------------------------------------------------------------------------------------------
   Net earnings per share                                                  $ 0.10        $ 0.13       $  0.25      $  0.32
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
                                       2
<PAGE>
<TABLE>
<CAPTION>

                Intervest Bancshares Corporation and Subsidiaries
      Condensed Consolidated Statements of Changes in Stockholders' Equity
                                   (Unaudited)

                                                                                               For the Nine-Months Ended
($ in thousands)                                                                                    September 30,
                                                                                               -------------------------
                                                                                                   1999         1998
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>            <C>
CLASS A COMMON STOCK
Balance at beginning of period                                                                  $ 2,184        $ 2,124
Issuance of 510 shares in exchange for common stock of minority stockholders of Intervest Bank        1              -
Issuance of 7,554 shares upon the conversion of debentures                                            7              -
Issuance of 1,800 and 40,300 shares, respectively, upon exercise of warrants                          2             41
------------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                          2,194          2,165
------------------------------------------------------------------------------------------------------------------------

CLASS B COMMON STOCK
Balance at beginning of period                                                                      300            300
Issuance of 5,000 shares upon the exercise of warrants                                                5              -
------------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                            305            300
------------------------------------------------------------------------------------------------------------------------

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of period                                                                   13,789         13,360
Issuance of 510 shares in exchange for common stock of minority stockholders of Intervest Bank        6              -
Issuance of 7,554 shares upon the conversion of debentures, net of issuance costs                    56              -
Compensation related to issuance of Class B stock warrants                                           19             36
Issuance of 5,000 shares upon exercise of Class B stock warrants                                     28              -
Issuance of 1,800 and 40,300 shares, respectively, upon exercise of Class A Stock Warrants           11            240
------------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                         13,909         13,636
------------------------------------------------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of period                                                                    3,271          1,836
Net earnings for the period                                                                         730          1,026
------------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                          4,001          2,862
------------------------------------------------------------------------------------------------------------------------

Total stockholders' equity at end of period                                                     $20,409        $18,963
------------------------------------------------------------------------------------------------------------------------
</TABLE>
     See accompanying notes to condensed consolidated financial statements.
                                       3
<PAGE>


<TABLE>
<CAPTION>


                Intervest Bancshares Corporation and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

                                                                                            For the Nine-Months Ended
                                                                                                  September 30,
                                                                                            -------------------------
     ($ in thousands)                                                                          1999           1998
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>               <C>
     OPERATING ACTIVITIES
     Net earnings                                                                           $    730          $  1,026
     Adjustments to reconcile net earnings to net cash provided by operating activities:
       Depreciation and amortization                                                             300               121
       Provision for loan loss reserves                                                          605               357
       Deferred income tax benefit                                                             (142)              (11)
       Interest expense on debentures                                                            473               167
       Gain on sale of mortgage loans                                                           (56)                 -
       Compensation expense related to Class B stock warrants                                     19                36
       Amortization of premiums, fees and discounts, net                                        (94)              (71)
       Increase in accrued interest receivable and other assets                                (324)             (428)
       Decrease in official checks outstanding                                                 (464)              (28)
       Increase in other liabilities                                                             631               150
------------------------------------------------------------------------------------------------------------------------
     Net cash provided by operating activities                                                 1,678             1,319
------------------------------------------------------------------------------------------------------------------------

     INVESTING ACTIVITIES
     Decrease (increase) in interest-earning deposits with banks                                  99             (100)
     Maturities and calls of securities held to maturity                                      27,556            32,826
     Purchases of securities held to maturity                                               (25,427)          (37,841)
     Sales of mortgage loans                                                                   5,660                 -
     Originations of loans receivable, net of principal repayments                          (31,393)          (22,947)
     Purchases of Federal Reserve Bank stock, net of redemptions                               (275)                 -
     Purchases of premises and equipment, net                                                (1,081)             (291)
------------------------------------------------------------------------------------------------------------------------
     Net cash used by investing activities                                                  (24,861)          (28,353)
------------------------------------------------------------------------------------------------------------------------

     FINANCING ACTIVITIES
     Net increase in demand, savings, NOW and money-market deposits                           21,151            12,095
     Net increase in time deposits                                                             5,733            11,794
     Net increase in mortgage escrow funds                                                     1,621             1,868
     Proceeds from Federal funds purchased                                                     1,325             1,160
     Repayments of Federal funds purchased                                                   (1,325)           (1,160)
     Proceeds from sale of convertible debentures, net of issuance costs                           -             6,523
     Proceeds from issuance of common stock, net of issuance costs                                47               281
------------------------------------------------------------------------------------------------------------------------
     Net cash provided by financing activities                                                28,552            32,561
------------------------------------------------------------------------------------------------------------------------

     Net increase in cash and cash equivalents                                                 5,369             5,527
     Cash and cash equivalents at beginning of period                                         13,472             9,176
------------------------------------------------------------------------------------------------------------------------
     Cash and cash equivalents at end of period                                             $ 18,841          $ 14,703
------------------------------------------------------------------------------------------------------------------------

     SUPPLEMENTAL DISCLOSURES
     Cash paid during the period for:
        Interest                                                                            $  6,204         $   5,758
        Income taxes                                                                             819               510
     Noncash financing activities:
        Issuance of common stock to minority stockholders of Intervest Bank                        7                 -
        Conversion of convertible debentures into common stock                                    70                 -
------------------------------------------------------------------------------------------------------------------------
</TABLE>

         See accompanying notes to condensed consolidated financial statements.
                                       4
<PAGE>


                Intervest Bancshares Corporation and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 1 - General

The  condensed   consolidated   financial  statements  of  Intervest  Bancshares
Corporation and Subsidiaries in this report have not been audited except for the
information derived from the audited  Consolidated  Balance Sheet as of December
31,  1998.  The  consolidated  financial  statements  include  the  accounts  of
Intervest  Bancshares   Corporation,   a  bank  holding  company  (the  "Holding
Company"), and its subsidiaries, Intervest Bank and Intervest National Bank (the
"Banks").  The Holding  Company and the Banks are  hereafter  referred to as the
"Company"  on a  consolidated  basis.  The Holding  Company's  primary  business
activity is the ownership of the Banks. The financial  statements in this report
should be read in conjunction  with the  consolidated  financial  statements and
related notes thereto included in the Company's Annual Report to Stockholders on
Form 10-KSB for the year ended December 31, 1998.

Intervest  National  Bank  received its national  charter from the Office of the
Comptroller of the Currency and opened for business on April 1, 1999.  Intervest
National Bank is a full-service  commercial bank with one banking office located
at One Rockefeller Plaza, Suite 300, New York, New York, 10020 and its telephone
number is (212) 218-8383. Intervest Bank is a Florida state-chartered commercial
bank with four banking offices in Clearwater, Florida and one in South Pasadena,
Florida.  The principal  executive  offices of Intervest Bank are located at 625
Court  Street,  Clearwater,  Florida,  33756 and its  telephone  number is (727)
442-2551.

The  Banks  primarily  focus  on  providing  personalized  banking  services  to
businesses  and  individuals  within their  respective  market areas.  The Banks
originate  commercial and multifamily  real estate loans and to a lesser extent,
commercial loans to businesses and consumer loans.  Intervest National Bank also
provides internet banking at its web site www.intervestnatbank.com.

The following table provides selected information  regarding the Holding Company
and the Banks at September 30, 1999.
<TABLE>
<CAPTION>

                                                                                                    Intervest
                                                                     Holding        Intervest        National
                                                                     Company             Bank            Bank     Consolidated
($ in thousands)
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>             <C>              <C>             <C>
    Total assets                                                     $28,116         $189,462         $35,458         $230,156
    Total cash and cash equivalents                                    2,115           12,949           5,916           18,841
    Total securities held to maturity, net                                 -           77,241           2,927           80,168
    Total loans, net of unearned fees and loan loss reserves           4,623           91,611          24,833          121,067
    Total deposits                                                         -          173,142          26,355          197,351
    Total convertible debentures                                       6,930                -               -            6,930
    Total stockholders' equity                                        20,409           12,250           8,509           20,409
    Number of  full-service branches                                       -                5               1                6
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

All material  intercompany  accounts and  transactions  have been  eliminated in
consolidation.  In the opinion of management, all material adjustments necessary
for a fair presentation of financial condition and results of operations for the
interim periods  presented in this report have been made. These  adjustments are
of a normal recurring nature.  The results of operations for the interim periods
are not  necessarily  indicative  of results that may be expected for the entire
year or any other  interim  period.  In  preparing  the  consolidated  financial
statements, management is required to make estimates and assumptions that affect
the  reported  amounts of assets,  liabilities,  revenues and  expenses.  Actual
results could differ from those estimates.  Certain  reclassifications have been
made to prior period amounts to conform to the current periods' presentation.
                                       5
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 2 - Loan Impairment and Credit Losses

The Company  monitors its loan portfolio to determine the  appropriate  level of
the  allowance for loan loss reserves  based on various  factors.  These factors
include:  the type and level of loans outstanding,  volume of loan originations;
overall  portfolio  quality;   loan  concentrations;   specific  problem  loans,
historical  chargeoffs and recoveries;  adverse  situations which may affect the
borrowers'  ability to repay;  and  management's  assessment  of the current and
anticipated economic conditions in the Company's lending regions.

No loans were  classified  as  nonaccrual  or impaired  during the 1999 and 1998
reporting periods in this report.

The table below  summarizes the activity in the allowance for loan loss reserves
for the periods indicated:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                                      For the Quarter Ended               For the Nine-Months
                                                                           September 30,                  Ended September 30,
                                                                      ---------------------               -------------------
($ in thousands)                                                        1999          1998              1999            1998
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>           <C>               <C>             <C>
Balance at beginning of period                                         $1,997        $1,405            $1,662          $1,173
Provision for loan losses charged to operations                           270           127               605             357
Recoveries                                                                  1             -                 1               2
-----------------------------------------------------------------------------------------------------------------------------
Balance at end of period                                               $2,268        $1,532            $2,268          $1,532
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Note 3 - Convertible Debentures

During  1999,  convertible  debentures  in the  aggregate  principal  amount  of
$70,000,  plus accrued  interest,  were  converted into shares of Class A common
stock at the election of the debenture holders. The conversion price was $10 per
share and 7,554  shares of Class A common stock were issued in  connection  with
the conversions.

Note 4 - Earnings Per Share (EPS)

Basic EPS is calculated by dividing net earnings by the weighted-average  number
of shares of common stock  outstanding.  Diluted EPS is  calculated  by dividing
adjusted net earnings by the  weighted-average  number of shares of common stock
outstanding and dilutive  potential  common stock shares that may be outstanding
in the future. Potential common stock shares may arise from outstanding dilutive
common  stock  warrants  (as  computed  by  the  "treasury  stock  method")  and
convertible debentures (as computed by the "if converted method").

Diluted EPS considers  the potential  dilution that could occur if the Company's
outstanding stock warrants and convertible debentures were converted into common
stock that then shared in the  Company's  adjusted  earnings  (as  adjusted  for
interest  expense,  net of taxes,  that would no longer occur if the  debentures
were converted).

Net  earnings  applicable  to common  stock and the  weighted-average  number of
common  shares used for basic and diluted  earnings per share  computations  are
summarized in the table that follows:
                                       6
<PAGE>
<TABLE>
<CAPTION>

                Intervest Bancshares Corporation and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)

                                                                           For the Quarter Ended      For the Nine-Months Ended
                                                                               September 30,               September 30,
                                                                           ----------------------------------------------------
                                                                             1999         1998           1999           1998
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>          <C>             <C>           <C>
BASIC EARNINGS PER SHARE
Net earnings:
  Earnings before change in accounting principle                           $  278,000   $  393,000      $  858,000    $1,026,000
  Cumulative effect of change in accounting principle                               -            -       (128,000)             -
-------------------------------------------------------------------------------------------------------------------------------
 Net earnings                                                                $278,000     $393,000        $730,000    $1,026,000
-------------------------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding                                 2,498,734    2,463,107       2,494,410     2,448,241
Per share amounts:
  Earnings before change in accounting principle                                $0.11        $0.16           $0.34         $0.42
  Cumulative effect of change in accounting principle                               -            -          (0.05)             -
-------------------------------------------------------------------------------------------------------------------------------
  Basic net earnings per share                                                  $0.11        $0.16           $0.29         $0.42
-------------------------------------------------------------------------------------------------------------------------------

DILUTED EARNINGS PER SHARE
-------------------------------------------------------------------------------------------------------------------------------
Adjusted net earnings (1)                                                    $278,000     $393,000        $730,000    $1,026,000
-------------------------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding for dilution:
  Shares outstanding                                                        2,498,734    2,463,107       2,494,410     2,448,241
  Potential dilutive shares resulting from conversion of warrants             219,860      487,711         455,035       737,825
  Potential dilutive shares resulting from conversion of debentures (1)             -            -               -             -
                                                                            ----------------------------------------------------
  Total average number of common shares outstanding used for dilution       2,718,594    2,950,818       2,949,445     3,186,066
                                                                            ----------------------------------------------------
Per share amount:
  Earnings before change in accounting principle                                $0.10        $0.13           $0.29         $0.32
  Cumulative effect of change in accounting principle                               -            -          (0.04)             -
-------------------------------------------------------------------------------------------------------------------------------
  Diluted net earnings per share                                                $0.10        $0.13           $0.25         $0.32
-------------------------------------------------------------------------------------------------------------------------------

(1)      The  convertible  debentures  were not  dilutive  and their  impact was
         excluded from the EPS computations.
</TABLE>

Note 5 - Regulatory Capital

The  Banks  are  required  to  maintain  certain  minimum   regulatory   capital
requirements.  The  following  is a  summary  at  September  30,  1999 of  those
regulatory  capital  requirements  and the  actual  capital  of  each  bank on a
percentage basis:
<TABLE>
<CAPTION>

                                                                       Actual              Minimum       To Be Considered
                                                                       Ratios            Requirement     Well Capitalized
                                                                       ------            -----------     ----------------
<S>                                                                    <C>                  <C>               <C>
         Intervest Bank
         Total capital to risk-weighted assets                         11.59%               8.00%             10.00%
         Tier 1 capital to risk-weighted assets                        10.33%               4.00%              6.00%
         Tier 1 capital to total average assets - leverage ratio        6.48%               4.00%              5.00%

         Intervest National Bank
         Total capital to risk-weighted assets                         30.96%               8.00%             10.00%
         Tier 1 capital to risk-weighted assets                        30.00%               4.00%              6.00%
         Tier 1 capital to total average assets - leverage ratio       34.59%               4.00%              5.00%
</TABLE>
                                       7
<PAGE>





                Intervest Bancshares Corporation and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 6 - Cumulative Effect of Change in Accounting Principle

On January 1, 1999,  the Company  adopted as required  the AICPA's  Statement of
Position (SOP) 98-5,  "Reporting on the Costs of Start-Up  Activities."  The SOP
requires that all start-up costs (except for those that are capitalizable  under
other  generally  accepted  accounting  principles)  be expensed as incurred for
financial statement purposes effective January 1, 1999. Previously, a portion of
start-up costs were generally capitalized and amortized over a period of time.

The adoption of this  statement  resulted in a net charge of $128,000 on January
1,  1999.  The  charge  represents  the  expensing,  net  of a tax  benefit,  of
cumulative  start-up costs that had been incurred  through  December 31, 1998 in
connection with organizing Intervest National Bank.

Note 7 - Recent Accounting Developments

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging  Activities."  SFAS No. 133  establishes  accounting  and  reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts and for hedging  activities.  In June 1999, the FASB
issued  Statement of Financial  Accounting  Standards  No. 137  "Accounting  for
Derivative  Instruments and Hedging  Activities - Deferral of the Effective Date
of FASB  Statement No. 133." SFAS No. 137 delays SFAS No. 133' s effective  date
to all fiscal quarters of all fiscal years beginning after June 15, 2000.

The Company is not a party to any derivative  instruments or hedging activities,
and does not  expect  the  aforementioned  Statements  of  Financial  Accounting
Standards on Derivative Instruments and Hedging Activities to have any impact on
the Company's financial statements when adopted.

Note 8 - Subsequent Event

The  Company  announced  on  October  18,  1999 that it has  agreed  to  acquire
Intervest  Corporation  of New York,  a  company  with  assets of  approximately
$95,000,000  consisting  primarily of a portfolio of mortgages on improved  real
property.  The combined  total assets of the two companies at September 30, 1999
would have been approximately $325,000,000.

The two companies are related in that the same persons serve on their boards and
the holders of all of the shares of Intervest  Corporation  of New York also own
approximately 48% of the voting shares of the Company.

In the  merger,  which  was  approved  by both  Boards of  Directors,  Intervest
Corporation  of New York  shareholders  will  receive an  aggregate of 1,250,000
shares of the  Company's  Class A common  stock in  exchange  for all  Intervest
Corporation  of New  York's  common  stock.  The  merger,  which is  subject  to
regulatory approvals, as well as approval by the shareholders of the Company, is
expected to close before the end of the year.

                                       8
<PAGE>


   ITEM 2.  Management's Discussion and Analysis or Plan of Operation

General
-------

Intervest  Bancshares  Corporation is the Holding Company for Intervest National
Bank in New York  City,  New York and  Intervest  Bank in  Clearwater,  Florida.
Hereafter,  all the entities are referred to as the "Company" on a  consolidated
basis.

The  Company  reported  earnings  for the  third  quarter  of 1999 of  $278,000,
compared to earnings of $186,000 in the second  quarter of 1999 and  $393,000 in
the third quarter of 1998.  Diluted  earnings per share amounted to $0.10 in the
third quarter of 1999, compared to $0.07 in the second quarter of 1999 and $0.13
per share in the third  quarter of 1998.  Earnings  for the first nine months of
1999 were $730,000, or $0.25 per diluted share, compared to $1,026,000, or $0.32
per diluted share, for the same period of 1998.

Earnings for the third quarter of 1999 increased $92,000 over the second quarter
of 1999, reflecting growth in the Company's loan portfolio, as well as improving
results  from  Intervest  National  Bank,  which opened for business on April 1,
1999. At September 30, 1999, Intervest National Bank had total assets, loans and
deposits   of   approximately   $35,000,000,    $25,000,000   and   $26,000,000,
respectively, more than double the amounts reported at June 30, 1999.

Results  for the third  quarter and nine months of 1999 were lower than the same
periods of 1998 due to  operating  and  start-up  expenses  associated  with the
opening of Intervest National Bank in April of 1999. In addition,  on January 1,
1999,  the  Company  adopted  the  AICPA's  Statement  of  Position  (SOP) 98-5,
"Reporting  on the Costs of  Start-Up  Activities."  The SOP  requires  that all
start-up  costs  be  expensed  as  incurred  for  financial  statement  purposes
effective January 1, 1999. The adoption of this statement  resulted in a charge,
net of a tax  benefit,  of $128,000 on January 1, 1999.  The charge  represented
cumulative  start-up costs incurred through  December 31, 1998,  associated with
organizing Intervest National Bank.

Excluding  Intervest  National  Bank's  operations and the cumulative  effect of
adopting the new accounting  standard,  the Company's  consolidated net earnings
would have increased to $404,000 in the 1999 third quarter, from $393,000 in the
same period of 1998.  Similarly,  net earnings for the first nine months of 1999
would have increased to $1,221,000, from $1,026,000 in the same period of 1998.

The  Company  also  announced  on October 18, 1999 that it has agreed to acquire
Intervest  Corporation  of New York,  a  company  with  assets of  approximately
$95,000,000,  consisting  primarily of a portfolio of mortgages on improved real
property.  The combined  total assets of the two companies at September 30, 1999
would be approximately  $325,000,000.  The two companies are related in that the
same  persons  serve on their  boards  and the  holders  of all of the shares of
Intervest  Corporation  of New York  also own  approximately  48% of the  voting
shares of the  Company.  In the  merger,  which was  approved  by both Boards of
Directors,  Intervest  Corporation  of New York  shareholders  will  receive  an
aggregate of 1,250,000  shares of the Company's Class A common stock in exchange
for all Intervest  Corporation of New York's common stock. The merger,  which is
subject to regulatory approvals,  as well as approval by the shareholders of the
Company, is expected to close before the end of the year.

                                       9
<PAGE>




  Comparison of Financial Condition at September 30, 1999 and December 31, 1998
  -----------------------------------------------------------------------------

Overview
--------

The following  table shows  selected  ratios of the Company at the end of or for
the period indicated:


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                             At or For the                         At or For the
                                                             Quarter Ended                       Nine Months Ended
                                                             September 30,                          September 30,
---------------------------------------------------------------------------------------------------------------------
                                                          1999           1998                   1999            1998
---------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>           <C>                    <C>            <C>
    Stockholders' equity to total assets                  8.87%         10.24%                 8.87%          10.24%
    Average stockholders' equity to average assets        9.53%         10.33%                 9.86%           9.87%
    Return on average assets (1)                          0.52%          0.87%                 0.48%           0.81%
    Return on average equity (1)                          5.49%          8.39%                 4.86%           7.49%
    Average interest-earning assets to
      interest-bearing liabilities                        1.10x          1.11x                 1.11x           1.11x
    Net interest margin (1)                               2.73%          2.83%                 2.70%           2.78%
    Noninterest expenses to average assets (1)            1.53%          1.14%                 1.50%           1.22%
---------------------------------------------------------------------------------------------------------------------
(1)   Ratios have been annualized.
</TABLE>

Total  assets  at  September  30,  1999  increased  15%  to  $230,156,000,  from
$200,522,000  at December  31,  1998,  primarily  reflecting  increases in loans
receivable and cash and cash equivalents.  These increases were partially offset
by a decline in securities held to maturity.

Total  liabilities  at  September  30,  1999  increased  to  $209,747,000,  from
$180,978,000  at  December  31,  1998,  or 16%,  reflecting  growth  in  deposit
accounts.  Stockholders'  equity grew 4% to  $20,409,000  at September 30, 1999,
from  $19,544,000 at year-end 1998. Book value per common share also improved to
$8.17 per share at September 30, 1999, from $7.87 at December 31, 1998.

The  Company's  balance  sheets at the dates  indicated  were  comprised  of the
following:

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------
                                                      At September 30, 1999                       At December 31, 1998
                                                    Carrying               % of                      Carrying           % of
    ($ in thousands)                                  Value            Total Assets                   Value         Total Assets
------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                  <C>                     <C>                   <C>
    Cash and cash equivalents                        $  18,841              8.2%                  $  13,472               6.7%
    Securities held to maturity, net                    80,168             34.8                      82,338              41.1
    Loans receivable, net                              121,067             52.6                      96,074              47.9
    All other assets                                    10,080              4.4                       8,638               4.3
------------------------------------------------------------------------------------------------------------------------------
    Total assets                                      $230,156            100.0%                   $200,522             100.0%
------------------------------------------------------------------------------------------------------------------------------
    Deposits                                          $197,351             85.7                    $170,467              85.0%
    Convertible debentures                               6,930              3.0                       7,000               3.5
    Accrued interest payable on debentures                 738              0.3                         299               0.2
    All other liabilities                                4,728              2.1                       3,212               1.6
------------------------------------------------------------------------------------------------------------------------------
    Total liabilities                                  209,747             91.1                     180,978              90.3
------------------------------------------------------------------------------------------------------------------------------
    Stockholders' equity                                20,409              8.9                      19,544               9.7
------------------------------------------------------------------------------------------------------------------------------
    Total liabilities and stockholders' equity        $230,156            100.0%                   $200,522             100.0%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Cash and Cash Equivalents
-------------------------

Cash and cash equivalents  increased due to higher  investments in overnight Fed
funds.  Excess cash has been invested short-term in anticipation of funding loan
commitments in the fourth quarter of 1999.

                                       10
<PAGE>

Securities Held to Maturity
---------------------------

Securities  held to maturity  declined due to net  maturities  and calls of U.S.
government agency  securities.  At September 30, 1999, the securities  portfolio
consisted of fixed-rate debt obligations of the Federal Home Loan Bank,  Federal
Farm  Credit  Bank,  Federal  National  Mortgage  Association,  and US  Treasury
securities.  Most of the securities allow the issuer the right to call or prepay
its obligation without prepayment penalty.

Loans Receivable
----------------

Loans receivable  increased primarily due to new commercial and multifamily real
estate loan originations  exceeding principal repayments.  At September 30, 1999
and December 31, 1998, the Company did not have any loans on a nonaccrual status
or classified as impaired.

Allowance for Loan Loss Reserves
--------------------------------

The Company  monitors its loan portfolio to determine the  appropriate  level of
the  allowance for loan loss reserves  based on various  factors.  These factors
include:  the type and level of loans outstanding,  volume of loan originations;
overall  portfolio  quality;   loan  concentrations;   specific  problem  loans,
historical  chargeoffs and recoveries;  adverse  situations which may affect the
borrowers'  ability to repay;  and  management's  assessment  of the current and
anticipated economic conditions in the Company's lending regions.

At  September  30,  1999,  the  allowance  amounted to  $2,268,000,  compared to
$1,662,000 at year-end  1998.  The allowance for loan loss reserves  represented
1.84% of total loans  outstanding  at September  30, 1999,  compared to 1.70% at
December  31,  1998.  The  increase in the  allowance  primarily  reflected  the
increased volume of new loan originations.

All Other Assets
----------------

All other assets  increased  primarily  due to purchases  ($1,081,000)  of fixed
assets  mostly by Intervest  National  Bank,  and a higher level of deferred tax
benefits  ($142,000)  generated  largely by start-up costs that were expensed by
Intervest National Bank for financial statement purposes.

Deposit Liabilities
-------------------

Deposit   liabilities   increased  from   $170,467,000   at  year-end  1998,  to
$197,351,000 at September 30, 1999. The increase was attributable to the opening
of Intervest  National  Bank on April 1, 1999,  whose  deposit  accounts grew to
$26,355,000 at September 30, 1999.

At September 30, 1999, the Company's time deposit accounts totaled  $104,766,000
and its  demand  deposit,  savings,  NOW and  money-market  accounts  aggregated
$92,585,000.  The same categories of deposit  accounts  totaled  $99,033,000 and
$71,434,000,  respectively,  at December 31, 1998. Time deposits represented 53%
of total deposits at September 30, 1999, compared to 58% at year-end 1998.

                                       11
<PAGE>




Convertible Debentures
----------------------

During 1999,  convertible debentures (the Debentures) in the aggregate principal
amount of $70,000 plus accrued  interest were  converted  into shares of Class A
common stock at the election of the Debenture holders.

The Holding Company's Debentures are due July 1, 2008 and are convertible at the
option of the  holders  at any time prior to April 1,  2008,  unless  previously
redeemed by the  Holding  Company,  into  shares of Class A common  stock of the
Holding Company at the following  current  conversion  prices per share:  $10.00
through  December  31,  1999,  $12.50 in 2000;  $14.00 in 2001;  $15.00 in 2002;
$16.00 in 2003;  $18.00 in 2004;  $21.00 in 2005; $24.00 in 2006; $27.00 in 2007
and  $30.00  from  January  1,  2008  through  April 1,  2008.  Interest  on the
debentures accrues and compounds quarterly and 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  and to  thereafter  receive  payments of interest
quarterly.  At September 30, 1999,  accrued  interest on the Debentures  totaled
$738,000.

All Other Liabilities
---------------------

All other  liabilities  increased  as a result of the Company  holding a greater
amount of  mortgage  escrow  funds.  Mortgage  escrow  funds  represent  advance
payments  made by  borrowers  for taxes and  insurance  that are remitted by the
Company to third parties. The increase reflects the timing of payments to taxing
authorities as well as the growth in the loan portfolio.

Stockholders' Equity and Regulatory Capital
-------------------------------------------

Stockholders'  equity  increased  almost entirely as a result of net earnings of
$730,000 and the issuance of 14,864 shares of common stock, which resulted,  net
of issuance costs, in a $116,000 aggregate increase in stockholders' equity. The
shares  were issued as follows:  7,554  shares of Class A common  stock upon the
conversion of convertible debentures;  1,800 shares of Class A common stock upon
the exercise of Class A warrants, 510 shares of Class A common stock in exchange
for the shares of minority  shareholders  of Intervest Bank, and 5,000 shares of
Class B common stock upon the exercise of Class B stock warrants.

Intervest   Bank  and  Intervest   National   Bank  are  both   well-capitalized
institutions  as  defined  by  FDIC  regulations.  See  note 5 to the  condensed
consolidated  financial  statements in this report for further  information  and
their respective capital ratios.

                         Liquidity and Capital Resources
                         -------------------------------

The Company manages its liquidity position on a daily basis to assure that funds
are  available to meet  operations,  loan and  investment  funding  commitments,
deposit  withdrawals and the repayment of borrowed funds. The Company's  primary
sources  of funds  consist  of:  retail  deposits  obtained  through  the Banks'
offices;  satisfactions  and  repayments of loans;  the  maturities and calls of
securities;  and cash provided by operating activities.  From time-to-time,  the
Company  may  also  borrow  funds  through  the  Fed  funds  market  or  sale of
debentures.  For information about the cash flows from the Company's  operating,
investing and financing activities, see the condensed consolidated statements of
cash flows on page 4 of this report.  At September 30, 1999, the Company's total
commitment to lend aggregated approximately $19,000,000.  Based on its cash flow
projections,  the  Company  believes  that it can  fund  all of its  outstanding
commitments from the aforementioned sources of funds.

                                       12
<PAGE>

                               Interest Rate Risk
                               ------------------

Interest  rate risk  arises  from  differences  in the  repricing  of assets and
liabilities within a given time period. The principal objective of the Company's
asset/liability  management  strategy is to minimize  its exposure to changes in
interest rates.  The Company uses "gap analysis,"  which measures the difference
between interest-earning assets and interest-bearing  liabilities that mature or
reprice within a given time period, to monitor its interest rate sensitivity. At
September 30, 1999, the Company's  one-year negative  interest-rate  sensitivity
gap was  $84,470,000,  or 36.7% of total  assets,  compared to  $73,637,000,  or
36.7%,  at December 31,  1998.  In  computing  the gap,  the Company  treats its
interest  checking,  money market and savings  deposit  accounts as  immediately
repricing.  For a further  discussion  of interest  rate risk and gap  analysis,
including all of the assumptions  used in developing the Company's  one-year gap
position, see the Company's 1998 Annual Report on Form 10-KSB, pages 26 and 27.

                              Year 2000 Compliance
                              --------------------

The Year 2000 issue is the result of computer  programs  that were written using
two digits rather than four digits to define the  applicable  year. As a result,
such  programs  may  recognize a date using "00" as the year 1900 instead of the
year 2000, which could result in system failures or miscalculations. The Company
is  aware  of the many  areas  affected  by the Year  2000  computer  issue,  as
addressed  by the  Federal  Financial  Institutions  Examination  Council in its
interagency statement, which provided an outline for institutions to effectively
manage the Year 2000 challenges.

The Company has completed its testing phase of mission  critical systems and has
determined  that  these  systems  are  Year  2000  compliant.  With  regards  to
non-mission  critical internal systems,  the Company has or is in the process of
replacing  those systems that tested as being  noncompliant.  Additionally,  the
Company  has  contingency  plans  that  provide  for  processing  its data  from
alternative sites.

The Company also recognizes the importance of its borrowers  rectifying any Year
2000 problems in a timely manner to avoid  deterioration  of the loan  portfolio
solely due to this issue.  In this regard,  the Company has identified  material
relationships  and  questionnaires  have been  completed  to assess the inherent
risks.  The Company  will work on a  one-on-one  basis with any borrower who has
been identified as having high Year 2000 risk exposure.

Notwithstanding  the above,  there can be no  assurances  that all  hardware and
software  that the Company uses will  function  properly on and after January 1,
2000,  or that  its  borrowers  and  vendors  will  perform  according  to their
representations,  or that other third parties may cause adverse  effects because
of the Year 2000 issue.

Accordingly, there can be no assurance that the failure of others to address the
Year 2000 issue or that the resulting effects will not have an adverse impact on
the Company's business,  financial condition,  and results of operations.  It is
anticipated  that the Banks' deposit  customers will have increased  demands for
cash in the latter  part of 1999 and  correspondingly,  the Banks will  maintain
adequate liquidity levels to meet any increased demand.

                                       13
<PAGE>


                       Comparison of Results of Operations
               for the Quarters Ended September 30, 1999 and 1998
               --------------------------------------------------

Overview
--------

The Company  reported net  earnings  for the third  quarter of 1999 of $278,000,
compared to $393,000 for the third quarter of 1998.  Diluted  earnings per share
amounted to $0.10,  compared to $0.13 per diluted  share in the third quarter of
1998.  The  decline in  earnings  was  primarily  due to a $297,000  increase in
noninterest  expenses  and a $143,000  increase in the  provision  for loan loss
reserves.  These items were partially  offset by an increase in net interest and
dividend  income of $156,000 and a $112,000  decline in the provision for income
taxes.

Net Interest and Dividend Income
--------------------------------

Net interest and dividend income is the Company's primary source of earnings and
is   influenced   primarily   by  the   amount,   distribution   and   repricing
characteristics of its interest-earning assets and interest-bearing  liabilities
as well as by the relative  levels and  movements of interest  rates.  The table
that  follows  sets  forth  information  on  average  assets,   liabilities  and
stockholders' equity;  yields earned on interest-earning  assets; and rates paid
on interest-bearing  liabilities for the periods indicated. The yields and rates
shown are based on a computation  of annualized  income/expense  for each period
divided by average interest-earning  assets/interest-bearing  liabilities during
each period.  Certain yields and rates shown are adjusted for related fee income
or expense.  Average  balances  are derived  from daily  balances.  Net interest
margin is computed by dividing  annualized  net interest and dividend  income by
the average of total interest-earning assets during each period.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                                             For the Quarter Ended
                                                     ------------------------------------------------------------------------
                                                          September 30, 1999                       September 30, 1998
                                                     -------------------------------         --------------------------------
                                                     Average      Interest    Yield/         Average      Interest    Yield/
($ in thousands)                                     Balance     Inc./Exp.     Rate          Balance     Inc./Exp.     Rate
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>           <C>     <C>              <C>            <C>     <C>
Assets
Interest-earning assets:
   Loans                                               $108,769      $2,396  8.81%            $  97,782      $2,260  9.25%
   Securities                                            82,371       1,193  5.79                66,464       1,037  6.24
   Other interest-earning assets                         12,041         150  4.98%                9,214         123  5.34
-----------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                           203,181      $3,739  7.36%              173,460      $3,420  7.89%
-----------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                                9,545                                   7,952
-----------------------------------------------------------------------------------------------------------------------------
Total assets                                           $212,726                                $181,412
-----------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   Checking deposits                                  $   7,380     $    56  3.04%             $  5,785       $  54  3.74%
   Savings deposits                                      23,363         243  4.16                16,842         207  4.93
   Money Market deposits                                 50,419         568  4.51                23,507         289  4.93
   Time deposits                                         95,864       1,325  5.53               103,123       1,492  5.80
                                                      ------------------------------------------------------------------------
   Total deposit accounts                               177,026       2,192  4.95               149,257       2,042  5.47
                                                      ------------------------------------------------------------------------
   Federal funds purchased                                  214           3  4.77                     -           -     -
   Convertible debentures and accrued interest            7,579         160  8.45                 7,062         150  8.50
-----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                      184,819      $2,355  5.10%              156,319      $2,192  5.61%
-----------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                              3,685                                   2,984
Noninterest-bearing liabilities                           3,959                                   3,362
Stockholders' equity                                     20,263                                  18,747
-----------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity             $212,726                                $181,412
-----------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                              $1,384  2.26%                           $1,228  2.28%
-----------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                    $  18,362              2.73%             $ 17,141              2.83%
-----------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                  1.10x                                   1.11x
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       14
<PAGE>

Net interest and dividend income increased to $1,384,000 in the third quarter of
1999, from $1,228,000 in the 1998 third quarter.  The increase was due to growth
in the Company's  balance sheet.  The Company's net interest  margin declined to
2.73%,  from 2.83%. The decline in the interest rate margin was due to the yield
on the Company's  earning  assets  declining at a slightly  faster pace than the
cost of its funds as well as a slight decline in the ratio of  earning-assets to
interest-bearing liabilities.

The Company's yield on earning assets declined by 53 basis points due to several
factors:  an increase in the percentage of earning assets held as securities and
short-term investments  (securities and short-term investments have lower yields
than the Company's  loan  portfolio);  calls of  higher-yielding  U.S government
agency securities with the resulting  proceeds being invested in securities with
lower rates;  and  originations  of new loans at lower rates and  prepayments of
higher-yielding loans caused by the very competitive lending environment.

The Company's  cost of funds declined by 51 basis points due to lower rates paid
on  deposit  accounts  as well as a change  in the mix of  deposits.  Lower-cost
deposits held in checking, savings and money-market accounts increased while the
level of time deposits declined.

Provision for Loan Loss Reserves
--------------------------------

The provision for loan loss reserves is based on management's ongoing assessment
of the adequacy of the allowance for loan loss reserves.  The provision amounted
to  $270,000  in the third  quarter of 1999,  compared  to $127,000 in the third
quarter of 1998.  See page 11 under the  Caption  for  "Allowance  for loan Loss
Reserves" for additional discussion of the reserves.

Noninterest Income
------------------

Total noninterest  income increased to $128,000 in the 1999 third quarter,  from
$71,000 in the third quarter of 1998,  reflecting an increase in loan fee income
from mortgage  lending  activities.  Such fees include loan application fees and
loan service and maintenance charges.

Noninterest Expenses
--------------------

Total  noninterest  expenses  increased  57% to $815,000 in the third quarter of
1999,  from  $518,000  in the third  quarter of 1998.  The  increase  was almost
entirely due to the opening of Intervest  National Bank on April 1, 1999,  which
required  the  addition of  employees  and  increased  occupancy  and  equipment
expenses.

Provision for Income Taxes
--------------------------

The  provision  for income  taxes  amounted to $149,000 in the third  quarter of
1999,  compared to $261,000 in the same period of 1998. The Company's  effective
tax rate  (inclusive  of state and local  taxes)  amounted  to 34.9% in the 1999
period,  compared to 39.9% in the 1998 period.  The decline in the effective tax
rate reflects  increased deferred tax benefits generated from Intervest National
Bank's operations.

                                       15
<PAGE>





                       Comparison of Results of Operations
             for the Nine-Months Ended September 30, 1999 and 1998
             -----------------------------------------------------

Overview
--------

The  Company's  earnings  for the  nine-months  ended  September  30,  1999 were
$730,000,  or $0.25 per  diluted  share,  compared to  $1,026,000,  or $0.32 per
diluted share for the same period of 1998. The decline in earnings was primarily
due to a $731,000  increase in noninterest  expenses and a $248,000  increase in
the provision for loan loss  reserves.  These items were  partially  offset by a
$559,000 increase in net interest and dividend income and a $130,000 increase in
noninterest  income.  Results for the nine-months  ended September 30, 1999 also
included a one-time  net charge of $128,000  related to the  Company's  required
adoption,  on January 1, 1999, of the AICPA's  Statement of Position (SOP) 98-5,
"Reporting on the Costs of Start-Up Activities."

Net Interest and Dividend Income
--------------------------------

Net interest and dividend income is the Company's primary source of earnings and
is   influenced   primarily   by  the   amount,   distribution   and   repricing
characteristics of its interest-earning assets and interest-bearing  liabilities
as well as by the relative  levels and  movements of interest  rates.  The table
that follows, for the nine-month periods ended September 30, 1999 and 1998, sets
forth the same information that is described above the table on page 14.
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------
                                                                            For the Nine-Months Ended
                                                      ----------------------------------------------------------------------
                                                           September 30, 1999                      September 30, 1998
                                                           ------------------                      ------------------
                                                      Average     Interest    Yield/         Average      Interest    Yield/
($ in thousands)                                      Balance    Inc./Exp.     Rate          Balance     Inc./Exp.     Rate
----------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>             <C>     <C>              <C>            <C>     <C>
Assets
Interest-earning assets:
   Loans                                             $  100,111      $6,580  8.76%            $  87,762      $6,010  9.13%
   Securities                                            84,301       3,674  5.81                66,577       3,075  6.16
   Other interest-earning assets                         10,044         350  4.65                 7,642         302  5.27
----------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                           194,456     $10,604  7.27%              161,981      $9,387  7.73%
----------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                                8,645                                   7,678
----------------------------------------------------------------------------------------------------------------------------
Total assets                                           $203,101                                $169,659
----------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   NOW deposits                                       $   7,516    $    174  3.09%            $   5,286      $  146  3.69%
   Savings deposits                                      25,396         786  4.13                15,703         572  4.87
   Money-market deposits                                 41,621       1,366  4.38                21,037         767  4.87
   Time deposits                                         93,408       3,855  5.50               101,193       4,352  5.75
                                                      ----------------------------------------------------------------------
   Total deposit accounts                               167,941       6,181  4.91               143,219       5,837  5.45
                                                      ----------------------------------------------------------------------
   Federal funds purchased                                  218           9  5.23                    26           1  5.13
   Convertible debentures and accrued interest            7,467         473  8.45                 2,619         167  8.50
----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                      175,626      $6,663  5.06%              145,864      $6,005  5.49%
----------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                              4,023                                   3,085
Noninterest-bearing liabilities                           3,431                                   2,442
Stockholders' equity                                     20,021                                  18,268
----------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity             $203,101                                $169,659
----------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                              $3,941  2.21%                           $3,382  2.24%
----------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                    $  18,830              2.70%            $  16,117              2.78%
----------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                  1.11x                                   1.11x
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       16
<PAGE>

Net interest and dividend  income  increased  to  $3,941,000  in the  nine-month
period ended September 30, 1999, from $3,382,000 in the same period of 1998. The
increase was due to growth in the  Company's  balance  sheet.  The Company's net
interest margin declined slightly to 2.70%, from the 2.78% in the same period of
1998.  The  decline  in the  margin  was  essentially  due to the  same  factors
discussed  in the  comparison  of the quarter  ended  September  30, 1999 versus
September 30, 1998.

Provision for Loan Loss Reserves
--------------------------------

The provision for loan loss reserves is based on management's ongoing assessment
of the adequacy of the allowance for loan loss reserves.  The provision amounted
to $605,000 for the nine-months  ended September 30, 1999,  compared to $357,000
for the same period of 1998.  See page 11 under the Caption for  "Allowance  for
Loan Loss Reserves" for additional discussion of the reserves.

Noninterest Income
------------------

Total  noninterest  income  increased  to  $351,000  in  the  nine-months  ended
September 30, 1999,  from $221,000 for the same period of 1998. The increase was
due to higher fee income from  mortgage  lending  activities.  Such fees include
loan application fees and loan service and maintenance charges.

Additionally,  noninterest  income for the 1999 period  included a $56,000  gain
(representing  the balance of unearned income) from the sale of four multifamily
real estate loans (with an aggregate  principal  balance of  $5,604,000)  by the
Holding  Company.  The sale was made in order to increase the Holding  Company's
liquidity for funding  Intervest  National  Bank's  initial  capital on April 1,
1999. The loans were sold to Intervest Corporation of New York, a related party,
at estimated fair value.

Noninterest Expenses
--------------------

Total noninterest  expenses increased 47% to $2,285,000 in the nine-month period
ended  September  30,  1999,  from  $1,554,000  in the same period of 1998.  The
increase was almost  entirely due to the opening of Intervest  National  Bank on
April 1, 1999, which required the addition of employees and increased  occupancy
and equipment expenses.

Provision for Income Taxes
--------------------------

The provision  for income taxes  amounted to $544,000 in the  nine-month  period
ended  September 30, 1999,  compared to $666,000 in the same period of 1998. The
Company's  effective tax rate  (inclusive of state and local taxes)  amounted to
38.8% in the 1999 period, compared to 39.3% in the 1998 period.

Cumulative Effect of Change in Accounting Principle
---------------------------------------------------

The  cumulative  effect of the change in  accounting  principle  represents  the
required  adoption,  on January 1, 1999,  of the AICPA's  Statement  of Position
(SOP) 98-5,  "Reporting on the Costs of Start-Up  Activities,"  which applies to
all companies except as provided for therein. The SOP requires that all start-up
costs (except for those that are  capitalizable  under other generally  accepted
accounting  principles) be expensed as incurred for financial statement purposes
effective  January  1,  1999.  Previously,  a portion  of  start-up  costs  were
generally  capitalized and amortized over a period of time. The adoption of this
statement resulted in the immediate  expensing on January 1, 1999 of $193,000 in
start-up costs incurred  through December 31, 1998 in connection with organizing
Intervest  National  Bank.  A deferred  tax benefit of $65,000  was  recorded in
conjunction with this charge.

                                       17
<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings
         Not Applicable

ITEM 2.  Changes in Securities and Use of Proceeds
(a)      Not Applicable
(b)      Not Applicable
(c)      Not Applicable
(d)      Not Applicable

ITEM 3.  Defaults Upon Senior Securities
         Not Applicable

ITEM 4.  Submission of Matters to a Vote of Security Holders

(a)      Not Applicable
(b)      Not Applicable
(c)      Not Applicable
(d)      Not Applicable

ITEM 5.  Other Information
         Not Applicable

ITEM 6.  Exhibits and Reports on Form 8-K
(a)      Exhibit Index  (numbered in accordance with Item 601 of Regulation S-B)
         27 - Financial Data Schedule (For SEC Purposes only)
(b)      No Reports on Form 8-K were filed  during the quarter  ended  September
         30, 1999.

                                   Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly  caused  this  report  to be signed  on its  behalf by the  undersigned
thereunto duly authorized.


         INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

         Date:  November 9, 1999            By:    /s/ Lowell S. Dansker
                                            ----------------------------
                                            Lowell S. Dansker,
                                            President and Treasurer
                                            (Chief Financial Officer)

         Date:  November 9, 1999            By:    /s/ Lawrence G. Bergman
                                            ------------------------------
                                            Lawrence G. Bergman,
                                            Vice President and Secretary

                                       18