================================================================================
                     U.S. 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 JUNE 30, 2004
                                                 -------------


                          Commission File No. 000-23377
                                              ---------

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


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

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

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


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 the number of shares outstanding of each of the registrant'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  5,663,075 Outstanding at July 30, 2004
-----------------------------------------------  --------------------------------------

Class B Common Stock, $1.00 par value per share    385,000 Outstanding at July 30, 2004
-----------------------------------------------  --------------------------------------
</TABLE>

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


<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q
                                  JUNE 30, 2004
                                TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION                                               Page
                                                                            ----

     ITEM 1.     FINANCIAL STATEMENTS

          Condensed Consolidated Balance Sheets
            as of June 30, 2004 (Unaudited) and December 31, 2003 . . . . . . .2

          Condensed Consolidated Statements of Earnings
            (Unaudited) for the Quarters and Six-Months Ended
            June 30, 2004 and 2003 . . . . . . . . . . . . . . . . . . . . . . 3

          Condensed Consolidated Statements of Changes in
            Stockholders' Equity (Unaudited)for the Six-Months
            Ended June 30, 2004 and 2003 . . . . . . . . . . . . . . . . . . . 4

          Condensed Consolidated Statements of Cash Flows (Unaudited)
            for the Six-Months Ended June 30, 2004 and 2003 . . . . . . . . . .5

          Notes to Condensed Consolidated Financial Statements
            (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

          Review by Independent Registered Public Accounting Firm . . . . . . 13

          Report of Independent Registered Public Accounting Firm . . . . . . 14

     ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                   CONDITION AND  RESULTS OF OPERATIONS . . . . . . . . . . . 16

     ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                   MARKET RISK . . . . . . . . . . . . . . . . . . . . . . . .27

     ITEM 4.     CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . .28

PART II. OTHER INFORMATION

     ITEM 1.     LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . .29

     ITEM 2.     CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER
                   PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . 29

     ITEM 3.     DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . .29

     ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . .29

     ITEM 5.     OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . .29

     ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . 29

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30


PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT

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 following factors are among those
that  could  cause  actual results to differ materially from the forward-looking
statements:  changes  in general economic, market and regulatory conditions, the
development  of  an  interest  rate  environment  that  may adversely affect the
Company's  interest  rate spread, other income or cash flow anticipated from the
Company's operations, investment and lending activities; and changes in laws and
regulations  affecting  banks  and  bank  holding  companies.


                                        1
<PAGE>
<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                                     INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                                           CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                                                  JUNE 30,    DECEMBER 31,
($in thousands, except par value)                                                                   2004          2003
----------------------------------------------------------------------------------------------  ------------  -------------
<S>                                                                                             <C>           <C>
ASSETS                                                                                           (Unaudited)
Cash and due from banks                                                                         $      3,656  $       8,833
Federal funds sold                                                                                    13,570         36,816
Commercial paper and other short-term investments                                                      2,653         18,479
                                                                                                ------------  -------------
   Total cash and cash equivalents                                                                    19,879         64,128
Securities held to maturity, net (estimated fair value of $194,871 and $152,995, respectively)       196,132        152,823
Federal Reserve Bank and Federal Home Loan Bank stock, at cost                                         4,642          3,075
Loans receivable (net of allowance for loan losses of $8,941 and $6,580, respectively)               868,355        664,545
Accrued interest receivable                                                                            5,598          4,995
Loan fees receivable                                                                                   6,946          5,622
Premises and equipment, net                                                                            7,084          5,752
Deferred income tax asset                                                                              4,083          2,960
Deferred debenture offering costs, net                                                                 4,579          4,023
Other assets                                                                                           1,968          3,600
----------------------------------------------------------------------------------------------  ------------  -------------
TOTAL ASSETS                                                                                    $  1,119,266  $     911,523
----------------------------------------------------------------------------------------------  ------------  -------------
LIABILITIES
Deposits:
   Noninterest-bearing demand deposit accounts                                                  $      7,062  $       6,210
   Interest-bearing deposit accounts:
      Checking (NOW) accounts                                                                         10,909          9,146
      Savings accounts                                                                                31,915         30,784
      Money market accounts                                                                          205,924        162,214
      Certificate of deposit accounts                                                                597,042        467,159
                                                                                                ------------  -------------
Total deposit accounts                                                                               852,852        675,513
Borrowed Funds:
      Federal funds purchased                                                                          3,384              -
      Subordinated debentures                                                                         93,560         94,690
      Subordinated debentures - capital securities                                                    46,392         30,928
      Accrued interest payable on all debentures                                                      12,055         14,510
      Mortgage note payable                                                                              249            255
                                                                                                ------------  -------------
Total borrowed funds                                                                                 155,640        140,383
Accrued interest payable on deposits                                                                   1,237          1,080
Mortgage escrow funds payable                                                                         15,354         10,540
Official checks outstanding                                                                           10,226          6,122
Other liabilities                                                                                      2,698          2,500
----------------------------------------------------------------------------------------------  ------------  -------------
TOTAL LIABILITIES                                                                                  1,038,007        836,138
----------------------------------------------------------------------------------------------  ------------  -------------
STOCKHOLDERS' EQUITY
Preferred stock (300,000 shares authorized, none issued)                                                   -              -
Class A common stock ($1.00 par value, 9,500,000 shares authorized,
   5,663,075 and 5,603,377 shares issued and outstanding, respectively)                                5,663          5,603
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                                                                    36,562         35,988
Retained earnings                                                                                     38,649         33,409
----------------------------------------------------------------------------------------------  ------------  -------------
TOTAL STOCKHOLDERS' EQUITY                                                                            81,259         75,385
==============================================================================================  ============  =============
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                      $  1,119,266  $     911,523
==============================================================================================  ============  =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.


                                        2
<PAGE>
<TABLE>
<CAPTION>
                              INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                                CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                                 (Unaudited)

                                                                     QUARTER ENDED        SIX-MONTHS ENDED
                                                                        JUNE 30,               JUNE 30,
                                                                   ------------------  ----------------------
($in thousands, except per share data)                               2004      2003       2004        2003
-----------------------------------------------------------------  --------  --------  ----------  ----------
<S>                                                                <C>       <C>       <C>         <C>
INTEREST AND DIVIDEND INCOME
Loans receivable                                                   $ 14,457  $11,613   $  28,249   $  22,283
Securities                                                              859      770       1,564       1,657
Other interest-earning assets                                            75       87         171         155
-----------------------------------------------------------------  --------  --------  ----------  ----------
TOTAL INTEREST AND DIVIDEND INCOME                                   15,391   12,470      29,984      24,095
-----------------------------------------------------------------  --------  --------  ----------  ----------

INTEREST EXPENSE
Deposits                                                              5,906    4,518      11,218       8,971
Subordinated debentures                                               2,098    2,067       4,331       4,024
Subordinated debentures - capital securities                            856      374       1,522         748
Federal funds purchased and mortgage note payable                         6        5          10           9
-----------------------------------------------------------------  --------  --------  ----------  ----------
TOTAL INTEREST EXPENSE                                                8,866    6,964      17,081      13,752
-----------------------------------------------------------------  --------  --------  ----------  ----------

NET INTEREST AND DIVIDEND INCOME                                      6,525    5,506      12,903      10,343
Provision for loan losses                                             1,284      430       2,361         774
-----------------------------------------------------------------  --------  --------  ----------  ----------
NET INTEREST AND DIVIDEND INCOME AFTER PROVISION FOR LOAN LOSSES      5,241    5,076      10,542       9,569
-----------------------------------------------------------------  --------  --------  ----------  ----------

NONINTEREST INCOME
Customer service fees                                                    75       50         134          88
Income from mortgage lending activities                                 414      261         604         414
Income from the early repayment of mortgage loans                       734      896       1,890       1,037
Commissions and fees                                                      -        -          56           -
Gain (loss) from early call of investment securities                      2      (37)         (3)        (40)
All other                                                                 -        6           -           6
-----------------------------------------------------------------  --------  --------  ----------  ----------
TOTAL NONINTEREST INCOME                                              1,225    1,176       2,681       1,505
-----------------------------------------------------------------  --------  --------  ----------  ----------

NONINTEREST EXPENSES
Salaries and employee benefits                                          941      897       1,902       1,764
Occupancy and equipment, net                                            481      318         825         638
Data processing                                                         127      190         256         338
Professional fees and services                                           95       80         198         187
Stationery, printing and supplies                                        46       37          90          79
Postage and delivery                                                     29       25          54          50
FDIC and general insurance                                               63       54         127         111
Director and committee fees                                              84       42         172          67
Advertising and promotion                                                22        7          35          22
All other                                                               157      229         304         407
-----------------------------------------------------------------  --------  --------  ----------  ----------
TOTAL NONINTEREST EXPENSES                                            2,045    1,879       3,963       3,663
-----------------------------------------------------------------  --------  --------  ----------  ----------
Earnings before income taxes                                          4,421    4,373       9,260       7,411
Provision for income taxes                                            1,916    1,807       4,020       3,044
-----------------------------------------------------------------  --------  --------  ----------  ----------
NET EARNINGS                                                       $  2,505  $ 2,566   $   5,240   $   4,367
-----------------------------------------------------------------  --------  --------  ----------  ----------

BASIC EARNINGS PER SHARE                                           $   0.42  $  0.55   $    0.87   $    0.93
DILUTED EARNINGS PER SHARE                                         $   0.37  $  0.45   $    0.78   $    0.77
DIVIDENDS PER SHARE                                                $      -  $     -   $       -   $       -
-----------------------------------------------------------------  --------  --------  ----------  ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.


                                        3
<PAGE>
<TABLE>
<CAPTION>
                               INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                  (Unaudited)


                                                                                   SIX-MONTHS ENDED
                                                                                        JUNE 30,
                                                                         --------------------------------------
                                                                                2004                2003
                                                                         ------------------  ------------------
($in thousands)                                                           SHARES    AMOUNT    SHARES    AMOUNT
-----------------------------------------------------------------------  ---------  -------  ---------  -------
<S>                                                                      <C>        <C>      <C>        <C>

CLASS A COMMON STOCK
Balance at beginning of period                                           5,603,377  $ 5,603  4,348,087  $ 4,348
Issuance of shares upon the exercise of warrants                            42,510       43      5,200        5
Issuance of shares upon the conversion of debentures                        17,188       17      5,948        6
-----------------------------------------------------------------------  ---------  -------  ---------  -------
Balance at end of period                                                 5,663,075    5,663  4,359,235    4,359
-----------------------------------------------------------------------  ---------  -------  ---------  -------

CLASS B COMMON STOCK
Balance at beginning of period                                             385,000      385    355,000      355
Issuance of shares for acquisition of Intervest Securities Corporation           -        -     30,000       30
-----------------------------------------------------------------------  ---------  -------  ---------  -------
Balance at end of period                                                   385,000      385    385,000      385
-----------------------------------------------------------------------  ---------  -------  ---------  -------

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of period                                                       35,988              24,134
Compensation related to vesting of certain Class B stock warrants                        10                  13
Compensation related to certain Class A stock warrants modified                           -                 194
Issuance of shares upon the exercise of warrants                                        383                  47
Issuance of shares upon the conversion of debentures                                    181                  36
Issuance of shares for acquisition of Intervest Securities Corporation                    -                 185
-----------------------------------------------------------------------  ---------  -------  ---------  -------
Balance at end of period                                                             36,562              24,609
-----------------------------------------------------------------------  ---------  -------  ---------  -------

RETAINED EARNINGS
Balance at beginning of period                                                       33,409              24,289
Net earnings for the period                                                           5,240               4,367
-----------------------------------------------------------------------  ---------  -------  ---------  -------
Balance at end of period                                                             38,649              28,656
-----------------------------------------------------------------------  ---------  -------  ---------  -------

-----------------------------------------------------------------------  ---------  -------  ---------  -------
TOTAL STOCKHOLDERS' EQUITY AT END OF PERIOD                              6,048,075  $81,259  4,744,235  $58,009
-----------------------------------------------------------------------  ---------  -------  ---------  -------
</TABLE>
See accompanying notes to condensed consolidated financial statements.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                              INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                 (Unaudited)

                                                                                         SIX-MONTHS ENDED
                                                                                              JUNE 30,
                                                                                      ----------------------
($in thousands)                                                                          2004        2003
------------------------------------------------------------------------------------  -----------  ---------
<S>                                                                                   <C>          <C>
OPERATING ACTIVITIES
Net earnings                                                                          $    5,240   $  4,367
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization                                                                307        261
Provision for loan losses                                                                  2,361        774
Deferred income tax benefit                                                               (1,123)      (507)
Amortization of deferred debenture offering costs                                            617        508
Compensation expense related to common stock warrants                                         10        207
Net amortization of premiums and (accretion) of discounts and deferred loan fees          (1,243)      (590)
Net loss from sale of foreclosed real estate                                                   -         51
Net (decrease) increase in accrued interest payable on debentures                         (2,382)       902
Net increase in official checks outstanding                                                4,104      1,165
Net change in all other assets and liabilities                                             5,564      2,544
------------------------------------------------------------------------------------  -----------  ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                 13,455      9,682
------------------------------------------------------------------------------------  -----------  ---------
INVESTING ACTIVITIES
Net decrease in interest-earning time deposits with banks                                      -      2,000
Maturities and calls of securities held to maturity                                       44,665     61,890
Purchases of securities held to maturity                                                 (89,128)   (39,185)
Net increase in loans receivable                                                        (208,814)   (86,416)
Sale of foreclosed real estate                                                                 -        150
Cash acquired through acquisition of Intervest Securities Corporation                          -        218
Purchases of Federal Reserve Bank and Federal Home Loan Bank stock                        (1,567)    (1,697)
Purchases of premises and equipment, net                                                  (1,639)       (87)
Investment in unconsolidated subsidiaries                                                   (464)         -
------------------------------------------------------------------------------------  -----------  ---------
NET CASH USED IN INVESTING ACTIVITIES                                                   (256,947)   (63,127)
------------------------------------------------------------------------------------  -----------  ---------
FINANCING ACTIVITIES
Net increase in deposits                                                                 177,339     47,430
Net increase in mortgage escrow funds payable                                              4,814      3,032
Net increase in federal funds purchased                                                    3,384          -
Principal repayments of debentures and mortgage note payable                             (11,006)    (1,406)
Gross proceeds from issuance of debentures                                                25,464      7,500
Debenture issuance costs                                                                  (1,178)      (607)
Proceeds from issuance of common stock                                                       426         52
------------------------------------------------------------------------------------  -----------  ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                199,243     56,001
------------------------------------------------------------------------------------  -----------  ---------
Net (decrease) increase in cash and cash equivalents                                     (44,249)     2,556
Cash and cash equivalents at beginning of period                                          64,128     30,849
====================================================================================  ===========  =========
Cash and cash equivalents at end of period                                            $   19,879   $ 33,405
====================================================================================  ===========  =========

SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest                                                                              $   18,689   $ 12,331
Income taxes                                                                               6,227      3,618
Noncash activities:
Loan to finance sale of foreclosed real estate                                                 -        880
Conversion of debentures and accrued interest into Class A common stock                      203         42
------------------------------------------------------------------------------------  -----------  ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.


                                        5
<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 2003 audited consolidated financial statements and
notes  thereto.  The  condensed consolidated financial statements in this report
should  be  read  in  conjunction  with  the 2003 audited consolidated financial
statements  and  notes  thereto  included in the Company's Annual Report on Form
10-K  for  the  year  ended  December  31,  2003.

The  financial  statements  include  the  accounts  of  Intervest  Bancshares
Corporation  (a  financial holding company referred to by itself as the "Holding
Company")  and its subsidiaries, Intervest National Bank (the "Bank"), Intervest
Mortgage  Corporation  and  Intervest  Securities  Corporation. The entities are
referred  to  collectively  as  the  "Company"  on  a  consolidated  basis.  All
significant  intercompany  balances  and  transactions  have  been eliminated in
consolidation.  Certain reclassifications have been made to prior period amounts
to  conform  to  the current period's 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.

Intervest  Statutory  Trust  I,  II and III are wholly owned subsidiaries of the
Holding  Company  that  are  unconsolidated  entities  as  required  by  FASB
Interpretation  No. 46, "Consolidation of Variable Interest Entities" as revised
in  December  2003.  FIN  46  requires  bank  holding  companies  that have used
controlled  business  trusts  to  raise  financing  by  issuing  trust preferred
securities  (capital  securities)  to  deconsolidate  their investments in those
trusts.  The  Company  adopted  FIN  46  in  the  first  quarter of 2004 and the
deconsolidation  of  Intervest Statutory Trust I and II, which were formed prior
to  FIN  46,  increased  both  the  Company's  total  assets  and borrowed funds
previously  reported  at  December  31,  2003  by  $968,000.

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 and the need for a
valuation  allowance  for deferred tax assets. 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.

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. From time to time, the Holding
Company also issues debt securities to raise funds for working capital purposes.
The  Company's  business  segment  is  banking.

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. It 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  used to originate real estate,
commercial  and  consumer  loans and to purchase investment securities. The Bank
emphasizes  multifamily  and  commercial  real  estate  lending.

Intervest  Mortgage  Corporation is a mortgage investment company engaged in the
real  estate  business,  including  the  origination and purchase of real estate
mortgage  loans,  consisting  of  first  mortgage  and  junior  mortgage  loans.
Intervest  Mortgage  Corporation  issues  debentures  to provide funding for its
business.


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

NOTE 2 - DESCRIPTION OF BUSINESS - CONTINUED

Intervest  Securities  Corporation is a broker/dealer and a NASD and SIPC member
firm  that  participates  as a selected dealer from time to time in offerings of
debt  securities  of  the  Company,  primarily  those  of  Intervest  Mortgage
Corporation.  On  June  2,  2003,  the  Holding  Company  acquired  all  of  the
outstanding  capital  stock  of Intervest Securities Corporation in exchange for
30,000  shares  of  its  Class  B  common  stock  that was newly issued for this
transaction.  Intervest  Securities  Corporation's  total  assets  consisted  of
approximately  $218,000  of  cash  at  the  time  of  acquisition.  Prior to the
acquisition,  Intervest  Securities Corporation was an affiliated entity in that
it  was  wholly  owned by the spouse of the Chairman of the Holding Company. The
acquisition  was  accounted  for  at  historical  cost.  No  restatements of the
Company's  prior  period consolidated financial statements were made because the
financial results of Intervest Securities Corporation were diminimus.

Intervest  Statutory  Trust  I,  Intervest  Statutory  Trust  II  and  Intervest
Statutory Trust III were formed in December 2001, September 2003 and March 2004,
respectively.  Each was formed for the sole purpose of issuing and administering
capital securities as discussed in note 7 herein.  The Trusts do not conduct any
trade  or  business.

NOTE 3 - LOANS RECEIVABLE
Loans receivable is summarized as follows:

<TABLE>
<CAPTION>
                                            At June 30, 2004       At December 31, 2003
                                         ----------------------  -------------------------
($in thousands)                          # of Loans    Amount    # of Loans     Amount
---------------------------------------  ----------  ----------  ----------  -------------
<S>                                      <C>         <C>         <C>         <C>
Commercial real estate loans                    218  $ 497,773          184  $    344,071
Residential multifamily loans                   236    371,689          210       310,650
Land development and other land loans             7     16,783            6        20,526
Residential 1-4 family loans                      3        130           26         1,628
Commercial business loans                        24      1,123           28         1,662
Consumer loans                                   11        172           16           319
---------------------------------------  ----------  ----------  ----------  -------------
Loans receivable                                499    887,670          470       678,856
---------------------------------------  ----------  ----------  ----------  -------------
Deferred loan fees                                     (10,374)                    (7,731)
---------------------------------------  ----------  ----------  ----------  -------------
Loans receivable, net of deferred fees                 877,296                    671,125
---------------------------------------  ----------  ----------  ----------  -------------
Allowance for loan losses                               (8,941)                    (6,580)
---------------------------------------  ----------  ----------  ----------  -------------
Loans receivable, net                                $ 868,355               $    664,545
---------------------------------------  ----------  ----------  ----------  -------------
</TABLE>

At June 30, 2004, there were no loans on nonaccrual status, compared to two real
estate loans (aggregate principal balance of $8,474,000) on nonaccrual status at
December 31, 2003. The loans were considered impaired but no valuation allowance
was  maintained  at  December  31,  2003  since  the estimated fair value of the
underlying  properties  exceeded  the Company's recorded investment. At June 30,
2004  and  December 31, 2003, there were no other impaired loans or loans ninety
days  past  due  and  still  accruing  interest.

NOTE 4 - ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses is summarized as follows:

<TABLE>
<CAPTION>
                                    Quarter Ended June 30,      Six-Months Ended June 30,
                                  --------------------------  -----------------------------
($in thousands)                       2004          2003          2004            2003
--------------------------------  ------------  ------------  -------------  --------------
<S>                               <C>           <C>           <C>            <C>
Balance at beginning of period    $      7,657  $      4,955  $       6,580  $        4,611
Provision charged to operations          1,284           430          2,361             774
--------------------------------  ------------  ------------  -------------  --------------
Balance at end of period          $      8,941  $      5,385  $       8,941  $        5,385
--------------------------------  ------------  ------------  -------------  --------------
</TABLE>

NOTE 5 - DEPOSITS
Scheduled maturities of certificates of deposit accounts are as follows:

<TABLE>
<CAPTION>
                               At June 30, 2004       At December 31, 2003
                           ----------------------  ------------------------
                                       Wtd-Avg                   Wtd-Avg
($in thousands)             Amount   Stated Rate     Amount    Stated Rate
-------------------------  --------  ------------  ----------  ------------
<S>                        <C>       <C>           <C>         <C>
Within one year            $254,086         2.68%  $  182,693         2.75%
Over one to two years       108,624         3.36       90,936         3.64
Over two to three years      58,524         4.93       30,094         4.43
Over three to four years     71,269         4.40       89,085         4.83
Over four years             104,539         4.24       74,351         4.20
-------------------------  --------  ------------  ----------  ------------
                           $597,042         3.50%  $  467,159         3.66%
-------------------------  --------  ------------  ----------  ------------
</TABLE>


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

NOTE 6 - SUBORDINATED DEBENTURES AND MORTGAGE NOTE PAYABLE

Subordinated debentures and mortgage note payable are summarized as follows:

<TABLE>
<CAPTION>
                                                                            At June 30,   At December 31,
                                                                           ------------  ----------------
($in thousands)                                                                2004            2003
-------------------------------------------------------------------------  ------------  ----------------
<S>                                                                        <C>           <C>
INTERVEST MORTGAGE CORPORATION:
Series 05/12/95 - interest at 2% above prime (1) - due April 1, 2004       $          -  $          9,000
Series 10/19/95 - interest at 2% above prime (1) - due October 1, 2004            9,000             9,000
Series 05/10/96 - interest at 2% above prime (1) - due April 1, 2005             10,000            10,000
Series 10/15/96 - interest at 2% above prime (1) - due October 1, 2005            5,500             5,500
Series 04/30/97 - interest at 1% above prime (1) - due October 1, 2005            8,000             8,000
Series 11/10/98 - interest at 9% fixed           - due January 1, 2005            2,600             2,600
Series 06/28/99 - interest at 8 1/2% fixed       - due July 1, 2004                   -             2,000
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             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             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                 -
Series 11/28/03 - interest at 6 1/2% fixed       - due April 1, 2009              3,500                 -
Series 11/28/03 - interest at 6 3/4% fixed       - due April 1, 2011              4,500                 -
                                                                           ------------  ----------------
                                                                                 86,350            87,350
INTERVEST BANCSHARES CORPORATION:
Series 05/14/98 - interest at 8% fixed           - due July 1, 2008               4,710             4,840
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
                                                                           ------------  ----------------
                                                                                  7,210             7,340
INTERVEST NATIONAL BANK:
Mortgage note payable - interest at 7% fixed  - due February 1, 2017                249               255
-------------------------------------------------------------------------  ------------  ----------------
                                                                           $     93,809  $         94,945
-------------------------------------------------------------------------  ------------  ----------------
</TABLE>
(1)  Prime  represents prime rate of JPMorganChase Bank, which was 4.25% on June
30,  2004  and  4.00% at December 31, 2003. The floating -rate debentures have a
maximum  interest  rate  of  12%.

In January 2004, Intervest Mortgage Corporation issued $10,000,000 of its Series
11/28/03  debentures  for  net proceeds, after offering costs, of $9,252,000. In
July  2004,  Intervest  Mortgage  Corporation  issued  Series  6/7/04 debentures
totaling  $11,500,000  as follows: $2,500,000 at 6.25% maturing January 1, 2008;
$4,000,000  at  6.5%  maturing January 1, 2010; and $5,000,000 at 6.75% maturing
January  1,  2012.  Net  proceeds after offering costs amounted to approximately
$10,730,000.

On March 1, 2004, Intervest Mortgage Corporation's Series 5/12/95 debentures due
April  1,  2004  were  redeemed  for  $9,000,000  of principal and $2,749,000 of
accrued  interest.  On  May  1,  2004,  Intervest  Mortgage Corporation's Series
6/28/99  debentures  due  July 1, 2004 were redeemed for $2,000,000 of principal
and  $980,000  of  accrued  interest.


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

NOTE 6 - SUBORDINATED DEBENTURES AND MORTGAGE NOTE PAYABLE, CONTINUED

Interest is paid quarterly on Intervest Mortgage Corporation's debentures except
for  the  following  debentures:  $1,950,000  of  Series 10/19/95; $1,980,000 of
Series  5/10/96;  all  of  Series 11/10/98, 6/28/99, 9/18/00; $770,000 of Series
8/01/01; $270,000 of Series 1/17/02; $1,520,000 of Series 8/05/02; $1,750,000 of
Series  11/28/03 and approximately $1,900,000 of Series 6/7/04, which accrue and
compound interest quarterly, with such interest due and payable at maturity. Any
holder  of  Series 10/19/95 and 5/10/96 debentures whose interest accrues and is
due  at  maturity  may  at  any  time  elect to receive the accrued interest and
regular  interest  payments  thereafter.

The  holders of Intervest Mortgage Corporation's Series 11/10/98 through 9/18/00
and  Series  1/17/02  through  6/7/04  debentures can require Intervest Mortgage
Corporation  to  repurchase the debentures for face amount plus accrued interest
each  year  (beginning  October  1, 2005 for Series 1/17/02, 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 and January 1, 2008 for Series
6/7/04).  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 11/28/03 and
6/7/04.  Redemptions  would  be  at  a  premium  of 1% if they occurred prior to
January  1, 2005 for Series 11/28/03 and July 1, 2005 for Series 6/7/04. 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 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: $12.00 in
2004;  $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. In the first quarter of 2004, $203,000 of debentures ($130,000
of  principal  and  $73,000  of  accrued interest) were converted into shares of
Class  A  common  stock.

At  June 30, 2004, interest accrues and compounds quarterly on $4,040,000 of the
convertible  debentures  at  the  rate  of  8%  per annum, while $670,000 of the
debentures  pay  interest  quarterly  at  the  rate of 8% per annum. All accrued
interest  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
payments  of  interest quarterly. All of the Holding Company's debentures may be
redeemed,  in whole or in part, at any time at the option of the Holding Company
for  face  value.

The  mortgage  note payable cannot be prepaid except during the last year of its
term.

Scheduled contractual maturities as of June 30, 2004 are as follows:

($in thousands)                              Principal   Accrued Interest
-------------------------------------------  ----------  -----------------
For the six-months ended December 31, 2004   $    9,007  $           3,320
For the year ended December 31, 2005             29,116              3,616
For the year ended December 31, 2006             10,269              1,603
For the year ended December 31, 2007              7,022                 96
For the year ended December 31, 2008             16,235              3,039
Thereafter                                       22,160                246
-------------------------------------------  ----------  -----------------
                                             $   93,809  $          11,920
-------------------------------------------  ----------  -----------------

NOTE 7 - SUBORDINATED DEBENTURES - CAPITAL SECURITIES

Capital  Securities  (commonly  referred  to  as Trust Preferred Securities) are
summarized  as  follows:

<TABLE>
<CAPTION>
                                                               At June 30, 2004      At December 31, 2003
                                                            ---------------------  ------------------------
                                                                         Accrued                 Accrued
($in thousands)                                             Principal   Interest   Principal     Interest
----------------------------------------------------------  ----------  ---------  ----------  ------------
<S>                                                         <C>         <C>        <C>         <C>
Capital Securities I -  debentures due December 18, 2031    $   15,464  $      59  $   15,464  $         58
Capital Securities II - debentures due September 17, 2033       15,464         41      15,464            39
Capital Securities III - debentures due March 17, 2034          15,464         35           -             -
----------------------------------------------------------  ----------  ---------  ----------  ------------
                                                            $   46,392  $     135  $   30,928  $         97
----------------------------------------------------------  ----------  ---------  ----------  ------------
</TABLE>


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

NOTE 7 - 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 and III. Each Trust
was  formed with a capital contribution of $464,000 from the Holding Company and
for  the  sole  purpose  of  issuing  and  administering 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  currently qualify as regulatory capital (see note 10).

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  $469,000,  $444,000  and  $444,000  associated with Capital
Securities  I,  II  and  III, respectively, have been capitalized by the Holding
Company  and  are  being  amortized  over  the  life of the securities using the
straight-line  method.

Cash  distributions  are  payable  in arrears as follows: Capital Securities I -
semi-annually  at  the fixed rate of 9.875% per annum on December 18 and June 18
of  each year; Capital Securities II - quarterly on March 17, June 17, September
17 and December 17 of each year based on a fixed rate of 6.75% per annum for the
first  five  years  and thereafter at the rate of 2.95% over 3 month libor until
maturity;  Capital  Securities  III  -  quarterly  on  March  17,      June  17,
September  17  and  December  17 of each year based on a fixed rate of 5.88% per
annum  for the first five years and thereafter at the rate of 2.79% over 3 month
libor  until  maturity.

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 and March 17, 2009
for  Capital  Securities  III, contemporaneously with the optional redemption by
the  Holding  Company of the Junior Subordinated Debentures in whole or in part.
Any  redemption  would  need  prior  regulatory  approvals.

NOTE  8  -  COMMON  STOCK  WARRANTS

At  June  30,  2004,  the  Holding  Company  had  696,465  common stock warrants
outstanding  that  entitle  its  holder, the Chairman of the Holding Company, to
purchase  one share of common stock for each warrant. All warrants are currently
exercisable.

Data concerning common stock warrants is as follows:

<TABLE>
<CAPTION>
                                                        Exercise Price Per Warrant
                                                      ------------------------------    Total        Wtd-Avg
Class A Common Stock Warrants:                        $          6.67  $      10.01   Warrants   Exercise Price
----------------------------------------------------  ---------------  -------------  ---------  ---------------
<S>                                                   <C>              <C>            <C>        <C>
Outstanding at December 31, 2003                              501,465        42,510    543,975   $          6.93
Exercised during 2004                                               -       (42,510)   (42,510)  $         10.01
----------------------------------------------------  ---------------  -------------  ---------
Outstanding at June 30, 2004                                  501,465             -    501,465   $          6.67
----------------------------------------------------  ---------------  -------------  ---------
Remaining contractual life in years at June 30, 2004              2.6             -        2.6
----------------------------------------------------  ---------------  -------------  ---------
<FN>
(1)  The holders of the 42,510 warrants outstanding at December 31, 2003
     presented these warrants to the Company for exercise prior to the
     expiration date of December 31, 2003. The resulting shares were issued in
     January 2004.
</TABLE>

<TABLE>
<CAPTION>
                                                        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, 2003 and June 30, 2004            145,000        50,000   195,000  $          7.52
----------------------------------------------------  ---------------  ------------  --------
Remaining contractual life in years at June 30, 2004              3.6           3.6       3.6
----------------------------------------------------  ---------------  ------------  --------  ---------------
</TABLE>


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

NOTE 8 - COMMON STOCK WARRANTS, CONTINUED

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 is
summarized  as  follows:

<TABLE>
<CAPTION>
                                                                Quarter Ended     Six-Months Ended
                                                                   June 30,            June 30,
                                                              ----------------  --------------------
($in thousands)                                                 2004     2003      2004       2003
------------------------------------------------------------  --------  ------  ----------  --------
<S>                                                           <C>       <C>     <C>         <C>
Compensation expense recorded in connection with vesting
    of Class B common stock warrants during the period        $      3  $    6  $       10  $     13
Compensation expense recorded in connection with
    Class A common stock warrants whose terms were modified          -     127           -       194
------------------------------------------------------------  --------  ------  ----------  --------
                                                              $      3  $  133  $       10  $    207
------------------------------------------------------------  --------  ------  ----------  --------
</TABLE>

NOTE 9 - 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 outstanding dilutive common
stock  warrants  (which  are  computed  using  the  "treasury stock method") and
convertible  debentures  (computed using the "if converted method"). Diluted EPS
considers  the  potential dilution that could occur if the Company's outstanding
stock  warrants and convertible debentures were converted into common stock that
then  shared in the Company's earnings (as adjusted for interest expense, net of
taxes, that would no longer occur if the debentures were converted).

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

<TABLE>
<CAPTION>
                                                                             Quarter Ended          Six-Months Ended
                                                                                June 30,                June 30,
                                                                         ----------------------  ----------------------
($in thousands, except share and per share amounts)                         2004        2003        2004        2003
-----------------------------------------------------------------------  ----------  ----------  ----------  ----------
<S>                                                                      <C>         <C>         <C>         <C>
Basic earnings per share:
  Net earnings applicable to common stockholders                         $    2,505  $    2,566  $    5,240  $    4,367
  Average number of common shares outstanding                             6,048,075   4,714,344   6,045,461   4,708,747
-----------------------------------------------------------------------  ----------  ----------  ----------  ----------
Basic net earnings per share amount                                      $     0.42  $     0.55  $     0.87  $     0.93
-----------------------------------------------------------------------  ----------  ----------  ----------  ----------
Diluted earnings per share:
  Net earnings applicable to common stockholders                         $    2,505  $    2,566  $    5,240  $    4,367
  Adjustment to net earnings from assumed conversion of debentures (1)           82         117         164         231
                                                                         ----------  ----------  ----------  ----------
  Adjusted net earnings for diluted earnings per share computation       $    2,587  $    2,683  $    5,404  $    4,598
                                                                         ----------  ----------  ----------  ----------
Average number of common shares outstanding:
  Common shares outstanding                                               6,048,075   4,714,344   6,045,461   4,708,747
  Potential dilutive shares resulting from exercise of warrants (2)         254,567     292,458     253,956     266,197
  Potential dilutive shares resulting from conversion of debentures (3)     609,425     983,656     612,642     983,656
                                                                         ----------  ----------  ----------  ----------
Total average number of common shares outstanding used for dilution       6,912,067   5,990,458   6,912,059   5,958,600
-----------------------------------------------------------------------  ----------  ----------  ----------  ----------
Diluted net earnings per share amount                                    $     0.37  $     0.45  $     0.78  $     0.77
-----------------------------------------------------------------------  ----------  ----------  ----------  ----------
<FN>
(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 June
     30, 2004 and 2003 totaling $7,557,000 and $9,846,000, respectively, were
     convertible into common stock at a price of $12.00 per share in 2004 and
     $10.01 per share in 2003 and resulted in additional common shares (based on
     average balances outstanding) .
</TABLE>


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

NOTE 10 - 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 meet their capital
adequacy  requirements.

Management  believes  that there are no current conditions or events outstanding
which  would  change  the  Bank's designation as a well-capitalized institution.

At  June  30,  2004, 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                     11.98%         8.00%             10.00%
Tier 1 capital to risk-weighted assets                    10.93%         4.00%              6.00%
Tier 1 capital to total average assets - leverage ratio    9.67%         4.00%              5.00%
</TABLE>

At  June  30,  2004,  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                     13.86%         8.00%                NA
Tier 1 capital to risk-weighted assets                    11.02%         4.00%                NA
Tier 1 capital to total average assets - leverage ratio    9.94%         4.00%                NA
</TABLE>

On  January  1,  2004,  the  Company  adopted  FASB  Interpretation  No.  46,
"Consolidation  of Variable Interest Entities" ("FIN 46") as revised in December
2003.  FIN 46 requires bank holding companies that have used controlled business
trusts  to  raise  financing  by  issuing  trust  preferred  securities (capital
securities)  to  deconsolidate  their  investments in those trusts.  At June 30,
2004,  the  Company has $45,000,000 of qualifying capital securities outstanding
(which  represents  total  debentures of $46,392,000 issued to the Trusts by the
Holding  Company  less  the  Holding  Company's  investments  in  those  Trusts
aggregating  $1,392,000)  that  are included in regulatory capital computations.

The  Federal  Reserve  continues  to  require  bank holding companies to include
eligible trust preferred securities in Tier I capital (up to 25 percent of total
Tier  I  Capital  and  the  remainder as Tier II Capital) for regulatory capital
purposes  until  further  notice.  The  Federal  Reserve  intends  to review the
regulatory implications of any accounting treatment changes brought about by FIN
46  and,  if  necessary,  it  will provide further regulatory guidance. However,
there  can  be  no  assurance  that  the  Federal Reserve will continue to allow
institutions  to  include  trust  preferred  securities  in  Tier  I Capital for
regulatory  capital  purposes. As of June 30, 2004, assuming the Company was not
allowed  to  treat  any  of the trust preferred securities as Tier 1 Capital, it
would  still  exceed  the  regulatory threshold for capital adequacy as follows:
total  capital  to  risk-weighted  assets  ratio  -  13.86%;  Tier  1 capital to
risk-weighted  assets  ratio - 8.16%; and Tier 1 capital to total average assets
(leverage  ratio)  -  7.36%.

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  June  30, 2004, Intervest Securities Corporation's net
capital  was  $468,000.


                                       12
<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
June  30,  2004 and for the three- and six-month periods ended June 30, 2004 and
2003 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.

     Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.


                                       13
<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 June 30,
2004  and  the  related  condensed  consolidated  statements of earnings for the
three-  and  six-month  periods  ended  June  30, 2004 and 2003, and the related
condensed  consolidated  statements  of changes in stockholders' equity and cash
flows  for  the  six-month  periods  ended June 30, 2004 and 2003. These interim
financial statements are the responsibility of the Company's management.

We  were  furnished  the  reports  of  the other auditor on their reviews of the
interim  financial  information  of  Intervest Mortgage Corporation, whose total
assets  as of June 30, 2004 constituted 10.3% of the related consolidated total,
and  whose  net  interest  income,  noninterest  income and net earnings for the
three- and six-month periods then ended, constituted 7.2%, 11.8%, and 20.0%; and
6.1%,  16.5% and 19.4%, respectively, and whose net interest income, noninterest
income  and  net  earnings  for  the three- and six-month periods ended June 30,
2003,  constituted  11.3%,  15.5%,  and  18.9%;  and  10.2%,  16.1%  and  17.6%,
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 auditor, 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  as of
December 31, 2003, 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 February 6,
2004,  with  respect  to note 3 dated March 16, 2004, we, based on our audit and
the  report  of  other  auditors,  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, 2003 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
August 2, 2004


                                       14
<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 June 30, 2004 and the related
condensed  consolidated statements of operations for each of the three-month and
six-month  periods  ended  June  30,  2004  and  2003, and the related condensed
consolidated  statements  of  changes in stockholders' equity and cash flows for
the  six-months  ended  June  30,  2004  and  2003  (all  of which 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 financial statements 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, 2003 and the related consolidated statements of
operations,  changes  in  stockholder's  equity and cash flows for the year then
ended  (not  presented  herein),  and  in  our report dated February 3, 2004, 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, 2003 (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
July 28, 2004


                                       15
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

                                     GENERAL
                                     -------

At  June  30,  2004,  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  three  wholly  owned unconsolidated subsidiaries, Intervest Statutory
Trust  I,  Intervest Statutory Trust II and Intervest Statutory Trust III. For a
discussion  of  the Company's business, see note 2 to the condensed consolidated
financial  statements  in  this  report.

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 provision for income tax
expense.  Noninterest  income  consists mostly of loan and other banking fees as
well  as  income  from  loan  prepayments.  The amount and timing of, as well as
income  from,  loan  prepayments,  if any, cannot be predicted and can fluctuate
significantly. 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 prepayment provisions, 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 significantly affected by general economic and
competitive  conditions,  changes  in market interest rates, government policies
and  actions  of  regulatory  authorities.  The  Company's  loan  portfolio  has
historically  been  concentrated  in  commercial  real  estate  and  multifamily
mortgage  loans.  The  properties  underlying  the  Company's mortgages are also
concentrated  in  New  York State and the State of Florida. Many of the New York
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.  Credit  risk,  which  represents  the  possibility  of  the  Company not
recovering  amounts  due  from  its borrowers, is significantly related to local
economic  conditions  in  the  areas  the properties are located, as well as the
Company's underwriting standards. Economic conditions affect the market value of
the underlying collateral as well as the levels of occupancy of income-producing
properties.  Additionally,  terrorist  acts,  such  as  those  that  occurred on
September  11,  2001, and armed conflicts, such as the recent Gulf War, may have
an  adverse  impact  on  economic  conditions.

    COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2004 AND DECEMBER 31, 2003
    ------------------------------------------------------------------------

OVERVIEW
--------

Total  assets at June 30, 2004 increased to $1,119,266,000, from $911,523,000 at
December  31,  2003.  Total  liabilities  at  June  30,  2004  increased  to
$1,038,007,000, from $836,138,000 at December 31, 2003, and stockholders' equity
increased  to  $81,259,000  at June 30, 2004, from $75,385,000 at year-end 2003.
Book value per common share increased to $13.44 per share at June 30, 2004, from
$12.59  at  December  31,  2003.

On  January  1,  2004,  the  Company  adopted  FASB  Interpretation  No.  46,
"Consolidation  of Variable Interest Entities" ("FIN 46") as revised in December
2003.  FIN 46 requires bank holding companies that have used controlled business
trusts to raise financing by issuing trust preferred securities to deconsolidate
their  investments  in  those  trusts.  The  adoption  of FIN 46 resulted in the
deconsolidation  of the Company's common stock investment in Intervest Statutory
I  and  Intervest  Statutory II, which increased both the Company's total assets
and borrowed funds previously reported at December 31, 2003 by $968,000.


                                       16
<PAGE>
Selected balance sheet information as of June 30, 2004 follows:

<TABLE>
<CAPTION>
                                                          Intervest    Intervest    Intervest      Inter-
                                               Holding    National     Mortgage    Securities     Company
($in thousands)                                Company      Bank         Corp.        Corp.     Amounts (1)    Combined
--------------------------------------------  ---------  -----------  -----------  -----------  ------------  -----------
<S>                                           <C>        <C>          <C>          <C>          <C>           <C>
Cash and cash equivalents                     $  3,343   $   15,866   $    7,237   $       456  $    (7,023)  $   19,879
Security investments                                 -      200,774            -             -            -      200,774
Loans receivable, net of deferred fees          15,853      753,953      107,490             -            -      877,296
Allowance for loan losses                          (85)      (8,530)        (326)            -            -       (8,941)
Investment in consolidated subsidiaries        114,059            -            -             -     (114,059)           -
All other assets                                 4,866       20,130        5,108            15          139       30,258
--------------------------------------------  ---------  -----------  -----------  -----------  ------------  -----------
Total assets                                  $138,036   $  982,193   $  119,509   $       471  $  (120,943)  $1,119,266
--------------------------------------------  ---------  -----------  -----------  -----------  ------------  -----------
Deposits                                      $      -   $  860,503   $        -   $         -  $    (7,651)  $  852,852
Borrowed funds and related interest payable     56,279        3,633       95,728             -            -      155,640
All other liabilities                              498       25,654        2,593             3          767       29,515
--------------------------------------------  ---------  -----------  -----------  -----------  ------------  -----------
Total liabilities                               56,777      889,790       98,321             3       (6,884)   1,038,007
--------------------------------------------  ---------  -----------  -----------  -----------  ------------  -----------
Stockholders' equity                            81,259       92,403       21,188           468     (114,059)      81,259
--------------------------------------------  ---------  -----------  -----------  -----------  ------------  -----------
Total liabilities and stockholders' equity    $138,036   $  982,193   $  119,509   $       471  $  (120,943)  $1,119,266
--------------------------------------------  ---------  -----------  -----------  -----------  ------------  -----------
</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 June 30, 2004 and
December  31,  2003  follows:

<TABLE>
<CAPTION>
                                                                     At June 30, 2004         At December 31, 2003
                                                                 -------------------------  -------------------------
                                                                  Carrying       % of        Carrying       % of
($in thousands)                                                    Value     Total Assets     Value     Total Assets
---------------------------------------------------------------  ----------  -------------  ----------  -------------
<S>                                                              <C>         <C>            <C>         <C>
Cash and cash equivalents                                        $   19,879           1.8%  $   64,128           7.0%
Security investments                                                200,774          17.9      155,898          17.1
Loans receivable, net of deferred fees and loan loss allowance      868,355          77.6      664,545          72.9
All other assets                                                     30,258           2.7       26,952           3.0
---------------------------------------------------------------  ----------  -------------  ----------  -------------
Total assets                                                     $1,119,266         100.0%  $  911,523         100.0%
---------------------------------------------------------------  ----------  -------------  ----------  -------------
Deposits                                                         $  852,852          76.2%  $  675,513          74.1%
Borrowed funds and related interest payable                         155,640          13.9      140,383          15.4
All other liabilities                                                29,515           2.6       20,242           2.2
---------------------------------------------------------------  ----------  -------------  ----------  -------------
Total liabilities                                                 1,038,007          92.7      836,138          91.7
---------------------------------------------------------------  ----------  -------------  ----------  -------------
Stockholders' equity                                                 81,259           7.3       75,385           8.3
---------------------------------------------------------------  ----------  -------------  ----------  -------------
Total liabilities and stockholders' equity                       $1,119,266         100.0%  $  911,523         100.0%
---------------------------------------------------------------  ----------  -------------  ----------  -------------
</TABLE>

CASH  AND  CASH  EQUIVALENTS
----------------------------

Cash  and  cash  equivalents  decreased  to  $19,879,000  at June 30, 2004, from
$64,128,000  at  December  31,  2003,  due to the deployment of those funds into
loans  and  securities.

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

Securities  held  to  maturity  increased to $196,132,000 at June 30, 2004, from
$152,823,000  at  December  31,  2003.  The  increase  was  due to new purchases
exceeding maturities and early calls during the period. The Company continues to
invest  in  short-term  (1-5  year)  U.S  government  agency debt obligations to
emphasize  liquidity.  The  portfolio  at  June  30, 2004 had a weighted-average
remaining  maturity  of  two  years  and  yield  of  2.03%.

The  Bank's  total  investment  in the Federal Reserve Bank and the Federal Home
Loan  Bank  of  New  York  stock  increased to $4,642,000 at June 30, 2004, from
$3,075,000 at December 31, 2003, due to additional purchases of 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  $868,355,000  at June 30, 2004, from $664,545,000 at December 31,
2003.  The  growth  reflected  new  originations  of  commercial real estate and
multifamily mortgage loans, partially offset by principal repayments.


                                       17
<PAGE>
New  loan  originations  totaled  $175,901,000 in the second quarter of 2004 and
$338,591,000  in  the  first  half  of  2004,  compared  to  $93,906,000  and
$165,295,000, respectively, for the same periods of 2003.

At June 30, 2004, there were no loans on nonaccrual status, compared to two real
estate loans (aggregate principal balance of $8,474,000) on nonaccrual status at
December 31, 2003. The loans were considered impaired but no valuation allowance
was  maintained  since  the  estimated  fair  value of the underlying properties
exceeded  the  Company's  recorded  investment.  In  March  2004, the loans were
brought current and returned to an accrual status. At June 30, 2004 and December
31,  2003,  there were no other impaired loans or loans ninety days past due and
still  accruing  interest.

At June 30, 2004, the allowance for loan losses amounted to $8,941,000, compared
to  $6,580,000  at  December  31, 2003. The allowance represented 1.02% of total
loans  (net of deferred fees) outstanding at June 30, 2004 and 0.98% at December
31,  2003.  The  increase  in  the  allowance  was due to provisions aggregating
$2,361,000  during  the  period  resulting  from  significant loan growth. For a
further  discussion  of  all  the  criteria  the  Company  uses to determine the
adequacy of the allowance, see pages 21 and 22 in the Company's Annual Report on
Form  10-K  for  the  year  ended  December  31,  2003.

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

The following table sets forth the composition of the caption "All other assets"
in  the  table  on  page  17:

<TABLE>
<CAPTION>
                                         At  June 30,   At December 31,
                                         -------------  ----------------
($in thousands)                              2004             2003
---------------------------------------  -------------  ----------------
<S>                                      <C>            <C>
Accrued interest receivable              $       5,598  $          4,995
Loans fee receivable                             6,946             5,622
Premises and equipment, net                      7,084             5,752
Deferred income tax asset                        4,083             2,960
Deferred debenture offering costs, net           4,579             4,023
All other                                        1,968             3,600
---------------------------------------  -------------  ----------------
                                         $      30,258  $         26,952
---------------------------------------  -------------  ----------------
</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 was due to the growth in 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 was due to an increase in mortgage loan originations.

Premises  and equipment increased due to net additions of $1,639,000 (almost all
of which was leasehold improvements associated with new office space), partially
offset  by  depreciation  and  amortization.

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. Management believes that it is more likely than not that the Company's
deferred  tax  asset will be realized and accordingly, a valuation allowance for
deferred  tax  assets  is  not  maintained.

Deferred debenture offering costs consist primarily of underwriters' commissions
and  are  amortized  over the terms of the debentures. The increase was due to a
total  of  $1,178,000  of  new  costs  associated  with  Intervest  Mortgage
Corporation's  issuance  of debentures and costs incurred by the Holding Company
in  connection  with  the  issuance  of  Capital  Securities.  The  new cost was
partially  offset  by  normal  amortization.

DEPOSITS
--------

Deposits  increased  to  $852,852,000  at  June  30,  2004, from $675,513,000 at
December  31,  2003,  primarily  reflecting  increases  in  money  market  and
certificate  of  deposit accounts of $43,710,000 and $129,883,000, respectively.
At  June  30,  2004,  certificate  of  deposit accounts totaled $597,042,000 and
checking,  savings  and  money market accounts aggregated $255,810,000. The same
categories  of  deposit  accounts  totaled  $467,159,000  and  $208,354,000,
respectively,  at December 31, 2003. Certificate of deposit accounts represented
70% of total deposits at June 30, 2004 and 69% at December 31, 2003.


                                       18
<PAGE>
BORROWED  FUNDS  AND  RELATED  INTEREST  PAYABLE
------------------------------------------------

At  June  30,  2004,  borrowed  funds  and related interest payable increased to
$155,640,000, from $140,383,000 at year-end 2003. The increase was primarily due
to  the issuance of Series 11/28/03 debentures by Intervest Mortgage Corporation
totaling  $10,000,000  and  the  issuance  of  $15,464,000  of debentures by the
Holding  company  to  its  wholly  owned  unconsolidated  subsidiary,  Intervest
Statutory  Trust  III.  The  new  debentures  were partially offset by the early
repayments  of  Intervest  Mortgage  Corporation's Series 5/12/95 debentures due
April  1,  2004 ($9,000,000 of principal and $2,749,000 of accrued interest) and
Series 6/28/99 debentures due July 1, 2004 ($2,000,000 of principal and $980,000
of  accrued  interest).  For  further  information on borrowed funds and related
interest  payable,  see  notes  6  and 7 to the condensed consolidated financial
statements  included  in  this  report.

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

The  table  below  sets  forth  the  composition  of  the  caption  "All  other
liabilities"  in  the  table  on  page  17  as  follows:

<TABLE>
<CAPTION>
                                       At June 30,   At December 31,
                                       ------------  ----------------
($in thousands)                            2004            2003
-------------------------------------  ------------  ----------------
<S>                                    <C>           <C>
Mortgage escrow funds payable          $     15,354  $         10,540
Official checks outstanding                  10,226             6,122
Accrued interest payable on deposits          1,237             1,080
All other                                     2,698             2,500
-------------------------------------  ------------  ----------------
                                       $     29,515  $         20,242
-------------------------------------  ------------  ----------------
</TABLE>

Mortgage  escrow  funds payable represent advance payments made by borrowers for
taxes  and  insurance that are remitted to third parties. The increase reflected
the  growth  in  the  loan  portfolio.  Official  checks  outstanding varies and
fluctuates  based  on  banking  activity.  Accrued  interest payable on deposits
fluctuates based on total deposits and timing of interest payments. All other is
comprised  mainly  of  accrued  expenses, income taxes payable (which fluctuates
based  on the Company's earnings, effective tax rate and timing of tax payments)
and fees received on loan commitments that have not yet been funded.

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

Stockholders' equity increased to $81,259,000 at June 30, 2004, from $75,385,000
at  year-end  2003  as  follows:

<TABLE>
<CAPTION>
($in thousands)                                                     Amount    Shares
------------------------------------------------------------------  -------  ---------
<S>                                                                 <C>      <C>
Stockholders' equity at December 31, 2003                           $75,385  5,988,377
Net earnings for the period                                           5,240          -
Class A common stock warrants exercised                                 426     42,510
Convertible debentures converted at election of debenture holders       198     17,188
Compensation expense on warrants held by the Chairman                    10          -
------------------------------------------------------------------  -------  ---------
Stockholders' equity at June 30, 2004                               $81,259  6,048,075
------------------------------------------------------------------  -------  ---------
</TABLE>

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

Interest  rate  risk  arises  from  differences  in  the repricing of assets and
liabilities  within  a given time period. 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 the Company's 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. For a
further  discussion  of  the assumptions used in preparing the gap analysis, see
pages  27  and 28 of the Company's Annual Report on Form 10-K for the year ended
December  31,  2003.

The  Company's  one-year  positive  interest  rate  sensitivity gap decreased to
$35,130,000,  or  3.1%  of  total  assets,  at  June  30,  2004,  compared  to
$118,124,000, or 13.0% at December 31, 2003. The decrease in the positive gap is
due  to  an increase in money market accounts and time deposits with a remaining
term  of  1  year  or  less.

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 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  19.8% at June 30, 2004, compared to a positive 29.6% at
year-end  2003.


                                       19
<PAGE>
The  table  below  summarizes  interest-earning  assets  and  interest-bearing
liabilities  as of June 30, 2004, 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)                                 $225,375   $243,863   $ 286,256   $132,176   $  887,670
Securities held to maturity (2)             21,032     76,124      98,976          -      196,132
Short-term investments                      16,223          -           -          -       16,223
FRB and FHLB stock                           2,628          -           -      2,014        4,642
----------------------------------------  ---------  ---------  ----------  ---------  -----------
Total rate-sensitive assets               $265,258   $319,987   $ 385,232   $134,190   $1,104,667
----------------------------------------  ---------  ---------  ----------  ---------  -----------
Deposit accounts (3):
  Interest checking deposits              $ 10,909   $      -   $       -   $      -   $   10,909
  Savings deposits                          31,915          -           -          -       31,915
  Money market deposits                    205,924          -           -          -      205,924
  Certificates of deposit                   67,770    186,316     238,417    104,539      597,042
                                          ---------  ---------  ----------  ---------  -----------
  Total deposits                           316,518    186,316     238,417    104,539      845,790
Federal funds purchased                      3,384          -           -          -        3,384
Debentures and mortgage note payable (1)    32,500      4,350      24,000     79,351      140,201
Accrued interest on debentures (1)           5,281      1,766       2,272      2,736       12,055
----------------------------------------  ---------  ---------  ----------  ---------  -----------
Total rate-sensitive liabilities          $357,683   $192,432   $ 264,689   $186,626   $1,001,430
----------------------------------------  ---------  ---------  ----------  ---------  -----------
GAP (repricing differences)               $(92,425)  $127,555   $ 120,543   $(52,436)  $  103,237
----------------------------------------  ---------  ---------  ----------  ---------  -----------
Cumulative GAP                            $(92,425)  $ 35,130   $ 155,673   $103,237   $  103,237
----------------------------------------  ---------  ---------  ----------  ---------  -----------
Cumulative GAP to total assets               (8.3)%       3.1%       13.9%       9.2%         9.2%
----------------------------------------  ---------  ---------  ----------  ---------  -----------
</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  ready accessible withdrawable accounts; and
certificates of deposit are scheduled through their maturity dates.

                                    LIQUIDITY
                                    ---------

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: retail deposits obtained through the Bank's branch offices
and  through  the mail; amortization, satisfactions and repayments of loans; the
maturities  and calls of securities; issuance of debentures; borrowings from the
federal  funds  market, FHLB advances and cash provided by operating activities.
For  additional  information  concerning  the  Company's  cash  flows,  see  the
condensed  consolidated  statements  of  cash flows included in this report. The
Company  believes  that  it  can  fund  its  contractual  obligations  from  the
aforementioned  sources  of  funds.

As a member of the FHLB and the FRB, the Bank can borrow from these institutions
on  a secured basis of up to $188,000,000 in aggregate at June 30, 2004 based on
available  collateral. The Bank has federal funds line of credit agreements with
correspondent banks whereby it can borrow on an overnight, unsecured basis of up
to $16,000,000, of which $3,384,000 was outstanding at June 30, 2004.

                     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  financial  statements.  The  Company's  maximum  exposure to credit risk is
represented by the contractual amount of those instruments. The Company uses the
same  credit  policies  in  making  commitments  as it does for on-balance sheet
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


                                       20
<PAGE>
contract.  Such  commitments  generally  have  fixed  expiration  dates or other
termination  clauses  and  may  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, if deemed necessary by
the Company 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 the Company's off-balance sheet financial instruments
is  as  follows:

<TABLE>
<CAPTION>
                               At          At
                            --------  -------------
                            June 30   December 31,
                            --------  -------------
($in thousands)               2004        2003
--------------------------  --------  -------------
<S>                         <C>       <C>
Unfunded loan commitments   $171,525  $     123,791
Available lines of credit        882            825
Standby letters of credit        750            100
--------------------------  --------  -------------
                            $173,157  $     124,716
--------------------------  --------  -------------
</TABLE>

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.


                                       21
<PAGE>
           COMPARISON OF RESULTS OF OPERATIONS FOR THE QUARTERS ENDED
           ----------------------------------------------------------
                             JUNE 30, 2004 AND 2003
                            -----------------------
OVERVIEW
--------

Consolidated net earnings for the second quarter of 2004 amounted to $2,505,000,
compared  to  $2,566,000  for  the  second quarter of 2003. Diluted earnings per
share for the 2004 quarter was $0.37, compared to $0.45 in the 2003 quarter. The
per  share  computation  for  2004  included  a  higher  number of common shares
outstanding  resulting from the exercise of common stock warrants and conversion
of debentures that occurred in the later part of 2003.

Consolidated  earnings were relatively unchanged as an increase of $1,019,000 in
net  interest  and  dividend  income  was  offset by an $854,000 increase in the
provision  for  loan  losses  and  a  $166,000 increase in noninterest expenses.

Selected  information  regarding results of operations for the second quarter of
2004  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>
Interest and dividend income                $    276   $   12,804   $    2,358  $         1   $       (48)  $      15,391
Interest expense                               1,069        5,960        1,885            -           (48)          8.866
                                            ---------  -----------  ----------  ------------  ------------  -------------
Net interest and dividend income                (793)       6,844          473            1             -           6,525
Provision for loan losses                          -        1,190           94            -             -           1,284
Noninterest income                                75        1,080        1,138            -        (1,068)          1,225
Noninterest expenses                              98        2,427          583            5        (1,068)          2,045
                                            ---------  -----------  ----------  ------------  ------------  -------------
Earnings before income taxes                    (816)       4,307          934           (4)            -           4,421
Provision for income taxes                      (377)       1,863          432           (2)            -           1,916
------------------------------------------  ---------  -----------  ----------  ------------  ------------  -------------
Net earnings                                $   (439)  $    2,444   $      502  $        (2)  $         -   $       2,505
------------------------------------------  ---------  -----------  ----------  ------------  ------------  -------------
Intercompany dividends (2)                       855         (855)           -            -             -               -
------------------------------------------  ---------  -----------  ----------  ------------  ------------  -------------
Net earnings after intercompany dividends   $    416   $    1,589   $      502  $        (2)  $         -   $       2,505
------------------------------------------  ---------  -----------  ----------  ------------  ------------  -------------

Net earnings after intercompany dividends
      for the same period of 2003           $     65   $    2,018   $      484  $        (1)  $         -   $       2,566
------------------------------------------  ---------  -----------  ----------  ------------  ------------  -------------
<FN>
(1)  All  significant  intercompany  balances and transactions are eliminated in
     consolidation.  Such  amounts  arise from intercompany deposit accounts and
     management  and  service  agreements.
(2)  Dividends  to  the Holding Company from the Bank provide funds for the debt
     service  on $45,000,000 of Capital Securities. The debt service is included
     in  the  Holding  Company's interest expense. The proceeds from the Capital
     Securities  are  invested  in  the  capital  of  the  Bank.
</TABLE>

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 $6,525,000 in the second quarter
of  2004,  from  $5,506,000  in  the second quarter of 2003. The improvement was
attributable  to  a  $316,785,000  increase  in  average interest-earning assets
resulting  from  continued growth in loans of $266,117,000 and a higher level of
security  and  short-term  investments  aggregating  $50,668,000.  The growth in
average  assets  was  funded  by  $252,786,000  of  new deposits, $32,968,000 of
additional  borrowed  funds  and  a $23,644,000 increase in stockholders' equity
(resulting  from  earnings  and  issuance  of shares upon the exercise of common
stock  warrants  and  conversion  of  convertible  debentures).

The  Company's  net  interest margin decreased to 2.53% in the second quarter of
2004,  from  3.06%  in  the  second quarter of 2003. The decrease was due to the
Company's  yield on interest-earning assets decreasing at a faster pace than its
cost  of  funds.

In  a  low  interest  rate  environment,  the  yield  on interest-earning assets
decreased 97 basis points to 5.96% in the 2004 quarter due to lower rates on new
mortgage loans originated, prepayments of higher-yielding loans and lower yields
earned on security and other short-term investments. The cost of funds decreased
46  basis points to 3.79% in the 2004 quarter due to lower rates paid on deposit
accounts and the addition of new debentures with lower rates than existing ones.


                                       22
<PAGE>
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
                                                  -----------------------------------------------------------------
                                                             June 30, 2004                   June 30, 2003
                                                  ---------------------------------  ------------------------------
                                                     Average     Interest   Yield/    Average    Interest   Yield/
($in thousands)                                      Balance    Inc./Exp.    Rate     Balance   Inc./Exp.    Rate
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
<S>                                                <C>          <C>         <C>      <C>        <C>         <C>
ASSETS
Interest-earning assets:
   Loans (1)                                       $  824,379   $   14,457    7.05%  $558,262   $   11,613    8.34%
   Securities                                         181,091          859    1.91    135,071          770    2.29
   Other interest-earning assets                       32,997           75    0.91     28,349           87    1.23
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total interest-earning assets                       1,038,467   $   15,391    5.96%   721,682   $   12,470    6.93%
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Noninterest-earning assets                             15,453                          14,082
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total assets                                       $1,053,920                        $735,764
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
   Interest checking deposits                      $   10,022   $       38    1.52%  $ 11,156   $       44    1.58%
   Savings deposits                                    31,834          141    1.78     31,745          151    1.91
   Money market deposits                              189,053          837    1.78    141,443          670    1.90
   Certificates of deposit                            557,952        4,890    3.52    353,556        3,653    4.14
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total deposit accounts                                788,861        5,906    3.01    537,900        4,518    3.37
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
   Federal funds purchased                                386            1    1.56          -            -       -
   Debentures and related interest payable            105,264        2,098    8.02    104,063        2,067    7.97
   Debentures - capital securities                     46,392          856    7.42     15,000          374   10.00
   Mortgage note payable                                  251            5    7.00        262            5    7.00
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total borrowed funds                                  152,293        2,960    7.82    119,325        2,446    8.22
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total interest-bearing liabilities                    941,154   $    8,866    3.79%   657,225   $    6,964    4.25%
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Noninterest-bearing deposits                            6,838                           5,013
Noninterest-bearing liabilities                        26,302                          17,544
Stockholders' equity                                   79,626                          55,982
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total liabilities and stockholders' equity         $1,053,920                        $735,764
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Net interest and dividend income/spread                         $    6,525    2.17%             $    5,506    2.68%
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Net interest-earning assets/margin                 $   97,313                 2.53%  $ 64,457                 3.06%
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                 1.10                            1.10
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
OTHER RATIOS:
  Return on average assets (2)                           0.95%                           1.40%
  Return on average equity  (2)                         12.58%                          18.33%
  Noninterest expense to average assets (2)              0.78%                           1.02%
  Efficiency ratio (3)                                     26%                             28%
  Average stockholders' equity to average assets         7.56%                           7.61%
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
<FN>
(1)  Includes  nonaccrual  loans,  if  any.
(2)  Annualized.
(3)  Defined  as  noninterest  expenses as a percentage of net interest income before the provision for loan losses
     plus noninterest income.
</TABLE>

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

The  provision  for loan losses increased to $1,284,000 in the second quarter of
2004,  from  $430,000  in  the second quarter of 2003. The provision is based on
management's ongoing assessment of the adequacy of the allowance for loan losses
that  takes  into consideration a number of factors as discussed on pages 21 and
22  in  the Company's Annual Report on Form 10-K for the year ended December 31,
2003.  The  higher  provision  was  a function of significant loan growth, which
amounted  to  $115,925,000  in  the  2004 quarter versus $44,184,000 in the 2003
quarter.


                                       23
<PAGE>
NONINTEREST  INCOME
-------------------

Noninterest  income  remained  relatively  unchanged at $1,225,000 in the second
quarter  of  2004  compared  to  $1,176,000  in the second quarter of 2003, as a
decrease  of $162,000 in income from the prepayment of mortgage loans was offset
by increased loan service charges of $167,000. The amount and timing of, as well
as  income from, loan prepayments, if any, cannot be predicted and can fluctuate
significantly. 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 prepayment provisions, and others prohibit prepayment of
indebtedness  entirely.

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

Noninterest  expenses  increased $166,000 to $2,045,000 in the second quarter of
2004,  from  $1,879,000  in  the second quarter of 2003. The increase was due to
increases in salary and employee benefits expense of $44,000, occupancy expenses
of  $163,000  and  director expense of $42,000, partially offset by decreases in
data processing expenses of $63,000 and all other expenses of $72,000.

Salaries  and employee benefits expense increased due to the following: $128,000
from  normal salary increases, a higher cost of employee benefits and additional
staff,  and  $90,000 from bonus payments to certain executives of the Company in
connection with the sale of capital securities and leasing of new space in 2004.
These  items  were  partially offset by a $127,000 decrease in compensation from
common stock warrants held by employees and directors, and a $47,000 increase in
SFAS No. 91 direct fee income (due to more loan originations).

Occupancy  expense  increased due to the leasing of larger office space. In May,
Intervest  Bancshares  Corporation  and its wholly owned subsidiaries, Intervest
National  Bank  (New  York office), Intervest Mortgage Corporation and Intervest
Securities Corporation, completed their move to newly constructed offices on the
entire  fourth  floor  at  One  Rockefeller  Plaza  in  New York City. Intervest
Mortgage  Corporation's  lease  obligation of approximately $22,000 per month on
its former space at 10 Rockefeller Plaza will expire in September 2004.

Director  expense  increased due to higher fees paid to directors for each board
and  committee  meeting  attended  beginning  in  June  2003.

Data  processing  expenses decreased due to lower fees incurred by the Bank. The
Bank renegotiated its data processing contract during late 2003 by extending the
expiration  date to 2010 and reducing the processing fee to a fixed amount until
its  assets  reach  $1.1  billion and thereafter the fee becomes variable and is
calculated  based  on  total  assets.  Previously,  the  data processing fee was
entirely  variable  and  a  function  of  the  Bank's  total  assets.

All  other  expenses  were  lower  due  to  a decrease of $49,000 in losses from
transactional  accounts  and  a  decrease  in foreclosed real estate expenses of
$57,000.

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

The  provision  for  income taxes increased $109,000 to $1,916,000 in the second
quarter of 2004, from $1,807,000 in the second quarter of 2003, primarily due to
a  higher effective income tax rate. The Company's effective tax rate (inclusive
of  state  and  local  taxes)  amounted to 43.3% in the 2004 period, compared to
41.3%  in  the  2003  period.  The  higher  rate  is  due to a larger portion of
consolidated  taxable  income  being  generated  from  the  Company's  New  York
operations,  which  is  taxed  at  higher  income  tax  rate  than  its  Florida
operations.


                                       24
<PAGE>
          COMPARISON OF RESULTS OF OPERATIONS FOR THE SIX-MONTHS ENDED
          ------------------------------------------------------------
                             JUNE 30, 2004 AND 2003
                             ----------------------
OVERVIEW
--------

For the first half of 2004, consolidated net earnings amounted to $5,240,000, or
$0.78  per  diluted share, an increase of $873,000 from $4,367,000, or $0.77 per
diluted share, reported in the first half of 2003. The per share computation for
2004  included  a  higher number of common shares outstanding resulting from the
exercise  of common stock warrants and conversion of debentures that occurred in
the  later  part  of 2003. The increase in net earnings was due to growth in net
interest  and  dividend  income  of  $2,560,000 and an increase of $1,176,000 in
noninterest  income,  partially offset by a $1,587,000 increase in the provision
for  loan  losses,  a  $976,000  increase  in  income tax expense and a $300,000
increase  in  noninterest  expenses.

Selected  information  regarding  results of operations for the six-months ended
June  30,  2004  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>
Interest and dividend income                $    572   $   24,822   $    4,694  $         2   $      (106)  $      29,984
Interest expense                               1,948       11,334        3,905            -          (106)         17,081
                                            ---------  -----------  ----------  ------------  ------------  -------------
Net interest and dividend income              (1,376)      13,488          789            2             -          12,903
Provision for loan losses                          7        2,220          134            -             -           2,361
Noninterest income                               150        2,183        2,277           56        (1,985)          2,681
Noninterest expenses                             186        4,675        1,044           43        (1,985)          3,963
                                            ---------  -----------  ----------  ------------  ------------  -------------
Earnings before income taxes                  (1,419)       8,776        1,888           15             -           9,260
Provision for income taxes                      (655)       3,795          873            7             -           4,020
------------------------------------------  ---------  -----------  ----------  ------------  ------------  -------------
Net earnings                                $   (764)  $    4,981   $    1,015  $         8   $         -   $       5,240
------------------------------------------  ---------  -----------  ----------  ------------  ------------  -------------
Intercompany dividends (2)                     1,485       (1,485)           -            -             -               -
------------------------------------------  ---------  -----------  ----------  ------------  ------------  -------------
Net earnings after intercompany dividends   $    721   $    3,496   $    1,015  $         8   $         -   $       5,240
------------------------------------------  ---------  -----------  ----------  ------------  ------------  -------------

Net earnings after intercompany dividends
     for the same period of 2003            $    143   $    3,456   $      769  $        (1)  $         -   $       4,367
------------------------------------------  ---------  -----------  ----------  ------------  ------------  -------------
<FN>
(1)  All  significant  intercompany  balances and transactions are eliminated in
     consolidation.  Such  amounts  arise from intercompany deposit accounts and
     management  and  service  agreements.
(2)  Dividends  to  the Holding Company from the Bank provide funds for the debt
     service  on $45,000,000 of Capital Securities. The debt service is included
     in  the  Holding  Company's interest expense. The proceeds from the Capital
     Securities  are  invested  in  the  capital  of  the  Bank.
</TABLE>

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 $12,903,000 in the first half of
2004,  from  $10,343,000  in  the  same  period  of  2003.  The  improvement was
attributable  to  a  $280,547,000  increase  in  average interest-earning assets
resulting  from  continued growth in loans of $241,237,000 and a higher level of
security  and  short-term  investments  aggregating  $39,310,000.  The growth in
average  assets  was  funded  by  $218,028,000  of  new deposits, $32,962,000 of
additional  borrowed  funds  and  a $23,164,000 increase in stockholders' equity
(resulting  from  earnings  and  issuance  of shares upon the exercise of common
stock  warrants  and  conversion  of  convertible  debentures).

The  Company's net interest margin decreased to 2.63% in the first half of 2004,
from  2.96%  in  the  same period of 2003. The decrease was due to the Company's
yield  on  interest-earning  assets decreasing at a faster pace than its cost of
funds.

In  a  low  interest  rate  environment,  the  yield  on interest-earning assets
decreased  78 basis points to 6.12% in the 2004 period due to lower rates on new
mortgage loans originated, prepayments of higher-yielding loans and lower yields
earned on security and other short-term investments. The cost of funds decreased
46  basis  points to 3.85% in the 2004 period due to lower rates paid on deposit
accounts and the addition of new debentures with lower rates than existing ones.


                                       25
<PAGE>
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>
                                                   ----------------------------------------------------------------
                                                                          Six-Months Ended
                                                   ----------------------------------------------------------------
                                                             June 30, 2004                   June 30, 2003
                                                   --------------------------------  ------------------------------
                                                     Average     Interest   Yield/    Average    Interest   Yield/
($in thousands)                                      Balance    Inc./Exp.    Rate     Balance   Inc./Exp.    Rate
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
<S>                                                <C>          <C>         <C>      <C>        <C>         <C>
ASSETS
Interest-earning assets:
   Loans (1)                                       $  775,082   $   28,249    7.33%  $533,845   $   22,283    8.42%
   Securities                                         173,283        1,564    1.82    146,532        1,657    2.28
   Other interest-earning assets                       36,776          171    0.94     24,217          155    1.29
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total interest-earning assets                         985,141   $   29,984    6.12%   704,594   $   24,095    6.90%
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Noninterest-earning assets                             15,945                          14,564
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total assets                                       $1,001,086                        $719,158
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
   Interest checking deposits                      $   10,194   $       78    1.54%  $ 11,492   $      100    1.75%
   Savings deposits                                    31,414          279    1.79     31,443          313    2.01
   Money market deposits                              178,409        1,579    1.78    140,169        1,392    2.00
   Certificates of deposit                            523,382        9,282    3.57    343,716        7,166    4.20
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total deposit accounts                                743,399       11,218    3.03    526,820        8,971    3.43
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
   Federal funds purchased                                193            1    1.56          -            -       -
   Debentures and related interest payable            109,212        4,331    7.97    101,366        4,024    8.01
   Debentures - capital securities                     39,935        1,522    7.66     15,000          748   10.06
   Mortgage note payable                                  252            9    6.98        264            9    6.98
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total borrowed funds                                  149,592        5,863    7.88    116,630        4,781    8.27
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total interest-bearing liabilities                    892,991   $   17,081    3.85%   643,450   $   13,752    4.31%
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Noninterest-bearing deposits                            6,509                           5,060
Noninterest-bearing liabilities                        23,562                          15,788
Stockholders' equity                                   78,024                          54,860
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Total liabilities and stockholders' equity         $1,001,086                        $719,158
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Net interest and dividend income/spread                         $   12,903    2.27%             $   10,343    2.59%
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Net interest-earning assets/margin                 $   92,150                 2.63%  $ 61,144                 2.96%
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                 1.10                            1.10
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
OTHER RATIOS:
  Return on average assets (2)                           1.05%                           1.21%
  Return on average equity  (2)                         13.43%                          15.92%
  Noninterest expense to average assets (2)              0.79%                           1.02%
  Efficiency ratio (3)                                     25%                             31%
  Average stockholders' equity to average assets         7.79%                           7.63%
-------------------------------------------------  -----------  ----------  -------  ---------  ----------  -------
<FN>
(1)  Includes  nonaccrual  loans,  if  any.
(2)  Annualized.
(3)  Defined  as  noninterest  expenses as a percentage of net interest income before the provision for loan losses
     plus  noninterest  income.
</TABLE>

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

The provision for loan losses increased to $2,361,000 in the first half of 2004,
from $774,000 in the same period of 2003. The provision is based on management's
ongoing  assessment  of the adequacy of the allowance for loan losses that takes
into  consideration  a  number of factors as discussed on pages 21 and 22 in the
Company's  Annual  Report on Form 10-K for the year ended December 31, 2003. The
higher  provision for the 2004 period was a function of significant loan growth,
which  amounted  to  $208,814,000  in the 2004 period, versus $87,296,000 in the
2003  period.


                                       26
<PAGE>
NONINTEREST  INCOME
-------------------

Noninterest income increased $1,176,000 to $2,681,000 in the first half of 2004,
from  $1,505,000  in  the same period of 2003. The increase was primarily due to
higher  income from the prepayment of mortgage loans of $853,000 and an increase
in loan service charges of $212,000. The amount and timing of, as well as income
from,  loan  prepayments,  if  any,  cannot  be  predicted  and  can  fluctuate
significantly. 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 prepayment provisions, and others prohibit prepayment of
indebtedness  entirely.

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

Noninterest expenses increased $300,000 to $3,963,000 in the first half of 2004,
from $3,663,000 in the same period of 2003. The increase was due to increases in
salary and employee benefits expense of $138,000, occupancy expenses of $187,000
and  director  expense  of  $105,000,  partially  offset  by  decreases  in data
processing  expenses  of  $82,000  and  all  other  expenses  of  $103,000.

Salaries  and employee benefits expense increased due to the following: $259,000
from  normal salary increases, a higher cost of employee benefits and additional
staff,  $146,000  from  bonus  payments  to certain executives of the Company in
connection with the sale of capital securities and leasing of new space in 2004,
and  $27,000  of  commission  expense.  These  items  were partially offset by a
$194,000  decrease  in compensation from common stock warrants held by employees
and  directors, and a $100,000 increase in SFAS No. 91 direct fee income (due to
more  loan  originations).

Occupancy  expense  increased due to the leasing of larger office space. In May,
Intervest  Bancshares  Corporation  and its wholly owned subsidiaries, Intervest
National  Bank  (New  York office), Intervest Mortgage Corporation and Intervest
Securities Corporation, completed their move to newly constructed offices on the
entire  fourth  floor  at  One  Rockefeller  Plaza  in  New York City. Intervest
Mortgage  Corporation's  lease  obligation of approximately $22,000 per month on
its former space at 10 Rockefeller Plaza will expire in September 2004.

Director  expense  increased due to higher fees paid to directors for each board
and  committee  meeting  attended  beginning  in  June  2003.

Data  processing  expenses decreased due to lower fees incurred by the Bank. The
Bank renegotiated its data processing contract during late 2003 by extending the
expiration  date to 2010 and reducing the processing fee to a fixed amount until
its  assets  reach  $1.1  billion and thereafter the fee becomes variable and is
calculated  based  on  total  assets.  Previously,  the  data processing fee was
entirely variable and a function of the Bank's total assets.

All  other  expenses  were  lower  due  to  a decrease of $49,000 in losses from
transactional  accounts  and  a  decrease  in foreclosed real estate expenses of
$57,000.

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

The  provision  for  income  taxes increased $976,000 to $4,020,000 in the first
half  of  2004, from $3,044,000 in the first half of 2003, due to higher pre-tax
income  and a higher effective income tax rate. The Company's effective tax rate
(inclusive  of  state  and  local  taxes)  amounted to 43.4% in the 2004 period,
compared to 41.1% in the 2003 period. The higher rate is due to a larger portion
of  consolidated  taxable  income  being  generated  from the Company's New York
operations,  which  is  taxed  at  higher  income  tax  rate  than  its  Florida
operations.

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's market risk arises primarily from interest rate
risk  inherent in its lending and deposit-taking activities, and the issuance of
its  debentures.  The  Company  has  not  engaged in and accordingly has no risk
related to trading accounts, commodities or foreign exchange. 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, 2003, 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, 2003. Management believes that there have been no significant
changes in the Company's market risk exposure since December 31, 2003.


                                       27
<PAGE>
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 "Asset and Liability Management"

ITEM 4. CONTROLS AND PROCEDURES

(a)  Evaluation  of  disclosure  controls and procedures.  The Company maintains
     ----------------------------------------------------
controls  and  procedures  designed  to  ensure  that information required to be
disclosed  in the reports that the Company files or submits under the Securities
Exchange  Act of 1934 is recorded, processed, summarized and reported within the
time  periods  specified  in  the rules and forms of the Securities and Exchange
Commission.  Based  upon  their  evaluation  of  those  controls  and procedures
performed  within 90 days of the filing date of this report, the Chief Executive
and  Chief  Financial  Officer  of  the  Company  concluded  that  the Company's
disclosure  controls  and  procedures  were  adequate.

(b)  Changes  in internal controls.   The Company made no significant changes in
     ------------------------------
its  internal controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation of those controls by the Chief
Executive  and  Chief  Financial  Officer.


                                       28
<PAGE>
PART II.  OTHER INFORMATION

ITEM 1.  LEGAL  PROCEEDINGS
     Not Applicable
ITEM 2.  CHANGES  IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
          SECURITIES
(a)  Not Applicable
(b)  Not Applicable
(c)  Not Applicable
(d)  Not Applicable
(e)  Not Applicable
ITEM 3.  DEFAULTS  UPON  SENIOR  SECURITIES
(a)  Not Applicable
(b)  Not Applicable
ITEM 4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS
(a)  An Annual Meeting of Stockholders was held on May 27, 2004.
(b)  Pursuant  to  the  Company's charter and bylaws, one-third of the directors
     are  elected  by  the  holders  of  Class A common stock and two-thirds are
     elected  by  holders of Class B common stock. On all other matters, Class A
     and  Class  B  common stockholders vote together as a single class. Each of
     the  persons named in the Proxy Statement dated April 22, 2004 as a nominee
     for  Director  was  elected for a one-year term expiring on the date of the
     next  annual  meeting  (see  Item  4-c).
(c)  The  table  below  summarizes voting results on the matter submitted to the
     Company's  common  stockholders:

<TABLE>
<CAPTION>
                                     FOR     AGAINST OR WITHHELD  ABSTAINED
--------------------------------  ---------  -------------------  ---------
<S>                               <C>        <C>                  <C>
ELECTION OF DIRECTORS - CLASS A
-------------------------------
Michael A. Callen                 5,399,580               22,171          -
Wayne F. Holly                    4,914,396              507,355          -
Lawton Swan, III                  5,395,896               25,855          -
ELECTION OF DIRECTORS  - CLASS B
--------------------------------
Lawrence G. Bergman                 385,000                    -          -
Jerome Dansker                      385,000                    -          -
Lowell S. Dansker                   385,000                    -          -
Paul DeRosa                         385,000                    -          -
Stephen A. Helman                   385,000                    -          -
Thomas E. Willett                   385,000                    -          -
David J. Willmott                   385,000                    -          -
Wesley T. Wood                      385,000                    -          -
--------------------------------  ---------  -------------------  ---------
</TABLE>

(d)  Not Applicable
ITEM 5.  OTHER INFORMATION
(a)  Not Applicable
(b)  Not Applicable
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
(a)  The following exhibits are filed as part of this report.
          31   - Certification of the principal executive and financial officer
               pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
          32   - Certification of the principal executive and financial officer
               pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
(b)  A  current  report  on  Form  8-K  dated  July  19,  2004  was filed by the
     registrant  to  furnish,  under Item 12, its quarterly earnings release for
     the  period  ended  June  30,  2004.


                                       29
<PAGE>
                                   SIGNATURES

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

INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

Date: August 12, 2004          By:    /s/  Lowell  S.  Dansker
                               -------------------------------
                               Lowell S. Dansker, Vice Chairman, President and
                                 Treasurer
                                     (Principal Executive and Financial Officer)


Date: August 12, 2004          By:    /s/ Lawrence G. Bergman
                               ------------------------------
                               Lawrence G. Bergman, Vice President and Secretary


                                       30
<PAGE>