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 JUNE 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
      of incorporation)                          identification no.)


                        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,                   2,193,280 Outstanding at
          $1.00 par value per share                    August 1, 1999
          -------------------------                    --------------

         Class B Common Stock,                    305,000 Outstanding at
          $1.00 par value per share                    August 1, 1999
          -------------------------                    --------------

-------------------------------------------------------------------------------







<PAGE>


                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>

                                   FORM 10-QSB
                                  June 30, 1999

                                TABLE OF CONTENTS

<S>                                                                                                              <C>
         PART I. FINANCIAL INFORMATION                                                                           Page

              Item 1.      Financial Statements

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

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

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

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

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


              Item 2.      Management's Discussion and Analysis of Financial Condition
                              and Results of Operations....................................................        9


              Item 3.      Quantitative and Qualitative Disclosures About Market Risk......................       17


           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..................................................................................       19
</TABLE>





<PAGE>




<TABLE>
<CAPTION>

PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. Financial Statements
----------------------------

                Intervest Bancshares Corporation and Subsidiaries
                      Condensed Consolidated Balance Sheets

                                                                               (Unaudited)
                                                                                  June 30,   December 31,
        ($ in thousands, except par value)                                          1999        1998
        ---------------------------------------------------------------------------------------------

<S>                                                                               <C>        <C>
ASSETS
Cash and due from banks                                                           $  2,712   $  2,876
Federal funds sold                                                                   5,900      6,473
Short-term investments                                                               1,328      4,123
                                                                                  --------   --------
    Total cash and cash equivalents                                                  9,940     13,472
Interest-bearing deposits with banks                                                   100        199
Securities held to maturity, net
    (estimated fair value of  $81,465 and $82,173, respectively)                    83,691     82,338
Restricted security, Federal Reserve Bank stock, at cost                               519        233
Loans receivable  (net of allowance for loan loss reserves of
    $1,997 and  $1,662, respectively)                                               98,670     96,074
Accrued interest receivable                                                          1,675      1,800
Premises and equipment, net                                                          5,559      4,917
Deferred income tax asset                                                              682        579
Other assets                                                                         1,211        910
-------------------------------------------------------------------------------   --------   --------
Total assets                                                                      $202,047   $200,522
-------------------------------------------------------------------------------   --------   --------

LIABILITIES
Deposits:
   Demand deposits                                                                $  3,379   $  3,027
   NOW deposits                                                                      7,745      7,955
   Savings deposits                                                                 25,017     26,823
   Money-market deposits                                                            41,126     33,629
   Time deposits                                                                    92,381     99,033
                                                                                  --------   --------
Total deposits                                                                     169,648    170,467
Federal funds purchased                                                              1,325       --
Convertible debentures                                                               6,940      7,000
Accrued interest on convertible debentures                                             589        299
Mortgage escrow funds                                                                1,590        870
Official checks outstanding                                                          1,108      1,572
Other liabilities                                                                      715        747
-------------------------------------------------------------------------------   --------   --------
Total liabilities                                                                  181,915    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,
    2,193,280 and 2,184,515 shares issued and outstanding, respectively)             2,193      2,184
Class B common stock ($1.00 par value, 700,000 shares authorized,
     305,000 and 300,000 issued and outstanding, respectively)                         305        300
Additional paid-in-capital, common                                                  13,893     13,789
Retained earnings                                                                    3,723      3,271
-------------------------------------------------------------------------------   --------   --------
Total stockholders' equity                                                          20,114     19,544
-------------------------------------------------------------------------------   --------   --------
Total liabilities, minority interest and stockholders' equity                     $202,047   $200,522
-------------------------------------------------------------------------------   --------   --------
</TABLE>
 See accompanying notes to condensed consolidated financial statements

                                       1
<PAGE>
<TABLE>
<CAPTION>

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

                                                                               For the                    For the
                                                                           Quarter Ended              Six-Months Ended
                                                                              June 30,                    June 30,
                                                                     ------------- ------------- ------------- ------------
($ in thousands, except per share data)                                    1999        1998          1999         1998
-------------------------------------------------------------------- ------------- ------------- ------------- ------------

INTEREST AND DIVIDEND INCOME
<S>                                                                        <C>           <C>           <C>          <C>
Loans receivable                                                           $2,043        $1,957        $4,184       $3,750
Securities                                                                  1,218         1,009         2,481        2,038
Other interest-earning assets                                                 128           109           200          179
-------------------------------------------------------------------- ------------- ------------- ------------- ------------
Total interest and dividend income                                          3,389         3,075         6,865        5,967
-------------------------------------------------------------------- ------------- ------------- ------------- ------------

INTEREST EXPENSE
Deposits                                                                    1,973         1,958         3,989        3,796
Convertible debentures                                                        164            17           319           17
-------------------------------------------------------------------- ------------- ------------- ------------- ------------
Total interest expense                                                      2,137         1,975         4,308        3,813
-------------------------------------------------------------------- ------------- ------------- ------------- ------------

Net interest and dividend income                                            1,252         1,100         2,557        2,154
Provision for loan loss reserves                                              223           130           335          230
-------------------------------------------------------------------- ------------- ------------- ------------- ------------
Net interest and dividend income
      after provision for loan loss reserves                                1,029           970         2,222        1,924
-------------------------------------------------------------------- ------------- ------------- ------------- ------------

NONINTEREST INCOME
Customer service fees                                                          34            30            66           56
Income from mortgage activities                                                66            54           156           91
All other                                                                       -             1             1            3
-------------------------------------------------------------------- ------------- ------------- ------------- ------------
Total noninterest income                                                      100            85           223          150
-------------------------------------------------------------------- ------------- ------------- ------------- ------------

NONINTEREST EXPENSES
Salaries and employee benefits                                                380           274           730          520
Occupancy and equipment, net                                                  214           107           321          204
Advertising and promotion                                                       4             4            11           12
Professional fees and services                                                 53            60           103          121
Stationery, printing and supplies                                              42            29            82           56
All other                                                                     130            53           223          123
-------------------------------------------------------------------- ------------- ------------- ------------- ------------
Total noninterest expenses                                                    823           527         1,470        1,036
-------------------------------------------------------------------- ------------- ------------- ------------- ------------

Earnings before income taxes & change in accounting principle                 306           528           975        1,038
Provision for income taxes                                                    120           203           395          405
Cumulative effect of change in accounting principle (note 6)                    -             -         (128)            -
-------------------------------------------------------------------- ------------- ------------- ------------- ------------
Net earnings                                                               $  186        $  325        $  452       $  633
-------------------------------------------------------------------- ------------- ------------- ------------- ------------

Basic earnings per share:
   Earnings before change in accounting principle                          $ 0.07        $ 0.13        $ 0.23       $ 0.26
   Cumulative effect of change in accounting principle                          -             -        (0.05)            -
-------------------------------------------------------------------- ------------- ------------- ------------- ------------
   Net earnings per share                                                  $ 0.07        $ 0.13        $ 0.18       $ 0.26
-------------------------------------------------------------------- ------------- ------------- ------------- ------------

Diluted earnings per share:
   Earnings before change in accounting principle                          $ 0.07        $ 0.10        $ 0.21       $ 0.19
   Cumulative effect of change in accounting principle                          -             -        (0.05)            -
-------------------------------------------------------------------- ------------- ------------- ------------- ------------
   Net earnings per share                                                  $ 0.07        $ 0.10        $ 0.16       $ 0.19
-------------------------------------------------------------------- ------------- ------------- ------------- ------------
See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                       2

<PAGE>
<TABLE>
<CAPTION>

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


                                                                                          For the Six-Months Ended
                                                                                                  June 30,
                                                                                       --------------------------------
($ in thousands)
                                                                                             1999            1998
-------------------------------------------------------------------------------------- ----------------- --------------

CLASS A COMMON STOCK
<S>                                                                                             <C>            <C>
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 6,455 shares upon the conversion of debentures                                            6              -
Issuance of 1,800 and 33,500 shares, respectively, upon exercise of warrants                          2             34
-------------------------------------------------------------------------------------- ----------------- --------------
Balance at end of period                                                                          2,193          2,158
-------------------------------------------------------------------------------------- ----------------- --------------

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 6,455 shares upon the conversion of debentures, net of
      issuance costs                                                                                 46              -
Compensation related to issuance of Class B stock warrants                                           13             30
Issuance of 5,000 shares upon exercise of Class B stock warrants                                     28              -
Issuance of 1,800 and 33,500 shares, respectively, upon exercise of Class A
      stock warrants                                                                                 11            201
-------------------------------------------------------------------------------------- ----------------- --------------
Balance at end of period                                                                         13,893         13,591
-------------------------------------------------------------------------------------- ----------------- --------------

RETAINED EARNINGS
Balance at beginning of period                                                                    3,271          1,836
Net earnings for the period                                                                         452            633
-------------------------------------------------------------------------------------- ----------------- --------------
Balance at end of period                                                                          3,723          2,469
-------------------------------------------------------------------------------------- ----------------- --------------

-------------------------------------------------------------------------------------- ----------------- --------------
Total stockholders' equity at end of period                                                     $20,114        $18,518
-------------------------------------------------------------------------------------- ----------------- --------------
</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 Six Months Ended
                                                                                                June 30,
                                                                                   ------------------------------------
     ($ in thousands)                                                                          1999           1998
     ----------------------------------------------------------------------------- ------------------ -----------------

<S>                                                                                         <C>               <C>
     OPERATING ACTIVITIES
     Net earnings                                                                           $    452          $    633
     Adjustments to reconcile net earnings to net cash provided by
          operating activities:
     Depreciation and amortization                                                               187               125
     Provision for loan loss reserves                                                            335               230
     Deferred income tax (benefit) expense                                                     (103)                18
     Interest expense on debentures                                                              313                16
     Gain on sale of mortgage loans                                                             (56)                 -
     Compensation expense related to stock warrants                                               13                30
     Amortization of premiums, fees and discounts, net                                          (95)                69
     Increase in accrued interest receivable and other assets                                  (181)             (374)
     (Decrease) increase in official checks outstanding                                        (464)               147
     Increase in other liabilities                                                                30               154
     ----------------------------------------------------------------------------- ------------------ -----------------
     Net cash provided by operating activities                                                   431             1,048
     ----------------------------------------------------------------------------- ------------------ -----------------

     INVESTING ACTIVITIES
     Decrease (increase) in interest-earning deposits with banks                                  99             (100)
     Maturities and calls of securities held to maturity                                      24,056            21,576
     Purchases of securities held to maturity                                               (25,427)          (23,568)
     Sales of mortgage loans                                                                   5,660                 -
     Originations of loans receivable, net of principal repayments                           (8,501)          (14,136)
     Purchases of Federal Reserve Bank stock                                                   (286)                 -
     Purchases of premises and equipment, net                                                  (829)             (278)
     ----------------------------------------------------------------------------- ------------------ -----------------
     Net cash used by investing activities                                                   (5,228)          (16,506)
     ----------------------------------------------------------------------------- ------------------ -----------------

     FINANCING ACTIVITIES
     Net increase in demand, savings, NOW and money-market deposits                            5,833             9,557
     Net (decrease) increase in time deposits                                                (6,652)             8,118
     Net increase in mortgage escrow funds                                                       720               945
     Net increase in Federal funds purchased                                                   1,325                 -
     Proceeds from sale of convertible debentures                                                  -             6,523
     Proceeds from issuance of common stock, net of issuance costs                                39               235
     ----------------------------------------------------------------------------- ------------------ -----------------
     Net cash provided by financing activities                                                 1,265            25,378
     ----------------------------------------------------------------------------- ------------------ -----------------

     Net (decrease) increase in cash and cash equivalents                                    (3,532)             9,920

     Cash and cash equivalents at beginning of period                                         13,472             9,176

     ----------------------------------------------------------------------------- ------------------ -----------------
     Cash and cash equivalents at end of period                                              $ 9,940          $ 19,096
     ----------------------------------------------------------------------------- ------------------ -----------------

     SUPPLEMENTAL DISCLOSURES Cash paid during the period for:
        Interest                                                                             $ 4,040         $   3,798
        Income taxes                                                                             701               229
     Noncash financing activities:
        Issuance of common stock to minority stockholders of Intervest Bank                        7                 -
        Conversion of convertible debentures into common stock                                    60                 -
     ----------------------------------------------------------------------------- ------------------ -----------------
</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  ("OCC") and opened for business on April 1, 1999.
Intervest National Bank is a full-service  commercial bank and is subject to the
supervision  of and  examination by the OCC. The principal  executive  office of
Intervest  National  Bank is located at One  Rockefeller  Plaza,  Suite 300, New
York,  New York,  10020 and its telephone  number is (212)  218-8383.  The Banks
primarily  focus on providing  personalized  banking  services to businesses and
individuals  within their  respective  market areas.  The Banks originate mainly
real estate loans (primarily commercial and multifamily) 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  financial  information  regarding the
Holding Company and the Banks at June 30, 1999.
<TABLE>
<CAPTION>

    --------------------------------------------------------- --------------- ------------- -------------- ---------------
                                                                                                Intervest
                                                                     Holding     Intervest  National Bank
    ($ in thousands)                                                 Company          Bank                   Consolidated
    --------------------------------------------------------- --------------- ------------- -------------- ---------------
<S>                                                                  <C>          <C>             <C>            <C>
    Total assets                                                     $27,745      $178,260        $16,768        $202,047
    Total cash and cash equivalents                                    1,359         2,518          6,343           9,940
    Total securities held to maturity, net                                 -        80,764          2,927          83,691
    Total  loans,   net  of  unearned  fees  and  loan  loss           5,226        87,475          5,969          98,670
    allowance
    Total deposits                                                         -       162,057          7,967         169,648
    Total convertible debentures                                       6,940             -              -           6,940
    Total stockholders' equity                                        20,114        11,829          8,635          20,114
    --------------------------------------------------------- --------------- ------------- -------------- ---------------
</TABLE>

All   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 that are discussed
on pages 22 and 23 of the Company's 1998 Annual Report on Form 10-KSB.

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:
<TABLE>
<CAPTION>

--------------------------------------------------------------- ---------------------------- -- ------------------------------
                                                                   For the Quarter Ended          For the Six -Months Ended
                                                                          June 30,                        June 30,
                                                                                                ------------------------------
                                                                -------------- -------------
($ in thousands)                                                         1999          1998              1999           1998
--------------------------------------------------------------- -------------- ------------- -- -------------- --------------
<S>                                                                    <C>           <C>               <C>            <C>
Balance at beginning of period                                         $1,774        $1,274            $1,662         $1,173
Provision for loan losses charged to operations                           223           130               335            230
Recoveries                                                                  -             1                 -              2
--------------------------------------------------------------- -------------- ------------- -- -------------- --------------
Balance at end of period                                               $1,997        $1,405            $1,997         $1,405
--------------------------------------------------------------- -------------- ------------- -- -------------- --------------
</TABLE>

Note 3 - Convertible Debentures

In the first half of 1999,  convertible  debentures in the  aggregate  principal
amount of $60,000, 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.

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 Six-Months Ended
                                                                                   June 30,                    June 30,
                                                                           ------------- ------------ -------------- ------------
                                                                               1999         1998          1999          1998
                                                                           ------------- ------------ -------------- ------------
--------------------------------------------------------------------------
<S>                                                                           <C>          <C>            <C>          <C>
BASIC EARNINGS PER SHARE
Net earnings applicable to common stockholders:
  Earnings before change in accounting principle                               $186,000     $325,000       $580,000     $633,000
  Cumulative effect of change in accounting principle                                 -            -      (128,000)            -
-------------------------------------------------------------------------- ------------- ------------ -------------- ------------
 Net earnings applicable to common stockholders                                $186,000     $325,000       $452,000     $633,000
-------------------------------------------------------------------------- ------------- ------------ -------------- ------------
Average number of common shares outstanding                                   2,494,567    2,453,140      2,492,212    2,440,595
-------------------------------------------------------------------------- ------------- ------------ -------------- ------------
Per share amount:
  Earnings before change in accounting principle                                  $0.07        $0.13          $0.23        $0.26
  Cumulative effect of change in accounting principle                                 -            -         (0.05)            -
-------------------------------------------------------------------------- ------------- ------------ -------------- ------------
  Basic net earnings per share                                                    $0.07        $0.13          $0.18        $0.26
-------------------------------------------------------------------------- ------------- ------------ -------------- ------------

DILUTED EARNINGS PER SHARE
Adjusted net earnings applicable to common stockholders:
  Net earnings applicable to common stockholders                               $186,000     $325,000       $452,000     $633,000
  Adjustment to net earnings from assumed conversion of debentures (1)                -        9,000              -        9,000
-------------------------------------------------------------------------- ------------- ------------ -------------- ------------
  Adjusted net earnings for diluted earnings per share computation             $186,000     $334,000       $452,000     $642,000
-------------------------------------------------------------------------- ------------- ------------ -------------- ------------
Average number of common shares outstanding:
  Common shares outstanding                                                   2,494,567    2,453,140      2,492,212    2,440,595
  Potential dilutive shares from conversion of warrants                         346,866      862,456        330,844      839,291
  Potential dilutive shares resulting from conversion of debentures (1)               -       67,037              -       33,518
-------------------------------------------------------------------------- ------------- ------------ -------------- ------------
  Total average number of common shares outstanding used for dilution         2,841,433    3,382,633      2,823,056    3,313,404
-------------------------------------------------------------------------- ------------- ------------ -------------- ------------
Per share amount:
  Earnings before change in accounting principle                                  $0.07        $0.10          $0.21        $0.19
  Cumulative effect of change in accounting principle                                 -            -         (0.05)            -
-------------------------------------------------------------------------- ------------- ------------ -------------- ------------
  Diluted net earnings per share                                                  $0.07        $0.10          $0.16        $0.19
-------------------------------------------------------------------------- ------------- ------------ -------------- ------------
      (1) The  convertible  debentures  were not diluted  for the 1999  periods and their  impact was  excluded  from the EPS
computations.

Note 5 - Regulatory Capital

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

                                                              Actual            Minimum                  To Be Considered
Intervest Bank                                                Ratios            Requirement              Well Capitalized
                                                             ---------         ------------              -----------------
<S>                                                           <C>                   <C>                        <C>
Total capital to risk-weighted assets                         11.77%                8.00%                      10.00%
Tier 1 capital to risk-weighted assets                        10.51%                4.00%                       6.00%
Tier 1 capital to total average assets - leverage ratio        6.36%                4.00%                       5.00%

                                                              Actual            Minimum                  To Be Considered
Intervest National Bank                                       Ratios            Requirement              Well Capitalized
                                                             ---------         ------------              -----------------
Total capital to risk-weighted assets                         96.93%                8.00%                      10.00%
Tier 1 capital to risk-weighted assets                        95.85%                4.00%                       6.00%
Tier 1 capital to total average assets - leverage ratio       79.24%                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  associated with organizing  Intervest  National Bank
that had been incurred through December 31, 1998.


























                                       8

<PAGE>

ITEM 2.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations

General
-------

Intervest  Bancshares  Corporation is the Holding Company for Intervest National
Bank in New York  City,  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 second  quarter  of 1999 of  $186,000,
compared to $325,000 for the second quarter of 1998.  Diluted earnings per share
were $0.07,  compared to $0.10 per diluted share in the second  quarter of 1998.
Earnings  for the first six months of 1999 were  $452,000,  or $0.16 per diluted
share,  compared to $633,000,  or $0.19 per diluted share for the same period of
1998.

Results for both periods of 1999 were reduced by operating and start-up expenses
associated with Intervest National Bank. Intervest National Bank is a nationally
chartered  commercial  bank that  opened for  business  on April 1, 1999.  It is
located  at One  Rockefeller  Plaza  in New  York  City  and  it  provides  full
commercial  banking  services,  including  internet  banking.  At June 30, 1999,
Intervest  National Bank had total assets,  loans and deposits of  approximately
$17,000,000, $6,000,000 and $8,000,000, respectively.

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 costs that can be capitalized
under other generally  accepted  accounting  principles) 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.

Absent  the  change in  accounting  principle  and the net  operating  loss from
Intervest  National  Bank,  the Company's  consolidated  net earnings would have
increased  to  $359,000 in the 1999 second  quarter,  from  $325,000 in the same
period of 1998,  and to $817,000 in the first half of 1999 from  $633,000 in the
first half of 1998.  The Company  expects that its net earnings will continue to
be reduced in the near term due to the start up of Intervest National Bank.

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                          Six-Months Ended
                                                      June 30,        June 30,                 June 30,          June 30,
                                                        1999            1998                     1999              1998
    ----------------------------------------------- -------------- ---------------- ------ ----------------- -----------------
<S>                                                   <C>              <C>                      <C>                <C>
Stockholders' equity to total assets                   9.96%           10.42%                    9.96%             10.42%
Average stockholders' equity to average assets        10.11%           10.81%                   10.03%             10.98%
Return on average assets (1)                           0.38%            0.77%                    0.46%              0.77%
Return on average equity (1)                           3.71%            7.12%                    4.54%              7.02%
Average interest-earning assets to
  interest-bearing liabilities                         1.11x            1.11x                    1.11x              1.11x
Net interest margin (1)                                2.66%            2.74%                    2.69%              2.75%
Noninterest expenses to average assets (1)             1.66%            1.25%                    1.48%              1.26%
------------------------------------------------------------------------------------------------------------------------------
(1)   Ratios have been annualized.
</TABLE>


                                       9

<PAGE>

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

Overview
--------

Total assets at June 30, 1999 increased to  $202,047,000,  from  $200,522,000 at
December 31, 1998,  reflecting  increases in loans receivable and investments in
securities  held to  maturity,  largely  offset  by a  decline  in cash and cash
equivalents. Total liabilities increased from $180,978,000 at December 31, 1998,
to $181,933,000 at June 30, 1999. Stockholders' equity grew 3% to $20,114,000 at
June 30, 1999. Book value per common share was $8.05 at June 30, 1999.

The Company's balance sheet was comprised of the following:



<TABLE>
<CAPTION>


    -------------------------------------------- -------------------------------- -------- ----------------------------------
                                                        At June 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                          $  9,940           4.9%                     $ 13,472            6.7%
Securities held to maturity, net                     83,691          41.4                        82,338           41.1
Loans receivable, net                                98,670          48.9                        96,074           47.9
All other assets                                      9,746           4.8                         8,638            4.3
------------------------------------------------------------------------------------------------------------------------------
Total assets                                       $202,047         100.0%                     $200,522          100.0%
------------------------------------------------------------------------------------------------------------------------------
Deposits                                           $169,648          84.0%                     $170,467           85.0%
Federal funds purchased                               1,325           0.7                           --              --
Convertible debentures                                6,940           3.4                         7,000            3.5
All other liabilities                                 4,020           1.9                         3,511            1.8
------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                   181,933          90.0                       180,978           90.3
------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                 20,114          10.0                        19,544            9.7
------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity         $202,047         100.0%                     $200,522          100.0%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

Cash and cash equivalents declined primarily due to the deployment of funds into
loans and government agency security  investments.  At June 30, 1999,  Intervest
National Bank had $5,900,000 of cash temporarily  invested in Federal funds sold
in anticipation of funding new loan originations in the third quarter of 1999.

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

Securities held to maturity increased due to purchases of U.S. government agency
securities, partially offset by maturities and calls of securities.

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

Loans  receivable  increased due to new commercial and  multifamily  real estate
loan  originations  exceeding  principal  repayments and sales of loans.  In the
first  quarter of 1999,  four  multifamily  real estate loans (with an aggregate
principal  balance of $5,604,000) held by the Holding Company were sold in order
to increase its 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 of par. At June 30, 1999 and December 31,
1998, the Company did not have any loans on a nonaccrual status or classified as
impaired.

                                       10


<PAGE>

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 that are discussed
on pages 22 and 23 of the Company's  1998 Annual Report on Form 10-KSB.  At June
30, 1999,  the  allowance  amounted to  $1,997,000,  compared to  $1,662,000  at
year-end  1998.  The  increase  reflected  management's  intent to maintain  the
allowance at a level it believes to be adequate. The allowance represented 1.98%
of total loans  outstanding at June 30, 1999,  compared to 1.70% at December 31,
1998.

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

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

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

Deposit  liabilities  declined  slightly due to  offsetting  factors.  Intervest
Bank's deposits  declined from  approximately  $170,400,000 at year-end 1998, to
$162,000,000 at June 30, 1999, which management attributes to a more competitvie
interest rate environment for deposits. This decline was substantially offset by
the  opening  of  Intervest  National  Bank on  April  1,  1999,  whose  deposit
liabilities have grown to approximately $8,000,000 at June 30, 1999.

At June 30, 1999, total time deposit accounts amounted to $92,381,000 and demand
deposit,  savings, NOW and money-market  accounts aggregated  $77,267,000.  This
compared to deposits of $99,033,000 and $71,434,000,  respectively,  at December
31, 1998.  Time  deposits  represented  54% of total  deposits at June 30, 1999,
compared to 58% at year-end 1998.

Federal Funds Purchased
-----------------------

Intervest  Bank,  from  time  to  time,  obtains  funds  through  Federal  funds
purchases.  During the second  quarter of 1999,  Intervest  Bank  utilized  this
funding source. At June 30, 1999, Federal funds purchased totaled $1,325,000.

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

In the first half of 1999,  convertible  debentures in the  aggregate  principal
amount of $60,000 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.  For a further  discussion of the  debentures,  see the Company's
1998 Annual Report on Form 10-KSB, page 25.


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

All other liabilities increased largely due the Company holding a greater amount
of mortgage  escrow funds,  which  represent  advance  payments by borrowers for
taxes and insurance,  and an increase in accrued interest payable on convertible
debentures outstanding.

                                       11


<PAGE>

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

Stockholders'  equity  increased  almost  entirely  as a result of net income of
$452,000,  the  issuance  of  6,455  shares  of Class A  common  stock  upon the
conversion of convertible debentures and 1,800 shares upon the exercise of Class
A stock  warrants,  510 Class A shares  issued  in  exchange  for the  shares of
minority  shareholders  of Intervest  Bank, and 5,000 Class B shares issued upon
the  exercise  of Class B stock  warrants.  The  issuance  of all  these  shares
resulted  in,  net  of  issuance  costs,  a  $105,000   aggregate   increase  in
stockholders' equity.

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

                         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' branch
offices; amortization, 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.  For  additional  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 June 30, 1999, the Company's total commitment to lend aggregated $13,717,000.
Based on its cash flow projections, the Company believes that it can fund all of
its   outstanding   commitments  and  future  capital   expenditures   from  the
aforementioned sources of funds.

                               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
June 30, 1999, the Company's one-year negative interest-rate sensitivity gap was
$83,080,000,  or 41.1% of total assets,  compared to  $73,637,000,  or 36.7%, at
December 31, 1998. In computing the gap, the Company treats its checking,  money
market and savings  deposit  accounts as  immediately  repricing.  For a further
discussion of interest rate risk and gap analysis, including all 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.

                                       12


<PAGE>

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 the  costs of making  modifications  to  correct  any Year 2000
issues will not materially  affect  reported  operating  results.  The Company's
contingency  plan  relative to Year 2000 issues has been  finalized  and tested.
Based on testing  results,  the  Company's  mission  critical  systems have been
deemed to be Year 2000 compliant and, therefore, a contingency plan has not been
developed  with respect to those systems.  With regards to non-mission  critical
internal systems,  the Company's  contingency plans are to replace those systems
that test as being  noncompliant.  Alternatively,  some systems could be handled
manually on an interim basis.  Should outside  service  providers not be able to
provide compliant  systems,  the Company will terminate those  relationships and
transfer to Year 2000 compliant vendors.

The Company also recognizes the importance of determining that its borrowers are
facing the Year 2000 problem in a timely  manner to avoid  deterioration  of the
loan portfolio  solely due to this issue. All material  relationships  have been
identified and questionnaires  have been completed to assess the inherent risks.
Deposit customers have received statement stuffers and informational material in
this regard.  The Company plans to work on a one-on-one  basis with any borrower
who has been identified as having high Year 2000 risk exposure.

Although  management  believes  that the Company will not incur  material  costs
associated  with  the Year  2000  issue,  there  can be no  assurances  that all
hardware  and software  that the Company  will use will be Year 2000  compliant.
Management cannot predict the amount of financial  difficulties it may incur due
to the Company's  customers and vendors  inability to perform according to their
agreements with the Company or the effects that other third parties may cause as
a result of this issue. Therefore, there can be no assurance that the failure or
delay of others to  address  the Year 2000 issue or that the costs  involved  in
such process will not have a material adverse effect 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  Company  will
maintain its liquidity levels to meet any increased demand.

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

Overview
--------

The Company  reported net  earnings for the second  quarter of 1999 of $186,000,
compared to $325,000 for the second quarter of 1998.  Diluted earnings per share
amounted to $0.07,  compared to $0.10 per diluted share in the second quarter of
1998.  The  decline in  earnings  was  primarily  due to a $296,000  increase in
noninterest  expenses  and a $93,000  increase  in the  provision  for loan loss
reserves.  These items were partially offset by higher net interest and dividend
income of $152,000 and a $83,000 decline in the provision for income taxes.

                                       13

<PAGE>

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
                                                  -----------------------------------------------------------------------------
                                                             June 30, 1999                            June 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                                              $  93,878      $2,043  8.70%            $  86,271      $1,957  9.07%
   Securities                                            83,819       1,218  5.81                65,870       1,009  6.13
   Other interest-earning assets                         10,938         128  4.68                 8,241         109  5.29
-------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                           188,635      $3,389  7.19%              160,382      $3,075  7.67%
-------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                                9,452                                   8,591
-------------------------------------------------------------------------------------------------------------------------------
Total assets                                           $198,087                                $168,973
-------------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   NOW deposits                                       $   7,848     $    62  3.17%            $   5,211    $     48  3.69%
   Savings deposits                                      25,986         265  4.09                15,824         192  4.87
   Money-market deposits                                 38,272         411  4.31                21,567         262  4.87
   Time deposits                                         89,997       1,235  5.50               101,509       1,456  5.75
                                                  -------------- ----------- --------- --- ------------- ----------- ----------
   Total deposit accounts                               162,103       1,973  4.88               144,111       1,958  5.44
                                                  -------------- ----------- --------- --- ------------- ----------- ----------
   Federal funds purchased                                  440           6  5.05                     -           -        -
   Convertible debentures and accrued interest            7,473         158  8.49                   801          17  8.49
-------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                      170,016      $2,137  5.03%              144,912      $1,975  5.45%
-------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                              4,276                                   2,960
Noninterest-bearing liabilities                           3,761                                   2,838
Stockholders' equity                                     20,034                                  18,263
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity             $198,087                                $168,973
-------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                              $1,252  2.16%                           $1,100  2.22%
-------------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                    $  18,619              2.66%             $ 15,470              2.74%
-------------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                  1.11x                                   1.11x
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Net interest and dividend  income  increased to $1,252,000 in the second quarter
of 1999, from  $1,100,000 in the 1998 second quarter.  The increase was entirely
due to growth in the Company's  balance sheet. The Company's net interest margin
declined  slightly  to 2.66%,  from the  2.74% in the  second  quarter  of 1998,
primarily reflecting a lower interest rate spread.

The decline in the  interest  rate spread was due to the yield on the  Company's
earning assets  declining at a slightly  faster pace than the cost of its funds.
The yield on earning assets declined by 48 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 and  maturities of  higher-yielding
securities  with the resulting  proceeds being invested in securities with lower
rates; originations of new loans at lower rates; and downward rate resets on the
loan portfolio due to the lower interest rate environment.

                                       14


<PAGE>

The Company's  cost of funds declined by 42 basis points due to lower rates paid
on deposit  accounts  as well as an  increase  in  lower-cost  deposits  held in
checking,  savings and  money-market  accounts,  and a decline in time deposits.
These factors were partially  offset by the higher-cost  funds obtained  through
the sale of convertible debentures in June 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  $223,000 in the second  quarter of 1999,  compared to $130,000 in the second
quarter of 1998.

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

Total noninterest income increased to $100,000 in the 1999 second quarter,  from
$85,000 in the second quarter of 1998, reflecting an increase in fee income from
mortgage activities.

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

Total  noninterest  expenses  increased 56% to $823,000 in the second quarter of
1999, from $527,000 in the second quarter of 1998. The increase over last year's
period was almost  entirely  due to the opening of  Intervest  National  Bank on
April 1,  1999,  which  resulted  in the  addition  of staff and  operating  and
start-up expenses.

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

The  provision  for income taxes  amounted to $120,000 in the second  quarter of
1999,  compared to $203,000 in the same period of 1998. The Company's  effective
tax rate  (inclusive  of state and local  taxes)  amounted  to 39.2% in the 1999
period, compared to 38.5% in the 1998 period.

                     Comparison of Results of Operations for
                  the Six-Months Ended June 30, 1999 and 1998
                  -------------------------------------------

Overview
--------

The Company's earnings for the first six months of 1999 were $452,000,  or $0.16
per diluted share, compared to $633,000, or $0.19 per diluted share for the same
period of 1998. The decline in earnings was primarily due to a $434,000 increase
in noninterest  expenses, a net charge of $128,000 (or $0.05 per share) from the
adoption of a new accounting  standard and a $105,000  increase in the provision
for loan loss reserves. These items were partially offset by a $403,000 increase
in net  interest  and  dividend  income and a $73,000  increase  in  noninterest
income.

Results for the 1999 first half were reduced by a one-time charge 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."  The SOP
requires that all start-up costs (except for those that are capitalizable  under
other  generally  accepted  accounting   principles)  be  expensed  as  incurred
effective  January  1,  1999.  Previously,  a portion  of  start-up  costs  were
generally  capitalized  and  amortized  over a  period  of  time  for  financial
statement  purposes.  The adoption of this statement resulted in a net charge of
$128,000 on January 1, 1999.

                                       15


<PAGE>

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 the same  information  that is described above the table
on page 14 for the six-month periods ended June 30, 1999 and 1998.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                             For the Six-Months Ended
                                                    ---------------------------------------------------------------------------
                                                              June 30, 1999                           June 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                                              $  95,684      $4,184  8.75%            $  82,667      $3,750  9.07%
   Securities                                            85,214       2,481  5.82                66,622       2,038  6.12
   Other interest-earning assets                          8,990         200  4.45                 7,238         179  4.95
-------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                           189,888      $6,865  7.23%              156,527      $5,967  7.62%
-------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                                8,397                                   7,661
-------------------------------------------------------------------------------------------------------------------------------
Total assets                                           $198,285                                $164,188
-------------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   NOW deposits                                       $   7,590    $    118  3.14%           $    5,032    $     91  3.65%
   Savings deposits                                      26,462         544  4.15                15,128         366  4.88
   Money-market deposits                                 37,192         798  4.33                19,782         478  4.87
   Time deposits                                         92,160       2,529  5.53               100,216       2,861  5.76
                                                    ------------ ----------- --------- --- ------------- ----------- ----------
   Total deposit accounts                               163,404       3,989  4.92               140,158       3,796  5.46
   Federal funds purchased                                  219           6  5.07                   --           --    --
   Convertible debentures and accrued interest            7,412         313  8.45                   426          17  8.44
-------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                      171,035      $4,308  5.04%              140,584      $3,813  5.42%
-------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                              4,215                                   2,989
Noninterest-bearing liabilities                           3,139                                   2,585
Stockholders' equity                                     19,896                                  18,030
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity             $198,285                                $164,188
-------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                              $2,557  2.19%                           $2,154  2.20%
-------------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                    $  18,853              2.69%            $  15,943              2.75%
-------------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                  1.11x                                   1.11x
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Net interest and dividend  income  increased to  $2,557,000 in the first half of
1999,  from  $2,154,000 in the 1998 first half. The increase was entirely due to
growth in the  Company's  balance  sheet.  The  Company's  net  interest  margin
declined  slightly  to  2.69%,  from the 2.75% in the  first  half of 1998.  The
decline was essentially  due to the same factors  discussed in the comparison of
the quarter ended June 30, 1999 versus June 30, 1998.

                                       16

<PAGE>

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 $335,000  in the first six months of 1999,  compared to $230,000 in the first
six months of 1998.

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

Total  noninterest  income  increased  to $223,000 in the 1999 first half,  from
$150,000 in the first half of 1998. The 1999 amount included a $56,000 gain from
the sale of mortgage loans,  which represented the balance of unearned income on
these  loans (see page 10 under the  caption  "Loans  Receivable"  for a further
discussion).

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

Total  noninterest  expenses  increased  42% to  $1,470,000 in the first half of
1999,  from  $1,036,000 in the first half of 1998. The increase over last year's
period was almost  entirely  due to the opening of  Intervest  National  Bank on
April 1,  1999,  which  resulted  in the  addition  of staff and  operating  and
start-up expenses.

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

The provision  for income taxes  amounted to $395,000 in the first half of 1999,
compared to $405,000 in the same period of 1998.  The  Company's  effective  tax
rate  (inclusive of state and local taxes) amounted to 40.5% in the 1999 period,
compared to 39.0% in the 1998 period.

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

The cumulative effect of 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.

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk

For a discussion of the Company's asset and liability management  strategy,  the
fair value of its financial  instruments as well as the effects of interest rate
risk,  see pages 26 through 29 and 51 and 52 of the  Company's  Annual Report on
Form  10-KSB  for the year  ended  December  31,  1998.  At June 30,  1999,  the
Company's one-year negative  interest-rate  sensitivity gap was $83,080,000,  or
41.1% of total assets, compared to $73,637,000,  or 36.7%, at December 31, 1998.
There  has been no  significant  change  in the  market  value of the  Company's
financial instruments at June 30, 1999, from December 31, 1998.

                                       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)      The Annual Meeting of Stockholders was held on May 4, 1999.
(b)      Pursuant  to  the  Company's  charter  and  bylaws,  one-third  of  the
         directors  are  elected  by the  holders  of Class A common  stock  and
         two-thirds are elected by holders of Class B common stock. On all other
         matters,  Class A and Class B common  stockholders  vote  together as a
         single class.  Each of the persons named in the Proxy  Statement  dated
         April 1, 1999 as a nominee for  Director was elected for one year terms
         expiring on the date of the next annual meeting (see Item 4-C).
(c)      The table that follows summarizes the voting results on the matter that
         was submitted to the Company's common stockholders:
<TABLE>
<CAPTION>

               ----------------------------------------- ------------------ ----------------------- ---------------------
                                                                For          Against or Withheld         Abstained
               ----------------------------------------- ------------------ ----------------------- ---------------------
<S>                                                          <C>                    <C>                      <C>
               Election of Directors - Class A
               Michael A. Callen                             1,957,074              8,000                    -
               Milton F. Gidge                               1,957,074              8,000                    -
               William F. Holly                              1,957,074              8,000                    -

               Election of Directors  - Class B
               Lawrence G. Bergman                            305,000                 -                      -
               Jerome Dansker                                 305,000                 -                      -
               Lowell S. Dansker                              305,000                 -                      -
               Edward J. Merz                                 305,000                 -                      -
               Thomas E. Willett                              305,000                 -                      -
               David J. Willmott                              305,000                 -                      -
               Wesley T. Wood                                 305,000                 -                      -
               ----------------------------------------- ------------------ ----------------------- ---------------------
</TABLE>

(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 June 30,
         1999.

                                       18
<PAGE>

                                   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:  August 10, 1999             By:    /s/ Lowell S. Dansker
                                            ----------------------------
                                                   Lowell S. Dansker,
                                                   President and Treasurer
                                                   (Chief Financial Officer)

         Date:  August 10, 1999             By:    /s/ Lawrence G. Bergman
                                            ------------------------------
                                                   Lawrence G. Bergman,
                                                   Vice President and Secretary