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

                    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, 2004
                                               ------------------


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

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


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

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

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


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

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

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

<TABLE>
<CAPTION>
<S>                                              <C>
Title of Each Class:                                        Shares Outstanding:
-----------------------------------------------  -----------------------------------------
Class A Common Stock, $1.00 par value per share  5,663,075 Outstanding at October 29, 2004
-----------------------------------------------  -----------------------------------------
Class B Common Stock, $1.00 par value per share  385,000 Outstanding at October 29, 2004
-----------------------------------------------  -----------------------------------------

</TABLE>
================================================================================


<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q
                               SEPTEMBER 30, 2004
                                TABLE OF CONTENTS


     PART I.  FINANCIAL  INFORMATION                                        Page
                                                                            ----

          ITEM 1.  FINANCIAL  STATEMENTS

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

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

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

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

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

               Review by Independent Registered Public Accounting Firm. . . . 14

               Report of Independent Registered Public Accounting Firm. . . . 15


          ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . 17

          ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                    MARKET RISK . . . . . . . . . . . . . . . . . . . . . . . 28

          ITEM 4.  CONTROLS AND PROCEDURES. . . . . . . . . . . . . . . . . . 29

     PART II. OTHER INFORMATION

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

          ITEM 2   UNREGISTERED SALES OF EQUITY SECURITIES AND
                   USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . 29

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

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

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

          ITEM 6.  EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . 29

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


PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT

The  Company  is  making  this  statement  in order to satisfy the "Safe Harbor"
provision contained in the Private Securities Litigation Reform Act of 1995. The
statements  contained  in  this  report  on Form 10-Q that are not statements of
historical  fact may include forward-looking statements that involve a number of
risks  and  uncertainties.  Such  forward-looking  statements  are made based on
management's  expectations  and  beliefs  concerning future events impacting the
Company  and  are subject to uncertainties and factors relating to the Company's
operations  and  economic environment, all of which are difficult to predict and
many  of  which  are  beyond the control of the Company, that could cause actual
results  of  the Company to differ materially from those matters expressed in or
implied  by  forward-looking  statements.  The following factors are among those
that  could  cause  actual results to differ materially from the forward-looking
statements:  changes  in general economic, market and regulatory conditions, the
development  of  an  interest  rate  environment  that  may adversely affect the
Company's  interest  rate spread, other income or cash flow anticipated from the
Company's operations, investment and lending activities; and changes in laws and
regulations  affecting  banks  and  bank  holding  companies.


                                        1
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                       INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                                             CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                                                 SEPTEMBER 30,   DECEMBER 31,
($in thousands, except par value)                                                                    2004            2003
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>              <C>
ASSETS                                                                                              (Unaudited)
Cash and due from banks                                                                         $        18,167  $       8,833
Federal funds sold                                                                                       15,037         36,816
Commercial paper and other short-term investments                                                        13,934         18,479
                                                                                                ------------------------------
    Total cash and cash equivalents                                                                      47,138         64,128
Securities held to maturity, net (estimated fair value of $254,525 and $152,995, respectively)          255,340        152,823
Federal Reserve Bank and Federal Home Loan Bank stock, at cost                                            4,642          3,075
Loans receivable (net of allowance for loan losses of $10,008 and $6,580, respectively)                 928,993        664,545
Accrued interest receivable                                                                               6,601          4,995
Loan fees receivable                                                                                      7,556          5,622
Premises and equipment, net                                                                               6,964          5,752
Deferred income tax asset                                                                                 4,564          2,960
Deferred debenture offering costs, net                                                                    5,280          4,023
Other assets                                                                                              2,178          3,600
==============================================================================================================================
TOTAL ASSETS                                                                                    $     1,269,256  $     911,523
==============================================================================================================================
LIABILITIES
Deposits:
  Noninterest-bearing demand deposit accounts                                                   $         6,350  $       6,210
  Interest-bearing deposit accounts:
    Checking (NOW) accounts                                                                              14,072          9,146
    Savings accounts                                                                                     30,723         30,784
    Money market accounts                                                                               210,433        162,214
    Certificate of deposit accounts                                                                     714,814        467,159
                                                                                                ------------------------------
Total deposit accounts                                                                                  976,392        675,513
Borrowed Funds:
    Subordinated debentures                                                                             105,060         94,690
    Subordinated debentures - capital securities                                                         61,856         30,928
    Accrued interest payable on all debentures                                                           13,206         14,510
    Mortgage note payable                                                                                   246            255
                                                                                                ---------------  -------------
Total borrowed funds                                                                                    180,368        140,383
Accrued interest payable on deposits                                                                      1,502          1,080
Mortgage escrow funds payable                                                                            20,170         10,540
Official checks outstanding                                                                               4,246          6,122
Other liabilities                                                                                         2,168          2,500
==============================================================================================================================
TOTAL LIABILITIES                                                                                     1,184,846        836,138
==============================================================================================================================
STOCKHOLDERS' EQUITY
Preferred stock (300,000 shares authorized, none issued)                                                      -              -
Class A common stock ($1.00 par value, 9,500,000 shares authorized,
  5,663,075 and 5,603,377 shares issued and outstanding, respectively)                                    5,663          5,603
Class B common stock ($1.00 par value, 700,000 shares authorized,
  385,000 shares issued and outstanding)                                                                    385            385
Additional paid-in-capital, common                                                                       36,561         35,988
Retained earnings                                                                                        41,801         33,409
------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                                                               84,410         75,385
==============================================================================================================================
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                      $     1,269,256  $     911,523
==============================================================================================================================
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                        2
<PAGE>
<TABLE>
<CAPTION>


                            INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                              CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                               (Unaudited)

                                                                      QUARTER ENDED    NINE-MONTHS ENDED
                                                                      SEPTEMBER 30,      SEPTEMBER 30,
                                                                      -------------------------------
($in thousands, except per share data)                              2004      2003      2004      2003
--------------------------------------------------------------------------------------------------------
<S>                                                                <C>      <C>       <C>       <C>
INTEREST AND DIVIDEND INCOME
Loans receivable                                                   $16,428  $12,172   $44,677   $34,455
Securities                                                           1,137      609     2,701     2,266
Other interest-earning assets                                           90       64       261       219
--------------------------------------------------------------------------------------------------------
TOTAL INTEREST AND DIVIDEND INCOME                                  17,655   12,845    47,639    36,940
--------------------------------------------------------------------------------------------------------

INTEREST EXPENSE
Deposits                                                             7,158    4,550    18,376    13,521
Subordinated debentures                                              2,291    2,110     6,622     6,134
Subordinated debentures - capital securities                           883      414     2,405     1,162
Other borrowed funds                                                    16        5        26        14
--------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE                                              10,348    7,079    27,429    20,831
--------------------------------------------------------------------------------------------------------

NET INTEREST AND DIVIDEND INCOME                                     7,307    5,766    20,210    16,109
Provision for loan losses                                            1,067      602     3,428     1,376
--------------------------------------------------------------------------------------------------------
NET INTEREST AND DIVIDEND INCOME AFTER PROVISION FOR LOAN LOSSES     6,240    5,164    16,782    14,733
--------------------------------------------------------------------------------------------------------

NONINTEREST INCOME
Customer service fees                                                   44       58       178       146
Income from mortgage lending activities                                430      206     1,034       620
Income from the early repayment of mortgage loans                      940      747     2,830     1,784
Commissions and fees                                                    63       38       119        38
Loss from early call of investment securities                            -      (11)       (3)      (51)
All other                                                                -        -         -         6
--------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME                                             1,477    1,038     4,158     2,543
--------------------------------------------------------------------------------------------------------

NONINTEREST EXPENSES
Salaries and employee benefits                                       1,004      892     2,906     2,656
Occupancy and equipment, net                                           463      310     1,288       948
Data processing                                                        131      192       387       530
Professional fees and services                                         100       89       298       276
Stationery, printing and supplies                                       47       33       137       112
Postage and delivery                                                    32       23        86        73
FDIC and general insurance                                              64       57       191       168
Director and committee fees                                             88       84       260       151
Advertising and promotion                                               46        4        81        26
All other                                                              166      128       470       535
--------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSES                                           2,141    1,812     6,104     5,475
--------------------------------------------------------------------------------------------------------
Earnings before income taxes                                         5,576    4,390    14,836    11,801
Provision for income taxes                                           2,424    1,859     6,444     4,903
========================================================================================================
NET EARNINGS                                                       $ 3,152  $ 2,531   $ 8,392   $ 6,898
========================================================================================================

BASIC EARNINGS PER SHARE                                           $  0.52  $  0.52   $  1.39   $  1.45
DILUTED EARNINGS PER SHARE                                         $  0.47  $  0.42   $  1.25   $  1.19
DIVIDENDS PER SHARE                                                $     -  $     -   $     -   $     -
--------------------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes to condensed consolidated financial statements.


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


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

CLASS A COMMON STOCK
Balance at beginning of period                                           5,603,377  $     5,603  4,348,087  $ 4,348
Issuance of shares upon the exercise of warrants                            42,510           43    279,900      280
Issuance of shares upon the conversion of debentures                        17,188           17     40,699       41
-------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                 5,663,075        5,663  4,668,686    4,669
-------------------------------------------------------------------------------------------------------------------

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

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of period                                                           35,988              24,134
Compensation related to vesting of certain Class B stock warrants                             9                  19
Compensation related to certain Class A stock warrants modified                               -                 290
Issuance of shares upon the exercise of warrants                                            383               2,522
Issuance of shares upon the conversion of debentures                                        181                 354
Issuance of shares for acquisition of Intervest Securities Corporation                        -                 185
-------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                 36,561              27,504
-------------------------------------------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of period                                                           33,409              24,289
Net earnings for the period                                                               8,392               6,898
-------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                 41,801              31,187
-------------------------------------------------------------------------------------------------------------------

===================================================================================================================
TOTAL STOCKHOLDERS' EQUITY AT END OF PERIOD                              6,048,075  $    84,410  5,053,686  $63,745
===================================================================================================================
</TABLE>


 See accompanying notes to condensed consolidated financial statements.


                                        4
<PAGE>
<TABLE>
<CAPTION>


                               INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (Unaudited)



                                                                                          NINE-MONTHS ENDED
                                                                                      ------------------------
                                                                                            SEPTEMBER 30,
                                                                                      ------------------------
($in thousands)                                                                          2004         2003
--------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>         <C>

OPERATING ACTIVITIES
Net earnings                                                                          $   8,392   $     6,898
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization                                                               459           391
Provision for loan losses                                                                 3,428         1,376
Deferred income tax benefit                                                              (1,604)         (903)
Amortization of deferred debenture offering costs                                           941           784
Compensation expense related to common stock warrants                                         9           309
Amortization of premiums (accretion) of discounts and deferred loan fees, net            (1,566)       (1,130)
Net loss from sale of foreclosed real estate                                                  -            51
Net (decrease) increase in accrued interest payable on debentures                        (1,231)        1,610
Net decrease in official checks outstanding                                              (1,876)       (1,933)
Net change in all other assets and liabilities                                            5,314         4,639
--------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                12,266        12,092
--------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Net decrease in interest-earning time deposits with banks                                     -         2,000
Maturities and calls of securities held to maturity                                      66,650        92,490
Purchases of securities held to maturity                                               (170,849)      (82,625)
Net increase in loans receivable                                                       (271,042)     (142,622)
Sale of foreclosed real estate                                                                -           150
Cash acquired through acquisition of Intervest Securities Corporation                         -           218
Purchases of Federal Reserve Bank and Federal Home Loan Bank stock                       (1,567)       (1,697)
Purchases of premises and equipment, net                                                 (1,671)         (155)
Investment in unconsolidated subsidiaries                                                  (928)         (464)
--------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                                                  (379,407)     (132,705)
--------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Net increase in deposits                                                                300,879        88,874
Net increase in mortgage escrow funds payable                                             9,630         7,800
Principal repayments of debentures and mortgage note payable                            (11,009)       (1,408)
Gross proceeds from issuance of debentures                                               52,428        31,000
Debenture issuance costs                                                                 (2,203)       (1,609)
Proceeds from issuance of common stock                                                      426         2,802
--------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                               350,151       127,459
--------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents                                    (16,990)        6,846
--------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period                                         64,128        30,849
==============================================================================================================
Cash and cash equivalents at end of period                                            $  47,138   $    37,695
==============================================================================================================

SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest                                                                              $  27,927   $    18,418
Income taxes                                                                              8,628         5,589
Noncash activities:
Loan to finance sale of foreclosed real estate                                                -           880
Conversion of debentures and accrued interest into Class A common stock                     203           395
--------------------------------------------------------------------------------------------------------------
</TABLE>



    See accompanying notes to condensed consolidated financial statements.


                                        5
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

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

The  condensed  consolidated  financial  statements  of  Intervest  Bancshares
Corporation  and  Subsidiaries  in  this report have not been audited except for
information  derived from the 2003 audited consolidated financial statements and
notes  thereto.  The  condensed consolidated financial statements in this report
should  be  read  in  conjunction  with  the 2003 audited consolidated financial
statements  and  notes  thereto  included in the Company's Annual Report on Form
10-K  for  the  year  ended  December  31,  2003.

The  financial  statements  include  the  accounts  of  Intervest  Bancshares
Corporation  (a  financial holding company referred to by itself as the "Holding
Company")  and its subsidiaries, Intervest National Bank (the "Bank"), Intervest
Mortgage  Corporation  and  Intervest  Securities  Corporation. The entities are
referred  to  collectively  as  the  "Company"  on  a  consolidated  basis.  All
significant  intercompany  balances  and  transactions  have  been eliminated in
consolidation.  Certain reclassifications have been made to prior period amounts
to  conform  to  the current period's presentation. The accounting and reporting
policies  of  the Company conform to accounting principles generally accepted in
the  United  States  of  America  and  to  general  practices within the banking
industry.

Intervest Statutory Trust I, II, III and IV are wholly owned subsidiaries of the
Holding  Company  that  are  unconsolidated  entities  as  required  by  FASB
Interpretation  No. 46, "Consolidation of Variable Interest Entities" as revised
in  December  2003.  FIN  46  requires  bank  holding  companies  that have used
controlled  business  trusts  to  raise  financing  by  issuing  trust preferred
securities  (capital  securities)  to  deconsolidate  their investments in those
trusts. On January 1, 2004,the Company adopted FIN 46 and the deconsolidation of
Intervest Statutory Trust I and II, which were formed prior to FIN 46, increased
both  the  Company's  total  assets  and  borrowed  funds previously reported at
December  31,  2003  by $968,000, but had no effect on net income, stockholders'
equity  and  regulatory  capital.

Management  is  required  to  make  estimates  and  assumptions  that affect the
reported amounts of assets, liabilities and disclosure of contingent liabilities
as  of  the  date  of  the  consolidated  financial statements, and revenues and
expenses  during  the  reporting periods. Actual results could differ from those
estimates.  Estimates  that  are  particularly susceptible to significant change
relate  to the determination of the allowance for loan losses and the need for a
valuation  allowance  for deferred tax assets. In the opinion of management, all
material  adjustments  necessary  for a fair presentation of financial condition
and  results of operations for the interim periods presented in this report have
been  made.  These  adjustments are of a normal recurring nature. The results of
operations  for  the  interim  periods are not necessarily indicative of results
that  may  be  expected  for  the  entire  year  or  any  other  interim period.

NOTE 2 - DESCRIPTION OF BUSINESS

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

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

The  Bank  is  a nationally chartered, full-service commercial bank that has its
headquarters  and  full-service  banking office in Rockefeller Plaza in New York
City,  and  a  total  of  five  full-service banking offices in Pinellas County,
Florida  -  four  in  Clearwater  and one in South Pasadena. The Bank conducts a
personalized commercial and consumer banking business and attracts deposits from
the  areas  served  by  its  banking  offices. It also provides internet banking
services  through  its  web  site:  www.intervestnatbank.com,  which can attract
deposit  customers from outside its primary market areas. The deposits, together
with  funds  derived  from  other  sources,  are  used to originate real estate,
commercial  and  consumer  loans and to purchase investment securities. The Bank
emphasizes  multifamily  and  commercial  real  estate  lending.

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


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

NOTE 2 - DESCRIPTION OF BUSINESS - CONTINUED

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

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

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

<TABLE>
<CAPTION>
                                           At September 30, 2004        At December 31, 2003
                                         -----------------------------------------------------
($in thousands)                          # of Loans      Amount      # of Loans     Amount
----------------------------------------------------------------------------------------------
<S>                                      <C>         <C>             <C>         <C>

Commercial real estate loans                    231  $     523,924          184  $    344,071
Residential multifamily loans                   246        400,630          210       310,650
Land development and other land loans            11         22,932            6        20,526
Residential 1-4 family loans                      4            984           26         1,628
Commercial business loans                        23          1,134           28         1,662
Consumer loans                                   15            294           16           319
----------------------------------------------------------------------------------------------
Loans receivable                                530        949,898          470       678,856
----------------------------------------------------------------------------------------------
Deferred loan fees                                         (10,897)                    (7,731)
----------------------------------------------------------------------------------------------
Loans receivable, net of deferred fees                     939,001                    671,125
----------------------------------------------------------------------------------------------
Allowance for loan losses                                  (10,008)                    (6,580)
----------------------------------------------------------------------------------------------
Loans receivable, net                                $     928,993               $    664,545
----------------------------------------------------------------------------------------------
</TABLE>

At September 30, 2004, $5,226,000 of loans were on a nonaccrual status, compared
to  $8,474,000  at December 31, 2003. These loans were considered impaired under
the  criteria  of  SFAS No.114. but no valuation allowance was maintained at any
time  since the Company believes that the estimated fair value of the underlying
properties exceeded the Company's recorded investment. At September 30, 2004 and
December  31, 2003, there were no other impaired loans or loans ninety days past
due  and  still  accruing  interest.

Interest  income  that  was  not  recorded  on  nonaccrual  loans  under  their
contractual  terms  amounted  to  $140,000 for the quarter and nine-month period
ended September 30, 2004, compared to $180,000 for the same periods of 2003. The
average  balance  of  nonaccrual (impaired) loans for the quarter and nine-month
period ended September 30, 2004 was $2,199,000 and $2,611,000, respectively. The
average  balance  of  impaired  loans  for  the  quarter  and  nine-months ended
September  30,  2003  was  $8,474,000  and  $2,432,000,  respectively.

<TABLE>
<CAPTION>
NOTE 4 - ALLOWANCE FOR LOAN LOSSES

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


                                  Quarter Ended   September 30,     Nine-Months Ended September 30,
                                  -------------------------------------------------------------------
($in thousands)                        2004            2003             2004              2003
-----------------------------------------------------------------------------------------------------
<S>                               <C>             <C>             <C>               <C>
Balance at beginning of period    $        8,941  $        5,385  $          6,580  $           4,611
Provision charged to operations            1,067             602             3,428              1,376
-----------------------------------------------------------------------------------------------------
Balance at end of period          $       10,008  $        5,987  $         10,008  $           5,987
-----------------------------------------------------------------------------------------------------
</TABLE>

NOTE 5 - DEPOSITS

Scheduled maturities of certificates of deposit accounts are as follows:


                                        7
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
        ----------------------------------------------------------------
NOTE 5 - DEPOSITS, CONTINUED

<TABLE>
<CAPTION>
                             At September 30, 2004   At December 31, 2003
                           ---------------------------------------------------
<S>                        <C>         <C>            <C>        <C>

                                       Wtd-Avg                   Wtd-Avg
($in thousands)            Amount      Stated Rate    Amount     Stated Rate
------------------------------------------------------------------------------
Within one year            $  259,683          2.75%  $ 182,693          2.75%
Over one to two years         134,280          3.35      90,936          3.64
Over two to three years       102,701          4.64      30,094          4.43
Over three to four years       63,110          4.16      89,085          4.83
Over four years               155,040          4.42      74,351          4.20
------------------------------------------------------------------------------
                           $  714,814          3.62%  $ 467,159          3.66%
------------------------------------------------------------------------------
</TABLE>

NOTE 6 - SUBORDINATED DEBENTURES AND MORTGAGE NOTE PAYABLE
Subordinated  debentures  and  mortgage  note payable are summarized as follows:

<TABLE>
<CAPTION>
($in thousands)                                                                At Sep 30, 2004   At Dec 31, 2003
-----------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>               <C>

INTERVEST MORTGAGE CORPORATION:
Series 05/12/95 - interest at 2% above prime (1) - due April 1, 2004           $              -  $          9,000
Series 10/19/95 - interest at 2% above prime (1) - due October 1, 2004                    9,000             9,000
Series 05/10/96 - interest at 2% above prime (1) - due April 1, 2005                     10,000            10,000
Series 10/15/96 - interest at 2% above prime (1) - due October 1, 2005                    5,500             5,500
Series 04/30/97 - interest at 1% above prime (1) - due October 1, 2005                    8,000             8,000
Series 11/10/98 - interest at 9% fixed           - due January 1, 2005                    2,600             2,600
Series 06/28/99 - interest at 8 1/2 % fixed      - due July 1, 2004                           -             2,000
Series 06/28/99 - interest at 9% fixed           - due July 1, 2006                       2,000             2,000
Series 09/18/00 - interest at 8 1/2 % fixed      - due January 1, 2006                    1,250             1,250
Series 09/18/00 - interest at 9% fixed           - due January 1, 2008                    1,250             1,250
Series 08/01/01 - interest at 7 1/2 % fixed      - due April 1, 2005                      1,750             1,750
Series 08/01/01 - interest at 8% fixed           - due April 1, 2007                      2,750             2,750
Series 08/01/01 - interest at 8 1/2 % fixed      - due April 1, 2009                      2,750             2,750
Series 01/17/02 - interest at 7 1/4 % fixed      - due October 1, 2005                    1,250             1,250
Series 01/17/02 - interest at 7 1/2 % fixed      - due October 1, 2007                    2,250             2,250
Series 01/17/02 - interest at 7 3/4 % fixed      - due October 1, 2009                    2,250             2,250
Series 08/05/02 - interest at 7 1/4 % fixed      - due January 1, 2006                    1,750             1,750
Series 08/05/02 - interest at 7 1/2 % fixed      - due January 1, 2008                    3,000             3,000
Series 08/05/02 - interest at 7 3/4 % fixed      - due January 1, 2010                    3,000             3,000
Series 01/21/03 - interest at 6 3/4 % fixed      - due July 1, 2006                       1,500             1,500
Series 01/21/03 - interest at 7 % fixed          - due July 1, 2008                       3,000             3,000
Series 01/21/03 - interest at 7 1/4 % fixed      - due July 1, 2010                       3,000             3,000
Series 07/25/03 - interest at 6 1/2 % fixed      - due October 1, 2006                    2,500             2,500
Series 07/25/03 - interest at 6 3/4 % fixed      - due October 1, 2008                    3,000             3,000
Series 07/25/03 - interest at 7 % fixed          - due October 1, 2010                    3,000             3,000
Series 11/28/03 - interest at 6 1/4 % fixed      - due April 1, 2007                      2,000                 -
Series 11/28/03 - interest at 6 1/2 % fixed      - due April 1, 2009                      3,500                 -
Series 11/28/03 - interest at 6 3/4 % fixed      - due April 1, 2011                      4,500                 -
Series 06/07/04 - interest at 6 1/4 % fixed      - due January 1, 2008                    2,500                 -
Series 06/07/04 - interest at 6 1/2 % fixed      - due January 1, 2010                    4,000                 -
Series 06/07/04 - interest at 6 3/4 % fixed      - due January 1, 2012                    5,000                 -
                                                                               ----------------------------------
                                                                                         97,850            87,350
INTERVEST BANCSHARES CORPORATION:
Series 05/14/98 - interest at 8% fixed           - due July 1, 2008                       4,710             4,840
Series 12/15/00 - interest at 8 1/2 % fixed      - due April 1, 2006                      1,250             1,250
Series 12/15/00 - interest at 9% fixed           - due April 1, 2008                      1,250             1,250
                                                                               ----------------------------------
                                                                                          7,210             7,340
INTERVEST NATIONAL BANK:
Mortgage note payable (2) - interest at 7% fixed  - due February 1, 2017                    246               255
-----------------------------------------------------------------------------------------------------------------
                                                                               $        105,306  $         94,945
-----------------------------------------------------------------------------------------------------------------
<FN>

(1)  Prime  represents  prime  rate  of  JPMorganChase  Bank,  which was 4.75% on September 30, 2004 and 4.00% at
December  31,  2003.  The  floating  -rate debentures have a maximum interest rate of 12%. (2) The note cannot be
prepaid  except  during  the  last  year  of  its  term.
</TABLE>


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

NOTE 6  - SUBORDINATED DEBENTURES AND MORTGAGE NOTE PAYABLE, CONTINUED

In January 2004, Intervest Mortgage Corporation issued $10,000,000 of its Series
11/28/03  debentures  for  net proceeds, after offering costs, of $9,252,000. In
July  2004,  Intervest  Mortgage  Corporation  issued  $11,500,000 of its Series
6/7/04  debentures  for  net  proceeds,  after  offering  costs, of $10,672,000.

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

Interest is paid quarterly on Intervest Mortgage Corporation's debentures except
for  the  following  debentures:  $1,950,000  of  Series 10/19/95; $1,980,000 of
Series  5/10/96;  all  of  Series 11/10/98, 6/28/99, 9/18/00; $770,000 of Series
8/01/01; $270,000 of Series 1/17/02; $1,520,000 of Series 8/05/02; $1,750,000 of
Series  11/28/03;  and  $1,910,000  of  Series 6/7/04, which accrue and compound
interest  quarterly,  with such interest due and payable at maturity. Any holder
of  Series  10/19/95 and 5/10/96 debentures whose interest accrues and is due at
maturity  may  at  any time elect to receive the accrued interest and thereafter
receive  regular  interest  payments  quarterly.

The  holders of Intervest Mortgage Corporation's Series 11/10/98 through 9/18/00
and  Series  1/17/02  through  6/7/04  debentures can require Intervest Mortgage
Corporation  to  repurchase the debentures for face amount plus accrued interest
each  year  (beginning  October  1, 2005 for Series 1/17/02, January 1, 2006 for
Series  8/05/02,  July  1,  2006  for Series 1/21/03, October 1, 2006 for Series
7/25/03,  January  1,  2007  for  Series 11/28/03 and January 1, 2008 for Series
6/7/04).  However,  in  no calendar year can the required purchases be more than
$100,000  in principal amount of each maturity, in each series of debentures, on
a  non-cumulative  basis.

Intervest Mortgage Corporation's debentures may be redeemed at its option at any
time,  in  whole  or  in  part,  for  face value, except for Series 11/28/03 and
6/7/04.  Redemptions  would  be  at  a  premium  of 1% if they occurred prior to
January  1, 2005 for Series 11/28/03 and July 1, 2005 for Series 6/7/04. All the
debentures  are  unsecured  and  subordinate  to  all  present and future senior
indebtedness,  as  defined  in  the  indenture  related  to  each  debenture.

Intervest  Mortgage Corporation has filed a registration statement related to an
offering  of  additional  subordinated  debentures.  It  is  anticipated  that
debentures in an aggregate principal amount of up to $14,000,000 will be issued.

The  Holding Company's Series 5/14/98 subordinated debentures are convertible at
the  option of the holders at any time prior to April 1, 2008 into shares of its
Class  A  common  stock  at the following conversion prices per share: $12.00 in
2004;  $14.00 in 2005; $16.00 in 2006; $18.00 in 2007 and $20.00 from January 1,
2008  through  April  1,  2008.  The  Holding Company has the right to establish
conversion  prices  that are less than those set forth above for such periods as
it may determine. In the first quarter of 2004, $203,000 of debentures ($130,000
of  principal  and  $73,000  of  accrued interest) were converted into shares of
Class  A  common  stock.

At September 30, 2004, interest accrues and compounds quarterly on $4,040,000 of
the  convertible  debentures  at the rate of 8% per annum, while $670,000 of the
debentures  pay  interest  quarterly  at  the  rate of 8% per annum. All accrued
interest  is  due and payable at maturity whether by acceleration, redemption or
otherwise.  Any  convertible  debenture  holder may, on or before July 1 of each
year  elect  to  be  paid all accrued interest and to thereafter receive regular
payments  of  interest quarterly. All of the Holding Company's debentures may be
redeemed,  in whole or in part, at any time at the option of the Holding Company
for  face  value.

<TABLE>
<CAPTION>
Scheduled contractual maturities as of September 30, 2004 are as follows:

($in thousands)                                Principal   Accrued Interest
----------------------------------------------------------------------------
<S>                                            <C>         <C>
For the three-months ended December 31, 2004   $    9,004  $           3,523
For the year ended December 31, 2005               29,116              3,768
For the year ended December 31, 2006               10,269              1,716
For the year ended December 31, 2007                7,022                111
For the year ended December 31, 2008               18,735              3,227
Thereafter                                         31,160                315
----------------------------------------------------------------------------
                                               $  105,306  $          12,660
----------------------------------------------------------------------------
</TABLE>


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

NOTE 7 - SUBORDINATED DEBENTURES - CAPITAL SECURITIES

<TABLE>
<CAPTION>
Capital  Securities  (commonly  referred  to  as Trust Preferred Securities) are
summarized  as  follows:

                                                              At September  30, 2004        At December 31, 2003
                                                            --------------------------  --------------------------------
                                                                            Accrued                             Accrued
($in thousands)                                              Principal     Interest           Principal        Interest
------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>          <C>            <C>                    <C>
Capital Securities I -  debentures due December 18, 2031    $    15,464  $         441  $              15,464  $      58
Capital Securities II - debentures due September 17, 2033        15,464             41                 15,464         39
Capital Securities III - debentures due March 17, 2034           15,464             35                      -          -
Capital Securities IV - debentures due Sepetmber 20, 2034        15,464             29                      -          -
------------------------------------------------------------------------------------------------------------------------
                                                            $    61,856  $         546  $              30,928  $      97
------------------------------------------------------------------------------------------------------------------------
</TABLE>

The  Capital  Securities  are  obligations of the Holding Company's wholly owned
statutory  business  trusts,  Intervest  Statutory Trust I, II, III and IV. Each
Trust  was  formed  with  a  capital  contribution  of $464,000 from the Holding
Company  and  for  the  sole  purpose  of  issuing  and  administering  Capital
Securities.  The  proceeds  from the issuance of the Capital Securities together
with  the  capital  contribution for each Trust were used to acquire the Holding
Company's  Junior  Subordinated  Debentures  that  are due concurrently with the
Capital  Securities.  The  Capital Securities qualify as regulatory capital (see
note  10).

The  sole  assets of the Trusts, the obligors on the Capital Securities, are the
Junior Subordinated Debentures. In addition, for each Trust, the Holding Company
has  guaranteed the payment of distributions on, payments on any redemptions of,
and  any  liquidation  distribution  with  respect  to  the  Capital Securities.
Issuance  costs  of  $469,000,  $444,000,  $444,000 and $216,000 associated with
Capital  Securities  I,  II, III and IV, respectively, have been capitalized and
are  being  amortized  over  the  life of the securities using the straight-line
method.

Interest  payments  on the Junior Subordinated Debentures (and the corresponding
distributions  on  the  Capital  Securities)  are payable in arrears as follows:
Capital  Securities  I  -  semi-annually  at the fixed rate of 9.875% per annum;
Capital  Securities  II - quarterly at the fixed rate of 6.75% per annum for the
first five years and thereafter at the rate of 2.95% over 3 month libor; Capital
Securities  III  -  quarterly at the fixed rate of 5.88% per annum for the first
five  years  and thereafter at the rate of 2.79% over 3 month libor; and Capital
Securities  IV  -  quarterly  at the fixed rate of 6.20% per annum for the first
five  years  and  thereafter  at  the rate of 2.40% over 3 month libor. Interest
payments  may  be  deferred at any time and from time to time during the term of
the  Junior  Subordinated Debentures at the election of the Company for up to 20
consecutive quarterly periods (5 years). There is no limitation on the number of
extension  periods  the Company may elect; provided, however, no deferral period
may  extend  beyond  the  maturity  date  of the Junior Subordinated Debentures.
During  an  interest  deferral  period,  interest will continue to accrue on the
Junior Subordinated Debentures and interest on such accrued interest will accrue
at an annual rate equal to the interest rate in effect for such deferral period,
compounded quarterly from the date such interest would have been payable were it
not  deferred.  At the end of the deferral period, the Company will be obligated
to  pay  all  interest  then  accrued  and  unpaid  on  the  Junior Subordinated
Debentures.

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


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

NOTE 8 - COMMON STOCK WARRANTS

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

<TABLE>
<CAPTION>
Data concerning common stock warrants is as follows:

                                                              Exercise Price Per Warrant      Total        Wtd-Avg
                                                           -------------------------------
<S>                                                        <C>           <C>                <C>        <C>

Class A Common Stock Warrants:                             $       6.67  $          10.01   Warrants   Exercise Price
----------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 2003                                501,465            42,510    543,975   $          6.93
Exercised during 2004                                                 -           (42,510)   (42,510)  $         10.01
-----------------------------------------------------------------------------------------------------
Outstanding at September 30, 2004                               501,465                 -    501,465   $          6.67
-----------------------------------------------------------------------------------------------------
Remaining contractual life in years at September 30, 2004           2.3                 -        2.3
-----------------------------------------------------------------------------------------------------
<FN>

(1)  The  holders  of the 42,510 warrants outstanding at December 31, 2003 presented these warrants to the Company for
exercise  prior  to  the  expiration  date  of  December  31,  2003. The resulting shares were issued in January 2004.
</TABLE>

<TABLE>
<CAPTION>
                                                              Exercise Price Per Warrant    Total        Wtd-Avg
                                                           ------------------------------
<S>                                                        <C>            <C>              <C>       <C>

Class B Common Stock Warrants:                             $        6.67  $         10.00  Warrants  Exercise Price
--------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 2003 and September 30, 2004          145,000           50,000   195,000  $          7.52
---------------------------------------------------------------------------------------------------
Remaining contractual life in years at September 30, 2004            3.3              3.3       3.3
--------------------------------------------------------------------------------------------------------------------
</TABLE>

The  Company elects to use the intrinsic value-based method prescribed under APB
Opinion  No.  25,  "Accounting for Stock Issued to Employees," in accounting for
its  stock  warrants.  Under  this method, compensation expense related to stock
warrants  granted to employees is the excess, if any, of the market price of the
stock  as  of  the  grant  or  modification  date over the exercise price of the
warrant.

Compensation  expense  recorded  in  connection  with  common  stock warrants is
summarized  as  follows:

<TABLE>
<CAPTION>
                                                                   Quarter Ended    Nine-Months Ended
                                                                   September 30,       September 30,
                                                              ------------------------------------------
<S>                                                           <C>       <C>        <C>       <C>
($in thousands)                                                   2004       2003      2004         2003
--------------------------------------------------------------------------------------------------------
Compensation expense recorded in connection with vesting
     of Class B common stock warrants during the period       $      -  $       6  $      9  $        19
Compensation expense recorded in connection with
    Class A common stock warrants whose terms were modified          -         96         -          290
--------------------------------------------------------------------------------------------------------
                                                              $      -  $     102  $      9  $       309
--------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 9 - EARNINGS PER SHARE (EPS)

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

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


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

NOTE 9 - EARNINGS PER SHARE (EPS) , CONTINUED

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

                                                                             Quarter Ended        Nine-Months Ended
                                                                              September 30,          September 30,
                                                                         ----------------------------------------------
($in thousands, except share and per share amounts)                         2004        2003        2004        2003
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>         <C>         <C>         <C>

Basic earnings per share:
  Net earnings applicable to common stockholders                         $    3,152  $    2,531  $    8,392  $    6,898
  Average number of common shares outstanding                             6,048,075   4,894,436   6,046,339   4,771,323
-----------------------------------------------------------------------------------------------------------------------
Basic net earnings per share amount                                      $     0.52  $     0.52  $     1.39  $     1.45
-----------------------------------------------------------------------------------------------------------------------
Diluted earnings per share:
  Net earnings applicable to common stockholders                         $    3,152  $    2,531  $    8,392  $    6,898
  Adjustment to net earnings from assumed conversion of debentures (1)           83         115         247         346
                                                                         ----------------------------------------------
  Adjusted net earnings for diluted earnings per share computation       $    3,235  $    2,646  $    8,639  $    7,244
                                                                         ----------------------------------------------
Average number of common shares outstanding:
  Common shares outstanding                                               6,048,075   4,894,436   6,046,339   4,771,323
  Potential dilutive shares resulting from exercise of warrants (2)         243,435     411,446     247,974     335,353
  Potential dilutive shares resulting from conversion of debentures (3)     605,217     966,281     603,071     966,281
                                                                         ----------------------------------------------
Total average number of common shares outstanding used for dilution       6,896,727   6,272,163   6,897,384   6,072,957
-----------------------------------------------------------------------------------------------------------------------
Diluted net earnings per share amount                                    $     0.47  $     0.42  $     1.25  $     1.19
-----------------------------------------------------------------------------------------------------------------------

<FN>
(1)  Represents  interest  expense  on dilutive convertible debentures, net of taxes, that would not occur if they were
     assumed  converted.
(2)  All outstanding warrants were considered for the EPS computations.
(3)  Convertible  debentures  (principal  and  accrued  interest)  outstanding  at September 30, 2004 and 2003 totaling
     $7,328,000 and $9,672,000, respectively, were convertible into common stock at a price of $12.00 per share in 2004
     and $10.01 per share in 2003 and resulted in additional common shares (based on average balances outstanding)
</TABLE>

NOTE 10 - REGULATORY CAPITAL

The  Bank  and  the  Holding Company are required to maintain regulatory defined
minimum  Tier  1  leverage  and  Tier  1  and  total  risk-based capital ratios.
Management  believes  that  the  Bank and the Holding Company meet their capital
adequacy  requirements. Management believes that there are no current conditions
or  events  outstanding  which  would  change  the  Bank's  designation  as  a
well-capitalized  institution.

At  September 30, 2004, the actual capital of the Bank on a percentage basis was
as  follows:

<TABLE>
<CAPTION>
                                                               Actual     Minimum     To Be Considered
                                                               Ratios   Requirement   Well Capitalized
                                                               -------  ------------  -----------------
<S>                                                            <C>      <C>           <C>
     Total capital to risk-weighted assets                     12.95%         8.00%             10.00%
     Tier 1 capital to risk-weighted assets                    11.87%         4.00%              6.00%
     Tier 1 capital to total average assets - leverage ratio   10.03%         4.00%              5.00%
</TABLE>

At  September  30,  2004,  the actual capital of the Company (consolidated) on a
percentage  basis  was  as  follows:

<TABLE>
<CAPTION>
                                                              Actual     Minimum     To Be Considered
                                                              Ratios   Requirement   Well Capitalized
                                                              -------  ------------  ----------------
<S>                                                            <C>      <C>           <C>
     Total capital to risk-weighted assets                     14.61%         8.00%  NA
     Tier 1 capital to risk-weighted assets                    10.53%         4.00%  NA
     Tier 1 capital to total average assets - leverage ratio    9.04%         4.00%  NA
</TABLE>

On  January  1,  2004,  the  Company  adopted  FASB  Interpretation  No.  46,
"Consolidation  of Variable Interest Entities" ("FIN 46") as revised in December
2003.  FIN 46 requires bank holding companies that have used controlled business
trusts  to  raise  financing  by  issuing  trust  preferred  securities (capital
securities)  to  deconsolidate  their  investments  in  those  trusts.


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

NOTE 10 - REGULATORY CAPITAL, CONTINUED

At  September  30,  2004,  the  Company  has  $60,000,000  of qualifying capital
securities  outstanding (which represents total debentures of $61,856,000 issued
to the Trusts by the Holding Company net of the Holding Company's investments in
those  Trusts aggregating $1,856,000) that are includable for regulatory capital
computations.

The  Federal  Reserve has reviewed the regulatory implications of the accounting
treatment  changes  brought  about  by  FIN  46  and  in  May 2004, the Board of
Governors of the Federal Reserve System issued a proposed rule that would retain
trust  preferred  securities  in  the  Tier  1 capital of bank holding companies
(BHC),  but with stricter quantitative limits and clearer qualitative standards.
The  proposal  would provide a three-year transition period for BHCs to meet the
new, stricter limitations within regulatory capital by proposing that the limits
on restricted core capital elements become fully effective as of March 31, 2007.
During  the  interim,  BHCs  with  restricted core capital elements in excess of
these  limits  must consult with the Federal Reserve on a plan for ensuring that
the  banking  organization  is  not  unduly  relying  upon these elements in its
capital  base  and,  where  appropriate,  for  reducing  such  reliance.

Until March 31, 2007, BHCs generally must comply with the current Tier 1 capital
limits. That is, BHCs generally should calculate their Tier 1 capital on a basis
that  limits  the  aggregate amount of qualifying cumulative perpetual preferred
stock  and  qualifying  trust  preferred  securities to 25 percent of the sum of
qualifying  common stockholder's equity, qualifying noncumulative and cumulative
perpetual  preferred  stock  (including  related  surplus),  qualifying minority
interest  in  the  equity  accounts of consolidated subsidiaries, and qualifying
trust preferred securities. Amounts of qualifying cumulative perpetual preferred
stock  and  qualifying trust preferred securities in excess of this limit may be
included  in  Tier  2  capital.

Beginning  March  31,  2007, qualifying cumulative perpetual preferred stock and
trust  preferred  securities, as well as certain types of minority interest, are
limited to 25 percent of the sum of core capital elements net of goodwill. Since
the  Holding  Company  currently  does not have any goodwill, this proposed rule
would  have  no  effect on its current calculation of Tier 1 regulatory capital.

Beginning March 31, 2007, the excess amounts of restricted core capital elements
in  the form of qualifying trust preferred securities included in Tier 2 capital
are  limited to 50 percent of Tier 1 capital (net of goodwill). Amounts of these
instruments  in  excess  of this limit, although not included in Tier 2 capital,
will  be  taken  into  account  in  the  overall assessment of an organization's
funding  and  financial  condition.

The  proposed  rule  also  provides  that  in  the  last  five  years before the
underlying  subordinated note matures, the associated trust preferred securities
must be treated as limited-life preferred stock. Thus, in the last five years of
the  life of the note, the outstanding amount of trust preferred securities will
be  excluded  from  Tier  1  capital  and  included  in Tier 2 capital, subject,
together  with  subordinated  debt  and other limited-life preferred stock, to a
limit  of  50 percent of Tier 1 capital. During this period, the trust preferred
securities  will be amortized out of Tier 2 capital by one-fifth of the original
amount  (less  redemptions)  each  year and excluded totally from Tier 2 capital
during  the  last  year  of  life  of  the  underlying  note.

As  of  September  30, 2004, assuming the Company no longer included the Capital
Securities  issued  by  Intervest  Statutory  Trust  I,  II, II and IV in Tier 1
Capital, the Company would still exceed the well capitalized threshold under the
regulatory  framework  for  prompt  corrective  action.

Intervest  Securities  Corporation  is  subject to the SEC's Uniform Net Capital
Rule  [15c3-1  (a)  (2)  (vi)],  which  requires  the maintenance of minimum net
capital of $5,000. At September 30, 2004, Intervest Securities Corporation's net
capital  was  $483,000.

NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS

In March 2004, the SEC issued Staff Accounting Bulletin No. 105, "Application of
Accounting  Principles  to  Loan  Commitments"  (SAB  105).  SAB  105  provides
recognition  guidance for entities that issue loan commitments that are required
to  be accounted for as derivative instruments. Currently, loan commitments that
the  Company enters into would not be required to be accounted for as derivative
instruments  under  SAB  105.


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

NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS, CONTINUED

In  March  2004,  the  Emerging  Issues Task Force of the FASB reached consensus
opinions  regarding  the  determination  of  whether an investment is considered
impaired,  whether the identified impairment is considered other-than-temporary,
how  to  measure other-than-temporary impairment, and how to disclose unrealized
losses  on  investments  that  are  not  other-than-temporarily  impaired.  The
consensus  opinions  are  detailed in Emerging Issues Task Force Issue No. 03-1,
The  Meaning  of  Other-Than-Temporary Impairment and its Application to Certain
Investments.  For  the  quarter  ended  September  30,  2004,  the  Company  has
determined that it has the ability and intent to hold its investments classified
as  held  to  maturity for a period of time sufficient for the fair value of the
securities  to  recover.



                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

             REVIEW BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     Hacker,  Johnson  & Smith, P.A., P.C., the Company's independent registered
public  accounting  firm,  has made a limited review of the financial data as of
September 30, 2004 and for the three- and nine-month periods ended September 30,
2004  and  2003  presented  in  this  document, in accordance with the standards
established by the Public Company Accounting Oversight Board. As part of Hacker,
Johnson  &  Smith,  P.A.,  P.C.'s  review, Eisner, LLP was relied upon for their
limited  review  of Intervest Mortgage Corporation, a wholly owned subsidiary of
the  Company.

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


                                       14
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We  have  reviewed  the  accompanying  condensed  consolidated  balance sheet of
Intervest  Bancshares  Corporation  and  Subsidiaries  (the  "Company")  as  of
September 30, 2004 and the related condensed consolidated statements of earnings
for the three- and nine-month periods ended September 30, 2004 and 2003, and the
related condensed consolidated statements of changes in stockholders' equity and
cash  flows  for the nine-month periods ended September 30, 2004 and 2003. These
interim financial statements are the responsibility of the Company's management.

We  were  furnished  the  reports  of  the other auditor on their reviews of the
interim  financial  information  of  Intervest Mortgage Corporation, whose total
assets  as  of  September 30, 2004 constituted 10.2% of the related consolidated
total,  and  whose  net interest income, noninterest income and net earnings for
the  three-  and  nine-month  periods  then  ended, constituted 6.9%, 10.4%, and
20.4%;  and  6.4%, 14.3% and 19.8%, respectively, and whose net interest income,
noninterest  income and net earnings for the three- and nine-month periods ended
September  30,  2003,  constituted  10.9%, 9.9%, and 20.1%; and 10.5%, 13.6% and
18.5%,  respectively,  of  the  related  consolidated  totals.

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

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

We  have  previously  audited,  in  accordance  with the standards of the Public
Company  Accounting  Oversight  Board,  the  consolidated  balance  sheet  as of
December  31,  2003,  and  the  related  consolidated  statements  of  earnings,
comprehensive  income,  changes  in  stockholders' equity and cash flows for the
year  then  ended  (not  presented  herein); and in our report dated February 6,
2004,  with  respect  to note 3 dated March 16, 2004, we, based on our audit and
the  report  of  other  auditors,  expressed  an  unqualified  opinion  on those
consolidated  financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of December 31, 2003 is
fairly stated, in all material respects, in relation to the consolidated balance
sheet  from  which  it  has  been  derived.


/s/ Hacker, Johnson & Smith, P.A., P.C.
---------------------------------------------
HACKER, JOHNSON & SMITH, P.A.,P.C.
Tampa, Florida
November 8, 2004


                                       15
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



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

We  have reviewed the condensed consolidated balance sheet of Intervest Mortgage
Corporation  and  Subsidiaries  (the "Company") as of September 30, 2004 and the
related  condensed  consolidated  statements  of  operations  for  each  of  the
three-month  and  nine-month  periods ended September 30, 2004 and 2003, and the
related condensed consolidated statements of changes in stockholders' equity and
cash  flows  for the nine-months ended September 30, 2004 and 2003 (all of which
are not presented separately herein). These interim financial statements are the
responsibility  of  the  Company's  management.

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

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

We  previously  audited,  in accordance with the standards of the Public Company
Accounting  Oversight  Board  (United States), the consolidated balance sheet of
the  Company  as of December 31, 2003 and the related consolidated statements of
operations,  changes  in  stockholder's  equity and cash flows for the year then
ended  (not  presented  herein),  and  in  our report dated February 3, 2004, we
expressed  an unqualified opinion on those consolidated financial statements. In
our  opinion,  the  information  set forth in the condensed consolidated balance
sheet as of December 31, 2003 (not presented separately herein) is fairly stated
in  all  material  respects  in  relation to the consolidated balance sheet from
which  it  has  been  derived.



/s/ Eisner, LLP
-----------------
EISNER,LLP
New York, New York
October 20, 2004


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

                                     GENERAL
                                     -------

At  September  30, 2004, Intervest Bancshares Corporation has three wholly owned
consolidated  subsidiaries  -  Intervest  National  Bank,  Intervest  Mortgage
Corporation  and  Intervest  Securities  Corporation  (hereafter  referred  to
collectively  as  the  "Company"  on a consolidated basis). Intervest Bancshares
Corporation  and  Intervest National Bank may be referred to individually as the
"Holding Company" and the "Bank," respectively. Intervest Bancshares Corporation
also  has  four  wholly  owned  unconsolidated subsidiaries, Intervest Statutory
Trust I, II, III and IV.  For a discussion of the Company's business, see note 2
to  the  condensed  consolidated  financial  statements  in  this  report.

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

The  Company's  profitability  is  also affected by the level of its noninterest
income  and  expenses,  provision  for  loan losses and provision for income tax
expense.  Noninterest  income  consists mostly of loan and other banking fees as
well  as  income  from  loan  prepayments.  The amount and timing of, as well as
income  from,  loan  prepayments,  if any, cannot be predicted and can fluctuate
significantly. Normally, the number of instances of prepayment of mortgage loans
tends  to  increase  during  periods  of  declining  interest rates and tends to
decrease  during  periods  of  increasing  interest rates. Many of the Company's
mortgage  loans include prepayment provisions, and others prohibit prepayment of
indebtedness entirely. Noninterest expense consists of compensation and benefits
expense, occupancy and equipment expenses, data processing expenses, advertising
expense,  professional  fees,  insurance  expense  and other operating expenses.

The  Company's  profitability  is significantly affected by general economic and
competitive  conditions,  changes  in market interest rates, government policies
and  actions  of  regulatory  authorities.  The  Company's  loan  portfolio  has
historically  been  concentrated  in  commercial  real  estate  and  multifamily
mortgage  loans.  The  properties  underlying  the  Company's mortgages are also
concentrated  in  New York State and the State of Florida.  Many of the New York
properties are located in New York City and are subject to rent control and rent
stabilization  laws,  which limit the ability of the property owners to increase
rents.  Credit  risk,  which  represents  the  possibility  of  the  Company not
recovering  amounts  due  from  its borrowers, is significantly related to local
economic  conditions  in  the  areas  the properties are located, as well as the
Company's underwriting standards. Economic conditions affect the market value of
the underlying collateral as well as the levels of occupancy of income-producing
properties.  Additionally,  terrorist  acts,  such  as  those  that  occurred on
September  11,  2001,  armed conflicts, such as the recent Gulf War, and natural
disasters,  such  as  hurricanes,  may  have  an  adverse  impact  on  economic
conditions.

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

OVERVIEW
--------

Total  assets  at  September  30,  2004  increased  to  $1,269,256,000,  from
$911,523,000  at  December  31,  2003.  Total  liabilities at September 30, 2004
increased  to  $1,184,846,000,  from  $836,138,000  at  December  31,  2003, and
stockholders'  equity  increased  to  $84,410,000  at  September  30, 2004, from
$75,385,000  at  year-end  2003. Book value per common share increased to $13.96
per  share  at  September  30,  2004,  from  $12.59  at  December  31,  2003.

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


                                       17
<PAGE>
Selected balance sheet information as of September 30, 2004 follows:
<TABLE>
<CAPTION>



                                                          Intervest    Intervest    Intervest      Inter-
                                               Holding    National     Mortgage    Securities     Company
($in thousands)                                Company      Bank         Corp.        Corp.     Amounts (1)    Combined
-------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>        <C>          <C>          <C>          <C>           <C>

Cash and cash equivalents                     $  3,085   $   30,476   $   18,706   $       490  $    (5,619)  $   47,138
Security investments                                 -      259,982            -             -            -      259,982
Loans receivable, net of deferred fees          15,792      814,291      108,918             -            -      939,001
Allowance for loan losses                          (85)      (9,591)        (332)            -            -      (10,008)
Investment in consolidated subsidiaries        132,790            -            -             -     (132,790)           -
All other assets                                 5,414       22,066        5,724             -          (61)      33,143
-------------------------------------------------------------------------------------------------------------------------
Total assets                                  $156,996   $1,117,224   $  133,016   $       490  $  (138,470)  $1,269,256
-------------------------------------------------------------------------------------------------------------------------
Deposits                                      $      -   $  982,267   $        -   $         -  $    (5,875)  $  976,392
Borrowed funds and related interest payable     72,285          246      107,837             -            -      180,368
All other liabilities                              301       25,236        2,347             7          195       28,086
-------------------------------------------------------------------------------------------------------------------------
Total liabilities                               72,586    1,007,749      110,184             7       (5,680)   1,184,846
-------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                            84,410      109,475       22,832           483     (132,790)      84,410
-------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity    $156,996   $1,117,224   $  133,016   $       490  $  (138,470)  $1,269,256
-------------------------------------------------------------------------------------------------------------------------
<FN>


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


A  comparison of selected balance sheet information as of September 30, 2004 and
December  31,  2003  follows:

<TABLE>
<CAPTION>
                                                                     At September 30, 2004      At December 31, 2003
                                                                 ---------------------------  ------------------------
                                                                   Carrying        % of       Carrying       % of
($in thousands)                                                     Value      Total Assets     Value    Total Assets
----------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>           <C>            <C>        <C>
Cash and cash equivalents                                        $     47,138           3.7%  $  64,128           7.0%
Security investments                                                  259,982          20.5     155,898          17.1
Loans receivable, net of deferred fees and loan loss allowance        928,993          73.2     664,545          72.9
All other assets                                                       33,143           2.6      26,952           3.0
----------------------------------------------------------------------------------------------------------------------
Total assets                                                     $  1,269,256         100.0%  $ 911,523         100.0%
----------------------------------------------------------------------------------------------------------------------
Deposits                                                         $    976,392          76.9%  $ 675,513          74.1%
Borrowed funds and related interest payable                           180,368          14.2     140,383          15.4
All other liabilities                                                  28,086           2.2      20,242           2.2
----------------------------------------------------------------------------------------------------------------------
Total liabilities                                                   1,184,846          93.3     836,138          91.7
----------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                                   84,410           6.7      75,385           8.3
----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                       $  1,269,256         100.0%  $ 911,523         100.0%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

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

Cash  and  cash equivalents decreased to $47,138,000 at September 30, 2004, from
$64,128,000  at  December 31, 2003, due to the partial deployment of those funds
into  loans  and  securities.

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

Securities  held  to  maturity  increased to $255,340,000 at September 30, 2004,
from  $152,823,000  at  December 31, 2003. The increase was due to new purchases
exceeding maturities and early calls during the period. The Company continues to
invest  in  short-term  (1-5  year)  U.S  government  agency debt obligations to
emphasize  liquidity  and  to  target  Intervest National Bank's loan-to-deposit
ratio at approximately 80%. The investment portfolio at September 30, 2004 had a
weighted-average  remaining maturity of 2.1 years and a yield of 2.24%, compared
to  1.75  years  and  a  yield  of  1.75%  at  December  31,  2003.

The  Bank's  total  investment  in the Federal Reserve Bank and the Federal Home
Loan  Bank of New York stock increased to $4,642,000 at September 30, 2004, from
$3,075,000  at  December  31,  2003,  due  to  additional  purchases  of  stock.

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

Loans  receivable,  net  of  deferred  fees  and  the allowance for loan losses,
increased  to  $928,993,000 at September 30, 2004, from $664,545,000 at December
31,  2003.  The  growth reflected new originations of commercial real estate and
multifamily  mortgage  loans,  partially  offset  by  principal  repayments.


                                       18
<PAGE>
New  loan  originations  totaled  $139,019,000  in the third quarter of 2004 and
$477,610,000  in  the  first  nine  months of 2004, compared to $123,937,000 and
$289,232,000,  respectively,  for  the  same  periods  of  2003.

At September 30, 2004, $5,226,000 of loans were on a nonaccrual status, compared
to  $8,474,000  at December 31, 2003. These loans were considered impaired under
the  criteria  of  SFAS No.114, but no valuation allowance was maintained at any
time  since the Company believes that the estimated fair value of the underlying
properties exceeded the Company's recorded investment. At September 30, 2004 and
December  31, 2003, there were no other impaired loans or loans ninety days past
due  and  still  accruing  interest.

At  September  30,  2004, the allowance for loan losses amounted to $10,008,000,
compared  to $6,580,000 at December 31, 2003. The allowance represented 1.07% of
total  loans  (net of deferred fees) outstanding at September 30, 2004 and 0.98%
at  December  31,  2003.  The  increase  in  the allowance was due to provisions
aggregating  $3,428,000  during  the  period resulting largely from loan growth,
which amounted to $271,042,000, as well as a decrease in the credit grade of two
loans  during  the  third  quarter  of 2004. For a further discussion of all the
criteria  the Company uses to determine the adequacy of the allowance, see pages
21  and  22  in  the  Company's  Annual  Report  on Form 10-K for the year ended
December  31,  2003.

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

The following table sets forth the composition of the caption "All other assets"
in  the  table  on  page  18:

<TABLE>
<CAPTION>
                                            At September 30,   At December 31,
                                            -----------------  ----------------
($in thousands)                                   2004               2003
-------------------------------------------------------------------------------
<S>                                         <C>                <C>
Accrued interest receivable                 $           6,601  $          4,995
Loans fee receivable                                    7,556             5,622
Premises and equipment, net                             6,964             5,752
Deferred income tax asset                               4,564             2,960
Deferred debenture offering costs, net                  5,280             4,023
Investment in unconsolidated subsidiaries               1,856               928
All other                                                 322             2,672
-------------------------------------------------------------------------------
                                            $          33,143  $         26,952
-------------------------------------------------------------------------------
</TABLE>

Accrued interest receivable fluctuates based on the amount of loans, investments
and  other  interest-earning  assets  outstanding  and  the  timing  of interest
payments  received.  The  increase  was  due  to  the  growth  in  these assets.

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

Premises  and equipment increased due to net additions of $1,671,000 (almost all
of which was leasehold improvements associated with new office space), partially
offset  by  depreciation  and  amortization.

Deferred income tax asset relates primarily to the unrealized tax benefit on the
Company's  allowance  for  loan  losses.  The  allowance  has  been expensed for
financial  statement  purposes but it is currently not deductible for income tax
purposes. Management believes that it is more likely than not that the Company's
deferred  tax  asset will be realized and accordingly, a valuation allowance for
deferred tax assets is not maintained. The increase in the deferred tax asset is
a  function  of the increase in the allowance for loan losses during the period.

Deferred debenture offering costs consist primarily of underwriters' commissions
and  are  amortized  over the terms of the debentures. The increase was due to a
total  of $2,203,000 of new costs associated with the issuance of both Intervest
Mortgage  Corporation's debentures and the Holding Company's Capital Securities.
The  additional  costs  was  partially  offset by normal amortization during the
period.

The  investment in unconsolidated subsidiaries consists of the Holding Company's
$464,000  individual  common  stock  investment  in  each  of its unconsolidated
subsidiary  Intervest  Statutory  Trust  I,  II,  II  and  IV.

DEPOSITS
--------

Deposits  increased  to $976,392,000 at September 30, 2004, from $675,513,000 at
December  31,  2003,  primarily  reflecting  increases  in  money  market  and
certificate  of  deposit accounts of $48,219,000 and $247,655,000,


                                       19
<PAGE>
respectively.  At  September  30,  2004, certificate of deposit accounts totaled
$714,814,000  and  checking,  savings  and  money  market  accounts  aggregated
$261,578,000.  The  same categories of deposit accounts totaled $467,159,000 and
$208,354,000,  respectively,  at  December  31,  2003.  Certificate  of  deposit
accounts  represented  73%  of  total  deposits at September 30, 2004 and 69% at
December  31,  2003.

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

At  September 30, 2004, borrowed funds and related interest payable increased to
$180,368,000, from $140,383,000 at year-end 2003. The increase was primarily due
to  the  issuance of Series 11/28/03 and 6/7/04 debentures by Intervest Mortgage
Corporation totaling $10,000,000 and $11,500,000, respectively, and the issuance
of  a  total  of  $30,928,000 of debentures by the Holding company to its wholly
owned unconsolidated subsidiaries, Intervest Statutory Trust III and IV. The new
debentures  were  partially offset by the early repayments of Intervest Mortgage
Corporation's  Series  5/12/95  debentures  due  April  1,  2004  ($9,000,000 of
principal  and $2,749,000 of accrued interest) and Series 6/28/99 debentures due
July  1,  2004  ($2,000,000  of principal and $980,000 of accrued interest). For
further  information on borrowed funds and related interest payable, see notes 6
and  7  to  the  condensed  consolidated  financial  statements included in this
report.

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

The  table  below  sets  forth  the  composition  of  the  caption  "All  other
liabilities"  in  the  table  on  page  18  as  follows:

<TABLE>
<CAPTION>
                                       At September 30,   At December 31,
                                       -----------------  ----------------
($in thousands)                              2004               2003
--------------------------------------------------------------------------
<S>                                    <C>                <C>

Mortgage escrow funds payable          $          20,170  $         10,540
Official checks outstanding                        4,246             6,122
Accrued interest payable on deposits               1,502             1,080
All other                                          2,168             2,500
--------------------------------------------------------------------------
                                       $          28,086  $         20,242
--------------------------------------------------------------------------
</TABLE>

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

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

Stockholders'  equity  increased  to  $84,410,000  at  September  30, 2004, from
$75,385,000  at  year-end  2003  as  follows:

<TABLE>
<CAPTION>
($in thousands)                                                     Amount    Shares
--------------------------------------------------------------------------------------
<S>                                                                 <C>      <C>

Stockholders' equity at December 31, 2003                           $75,385  5,988,377
Net earnings for the period                                           8,392          -
Class A common stock warrants exercised                                 426     42,510
Convertible debentures converted at election of debenture holders       198     17,188
Compensation expense on warrants held by the Chairman                     9          -
--------------------------------------------------------------------------------------
Stockholders' equity at September 30, 2004                          $84,410  6,048,075
--------------------------------------------------------------------------------------
</TABLE>

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

Interest  rate  risk  arises  from  differences  in  the repricing of assets and
liabilities  within a given time period. The Company does note engage in trading
or  hedging activities, nor does it invest in interest rate derivatives or enter
into interest rate swaps. The primary objective of the Company's asset/liability
management  strategy  is  to  limit,  within established guidelines, the adverse
impact  of  changes  in  interest  rates on its net interest income and capital.

The  Company  uses  "gap  analysis,"  which  measures  the  difference  between
interest-earning  assets and interest-bearing liabilities that mature or reprice
within  a  given  time  period,  to monitor its interest rate sensitivity. For a
further  discussion  of  the assumptions used in preparing the gap analysis, see
pages  27  and 28 of the Company's Annual Report on Form 10-K for the year ended
December 31, 2003. The Company's one-year positive interest rate sensitivity gap
amounted  to  $108,803, or 8.6% of total assets, at September 30, 2004, compared
to  $118,124,000,  or  13.0%  at  December  31,  2003


                                       20
<PAGE>
For  purposes  of  computing the gap, all deposits with no stated maturities are
treated  as  readily accessible accounts. However, if such deposits were treated
differently, the one-year gap would then change. The behavior of core depositors
may  not  necessarily  result  in the immediate withdrawal of funds in the event
deposit  rates  offered  by  the Bank did not change as quickly and uniformly as
changes  in  general  market rates. For example, if only 25% of deposits with no
stated  maturity  were  assumed to be readily accessible, the one-year gap would
have  been  a positive 23.7% at September 30, 2004, compared to a positive 29.6%
at  year-end  2003.

The  table  below  summarizes  interest-earning  assets  and  interest-bearing
liabilities  as  of  September 30, 2004, that are scheduled to mature or reprice
within  the  periods  shown.

<TABLE>
<CAPTION>
                                             0-3       4-12      Over 1-4    Over 4
                                             ---       ----      --------    ------
($in thousands)                            Months     Months      Years       Years       Total
--------------------------------------------------------------------------------------------------
<S>                                       <C>        <C>        <C>         <C>        <C>

Loans (1)                                 $258,701   $270,316   $ 265,729   $155,152   $  949,898
Securities held to maturity (2)             23,263     84,517     146,437      1,123      255,340
Short-term investments                      28,971          -           -          -       28,971
FRB and FHLB stock                           2,628          -           -      2,014        4,642
--------------------------------------------------------------------------------------------------
Total rate-sensitive assets               $313,563   $354,833   $ 412,166   $158,289   $1,238,851
--------------------------------------------------------------------------------------------------
Deposit accounts (3):
  Interest checking deposits              $ 14,072   $      -   $       -   $      -   $   14,072
  Savings deposits                          30,723          -           -          -       30,723
  Money market deposits                    210,433          -           -          -      210,433
  Certificates of deposit                   61,004    198,679     300,091    155,040      714,814
                                          --------------------------------------------------------
  Total deposits                           316,232    198,679     300,091    155,040      970,042
Debentures and mortgage note payable (1)    32,500      4,350      49,674     80,638      167,162
Accrued interest on debentures (1)           6,024      1,808       5,059        315       13,206
--------------------------------------------------------------------------------------------------
Total rate-sensitive liabilities          $354,756   $204,837   $ 354,824   $235,993   $1,150,410
--------------------------------------------------------------------------------------------------
GAP (repricing differences)               $(41,193)  $149,996   $  57,342   $(77,704)  $   88,441
--------------------------------------------------------------------------------------------------
Cumulative GAP                            $(41,193)  $108,803   $ 166,145   $ 88,441   $   88,441
--------------------------------------------------------------------------------------------------
Cumulative GAP to total assets               (3.2)%       8.6%       13.1%       7.0%         7.0%
--------------------------------------------------------------------------------------------------
<FN>

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

                                    LIQUIDITY
                                    ---------

The Company manages its liquidity position on a daily basis to assure that funds
are  available  to  meet  operations,  loan  and investment commitments, deposit
withdrawals  and  the repayment of borrowed funds. The Company's primary sources
of  funds consist of: retail deposits obtained through the Bank's branch offices
and  through  the mail; amortization, satisfactions and repayments of loans; the
maturities  and calls of securities; issuance of debentures; borrowings from the
federal  funds  market, FHLB advances and cash provided by operating activities.
For  additional  information  concerning  the  Company's  cash  flows,  see  the
condensed  consolidated  statements  of  cash flows included in this report. The
Company  believes  that  it  can  fund  its  contractual  obligations  from  the
aforementioned  sources  of  funds.

As a member of the FHLB and the FRB, the Bank can borrow from these institutions
on  a  secured  basis  of  up to $245,000,000 in aggregate at September 30, 2004
based  on  available  collateral.  The  Bank  has  federal  funds line of credit
agreements  with  correspondent  banks  whereby  it  can borrow on an overnight,
unsecured  basis  of  up to $16,000,000 at September 30, 2004. No borrowing from
these  sources  were  outstanding  at  September  30,  2004.

                     OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
                     ---------------------------------------

The  Company  is a party to financial instruments with off-balance sheet risk in
the  normal  course  of  business  to meet the financing needs of its customers.
These  instruments are in the form of commitments to extend credit, unused lines
of  credit  and  standby letters of credit, and may involve, to varying degrees,
elements of credit and


                                       21
<PAGE>
interest  rate  risk  in  excess  of  the  amounts  recognized  in the financial
statements.  The Company's maximum exposure to credit risk is represented by the
contractual  amount  of  those  instruments.  The  Company  uses the same credit
policies  in  making  commitments  as  it does for on-balance sheet instruments.
Commitments  to extend credit are agreements to lend funds to a customer as long
as  there  is  no  violation  of any condition established in the contract. Such
commitments  generally  have fixed expiration dates or other termination clauses
and  may  require  payment  of  fees.

Since  some  of the commitments are expected to expire without being drawn upon,
the  total  commitment  amount  does  not  necessarily  represent  future  cash
requirements.  The  Company  evaluates  each  customer's  creditworthiness  on a
case-by-case  basis.  The  amount of collateral obtained, if deemed necessary by
the Company upon extension of credit, is based on management's credit evaluation
of  the  counterparty.

Standby  letters  of credit are conditional commitments issued by the Company to
guarantee  the  performance  of  a  customer  to  a third party. The credit risk
involved  in  issuing letters of credit is essentially the same as that involved
in  extending  loans  to  customers.

The contractual amounts of the Company's off-balance sheet financial instruments
is  as  follows:

<TABLE>
<CAPTION>
                                  At             At
                                  --             --
                            September 30,   December 31,
                            --------------  -------------
($in thousands)                  2004           2003
---------------------------------------------------------
<S>                         <C>             <C>

Unfunded loan commitments   $      115,388  $     123,791
Available lines of credit              858            825
Standby letters of credit              750            100
---------------------------------------------------------
                            $      116,996  $     124,716
---------------------------------------------------------
</TABLE>

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


                                       22
<PAGE>
   COMPARISON OF RESULTS OF OPERATIONS FOR THE QUARTERS ENDED SEPTEMBER 30, 2004
   -----------------------------------------------------------------------------
                                    AND 2003
                                    --------
OVERVIEW
--------

Consolidated  net  earnings for the third quarter of 2004 increased $621,000, or
25%,  to  $3,152,000, from $2,531,000 for the same quarter of 2003, representing
the  highest  quarterly  earnings ever reported by the Company. Diluted earnings
per share for the 2004 quarter was $0.47, compared to $0.42 in the 2003 quarter.
The  per  share  computation  for 2004 includes a higher number of common shares
outstanding  resulting from the exercise of common stock warrants and conversion
of  debentures  that  occurred  in  the  later  part  of  2003.

The  increase  in  consolidated  earnings  for  the  third  quarter  of 2004 was
primarily  due  to the continued growth in the Company's lending activities. Net
interest  and  dividend  income  increased 27% or $1,541,000 from the prior year
quarter while noninterest income also increased $439,000 in the current quarter.
These  revenue  increases  were  partially  offset by a $465,000 increase in the
provision  for  loan  losses,  a  $565,000 increase in income tax expense  and a
$329,000  increase  in  noninterest  expenses.

Selected  information  regarding  results of operations for the third quarter of
2004  follows:

<TABLE>
<CAPTION>
                                                        Intervest   Intervest    Intervest      Inter-
                                             Holding    National     Mortgage   Securities     Company
($in thousands)                              Company      Bank        Corp.        Corp.     Amounts (1)   Consolidated
------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>        <C>          <C>         <C>          <C>           <C>

Interest and dividend income                $    285   $   14,839   $    2,576  $         2  $       (47)  $      17,655
Interest expense                               1,099        7,221        2,075            -          (47)         10,348
                                            ----------------------------------------------------------------------------
Net interest and dividend income                (814)       7,618          501            2            -           7,307
Provision for loan losses                          -        1,061            6            -            -           1,067
Noninterest income                               125        1,248        1,322           63       (1,281)          1,477
Noninterest expenses                             120        2,648          619           35       (1,281)          2,141
                                            ----------------------------------------------------------------------------
Earnings before income taxes                    (809)       5,157        1,198           30            -           5,576
Provision for income taxes                      (374)       2,230          554           14            -           2,424
------------------------------------------------------------------------------------------------------------------------
Net earnings                                $   (435)  $    2,927   $      644  $        16  $         -   $       3,152
------------------------------------------------------------------------------------------------------------------------
Intercompany dividends (2)                       855         (855)           -            -            -               -
------------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany dividends   $    420   $    2,072   $      644  $        16  $         -   $       3,152
------------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany dividends
        for the same period of 2003         $     75   $    1,939   $      509  $         8  $         -   $       2,531
------------------------------------------------------------------------------------------------------------------------

<FN>

(1)  All  significant  intercompany  balances  and transactions are eliminated in consolidation. Such amounts arise from
     intercompany deposit accounts and management and service agreements.
(2)  Dividends to the Holding Company from the Bank provide funds for the debt service on $60,000,000 of Capital
     Securities. The debt service is included in the Holding Company's interest expense. The proceeds from the Capital
     Securities are invested in the capital of the Bank.
</TABLE>

NET INTEREST AND DIVIDEND INCOME
--------------------------------

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

Net interest and dividend income increased to $7,307,000 in the third quarter of
2004,  from  $5,766,000  in  the  third  quarter  of  2003.  The improvement was
attributable  to  a  $429,515,000  increase  in  average interest-earning assets
resulting  from  continued growth in loans of $336,968,000 and a higher level of
security  and  short-term  investments  aggregating  $92,547,000.  The growth in
average  assets  was  funded  by  $360,328,000  of  new deposits, $41,124,000 of
additional  borrowed  funds  and  a $21,889,000 increase in stockholders' equity
(resulting  from  earnings  and  issuance  of shares upon the exercise of common
stock  warrants  and  conversion  of  convertible  debentures).

The  Company's  net  interest  margin decreased to 2.46% in the third quarter of
2004,  from  3.03%  in  the  third  quarter of 2003. The decrease was due to the
Company's  yield on interest-earning assets decreasing at a faster pace than its
cost  of  funds.

In  a  low  interest  rate  environment,  the  yield  on interest-earning assets
decreased 82 basis points to 5.94% in the 2004 quarter due to lower rates on new
mortgage  loans  originated  as  well  as  prepayments of higher-yielding loans,
partially  offset  by  higher  yields  earned  on  security and other short-term
investments.  The  cost  of funds decreased


                                       23
<PAGE>
32  basis points to 3.80% in the 2004 quarter due to lower rates paid on deposit
accounts and the addition of new debentures with lower rates than existing ones.

Interest  income  that  was  not  recorded  on  nonaccrual  loans  under  their
contractual  terms  amounted to $140,000 for the third quarter of 2004, compared
to $180,000 for the same period of 2003. The average balance of nonaccrual loans
for  the third quarter of 2004 amounted to $2,199,000, compared to $8,474,000 in
the  2003  quarter.

The  following  table  provides  information on: average assets, liabilities and
stockholders'  equity;  yields earned on interest-earning assets; and rates paid
on  interest-bearing liabilities for the periods indicated. The yields and rates
shown  are  based  on a computation of income/expense (including any related fee
income  or  expense)  for  each  period  divided  by  average  interest-earning
assets/interest-bearing  liabilities  during  each  period. Average balances are
derived  from  daily  balances.  Net interest margin is computed by dividing net
interest  and  dividend  income  by the average of total interest-earning assets
during  each  period.

<TABLE>
<CAPTION>

                                                   ---------------------------------------------------------------
                                                                             Quarter Ended
                                                   ---------------------------------------------------------------
                                                           September 30, 2004             September 30, 2003
                                                   --------------------------------  -----------------------------
                                                     Average     Interest   Yield/    Average    Interest   Yield/
($in thousands)                                    Balance      Inc./Exp.   Rate     Balance    Inc./Exp.   Rate
------------------------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>         <C>      <C>        <C>         <C>
ASSETS
Interest-earning assets:
    Loans (1)                                      $  942,342   $   16,428    6.94%  $605,374   $   12,172    7.98%
    Securities                                        216,463        1,137    2.09    121,674          609    1.99
    Other interest-earning assets                      24,566           90    1.46     26,808           64    0.95
------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                       1,183,371   $   17,655    5.94%   753,856   $   12,845    6.76%
------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                             15,204                          12,329
------------------------------------------------------------------------------------------------------------------
Total assets                                       $1,198,575                        $766,185
------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
    Interest checking deposits                     $   12,271   $       48    1.56%  $ 10,713   $       39    1.44%
    Savings deposits                                   31,572          142    1.79     32,108          145    1.79
    Money market deposits                             204,139          982    1.91    145,134          651    1.78
    Certificates of deposit                           667,933        5,986    3.57    368,707        3,715    4.00
------------------------------------------------------------------------------------------------------------------
Total deposit accounts                                915,915        7,158    3.11    556,662        4,550    3.24
------------------------------------------------------------------------------------------------------------------
  Fed funds purchased and FHLB Advances                 3,089           12    1.55          -            -       -
  Debentures and related interest payable             114,654        2,291    7.95    107,565        2,110    7.78
  Debentures - capital securities                      48,241          883    7.28     17,283          414    9.50
  Mortgage note payable                                   247            4    7.01        259            5    7.00
------------------------------------------------------------------------------------------------------------------
Total borrowed funds                                  166,231        3,190    7.64    125,107        2,529    8.02
------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                  1,082,146   $   10,348    3.80%   681,769   $    7,079    4.12%
------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                            6,868                           5,793
Noninterest-bearing liabilities                        27,256                          18,207
Stockholders' equity                                   82,305                          60,416
------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity         $1,198,575                        $766,185
------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                         $    7,307    2.14%             $    5,766    2.64%
------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                 $  101,225                 2.46%  $ 72,087                 3.03%
------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
    to total interest-bearing liabilities                1.09                            1.11
------------------------------------------------------------------------------------------------------------------
OTHER RATIOS:
  Return on average assets (2)                           1.05%                           1.32%
  Return on average equity  (2)                         15.32%                          16.76%
  Noninterest expense to average assets (2)              0.71%                           0.95%
  Efficiency ratio (3)                                     24%                             27%
  Average stockholders' equity to average assets         6.87%                           7.89%
------------------------------------------------------------------------------------------------------------------

<FN>
(1)  Includes nonaccrual loans, if any.
(2)  Annualized.
(3)  Defined  as  noninterest  expenses as a percentage of net interest income before the provision for loan losses
     plus  noninterest  income.
</TABLE>


                                       24
<PAGE>
PROVISION FOR LOAN LOSSES
-------------------------

The  provision  for  loan  losses  increased $465,000 to $1,067,000 in the third
quarter  of  2004,  from  $602,000  in  the  third  quarter  of 2003. The higher
provision  was  a  function of loan growth, which amounted to $62,228,000 in the
2004  quarter  versus  $56,206,000  in  the  2003 quarter, and a decrease in the
credit  grade  of  two  loans  during  the  third  quarter  of  2004.

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

Noninterest  income  increased  $439,000  to  $1,477,000 in the third quarter of
2004,  from  $1,038,000  in  the  third  quarter  of 2003. The higher income was
primarily  due  to a $193,000 increase in income from the prepayment of mortgage
loans  and  $170,000 of additional fee income from loan commitments that expired
and  were  not  funded.  Income  from  the prepayment of mortgage loans consists
largely  of  the  recognition of unearned fees associated with such loans at the
time  of  payoff and the receipt of prepayment penalties and interest in certain
cases.

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

Noninterest  expenses  increased  $329,000 to $2,141,000 in the third quarter of
2004,  from  $1,812,000 in the third quarter of 2003. The increase was primarily
due  to increases in salary and employee benefits expense of $112,000, occupancy
and  equipment  expenses  of  $153,000 and advertising expense of $42,000. These
increases  were  partially  offset  by a decrease in data processing expenses of
$61,000.

The  Company's  efficiency  ratio,  which is a measure of its ability to control
expenses,  was  24% for the third quarter of 2004 and represented the third best
ratio  as  of  March  31,  2004  among the 500 largest bank holding companies as
reported  by  American  Banker  in  their  September  2,  2004  issue.

Salaries  and employee benefits expense increased due to the following: $125,000
from  normal salary increases, a higher cost of employee benefits and additional
staff,  and $103,000 from bonus payments to certain executives of the Company in
connection with the sale of capital securities and leasing of new space in 2004,
and  $12,000 of additional commission expense. These items were partially offset
by  a  $102,000  decrease  in  compensation  from  common stock warrants held by
employees and directors, and a $26,000 decrease in compensation resulting from a
higher  level  of SFAS No. 91 direct fee income (due to more loan originations).
The  Company  had  66  fulltime  employees  at  September  30, 2004 versus 60 at
September  30,  2003.

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

Advertising expenses increased due to additional advertising to support loan and
deposit  growth.

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

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

The  provision  for  income  taxes increased $565,000 to $2,424,000 in the third
quarter  of 2004, from $1,859,000 in the third quarter of 2003, primarily due to
an  increase  in  pre-tax  income  and  a  higher effective income tax rate. The
Company's  effective  tax  rate (inclusive of state and local taxes) amounted to
43.5%  in the 2004 period, compared to 42.3% in the 2003 period. The higher rate
is  due  to a larger portion of consolidated taxable income being generated from
the Company's New York operations, which is taxed at higher income tax rate than
its  Florida  operations.


                                       25
<PAGE>
COMPARISON OF RESULTS OF OPERATIONS FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2004
--------------------------------------------------------------------------------
                                    AND 2003
                                    --------
OVERVIEW
--------

For  the  first  nine  months  of  2004,  consolidated  net earnings amounted to
$8,392,000,  or  $1.25  per  diluted  share,  an  increase  of  $1,494,000  from
$6,898,000,  or  $1.19  per  diluted share, reported in the first nine months of
2003.  The  per  share  computation  for 2004 includes a higher number of common
shares  outstanding  resulting  from  the  exercise of common stock warrants and
conversion  of  debentures  that  occurred  in  the  later  part  of  2003.

The increase was due to growth in net interest and dividend income of $4,101,000
and  an  increase  of  $1,615,000 in noninterest income. These revenue increases
were partially offset by a $2,052,000 increase in the provision for loan losses,
a  $1,541,000  increase  in  income  tax  expense  and  a  $629,000  increase in
noninterest  expenses.

Selected  information  regarding results of operations for the nine-months ended
September  30,  2004  follows:

<TABLE>
<CAPTION>
                                                        Intervest   Intervest    Intervest      Inter-
                                             Holding    National     Mortgage   Securities     Company
($in thousands)                              Company      Bank        Corp.        Corp.     Amounts (1)   Consolidated
------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>        <C>          <C>         <C>          <C>           <C>

Interest and dividend income                $    856   $   39,662   $    7,270  $         4  $      (153)  $      47,639
Interest expense                               3,046       18,555        5,981            -         (153)         27,429
                                            ----------------------------------------------------------------------------
Net interest and dividend income              (2,190)      21,107        1,289            4            -          20,210
Provision for loan losses                          7        3,281          140            -            -           3,428
Noninterest income                               276        3,431        3,599          119       (3,267)          4,158
Noninterest expenses                             307        7,324        1,662           78       (3,267)          6,104
                                            ----------------------------------------------------------------------------
Earnings before income taxes                  (2,228)      13,933        3,086           45            -          14,836
Provision for income taxes                    (1,029)       6,025        1,427           21            -           6,444
------------------------------------------------------------------------------------------------------------------------
Net earnings                                $ (1,199)  $    7,908   $    1,659  $        24  $         -   $       8,392
------------------------------------------------------------------------------------------------------------------------
Intercompany dividends (2)                     2,340       (2,340)           -            -            -               -
------------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany dividends   $  1,141   $    5,568   $    1,659  $        24  $         -   $       8,392
------------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany dividends
        for the same period of 2003         $    217   $    5,396   $    1,278  $         7  $         -   $       6,898
------------------------------------------------------------------------------------------------------------------------
<FN>

(1)  All  significant  intercompany  balances  and transactions are eliminated in consolidation. Such amounts arise from
     intercompany  deposit  accounts  and  management  and  service  agreements.
(2)  Dividends  to  the  Holding  Company  from  the  Bank  provide funds for the debt service on $60,000,000 of Capital
     Securities.  The debt service is included in  the Holding Company's interest expense. The proceeds from the Capital
     Securities  are  invested  in  the  capital  of  the  Bank.
</TABLE>

NET INTEREST AND DIVIDEND INCOME
--------------------------------

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

Net  interest  and  dividend  income  increased to $20,210,000 in the first nine
months of 2004, from $16,109,000 in the same period of 2003. The improvement was
attributable  to  a  $330,480,000  increase  in  average interest-earning assets
resulting  from  continued growth in loans of $273,320,000 and a higher level of
security  and  short-term  investments  aggregating  $57,160,000.  The growth in
average  assets  was  funded  by  $265,768,000  of  new deposits, $35,695,000 of
additional  borrowed  funds  and  a $22,721,000 increase in stockholders' equity
(resulting  from  earnings  and  issuance  of shares upon the exercise of common
stock  warrants  and  conversion  of  convertible  debentures).

The Company's net interest margin decreased to 2.57% in the first nine months of
2004,  from  2.99%  in  the  same  period  of  2003. The decrease was due to the
Company's  yield on interest-earning assets decreasing at a faster pace than its
cost  of  funds.

In  a  low  interest  rate  environment,  the  yield  on interest-earning assets
decreased  80 basis points to 6.05% in the 2004 period due to lower rates on new
mortgage loans originated, prepayments of higher-yielding loans and lower yields
earned on security and other short-term investments. The cost of funds decreased
41  basis  points to 3.83% in the 2004 period due to lower rates paid on deposit
accounts and the addition of new debentures with lower rates than existing ones.


                                       26
<PAGE>
Interest  income  that  was  not  recorded  on  nonaccrual  loans  under  their
contractual  terms  amounted  to  $140,000  for  the  first nine months of 2004,
compared  to  $180,000  for  the  same  period  of  2003. The average balance of
nonaccrual  loans  for the nine-month period of 2004 was $2,611,000, compared to
$2,432,000  for  the  2003  period.

The  following  table  provides  information on: average assets, liabilities and
stockholders'  equity;  yields earned on interest-earning assets; and rates paid
on  interest-bearing liabilities for the periods indicated. The yields and rates
shown  are  based  on a computation of income/expense (including any related fee
income  or  expense)  for  each  period  divided  by  average  interest-earning
assets/interest-bearing  liabilities  during  each  period. Average balances are
derived  from  daily  balances.  Net interest margin is computed by dividing net
interest  and  dividend  income  by the average of total interest-earning assets
during  each  period.

<TABLE>
<CAPTION>
                                                   ---------------------------------------------------------------
                                                                             Nine-Months Ended
                                                   ---------------------------------------------------------------
                                                            September 30, 2004             September 30, 2003
                                                   ---------------------------------  ----------------------------
                                                     Average     Interest   Yield/    Average    Interest   Yield/
($in thousands)                                      Balance    Inc./Exp.    Rate     Balance   Inc./Exp.    Rate
------------------------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>         <C>      <C>        <C>         <C>

ASSETS
Interest-earning assets:
  Loans (1)                                        $  831,281   $   44,677    7.18%  $557,961   $   34,455    8.26%
  Securities                                          187,761        2,701    1.92    138,155        2,266    2.19
  Other interest-earning assets                        32,672          261    1.07     25,118          219    1.17
------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                       1,051,714   $   47,639    6.05%   721,234   $   36,940    6.85%
------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                             15,684                          13,793
------------------------------------------------------------------------------------------------------------------
Total assets                                       $1,067,398                        $735,027
------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
    Interest checking deposits                    $   10,891   $      126    1.55%  $ 11,229   $      140    1.67%
    Savings deposits                                  31,467          421    1.79     31,679          457    1.93
    Money market deposits                            187,058        2,561    1.83    141,842        2,043    1.93
    Certificates of deposit                          571,917       15,268    3.57    352,139       10,881    4.13
------------------------------------------------------------------------------------------------------------------
Total deposit accounts                               801,333       18,376    3.06    536,889       13,521    3.37
------------------------------------------------------------------------------------------------------------------
    Fed funds purchased and FHLB advances              1,165           13    1.49          -            -       -
    Debentures and related interest payable          111,043        6,622    7.97    103,456        6,134    7.93
    Debentures - capital securities                   42,723        2,405    7.52     15,769        1,162    9.85
    Mortgage note payable                                251           13    7.00        262           14    7.00
------------------------------------------------------------------------------------------------------------------
Total borrowed funds                                 155,182        9,053    7.79    119,487        7,310    8.18
------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                   956,515   $   27,429    3.83%   656,376   $   20,831    4.24%
------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                            6,630                           5,306
Noninterest-bearing liabilities                        24,791                          16,604
Stockholders' equity                                   79,462                          56,741
------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity         $1,067,398                        $735,027
------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                        $   20,210    2.22%             $   16,109    2.61%
------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                 $   95,199                2.57%   $ 64,858                2.99%
------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
    to total interest-bearing liabilities               1.10                             1.10
------------------------------------------------------------------------------------------------------------------
OTHER RATIOS:
  Return on average assets (2)                           1.05%                           1.25%
  Return on average equity  (2)                         14.08%                          16.21%
  Noninterest expense to average assets (2)              0.76%                           0.99%
  Efficiency ratio (3)                                     25%                             29%
  Average stockholders' equity to average assets         7.44%                           7.72%
------------------------------------------------------------------------------------------------------------------
<FN>

(1) Includes nonaccrual loans, if any.
(2)  Annualized.
(3)  Defined  as  noninterest  expenses as a percentage of net interest income before the provision for loan losses
plus  noninterest  income.
</TABLE>

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

The  provision  for  loan losses increased $2,052,000 to $3,428,000 in the first
nine  months  of  2004,  from  $1,376,000 in the same period of 2003. The higher
provision  was  a function of loan growth, which amounted to $271,042,000


                                       27
<PAGE>
in  the  2004  period,  versus  $143,502,000  in  the  2003 period, as well as a
decrease  in  the  credit  grade  of two loans during the third quarter of 2004.

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

Noninterest  income  increased $1,615,000 to $4,158,000 in the first nine months
of  2004, from $2,543,000 in the same period of 2003. The increase was primarily
due  to  higher  income  of  $1,046,000 from the prepayment of mortgage loans, a
$266,000  increase in loan service charges and $148,000 of additional fee income
from  loan  commitments  that  expired  and  were  not  funded.

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

Noninterest  expenses  increased $629,000 to $6,104,000 in the first nine months
of  2004,  from  $5,475,000  in the same period of 2003. The increase was due to
increases  in  salary  and  employee benefits expense of $250,000, occupancy and
equipment  expenses  of  $340,000, director expenses of $109,000 and advertising
expenses  of $55,000. These increases were partially offset by decreases in data
processing  expenses  of  $143,000  and  all  other  expenses  of  $65,000.

Salaries  and employee benefits expense increased due to the following: $387,000
from  normal salary increases, a higher cost of employee benefits and additional
staff,  $249,000  from  bonus  payments  to certain executives of the Company in
connection with the sale of capital securities and leasing of new space in 2004,
and  $40,000 of additional commission expense. These items were partially offset
by  a  $300,000  decrease  in  compensation  from  common stock warrants held by
employees  and directors, and a $126,000 decrease in compensation resulting from
a higher level of SFAS No. 91 direct fee income (due to more loan originations).
The  Company  had  66  fulltime  employees  at  September  30, 2004 versus 60 at
September  30,  2003.

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

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

Advertising expenses increased due to additional advertising to support loan and
deposit  growth.

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

All  other  expenses  were  lower  due  to  a decrease of $49,000 in losses from
transactional  accounts  and  a  decrease  in foreclosed real estate expenses of
$92,000,  partial  offset  by  increased  travel  expenses  of  $15,000.

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

The  provision  for income taxes increased $1,541,000 to $6,444,000 in the first
nine  months  of 2004, from $4,903,000 in the same period of 2003, due to higher
pre-tax  income  and a higher effective income tax rate. The Company's effective
tax  rate  (inclusive  of  state  and local taxes) amounted to 43.4% in the 2004
period, compared to 41.5% in the 2003 period. The higher rate is due to a larger
portion  of  consolidated  taxable income being generated from the Company's New
York  operations,  which  is  taxed  at  higher income tax rate than its Florida
operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market  risk  is  the  risk  of  loss  from adverse changes in market prices and
interest  rates.  The  Company  has  not  engaged in and accordingly has no risk
related  to trading accounts, commodities, foreign exchange, hedging activities,
interest  rate  derivatives  or  interest  rate swaps. The Company's market risk
arises  primarily  from  interest  rate  risk  inherent  in  its  lending  and
deposit-taking  activities,  and the issuance of its debentures. The measurement
of market risk associated with financial instruments is meaningful only when all
related and offsetting on-and off-balance sheet transactions are


                                       28
<PAGE>
aggregated,  and  the  resulting net positions are identified. Disclosures about
the  fair  value of financial instruments as of December 31, 2003, which reflect
changes  in market prices and rates, can be found in note 20 to the consolidated
financial  statements  included  in the Company's Annual Report on Form 10-K for
the  year  ended  December 31, 2003. Management believes that there have been no
significant  changes  in  the  Company's market risk exposure since December 31,
2003.

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

ITEM 4. CONTROLS AND PROCEDURES

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

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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
     Not Applicable

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a)  Not Applicable
(b)  Not Applicable
(c)  Not Applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a)  Not Applicable
(b)  Not Applicable

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
(a)  In  November  2004,  Intervest  National  Bank,  the  Company's subsidiary,
     entered  into employment agreements with Mr. Keith A. Olsen, Mr. Raymond C.
     Sullivan  and  Mr.  John  J.  Arvonio. Those agreements are filed herein as
     Exhibits  10.3,  10.4  and  10.5,  respectively.
(b)  Not Applicable

ITEM 6. EXHIBITS
     The following exhibits are filed as part of this report.

     4.10 -  Form  of  Indenture  between  the  Company, as Issuer, and U.S Bank
          National  Association,  as  Trustee,  dated  as  of  March  17,  2004.

     4.11 -  Form  of  Indenture  between the Company, as Issuer, and Wilmington
          Trust  Company,  as  Trustee,  dated  as  of  September  20,  2004.


                                       29
<PAGE>
     EXHIBITS, CONTINUED

     10.0 -  Employment  and Supplemental Benefits Agreement between the Company
             and  Jerome  Dansker  dated  as  of  July  1,  2004.

     10.1 -  Employment  and Supplemental Benefits Agreement between the Company
             and  Lowell  S.  Dansker  dated  as  of  July  1,  2004.

     10.2 -  Employment  and Supplemental Benefits Agreement between the Company
             and  Lawrence  G.  Bergman  dated  as  of  July  1,  2004.

     10.3 -  Employment Agreement between Intervest National Bank, the Company's
             subsidiary and Keith  A.  Olsen  dated  as  of  November  9,  2004.

     10.4 -  Employment Agreement between Intervest National Bank, the Company's
             subsidiary and Raymond C.  Sullivan  dated as of November 10, 2004.

     10.5 -  Employment Agreement between Intervest National Bank, the Company's
             subsidiary and John J.  Arvonio  dated  as  of  November  10, 2004.

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

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

                                   SIGNATURES



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


INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

Date: November 10, 2004          By: /s/ Lowell S. Dansker
                                     -------------------------------
                                     Lowell S. Dansker, Vice Chairman,
                                     President and Treasurer
                                     (Principal Executive and Financial Officer)



Date: November 10, 2004          By: /s/ Lawrence G. Bergman
                                     ------------------------------
                                     Lawrence G. Bergman, Vice President
                                     and Secretary


                                       30
<PAGE>