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

                     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 September 30, 2000

                          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)


                        10 Rockefeller Plaza, Suite 1015
                          New York, New York 10020-1903
      --------------------------------------------------------------------
                    (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 12, 13 or 15(d) of the  Securities  Exchange Act
of 1934  during  the  past 12  months  (or for  such  shorter  period  that  the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days:

YES  XX   NO
     ---     ---

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

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

Class A Common Stock,                                  3,544,629 Outstanding at
$1.00 par value per share                              November 1,2000
-------------------------                              -------------------------

Class B Common Stock,                                  355,000 Outstanding at
$1.00 par value per share                              November 1, 2000
-------------------------                              -------------------------
================================================================================
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q
                               September 30, 2000

                                TABLE OF CONTENTS

  PART I. FINANCIAL INFORMATION                                             Page
                                                                            ----

     Item 1.    Financial Statements

        Condensed Consolidated Balance Sheets
           as of September 30, 2000 (Unaudited) and December 31, 1999 .........2

        Condensed Consolidated Statements of Earnings (Unaudited)
           for the Quarters and Nine-Months Ended September 30, 2000 and 1999..3

        Condensed Consolidated  Statements of Changes in Stockholders' Equity
           (Unaudited) for the Nine-Months Ended September 30,
           2000 and 1999 ..................................................... 4

        Condensed Consolidated Statements of Cash Flows (Unaudited)
           for the Nine-Months Ended September 30, 2000 and 1999...............5

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

        Review by Independent Certified Public Accountants ...................14

        Report on Review by Independent Certified Public Accountants .........15

     Item 2.    Management's Discussion and Analysis of Financial Condition
                    and Results of Operations ................................16

     Item 3.    Quantitative and Qualitative Disclosures about Market Risk....25

 PART II. OTHER INFORMATION

     Item 1.    Legal Proceedings.............................................25

     Item 2.    Changes in Securities and Use of Proceeds.....................25

     Item 3.    Defaults Upon Senior Securities...............................25

     Item 4.    Submission of Matters to a Vote of Security Holders...........25

     Item 5.    Other Information.............................................25

     Item 6.    Exhibits and Reports on Form 8-K .............................25

 Signatures...................................................................25

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>


PART I.  FINANCIAL INFORMATION ITEM 1. Financial Statements

                Intervest Bancshares Corporation and Subsidiaries
                      Condensed Consolidated Balance Sheets

<TABLE>
                                                                                         (Unaudited)
                                                                                         September 30,      December 31,
      ($ in thousands, except par value)                                                      2000              1999
      ---------------------------------------------------------------------------------------------------- ----------------
      <S>                                                                                     <C>               <C>
      ASSETS
      Cash and due from banks                                                                 $ 6,040           $ 4,663
      Federal funds sold                                                                       13,169             3,900
      Short-term investments                                                                    8,151            23,532
                                                                                        -----------------------------------
          Total cash and cash equivalents                                                      27,360            32,095
      Interest-earning time deposits with banks                                                 2,050                 -
      Securities held to maturity, net
          (estimated fair value of $89,467 and $79,882, respectively)                          91,377            83,132
      Federal Reserve Bank stock, at cost                                                         596               508
      Loans receivable
        (net of allowance for loan loss reserves of $2,785 and $2,493, respectively)          258,995           210,444
      Accrued interest receivable                                                               2,811             1,995
      Premises and equipment, net                                                               5,656             5,863
      Deferred income tax asset                                                                   979               936
      Deferred debenture offering costs                                                         2,757             3,721
      Other assets                                                                              1,455             1,787
      ---------------------------------------------------------------------------------------------------------------------
      Total assets                                                                           $394,036          $340,481
      ---------------------------------------------------------------------------------------------------------------------
      LIABILITIES
      Deposits:
         Noninterest-bearing demand deposit accounts                                          $ 4,718           $ 4,337
         Interest-bearing deposit accounts:
            Checking (NOW) accounts                                                             8,312             6,636
            Savings accounts                                                                   16,786            18,722
            Money-market accounts                                                              49,568            48,591
            Certificate of deposit accounts                                                   202,350           122,794
                                                                                        -----------------------------------
         Total deposits                                                                       281,734           201,080
      Federal funds purchased                                                                       -             6,955
      Subordinated debentures payable (note 5)                                                 60,330            84,330
      Accrued interest payable on debentures (note 5)                                           6,957             8,092
      Mortgage escrow funds payable                                                             6,132             3,375
      Official checks outstanding                                                               1,357             1,821
      Other liabilities                                                                         1,908             1,224
      ---------------------------------------------------------------------------------------------------------------------
      Total liabilities                                                                       358,418           306,877
      ---------------------------------------------------------------------------------------------------------------------
      STOCKHOLDERS' EQUITY
      Preferred stock (300,000 shares authorized, none issued)                                      -                 -
      Class A common stock ($1.00 par value, 9,500,000 shares authorized,
          3,544,629 and 3,531,879 shares issued and outstanding, respectively)                  3,545             3,532
      Class B common stock ($1.00 par value, 700,000 shares authorized,
          355,000 and 305,000 shares issued and outstanding, respectively)                        355               305
      Additional paid-in-capital                                                               18,971            18,770
      Retained earnings                                                                        12,747            10,997
      ---------------------------------------------------------------------------------------------------------------------
      Total stockholders' equity                                                               35,618            33,604
      ---------------------------------------------------------------------------------------------------------------------
      Total liabilities and stockholders' equity                                             $394,036          $340,481
      ---------------------------------------------------------------------------------------------------------------------
      See accompanying notes to condensed consolidated financial statements.

                                       2
</TABLE>

<PAGE>
                Intervest Bancshares Corporation and Subsidiaries
                  Condensed Consolidated Statements of Earnings
                                   (Unaudited)
<TABLE>
                                                                                       Quarter Ended          Nine-Months Ended
                                                                                       September 30,             September 30,
                                                                                ----------------------------------------------------
<S>                                                                                  <C>          <C>          <C>           <C>
($ in thousands, except per share data)                                              2000         1999         2000          1999
------------------------------------------------------------------------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME
Loans receivable                                                                    $6,538        $4,775      $18,214      $13,772
Securities                                                                           1,462         1,548        4,413        4,560
Other interest-earning assets                                                          324           164          611          435
------------------------------------------------------------------------------------------------------------------------------------
Total interest and dividend income                                                   8,324         6,487       23,238       18,767
------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits                                                                             4,074         2,148       10,387        6,132
Federal funds purchased                                                                  -             3          146            9
Subordinated debentures                                                              1,869         2,430        6,374        7,272
------------------------------------------------------------------------------------------------------------------------------------
Total interest expense                                                               5,943         4,581       16,907       13,413
------------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income                                                     2,381         1,906        6,331        5,354
Provision for loan loss reserves                                                        47           270          292          605
------------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income after provision for loan loss                       2,334         1,636        6,039        4,749
------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Customer service fees                                                                   38            34          104          100
Income from mortgage lending activities                                                268           185          541          675
All other                                                                               32             -           33            1
------------------------------------------------------------------------------------------------------------------------------------
Total noninterest income                                                               338           219          678          776
------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSES
Salaries and employee benefits                                                         491           465        1,675        1,449
Occupancy and equipment, net                                                           286           276          835          687
Advertising and promotion                                                                6            30           31          110
Professional fees and services                                                         100            71          320          184
Stationery, printing and supplies                                                       31            27          104          119
All other                                                                              167           134          497          447
------------------------------------------------------------------------------------------------------------------------------------
Total noninterest expenses                                                           1,081         1,003        3,462        2,996
------------------------------------------------------------------------------------------------------------------------------------
Earnings before taxes, extraordinary item
          and change in accounting principle                                         1,591           852        3,255        2,529
Provision for income taxes                                                             662           344        1,299        1,060
                                                                                ----------------------------------------------------
Earnings before extraordinary item
          and change in accounting principle                                           929           508        1,956        1,469
Extraordinary item, net of tax (note 5)                                                  -             -         (206)           -
Cumulative effect of change in accounting principle, net of tax (note 6)                 -             -            -         (128)
------------------------------------------------------------------------------------------------------------------------------------
Net earnings                                                                         $ 929          $508      $ 1,750      $ 1,341
------------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share:
   Earnings before extraordinary item and change in accounting principle            $ 0.24         $0.14       $ 0.50       $ 0.39
   Extraordinary item                                                                    -             -        (0.05)           -
   Cumulative effect of change in accounting principle                                   -             -            -        (0.03)
------------------------------------------------------------------------------------------------------------------------------------
   Net earnings per share                                                           $ 0.24         $0.14      $ 0. 45       $ 0.36
------------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share:
   Earnings before extraordinary item and change in accounting principle            $ 0.24         $0.13       $ 0.50       $ 0.35
   Extraordinary item                                                                    -             -        (0.05)           -
   Cumulative effect of change in accounting principle                                   -             -            -        (0.03)
------------------------------------------------------------------------------------------------------------------------------------
   Net earnings per share                                                           $ 0.24         $0.13       $ 0.45       $ 0.32
------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to condensed consolidated financial statements.
</TABLE>
                                       3
<PAGE>


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

<TABLE>
                                                                                                Nine-Months Ended
                                                                                                 September 30,
                                                                                          -----------------------------
<S>                                                                                             <C>           <C>
($ in thousands)                                                                                2000          1999
-----------------------------------------------------------------------------------------------------------------------

CLASS A COMMON STOCK
Balance at beginning of period                                                                  $ 3,532        $ 3,434
Issuance of 510 shares in exchange for common stock of minority
     stockholders of Intervest Bank                                                                   -              1
Issuance of 7,554 shares upon the conversion of debentures                                            -              7
Issuance of 12,750 and 1,800 shares, respectively, upon exercise of warrants                         13              2
-----------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                          3,545          3,444
-----------------------------------------------------------------------------------------------------------------------

CLASS B COMMON STOCK
Balance at beginning of period                                                                      305            300
Issuance of 5,000 shares upon the exercise of warrants                                                -              5
Issuance of 50,000 shares of restricted stock compensation (note 2)                                  50              -
-----------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                            355            305
-----------------------------------------------------------------------------------------------------------------------

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of period                                                                   18,770         18,148
Issuance of 510 shares in exchange for common stock of minority
     stockholders of Intervest Bank                                                                   -              6
Issuance of 7,554 shares upon the conversion of debentures, net of
      issuance costs                                                                                  -             56
Compensation related to issuance of Class B common stock warrants                                    19             19
Issuance of 5,000 shares upon exercise of Class B stock warrants                                      -             28
Issuance of 50,000 shares of restricted Class B stock (note 2)                                      109              -
Issuance of 12,750 and 1,800 shares, respectively, upon
      exercise of Class A stock warrants                                                             73             11
-----------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                         18,971         18,268
-----------------------------------------------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of period                                                                   10,997          9,230
Comprehensive income - net earnings for the period                                                1,750          1,341
-----------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                         12,747         10,571
-----------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity at end of period                                                     $35,618        $32,588
-----------------------------------------------------------------------------------------------------------------------
     See accompanying notes to condensed consolidated financial statements.
</TABLE>
                                       4
<PAGE>



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

                                                                                             Nine-Months Ended
                                                                                               September 30,
                                                                                     ----------------------------------
    <S>                                                                                       <C>           <C>
   ($ in thousands)                                                                           2000          1999
   --------------------------------------------------------------------------------------------------------------------
   OPERATING ACTIVITIES
   Net earnings                                                                               $1,750        $1,341
   Adjustments to  reconcile  net  earnings to net cash  provided  by  operating
        activities:
     Depreciation and amortization                                                               334           303
     Provision for loan loss reserves                                                            292           605
     Deferred income tax benefit                                                                 (43)         (139)
     Amortization of deferred debenture offering costs                                           964           711
     Compensation expense from awards of common stock and warrants                               178            19
     Amortization of premiums, fees and discounts, net                                        (1,171)         (817)
     (Decrease) increase in accrued interest payable on debentures                            (1,135)        1,549
     Decrease in official checks outstanding                                                    (464)         (464)
     Change in all other assets and liabilities, net                                           1,196         1,074
   --------------------------------------------------------------------------------------------------------------------
   Net cash provided by operating activities                                                   1,901         4,182
   --------------------------------------------------------------------------------------------------------------------
   INVESTING ACTIVITIES
   (Increase) decrease in interest-earning time deposits with banks                           (2,050)           99
   Maturities and calls of securities held to maturity                                        19,841        27,556
   Purchases of securities held to maturity                                                  (27,608)      (25,427)
   Originations of loans receivable, net of principal repayments                             (49,146)      (10,521)
   Purchases of Federal Reserve Bank stock, net                                                  (88)         (275)
   Purchases of premises and equipment, net                                                     (127)       (1,143)
   --------------------------------------------------------------------------------------------------------------------
   Net cash used by investing activities                                                     (59,178)       (9,711)
   --------------------------------------------------------------------------------------------------------------------
   FINANCING ACTIVITIES
   Net increase in demand, savings, NOW and money-market deposits                              1,098        15,392
   Net increase in certificates of deposit accounts                                           79,556         5,733
   Net increase in mortgage escrow funds payable                                               2,757         1,564
   Repayments of federal funds purchased, net                                                 (6,955)            -
   Repayments of debentures                                                                  (24,000)      (10,000)
   Proceeds from issuance of debentures, net of debenture offering costs                           -         6,606
   Proceeds from issuance of common stock                                                         86            47
   --------------------------------------------------------------------------------------------------------------------
   Net cash provided by financing activities                                                  52,542        19,342
   --------------------------------------------------------------------------------------------------------------------
   Net (decrease) increase in cash and cash equivalents                                       (4,735)       13,813
   Cash and cash equivalents at beginning of period                                           32,095        40,977
   --------------------------------------------------------------------------------------------------------------------
   Cash and cash equivalents at end of period                                               $ 27,360      $ 54,790
   --------------------------------------------------------------------------------------------------------------------
   SUPPLEMENTAL DISCLOSURES
   Cash paid during the period for:
      Interest                                                                               $17,207      $ 11,166
      Income taxes                                                                               451         1,443
   Noncash financing activities:
      Issuance of common stock to minority stockholders of Intervest Bank                          -            70
      Conversion of convertible debentures into common stock                                       -             7
   --------------------------------------------------------------------------------------------------------------------
      See accompanying notes to condensed consolidated financial statements.

</TABLE>
                                       5
<PAGE>

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

Note 1 - General

The  condensed   consolidated   financial  statements  of  Intervest  Bancshares
Corporation and Subsidiaries in this report have not been audited except for the
information derived from the audited  Consolidated  Balance Sheet as of December
31, 1999. The financial  statements in this report should be read in conjunction
with the consolidated financial statements and related notes thereto included in
the Company's  Annual Report to  Stockholders  on Form 10-KSB for the year ended
December 31, 1999.

The  condensed   consolidated  financial  statements  include  the  accounts  of
Intervest  Bancshares  Corporation (a bank holding company referred to by itself
as the "Holding Company") and its wholly owned subsidiaries,  Intervest National
Bank,  Intervest  Bank and  Intervest  Corporation  of New  York.  The banks are
referred to together as the  "Banks." The Holding  Company and its  subsidiaries
are referred to as the "Company" on a consolidated  basis. The Holding Company's
primary business activity is the ownership of the aforementioned subsidiaries.

Intervest  National Bank is a nationally  chartered  commercial  bank located in
Rockefeller  Plaza in New York City.  It opened for  business  on April 1, 1999.
Intervest Bank is a Florida state  chartered  commercial  bank with four banking
offices in Clearwater,  Florida and one in South  Pasadena,  Florida.  The Banks
conduct a full-service commercial banking business, which consists of attracting
deposits from the general public and investing those funds,  together with other
sources  of  funds,   primarily   through  the  origination  of  commercial  and
multifamily real estate loans, and through the purchase of security investments.
Intervest National Bank also provides Internet banking services at its Web Site:
www.intervestnatbank.com.

Intervest  Corporation of New York is located in  Rockefeller  Plaza in New York
City  and is in  the  business  of  originating  and  acquiring  commercial  and
multifamily  residential loans. As discussed in note 2, Intervest Corporation of
New York was  acquired by the Holding  Company  effective  March 10,  2000.  The
acquisition   was   accounted   for   at   historical   cost   similar   to  the
pooling-of-interests method of accounting.  Under this method of accounting, the
recorded assets, liabilities,  shareholders' equity, income and expenses of both
companies  are  combined  and  recorded  at  their   historical   cost  amounts.
Accordingly,  all prior  period  financial  information  in this report has been
adjusted  to include the  accounts of  Intervest  Corporation  of New York.  All
material   intercompany  accounts  and  transactions  have  been  eliminated  in
consolidation.

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

Note 2 - Acquisition of Intervest Corporation of New York

On March 10, 2000, Intervest Bancshares Corporation completed the acquisition of
Intervest Corporation of New York. The two entities are related in that the same
persons  serve on their  boards and the  former  holders of all of the shares of
Intervest  Corporation  of New York also owned  approximately  48% of the voting
shares of Intervest  Bancshares  Corporation prior to the merger. Both Boards of
Directors,   the   shareholders  of  both  the  Holding  Company  and  Intervest
Corporation  of New York, and the Federal  Reserve Bank of Atlanta  approved the
merger. In the merger,  Intervest  Corporation of New York shareholders received
an aggregate of 1,250,000  shares of the Holding  Company's Class A common stock
in exchange for all of Intervest Corporation of New York's capital stock.

                                       6
<PAGE>


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

Note 2 - Acquisition of Intervest Corporation of New York, Continued

In  connection  with the merger,  the  Holding  Company  incurred  approximately
$210,000 in expenses related to attorney and consulting fees, printing and stock
compensation   expense.  The  Board  of  Directors  and  the  Holding  Company's
shareholders  approved a grant of 50,000  shares of Class B common  stock to the
Chairman  of  the  Holding   Company  for  his  services  with  respect  to  the
development,  structuring and other activities  associated with the merger. This
resulted in $159,000 of compensation  expense being recorded,  which is included
in the consolidated  statements of earnings for the nine-months  ended September
30, 2000.

Certain pro forma consolidated  balance sheet information follows as of December
31, 1999:

<TABLE>
                                                                 Originally      Historical       Pro Forma
($ in thousands)                                                  Reported          ICNY         Adjustments       Adjusted
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>             <C>            <C>     <C>         <C>
Cash and cash equivalents                                          $ 7,429         $30,754        $(6,088)(1)         $ 32,095
Securities held to maturity                                         83,132               -             -                83,132
Federal Reserve Bank stock                                             508               -             -                   508
Loans receivable, net of unearned fees
               and loan loss reserves                              147,154          63,290             -               210,444
Accrued interest receivable                                          1,349             646             -                 1,995
Premises and equipment, net                                          5,767              96             -                 5,863
Deferred income tax asset                                              912              24             -                   936
Deferred debenture offering costs                                      479           3,242             -                 3,721
All other assets                                                     1,099             688             -                 1,787
-------------------------------------------------------------------------------------------------------------------------------
Total assets                                                      $247,829         $98,740        $(6,088)            $340,481
-------------------------------------------------------------------------------------------------------------------------------

Deposit liabilities                                               $207,168           $   -        $(6,088)(1)         $201,080
Federal funds purchased                                              6,955               -            -                  6,955
Debentures payable                                                   6,930          77,400            -                 84,330
Accrued interest on debentures payable                                 892           7,200            -                  8,092
Mortgage escrow funds payable                                        1,521           1,854            -                  3,375
Official checks outstanding                                          1,821               -            -                  1,821
All other liabilities                                                1,078             146            -                  1,224
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                                  226,365          86,600         (6,088)             306,877
-------------------------------------------------------------------------------------------------------------------------------

Common stock and paid-in capital                                    16,998           5,609            -                 22,607
Retained earnings                                                    4,466           6,531            -                 10,997
-------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                          21,464          12,140            -                 33,604
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                        $247,829         $98,740        $(6,088)            $340,481
-------------------------------------------------------------------------------------------------------------------------------


<FN>
(1)  Represents  the  elimination  of  certain  intercompany  deposit  accounts.
     Certain  reclassifications  were also  made to the  historical  amounts  of
     Intervest Corporation of New York and the Company to conform to the current
     period's presentation.
</FN>
</TABLE>
                                       7
<PAGE>


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

Note 2 - Acquisition of Intervest Corporation of New York, Continued

A pro forma summary of the Company's  consolidated statement of earnings for the
quarter ended September 30, 1999 follows:

<TABLE>
                                                                            Originally   Historical    Pro Forma
($ in thousands)                                                             Reported       ICNY      Adjustments     Adjusted
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>         <C>          <C>             <C>
Interest and dividend income                                                   $3,739      $2,792       $ (44)(a)       $6,487
Interest expense                                                                2,355       2,270         (44)(a)        4,581
                                                                         ------------------------------------------------------
Net interest and dividend income                                                1,384         522          -             1,906
Provision for loan loss reserves                                                  270           -          -               270
                                                                         ------------------------------------------------------
Net interest and dividend income after provision for loan loss reserves         1,114         522          -             1,636
Noninterest income                                                                128          91          -               219
Noninterest expenses                                                              815         188          -             1,003
                                                                         ------------------------------------------------------
Earnings before taxes                                                             427         425          -               852
Provision for income taxes                                                        149         195          -               344
-------------------------------------------------------------------------------------------------------------------------------
Net earnings                                                                    $ 278       $ 230        $ -              $508
-------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share                                                        $0.11           -          -            $ 0.14
Diluted earnings per share                                                      $0.10           -          -            $ 0.13

Average number of common shares outstanding - Basic                         2,498,734           -      1,250,000     3,748,734
Average number of common shares outstanding - Diluted                       2,718,594           -      1,250,000     3,968,594
-------------------------------------------------------------------------------------------------------------------------------

A pro forma summary of the Company's  consolidated statement of earnings for the
nine-months ended September 30, 1999 follows:

                                                                            Originally   Historical    Pro Forma
($ in thousands)                                                             Reported       ICNY      Adjustments     Adjusted
--------------------------------------------------------------------------------------------------------------------------------
Interest and dividend income                                                $10,604      $8,212       $ (49)(a)         $18,767
Interest expense                                                              6,663       6,799         (49)(a)          13,413
                                                                         -------------------------------------------------------
Net interest and dividend income                                              3,941       1,413           -               5,354
Provision for loan loss reserves                                                605           -           -                 605
                                                                         -------------------------------------------------------
Net interest and dividend income after provision for loan loss reserves       3,336       1,413           -               4,749
Noninterest income                                                              351         425           -                 776
Noninterest expenses                                                          2,285         711           -               2,996
                                                                         -------------------------------------------------------
Earnings before taxes and change in accounting principle                      1,402       1,127           -               2,529
Provision for income taxes                                                      544         516           -               1,060
Cumulative effect of change in accounting principle                            (128)          -           -                (128)
--------------------------------------------------------------------------------------------------------------------------------
Net earnings                                                                   $730       $ 611        $  -            $  1,341
--------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share                                                      $0.29           -           -             $  0.36
Diluted earnings per share                                                    $0.25           -           -             $  0.32

Average number of common shares outstanding - Basic                       2,494,410           -      1,250,000        3,744,410
Average number of common shares outstanding - Diluted                     2,949,445           -      1,250,000        4,199,445
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(a)    Represents the elimination of certain intercompany interest expense.
</FN>
</TABLE>
                                       8
<PAGE>
                Intervest Bancshares Corporation and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

Note 2 - Acquisition of Intervest Corporation of New York, Continued

A summary of the Company's  consolidated  statements of earnings for the quarter
and nine-months ended September 30, 2000 follows:
<TABLE>
                                                                          For the Quarter Ended     For the Nine-Months Ended
                                                                           September 30, 2000           September 30, 2000
                                                                        --------------------------  ---------------------------
                                                                           Excluding         As        Excluding         As
($ in thousands)                                                              ICNY        Reported        ICNY        Reported
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>           <C>          <C>           <C>
Interest and dividend income                                                  $6,309        $8,324       $16,697       $23,238
Interest expense                                                               4,247         5,943        11,042        16,907
                                                                        -------------------------------------------------------
Net interest and dividend income                                               2,062         2,381         5,655         6,331
Provision for loan loss reserves                                                  47            47           292           292
                                                                        -------------------------------------------------------
Net interest and dividend income
     after provision for loan loss reserves                                    2,015         2,334         5,363         6,039
Noninterest income                                                               134           338           390           678
Noninterest expenses                                                             942         1,081         2,918         3,462
                                                                        -------------------------------------------------------
Earnings before taxes and extraordinary item                                   1,207         1,591         2,835         3,255
Provision for income taxes                                                       485           662         1,107         1,299
Extraordinary item                                                                 -             -             -          (206)
-------------------------------------------------------------------------------------------------------------------------------
Net earnings                                                                   $ 722         $ 929       $ 1,728       $ 1,750
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The amounts  reported in the table above are after  elimination of  intercompany
revenue and expense.

Note 3 - Allowance for Loan Loss Reserves

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

No loans were  classified  as  nonaccrual  or impaired  during the 2000 and 1999
reporting periods in this report.

Activity in the allowance for loan loss reserves is summarized as follows:

<TABLE>
                                                                   For the Quarter Ended          For the Nine-Months Ended
                                                                       September 30,                     September 30,
                                                                ----------------------------     -----------------------------
<S>                                                                   <C>           <C>               <C>             <C>
($ in thousands)                                                      2000          1999              2000            1999
------------------------------------------------------------------------------------------------------------------------------
Balance at beginning of period                                       $2,738        $1,997            $2,493          $1,662
Provision charged to operations                                          47           270               292             605
Recoveries                                                                -             1                 -               1
------------------------------------------------------------------------------------------------------------------------------
Balance at end of period                                             $2,785        $2,268            $2,785          $2,268
------------------------------------------------------------------------------------------------ ------------- ---------------
</TABLE>

Note 4 - Earnings Per Share (EPS)

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

                                       9
<PAGE>
                Intervest Bancshares Corporation and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

Note 4 - Earnings Per Share (EPS), Continued

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

EPS  computations for the 1999 periods have been adjusted to include the results
of  operations  of Intervest  Corporation  of New York as well as the  1,250,000
Class A common shares issued in the merger.

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 tables that follows:
<TABLE>
                                                                            For the Quarter Ended      For the Nine-Months Ended
                                                                                September 30,                September 30,
                                                                          ---------------------------------------------------------
<S>                                                                            <C>          <C>            <C>            <C>
BASIC EARNINGS PER SHARE                                                       2000         1999           2000           1999
-----------------------------------------------------------------------------------------------------------------------------------
Net earnings:
  Earnings before extraordinary item and change in accounting principle       $929,000     $508,000       $1,956,000     $1,469,000
  Extraordinary item (1)                                                             -            -         (206,000)             -
  Cumulative effect of change in accounting principle (2)                            -            -                -       (128,000)
-----------------------------------------------------------------------------------------------------------------------------------
 Net earnings                                                                 $929,000     $508,000       $1,750,000     $1,341,000
-----------------------------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding                                  3,896,365    3,748,734        3,879,500      3,744,410
Per share amounts:
  Earnings before extraordinary item and change in accounting principle          $0.24        $0.14            $0.50          $0.39
  Extraordinary item (1)                                                             -            -            (0.05)             -
  Cumulative effect of change in accounting principle (2)                            -            -                -          (0.03)
-----------------------------------------------------------------------------------------------------------------------------------
  Basic net earnings per share                                                   $0.24        $0.14            $0.45          $0.36
-----------------------------------------------------------------------------------------------------------------------------------

DILUTED EARNINGS PER SHARE
Average number of common shares outstanding for dilution:
  Common shares outstanding per above                                        3,896,365    3,748,734        3,879,500      3,744,410
  Potential dilutive shares resulting from exercise of warrants (3)                  -      219,860               -         455,035
  Potential dilutive shares resulting from conversion of debentures (3)              -            -               -               -
                                                                          ---------------------------------------------------------
  Total average number of common shares outstanding                          3,896,365    3,968,594        3,879,500      4,199,445
                                                                          ---------------------------------------------------------
Per share amounts:
  Earnings before extraordinary item and change in accounting principle          $0.24        $0.13            $0.50          $0.35
  Extraordinary item (1)                                                             -            -            (0.05)             -
  Cumulative effect of change in accounting principle (2)                            -            -               -           (0.03)
-----------------------------------------------------------------------------------------------------------------------------------
  Diluted net earnings per share                                                 $0.24        $0.13           $0.45           $0.32
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Represents a charge, net of taxes, from the early retirement of debentures.
(2)  Represents  a charge,  net of taxes,  from the  adoption  of  Statement  of
     Position 98-5, "Reporting on the Costs of Start-Up Activities."
(3)  A total of 2,650,000 of common stock warrants with exercise  prices ranging
     from $6.67 to $15.00 were not considered in the computations of diluted EPS
     for 2000 because they were not dilutive.  A total of 1,133,000 common stock
     warrants  with  exercise  prices  ranging  from  $10.00 to $14.00  were not
     considered  in the  computations  of diluted EPS for 1999 because they were
     not dilutive. Additionally,  convertible debentures totaling $6,930,000 and
     convertible  at $12.50 per share into  Class A common  stock were  excluded
     from all diluted EPS computations because they were not dilutive,  and as a
     result,  adjusted  net earnings for diluted EPS is the same as net earnings
     for basic EPS.
</FN>
</TABLE>
                                       10
<PAGE>
                Intervest Bancshares Corporation and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

Note 5 - Subordinated Debentures Payable and Extraordinary Item

Debentures outstanding are summarized as follows:
<TABLE>
                                                                               At September 30,     At December 31,
        ($ in thousands)                                                             2000                1999
        --------------------------------------------------------------------------------------------------------------
        INTERVEST CORPORATION OF NEW YORK:
        <S>                                                                              <C>                 <C>
        Series 06/29/92 - interest at 2% above prime - due April 1, 2000                 $   -               $7,000
        Series 09/13/93 - interest at 2% above prime - due October 1, 2001                   -                8,000
        Series 01/28/94 - interest at 2% above prime - due April 1, 2002                     -                4,500
        Series 10/28/94 - interest at 2% above prime - due April 1, 2003                     -                4,500
        Series 05/12/95 - interest at 2% above prime - due April 1, 2004                 9,000                9,000
        Series 10/19/95 - interest at 2% above prime - due October 1, 2004               9,000                9,000
        Series 05/10/96 - interest at 2% above prime - due April 1, 2005                10,000               10,000
        Series 10/15/96 - interest at 2% above prime - due October 1, 2005               5,500                5,500
        Series 04/30/97 - interest at 1% above prime - due October 1, 2005               8,000                8,000
        Series 11/10/98 - interest at 8% fixed       - due January 1, 2001               1,400                1,400
        Series 11/10/98 - interest at 81/2% fixed    - due January 1, 2003               1,400                1,400
        Series 11/10/98 - interest at 9% fixed       - due January 1, 2005               2,600                2,600
        Series 06/28/99 - interest at 8% fixed       - due July 1, 2002                  2,500                2,500
        Series 06/28/99 - interest at 81/2% fixed    - due July 1, 2004                  2,000                2,000
        Series 06/28/99 - interest at 9% fixed       - due July 1, 2006                  2,000                2,000
                                                                                --------------------------------------
                                                                                        53,400               77,400
        INTERVEST BANCSHARES CORPORATION:
        Series 05/14/98 - interest at 8% fixed       - due July 1, 2008                  6,930                6,930
        --------------------------------------------------------------------------------------------------------------
                                                                                       $60,330              $84,330
        --------------------------------------------------------------------------------------------------------------
</TABLE>

The "Prime" in the preceding  table refers to the prime rate of Chase  Manhattan
Bank,  which was 9.5% on September 30 and June 30, 2000,  9.0% on March 31, 2000
and 8.50% at December 31, 1999.

In the first half of 2000,  Intervest  Corporation of New York's Series 6/29/92,
9/13/93,  1/28/94 and 10/28/94 debentures totaling $24,000,000 in principal were
redeemed  prior to maturity for the  outstanding  principal  amount plus accrued
interest  aggregating  $3,970,000.  In connection with these early  redemptions,
$382,000 of unamortized deferred debenture offering costs was charged to expense
in the second quarter of 2000 and reported as an extraordinary  charge, net of a
tax benefit of $176,000,  in the condensed  consolidated  statement of earnings
for the nine-months ended September 30, 2000.

Intervest  Corporation of New York's  floating-rate  Series  5/12/95,  10/19/95,
5/10/96,  10/15/96 and 4/30/97  debentures have a maximum  interest rate of 12%.
The payment of interest on an  aggregate  of  $18,440,000  of these  debentures,
which  interest  is  compounded,  is  deferred  until  maturity.  The payment of
interest on the remaining debentures is made quarterly.  Any debenture holder in
the  aforementioned  Series who has deferred receipt of interest may at any time
elect to receive the deferred interest and subsequently receive regular payments
of interest.

Intervest   Corporation  of  New  York's  Series  11/10/98  and  Series  6/28/99
debentures  accrue  and  compound  interest  quarterly.  The  holders  of  these
debentures  can require the Company to repurchase the debentures for face amount
plus  accrued  interest  each year  beginning  on July 1, 2001 and July 1, 2002,
respectively,  provided,  however  that in no calendar  year will the Company be
required to purchase more than $100,000 in principal  amount of each maturity of
debentures, on a non-cumulative basis.

All the  debentures  may be  redeemed,  in whole or in part,  at any time at the
option of the  Intervest  Corporation  of New York,  for face value,  except for
certain for Series 11/10/98 debentures due January 1, 2003 and 2005, which would
be at a premium of 1% if the  redemption  is prior to  January 1, 2001.  All the
debentures  are  unsecured  and  subordinate  to all present  and future  senior
indebtedness, as defined.
                                       11
<PAGE>
                Intervest Bancshares Corporation and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------

Note 5 - Subordinated Debentures Payable and Extraordinary Item, Continued

The Holding  Company's Series 05/14/98  subordinated  debentures are due July 1,
2008 and are convertible at the option of the holders at any time prior to April
1, 2008, unless previously redeemed by the Holding Company, into shares of Class
A common stock of the Holding  Company at the  following  conversion  prices per
share: $12.50 in 2000; $14.00 in 2001; $15.00 in 2002; $16.00 in 2003; $18.00 in
2004;  $21.00 in 2005; $24.00 in 2006; $27.00 in 2007 and $30.00 from January 1,
2008  through  April 1, 2008.  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.  The Holding  Company also has the option at any time to call
all or any part of the convertible debentures for payment and redeem the same at
any time  prior to  maturity  thereof  for face  amount.  Interest  accrues  and
compounds  each  calendar  quarter at 8%.  All  accrued  interest  is payable at
maturity  whether by  acceleration,  redemption  or otherwise.  Any  convertible
debenture  holder may, on or before July 1 of each year commencing July 1, 2003,
elect to be paid all accrued  interest  and to  thereafter  receive  payments of
interest quarterly.

Scheduled contractual  maturities of all debentures as of September 30, 2000 are
summarized as follows:

   ($ in thousands)                                Principal    Accrued Interest
   -----------------------------------------------------------------------------
   For the three-months ended December 31, 2000        $   -                $  -
   For the year ended December 31, 2001                1,400                 216
   For the year ended December 31, 2002                2,500                 240
   For the year ended December 31, 2003                1,400                 230
   For the year ended December 31, 2004               20,000               3,155
   Thereafter                                         35,030               3,116
   -----------------------------------------------------------------------------
                                                     $60,330              $6,957
   -----------------------------------------------------------------------------

Note 6 - Cumulative Effect of Change in Accounting Principle

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

Note 7 - Regulatory Matters

The  Company  (on a  consolidated  basis)  and the Banks are  subject to various
regulatory  capital  requirements  administered by the federal banking agencies.
Failure to meet capital requirements can initiate certain mandatory and possibly
discretionary actions by the regulators that, if undertaken, could have a direct
material  effect on the Company's  and the Banks'  financial  statements.  Under
capital adequacy  guidelines and the regulatory  framework for prompt corrective
action,  the Company and the Banks must meet specific  capital  guidelines  that
involve  quantitative   measures  of  their  assets,   liabilities  and  certain
off-balance  sheet items as calculated  under regulatory  accounting  practices.
These  capital  amounts  are  also  subject  to  qualitative  judgement  by  the
regulators about components, risk weighting and other factors. Prompt corrective
action provisions are not applicable to bank holding companies.

Quantitative  measures established by the regulations to ensure capital adequacy
require  the Company  and the Banks to  maintain  minimum  amounts and ratios of
total and Tier 1  capital  to  risk-weighted  assets  and of Tier 1  capital  to
average  assets,  as  defined by the  regulations.  Management  believes,  as of
September 30, 2000, that the Company, Intervest Bank and Intervest National Bank
met all capital adequacy requirements to which they are subject.

                                       12
<PAGE>

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

Note 7 - Regulatory Matters, Continued

As of  September  30, 2000,  the most recent  notification  from the  regulators
categorized  the  Banks  as   well-capitalized   institutions  under  regulatory
framework for prompt corrective  action.  Management  believes that there are no
current conditions or events outstanding that would change the designations from
well capitalized.

The tables below present information regarding the Company's  (consolidated) and
the Banks' capital adequacy.
<TABLE>

                                             Actual             Minimum           To Be Considered
                                             Ratios           Requirement         Well Capitalized
                                             ------           -----------         ----------------
    Consolidated
    ------------
    <S>                                      <C>                <C>
    Total capital to risk-weighted assets    12.72%             8.00%                    NA
    Tier 1 capital to risk-weighted assets   11.78%             4.00%                    NA
    Tier 1 capital to total average assets -
    leverage ratio                            8.97%             4.00%                    NA

    Intervest Bank
    --------------
    Total capital to risk-weighted assets    11.00%             8.00%                   10.00%
    Tier 1 capital to risk-weighted assets    9.74%             4.00%                    6.00%
    Tier 1 capital to total average assets -  6.62%             4.00%                    5.00%
    leverage ratio

    Intervest National Bank
    -----------------------
    Total capital to risk-weighted assets    14.24%             8.00%                   10.00%
    Tier 1 capital to risk-weighted assets   13.34%             4.00%                    6.00%
    Tier 1 capital to total average assets - 11.01%             4.00%                    5.00%
    leverage ratio

</TABLE>

On June 15, 2000, Intervest National Bank and its primary regulator,  the Office
of the  Comptroller of the Currency of the United States of America entered into
a Memorandum of  Understanding  ("MOU").  The MOU is a formal written  agreement
whereby,  among other things,  Intervest  National  Bank shall  review,  revise,
develop and  implement  various  policies  and  procedures  with  respect to its
lending and credit  underwriting.  Management has  implemented  various  actions
towards bringing Intervest National Bank into full compliance with the MOU.

                                       13
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries

               Review by Independent Certified Public Accountants

Hacker,   Johnson  &  Smith  PA,  the  Company's  independent  certified  public
accountants,  have made a limited  review of the financial  data as of September
30, 2000, and for the three- and nine-month periods then ended presented in this
document,  in accordance with standards established by the American Institute of
Certified Public Accountants.

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
















                                       14
<PAGE>

          Report on Review by Independent Certified Public Accountants

The Board of Directors
Intervest Bancshares Corporation and Subsidiaries
New York, New York:

         We have reviewed the condensed  consolidated balance sheet of Intervest
Bancshares  Corporation  and  Subsidiaries  (the  "Company") as of September 30,
2000,  and the related  condensed  consolidated  statements  of earnings for the
three- and nine-month periods then ended and the related condensed  consolidated
statements of changes in stockholders'  equity and cash flows for the nine-month
period then ended included in this report.  These  financial  statements are the
responsibility of the Company's management.

         We were furnished with the report of other  accountants on their review
of the interim financial information of Intervest Corporation of New York, whose
total  assets  as of  September  30,  2000,  constituted  17.7%  of the  related
consolidated total, and whose interest income, noninterest income and net income
for the three- and nine-month  periods then ended constituted  24.2%,  60.4% and
22.3%;  and 28.1%,  42.5% and 1.3%,  respectively,  of the related  consolidated
totals for each period.

         We conducted our review in accordance with standards established by the
American  Institute  of  Certified  Public  Accountants.  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 generally accepted auditing standards, 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  review and the  report of other  accountants,  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 generally accepted accounting principles.

HACKER, JOHNSON & SMITH PA
Tampa, Florida
November 10, 2000


                                       15
<PAGE>

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

General

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

All  financial  information  in this  report has been  adjusted  to include  the
accounts of Intervest Corporation of New York, which was acquired by the Company
through a merger completed on March 10, 2000. Intervest  Corporation of New York
engages in the business of originating and acquiring  commercial and multifamily
residential  loans. The merger has been accounted for at historical cost similar
to the  pooling-of-interests  method of accounting.  See note 2 to the condensed
consolidated financial statements for a further discussion of the merger.

The Company reported that its net earnings  increased 83% to $929,000,  or $0.24
per fully diluted share, in the third quarter of 2000,  from $508,000,  or $0.13
per fully  diluted  share,  in the third quarter of 1999.  Higher  earnings were
primarily  due to a  $475,000  increase  in net  interest  income and a $223,000
decline in the provision for loan loss reserves,  partially offset by a $318,000
increase in the provision for income taxes.

Earnings from Intervest  National Bank and Intervest Bank, the Company's banking
subsidiaries,  increased  from the same  period a year ago.  Intervest  National
Bank's net earnings  increased to $182,000 in the third quarter of 2000,  from a
net loss of $126,000 in the same quarter of 1999 (Intervest National Bank opened
for  business on April 1, 1999).  Intervest  Bank's net  earnings  increased  to
$529,000 in the third  quarter of 2000,  from  $421,000  in the same  quarter of
1999.  At  September  30,  2000,  Intervest  National  Bank's  total assets were
$112,727,000 and Intervest Bank's total assets were $205,492,000.

For the  nine-months  ended  September  30,  2000,  net  earnings  increased  to
$1,750,000,  or $0.45 per fully diluted  share,  from  $1,341,000,  or $0.32 per
fully diluted share,  for the same period of 1999. The  improvement was due to a
$977,000 increase in net interest income and a $313,000 decline in the provision
for loan loss  reserves.  These  items were  partially  offset by  approximately
$210,000 of nonrecurring  expenses  associated with the acquisition of Intervest
Corporation  of New York,  increased  operating  expenses  resulting from a full
nine-months of operations of Intervest  National Bank and a $239,000 increase in
the provision for income taxes.

Selected information about the Holding Company and its subsidiaries at September
30, 2000 and for the quarter and nine-months  ended September 30, 2000,  follows
in the table below:
<TABLE>
                                                                                                     Intervest
                                                                                        Intervest   Corporation
                                                               Holding      Intervest    National       of          Consolidated
  ($ in thousands)                                             Company         Bank        Bank      New York        Amounts (1)
  -----------------------------------------------------------------------------------------------------------------------------
  <S>                                                          <C>         <C>          <C>            <C>            <C>
  Total assets                                                 $44,068     $205,492     $112,727       $69,639        $394,036
  Total cash and cash equivalents                                2,456        2,760       13,796        10,952          27,360
  Total securities, net                                              -       75,446       16,527             -          91,377
  Total loans, net of unearned fees and loan loss reserves       5,697      119,551       78,283        55,464         258,995
  Total deposit liabilities                                          -      186,530       98,048             -         281,734
  Total debentures payable and related accrued interest          8,300            -            -        58,987          67,287
  Total stockholders' equity                                    35,618       14,241       11,874         9,162          35,618
  Net earnings for the quarter ended                                11          529          182           207             929
  Net earnings (loss) for the nine-months ended                   (148)       1,495          381            22           1,750
  Number of full-service banking offices                             -            5            1             -               6
  -----------------------------------------------------------------------------------------------------------------------------
<FN>
 (1)    Consolidated amounts exclude intercompany balances and therefore the
        individual amounts may not total.
</FN>
</TABLE>
                                       16
<PAGE>
Comparison of Financial Condition at September 30, 2000 and December 31, 1999

Overview
--------

Total assets at September 30, 2000 increased to $394,036,000,  from $340,481,000
at December 31, 1999. The increase  reflected new mortgage loans  originated and
purchases of new security investments.  These increases were funded by growth in
certificate of deposit accounts.

Total  liabilities  at  September  30,  2000  increased  to  $358,418,000,  from
$306,877,000  at December  31,  1999,  due to growth in  certificate  of deposit
accounts.  The increase in deposits was  partially  offset by the  retirement of
certain debentures payable and the repayment of federal funds purchased.

Stockholders'  equity  increased  to  $35,618,000  at September  30, 2000,  from
$33,604,000  at  year-end  1999.  The  increase   reflected   earnings  for  the
nine-months  ended  September  30,  2000 and the  issuance  of  common  stock in
connection  with a stock  award and the  exercise  of  warrants.  Book value per
common share  increased to $9.13 per share at September 30, 2000,  from $8.76 at
December 31, 1999.

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

<TABLE>
                                                      At September 30, 2000                       At December 31, 1999
                                                 -------------------------------          -----------------------------------
                                                    Carrying          % of                      Carrying           % of
($ in thousands)                                      Value       Total Assets                   Value         Total Assets
------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>               <C>                       <C>                <C>
Cash and cash equivalents                           $ 27,360          7.0%                       $32,095           9.4%
Interest-earning time deposits with banks              2,050          0.5                              -             -
Securities, net                                       91,973         23.3                         83,640          24.6
Loans receivable, net                                258,995         65.7                        210,444          61.8
All other assets                                      13,658          3.5                         14,302           4.2
------------------------------------------------------------------------------------------------------------------------------
Total assets                                        $394,036        100.0%                      $340,481         100.0%
------------------------------------------------------------------------------------------------------------------------------
Deposits                                            $281,734         71.5                       $201,080          59.1%
Federal funds purchased                                    -            -                          6,955           2.0
Debentures payable                                    60,330         15.3                         84,330          24.8
Accrued interest payable on debentures                 6,957          1.8                          8,092           2.3
All other liabilities                                  9,397          2.4                          6,420           1.9
------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                    358,418         91.0                        306,877          90.1
------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                  35,618          9.0                         33,604           9.9
------------------------------------------------ -----------------------------------------------------------------------------
Total liabilities and stockholders' equity          $394,036        100.0%                      $340,481         100.0%
------------------------------------------------ -----------------------------------------------------------------------------
</TABLE>

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

Cash and cash equivalents include  interest-bearing and noninterest-bearing cash
balances,   investments  in  overnight   federal  funds  and  other   short-term
investments  that have original  maturities of three months or less.  Short-term
investments  are  normally   comprised  of  commercial  paper  issued  by  large
commercial banks,  certificates of deposit and U.S. government  securities.  The
level  of cash  and  cash  equivalents  fluctuates  based  on  various  factors,
including  liquidity needs, loan demand,  deposit flows,  repayments of borrowed
funds and alternative security investment opportunities.

Securities
----------

Securities  which the Company has the intent and ability to hold to maturity are
classified as held to maturity and carried at amortized cost. Securities held to
maturity totaled  $91,377,000 at September 30, 2000,  compared to $83,132,000 at
December 31, 1999. The increase reflected  additional  purchases.  The portfolio
consists of fixed-rate debt  obligations of the Federal Home Loan Bank,  Federal
Farm Credit Bank,  Federal  National  Mortgage  Association and the Federal Home
Loan  Mortgage  Corporation.  Most of the  securities  have terms that allow the
issuer the right to call or prepay its obligation without prepayment penalty.

                                       17
<PAGE>
In order for the Banks to be members of the Federal Reserve Banking System,  the
Banks  maintain an investment in the capital stock of the Federal  Reserve Bank,
which pays a dividend that is currently 6%. The amount of the investment,  which
amounted to  $596,000  at  September  30,  2000 and  $508,000 at year-end  1999,
fluctuates based on each Bank's capital level.

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

Loans  receivable,  before the  allowance for loan loss  reserves,  increased to
$261,780,000 at September 30, 2000, from  $212,937,000 at December 31, 1999. The
increase  was  due  to  new   commercial  and   multifamily   real  estate  loan
originations,  partially offset by principal repayments.  Commercial real estate
and multifamily real estate properties collateralized almost all of the loans in
the Company's loan portfolio.

At September 30, 2000 and December 31, 1999,  the Company did not have any loans
on a nonaccrual status or classified as impaired.

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

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

At  September  30,  2000,  the  allowance  amounted to  $2,785,000,  compared to
$2,493,000 at year-end  1999.  The increase in the allowance was due to new loan
originations.  The allowance  represented  1.06% of total loans  outstanding  at
September 30, 2000, compared to 1.17% at December 31, 1999.

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

The following table shows the composition of all other assets:

                                                      At Sept 30,     At Dec 31,
     ($ in thousands)                                   2000            1999
    ----------------------------------------------------------------------------
     Accrued interest receivable                        $ 2,811         $ 1,995
     Loan fees receivable                                 1,181             839
     Premises and equipment, net                          5,656           5,863
     Deferred income tax asset                              979             936
     Deferred debenture offering costs                    2,757           3,721
     All other                                              274             948
    ----------------------------------------------------------------------------
                                                       $ 13,658         $14,302
    ----------------------------------------------------------------------------

Accrued interest receivable fluctuates based on the amount of loans, investments
and other interest-earning assets outstanding.

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.

Deferred debenture offering costs consist primarily of underwriters' commissions
and are  amortized  over the terms of the  debentures.  The  decline  was due to
normal  amortization  as well as the  accelerated  amortization  of  $382,000 in
connection  with the early  retirement of  debentures  in the second  quarter of
2000.  See  note 5 to the  condensed  consolidated  financial  statements  for a
further discussion.

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

Deposit  liabilities  increased  to  $281,734,000  at September  30, 2000,  from
$201,080,000  at December  31,  1999,  due to growth in  certificate  of deposit
accounts.  At  September  30,  2000,  certificate  of deposit  accounts  totaled
$202,350,000  and  demand  deposit,   savings,  NOW  and  money-market  accounts
aggregated  $79,384,000.   The  same  categories  of  deposit  accounts  totaled
$122,794,000 and $78,286,000, respectively, at December 31, 1999. Certificate of
deposit  accounts  represented  72% of total  deposits at  September  30,  2000,
compared to 61% at year-end 1999.

                                       18
<PAGE>
Federal Funds Purchased
-----------------------

From time to time,  the Banks purchase  Federal funds to manage their  liquidity
needs.  At September  30, 2000,  there were no  outstanding  funds,  compared to
$6,955,000 outstanding at December 31, 1999.

Debentures Payable and Accrued Interest Payable on Debentures
-------------------------------------------------------------

At September 30, 2000,  debentures payable amounted to $60,330,000,  compared to
$84,330,000 at year-end 1999. In the first half of 2000,  Intervest  Corporation
of New York's Series 6/29/92,  9/13/93, 1/28/94 and 10/28/94 debentures totaling
$24,000,000  in  principal  amount  were  redeemed  prior  to  maturity  for the
outstanding principal amount plus accrued interest aggregating $3,970,000.

At September 30, 2000,  debentures payable consisted of $53,400,000 of Intervest
Corporation  of New  York's  registered  floating  and  fixed-rate  subordinated
debentures  and  $6,930,000  of the  Holding  Company's  fixed-rate  convertible
subordinated  debentures.  From time to time, Intervest  Corporation of New York
has  issued  debentures  and the  proceeds  were  used for the  origination  and
purchase of commercial and multifamily  mortgage loans.  The Holding Company has
issued debentures to raise funds for working capital purposes.

At September  30,  2000,  accrued  interest  payable on  debentures  amounted to
$6,957,000,  compared to $8,092,000 at year-end 1999. The decline  reflected the
early  retirement  of  the  debentures  discussed  above,  partially  offset  by
additional  accruals.  The accrued  interest at September 30, 2000 is payable at
the maturity of various debentures.  For a further discussion of the debentures,
including conversion prices and redemption premiums, see note 5 to the condensed
consolidated financial statements.

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

The following table shows the composition of all other liabilities:

                                                         At              At
                                                   September 30,    December 31,
 ($ in thousands)                                      2000              1999
 ---------------------------------------------- --------------- ----------------
 Mortgage escrow funds payable                         $6,132            $3,375
 Accrued interest payable on deposits                     712               461
 Official checks outstanding                            1,357             1,821
 All other                                              1,196               763
 ---------------------------------------------- --------------- ----------------
                                                       $9,397            $6,420
 ---------------------------------------------- --------------- ----------------

Mortgage escrow funds payable  represent  advance payments made by borrowers for
real  estate  taxes and  insurance  that are  remitted  by the  Company to third
parties.  The increase reflects the timing of payments to taxing  authorities as
well  as the  growth  in the  loan  portfolio.  The  level  of  official  checks
outstanding varies and fluctuates based on banking activity.

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

Stockholders'  equity  increased  to  $35,618,000  at September  30, 2000,  from
$33,604,000  at December 31, 1999.  The increase was almost  entirely due to net
earnings of $1,750,000  and the issuance of 62,750  shares of common stock.  The
issuance  of  common  stock  resulted,  net of  issuance  costs,  in a  $245,000
aggregate  increase in stockholders'  equity. The shares were issued as follows:
12,750 shares of Class A common stock upon the exercise of Class A warrants; and
50,000 shares of Class B common stock issued in connection with the merger. (See
note  2 to  the  condensed  consolidated  financial  statements  for  a  further
discussion of the stock issued in connection with the merger.)

Intervest   Bank  and  Intervest   National   Bank  are  both   well-capitalized
institutions  as  defined  by FDIC  regulations.  (See  note 7 to the  condensed
consolidated  financial  statements  for  capital  ratios.)  On June  15,  2000,
Intervest National Bank and its primary regulator, the Office of the Comptroller
of the Currency of the United  States of America  entered  into a Memorandum  of
Understanding  ("MOU").  The MOU is a formal written  agreement  whereby,  among
other  things,  Intervest  National  Bank  shall  review,  revise,  develop  and
implement various policies and procedures with respect to its lending and credit
underwriting.  Management  has  implemented  various  actions  towards  bringing
Intervest National Bank into full compliance with the MOU.

                                       19
<PAGE>
Liquidity and Capital Resources
-------------------------------

The Company manages its liquidity position on a daily basis to assure that funds
are available to meet  requirements for operations,  loan  commitments,  deposit
withdrawals and the repayment of borrowed funds.  The Company's  primary sources
of funds  consist of:  retail  deposits  obtained  through  the Banks'  offices;
satisfactions  and repayments of loans;  the maturities and calls of securities;
and cash provided by operating activities. From time to time, the Banks may also
utilize the Federal funds market.

From time to time,  Intervest  Corporation of New York has issued debentures and
the proceeds have been used for the  origination  and purchase of commercial and
multifamily  mortgage loans.  The Holding Company has also issued  debentures to
raise funds for working capital purposes.  In the first half of 2000,  Intervest
Corporation of New York repaid  $24,000,000 of debentures plus accrued  interest
of $3,970,000 to debenture  holders.  Adequate  funds were  maintained to retire
these debentures.

At  September  30, 2000,  the  Company's  total  commitment  to lend  aggregated
approximately  $14,922,000.  Based on its cash  flow  projections,  the  Company
believes  that  it can  fund  all of its  outstanding  lending  commitments  and
maturing  liabilities from the aforementioned  sources of funds. For information
about the cash flows  from the  Company's  operating,  investing  and  financing
activities,  see the  condensed  consolidated  statements  of cash flows in this
report.

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

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.   At  September   30,  2000,   the  Company's   one-year   negative
interest-rate  sensitivity gap was $31,503,000,  or 8% of total assets, compared
to $80,693,000,  or 23.7%, at December 31, 1999. The decline in the negative gap
was largely due to the  retirement of  debentures  as well as new  variable-rate
loan originations.

In computing the gap, the Company  treats  interest  checking,  money market and
savings deposit accounts as immediately  repricing.  For a further discussion of
interest  rate  risk  and  gap  analysis,  including  the  assumptions  used  in
developing  the one-year gap position,  see the Company's  1999 Annual Report on
Form 10-KSB, pages 28 and 29.

Comparison of Results of Operations  for the Quarters  Ended  September 30, 2000
and 1999
--------------------------------------------------------------------------------

Overview
--------

Net earnings for the third quarter of 2000  increased to $929,000,  or $0.24 per
fully diluted share,  from $508,000,  or $0.13 per fully diluted share,  for the
third quarter of 1999. The improvement was primarily due to a $475,000  increase
in net interest and dividend income and a $223,000  decline in the provision for
loan loss reserves, partially offset by a $318,000 increase in the provision for
income taxes.

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

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

                                       20
<PAGE>
<TABLE>
                                                                             For the Quarter Ended
                                                  ----------------------------------------------------------------------------
                                                          September 30, 2000                       September 30, 1999
                                                  ----------------------------------------------------------------------------
                                                     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                                               $257,592      $6,538     10.10%          $171,578     $4,775     11.04%
   Securities                                            97,514       1,462      5.96            107,193      1,548      5.73
   Other interest-earning assets                         19,671         324      6.55             14,627        164      4.45
------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                           374,777      $8,324      8.84%           293,398     $6,487      8.77%
------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                               13,378                                   13,647
------------------------------------------------------------------------------------------------------------------------------
Total assets                                           $388,155                                 $307,045
------------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   Checking deposits                                    $ 7,714        $ 58      2.99%           $ 7,380       $ 56      3.01%
   Savings deposits                                      17,341         233      5.35             23,113        242      4.15
   Money-market deposits                                 51,294         701      5.44             46,795        525      4.45
   Certificates of deposit                              193,640       3,082      6.33             95,864      1,325      5.48
                                                  ----------------------------------------------------------------------------
   Total deposit accounts                               269,989       4,074      6.00            173,152      2,148      4.92
   Federal funds purchased                                    -           -         -                214          3      5.56
   Debentures and accrued interest payable               67,336       1,869     11.04             91,331      2,430     10.56
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                      337,325      $5,943      7.01%           264,697     $4,581      6.87%
------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                              6,766                                    3,685
Noninterest-bearing liabilities                           8,940                                    6,302
Stockholders' equity                                     35,124                                   32,361
------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity             $388,155                                 $307,045
------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                              $2,381      1.83%                       $1,906      1.90%
------------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                      $37,452                  2.53%           $28,701                 2.58%
------------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                  1.11x                                    1.11x
------------------------------------------------------------------------------------------------------------------------------
Other Ratios:
  Return on average assets (1)                            0.96%                                    0.66%
  Return on average equity  (1)                          10.58%                                    6.28%
  Noninterest expense to average assets (1)               1.11%                                    1.31%
  Efficiency ratio                                       39.76%                                   47.20%
  Average stockholders' equity to average assets          9.05%                                   10.54%
-------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Annualized
</FN>
</TABLE>

Net interest and dividend income increased to $2,381,000 in the third quarter of
2000,  from   $1,906,000  in  the  1999  third  quarter.   The  improvement  was
attributable to a $86,014,000 increase in the average loan portfolio,  partially
offset by a decline in the interest rate spread from 1.90% to 1.83%.  The growth
in  the  loan  portfolio  was  funded  by  a  $97,776,000  increase  in  average
certificates of deposit.

The Company's cost of funds increased 14 basis points to 7.01% due to the rising
interest rate environment,  as evidenced by the Federal Reserve Board increasing
the Federal Funds target rate on six occasions  between June 1999 and June 2000,
for a total increase of 175 basis points.  The higher rate environment  resulted
in higher rates paid by the Company on its deposit  accounts  and  floating-rate
debentures,  as well as an increase in depositors' preference for certificate of
deposit  accounts.  Such  accounts  normally  pay a higher rate than savings and
money-market accounts.

The Company's  yield on earning assets  increased 7 basis points to 8.84%.  This
increase was a function of increased loan  originations and higher yields earned
on investment securities and other short-term investments, partially offset by a
decline in the average  yield earned on the loan  portfolio.  Despite the higher
interest rate environment,  the average yield on the loan portfolio declined due
to competitive lending  conditions.  The competitive lending conditions resulted
in originations of new loans with lower interest rates than the average yield of
the existing  portfolio,  as well as prepayments of  higher-yielding  loans. The
effect of loan  prepayments  as well as new loans with lower rates was offset to
some degree by rate increases on floating-rate loans.

                                       21
<PAGE>
Provision for Loan Loss Reserves
--------------------------------

The provision is based on management's ongoing assessment of the adequacy of the
allowance for loan loss  reserves,  which takes into  consideration  a number of
factors that are  discussed in note 3 to the  condensed  consolidated  financial
statements.  The  provision  amounted  to $47,000 in the third  quarter of 2000,
compared to $270,000 in the third quarter of 1999.

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

Noninterest  income  was  $338,000  in the third  quarter of 2000,  compared  to
$219,000  in the third  quarter  of 1999,  or a $119,000  increase.  Noninterest
income  includes  fees from  customer  service  charges and income from mortgage
lending activities,  which are comprised of loan prepayment fees, fees earned on
expired loan commitments,  and loan service, inspection and maintenance charges.
The  increase  from the prior year  quarter  was  primarily  due to higher  loan
prepayment fee income.

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

Noninterest  expenses were $1,081,000 in the third quarter of 2000,  compared to
$1,003,000 in the third quarter of 1999, or a $78,000 increase. The increase was
primarily due to normal salary increases and a higher level of professional fees
and services.

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

The  provision  for income taxes  increased to $662,000 in the third  quarter of
2000, from $344,000 in the same period of 1999,  primarily due to higher pre-tax
earnings.  The Company's effective tax rate (inclusive of state and local taxes)
amounted to 41.6% in the 2000 period, compared to 40.4% in the 1999 period.

Comparison of Results of Operations for the Nine-Months Ended September 30, 2000
and 1999
--------------------------------------------------------------------------------

Overview
--------

For the first nine months of 2000,  net  earnings  increased to  $1,750,000,  or
$0.45 per fully  diluted  share,  from  $1,341,000,  or $0.32 per fully  diluted
share,  for the same  period  of 1999.  The  improvement  was due to a  $977,000
increase  in net  interest  and  dividend  income and a $313,000  decline in the
provision  for loan  loss  reserves.  These  items  were  partially  offset by a
$466,000  increase  in  noninterest  expenses  and a  $239,000  increase  in the
provision for income taxes.

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

Net interest and dividend income is the Company's primary source of earnings and
is   influenced   primarily   by  the   amount,   distribution   and   repricing
characteristics of its interest-earning assets and interest-bearing  liabilities
as well as by the relative levels and movements of interest rates.

The table that follows sets forth information on average assets, liabilities and
stockholders' equity;  yields earned on interest-earning  assets; and rates paid
on interest-bearing  liabilities for the periods indicated. The yields and rates
shown are based on a computation  of annualized  income/expense  for each period
divided by average interest-earning  assets/interest-bearing  liabilities during
each period.  Certain yields and rates shown are adjusted for related fee income
or expense.  Average  balances  are  derived  mainly  from daily  balances.  Net
interest  margin is computed by dividing  annualized  net  interest and dividend
income by the average of total interest-earning assets during each period.

                                       22
<PAGE>

<TABLE>
                                                                           For the Nine-Months Ended
                                                  -----------------------------------------------------------------------------
                                                          September 30, 2000                       September 30, 1999
                                                  -----------------------------------------------------------------------------
                                                     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                                               $244,990     $18,214     9.93%           $166,830     $13,772    11.04%
   Securities                                            99,442       4,413     5.93             108,429       4,560     5.62
   Other interest-earning assets                         13,209         611     6.18              13,467         435     4.32
-------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                           357,641     $23,238    8.68%             288,726     $18,767     8.69%
-------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                               13,787                                   12,694
-------------------------------------------------------------------------------------------------------------------------------
Total assets                                           $371,428                                 $301,420
-------------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   Checking deposits                                    $ 7,589       $ 172     3.03%            $ 7,516       $ 174     3.10%
   Savings deposits                                      17,545         678     5.16              25,296         785     4.15
   Money-market deposits                                 51,900       2,074     5.34              40,021       1,318     4.40
   Certificates of deposit                              163,823       7,463     6.09              93,408       3,855     5.52
                                                  -----------------------------------------------------------------------------
   Total deposit accounts                               240,857      10,387     5.76             166,241       6,132     4.93
   Federal funds purchased                                3,321         146     5.87                 218           9     5.52
   Debentures and accrued interest payable               78,514       6,374    10.84              92,977       7,272    10.46
------------------------------------------------- -----------------------------------------------------------------------------
Total interest-bearing liabilities                      322,692     $16,907     7.00%            259,436     $13,413     6.91%
------------------------------------------------- -----------------------------------------------------------------------------
Noninterest-bearing deposits                              5,980                                    4,023
Noninterest-bearing liabilities                           8,297                                    6,069
Stockholders' equity                                     34,459                                   31,892
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity             $371,428                                 $301,420
-------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                              $6,331    1.68%                          $5,354     1.78%
-------------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                      $34,949                 2.36%            $29,290                 2.48%
-------------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                  1.11x                                    1.11x
-------------------------------------------------------------------------------------------------------------------------------
Other Ratios:
  Return on average assets (1)                            0.63%                                   0.59%
  Return on average equity  (1)                           6.77%                                   5.61%
  Noninterest expense to average assets (1)               1.24%                                   1.33%
  Efficiency ratio                                       49.39%                                  48.87%
  Average stockholders' equity to average assets          9.28%                                  10.58%
-------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Annualized
</FN>
</TABLE>

Net interest  and dividend  income  increased  to  $6,331,000  in the first nine
months of 2000,  from $5,354,000 in the same period of 1999. The improvement was
attributable to a $78,160,000 increase in the average loan portfolio,  partially
offset by a decline in the interest rate spread from 1.78% to 1.68%.  The growth
in the loan portfolio was funded primarily by a $74,616,000  increase in average
deposits.

The Company's cost of funds  increased 9 basis points to 7.00% due to the rising
interest rate environment,  as evidenced by the Federal Reserve Board increasing
the Federal Funds target rate on six occasions  between June 1999 and June 2000,
for a total of 175 basis points. The higher rate environment  resulted in higher
rates paid by the Company on its deposit accounts and floating-rate  debentures,
as well as an increase in  depositors'  preference  for  certificate  of deposit
accounts. Such accounts normally pay a higher rate than savings and money-market
accounts.

The Company's  yield on earning assets  declined 1 basis point to 8.68% due to a
decline in the overall yield on the loan portfolio.  Despite the higher interest
rate  environment,  the  average  yield on the loan  portfolio  declined  due to
competitive lending  conditions.  The competitive lending conditions resulted in
originations  of new loans with lower  interest  rates than the average yield of
the existing  portfolio,  as well as prepayments of  higher-yielding  loans. The
effect of loan  prepayments  as well as new loans with lower rates was partially
offset by rate  increases on  floating-rate  loans and higher  yields  earned on
investment securities and other short-term investments.

                                       23
<PAGE>

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

The provision is based on management's ongoing assessment of the adequacy of the
allowance for loan loss  reserves,  which takes into  consideration  a number of
factors that are  discussed in note 3 to the  condensed  consolidated  financial
statements in this report.  The provision amounted to $292,000 in the first nine
months of 2000, compared to $605,000 in the first nine months of 1999.

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

Noninterest  income  declined to $678,000 in the first nine months of 2000, from
$776,000 in the first nine months of 1999,  primarily  due to lower  income from
mortgage  lending  activities.  Noninterest  income  includes fees from customer
service charges and income from mortgage lending activities, which are comprised
of loan  prepayment  fees,  fees earned on expired  loan  commitments,  and loan
service, inspection and maintenance charges.

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

Noninterest  expenses  increased to $3,462,000 in the first nine months of 2000,
from  $2,996,000  in the first  nine  months of 1999.  The  increase  was due to
approximately  $210,000 of nonrecurring expenses associated with the acquisition
of  Intervest  Corporation  of New  York and  increased  operating  expenses  of
Intervest  National Bank, which was in business for the full nine months of 2000
versus six months for the 1999 period  (Intervest  National Bank opened on April
1, 1999). The increase in operating expenses  reflected higher  compensation and
occupancy and equipment expenses.  The nonrecurring expenses related to attorney
fees,  consulting fees, printing costs, and stock compensation expense (see note
2 to the condensed consolidated financial statements).

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

The provision  for income taxes  amounted to $1,299,000 in the first nine months
of 2000,  compared  to  $1,060,000  in the same  period  of 1999,  due to higher
pre-tax income.  The Company's  effective tax rate (inclusive of state and local
taxes)  amounted  to  39.9% in the 2000  period,  compared  to 41.9% in the 1999
period.  The decline in the effective tax rate reflects lower New York State and
City taxes  generated from  Intervest  Corporation of New York's and the Holding
Company's operations.

Extraordinary Item
------------------

In the second  quarter of 2000,  Intervest  Corporation of New York redeemed its
Series  9/13/93,  1/28/94 and 10/28/94  debentures  aggregating  $17,000,000  in
principal  amount prior to maturity for the  outstanding  principal plus accrued
interest.  In connection with these early  redemptions,  $382,000 of unamortized
deferred  debenture  offering costs was charged to expense in the second quarter
of 2000  and  reported  as an  extraordinary  charge,  net of a tax  benefit  of
$176,000,  in  the  condensed  consolidated   statement  of  earnings  for  the
nine-months ended September 30, 2000.

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

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

Year 2000 Issue
---------------

The Year 2000 issue is the result of computer  programs  that were written using
two digits rather than four digits to define the  applicable  year. As a result,
such  programs  may  recognize a date using "00" as the year 1900 instead of the
year 2000,  which could result in system failures or  miscalculations.  Prior to
January 1, 2000, the Company had completed all upgrades necessary to ensure that
its operating  and  financial  systems were Year 2000  compliant.  To date,  the
Company has not experienced any problems as a result of the Year 2000 issue, nor
does management expect it will.  Expenses incurred by the Company related to the
Year 2000 issue have not been material.

                                       24
<PAGE>


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.  The Company has no
risk related to trading accounts, commodities or foreign exchange.

Management  actively  monitors  and manages  the  Company's  interest  rate risk
exposure.  The primary  objective  in managing  interest  rate risk 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.  However,  a sudden and  substantial
increase in interest rates could adversely impact the Company's earnings, to the
extent that the interest rates borne by assets and  liabilities do not change at
the same speed, to the same extent,  or on the same basis.  Management  believes
that  there  have been no  significant  changes  in the  Company's  market  risk
exposure since December 31, 1999.

PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings

         Not Applicable

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

ITEM 3.  Defaults Upon Senior Securities

         Not Applicable

ITEM 4.  Submission of Matters to a Vote of Security Holders
         (a) Not Applicable (b)  Not Applicable
         (c) Not Applicable (d)  Not Applicable

ITEM 5.  Other Information

         Not Applicable

ITEM 6.  Exhibits and Reports on Form 8-K

(a)      Exhibit Index  (numbered in accordance with Item 601 of Regulation S-B)
         27 - Financial Data Schedule (For SEC Purposes only)

(b)      No reports on Form 8-K were filed during the quarter ended
         September 30, 2000.

                                   Signatures

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

INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

Date:  November 10, 2000      By: /s/ Lowell S. Dansker
                              --------------------------------------------------
                                      Lowell S. Dansker, President and Treasurer
                                      (CFO)

Date:  November 10, 2000      By: /s/ Lawrence G. Bergman
                              --------------------------------------------------
                                      Lawrence G. Bergman, Vice President and
                                      Secretary