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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005
                                               ------------------

                                       or

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

                 For The Transition Period From        to
                                                ------    ------

                        Commission file number 000-23377
                                               ---------

                        INTERVEST BANCSHARES CORPORATION
                        --------------------------------
             (Exact name of registrant as specified in its charter)

                 DELAWARE                               13-3699013
     ---------------------------------     ------------------------------------
       (State or other jurisdiction        (I.R.S. Employer Identification No.)
     of incorporation or organization)

                        ONE ROCKEFELLER PLAZA, SUITE 400
                          NEW YORK, NEW YORK 10020-2002
        ---------------------------------------------------------------
              (Address of principal executive offices) (Zip Code)

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

                                 NOT APPLICABLE
     ----------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

Indicate  by  check  mark  whether  the  registrant  is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Exchange  Act):
YES       NO  XX.
     --       --

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act):
YES       NO  XX.
     --       --

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

<TABLE>
<CAPTION>
     Title of Each Class:                             Shares Outstanding:
     -----------------------------------------------  --------------------------------------------
<S>                                                   <C>

     Class A Common Stock, $1.00 par value per share  7,362,577 outstanding as of October 31, 2005
     -----------------------------------------------  --------------------------------------------

     Class B Common Stock, $1.00 par value per share  385,000 outstanding as of October 31, 2005
     -----------------------------------------------  --------------------------------------------
</TABLE>

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


<PAGE>
<TABLE>
<CAPTION>
===============================================================================================
                            INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

                                              FORM 10-Q
                                         SEPTEMBER 30, 2005
                                          TABLE OF CONTENTS

     PART I. FINANCIAL INFORMATION                                                         Page
                                                                                           ----
<S>                                                                                        <C>
       ITEM 1.     FINANCIAL STATEMENTS

         Condensed Consolidated Balance Sheets
           as of September 30, 2005 (Unaudited) and December 31, 2004 . . . . . . . . . .     3

         Condensed Consolidated Statements of Earnings (Unaudited)
           for the Quarters and Nine-Months Ended September 30, 2005 and 2004 . . . . . .     4

         Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
           for the Nine-Months Ended September 30, 2005 and 2004. . . . . . . . . . . . .     5

         Condensed Consolidated Statements of Cash Flows (Unaudited)
           for the Nine-Months Ended September 30, 2005 and 2004. . . . . . . . . . . . .     6

         Notes to Condensed Consolidated Financial Statements (Unaudited) . . . . . . . .     7

         Review by Independent Registered Public Accounting Firm. . . . . . . . . . . . .    17

         Report of Independent Registered Public Accounting Firm. . . . . . . . . . . . .    18

       ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                     RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . .    20

       ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . .    37

       ITEM 4.     CONTROLS AND PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . .    37

     PART II. OTHER INFORMATION

       ITEM 1.     LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . .    37

       ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. . . . . .    37

       ITEM 3.     DEFAULTS UPON SENIOR SECURITIES. . . . . . . . . . . . . . . . . . . .    37

       ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . . . .    37

       ITEM 5.     OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . .    38

       ITEM 6.     EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    38

     SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    39
</TABLE>

PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
Intervest Bancshares Corporation and subsidiaries (the "Company") is making this
statement  in  order  to  satisfy  the  "Safe Harbor" provision contained in the
Private  Securities  Litigation  Reform Act of 1995. The statements contained in
this  report on Form 10-Q that are not statements of historical fact may include
forward-looking  statements  that  involve  a number of risks and uncertainties.
Such  forward-looking statements are made based on management's expectations and
beliefs  concerning  future  events  impacting  the  Company  and are subject to
uncertainties  and  factors  relating  to  the Company's operations and economic
environment,  all of which are difficult to predict and many of which are beyond
the  control  of  the Company, that could cause actual results of the Company to
differ  materially from those matters expressed in or implied by forward-looking
statements. The factors below are among those that could cause actual results to
differ materially from the forward-looking statements.

RISK FACTORS
The  Company's  business  is  affected by a number of factors, including but not
limited to the impact of: interest rates; loan demand; loan concentrations; loan
prepayments;  dependence  on  brokers  and other sources for new loan referrals,
ability  to  raise  funds for investment; competition; general or local economic
conditions;  credit  risk  and  the  related  adequacy of the allowance for loan
losses;  terrorist  acts;  natural  disasters;  armed  conflicts;  environmental
liabilities, regulatory supervision and regulation and costs thereof;


                                        2
<PAGE>
dependence  on  a  limited number of key personnel; and voting control held by a
limited  number  of  stockholders who are also executive officers and directors.

PART 1.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                       INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                                             CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                                                 SEPTEMBER 30,    DECEMBER 31,
($ in thousands, except par value)                                                                   2005             2004
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>              <C>
ASSETS                                                                                              (Unaudited)       (Audited)
Cash and due from banks                                                                         $        10,681  $       12,026
Federal funds sold                                                                                       21,057           9,948
Commercial paper and other short-term investments                                                        11,285           2,625
                                                                                                -------------------------------
  Total cash and cash equivalents                                                                        43,023          24,599
Securities held to maturity, net (estimated fair value of $235,155 and $247,211, respectively)          237,724         248,888
Federal Reserve Bank and Federal Home Loan Bank stock, at cost                                            6,118           5,092
Loans receivable (net of allowance for loan losses of $14,394 and $11,106, respectively)              1,304,761       1,004,290
Accrued interest receivable                                                                               6,786           6,699
Loan fees receivable                                                                                     10,535           8,208
Premises and equipment, net                                                                               6,534           6,636
Deferred income tax asset                                                                                 6,596           5,095
Deferred debenture offering costs, net                                                                    5,852           4,929
Other assets                                                                                              2,916           2,315
===============================================================================================================================
TOTAL ASSETS                                                                                    $     1,630,845  $    1,316,751
===============================================================================================================================
LIABILITIES
Deposits:
  Noninterest-bearing demand deposit accounts                                                   $         5,596  $        6,142
  Interest-bearing deposit accounts:
    Checking (NOW) accounts                                                                               8,183          15,051
    Savings accounts                                                                                     23,497          27,359
    Money market accounts                                                                               214,536         200,549
    Certificate of deposit accounts                                                                   1,050,497         744,771
                                                                                                -------------------------------
Total deposit accounts                                                                                1,302,309         993,872
Borrowed Funds:
    Federal Home Loan Bank advances                                                                           -          36,000
    Subordinated debentures                                                                              91,070          94,430
    Subordinated debentures - capital securities                                                         61,856          61,856
    Accrued interest payable on all borrowed funds                                                        7,332          10,154
    Mortgage note payable                                                                                   233             242
                                                                                                -------------------------------
Total borrowed funds                                                                                    160,491         202,682
Accrued interest payable on deposits                                                                      2,783           1,718
Mortgage escrow funds payable                                                                            27,010          14,533
Official checks outstanding                                                                               5,463          12,061
Other liabilities                                                                                         3,582           1,791
-------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                                                     1,501,638       1,226,657
-------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock (300,000 shares authorized, none issued)                                                      -               -
Class A common stock ($1.00 par value, 9,500,000 shares authorized,
  7,354,903 and 5,886,433 shares issued and outstanding, respectively)                                    7,355           5,886
Class B common stock ($1.00 par value, 700,000 shares authorized,
  385,000 shares issued and outstanding)                                                                    385             385
Additional paid-in-capital, common                                                                       64,268          38,961
Retained earnings                                                                                        57,199          44,862
-------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                                                              129,207          90,094
===============================================================================================================================
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                      $     1,630,845  $    1,316,751
===============================================================================================================================
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                        3
<PAGE>
<TABLE>
<CAPTION>
                               INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                                 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                                  (Unaudited)

                                                                       QUARTER ENDED      NINE-MONTHS ENDED
                                                                        SEPTEMBER 30,       SEPTEMBER 30,
                                                                   -------------------------------------------
($ in thousands, except per share data)                              2005       2004       2005        2004
--------------------------------------------------------------------------------------------------------------
<S>                                                                <C>        <C>        <C>        <C>
INTEREST AND DIVIDEND INCOME
Loans receivable                                                   $  23,569  $  16,428  $  63,180  $  44,677
Securities                                                             1,895      1,137      5,181      2,701
Other interest-earning assets                                            297         90        664        261
--------------------------------------------------------------------------------------------------------------
TOTAL INTEREST AND DIVIDEND INCOME                                    25,761     17,655     69,025     47,639
--------------------------------------------------------------------------------------------------------------

INTEREST EXPENSE
Deposits                                                              12,029      7,158     31,443     18,376
Subordinated debentures                                                1,973      2,291      6,036      6,622
Subordinated debentures - capital securities                           1,089        883      3,268      2,405
Other borrowed funds                                                      15         16        142         26
--------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE                                                15,106     10,348     40,889     27,429
--------------------------------------------------------------------------------------------------------------

NET INTEREST AND DIVIDEND INCOME                                      10,655      7,307     28,136     20,210
Provision for loan losses                                              1,803      1,067      3,288      3,428
--------------------------------------------------------------------------------------------------------------
NET INTEREST AND DIVIDEND INCOME AFTER PROVISION FOR LOAN LOSSES       8,852      6,240     24,848     16,782
--------------------------------------------------------------------------------------------------------------

NONINTEREST INCOME
Customer service fees                                                    105         44        260        178
Income from mortgage lending activities                                  304        430        754      1,034
Income from the early repayment of mortgage loans                      1,348        940      3,570      2,830
Commissions and fees                                                      56         63        115        119
Gain (loss) from early call of investment securities                       -          -          1         (3)
--------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME                                               1,813      1,477      4,700      4,158
--------------------------------------------------------------------------------------------------------------

NONINTEREST EXPENSES
Salaries and employee benefits                                         1,336      1,004      4,003      2,906
Occupancy and equipment, net                                             395        463      1,109      1,288
Data processing                                                          156        131        438        387
Professional fees and services                                           172        100        578        298
Stationery, printing and supplies                                         52         47        161        137
Postage and delivery                                                      31         32         96         86
FDIC and general insurance                                                82         64        238        191
Director and committee fees                                              141         88        394        260
Advertising and promotion                                                 52         46        149         81
All other                                                                149        166        523        470
--------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSES                                             2,566      2,141      7,689      6,104
--------------------------------------------------------------------------------------------------------------
Earnings before income taxes                                           8,099      5,576     21,859     14,836
Provision for income taxes                                             3,533      2,424      9,522      6,444
==============================================================================================================
NET EARNINGS                                                       $   4,566  $   3,152  $  12,337  $   8,392
==============================================================================================================


BASIC EARNINGS PER SHARE                                           $    0.66  $    0.52  $    1.90  $    1.39
DILUTED EARNINGS PER SHARE                                         $    0.61  $    0.47  $    1.76  $    1.25
CASH DIVIDENDS PER SHARE                                           $       -  $       -  $       -  $       -
--------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                             INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                (Unaudited)

                                                                              NINE-MONTHS ENDED
                                                                                 SEPTEMBER 30,
                                                                    ---------------------------------------
                                                                           2005                 2004
                                                                    ---------------------------------------
($ thousands)                                                        SHARES     AMOUNT    SHARES    AMOUNT
-----------------------------------------------------------------------------------------------------------
<S>                                                                 <C>        <C>       <C>        <C>

CLASS A COMMON STOCK
Balance at beginning of period                                      5,886,433  $  5,886  5,603,377  $ 5,603
Issuance of shares upon the exercise of warrants                            -         -     42,510       43
Issuance of shares upon the conversion of debentures                   32,002        32     17,188       17
Issuance of shares in public offering                               1,436,468     1,437          -        -
-----------------------------------------------------------------------------------------------------------
Balance at end of period                                            7,354,903     7,355  5,663,075    5,663
-----------------------------------------------------------------------------------------------------------

CLASS B COMMON STOCK
-----------------------------------------------------------------------------------------------------------
Balance at beginning and end of period                                385,000       385    385,000      385
-----------------------------------------------------------------------------------------------------------

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of period                                                   38,961              35,988
Compensation related to vesting of certain Class B stock warrants                     -                   9
Issuance of shares upon the exercise of warrants                                      -                 383
Issuance of shares upon the conversion of debentures                                409                 181
Issuance of shares in public offering                                            24,898                   -
-----------------------------------------------------------------------------------------------------------
Balance at end of period                                                         64,268              36,561
-----------------------------------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of period                                                   44,862              33,409
Net earnings for the period                                                      12,337               8,392
-----------------------------------------------------------------------------------------------------------
Balance at end of period                                                         57,199              41,801
-----------------------------------------------------------------------------------------------------------

===========================================================================================================
TOTAL STOCKHOLDERS' EQUITY AT END OF PERIOD                         7,739,903  $129,207  6,048,075  $84,410
===========================================================================================================
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                        5
<PAGE>
<TABLE>
<CAPTION>
                            INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (Unaudited)

                                                                                    NINE-MONTHS ENDED
                                                                                       SEPTEMBER 30,
                                                                                ------------------------
($ in thousands)                                                                   2005         2004
--------------------------------------------------------------------------------------------------------
<S>                                                                             <C>          <C>
OPERATING ACTIVITIES
Net earnings                                                                    $   12,337   $    8,392
Adjustments to reconcile net earnings to net cash provided
    by operating activities:
Depreciation and amortization                                                          415          459
Provision for loan losses                                                            3,288        3,428
Deferred income tax benefit                                                         (1,501)      (1,604)
Amortization of deferred debenture offering costs                                      890          941
Compensation expense related to common stock warrants                                    -            9
Amortization of premiums (accretion) of discounts and deferred loan fees, net       (5,305)      (1,566)
Net decrease in accrued interest payable on debentures                              (2,613)      (1,231)
Net decrease in official checks outstanding                                         (6,598)      (1,876)
Net increase in loan fees receivable                                                (2,327)      (1,934)
Net change in all other assets and liabilities                                      10,256        4,713
--------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                            8,842        9,731
--------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Maturities and calls of securities held to maturity                                 62,820       66,650
Purchases of securities held to maturity                                           (52,360)    (170,849)
Net increase in loans receivable                                                  (305,859)    (271,042)
Purchases of Federal Reserve Bank and Federal Home Loan Bank stock                  (1,026)      (1,567)
Purchases of premises and equipment, net                                              (313)      (1,671)
Investment in unconsolidated subsidiaries                                                -         (928)
--------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                                             (296,738)    (379,407)
--------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in deposits                                                           308,437      300,879
Net increase in mortgage escrow funds payable                                       12,477        9,630
Net decrease in FHLB advances                                                      (36,000)           -
Principal repayments of debentures and mortgage note payable                       (29,109)     (11,009)
Gross proceeds from issuance of debentures                                          26,000       52,428
Debenture issuance costs                                                            (1,820)      (2,203)
Proceeds from issuance of common stock                                              28,370        2,961
Common stock issuance costs                                                         (2,035)           -
--------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                          306,320      352,686
--------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                                18,424      (16,990)
Cash and cash equivalents at beginning of period                                    24,599       64,128
========================================================================================================
Cash and cash equivalents at end of period                                      $   43,023   $   47,138
========================================================================================================

SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
  Interest                                                                      $   41,547   $   27,927
  Income taxes                                                                       9,860        8,628
Noncash activities:
  Conversion of debentures and accrued interest into Class A common stock              441          203
--------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                        6
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

NOTE 1 - PRINCIPLES OF CONSOLIDATION, BASIS OF PRESENTATION AND USE OF ESTIMATES

The  condensed  consolidated  financial  statements  of  Intervest  Bancshares
Corporation  and  Subsidiaries  in  this report have not been audited except for
information  derived from the 2004 audited consolidated financial statements and
notes  thereto.  The  condensed consolidated financial statements in this report
should  be  read  in  conjunction  with  the 2004 audited consolidated financial
statements  and  notes  thereto  included in the Company's Annual Report on Form
10-K  for  the  year  ended  December  31,  2004.

The  financial  statements  include  the  accounts  of  Intervest  Bancshares
Corporation  (a  financial holding company referred to by itself as the "Holding
Company")  and  its  three subsidiaries, Intervest National Bank (referred to as
the  "Bank"),  Intervest  Mortgage  Corporation  and  Intervest  Securities
Corporation. All the entities are referred to collectively as the "Company" on a
consolidated  basis. All significant intercompany balances and transactions have
been  eliminated  in  consolidation. Intervest Statutory Trust I, II, III and IV
are  wholly  owned  subsidiaries  of the Holding Company that are unconsolidated
entities  as  required  by  Financial  Accounting  Standards  Board  (FASB)
Interpretation  No.  46-R,  "Consolidation  of  Variable  Interest  Entities."

Certain  reclassifications  have been made to prior period amounts to conform to
the  current periods' presentation. The accounting and reporting policies of the
Company conform to accounting principles generally accepted in the United States
of  America  and  to  general  practices  within  the  banking  industry.

Management  is  required  to  make  estimates  and  assumptions  that affect the
reported amounts of assets, liabilities and disclosure of contingent liabilities
as  of  the  date  of  the  consolidated  financial statements, and revenues and
expenses  during  the  reporting periods. Actual results could differ from those
estimates.  Estimates  that  are  particularly susceptible to significant change
relate  to the determination of the allowance for loan losses. 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.

NOTE 2 - DESCRIPTION OF BUSINESS

The  offices  of  the Holding Company, Intervest Mortgage Corporation, Intervest
Securities  Corporation  and  the  Bank's  headquarters and full-service banking
office  are  located  on the entire fourth floor of One Rockefeller Plaza in New
York  City, New York, 10020-2002, and the main telephone number is 212-218-2800.

The  Holding Company's primary business is the operation of its subsidiaries. It
does  not  engage  in  any  other  substantial  business activities other than a
limited  amount  of real estate mortgage lending, including the participation in
loans originated by the Bank. From time to time, the Holding Company also issues
debt and equity securities to raise funds for working capital purposes.

The  Company's  primary business segment is banking and real estate lending. The
Company's  lending  activities  is  comprised  almost entirely of mortgage loans
secured  by  commercial and multifamily real estate properties (including rental
and  cooperative/condominium  apartment  buildings,  office  buildings, mix-used
properties,  shopping  centers,  hotels,  restaurants,  industrial  properties,
parking  lots/garages  and  vacant  land).  These  loans have an average life of
approximately  three  years.  The Company tends to lend in areas that are in the
process  of  being  revitalized,  with  a  concentration  of loans on properties
located in New York State and the State of Florida. A significant portion of the
residential  properties  are  located  in  New York City and are subject to rent
control  and  rent  stabilization  laws, which limit the ability of the property
owners  to  increase  rents.

The  Bank  is  a nationally chartered, full-service commercial bank that has its
headquarters  and  full-service  banking office in Rockefeller Plaza in New York
City,  and  a  total  of  five  full-service banking offices in Pinellas County,
Florida  -  four  in  Clearwater  and one in South Pasadena. The Bank conducts a
personalized commercial and consumer banking business and attracts deposits from
the areas served by its banking offices. The Bank also provides internet banking
services  through  its  web  site:  www.intervestnatbank.com,  which can attract
deposit  customers from outside its primary market areas. The deposits, together
with  funds  derived  from  other sources, are mainly used to originate mortgage
loans  secured  by  commercial  and  multifamily  real  estate properties and to
purchase  investment  securities. The information on the aforementioned web site
is  not and should not be considered part of this report and is not incorporated
by  reference.


                                        7
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

NOTE 2 - DESCRIPTION OF BUSINESS - CONTINUED

Intervest  Mortgage  Corporation's  business focuses on the origination of first
mortgage  and  junior  mortgage loans secured by commercial and multifamily real
estate  properties.  It  also  provides  loan  origination services to the Bank.
Intervest  Mortgage  Corporation funds its lending business through the issuance
of  subordinated  debentures  in  public  offerings. It currently has one active
wholly  owned  subsidiary,  Intervest  Realty  Servicing  Corporation,  which is
engaged  in  certain  mortgage  servicing  activities.

Intervest Securities Corporation is a broker/dealer and a member of the National
Association  of Securities Dealers (NASD) whose business activities to date have
not  been  material. Its only revenues have been derived from participating as a
selected  dealer  from  time  to  time  in  offerings  of debt securities of the
Company,  primarily  those  of  Intervest  Mortgage  Corporation.

Intervest  Statutory  Trust I, II, III and IV issued in December 2001, September
2003,  March  2004  and  September  2004,  $15.0 million, respectively, of trust
preferred securities for a total of $60.0 million. Each trust was formed for the
sole  purpose  of  issuing and administering the trust preferred securities. The
trusts  do not conduct any trade or business. For a further discussion, see note
8.

NOTE 3 - SECURITIES

The  carrying value (amortized cost) and estimated fair value of securities held
to  maturity  are  as  follows:

<TABLE>
<CAPTION>
                                          Gross        Gross   Estimated                    Wtd-Avg
                                          -----        -----   ---------                    -------
                         Amortized   Unrealized   Unrealized        Fair         Wtd-Avg  Remaining
                         ---------   ----------   ----------        ----         -------  ---------
($ in thousands)              Cost        Gains       Losses       Value           Yield   Maturity
---------------------------------------------------------------------------------------------------
<S>                     <C>         <C>          <C>          <C>         <C>             <C>
At September 30, 2005   $  237,724  $         -  $     2,569  $  235,155           2.91%  1.1 Years
At December 31, 2004    $  248,888  $        12  $     1,689  $  247,211           2.33%  1.4 Years
---------------------------------------------------------------------------------------------------
</TABLE>

All  the  securities  at  September  30,  2005  and  December 31, 2004 were debt
obligations  of  U.S. government corporations or sponsored agencies (FHLB, FNMA,
FHLMC,  SLMA or FFCB) and were held by the Bank. The securities have fixed rates
or have predetermined scheduled rate increases, and some have call features that
allow  the issuer to call the security at par before its stated maturity without
penalty.

At  September  30,  2005, the portfolio consisted of 155 securities all of which
had  an  unrealized  loss. Substantially all of the unrealized losses were for a
continuous  period of more than 12 months. Management believes that the cause of
these unrealized losses is directly related to changes in market interest rates.
In general, as interest rates rise, the fair value of fixed rate securities will
decrease; as interest rates fall, their fair value will increase.

Management  views the unrealized losses noted above to be temporary based on the
impact of interest rates, the very short maturities of the investments and their
high  credit  quality.  In addition, the Bank has the ability and intent to hold
its  investments  for  a  period  of  time  sufficient for the fair value of the
securities  to recover. Management evaluates securities for other-than-temporary
impairment  at  least on a quarterly basis, and more frequently when economic or
market  concerns  warrant  such  evaluation.

The  amortized  cost  and estimated fair value of securities held to maturity by
remaining  term  to  contractual  maturity  is  as  follows:

<TABLE>
<CAPTION>
     ($ in thousands)                         Amortized Cost   Estimated Fair Value   Average Yield
     ----------------------------------------------------------------------------------------------
<S>                                          <C>              <C>                    <C>
     At September 30, 2005:
     Due in one year or less                 $       124,213  $             123,291           2.57%
     Due after one year through five years           113,511                111,864           3.27%
     ----------------------------------------------------------------------------------------------
                                             $       237,724  $             235,155           2.91%
     ----------------------------------------------------------------------------------------------
     ($ in thousands)                         Amortized Cost   Estimated Fair Value   Average Yield
     ----------------------------------------------------------------------------------------------
     At December 31, 2004:
     Due in one year or less                 $        84,586  $              84,235           1.81%
     Due after one year through five years           164,302                162,976           2.59%
     ----------------------------------------------------------------------------------------------
                                             $       248,888  $             247,211           2.33%
     ----------------------------------------------------------------------------------------------
</TABLE>

There  were  no  securities  classified  as  available  for sale or any sales of
securities  during  the  reporting  periods.


                                        8
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

NOTE 4 - LOANS RECEIVABLE

Loans receivable are summarized as follows:

<TABLE>
<CAPTION>
                                               At September 30, 2005    At December 31, 2004
                                               ---------------------    --------------------
     ($ in thousands)                         # of Loans    Amount     # of Loans    Amount
     -----------------------------------------------------------------------------------------
<S>                                           <C>         <C>          <C>         <C>
     Commercial real estate loans                 268     $  699,944       244     $  601,512
     Residential multifamily loans                247        532,816       249        403,613
     Land development and other land loans         28         97,764        11         19,198
     Residential 1-4 family loans                   3            484         4            984
     Commercial business loans                     21            986        23          1,215
     Consumer loans                                16            608        12            221
     -----------------------------------------------------------------------------------------
     Loans receivable                             583      1,332,602       543      1,026,743
     -----------------------------------------------------------------------------------------
     Deferred loan fees                                      (13,447)                 (11,347)
     -----------------------------------------------------------------------------------------
     Loans receivable, net of deferred fees                1,319,155                1,015,396
     -----------------------------------------------------------------------------------------
     Allowance for loan losses                               (14,394)                 (11,106)
     -----------------------------------------------------------------------------------------
     Loans receivable, net                                $1,304,761               $1,004,290
     -----------------------------------------------------------------------------------------
</TABLE>

At September 30, 2005, $0.7 million of loans were on nonaccrual status, compared
to  $4.6 million at December 31, 2004. Such loans were considered impaired under
the  criteria of Statement of Financial Accounting Standards (SFAS) No. 114, but
no  valuation  allowance  was  maintained at any time since the Company believes
that  the  estimated  fair  value  of  the  underlying  properties  exceeded the
Company's  recorded  investment.  In  April 2005, the property collateralizing a
nonaccrual loan with a principal balance of $3.9 million was sold at foreclosure
to a third party. The loan was repaid in full and the Bank recovered all amounts
due thereunder. At September 30, 2005 and December 31, 2004, there were no other
impaired  loans.  At September 30, 2005, there were $2.7 million of loans ninety
days  past  due and still accruing interest since they were deemed by management
to be well secured and in the process of collection. There were no such loans at
December  31,  2004.

Interest  income  that  was  not  recorded  on  nonaccrual  loans  under  their
contractual  terms  amounted to $19,000 for the quarter ended September 30, 2005
and  $55,000  for the nine-months ended September 30, 2005, compared to $140,000
for the quarter and nine-months ended September 30, 2004. The average balance of
nonaccrual  loans  for  the quarter and nine-months ended September 30, 2005 and
2004  was  $0.8  million and $2.1 million for the 2005 periods, and $2.2 million
and  $2.6  million  for  the  2004  periods,  respectively.

NOTE 5 - ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses is summarized as follows:

<TABLE>
<CAPTION>
                                      Quarter Ended September 30,    Nine-Months Ended September 30,
                                  --------------------------------  --------------------------------
($ in thousands)                       2005             2004             2005             2004
----------------------------------------------------------------------------------------------------
<S>                               <C>              <C>              <C>              <C>
Balance at beginning of period    $        12,591  $         8,941  $        11,106  $         6,580
Provision charged to operations             1,803            1,067            3,288            3,428
----------------------------------------------------------------------------------------------------
Balance at end of period          $        14,394  $        10,008  $        14,394  $        10,008
----------------------------------------------------------------------------------------------------
</TABLE>

NOTE  6  -  DEPOSITS

Scheduled maturities of certificates of deposit accounts are as follows:

<TABLE>
<CAPTION>
                                       At September 30, 2005    At December 31, 2004
                                     ------------------------  ----------------------
                                                   Wtd-Avg                 Wtd-Avg
          ($ in thousands)             Amount    Stated Rate    Amount   Stated Rate
          ---------------------------------------------------------------------------
<S>                                  <C>         <C>           <C>       <C>
          Within one year            $  338,774         3.44%  $269,553         2.84%
          Over one to two years         225,223         4.22    119,780         3.43
          Over two to three years       117,125         4.13    134,409         4.48
          Over three to four years      178,138         4.35     75,317         4.06
          Over four years               191,237         4.65    145,712         4.48
          ---------------------------------------------------------------------------
                                     $1,050,497         4.06%  $744,771         3.68%
          ---------------------------------------------------------------------------
</TABLE>

Certificate  of  deposit accounts of $100,000 or more totaled $344.2 million and
$215.9  million  at  September  30, 2005 and December 31, 2004, respectively. At
September  30,  2005,  certificate  of  deposit  accounts of $100,000 or more by
remaining maturity were as follows: due within one year $107.2 million; over one
to two years $79.9 million; over two to three years $35.6 million; over three to
four years $57.6 million; and over four years $63.9 million.


                                        9
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

NOTE 7 - SUBORDINATED DEBENTURES AND MORTGAGE NOTE PAYABLE

Subordinated  debentures  by  series and mortgage note payable are summarized as
follows:

<TABLE>
<CAPTION>
                                                                          At September  30,   At December 31,
($ in thousands)                                                                 2005               2004
--------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                 <C>
INTERVEST MORTGAGE CORPORATION:
Series 05/10/96 - interest at 2% above prime (1) - due April 1, 2005      $                -  $         10,000
Series 10/15/96 - interest at 2% above prime (1) - due October 1, 2005                     -             5,500
Series 04/30/97 - interest at 1% above prime (1) - due October 1, 2005                     -             8,000
Series 11/10/98 - interest at 9% fixed           - due January 1, 2005                     -             2,600
Series 06/28/99 - interest at 9% fixed           - due July 1, 2006                    2,000             2,000
Series 09/18/00 - interest at 8 1/2% fixed       - due January 1, 2006                 1,250             1,250
Series 09/18/00 - interest at 9% fixed           - due January 1, 2008                 1,250             1,250
Series 08/01/01 - interest at 7 1/2% fixed       - due April 1, 2005                       -             1,750
Series 08/01/01 - interest at 8% fixed           - due April 1, 2007                   2,750             2,750
Series 08/01/01 - interest at 8 1/2% fixed       - due April 1, 2009                   2,750             2,750
Series 01/17/02 - interest at 7 1/4% fixed       - due October 1, 2005                     -             1,250
Series 01/17/02 - interest at 7 1/2% fixed       - due October 1, 2007                 2,250             2,250
Series 01/17/02 - interest at 7 3/4% fixed       - due October 1, 2009                 2,250             2,250
Series 08/05/02 - interest at 7 1/4% fixed       - due January 1, 2006                 1,750             1,750
Series 08/05/02 - interest at 7 1/2% fixed       - due January 1, 2008                 3,000             3,000
Series 08/05/02 - interest at 7 3/4% fixed       - due January 1, 2010                 3,000             3,000
Series 01/21/03 - interest at 6 3/4% fixed       - due July 1, 2006                    1,500             1,500
Series 01/21/03 - interest at 7% fixed           - due July 1, 2008                    3,000             3,000
Series 01/21/03 - interest at 7 1/4% fixed       - due July 1, 2010                    3,000             3,000
Series 07/25/03 - interest at 6 1/2% fixed       - due October 1, 2006                 2,500             2,500
Series 07/25/03 - interest at 6 3/4% fixed       - due October 1, 2008                 3,000             3,000
Series 07/25/03 - interest at 7 % fixed          - due October 1, 2010                 3,000             3,000
Series 11/28/03 - interest at 6 1/4% fixed       - due April 1, 2007                   2,000             2,000
Series 11/28/03 - interest at 6 1/2% fixed       - due April 1, 2009                   3,500             3,500
Series 11/28/03 - interest at 6 3/4% fixed       - due April 1, 2011                   4,500             4,500
Series 06/07/04 - interest at 6 1/4% fixed       - due January 1, 2008                 2,500             2,500
Series 06/07/04 - interest at 6 1/2% fixed       - due January 1, 2010                 4,000             4,000
Series 06/07/04 - interest at 6 3/4% fixed       - due January 1, 2012                 5,000             5,000
Series 03/21/05 - interest at 6 1/4% fixed       - due April 1, 2009                   3,000                 -
Series 03/21/05 - interest at 6 1/2% fixed       - due April 1, 2011                   4,500                 -
Series 03/21/05 - interest at 7% fixed           - due April 1, 2013                   6.500                 -
Series 08/12/05 - interest at 6 1/4% fixed       - due October 1, 2009                 2,000                 -
Series 08/12/05 - interest at 6 1/2% fixed       - due October 1, 2011                 4,000                 -
Series 08/12/05 - interest at 7% fixed           - due October 1, 2013                 6,000                 -
                                                                          ------------------------------------
                                                                                      85,750            88,850

INTERVEST BANCSHARES CORPORATION:
Series 05/14/98 - interest at 8% fixed           - due July 1, 2008                    2,820             3,080
Series 12/15/00 - interest at 8 1/2% fixed       - due April 1, 2006                   1,250             1,250
Series 12/15/00 - interest at 9% fixed           - due April 1, 2008                   1,250             1,250
                                                                          ------------------------------------
                                                                                       5,320             5,580

INTERVEST NATIONAL BANK:
Mortgage note payable (2) - interest at 7% fixed  - due February 1, 2017                 233               242
--------------------------------------------------------------------------------------------------------------
                                                                          $           91,303  $         94,672
--------------------------------------------------------------------------------------------------------------
</TABLE>
     (1)  Prime  represents prime rate of JPMorganChase Bank, which was 6.75% at
          September  30,  2005  and  5.25%  at  December  31,  2004.
     (2)  The note cannot be prepaid except during the last year of its term.

During 2005, Intervest Mortgage Corporation repaid the following debentures:

-    Series  11/10/98 on January 1 were repaid for $2.6 million of principal and
     $1.9  million  of  accrued  interest;
-    Series  5/10/96  and  8/01/01  on April 1 were repaid for $11.75 million of
     principal  and  $2.3  million  of  accrued  interest;
-    Series  10/15/96 and Series 1/17/02 on August 1 were repaid early for $6.75
     million  of  principal  and  $0.1  million  of  accrued  interest;  and
-    Series  4/30/97  on  September  1  were  repaid  early  for $8.0 million of
     principal  and  $0.1  million  of  accrued  interest.

During 2005, Intervest Mortgage Corporation issued the following debentures:

-    Series  3/21/05  in  April for $14.0 million of principal for net proceeds,
     after  offering  costs,  of  $13.0  million;  and
-    Series  8/12/05  in  September  for  $12.0  million  of  principal  for net
     proceeds,  after  offering  costs,  of  $11.1  million.


                                       10
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

NOTE 7 - SUBORDINATED DEBENTURES AND MORTGAGE NOTE PAYABLE, CONTINUED

Interest is paid quarterly on Intervest Mortgage Corporation's debentures except
for  the  following:  all  of Series 6/28/99 and 9/18/00; $0.6 million of Series
8/01/01;  $0.3  million  of Series 1/17/02; $1.5 million of Series 8/05/02; $1.8
million  of  Series  11/28/03;  $1.9  million  of Series 6/7/04; $1.9 million of
Series  3/21/05;  and  $1.8  million  of Series 8/12/05, all of which accrue and
compound  interest  quarterly,  with  such interest due and payable at maturity.

The  holders  of  Intervest  Mortgage  Corporation's Series 6/28/99, 9/18/00 and
1/17/02  through  8/12/05 debentures can require Intervest Mortgage Corporation,
on  a first come basis during a specified time, to repurchase the debentures for
face  amount plus accrued interest once each year (beginning January 1, 2006 for
Series  8/05/02,  July  1,  2006  for Series 1/21/03, October 1, 2006 for Series
7/25/03, January 1, 2007 for Series 11/28/03, January 1, 2008 for Series 6/7/04,
April  1,  2009  for  Series  3/21/05  and  October 1, 2009 for Series 8/12/05).
However, in no calendar year can the required purchases be more than $100,000 in
principal  amount  of  each  maturity,  in  each  series  of  debentures,  on  a
non-cumulative  basis.

Intervest Mortgage Corporation's debentures may be redeemed at its option at any
time,  in whole or in part, for face value, except for Series 3/21/05 and Series
8/12/05,  which  would  be  at  a  premium  of 1% if they were redeemed prior to
October  1,  2006  and  April  1,  2007,  respectively.  All  the debentures are
unsecured  and  subordinate  to  all  present and future senior indebtedness, as
defined  in  the  indenture  related  to  each  debenture.

The  Holding  Company's  Series  5/14/98 subordinated debentures are convertible
along  with  accrued  interest at the option of the holders at any time prior to
April  1,  2008  into  shares  of  its  Class  A  common  stock at the following
conversion  prices per share: $14.00 in 2005; $16.00 in 2006; $18.00 in 2007 and
$20.00  from  January 1, 2008 through April 1, 2008. The Holding Company has the
right  to  establish  conversion prices that are less than those set forth above
for  such  periods  as it may determine. For the nine-months ended September 30,
2005,  $441,000  of  debentures  ($260,000  of principal and $188,000 of accrued
interest  less  $7,000 of deferred debenture offering costs) were converted into
shares  of  Class  A  common  stock  at  $14.00  per  share.

At September 30, 2005, interest accrued and compounded quarterly on $2.2 million
of  the  Holding  Company's  convertible debentures at the rate of 8% per annum,
while  $0.6  million of the convertible debentures pay interest quarterly at the
rate of 8% per annum. All accrued interest of $1.8 million is due and payable at
maturity  whether  by  acceleration,  redemption  or  otherwise. Any convertible
debenture  holder  may,  on  or before July 1 of each year, elect to be paid all
accrued  interest  and  to  thereafter  receive  regular  quarterly  payments of
interest.  The  Holding Company may redeem any of its debentures, in whole or in
part,  at  any  time  for  face  value.

Scheduled contractual maturities as of September 30, 2005 were as follows:

<TABLE>
<CAPTION>
          ($ in thousands)                                      Principal   Accrued Interest
          -----------------------------------------------------------------------------------
<S>                                                             <C>         <C>
          For the period October 1, 2005 to December 31, 2005   $        4  $           1,137
          For the year ended December 31, 2006                      10,264              2,198
          For the year ended December 31, 2007                       7,015                175
          For the year ended December 31, 2008                      16,836              2,608
          For the year ended December 31, 2009                      13,517                256
          Thereafter                                                43,667                422
          -----------------------------------------------------------------------------------
                                                                $   91,303  $           6,796
          -----------------------------------------------------------------------------------
</TABLE>

NOTE 8 - SUBORDINATED DEBENTURES - CAPITAL SECURITIES

Capital  Securities  (commonly  referred  to  as trust preferred securities) are
summarized  as  follows:

<TABLE>
<CAPTION>
                                                             At September 30, 2005  At December  31, 2004
                                                             ---------------------  ---------------------
                                                                          Accrued                Accrued
($ in thousands)                                             Principal   Interest   Principal   Interest
---------------------------------------------------------------------------------------------------------
<S>                                                          <C>         <C>        <C>         <C>
Capital Securities   I -  debentures due December 18, 2031   $   15,464  $     441  $   15,464  $      59
Capital Securities  II - debentures due September 17, 2033       15,464         35      15,464         41
Capital Securities III - debentures due March 17, 2034           15,464         31      15,464         36
Capital Securities  IV - debentures due September 20, 2034       15,464         29      15,464         29
---------------------------------------------------------------------------------------------------------
                                                             $   61,856  $     536  $   61,856  $     165
---------------------------------------------------------------------------------------------------------
</TABLE>


                                       11
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

NOTE 8 - SUBORDINATED DEBENTURES - CAPITAL SECURITIES, CONTINUED

The  Capital  Securities  are  obligations of the Holding Company's wholly owned
statutory  business  trusts,  Intervest  Statutory Trust I, II, III and IV. Each
Trust  was  formed  with  a  capital  contribution  of $464,000 from the Holding
Company  and  for  the  sole  purpose  of  issuing and administering the Capital
Securities.  The  proceeds  from the issuance of the Capital Securities together
with  the  capital  contribution for each Trust were used to acquire the Holding
Company's  Junior  Subordinated  Debentures  that  are due concurrently with the
Capital  Securities.  The  Capital  Securities,  net  of  the  Company's capital
contributions totaling $1.9 million, qualify as regulatory capital.

The  sole  assets of the Trusts, the obligors on the Capital Securities, are the
Junior Subordinated Debentures. In addition, for each Trust, the Holding Company
has  guaranteed the payment of distributions on, payments on any redemptions of,
and  any  liquidation  distribution  with  respect  to  the  Capital Securities.
Issuance  costs  of  $0.5  million,  $0.4 million, $0.4 million and $0.2 million
associated  with  Capital  Securities I, II, III and IV, respectively, have been
capitalized  by the Holding Company and are being amortized over the life of the
securities  using  the  straight-line  method.

Interest  payments  on the Junior Subordinated Debentures (and the corresponding
distributions  on  the  Capital  Securities)  are payable in arrears as follows:
Capital  Securities  I  -  semi-annually  at the fixed rate of 9.875% per annum;
Capital  Securities  II  -  quarterly at the fixed rate of 6.75% per annum until
September  17,  2008  and  thereafter  at  the rate of 2.95% over 3 month libor;
Capital  Securities  III  - quarterly at the fixed rate of 5.88% per annum until
March  17,  2009  and  thereafter  at  the rate of 2.79% over 3 month libor; and
Capital  Securities  IV  -  quarterly at the fixed rate of 6.20% per annum until
September 20, 2009 and thereafter at the rate of 2.40% over 3 month libor.

Interest  payments  may be deferred at any time and from time to time during the
term  of  the  Junior  Subordinated  Debentures  at  the election of the Holding
Company  for  up  to  20  consecutive quarterly periods, or 5 years. There is no
limitation  on  the  number  of extension periods the Holding Company may elect;
provided, however, no deferral period may extend beyond the maturity date of the
Junior  Subordinated  Debentures.  During  an interest deferral period, interest
will  continue  to  accrue on the Junior Subordinated Debentures and interest on
such  accrued  interest will accrue at an annual rate equal to the interest rate
in  effect  for  such  deferral  period, compounded quarterly from the date such
interest  would  have  been  payable  were  it  not  deferred. At the end of the
deferral  period, the Holding Company will be obligated to pay all interest then
accrued  and  unpaid.

All  of  the  Capital Securities are subject to mandatory redemption as follows:
(i)  in  whole,  but  not  in  part,  upon  repayment of the Junior Subordinated
Debentures  at stated maturity or earlier, at the option of the Holding Company,
within  90  days following the occurrence and continuation of certain changes in
the  tax or capital treatment of the Capital Securities, or a change in law such
that the Trust would be considered an investment company, contemporaneously with
the redemption by the Holding Company of the Junior Subordinated Debentures; and
(ii)  in  whole or in part at any time on or after December 18, 2006 for Capital
Securities  I,  September 17, 2008 for Capital Securities II, March 17, 2009 for
Capital  Securities  III,  and  September  20,  2009  for  Capital Securities IV
contemporaneously  with  the  optional  redemption by the Holding Company of the
Junior  Subordinated  Debentures  in  whole  or in part. Any redemption would be
subject  to  the  receipt  of  regulatory  approvals.

NOTE 9 - SHORT-TERM BORROWINGS AND LINES OF CREDIT

From time to time, the Bank may borrow funds on an overnight or short-term basis
to  manage  its liquidity needs. At  September 30, 2005, the Bank had agreements
with  correspondent  banks  whereby  it  could  borrow  up to $16 million  on an
unsecured  basis.

In  addition,  as  a member of the Federal Home Loan Bank of New York (FHLB) and
the  Federal Reserve Bank of New York (FRB), the Bank can also borrow from these
institutions  on  a secured basis. At September 30, 2005, the Bank had available
collateral  consisting  of  investment securities to support total borrowings of
$229  million  from  the  FHLB  and  FRB.  At  September 30, 2005, there were no
outstanding borrowings from any of the aforementioned sources.


                                       12
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

NOTE 9 - SHORT-TERM BORROWINGS AND LINES OF CREDIT, CONTINUED

The  following  is  a  summary  of  certain  information  regarding  short-term
borrowings  in  the  aggregate:

<TABLE>
<CAPTION>
                                                          Quarter Ended           Nine-Months Ended
                                                          September  30,            September  30,
                                                     --------------------------------------------------
($ in thousands)                                        2005         2004         2005         2004
-------------------------------------------------------------------------------------------------------
<S>                                                  <C>          <C>          <C>          <C>
Balance at period end                                $        -   $        -   $        -   $        -
Maximum amount outstanding at any month end          $    3,000   $   16,000   $   17,000   $   16,000
Average outstanding balance for the period           $    1,108   $    3,089   $    6,234   $    1,165
Weighted-average interest rate paid for the period         3.94%        1.55%        2.79%        1.49%
Weighted-average interest rate at period end                  -%           -%           -%           -%
-------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 10 - COMMON STOCK WARRANTS

The  Holding  Company had 696,465 common stock warrants outstanding that entitle
its  holder,  the Chairman of the Board of the Company, to purchase one share of
Class  A  or  Class  B  common  stock  as  the case may be for each warrant. All
warrants  are  currently  exercisable.

Data concerning common stock warrants is as follows:

<TABLE>
<CAPTION>
                                                            Exercise Price Per Warrant
                                                            --------------------------          Wtd-Avg
Class A Common Stock Warrants:                             $                      6.67   Exercise Price
-------------------------------------------------------------------------------------------------------
<S>                                                        <C>                          <C>
Outstanding at December 31, 2004 and September 30, 2005                        501,465  $          6.67
Remaining contractual life in years at September 30, 2005                          1.3
-------------------------------------------------------------------------------------------------------
                                                              Exercise Price Per Warrant
                                                              --------------------------     Total          Wtd-Avg
Class B Common Stock Warrants:                             $          6.67  $      10.00  Warrants   Exercise Price
-------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>              <C>           <C>       <C>
Outstanding at December 31, 2004 and September 30, 2005            145,000        50,000   195,000  $          7.52
Remaining contractual life in years at September 30, 2005              2.3           2.3       2.3
-------------------------------------------------------------------------------------------------------------------
</TABLE>

The  Company elects to use the intrinsic value-based method prescribed under APB
Opinion  No.  25,  "Accounting for Stock Issued to Employees," in accounting for
its  stock  warrants.  Under  this method, compensation expense related to stock
warrants  granted to employees is the excess, if any, of the market price of the
stock  as  of  the  grant  or  modification  date over the exercise price of the
warrant.  Compensation expense recorded in connection with common stock warrants
amounted  to  $9,000  for the nine-months ended September 30, 2004. There was no
such  compensation for the quarterly period ended September 30, 2004 and for the
quarterly  and  nine-month  periods  of  2005.

NOTE 11 - 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
and  dilutive  potential  common  stock  shares  that  may be outstanding in the
future.

Potential  common stock shares consist of shares that may arise from outstanding
dilutive  common  stock  warrants  (the  number  of  which is computed using the
"treasury stock method") and from outstanding convertible debentures (the number
of which is computed using the "if converted method"). Diluted EPS considers the
potential  dilution  that  could occur if the Company's outstanding common stock
warrants  and  convertible debentures were converted into common stock that then
shared  in  the  Company's  earnings  (as  adjusted for interest expense, net of
taxes, that would no longer occur if the debentures were converted).


                                       13
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED
--------------------------------------------------------------------------------

NOTE 11 - EARNINGS PER SHARE (EPS), CONTINUED

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

<TABLE>
<CAPTION>
                                                                               Quarter Ended        Nine-Months Ended
                                                                               September 30,          September 30,
                                                                         ----------------------------------------------
($ in thousands, except share and per share amounts)                         2005        2004        2005        2004
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>         <C>         <C>         <C>
Basic Earnings Per Share:
  Net earnings applicable to common stockholders                         $    4,566  $    3,152  $   12,337  $    8,392
  Average number of common shares outstanding                             6,967,473   6,048,075   6,508,297   6,046,339
-----------------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share                                                 $     0.66  $     0.52  $     1.90  $     1.39
-----------------------------------------------------------------------------------------------------------------------
Diluted Earnings Per Share:
  Net earnings applicable to common stockholders                         $    4,566  $    3,152  $   12,337  $    8,392
  Adjustment to net earnings from assumed conversion of debentures (1)           55          83         165         247
                                                                         ----------------------------------------------
  Adjusted net earnings for diluted earnings per share computation       $    4,621  $    3,235  $   12,502  $    8,639
                                                                         ----------------------------------------------
Average number of common shares outstanding:
  Common shares outstanding                                               6,967,473   6,048,075   6,508,297   6,046,339
  Potential dilutive shares resulting from exercise of warrants (2)         269,754     243,435     259,052     247,974
  Potential dilutive shares resulting from conversion of debentures (3)     335,664     605,217     339,191     603,071
                                                                         ----------------------------------------------
Total average number of common shares outstanding used for dilution       7,572,891   6,896,727   7,106,540   6,897,384
-----------------------------------------------------------------------------------------------------------------------
Diluted Earnings Per Share                                               $     0.61  $     0.47  $     1.76  $     1.25
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Represents  interest  expense  on  dilutive  convertible debentures, net of
     taxes, that would not occur if they were assumed converted.
(2)  All outstanding warrants were considered for the EPS computations.
(3)  Convertible  debentures  (principal  and  accrued  interest) outstanding at
     September  30,  2005  and  2004  totaling  $4.6  million  and $7.3 million,
     respectively,  were  convertible into common stock at a price of $14.00 per
     share  in  2005  and  $12.00  per  share in 2004 and resulted in additional
     common  shares  (based  on  average  balances  outstanding).

NOTE 12 - OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

The  Company  is a party to financial instruments with off-balance sheet risk in
the  normal  course  of  business  to meet the financing needs of its customers.
These  instruments are in the form of commitments to extend credit, unused lines
of  credit  and  standby letters of credit, and may involve, to varying degrees,
elements of credit and interest rate risk in excess of the amounts recognized in
the  consolidated financial statements. The Company's maximum exposure to credit
risk is represented by the contractual amount of those instruments.

Commitments  to extend credit are agreements to lend funds to a customer as long
as  there  is  no  violation  of any condition established in the contract. Such
commitments  generally  have fixed expiration dates or other termination clauses
and normally require payment of fees. Since some of the commitments are expected
to  expire  without  being  drawn  upon,  the  total  commitment amount does not
necessarily  represent  future  cash  requirements.  The  Company evaluates each
customer's  creditworthiness  on  a case-by-case basis. The amount of collateral
obtained  upon extension of credit is based on management's credit evaluation of
the  counterparty.  Standby letters of credit are conditional commitments issued
by  the Company to guarantee the performance of a customer to a third party. The
credit  risk  involved  in  issuing letters of credit is essentially the same as
that  involved  in  extending  loans  to  customers.

The contractual amounts of off-balance sheet financial instruments is summarized
as  follows:

<TABLE>
<CAPTION>
                                  At September 30,   At December 31,
                                 -----------------  ----------------
     ($ in thousands)                   2005               2004
     ---------------------------------------------------------------
<S>                              <C>                <C>
     Unfunded loan commitments   $         163,544  $        159,697
     Available lines of credit                 809               789
     Standby letters of credit                 138               750
     ---------------------------------------------------------------
                                 $         164,491  $        161,236
     ---------------------------------------------------------------
</TABLE>

Management  is  not  aware  of  any  trends,  known  demands,  commitments  or
uncertainties  which  are expected to have a material impact on future operating
results,  liquidity  or  capital  resources.


                                       14
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

NOTE 13 - REGULATORY CAPITAL

The  Bank  and  the  Holding Company are required to maintain regulatory defined
minimum  Tier  1  leverage  and  Tier  1  and  total  risk-based capital ratios.
Management believes that the Bank and the Holding Company are in compliance with
their  capital  adequacy requirements. Management is not aware of any conditions
or  events  outstanding  which  would  change  the  Bank's  designation  as  a
well-capitalized  institution.

At  September 30, 2005, the actual capital of the Bank on a percentage basis was
as  follows:

<TABLE>
<CAPTION>
                                                              Actual   Minimum       To Be Considered
                                                              Ratios   Requirement   Well Capitalized
                                                              -------  ------------  -----------------
<S>                                                           <C>      <C>           <C>
     Total capital to risk-weighted assets                     12.72%         8.00%             10.00%
     Tier 1 capital to risk-weighted assets                    11.65%         4.00%              6.00%
     Tier 1 capital to total average assets - leverage ratio   10.61%         4.00%              5.00%
</TABLE>

At  September  30,  2005,  the actual capital of the Company (consolidated) on a
percentage  basis  was  as  follows:

<TABLE>
<CAPTION>
                                                              Actual   Minimum       To Be Considered
                                                              Ratios   Requirement   Well Capitalized
                                                              -------  ------------  ----------------
<S>                                                           <C>      <C>           <C>
     Total capital to risk-weighted assets                     14.42%         8.00%                NA
     Tier 1 capital to risk-weighted assets                    12.21%         4.00%                NA
     Tier 1 capital to total average assets - leverage ratio   11.07%         4.00%                NA
</TABLE>

The  Federal  Reserve  on  March  1,  2005 issued a final rule that allows trust
preferred  securities  to  continue to be included in the Tier 1 capital of bank
holding companies, but with stricter quantitative limits and clearer qualitative
standards.  The new rule provides a transition period for bank holding companies
to  meet the new, stricter limitations by allowing the limits on restricted core
capital  elements  to become fully effective as of March 31, 2009. For a further
discussion  of  these  regulatory implications, see the section entitled "Recent
Accounting  and  Regulatory  Developments"  in  note 1 to consolidated financial
statements  included  in  the  Company's Annual Report on Form 10-K for the year
ended  December  31,  2004.

Intervest  Securities  Corporation  is  subject to the SEC's Uniform Net Capital
Rule  [15c3-1  (a)  (2)  (vi)],  which  requires  the maintenance of minimum net
capital of $5,000. At September 30, 2005, Intervest Securities Corporation's net
capital  was  $505,000.

NOTE 14 - RECENT ACCOUNTING PRONOUNCEMENTS

In  December  2004,  the  FASB  issued SFAS No. 123 (revised 2004), "Share-Based
Payment,"  SFAS No. 123-R. SFAS No. 123-R requires companies to recognize in the
income  statement  the  grant-date  fair  value  of  stock  options  and  other
equity-based  compensation  issued  to employees and directors, but expresses no
preference  for  a  type  of  valuation  model.  SFAS  No.  123-R eliminates the
intrinsic  value-based  method  that  the  Company  currently  uses.

In  March  2005,  the  Securities  and  Exchange  Commission  staff issued Staff
Accounting  Bulletin No. 107 (SAB No.107) to provide guidance on SFAS No. 123-R.
SAB  No.  107  provides  the staff's view regarding the valuation of share-based
payment  arrangements  for  public  companies.  In particular, this SAB provides
guidance  related  to  share-based  payment transactions with non-employees, the
transition from non public to public entity status, valuation methods (including
assumptions  such  as expected volatility and expected term), the accounting for
certain  redeemable  financial  instruments  issued  under  share-based  payment
arrangements,  the  classification  of  compensation expense, non-GAAP financial
measures,  first  time  adoption of SFAS No. 123 R, the modification of employee
share  options  prior  to  the  adoption  of  SFAS  No.  123 R and disclosure in
Management's  Discussion  and Analysis subsequent to adoption of SFAS No. 123 R.
SAB  No.  107  is  effective  March  29,  2005.

In  April  2005 the U.S. Securities and Exchange Commission announced a deferral
of  the  effective  date of SFAS No. 123-R for calendar year companies until the
beginning  of  2006.  The  Company's  financial  statements  will be prepared in
accordance  with  this new standard if and when the Company issues any new stock
warrants  and/or  options to employees or directors in the future. The amount of
any impact cannot be determined at this juncture.


                                       15
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

NOTE 14 - RECENT ACCOUNTING PRONOUNCEMENTS, CONTINUED

On  May  30,  2005,  the  FASB issued SFAS No. 154 "Accounting Changes and Error
Corrections." This statement requires entities that voluntarily make a change in
accounting  principle  to  apply  that  change retrospectively to prior periods'
financial  statements,  unless  this  would  be  impracticable.  SFAS  No.  154
supersedes  APB  Opinion  No.  20, Accounting Changes, which previously required
that  most  voluntary changes in accounting principle be recognized by including
in  the current period's net income the cumulative effect of changing to the new
accounting  principle.  SFAS  No.  154  also  makes  a  distinction  between
"retrospective  application" of an accounting principle and the "restatement" of
financial  statements to reflect the correction of an error. Another significant
change  in  practice  under  SFAS  No. 154 will be that if an entity changes its
method of depreciation, amortization, or depletion for long-lived, non-financial
assets,  the  change  must  be accounted for as a change in accounting estimate.
Under  APB Opinion No. 20, such a change would have been reported as a change in
accounting  principle.

SFAS  No.  154 applies to accounting changes and error corrections that are made
in  fiscal  years  beginning  after  December  15,  2005. Earlier application is
permitted  for  accounting  changes  and corrections of errors made occurring in
fiscal  years  beginning  after  June 1, 2005. The Statement does not change the
transition provisions of any existing accounting pronouncements, including those
that  are  in  a  transition  phase  as of the effective date of this Statement.


                                       16
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

             REVIEW BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     Hacker,  Johnson  & Smith, P.A., P.C., the Company's independent registered
public  accounting  firm,  has made a limited review of the financial data as of
September 30, 2005 and for the three- and nine-month periods ended September 30,
2005  and  2004  presented  in  this  document, in accordance with the standards
established by the Public Company Accounting Oversight Board. As part of Hacker,
Johnson  &  Smith,  P.A.,  P.C.'s  review, Eisner, LLP was relied upon for their
limited  review  of Intervest Mortgage Corporation, a wholly owned subsidiary of
the  Company.

     The  reports  of  Hacker,  Johnson  &  Smith,  P.A.,  P.C.  and Eisner, LLP
furnished pursuant to Article 10 of Regulation S-X are included herein.


                                       17
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Intervest Bancshares Corporation
New York, New York:

We  have  reviewed  the  accompanying  condensed  consolidated  balance sheet of
Intervest  Bancshares  Corporation  and  Subsidiaries  (the  "Company")  as  of
September 30, 2005 and the related condensed consolidated statements of earnings
for  the  three-month  and nine-month periods ended September 30, 2005 and 2004,
and  the  related  condensed consolidated statements of changes in stockholders'
equity  and  cash  flows for the nine-month periods ended September 30, 2005 and
2004. These interim financial statements are the responsibility of the Company's
management.

We  were  furnished  the  reports  of  the  other  independent registered public
accounting  firm  on  their  reviews  of  the  interim  financial information of
Intervest  Mortgage  Corporation,  whose  total  assets as of September 30, 2005
constituted  5.9%  of  the  related  consolidated  total, and whose net interest
income,  noninterest  income and net earnings for the three-month and nine-month
periods  then  ended,  constituted  8.9%,  11.5%, and 19.6%; and 7.5%, 12.0% and
18.1%,  respectively,  and whose net interest income, noninterest income and net
earnings  for  the  three-  and  nine-month  periods  ended  September 30, 2004,
constituted  6.9%, 10.4%, and 20.4%; and 6.4%, 14.3% and 19.8%, respectively, of
the  related  consolidated  totals.

We  conducted our reviews in accordance with the standards of the Public Company
Accounting  Oversight  Board  (United  States).  A  review  of interim financial
information  consists principally of applying analytical procedures to financial
data  and  making  inquiries of persons responsible for financial and accounting
matters.  It  is  substantially  less  in  scope  than  an  audit  conducted  in
accordance  with the standards of the Public Company Accounting Oversight Board,
the  objective  of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based  on our reviews and the reports of the other independent registered public
accounting  firm,  we are not aware of any material modifications that should be
made  to  the  condensed consolidated financial statements referred to above for
them  to  be  in  conformity with U.S. generally accepted accounting principles.

We  have  previously  audited,  in  accordance  with the standards of the Public
Company  Accounting  Oversight  Board,  the  consolidated  balance  sheet of the
Company  as  of  December  31,  2004, and the related consolidated statements of
earnings,  comprehensive  income, changes in stockholders' equity and cash flows
for  the  year  then ended (not presented herein); and in our report dated March
11,  2005,  we,  based  on  our  audit  and  the report of the other independent
registered  public  accounting  firm,  expressed an unqualified opinion on those
consolidated  financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of December 31, 2004 is
fairly stated, in all material respects, in relation to the consolidated balance
sheet  from  which  it  has  been  derived.


/s/  Hacker, Johnson & Smith, P.A., P.C.
----------------------------------------
HACKER, JOHNSON & SMITH, P.A.,P.C.
Tampa, Florida
October 26, 2005


                                       18
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Stockholder
Intervest Mortgage Corporation
New York, New York:

We  have reviewed the condensed consolidated balance sheet of Intervest Mortgage
Corporation  and  Subsidiaries  (the "Company") as of September 30, 2005 and the
related  condensed  consolidated  statements  of  operations  for  each  of  the
three-month  and  nine-month  periods ended September 30, 2005 and 2004, and the
related condensed consolidated statements of changes in stockholder's equity and
cash  flows  for the nine-months ended September 30, 2005 and 2004 (all of which
are not presented separately herein). These interim financial statements are the
responsibility  of  the  Company's  management.

We  conducted  our  reviews  in  accordance with standards of the Public Company
Accounting  Oversight  Board  (United  States).  A  review  of interim financial
information  consists principally of applying analytical procedures to financial
data  and  making  inquiries of persons responsible for financial and accounting
matters.  It  is  substantially  less  in  scope  than  an  audit  conducted  in
accordance  with the standards of the Public Company Accounting Oversight Board,
the  objective  of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be  made  to  the  condensed  consolidated  interim  financial  statements  (not
presented separately herein) referred to above for them to be in conformity with
U.S.  generally  accepted  accounting  principles.

We  previously  audited,  in accordance with the standards of the Public Company
Accounting  Oversight  Board  (United States), the consolidated balance sheet of
the  Company  as of December 31, 2004 and the related consolidated statements of
operations,  changes  in  stockholder's  equity and cash flows for the year then
ended  (all  of  which  are  not presented separately herein), and in our report
dated  February  10,  2005,  we  expressed  an  unqualified  opinion  on  those
consolidated  financial statements. In our opinion, the information set forth in
the  condensed consolidated balance sheet as of December 31, 2004 (not presented
separately  herein) is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.


/s/  Eisner, LLP
----------------
EISNER,LLP
New York, New York
October 26, 2005


                                       19
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

                                    OVERVIEW
                                    --------

Intervest  Bancshares  Corporation  has  three  wholly  owned  consolidated
subsidiaries  -  Intervest  National  Bank,  Intervest  Mortgage Corporation and
Intervest  Securities  Corporation  (hereafter  referred  to collectively as the
"Company"  on  a  consolidated  basis).  Intervest  Bancshares  Corporation  and
Intervest National Bank may be referred to individually as the "Holding Company"
and  the  "Bank,"  respectively.  Intervest Bancshares Corporation also has four
wholly  owned  unconsolidated subsidiaries, Intervest Statutory Trust I, II, III
and  IV,  which  were  formed in connection with the issuance of trust preferred
securities.  For  a  discussion  of  the  Company's  business, see note 2 to the
condensed  consolidated  financial  statements  in  this  report.

The  Company's  principal revenues are derived from interest, dividends and fees
earned  on  its  interest-earning assets, which are comprised of mortgage loans,
securities  and  other  short-term investments. The Company's principal expenses
consist  of  interest  paid  on  its  interest-bearing  liabilities,  which  are
comprised  of  deposits,  debentures  and  other  short-term borrowings, and its
operating  and  general  expenses.

The  Company's profitability depends primarily on its net interest income, which
is  the  difference  between interest income generated from its interest-earning
assets  and  the  interest expense incurred on its interest-bearing liabilities.
Net  interest  income  is  dependent upon the interest-rate spread, which is the
difference  between  the average yield earned on interest-earning assets and the
average  rate paid on interest-bearing liabilities. When interest-earning assets
approximate  or  exceed interest-bearing liabilities, any positive interest rate
spread  will  generate net interest income. The interest rate spread is impacted
by  interest  rates,  deposit  flows  and  loan  demand.

The  Company's  profitability  is  also affected by the level of its noninterest
income  and  expenses,  provision  for  loan  losses  and  income  tax  expense.
Noninterest  income  consists  mostly  of loan and other banking fees as well as
income  from loan prepayments. When a mortgage loan is repaid prior to maturity,
the  Company  may recognize prepayment income, which consists of the recognition
of  unearned  fees  associated  with  such  loans  at the time of payoff and the
receipt  of additional prepayment fees and interest in certain cases. The amount
of  income  from  loan  prepayments  can  fluctuate  significantly and cannot be
predicted.  Normally,  the  number  of instances of prepayment of mortgage loans
tends  to  increase  during  periods  of  declining  interest rates and tends to
decrease  during  periods  of  increasing  interest rates. Many of the Company's
mortgage  loans  include  provisions  relating to prepayment and others prohibit
prepayment  of  indebtedness  entirely.  Noninterest  expense  consists  of
compensation  and  benefits  expense,  occupancy  and  equipment  expenses, data
processing  expenses,  advertising expense, professional fees, insurance expense
and  other operating expenses. The Company's profitability is also significantly
affected  by  general  economic  and  competitive  conditions, changes in market
interest  rates,  government  policies  and  actions  of regulatory authorities.

Nearly  all  (99.8%) of the Company's loan portfolio is concentrated in mortgage
loans  secured  by  commercial and multifamily real estate properties (including
rental  and  cooperative/condominium  apartment  buildings,  office  buildings,
mix-used  properties,  shopping  centers,  hotels,  restaurants,  industrial
properties,  parking  lots/garages and vacant land). These loans have an average
life  of  approximately three years. The Company tends to lend in areas that are
in the process of being revitalized, with a concentration of loans on properties
located in New York State and the State of Florida. A significant portion of the
residential  properties  are  located  in  New York City and are subject to rent
control  and  rent  stabilization  laws, which limit the ability of the property
owners  to  increase  rents.

All  loans  are  subject to the risk of default, otherwise known as credit risk,
which  represents the possibility of the Company not recovering amounts due from
its  borrowers.  A borrower's ability to make payments due under a mortgage loan
is  dependent upon the risks associated with real estate investments in general,
including  the  following: general or local economic conditions in the areas the
properties  are  located,  neighborhood  values, interest rates, real estate tax
rates,  operating expenses of the mortgaged properties, supply of and demand for
rental  units,  supply  of  and  demand  for  properties,  ability to obtain and
maintain  adequate occupancy of the properties, zoning laws, governmental rules,
regulations  and  fiscal  policies.  Additionally, terrorist acts, such as those
that  occurred  on  September  11,  2001,  armed  conflicts,  such as the war on
terrorism, and natural disasters, such as hurricanes, may have an adverse impact
on  economic  conditions.  Economic  conditions  affect  the  market  value  of


                                       20
<PAGE>
the mortgaged properties underlying the Company's loans as well as the levels of
occupancy  of  income-producing  properties.

                          CRITICAL ACCOUNTING POLICIES
                          ----------------------------

The  preparation  of  the  Company's  consolidated  financial statements and the
information  included in Management's Discussion and Analysis herein is governed
by  policies  that  are based on accounting principles generally accepted in the
United  States  (GAAP)  and  general  practices within the banking industry. The
financial  information  contained in the Company's financial statements is, to a
significant  extent,  based on measures of the financial effects of transactions
and  events  that  have  already occurred. A variety of factors could affect the
ultimate  value  that  is  obtained  either  when earning income, recognizing an
expense, recovering an asset or relieving a liability.  In addition, GAAP itself
may change from one previously acceptable method to another method. Although the
economics  of the Company's transactions would be the same, the timing of events
that  would  impact  its  transactions could change.  Among the more significant
policies  of  the  Company  are  those  that govern accounting for loans and the
allowance  for  loan  losses.  For a summary of all of the Company's significant
accounting  policies, see note 1 to the consolidated financial statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 2004.

An  accounting  policy  is  deemed  to  be  "critical"  if  it is important to a
company's  results  of  operations  and  financial  condition,  and  requires
significant judgment and estimates on the part of management in its application.
The  preparation  of  financial statements and related disclosures in conformity
with  GAAP  requires  management  to  make estimates and assumptions that affect
certain  amounts  reported  in the financial statements and related disclosures.
Actual  results  could  differ from these estimates and assumptions. The Company
believes  that the estimates and assumptions used in connection with the amounts
reported  in its financial statements and related disclosures are reasonable and
made  in  good  faith.

The  Company  believes  that  currently its only significant critical accounting
policy  relates  to  the  determination  of  the  allowance for loan losses. The
allowance  for  loan  losses  reflects management's judgment as to the estimated
losses  that  may  result from defaults in the loan portfolio. The allowance for
loan  losses is established through a provision charged to operations. Loans are
charged  against  the allowance when management believes that the collectability
of  the principal is unlikely. Subsequent recoveries are added to the allowance.

The  adequacy of the Company's allowance for loan losses is evaluated monthly or
more  frequently  when  necessary  with  consideration  given  to  the following
factors: (i) the size of the loan portfolio, which continues to experience rapid
growth  and an increase in individual loan balances; (ii) the nature of the loan
portfolio,  which  is  concentrated  on  commercial  and multifamily real estate
properties,  including loans on substantially vacant properties and vacant land,
all  of  which are generally considered to have more credit risk than 1-4 family
residential  lending because these loans tend to involve larger loan balances to
single  borrowers and their repayment is typically dependent upon the successful
operation  of  the underlying real estate for income-producing properties, while
loans  on vacant land typically do not have income streams and depend upon other
sources  of  cash  flow  from the borrower for repayment; (iii) specific problem
loans, such as loans on nonaccrual status, and loan commitments and estimates of
fair  value  of  the  underlying  properties;  (iv)  historical  chargeoffs  and
recoveries;  (v)  adverse  situations which may affect the borrowers' ability to
repay;  and (vi) management's perception of the current and anticipated economic
conditions  in  the  Company's lending areas, which are concentrated in New York
and Florida. Although management believes it uses the best information available
to  make  determinations  with  respect to the allowance for loan losses, future
adjustments  may  be  necessary if economic conditions, or other factors, differ
from  those  previously  assumed  in  the  determination  of  the  level  of the
allowance.

For  calculation  purposes,  the  allowance  for  loan losses is comprised of an
unallocated  portion  (which  is derived from an estimated loss factor currently
ranging  from  0.30%  to 1.35% multiplied by the principal amount of loans rated
acceptable, and higher percentages for loans that are assigned a credit grade of
special  mention  or  lower)  and, from time to time, an allocated (or specific)
portion  on  certain  loans, particularly for loans that have been identified as
being  impaired.

Statement  of Financial Accounting Standards (SFAS) No. 114 specifies the manner
in  which the portion of the allowance for loan losses related to impaired loans
is  computed.  A  loan  is  normally  deemed  impaired  when, based upon current
information  and  events,  it is probable that we will be unable to collect both
full  principal  and interest due according to the contractual terms of the loan
agreement.  Impairment  for  larger balance loans such as commercial real estate
and  multifamily  loans  are  measured  based  on: the present value of expected
future  cash


                                       21
<PAGE>
flows,  discounted  at  the  loan's  effective  interest rate; or the observable
market  price of the loan; or the estimated fair value of the loan's collateral,
if payment of the principal and interest is dependent upon the collateral.  When
the fair value of the property is less than the recorded investment in the loan,
this  deficiency  is  recognized  as  a  valuation  allowance within the overall
allowance  for  loan  losses and a charge through the provision for loan losses.
The  Company's policy is to charge off any portion of the recorded investment in
the  loan that exceeds the fair value of the collateral. The Company considers a
variety  of factors in determining whether a loan is impaired, including (i) any
notice from the borrower that the borrower will be unable to repay all principal
and  interest  amounts  contractually  due  under  the  loan agreement, (ii) any
delinquency  in the principal and/or interest payments other than minimum delays
or  shortfalls in payments, and (iii) other information known by management that
would  indicate the full repayment of principal and interest is not probable. In
evaluating loans for impairment, management generally considers delinquencies of
60  days  or  less  to be minimum delays, and accordingly does not consider such
delinquent  loans  to  be impaired in the absence of other indications. Impaired
loans  normally consist of loans on nonaccrual status.  Generally, all loans are
evaluated  for  impairment  on  a  loan-by-loan  basis.

Finally,  the  Company's  regulators,  as  an integral part of their examination
process,  periodically  review  the  allowance for loan losses. Accordingly, the
Company may be required to take certain chargeoffs and/or recognize additions to
the allowance based on the regulators' judgment concerning information available
to  them  during  their  examination.

  COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
  -----------------------------------------------------------------------------

OVERVIEW
--------

Total  assets  at September 30, 2005 increased to $1.6 billion, from $1.3 billon
at  December 31, 2004. Total liabilities at September 30, 2005 increased to $1.5
billion,  from  $1.2  billion  at  December  31,  2004, and stockholders' equity
increased  to  $129.2  million  at  September  30,  2005,  from $90.1 million at
December  31, 2004. Book value per common share increased to $16.69 at September
30, 2005, from $14.37 at December 31, 2004.

Selected balance sheet information as of September 30, 2005 follows:

<TABLE>
<CAPTION>
                                                          Intervest    Intervest    Intervest     Inter-
                                               Holding    National     Mortgage    Securities    Company
($ in thousands)                               Company      Bank         Corp.        Corp.     Amounts (1)    Consolidated
----------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>        <C>          <C>          <C>          <C>           <C>
Cash and cash equivalents                     $  3,073   $   30,173   $   33,341   $       543  $   (24,107)  $      43,023
Security investments                                 -      243,842            -             -            -         243,842
Loans receivable, net of deferred fees          12,427    1,227,509       79,219             -            -       1,319,155
Allowance for loan losses                          (85)     (14,069)        (240)            -            -         (14,394)
Investment in consolidated subsidiaries        178,632            -            -             -     (178,632)              -
All other assets                                 4,997       28,158        6,061             3            -          39,219
----------------------------------------------------------------------------------------------------------------------------
Total assets                                  $199,044   $1,515,613   $  118,381   $       546  $  (202,739)  $   1,630,845
----------------------------------------------------------------------------------------------------------------------------
Deposits                                      $      -   $1,326,513   $        -   $         -  $   (24,204)  $   1,302,309
Borrowed funds and related interest payable     69,519          233       90,739             -            -         160,491
All other liabilities                              318       36,501        1,881            41           97          38,838
----------------------------------------------------------------------------------------------------------------------------
Total liabilities                               69,837    1,363,247       92,620            41      (24,107)      1,501,638
----------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                           129,207      152,366       25,761           505     (178,632)        129,207
----------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity    $199,044   $1,515,613   $  118,381   $       546  $  (202,739)  $   1,630,845
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  All  significant  intercompany  balances and transactions are eliminated in
     consolidation.  Such  amounts  arise  largely  from  intercompany  deposit
     accounts  and  investments.

A  comparison of selected balance sheet information as of September 30, 2005 and
December  31,  2004  follows:

<TABLE>
<CAPTION>
                                                                     At September 30, 2005         At December 31, 2004
                                                                 ----------------------------  ----------------------------
                                                                   Carrying         % of         Carrying         % of
($ in thousands)                                                     Value      Total Assets       Value      Total Assets
---------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>            <C>            <C>            <C>
Cash and cash equivalents                                        $      43,023           2.6%  $      24,599           1.9%
Security investments                                                   243,842          15.0         253,980          19.3
Loans receivable, net of deferred fees and loan loss allowance       1,304,761          80.0       1,004,290          76.3
All other assets                                                        39,219           2.4          33,882           2.5
---------------------------------------------------------------------------------------------------------------------------
Total assets                                                     $   1,630,845         100.0%  $   1,316,751         100.0%
---------------------------------------------------------------------------------------------------------------------------
Deposits                                                         $   1,302,309          79.9%  $     993,872          75.5%
Borrowed funds and related interest payable                            160,491           9.8         202,682          15.4
All other liabilities                                                   38,838           2.4          30,103           2.2
---------------------------------------------------------------------------------------------------------------------------
Total liabilities                                                    1,501,638          92.1       1,226,657          93.1
---------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                                   129,207           7.9          90,094           6.9
---------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                       $   1,630,845         100.0%  $   1,316,751         100.0%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       22
<PAGE>
CASH  AND  CASH  EQUIVALENTS
----------------------------

Cash and cash equivalents increased to $43.0 million at September 30, 2005, from
$24.6  million  at  December  31,  2004.  The level of cash and cash equivalents
fluctuates  based  on  various  factors, including liquidity needs, loan demand,
deposit  flows, calls and maturities of securities, repayments of borrowed funds
and  alternative  investment opportunities. The increase reflected the temporary
investment  into  overnight  federal  funds  of  deposit  inflows as well as the
proceeds  from  the issuance of stock during September. A portion of these funds
is  expected  to  fund  new  loans.

SECURITY  INVESTMENTS
---------------------

Securities  for which the Company has the intent and ability to hold to maturity
are  classified  as  held  to maturity and carried at amortized cost. Currently,
only the Bank holds such security investments, which decreased to $237.7 million
at  September  30,  2005, from $248.9 million at December 31, 2004. The decrease
reflected  maturities  exceeding  new  purchases  during  the  period.  The Bank
continues  to  invest  in  short-term  (up to 5 year maturities) U.S. government
agency  debt  obligations  to  emphasize  liquidity  and to currently target its
loan-to-deposit  ratio  at  approximately  85%.  The  investment  portfolio  at
September  30, 2005 had a weighted-average remaining maturity of 1.1 years and a
yield of 2.91%, compared to 1.4 years and a yield of 2.33% at December 31, 2004.
At  September  30,  2005  and  December 31, 2004, the portfolio's estimated fair
value  was  $235.2  million  and  $247.2  million,  respectively.

In  order  for the Bank to be a member of the Federal Reserve Bank (FRB) and the
Federal  Home  Loan Bank of New York (FHLB), the Bank maintains an investment in
their  capital  stock.  The  Bank's  total  investment in the FRB and FHLB stock
increased  to  $6.1 million at September 30, 2005, from 5.1 million December 31,
2004.  The total investment fluctuates based on the Bank's capital level for the
FRB  stock  and  the  Bank's  loans and outstanding FHLB borrowings for the FHLB
stock.

LOANS RECEIVABLE, NET OF DEFERRED FEES AND ALLOWANCE FOR LOAN LOSSES
--------------------------------------------------------------------

Loans  receivable,  net  of  deferred  fees  and  the allowance for loan losses,
increased  to  $1.3  billion at September 30, 2005 from $1.0 billion at December
31,  2004.  The  growth  reflected  new  mortgage  loan  originations secured by
commercial  and multifamily real estate exceeding principal repayments. New loan
originations  totaled $220.7 million and $545.3 million in the third quarter and
first  nine  months of 2005, respectively, compared to $139.0 million and $477.6
million  in  the  third  quarter  and  first  nine months of 2004, respectively.

Nearly  all  (99.8%) of the Company's loan portfolio is concentrated in mortgage
loans  (with an average life of approximately 3 years) secured by commercial and
multifamily real estate properties (including rental and cooperative/condominium
apartment  buildings,  office  buildings, mix-used properties, shopping centers,
hotels,  restaurants,  industrial  properties,  parking  lots/garages and vacant
land).  At September 30, 2005, such loans consist of 543 loans with an aggregate
principal balance of $1.3 billion and an average principal size of $2.4 million.
Loans  with principal balances of $5.0 million or more aggregated to 62 loans or
$551.2 million, with the largest loan amounting to $18.7 million.

At September 30, 2005, $0.7 million of loans were on nonaccrual status, compared
to  $4.6  million  at  December  31,  2004.  In  April  2005,  the  property
collateralizing  a  nonaccrual loan with a principal balance of $3.9 million was
sold  at  foreclosure  to  a third party. The loan was paid in full and the Bank
recovered  all  amounts due thereunder. Nonaccrual loans are considered impaired
under the criteria of SFAS No. 114, but no valuation allowance was maintained at
any  time  since  the  Company  believes  that  the  estimated fair value of the
underlying  properties  exceeded  its recorded investment. At September 30, 2005
and  December  31,  2004,  there  were  no  other  impaired  loans.

At September 30, 2005, there were $2.7 million of loans ninety days past due and
still  accruing  interest  because  they  were  deemed  by management to be well
secured  and  in  the process of collection. Such amount represented three loans
that  are  past  their maturity date, but in each case the borrower continues to
make  monthly  payments  of  interest and principal. Based upon discussions with
these  borrowers,  it  is  anticipated  that  these loans will repaid in full or
refinanced  in the near term. There were no loans ninety days past due and still
accruing  interest  at  December  31,  2004.


                                       23
<PAGE>
At  September 30, 2005, the allowance for loan losses amounted to $14.4 million,
compared  to $11.1 million at December 31, 2004. The allowance represented 1.09%
of  total  loans  (net  of  deferred fees) outstanding at September 30, 2005 and
December  31,  2004.  The  increase  in  the  allowance  was  due  to provisions
aggregating  $3.3  million  during the period resulting largely from loan growth
(which  amounted  to $305.9 million from December 31, 2004), partially offset by
the  favorable  impact from the satisfaction of the $3.9 million nonaccrual loan
noted  above.  For  a  further  discussion  of  the criteria the Company uses to
determine  the  adequacy  of  the  allowance, see the section entitled "Critical
Accounting  Policies"  included  in  this  report.

ALL  OTHER  ASSETS
------------------

The following table sets forth the composition of the caption "All other assets"
as  follows:

<TABLE>
<CAPTION>
                                                       At September 30,  At December 31,
                                                      -----------------  ----------------
          ($ in thousands)                                   2005              2004
          -------------------------------------------------------------------------------
<S>                                                   <C>                <C>
          Accrued interest receivable                 $           6,786  $          6,699
          Loan fees receivable                                   10,535             8,208
          Premises and equipment, net                             6,534             6,636
          Deferred income tax asset                               6,596             5,095
          Deferred debenture offering costs, net                  5,852             4,929
          Investment in unconsolidated subsidiaries               1,856             1,856
          All other                                               1,060               459
          -------------------------------------------------------------------------------
                                                      $          39,219  $         33,882
          -------------------------------------------------------------------------------
</TABLE>

Accrued interest receivable fluctuates based on the amount of loans, investments
and  other  interest-earning  assets  outstanding  and  the  timing  of interest
payments  received.  The increase of $0.1 million from December 31, 2004 was due
to  the  growth  in  all  of  these  assets.

Loan fees receivable are fees due to the Company in accordance with the terms of
mortgage  loans.  Such  amounts are generally due upon the full repayment of the
loan.  This  fee is recorded as deferred income at the time a loan is originated
and  is  then  amortized to interest income over the life of the loan as a yield
adjustment.  The  increase of $2.3 million from December 31, 2004 was due to the
increase  in  the  loan  portfolio.

Premises  and  equipment decreased by $0.1 million from December 31, 2004 as net
purchases  of  $0.3  million  during  the  period  were  more  than  offset  by
depreciation  and  amortization.

The deferred income tax asset relates primarily to the unrealized tax benefit on
the  Company's  allowance  for  loan losses. The allowance has been expensed for
financial  statement  purposes but it is currently not deductible for income tax
purposes until actual loan chargeoffs are incurred. The increase in the deferred
tax  asset  of $1.5 million from December 31, 2004 is a function of the increase
in  the  allowance  for  loan  losses  during  the  period.

Deferred debenture offering costs consist primarily of underwriters' commissions
and  are  amortized  over  the terms of the debentures. The net increase of $0.9
million  from  December  31,  2004  was  due to $1.8 million of additional costs
incurred  in connection with the issuance of new debentures, partially offset by
$0.9  million  of  amortization  during  the  period.

The  investment in unconsolidated subsidiaries consists of the Holding Company's
total  common  stock  investment in Intervest Statutory Trust I, II, III and IV.

All  other assets increased by $0.6 million from December 31, 2004 primarily due
to  $0.3  million  of debenture proceeds receivable at September 30, 2005, which
was  collected  in  full  in  October  2005.

DEPOSITS
--------

Deposits increased to $1.3 billion at September 30, 2005, from $993.9 million at
December  31,  2004,  reflecting increases in certificate of deposit accounts of
$305.7  million  and  an increase in checking, savings and money market accounts
totaling  $2.7  million.

At September 30, 2005, certificate of deposit accounts totaled $1.0 billion, and
checking,  savings and money market accounts aggregated $251.8 million. The same
categories  of  deposit  accounts  totaled  $744.8  million  and $249.1 million,
respectively,  at December 31, 2004. Certificate of deposit accounts represented
81%  of  total


                                       24
<PAGE>
deposits  at September 30, 2005 and 75% at December 31, 2004. In September 2005,
the  Bank  began  accepting  brokered  deposits as another source of funds. Such
accounts  totaled  $36.6  million  at  September  30,  2005.

BORROWED FUNDS AND RELATED INTEREST PAYABLE
-------------------------------------------

At  September 30, 2005, borrowed funds and related interest payable decreased to
$160.5  million,  from $202.7 million at December 31, 2004. The decrease was due
to  the  full  repayment  of  $36.0 million of short-term FHLB borrowings by the
Bank,  and  a  net  decrease of $6.3 million of Intervest Mortgage Corporation's
outstanding  debentures  and  related  accrued  interest  payable resulting from
repayments  exceeding  new  issues  during  the  period.

ALL  OTHER  LIABILITIES
-----------------------

The  table  below  sets  forth  the  composition  of  the  caption  "All  other
liabilities"  as  follows:

<TABLE>
<CAPTION>
                                                  At September 30,  At December 31,
                                                 -----------------  ----------------
          ($ in thousands)                              2005              2004
          --------------------------------------------------------------------------
<S>                                              <C>                <C>
          Mortgage escrow funds payable          $          27,010  $         14,533
          Official checks outstanding                        5,463            12,061
          Accrued interest payable on deposits               2,783             1,718
          Income taxes payable                               1,244                81
          All other                                          2,338             1,710
          --------------------------------------------------------------------------
                                                 $          38,838  $         30,103
          --------------------------------------------------------------------------
</TABLE>

Mortgage  escrow funds payable represent advance payments made to the Company by
borrowers  for  taxes  and  insurance  that are remitted by the Company to third
parties.  The  increase  of  $12.5  million from December 31, 2004 reflected the
growth in the loan portfolio as well as the timing of tax payments.

Official  checks  outstanding  vary  and  fluctuate  based  on banking activity.
Accrued  interest  payable  on  deposits  fluctuates based on total deposits and
timing  of  interest  payments. The increase of $1.1 million in accrued interest
payable  from  December  31, 2004 reflected the growth in deposits. Income taxes
payable  fluctuates  based  on  the  Company's  earnings, effective tax rate and
timing  of  tax  payments.

All other liabilities are comprised mainly of accrued expenses and fees received
on  loan commitments that have not yet been funded. The increase of $0.6 million
from  December  31,  2004  reflected a higher level of accrued expenses and fees
received on loan commitments that have not yet been funded.

STOCKHOLDERS'  EQUITY
---------------------

Stockholders'  equity  increased  to  $129.2 million at September 30, 2005, from
$90.1  million  at  December  31,  2004  as  follows:

<TABLE>
<CAPTION>
     ($ in thousands)                                                         Amount    Shares
     -------------------------------------------------------------------------------------------
<S>                                                                          <C>       <C>
     Stockholders' equity at December 31, 2004                               $ 90,094  6,271,433
     Net earnings for the period                                               12,337          -
     Class A common stock issued in public offering, net of issuance costs     26,335  1,436,468
     Convertible debentures converted at election of debenture holders            441     32,002
     -------------------------------------------------------------------------------------------
     Stockholders' equity at September 30, 2005                              $129,207  7,739,903
     -------------------------------------------------------------------------------------------
</TABLE>

The Holding Company completed in August a public offering of 1,250,000 shares of
its  Class  A  Common  Stock  for  $19.75  per  share and in September issued an
additional  186,468  shares  of  Class  A  common  stock for $19.75 per share in
connection  with  the  exercise  by  the  underwriters  of an option to purchase
additional  shares to cover over-allotments. The issuance of these shares, after
underwriting  commissions  and expenses, resulted in $26.3 million of additional
capital  for  the  Company.


                                       25
<PAGE>
                      COMPARISON OF RESULTS OF OPERATIONS
                      -----------------------------------
               FOR THE QUARTERS ENDED SEPTEMBER 30, 2005 AND 2004
               --------------------------------------------------

OVERVIEW
--------

Consolidated net earnings for the third quarter of 2005 increased by 45% to $4.6
million or $0.61 per diluted share, from $3.2 million or $0.47 per diluted share
reported  in the third quarter of 2004. The increase was due to continued growth
in  the  Company's  lending  activities.

The  $1.4  million  increase  in  consolidated earnings reflected a $3.3 million
increase  in  net  interest  and  dividend income and a $0.3 million increase in
noninterest  income,  partially  offset by a $1.1 million increase in income tax
expense,  a  $0.7  million  increase in the provision for loan losses and a $0.4
million  increase  in  noninterest  expenses.

The Company's return on average assets and equity increased to 1.17% and 16.32%,
respectively,  in  the  2005 quarter, from 1.05% and 15.32% in the 2004 quarter.
The  Company's  efficiency  ratio,  which is a measure of its ability to control
expenses as a percentage of its revenues, continues to be favorable and improved
to 21% for the third quarter of 2005, from 24% in the 2004 quarter.

Selected  information  regarding  results of operations for the third quarter of
2005  follows:

<TABLE>
<CAPTION>
                                             Intervest    Intervest    Intervest                Inter-
                                             National     Mortgage    Securities    Holding    Company
($ in thousands)                               Bank         Corp.        Corp.      Company   Amounts (2)   Consolidated
-------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>          <C>          <C>        <C>           <C>
Interest and dividend income                $   22,873   $    2,762   $         3  $    223   $      (100)  $      25,761
Interest expense                                12,144        1,810             -     1,252          (100)         15,106
                                            -----------------------------------------------------------------------------
Net interest and dividend income                10,729          952             3    (1,029)            -          10,655
Provision for loan losses                        1,850          (47)            -         -             -           1,803
Noninterest income                               1,495        1,411            56       166        (1,315)          1,813
Noninterest expenses                             2,949          746            35       151        (1,315)          2,566
                                            -----------------------------------------------------------------------------
Earnings before taxes                            7,425        1,664            24    (1,014)            -           8,099
Provision for income taxes                       3,222          769            11      (469)            -           3,533
-------------------------------------------------------------------------------------------------------------------------
Net earnings                                $    4,203   $      895   $        13  $   (545)  $         -   $       4,566
-------------------------------------------------------------------------------------------------------------------------
Intercompany dividends (1)                      (1,089)           -             -     1,089             -               -
-------------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany dividends   $    3,114   $      895   $        13  $    544   $         -   $       4,566
-------------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany dividends
    for the same period of 2004             $    2,072   $      644   $        16  $    420   $         -   $       3,152
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Dividends  to  the Holding Company from the Bank provide funds for the debt
     service  on  the  subordinated  debentures-capital  securities,  which  is
     included  in  the  Holding  Company's  interest  expense.

(2)  All  significant  intercompany  balances and transactions are eliminated in
     consolidation.  Such  amounts  arise from intercompany deposit accounts and
     management  and  service  agreements.

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.

Net interest and dividend income increased to $10.6 million in the third quarter
of  2005,  from  $7.3  million in the third quarter of 2004. The improvement was
attributable  to  a  $358.7  million increase in average interest-earning assets
resulting from continued growth in loans of $304.0 million and a higher level of
security  and  short-term  investments  aggregating $54.7 million. The growth in
average  assets  was  funded  by  $333.6  million of additional interest-bearing
deposits  and  a  $29.6  million  increase  in  stockholders'  equity.

The  Company's  net  interest  margin increased to 2.74% in the third quarter of
2005,  from 2.46% in the third quarter of 2004. The higher margin was due to the
Company's  yield on interest-earning assets increasing at a faster pace than its
cost  of  funds.


                                       26
<PAGE>
In  a rising rate environment, the yield on interest-earning assets increased 69
basis  points  to 6.63% in the 2005 quarter due to higher yields on new mortgage
loans originated, an increase in yields earned on variable rate loans indexed to
the  prime  rate,  and  higher  yields  earned  on security and other short-term
investments. The cost of funds also increased by 46 basis points to 4.26% in the
2005 quarter due to higher rates paid on deposit accounts.

The  following  table  provides  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 income/expense (including any related fee
income  or  expense)  for  each  period  divided  by  average  interest-earning
assets/interest-bearing  liabilities  during  each  period. Average balances are
derived  from  daily  balances.  Net interest margin is computed by dividing net
interest  and  dividend  income  by the average of total interest-earning assets
during  each  period.

<TABLE>
<CAPTION>
                                                   --------------------------------------------------------------------
                                                                               Quarter Ended
                                                   --------------------------------------------------------------------
                                                            September 30, 2005                September 30, 2004
                                                   ---------------------------------  ---------------------------------
                                                     Average    Interest    Yield/      Average    Interest    Yield/
($ in thousands)                                     Balance    Inc./Exp.   Rate (2)    Balance    Inc./Exp.   Rate (2)
-----------------------------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>         <C>       <C>          <C>         <C>
ASSETS
Interest-earning assets:
    Loans (1)                                      $1,246,341   $   23,569     7.50%  $  942,342   $   16,428     6.94%
    Securities                                        260,272        1,895     2.89      216,463        1,137     2.09
    Other interest-earning assets                      35,441          297     3.32       24,566           90     1.46
-----------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                       1,542,054   $   25,761     6.63%   1,183,371   $   17,655     5.94%
-----------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                             14,715                             15,204
-----------------------------------------------------------------------------------------------------------------------
Total assets                                       $1,556,769                         $1,198,575
-----------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
    Interest checking deposits                     $    9,855   $       36     1.45%  $   12,271   $       48     1.56%
    Savings deposits                                   23,597          153     2.57       31,572          142     1.79
    Money market deposits                             201,607        1,576     3.10      204,139          982     1.91
    Certificates of deposit                         1,014,414       10,264     4.01      667,933        5,986     3.57
-----------------------------------------------------------------------------------------------------------------------
Total deposit accounts                              1,249,473       12,029     3.82      915,915        7,158     3.11
-----------------------------------------------------------------------------------------------------------------------
    Fed funds purchased and FHLB Advances               1,108           11     3.94        3,089           12     1.55
    Debentures and related interest payable            93,283        1,973     8.39      114,654        2,291     7.95
    Debentures - capital securities                    61,856        1,089     6.98       48,241          883     7.28
    Mortgage note payable                                 235            4     7.01          247            4     7.01
-----------------------------------------------------------------------------------------------------------------------
Total borrowed funds                                  156,482        3,077     7.80      166,231        3,190     7.64
-----------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                  1,405,955   $   15,106     4.26%   1,082,146   $   10,348     3.80%
-----------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                            5,910                              6,868
Noninterest-bearing liabilities                        32,971                             27,256
Stockholders' equity                                  111,933                             82,305
-----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity         $1,556,769                         $1,198,575
-----------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                         $   10,655     2.37%               $    7,307     2.14%
-----------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                 $  136,099                  2.74%  $  101,225                  2.46%
-----------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
  to total interest-bearing liabilities                  1.10                               1.09
-----------------------------------------------------------------------------------------------------------------------
OTHER RATIOS:
  Return on average assets (2)                           1.17%                              1.05%
  Return on average equity  (2)                         16.32%                             15.32%
  Noninterest expense to average assets (2)              0.66%                              0.71%
  Efficiency ratio (3)                                     21%                                24%
  Average stockholders' equity to average assets         7.19%                              6.87%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  Includes  nonaccrual  loans.
(2)  Annualized.
(3)  Defined  as  noninterest expenses (excluding the provision for loan losses)
     as  a  percentage  of  net  interest  and  dividend income plus noninterest
     income.


                                       27
<PAGE>
The  following  table  provides  information  regarding  changes in interest and
dividend  income  and  interest  expense.  For each category of interest-earning
assets  and  interest-bearing  liabilities,  information  is provided on changes
attributable to (1) changes in rate (change in rate multiplied by prior volume),
(2)  changes  in  volume  (change  in  volume  multiplied by prior rate) and (3)
changes in rate-volume (change in rate multiplied by change in volume).

<TABLE>
<CAPTION>
                                                         For the Quarter Ended September 30, 2005 vs 2004
                                                   ----------------------------------------------------------
                                                               Increase (Decrease) Due To Change In:
                                                   ----------------------------------------------------------
     ($ in thousands)                                  Rate          Volume       Rate/Volume       Total
     --------------------------------------------------------------------------------------------------------
<S>                                                <C>            <C>            <C>            <C>
     Interest-earning assets:
       Loans                                       $      1,319   $      5,274   $        548   $      7,141
       Securities                                           433            229             96            758
       Other interest-earning assets                        114             40             53            207
     --------------------------------------------------------------------------------------------------------
     Total interest-earning assets                        1,866          5,543            697          8,106
     --------------------------------------------------------------------------------------------------------
     Interest-bearing liabilities:
       Interest checking deposits                            (3)            (9)             -            (12)
       Savings deposits                                      62            (36)           (15)            11
       Money market deposits                                607            (12)            (1)           594
       Certificates of deposit                              735          3,092            451          4,278
     --------------------------------------------------------------------------------------------------------
     Total deposit accounts                               1,401          3,035            435          4,871
     --------------------------------------------------------------------------------------------------------
       Federal funds purchased and FHLB advances             18             (8)           (11)            (1)
       Debentures and accrued interest payable              126           (425)           (19)          (318)
       Debentures - capital securities                      (36)           248             (6)           206
       Mortgage note payable                                  -              -              -              -
     --------------------------------------------------------------------------------------------------------
     Total borrowed funds                                   108           (185)           (36)          (113)
     --------------------------------------------------------------------------------------------------------
     Total interest-bearing liabilities                   1,509          2,850            399          4,758
     --------------------------------------------------------------------------------------------------------
     Net change in interest and dividend income    $        357   $      2,693   $        298   $      3,348
     --------------------------------------------------------------------------------------------------------
</TABLE>

PROVISION  FOR  LOAN  LOSSES
----------------------------

The  provision  for loan losses increased by $0.7 million to $1.8 million in the
third  quarter  of  2005,  from  $1.1  million in the third quarter of 2004. The
higher  provision  was  due  to  an increase in the amount of loan growth. Total
loans  grew  by  $146.5 million in the 2005 period, compared to $62.2 million in
the  2004  period.

NONINTEREST  INCOME
-------------------

Noninterest  income  increased  by  $0.3  million  to  $1.8 million in the third
quarter  of  2005,  from  $1.5  million in the third quarter of 2004. The higher
income  was  primarily  due  to  a  $0.4  million  increase  in  income from the
prepayment  of  mortgage  loans.  Income  from  the prepayment of mortgage loans
consists  of  the recognition of unearned fees associated with such loans at the
time  of  payoff and the receipt of prepayment penalties and interest in certain
cases.  The  Company's income from loan prepayments, which fluctuates and cannot
be  predicted,  tends to increase during periods of declining interest rates and
tends to decrease during periods of increasing interest rates.

NONINTEREST  EXPENSES
---------------------

Noninterest  expenses  increased  by  $0.4  million to $2.5 million in the third
quarter  of  2005,  from $2.1 million in the third quarter of 2004. The increase
was  primarily  due to increases in salary and employee benefits expense of $0.3
million  and  professional  fees  expense of $0.1 million, partially offset by a
$0.1 million decrease in occupancy and equipment expense.

Salaries  and  employee  benefits  expense  increased due to salary increases, a
higher  cost of employee benefits and additional staff aggregating $0.3 million.
The  Company  had 68 fulltime employees at September 30, 2005, compared to 66 at
September  30,  2004.

Professional fees expense increased due to the growth in the Company's assets as
well  as  additional accruals for consulting expense associated with the ongoing
compliance with the Sarbanes Oxley requirements for internal controls.
Occupancy  and  equipment  expense  decreased  due to a decrease in rent expense
resulting  from  the  termination  in  September  2004  of  Intervest  Mortgage
Corporation's lease on its former space at 10 Rockefeller Plaza.


                                       28
<PAGE>
PROVISION  FOR  INCOME  TAXES
-----------------------------

The  provision for income taxes increased by $1.1 million to $3.5 million in the
third quarter of 2005, from $2.4 million in the third quarter of 2004, due to an
increase  in  pre-tax  income.  The  Company's  effective tax rate (inclusive of
state  and  local taxes) amounted to 43.6% in the 2005 period, compared to 43.5%
in  the  2004  period.

                      COMPARISON OF RESULTS OF OPERATIONS
                      -----------------------------------
              FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
              -----------------------------------------------------

OVERVIEW
--------

Consolidated  net  earnings  for the first nine months of 2005 increased by $3.9
million, or 47%, to $12.3 million, or $1.76 per diluted share, from $8.4 million
or $1.25 per diluted share reported in the same period of 2004. The increase was
due  to  continued  growth  in  the  Company's  lending activities. Net earnings
increased  by  $3.9  million  due to a $7.9 million increase in net interest and
dividend  income  and  a  $0.5 million increase in noninterest income, partially
offset  primarily  by  a  $3.1 million increase in income tax expense and a $1.6
million  increase  in  noninterest  expenses.

The  Company's  return  on  average  assets  and  equity  was  1.13% and 16.53%,
respectively,  in the first nine months of 2005, compared to 1.05% and 14.08% in
the  first  nine  months  of  2004.  The  Company's efficiency ratio, which is a
measure  of  its  ability  to  control expenses as a percentage of its revenues,
continues to be favorable and improved to 23% for the first nine months of 2005,
from  25%  in  the  first  nine  months  of  2004.

Selected  information  regarding results of operations for the first nine months
of  2005  follows:

<TABLE>
<CAPTION>
                                             Intervest    Intervest    Intervest                Inter-
                                             National     Mortgage    Securities    Holding    Company
($ in thousands)                               Bank         Corp.        Corp.      Company   Amounts (2)   Consolidated
-------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>          <C>          <C>        <C>           <C>
Interest and dividend income                $   60,944   $    7,650   $         9  $    717   $      (295)  $      69,025
Interest expense                                31,880        5,546             -     3,758          (295)         40,889
                                            -----------------------------------------------------------------------------
Net interest and dividend income                29,064        2,104             9    (3,041)            -          28,136
Provision for loan losses                        3,380          (92)            -         -             -           3,288
Noninterest income                               3,969        4,275           115       391        (4,050)          4,700
Noninterest expenses                             8,815        2,315            79       530        (4,050)          7,689
                                            -----------------------------------------------------------------------------
Earnings before taxes                           20,838        4,156            45    (3,180)            -          21,859
Provision for income taxes                       9,048        1,922            21    (1,469)            -           9,522
-------------------------------------------------------------------------------------------------------------------------
Net earnings                                $   11,790   $    2,234   $        24  $ (1,711)  $         -   $      12,337
-------------------------------------------------------------------------------------------------------------------------
Intercompany dividends (1)                      (3,267)           -             -     3,267             -               -
-------------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany dividends   $    8,523   $    2,234   $        24  $  1,556   $         -   $      12,337
-------------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany dividends
    for the same period of 2004             $    5,568   $    1,659   $        24  $  1,141   $         -   $       8,392
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Dividends  to  the Holding Company from the Bank provide funds for the debt
     service  on  the  subordinated  debentures-capital  securities,  which  is
     included  in  the  Holding  Company's  interest  expense.
(2)  All  significant  intercompany  balances and transactions are eliminated in
     consolidation.  Such  amounts  arise from intercompany deposit accounts and
     management  and  service  agreements.

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.

Net  interest  and  dividend income increased to $28.1 million in the first nine
months  of  2005,  from  $20.2  million  in  the  first nine months of 2004. The
improvement  was  attributable  to  a  $391.9  million  increase  in  average
interest-earning  assets  resulting  from  continued  growth  in loans of $322.1
million  and  a  higher level of security and short-term investments aggregating
$69.7  million.  The  growth  in  average assets was funded by $355.4 million of
additional  interest-bearing deposits, $9.2 million of additional borrowed funds
and  a  $20.0  increase  in  stockholders'  equity.

The  Company's net interest margin increased slightly to 2.61% in the first nine
months  of  2005, from 2.57% in the first nine months of 2004. The higher margin
was due to the Company's yield on interest-earning assets increasing at a faster
pace  than  its  cost  of  funds.


                                       29
<PAGE>
In  a rising rate environment, the yield on interest-earning assets increased 34
basis  points  to 6.39% in the first nine months of 2005 primarily due to higher
yields  on  new  mortgage  loans  originated,  an  increase  in yields earned on
variable  rate  loans  indexed  to  the  prime rate, and higher yields earned on
security  and  other short-term investments. The cost of funds also increased by
31  basis  points  to  4.14%  in  the first nine months of 2005 primarily due to
higher  rates  paid  on  deposit  accounts.

The  following  table  provides  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 income/expense (including any related fee
income  or  expense)  for  each  period  divided  by  average  interest-earning
assets/interest-bearing  liabilities  during  each  period. Average balances are
derived  from  daily  balances.  Net interest margin is computed by dividing net
interest  and  dividend  income  by the average of total interest-earning assets
during  each  period.

<TABLE>
<CAPTION>
                                                   --------------------------------------------------------------------
                                                                            Nine-Months Ended
                                                   --------------------------------------------------------------------
                                                            September 30, 2005                September 30, 2004
                                                   ---------------------------------  ---------------------------------
                                                     Average    Interest    Yield/      Average    Interest    Yield/
($ in thousands)                                     Balance    Inc./Exp.   Rate (2)    Balance    Inc./Exp.   Rate (2)
-----------------------------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>         <C>       <C>          <C>         <C>
ASSETS
Interest-earning assets:
    Loans (1)                                      $1,153,425   $   63,180     7.32%  $  831,281   $   44,677     7.18%
    Securities                                        259,572        5,181     2.67      187,761        2,701     1.92
    Other interest-earning assets                      30,569          664     2.90       32,672          261     1.07
-----------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                       1,443,566   $   69,025     6.39%   1,051,714   $   47,639     6.05%
-----------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                             14,921                             15,684
-----------------------------------------------------------------------------------------------------------------------
Total assets                                       $1,458,487                         $1,067,398
-----------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
    Interest checking deposits                     $   11,408   $      130     1.52%  $   10,891   $      126     1.55%
    Savings deposits                                   23,547          405     2.30       31,467          421     1.79
    Money market deposits                             195,714        3,943     2.69      187,058        2,561     1.83
    Certificates of deposit                           926,087       26,965     3.89      571,917       15,268     3.57
-----------------------------------------------------------------------------------------------------------------------
Total deposit accounts                              1,156,756       31,443     3.63      801,333       18,376     3.06
-----------------------------------------------------------------------------------------------------------------------
  Fed funds purchased and FHLB Advances                 6,234          130     2.79        1,165           13     1.49
  Debentures and related interest payable              96,066        6,036     8.40      111,043        6,622     7.97
  Debentures - capital securities                      61,856        3,268     7.06       42,723        2,405     7.52
  Mortgage note payable                                   238           12     7.00          251           13     7.00
-----------------------------------------------------------------------------------------------------------------------
Total borrowed funds                                  164,394        9,446     7.68      155,182        9,053     7.79
-----------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                  1,321,150   $   40,889     4.14%     956,515   $   27,429     3.83%
-----------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                            5,942                              6,630
Noninterest-bearing liabilities                        31,904                             24,791
Stockholders' equity                                   99,491                             79,462
-----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity         $1,458,487                         $1,067,398
-----------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                         $   28,136     2.25%               $   20,210     2.22%
-----------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                 $  122,416                  2.61%  $   95,199                  2.57%
-----------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
  to total interest-bearing liabilities                  1.09                               1.10
-----------------------------------------------------------------------------------------------------------------------
OTHER RATIOS:
  Return on average assets (2)                           1.13%                              1.05%
  Return on average equity  (2)                         16.53%                             14.08%
  Noninterest expense to average assets (2)              0.70%                              0.76%
  Efficiency ratio (3)                                     23%                                25%
  Average stockholders' equity to average assets         6.82%                              7.44%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  Includes  nonaccrual  loans.
(2)  Annualized.
(3)  Defined  as  noninterest expenses (excluding the provision for loan losses)
     as  a  percentage  of  net  interest  and  dividend income plus noninterest
     income.


                                       30
<PAGE>
The  following  table  provides  information  regarding  changes in interest and
dividend  income  and  interest  expense.  For each category of interest-earning
assets  and  interest-bearing  liabilities,  information  is provided on changes
attributable to (1) changes in rate (change in rate multiplied by prior volume),
(2)  changes  in  volume  (change  in  volume  multiplied by prior rate) and (3)
changes  in  rate-volume  (change  in  rate  multiplied  by  change  in volume).

<TABLE>
<CAPTION>
                                                      For the Nine-Months Ended September 30, 2005 vs 2004
                                                      ----------------------------------------------------
                                                             Increase (Decrease) Due To Change In:
                                                             -------------------------------------
     ($ in thousands)                                  Rate          Volume       Rate/Volume       Total
     --------------------------------------------------------------------------------------------------------
<S>                                                <C>            <C>            <C>            <C>
     Interest-earning assets:
       Loans                                       $        873   $     17,347   $        283   $     18,503
       Securities                                         1,056          1,034            390          2,480
       Other interest-earning assets                        448            (17)           (28)           403
     --------------------------------------------------------------------------------------------------------
     Total interest-earning assets                        2,377         18,364            645         21,386
     --------------------------------------------------------------------------------------------------------
     Interest-bearing liabilities:
       Interest checking deposits                            (2)             6              -              4
       Savings deposits                                     120           (106)           (30)           (16)
       Money market deposits                              1,207            119             56          1,382
       Certificates of deposit                            1,373          9,483            841         11,697
     --------------------------------------------------------------------------------------------------------
     Total deposit accounts                               2,698          9,502            867         13,067
     --------------------------------------------------------------------------------------------------------
       Federal funds purchased and FHLB advances             11             57             49            117
       Debentures and accrued interest payable              358           (895)           (49)          (586)
       Debentures - capital securities                     (147)         1,066            (56)           863
       Mortgage note payable                                  -             (1)             -             (1)
     --------------------------------------------------------------------------------------------------------
     Total borrowed funds                                   222            227            (56)           393
     --------------------------------------------------------------------------------------------------------
     Total interest-bearing liabilities                   2,920          9,729            811         13,460
     --------------------------------------------------------------------------------------------------------
     Net change in interest and dividend income    $       (543)  $      8,635   $       (166)  $      7,926
     --------------------------------------------------------------------------------------------------------
</TABLE>

PROVISION  FOR  LOAN  LOSSES
----------------------------

The  provision  for loan losses decreased by $0.1 million to $3.3 million in the
first  nine  months of 2005, from $3.4 million in the first nine months of 2004.
The  lower  provision  was  a function of the favorable impact (of approximately
$0.6  million)  from  the  satisfaction of a $3.9 million nonaccrual loan in the
second  quarter  of  2005,  largely  offset by an increase in the amount of loan
growth.  Total  loans  grew  by  $305.9  million in the 2005 period, compared to
$271.0  million  in  the  2004  period.

NONINTEREST  INCOME
-------------------

Noninterest  income  increased by $0.5 million to $4.7 million in the first nine
months  of  2005, from $4.2 million in the first nine months of 2004. The higher
income  was  due  to  a  $0.7  million increase in income from the prepayment of
mortgage  loans  and  a  $0.1  million  increase  in  fees  from  early  deposit
withdrawals,  partially  offset  by  a $0.3 million decrease in fees earned from
expired  loan  commitments  that  were not funded. The prepayment income for the
2005  period included $0.6 million from the early satisfaction of the nonaccrual
loan  noted above. See the section entitled "Comparison of Results of Operations
for  the  Quarters  Ended  September  30, 2005 and 2004" for a discussion of the
effects of rising and falling interest rates on prepayment income.

NONINTEREST  EXPENSES
---------------------

Noninterest expenses increased by $1.6 million to $7.7 million in the first nine
months of 2005, from $6.1 million in the first nine months of 2004. The increase
was  primarily  due  to increases in the following: salary and employee benefits
expense of $1.1 million; professional fees expense of $0.3 million; director and
committee  fees expense of $0.1 million, advertising expense of $0.1 million and
all  other  expenses of $0.1 million. These increases were partially offset by a
$0.2 million decrease in occupancy and equipment expense.

Salaries  and  employee  benefits  expense  increased  primarily  due  to salary
increases,  a  higher cost of employee benefits and additional staff aggregating
$0.6  million,  and  a  $0.4  million  increase  in  bonus  payments  to certain
executives  of  the  Company. The Company had 68 fulltime employees at September
30,  2005,  compared  to  66  at  September  30,  2004.


                                       31
<PAGE>
Professional fees expense increased due to the growth in the Company's assets as
well  as  additional  accruals  ($0.2 million) for consulting expense associated
with  the  ongoing  compliance with the Sarbanes Oxley requirements for internal
controls.

Director  and  committee  fees  expense  increased  due  to  higher fees paid to
directors for each board and committee meeting attended. The fees were increased
for  board and committee meetings in October 2004 and an additional increase was
made  in  June  2005  for  audit  committee  meetings.
Advertising  expense increased due to additional advertising to support loan and
deposit  growth.  All  other  expense  increased  due to the payment of a Nasdaq
National  Market  entry fee. The Company's Class A common stock began trading on
the Nasdaq National Market on June 27, 2005. Previously, the stock had traded on
the  Nasdaq  SmallCap  Market.

Occupancy  and  equipment  expense  decreased  due to a decrease in rent expense
resulting  from  the  termination  in  September  2004  of  Intervest  Mortgage
Corporation's  lease  on its former space at 10 Rockefeller Plaza, a lower level
of  depreciation  expense,  and  an  increase in sublease income from the Bank's
Florida  offices.

PROVISION  FOR  INCOME  TAXES
-----------------------------

The  provision for income taxes increased by $3.1 million to $9.5 million in the
first  nine  months of 2005, from $6.4 million in the first nine months of 2004,
due  to  an  increase  in  pre-tax  income.  The  Company's  effective  tax rate
(inclusive  of  state  and  local  taxes)  amounted to 43.6% in the 2005 period,
compared  to  43.4%  in  the  2004  period.

               OFF-BALANCE SHEET AND OTHER FINANCING ARRANGEMENTS
               --------------------------------------------------

The Company is party to financial instruments with off-balance sheet risk in the
normal  course  of  business to meet the financing needs of its customers. For a
further  discussion of these financial instruments, see note 12 to the condensed
consolidated  financial  statements  in  this  report.

                         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 commitments, deposit
withdrawals  and  the repayment of borrowed funds. The Company's primary sources
of  funds  consist of the following: retail deposits obtained through the Bank's
branch  offices  and through the mail; satisfactions and principal repayments of
loans;  the  maturities  and  calls  of  securities;  issuance  of  debentures;
borrowings  from  the  federal  funds market and through FHLB advances; and cash
flow  provided  by  operating  activities.  For additional detail concerning the
Company's  cash  flows,  see the condensed consolidated statements of cash flows
included  in  this  report.

The  Bank has and expects to continue to rely heavily on certificates of deposit
(time deposits) as a source of funds. Total deposits amounted to $1.3 billion at
September  30, 2005 and time deposits represented 81%, or $1.1 billion, of those
deposits.  Additionally, time deposits of $100,000 or more at September 30, 2005
totaled $344.2 million and included $36.6 million of brokered deposits. The Bank
began  accepting  brokered deposits as another source of funds beginning in June
2005. The Bank must maintain its status as a well-capitalized insured depository
institution  in  order  to  solicit  and accept, renew or roll over any brokered
deposit without restriction. Time deposits are the only deposit accounts offered
by  the  Bank  that  have  stated  maturity  dates. These deposits are generally
considered  to  be  rate  sensitive and have a higher cost than deposits with no
stated maturities, such as checking, savings and money market accounts. The Bank
needs  to  pay competitive interest rates to attract and retain time deposits to
fund its loan originations. In addition, the Bank has and expects to continue to
rely  on  capital contributions from the Holding Company to increase its capital
to  support  its  rapid  asset growth. The Holding Company made a total of $32.5
million  of  capital  contributions  to the Bank during the first nine months of
2005.  At  September  30,  2005,  the  Bank  had $369.5 million of time deposits
maturing  by  December  31, 2006. The Bank expects that a substantial portion of
these  deposits  will  be  renewed  and  stay  with  the  Bank.

The  Bank,  from  time  to  time, may borrow funds on an overnight or short-term
basis  to  manage  its  liquidity  needs.  At  September  30, 2005, the Bank had
agreements with correspondent banks whereby it could borrow up to $16 million on
an  unsecured  basis. In addition, as a member of the FHLB and FRB, the Bank can
also  borrow  from  these institutions on a secured basis. During the first nine
months  of  2005,  the Bank borrowed a total of $46.4 million of short-term FHLB
advances  and  overnight  federal  funds  purchases  and repaid a total of $82.4
million  for  a  net  decrease  of  $36.0  million  from  short-term  borrowings
outstanding  at  December  31,  2004.  At  September  30,


                                       32
<PAGE>
2005,  there  were  no  outstanding  borrowings  from  any of the aforementioned
sources.  At September 30, 2005, the Bank had available collateral consisting of
investment  securities to support total borrowings of $229 million from the FHLB
and  FRB.

Intervest  Mortgage  Corporation  has  and  expects  to  continue to rely on the
issuance of its subordinated debentures in registered, best efforts offerings to
the  public  as a source of funds to support its loan originations. In addition,
as  the Bank's mortgage loan portfolio has grown, service fee income received by
Intervest  Mortgage  Corporation  from  the  Bank  has  comprised  an increasing
percentage  of  Intervest  Mortgage  Corporation's  cash  flow.  The  Bank has a
servicing  agreement  with  Intervest  Mortgage  Corporation  whereby  Intervest
Mortgage  Corporation  provides the Bank with mortgage loan origination services
in  exchange  for  a  monthly fee that is based on loan origination volumes. The
services  include  the identification of potential properties and borrowers; the
inspection of properties constituting collateral for such loans; the negotiation
of  the  terms  and  conditions  of  such  loans  in  accordance with the Bank's
underwriting  standards;  and coordinating the preparation of commitment letters
and  the  loan closing process. The services are performed by Intervest Mortgage
Corporation's personnel and the related expenses are borne by Intervest Mortgage
Corporation.  In addition, from time to time, Intervest Mortgage Corporation has
also received capital contributions from the Holding Company.

The  future  growth  of  Intervest  Mortgage  Corporation's  lending business is
dependent  on  its continuing ability to sell its debentures with interest rates
that  would  result  in a positive interest rate spread, which is the difference
between yields earned on its loans and the rates paid on its debentures.

As detailed in note 7 to the condensed consolidated financial statements in this
report,  at  September  30, 2005, $85.8 million in aggregate principal amount of
Intervest  Mortgage  Corporation's subordinated debentures were outstanding with
fixed  interest  rates  that  range from 6.25% to 9.00% per annum and maturities
that range from January 1, 2006 to October 1, 2013. During the first nine months
of 2005, Intervest Mortgage Corporation repaid various debentures for a total of
$33.5  million  ($29.1  million of principal and $4.4 million of related accrued
interest  payable), and issued new debentures with an aggregate principal amount
of  $26.0  million  for net proceeds, after offering costs, of $24.1 million. At
September  30,  2005,  Intervest  Mortgage  Corporation  had  $12.3  million  of
debentures  and  related accrued interest payable maturing by December 31, 2006,
which  are  expected  to  be  repaid from cash flow generated from maturities of
existing  mortgage  loans, ongoing operations and cash on hand. In October 2005,
Intervest  Mortgage  Corporation  notified  holders  of  its  Series 9/18/00 and
Series  8/5/02 debentures due to mature on January 1, 2005 that these debentures
will be redeemed on December 1, 2005. Total interest and principal of $3,786,000
will  be  disbursed  from  cash  on  hand.

The  Holding  Company's  sources  of funds and capital to date have been derived
from  the  following: interest income from a limited portfolio of mortgage loans
and  short-term investments; monthly dividends from the Bank to service interest
expense  on  trust  preferred securities; monthly management fees from Intervest
Mortgage  Corporation and the Bank for providing these subsidiaries with certain
administrative  services;  the  issuance  of  its  common  stock  through public
offerings,  exercise  of  outstanding  common  stock  warrants and conversion of
outstanding  convertible  debentures; the issuance of trust preferred securities
through  its  wholly  owned  business  trusts;  and the direct issuance of other
subordinated  debentures  to  the public. These sources of funds are expected to
continue  to  be  available  to  the Holding Company. At September 30, 2005, the
Holding  Company  had  $1.3  million  of debentures and related accrued interest
payable maturing by December 31, 2006, which are expected to be repaid from cash
on  hand. The Holding Company completed in August a public offering of 1,250,000
shares  of its Class A common stock for $19.75 per share and in September issued
an  additional  186,468  shares  of Class A common stock for $19.75 per share in
connection  with  the  exercise  by  the  underwriters  of an option to purchase
additional  shares to cover over-allotments. The issuance of these shares, after
underwriting  commissions  and expenses, resulted in $26.3 million of additional
capital  for  the  Company.

The  Holding  Company,  through  its  wholly  owned  business  trusts  Intervest
Statutory  Trust  I,  II,  III  and IV, issued in December 2001, September 2003,
March  2004  and September 2004, $15.0 million, respectively, of trust preferred
securities  for  a  total  of  $60  million  at both fixed and variable rates of
interest  that mature in 2031 or later. The total proceeds from these securities
have  been  invested in the Bank at various times through capital contributions.
The  Holding  Company  is required to make interest payments on the principal of
those  securities,  which  currently  amount  to $4.4 million annually. The Bank
provides  funds to Holding Company in the form of dividends for this purpose. At
September 30, 2005, $43.1 million of the trust preferred securities qualified as
regulatory  Tier  1 capital and the remainder qualified as Tier 2 capital in the
Holding  Company's  computation  of  regulatory  capital.


                                       33
<PAGE>
Additional  information  concerning  outstanding  time  deposits, debentures and
trust  preferred  securities, including interest rates and maturity dates can be
found  in  notes 6, 7 and 8 of the notes to the condensed consolidated financial
statements  included  in  this  report.

At  September  30, 2005, total commitments to lend aggregated to $164.5 million.
Although  there  is  no  certainty, management anticipates the majority of these
loan  commitments  will  fund  over the next 12 months. If all these commitments
were to close, they would be funded by the sources of funds described above. The
Company  considers  its  current  liquidity  and  sources of funds sufficient to
satisfy  its  outstanding  lending  commitments  and  its  maturing liabilities.
Management  is  not  aware  of  any  trends,  known  demand,  commitments  or
uncertainties  which  are expected to have a material impact on future operating
results,  liquidity  or  capital  resources.

REGULATORY CAPITAL

The  Bank  is  subject  to  various regulatory capital requirements. The Federal
Deposit Insurance Corporation (FDIC) and other bank regulatory agencies use five
capital  categories ranging from well capitalized to critically undercapitalized
to  determine  various  matters,  including  prompt  corrective  action and each
institution's  FDIC  deposit  insurance  premiums.  These  categories  involve
quantitative  measures  of  a  bank's  assets,  liabilities,  and  certain
off-balance-sheet items as calculated under regulatory accounting practices. The
capital amounts and classifications are also subject to qualitative judgments by
the  regulators about components, risk weightings, and other factors. Failure to
meet  minimum  capital  requirements can initiate certain mandatory and possibly
additional  discretionary  actions  by the regulators that, if undertaken, could
have  a  direct  material  effect  on  the  Company's  consolidated  financial
statements.

The  Bank is required to maintain regulatory defined minimum Tier 1 leverage and
Tier  1and  total  risk-based  capital  ratio  levels of at least 4%, 4% and 8%,
respectively.  At  September 30, 2005 and December 31, 2004, management believes
the  Bank  met  its  capital  adequacy  requirements  and  is a well-capitalized
institution as defined in the regulations, which require minimum Tier 1 leverage
and  Tier  1  and  total  risk-based  ratios  of  5%,  6% and 10%, respectively.
Management is not aware of any conditions or events that would change the Bank's
designation  as  a  well-capitalized  institution.

Information  regarding  the  Bank's  regulatory  capital  and  related ratios is
summarized  as  follows:

<TABLE>
<CAPTION>
                                               At September 30,    At December 31,
                                              ------------------  -----------------
     ($ in thousands)                                2005               2004
     ------------------------------------------------------------------------------
<S>                                           <C>                 <C>
     Tier 1 Capital                           $         152,366   $        106,724
     Tier 2 Capital                                      14,069             10,689
     ------------------------------------------------------------------------------
     Total risk-based capital                 $         166,435   $        117,413
     ------------------------------------------------------------------------------
     Net risk-weighted assets                 $       1,307,947   $        971,823
     Average assets for regulatory purposes   $       1,436,027   $      1,140,624
     ------------------------------------------------------------------------------
     Tier 1 capital to average assets                     10.61%              9.36%
     Tier 1 capital to risk-weighted assets               11.65%             10.98%
     Total capital to risk-weighted assets                12.72%             12.08%
     ------------------------------------------------------------------------------
</TABLE>

The  Holding  Company  on  a consolidated basis is subject to minimum regulatory
capital  requirements  administered by the FRB. These guidelines require a ratio
of  Tier 1 or Core Capital, as defined in the guidelines, to total risk-weighted
assets of at least 4% and a ratio of total capital to risk-weighted assets of at
least  8%.  The  guidelines  also  require a ratio of Tier 1 capital to adjusted
total average assets of not less than 3%. At September 30, 2005 and December 31,
2004,  management  believes  that  the  Holding Company met its capital adequacy
requirements.

Information  regarding  the  Holding  Company's  regulatory  capital and related
ratios  is  summarized  below:

<TABLE>
<CAPTION>
                                               At September 30,    At December 31,
                                              ------------------  -----------------
     ($ in thousands)                                2005               2004
     ------------------------------------------------------------------------------
<S>                                           <C>                 <C>
     Tier 1 Capital (1)                       $         172,276   $        115,031
     Tier 2 Capital (1)                                  31,325             41,074
     ------------------------------------------------------------------------------
     Total risk-based capital                 $         203,601   $        156,105
     ------------------------------------------------------------------------------
     Net risk-weighted assets                 $       1,411,500   $      1,096,711
     Average assets for regulatory purposes   $       1,556,769   $      1,273,770
     ------------------------------------------------------------------------------
     Tier 1 capital to average assets                     11.07%              9.03%
     Tier 1 capital to risk-weighted assets               12.21%             10.49%
     Total capital to risk-weighted assets                14.42%             14.23%
     ------------------------------------------------------------------------------
</TABLE>


                                       34
<PAGE>
     (1)  There  are  $60  million  of qualifying capital securities outstanding
     (total debentures of $61.9 million issued to Statutory Trust I, II, III and
     IV  by  the Holding Company less the Holding Company's investments in those
     trusts  aggregating  $1.9  million). At September 30, 2005 and December 31,
     2004,  $43.1  million  and $30.0 million of those securities, respectively,
     was  included  in Tier 1 Capital, and the remaining portion was included in
     Tier  2  Capital.


Intervest  Securities  Corporation  is  subject to the SEC's Uniform Net Capital
Rule  [15c3-1  (a)  (2)  (vi)],  which  requires  the maintenance of minimum net
capital  of  $5,000.  At  September  30,  2005  and December 31, 2004, Intervest
Securities  Corporation's  net  capital  was  $0.5  million.

The  Federal Reserve Bank on March 1, 2005 issued a final rule that allows trust
preferred  securities  to  continue to be included in the Tier 1 capital of bank
holding  companies  (BHC),  but  with  stricter  quantitative limits and clearer
qualitative  standards.  The  new  rule provides a transition period for BHCs to
meet  the  new,  stricter  limitations within regulatory capital by allowing the
limits on restricted core capital elements to become fully effective as of March
31,  2009.  For  a  further discussion of these regulatory implications, see the
section  entitled  "Recent  Accounting and Regulatory Developments" in note 1 to
the consolidated financial statements included in the Company's Annual Report on
Form  10-K  for  the  year  ended  December  31,  2004.

                         ASSET AND LIABILITY MANAGEMENT
                         ------------------------------

Interest  rate  risk  arises  from  differences  in  the repricing of assets and
liabilities  within  a given time period. The Company does not engage in trading
or  hedging activities, nor does it invest in interest rate derivatives or enter
into interest rate swaps. The primary objective of the Company's asset/liability
management  strategy  is  to  limit,  within established guidelines, the adverse
impact  of  changes  in  interest  rates on its net interest income and capital.

The  Company  uses  "gap  analysis,"  which  measures  the  difference  between
interest-earning  assets and interest-bearing liabilities that mature or reprice
within  a  given time period, to monitor its interest rate sensitivity. An asset
or  liability  is  normally  considered to be interest-rate sensitive if it will
reprice  or mature within one year or less. The interest-rate sensitivity gap is
the  difference between interest-earning assets and interest-bearing liabilities
scheduled  to  mature  or  reprice within one-year. A gap is considered positive
when the amount of interest rate-sensitive assets exceeds the amount of interest
rate-sensitive  liabilities.  Conversely,  a gap is considered negative when the
opposite  is  true.

In  a  period  of  rising interest rates, a negative gap would tend to adversely
affect  net  interest  income,  while  a positive gap would tend to increase net
interest  income.  In  a  period of falling interest rates, a negative gap would
tend  to  increase  net  interest  income,  while  a  positive gap would tend to
adversely  affect  net interest income. If the repricing of the Company's assets
and  liabilities were equally flexible and moved concurrently, the impact of any
increase  or decrease in interest rates on net interest income would be minimal.

A  simple  interest rate gap analysis by itself may not be an accurate indicator
of how net interest income will be affected by changes in interest rates for the
following  reasons.  Income  associated  with  interest-earning assets and costs
associated  with  interest-bearing  liabilities may not be affected uniformly by
changes in interest rates. In addition, the magnitude and duration of changes in
interest  rates  may  have  a  significant  impact  on  net interest income. For
example,  although certain assets and liabilities may have similar maturities or
periods  of  repricing, they may react in different degrees to changes in market
interest  rates.  Interest  rates  on  certain  types  of assets and liabilities
fluctuate in advance of changes in general market interest rates, while interest
rates  on  other  types  may  lag  behind  changes  in market interest rates. In
addition,  certain  assets,  such  as  adjustable-rate  mortgage loans, may have
features  generally  referred to as "interest rate caps or collars," which limit
changes  in interest rates on a short-term basis and over the life of the asset.
In  the  event of a change in interest rates, asset prepayment and early deposit
withdrawal  levels  also  could  deviate  significantly  from  those  assumed in
calculating  the  interest-rate  gap.  The  ability of many borrowers to service
their debts also may decrease in the event of an interest-rate increase, and the
behavior  of depositors may be different than those assumed in the gap analysis.

The  Company's  one-year  positive  interest  rate  sensitivity gap increased to
$461.3  million  ,  or 28.3% of total assets, at September 30, 2005, from $114.0
million,  or  8.7%  at  December  31,  2004.  The  increase  in the positive gap
primarily  reflects  an increase in loans that reprice or mature within one year
funded  by  time  deposits  with  terms  of  more than one year. For purposes of
computing the gap, all deposits with no stated maturities are treated as readily
accessible  accounts.  However,  if  such deposits were treated differently, the
one-year  gap  would  then  change.  The


                                       35
<PAGE>
behavior  of  core  depositors  may  not  necessarily  result  in  the immediate
withdrawal  of  funds  in  the  event  deposit rates offered by the Bank did not
change as quickly and uniformly as changes in general market rates. For example,
if  only  25%  of  deposits  with  no stated maturity were assumed to be readily
accessible,  the  one-year gap would have been a positive 39.6% at September 30,
2005, compared to a positive 22.5 % at December 31, 2004.

Many  of the Company's floating-rate loans have a "floor," or minimum rate, that
is determined in relation to prevailing market rates on the date of origination.
This floor only adjusts upwards in the event of increases in the loan's interest
rate.  This  feature  reduces  the  effect  on interest income of a falling rate
environment  because  the  interest  rates  on such loans do not reset downward.
However,  the Company may nonetheless experience loan prepayments, the amount of
which  cannot  be predicted, and reinvestment risk associated with the resulting
proceeds.

Notwithstanding  all  of the above, there can be no assurances that a sudden and
substantial  increase  in  interest rates may not adversely impact the Company's
earnings,  to the extent that the interest rates borne by assets and liabilities
do not change at the same speed, to the same extent, or on the same basis.

The  table  that follows summarizes interest-earning assets and interest-bearing
liabilities  as  of  September 30, 2005, that are scheduled to mature or reprice
within  the  periods  shown.

<TABLE>
<CAPTION>
                                                  0-3       4-12    Over 1-4      Over 4
                                                  ---       ----    --------      ------
($ in thousands)                               Months     Months       Years       Years        Total
-----------------------------------------------------------------------------------------------------
<S>                                         <C>        <C>        <C>         <C>         <C>
Loans (1)                                   $530,896   $341,472   $ 386,565   $  73,669   $1,332,602
Securities held to maturity (2)               39,450    110,240      88,034           -      237,724
Short-term investments                        32,342          -           -           -       32,342
FRB and FHLB stock                             3,519          -           -       2,599        6,118
-----------------------------------------------------------------------------------------------------
Total rate-sensitive assets                 $606,207   $451,712   $ 474,599   $  76,268   $1,608,786
-----------------------------------------------------------------------------------------------------
Deposit accounts (3):
  Interest checking deposits                $  8,183   $      -   $       -   $       -   $    8,183
  Savings deposits                            23,497          -           -           -       23,497
  Money market deposits                      214,536          -           -           -      214,536
  Certificates of deposit                     75,802    262,972     520,486     191,237    1,050,497
-----------------------------------------------------------------------------------------------------
  Total deposits                             322,018    262,972     520,486     191,237    1,296,713
-----------------------------------------------------------------------------------------------------
Debentures and mortgage note payable (1)           -      7,750      81,962      63,447      153,159
Accrued interest on all borrowed funds (1)     1,672      2,198       3,013         449        7,332
-----------------------------------------------------------------------------------------------------
Total borrowed funds                           1,672      9,948      84,975      63,896      160,491
-----------------------------------------------------------------------------------------------------
Total rate-sensitive liabilities            $323,690   $272,920   $ 605,461   $ 255,133   $1,457,204
-----------------------------------------------------------------------------------------------------
GAP (repricing differences)                 $282,517   $178,792   $(130,862)  $(178,865)  $  151,582
-----------------------------------------------------------------------------------------------------
Cumulative GAP                              $282,517   $461,309   $ 330,447   $ 151,582   $  151,582
-----------------------------------------------------------------------------------------------------
Cumulative GAP to total assets                  17.3%      28.3%       20.3%        9.3%         9.3%
-----------------------------------------------------------------------------------------------------
</TABLE>

     Significant assumptions used in preparing the preceding gap table follow:

     (1)  Floating-rate  loans and debentures payable are included in the period
     in  which  their interest rates are next scheduled to adjust rather than in
     the  period  in  which they mature. Fixed-rate loans and debentures payable
     are  scheduled,  including  repayments,  according  to  their  contractual
     maturities.  Deferred  loan  fees  are  excluded  from  this  analysis; (2)
     securities  are  scheduled  according  to  the earlier of their contractual
     maturity  or  the date in which the interest rate is scheduled to increase.
     The effects of possible prepayments that may result from the issuer's right
     to call a security before its contractual maturity date are not considered;
     (3)  interest  checking,  savings and money market deposits are regarded as
     readily  accessible  withdrawable accounts; and certificates of deposit are
     scheduled  through  their  maturity  dates.

                           SARBANES OXLEY ACT OF 2002
                           --------------------------

The  requirements  of  Section  404 of the Sarbanes Oxley Act and Securities and
Exchange Commission rules and regulations require an annual management report on
the Company's internal controls over financial reporting, including, among other
matters,  management's assessment of the effectiveness of the Company's internal
control  over  financial  reporting,  and an attestation report by the Company's
independent registered public accounting firm addressing these assessments.

Beginning  with  the  Company's  annual  report for the year ending December 31,
2006,  the  Company will have to include in its annual report on Form 10-K filed
with  the  Securities  and  Exchange  Commission  a  report  of


                                       36
<PAGE>
management regarding the Company's internal controls over financial reporting in
accordance  with  the  above  requirements.

In  this  regard,  the  Company has begun a process to document and evaluate its
internal  control  over  financial  reporting  in  order  to  satisfy  these
requirements.  The  process  includes  dedicating  internal resources toward the
adoption  of a detailed work plan and will also involve the retention of outside
consultants.
This  process  is  designed  to (i) assess and document the adequacy of internal
control  over financial reporting, (ii) take steps to improve control processes,
where  appropriate,  and  (iii)  verify  through  testing  that  controls  are
functioning  as  documented.  To  date,  the  Company  has  identified  certain
deficiencies  in  the design and operating effectiveness of its internal control
over  financial  reporting, and it believes that they have been corrected or are
in  the  process  of  being  corrected.  Although this process is not completed,
management  is  not  aware  of  any  "significant  deficiencies"  or  "material
weaknesses"  in  the  Company's  internals  control over financial reporting, as
defined  in applicable Securities and Exchange Commission rules and regulations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market  risk  is  the  risk  of  loss  from adverse changes in market prices and
interest  rates.  The  Company  has  not  engaged in and accordingly has no risk
related  to trading accounts, commodities, foreign exchange, hedging activities,
interest  rate  derivatives  or  interest  rate swaps. The Company's market risk
arises  primarily  from  interest  rate  risk  inherent  in  its  lending  and
deposit-taking  activities,  and the issuance of its debentures. The measurement
of market risk associated with financial instruments is meaningful only when all
related and offsetting on-and off-balance sheet transactions are aggregated, and
the  resulting net positions are identified. Disclosures about the fair value of
financial  instruments  as of December 31, 2004, which reflect changes in market
prices  and  rates,  can  be  found  in  note  20  to the consolidated financial
statements  included  in  the  Company's Annual Report on Form 10-K for the year
ended December 31, 2004. Management believes that there have been no significant
changes in the Company's market risk exposure since December 31, 2004.

Management  actively  monitors  and  manages  the  Company's  interest rate risk
exposure.  The  primary  objective  in  managing interest rate risk is to limit,
within  its  established  guidelines,  the adverse impact of changes in interest
rates  on  the  Company's  net  interest  income  and  capital.  For  a  further
discussion, see the section entitled "Asset and Liability Management" under Item
2  of  this  report.

ITEM  4.  CONTROLS  AND  PROCEDURES

The  Company's  management  evaluated,  with  the participation of its Principal
Executive  and Financial Officers, the effectiveness of the Company's disclosure
controls  and  procedures  (as  defined in Rule 13a-15(e) or 15d-15(e) under the
Securities  Exchange  Act  of  1934) as of the end of the period covered by this
report. Based on such evaluation, the Principal Executive and Financial Officers
have  concluded  that  the  Company's  disclosure  controls  and  procedures are
designed  to ensure that information required to be disclosed in the reports the
Company  files  or  furnishes  under  the  Securities  Exchange  Act  of 1934 is
recorded,  processed,  summarized and reported within the time periods specified
in  the  SEC's  rules and regulations, and are operating in an effective manner.
The  Company made no significant changes in its internal controls over financial
reporting  or  in  other  factors that could significantly affect these controls
subsequent  to  September  30,  2005.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Not Applicable

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

(a)  Not Applicable
(b)  Not Applicable


                                       37
<PAGE>
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

On  October  27,  2005,  the  Board of Directors of the registrant approved cash
incentive  awards  to the following executive officers in the following amounts:
Jerome Dansker - $201,000; Lowell S. Dansker - $146,000; and Lawrence G. Bergman
-  $56,000.  The  expense  of  the  incentive awards will be allocated among the
Company's  subsidiaries.  In  addition,  the Board of Directors extended, for an
additional  one-year  term  expiring  on  December  31,  2006,  the  employment
agreements  between  Intervest  National  Bank  and  the  following  officers of
Intervest  National Bank, and at the following annual salaries: Raymond Sullivan
($180,000);  Keith  Olsen  ($220,000);  and John Arvonio ($180,000). The Company
also  extended  the  employment agreement between Intervest Mortgage Corporation
and  John  Hoffmann  for  an  additional  one-year  term  at an annual salary of
$115,000.  The Company also approved the payment of bonuses to those officers as
follows:  Raymond  Sullivan  -  $10,000;  Keith  Olsen - $10,000; John Arvonio -
$10,000;  and  John  Hoffmann  -  $10,000.

On  September  27,  2005,  Intervest  Mortgage Corporation (the Company's wholly
owned  subsidiary  and hereafter referred to as "Intervest") issued subordinated
debentures  in  the  aggregate  principal  amount  of  $12.0 million maturing as
follows;  $2.0  million on October 1, 2009, $4.0 million on October 1, 2011, and
$6.0 million on October 1, 2013 (collectively, the "Debentures"). The Debentures
were issued under an Indenture, dated as of September 1, 2005, between Intervest
and  The  Bank  of  New  York,  as Trustee (the "Indenture"). The Debentures are
general  unsecured obligations of Intervest, and will be subordinated in payment
of principal and interest to all senior indebtedness of Intervest, as defined in
the  Indenture.

Intervest may, at its option, at any time call all or any part of the Debentures
(including  all  or any part of the Debentures of any maturity) for payment, and
redeem the same at any time prior to the maturity thereof.  The redemption price
for  Debentures  will  be     face  amount  plus  a  1%  premium  if the date of
redemption  is  prior to April 1, 2007, or face amount if the date of redemption
is  on  or  after  April  1,  2007. In all cases, the Debenture holder will also
receive  interest  accrued  to  the  date  of  redemption.

The  Debentures  were  offered  by  Sage  Rutty & Co., Inc. (the "Underwriter').
Intervest paid to the Underwriter a commission equal to 3% of the purchase price
of  Debentures  due  October 1, 2009, 5% of the purchase price of Debentures due
October 1, 2011, and 7% of the purchase price of Debentures due October 1, 2013,
which are sold by the Underwriter or participating broker/dealers.  In addition,
Intervest  paid  the  Underwriter  a fee equal to   of 1% of the aggregate gross
amount  of  Debentures  due October 1, 2009, and 1% of Debentures due October 1,
2011  and  October  1,  2013  sold  in  the offering, and will pay the costs and
expenses  of  Underwriter's  counsel  associated  with  the  offering  of  the
Debentures.

Interest  on the Debentures will be paid or will accrue on the first day of each
calendar  quarter  at the following annual interest rates:  6.25% for Debentures
maturing  October 1, 2009, 6.5% for Debentures maturing October 1, 2011 and 7.0%
for  Debentures  maturing October 1, 2013.  If the purchaser has elected to have
interest  accrue,  then,  in  addition  to  interest  accruing  on the principal
balance,  interest  will  accrue  each  calendar  quarter  on the balance of the
accrued  interest  as  of  the  last  day  of  the preceding quarter at the same
interest  rate, with all accrued interest  payable at maturity. In either event,
the entire principal amount of each Debenture is payable at maturity.

A  holder  of Debentures will have the right, commencing in 2009, to require the
Company to purchase his or her Debentures for the face amount, together with any
accrued  but unpaid interest through the Repurchase Date (as hereafter defined).
However,  the  Company  will  not, in any calendar year, be required to purchase
more than $100,000 in aggregate principal amount of each maturity of Debentures,
on  a  non-cumulative  basis.  Any  such repurchases will be made only once each
calendar  year,  on  October  1 of each year (the "Repurchase Date"), commencing
October  1,  2009.  In  addition,  the  Indenture  contains  customary events of
default,  the  occurrence  of  any  of  which  could  lead to an acceleration of
Intervest's  obligations  under  the  Debentures.


                                       38
<PAGE>
ITEM  6.  EXHIBITS

     The following exhibits are filed as part of this report.

31.0 Certification of the principal executive officer pursuant to Section 302 of
     The Sarbanes-Oxley Act of 2002.

31.1 Certification of the principal financial officer pursuant to Section 302 of
     The Sarbanes-Oxley Act of 2002.

32.0 Certification of the principal executive and financial officers pursuant to
     Section 906 of The Sarbanes-Oxley Act of 2002.

                                   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


Date: October 27, 2005     By:  /s/ Jerome Dansker
                           -----------------------
                           Jerome Dansker, Chairman and Executive Vice President
                           (Principal Executive Officer)




Date: October 27, 2005     By:  /s/ Lowell S. Dansker
                           --------------------------
                           Lowell S. Dansker, Vice Chairman, President
                           and Treasurer
                           (Principal Financial Officer)


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