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                     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, 2002
                                               ------------------

                          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
     of incorporation)                                       identification no.)


                        10 Rockefeller Plaza, Suite 1015
                          New York, New York 10020-1903
      --------------------------------------------------------------------
                    (Address of principal executive offices)

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

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

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

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

Class A Common Stock, $1.00 par value per share                   3,821,979 Outstanding at October 31, 2002
-----------------------------------------------                   -----------------------------------------

Class B Common Stock, $1.00 par value per share                     355,000 Outstanding at October 31, 2002
-----------------------------------------------                     ---------------------------------------
</TABLE>

================================================================================
<PAGE>



                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q
                               September 30, 2002
                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                     <C>
PART I. FINANCIAL INFORMATION                                                                           Page
                                                                                                        ----
     Item 1.      Financial Statements

         Condensed Consolidated Balance Sheets
            as of September 30, 2002 (Unaudited) and December 31, 2001...................................  2

         Condensed Consolidated Statements of Earnings (Unaudited)
            for the Quarters and Nine-Months Ended September 30, 2002 and 2001...........................  3

         Condensed Consolidated Statements of Comprehensive Income (Unaudited)
            for the Quarters and Nine-Months Ended September 30, 2002 and 2001 ..........................  4

         Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
            for the Nine-Months Ended September 30, 2002 and 2001 .......................................  5

         Condensed Consolidated Statements of Cash Flows (Unaudited)
            for the Nine-Months Ended September 30, 2002 and 2001........................................  6

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

         Review by Independent Certified Public Accountants ............................................. 10

         Report on Reviews by Independent Certified Public Accountants .................................. 11

     Item 2.      Management's Discussion and Analysis of Financial Condition and
                                    Results of Operations ............................................... 13

     Item 3.      Quantitative and Qualitative Disclosures about Market Risk............................. 23

     Item 4.      Controls and Procedures ............................................................... 23

PART II. OTHER INFORMATION

     Item 1.      Legal Proceedings...................................................................... 24

     Item 2.      Changes in Securities and Use of Proceeds.............................................. 24

     Item 3.      Defaults Upon Senior Securities........................................................ 24

     Item 4.      Submission of Matters to a Vote of Security Holders.................................... 24

     Item 5.      Other Information...................................................................... 24

     Item 6.      Exhibits and Reports on Form 8-K ...................................................... 24

Signatures............................................................................................... 24

Certification ........................................................................................... 25
</TABLE>

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>


                Intervest Bancshares Corporation and Subsidiaries
                      Condensed Consolidated Balance Sheets

<TABLE>
                                                                                                     September 30,     December 31,
($ in thousands, except par value)                                                                       2002              2001
----------------------------------------------------------------------------------------------------------------------------------
ASSETS                                                                                                         (Unaudited)
<S>                                                                                                    <C>              <C>
Cash and due from banks                                                                                $  5,755         $  4,714
Federal funds sold                                                                                        8,809            6,345
Commercial paper                                                                                         22,200           12,400
Other short-term investments                                                                                877              950
                                                                                                       -------------------------
    Total cash and cash equivalents                                                                      37,641           24,409
Time deposits with banks                                                                                      -              250
Securities available for sale at estimated fair value                                                     5,654            6,192
Securities held to maturity, net (estimated fair value of $147,134 and $99,404, respectively)           146,400           99,157
Federal Reserve Bank stock, at cost                                                                       1,104              654
Loans receivable (net of allowance for loan losses of $4,301 and $3,380, respectively)                  450,090          365,146
Accrued interest receivable                                                                               4,557            3,202
Loan fees receivable                                                                                      3,327            2,679
Premises and equipment, net                                                                               6,196            6,042
Foreclosed real estate                                                                                    1,081                -
Deferred income tax asset                                                                                 1,685            1,236
Deferred debenture offering costs, net                                                                    3,729            3,396
Other assets                                                                                                257              259
--------------------------------------------------------------------------------------------------------------------------------
Total assets                                                                                           $661,721         $512,622
--------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Noninterest-bearing demand deposit accounts                                                            $  4,584         $  5,550
Interest-bearing deposit accounts:
      Checking (NOW) accounts                                                                             9,023           10,204
      Savings accounts                                                                                   29,833           24,624
      Money market accounts                                                                             132,344           80,594
      Certificate of deposit accounts                                                                   310,839          241,465
                                                                                                       -------------------------
Total deposit accounts                                                                                  486,623          362,437
Subordinated debentures payable                                                                          84,430           73,430
Guaranteed preferred beneficial interest in junior subordinated debentures                               15,000           15,000
Note payable                                                                                                269                -
Accrued interest payable on all debentures                                                               13,383           11,480
Accrued interest payable on deposits                                                                        853              817
Mortgage escrow funds payable                                                                             9,684            4,253
Official checks outstanding                                                                               2,394            3,219
Other liabilities                                                                                         1,967            1,591
--------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                                                                       614,603          472,227
--------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock (300,000 shares authorized, none issued)                                                      -                -
Class A common stock ($1.00 par value, 9,500,000 shares authorized,
    3,764,079 and 3,544,629 shares issued and outstanding, respectively )                                 3,764            3,545
Class B common stock ($1.00 par value, 700,000 shares authorized,
    355,000 shares issued and outstanding)                                                                  355              355
Additional paid-in-capital, common                                                                       20,531           19,001
Retained earnings                                                                                        22,379           17,383
Accumulated other comprehensive income -
    Net unrealized gain on securities available for sale, net of tax                                         89              111
--------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                                               47,118           40,395
--------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                                                             $661,721         $512,622
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       2
<PAGE>

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

<TABLE>
                                                                                            Quarter Ended         Nine-Months Ended
                                                                                            September 30,            September 30,
                                                                                         -------------------------------------------
($ in thousands, except per share data)                                                   2002         2001        2002        2001
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>         <C>         <C>         <C>
INTEREST AND DIVIDEND INCOME
Loans receivable                                                                         $10,254     $ 8,050     $29,046     $21,637
Securities                                                                                 1,064         463       2,889       2,643
Other interest-earning assets                                                                 78         437         180       1,758
------------------------------------------------------------------------------------------------------------------------------------
Total interest and dividend income                                                        11,396       8,950      32,115      26,038
------------------------------------------------------------------------------------------------------------------------------------

INTEREST EXPENSE
Deposits                                                                                   4,603       4,193      12,872      12,968
Subordinated debentures                                                                    1,874       1,821       5,451       5,722
Junior debentures - capital securities                                                       375           -       1,123           -
Note payable                                                                                   5           -          12           -
Federal funds purchased                                                                        -           -           2           -
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Total interest expense                                                                     6,857       6,014      19,460      18,690
------------------------------------------------------------------------------------------------------------------------------------

Net interest and dividend income                                                           4,539       2,936      12,655       7,348
Provision for loan loss reserves                                                             192         264         964         364
------------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income after
      provision for loan loss reserves                                                     4,347       2,672      11,691       6,984
------------------------------------------------------------------------------------------------------------------------------------

NONINTEREST INCOME
Customer service fees                                                                         40          37         123         110
Income from mortgage lending activities                                                      690         198       1,259         915
All other                                                                                      6           2           6           6
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Total noninterest income                                                                     736         237       1,388       1,031
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NONINTEREST EXPENSES
Salaries and employee benefits                                                               714         611       2,252       1,823
Occupancy and equipment, net                                                                 358         277         995         859
Data processing                                                                              150         109         416         204
Advertising and promotion                                                                     19           6          53          20
Professional fees and services                                                                85          72         250         269
Stationery, printing and supplies                                                             34          32         105         100
Postage and delivery                                                                          24          29          70          72
FDIC and general insurance                                                                    48          46         132         131
All other                                                                                    162         131         463         488
------------------------------------------------------------------------------------------------------------------------------------
Total noninterest expenses                                                                 1,594       1,313       4,736       3,966
------------------------------------------------------------------------------------------------------------------------------------
Earnings before taxes                                                                      3,489       1,596       8,343       4,049
Provision for income taxes                                                                 1,385         667       3,347       1,661
------------------------------------------------------------------------------------------------------------------------------------
Net earnings                                                                             $ 2,104     $   929     $ 4,996     $ 2,388
------------------------------------------------------------------------------------------------------------------------------------

Basic earnings per share                                                                 $  0.52     $  0.24     $  1.26     $  0.61
Diluted earnings per share                                                               $  0.41     $  0.24     $  1.01     $  0.61
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>



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





<TABLE>
                                                                                                   Quarter            Nine-Months
                                                                                                    Ended                Ended
                                                                                                September 30,        September 30,
                                                                                              -----------------   ------------------
($ in thousands)                                                                                2002      2001       2002      2001
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>       <C>       <C>        <C>
Net earnings                                                                                  $ 2,104   $   929   $ 4,996    $ 2,388
------------------------------------------------------------------------------------------------------------------------------------
Net unrealized gains (losses) on securities available for sale                                      8        94       (38)       644
Provision for income taxes related to unrealized gains (losses)
   on securities available for sale                                                                 4        46       (16)       253
------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss), net of tax                                                       4        48       (22)       391
------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income, net of tax                                                        $ 2,108   $   977   $ 4,974    $ 2,779
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to condensed consolidated financial statements.








                                       4
<PAGE>




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

<TABLE>
                                                                                                               Nine-Months Ended
                                                                                                                 September 30,
                                                                                                           -------------------------
($ in thousands)                                                                                             2002            2001
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                        <C>             <C>
CLASS A COMMON STOCK
Balance at beginning of period                                                                             $  3,545        $  3,545
Issuance of 219,450 shares upon the exercise of warrants in 2002                                                219               -
------------------------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                                      3,764           3,545
------------------------------------------------------------------------------------------------------------------------------------

CLASS B COMMON STOCK
------------------------------------------------------------------------------------------------------------------------------------
Balance at beginning and end of period                                                                          355             355
------------------------------------------------------------------------------------------------------------------------------------

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of period                                                                               19,001          18,975
Compensation related to vesting of certain Class B stock warrants                                                19              20
Compensation related to certain Class A stock warrants modified                                                  74               -
Issuance of 219,450 shares upon the exercise of Class A stock warrants
     and related tax benefit in 2002                                                                          1,437               -
------------------------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                                     20,531          18,995
------------------------------------------------------------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of period                                                                               17,383          13,605
Net earnings for the period                                                                                   4,996           2,388
------------------------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                                     22,379          15,993
------------------------------------------------------------------------------------------------------------------------------------

ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance at beginning of period                                                                                  111            (252)
Net change in accumulated other comprehensive income, net                                                       (22)            391
------------------------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                                         89             139
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity at end of period                                                                $ 47,118        $ 39,027
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to condensed consolidated financial statements.



                                       5
<PAGE>


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

<TABLE>
                                                                                                               Nine-Months Ended
                                                                                                                 September 30,
                                                                                                         ---------------------------
($ in thousands)                                                                                            2002             2001
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                                      <C>              <C>
OPERATING ACTIVITIES
Net earnings                                                                                             $   4,996        $   2,388
Adjustments to reconcile net earnings to net cash provided by
      operating activities:
Depreciation and amortization                                                                                  473              353
Provision for loan loss reserves                                                                               964              364
Deferred income tax benefit                                                                                   (433)            (210)
Amortization of deferred debenture offering costs                                                              677              545
Compensation expense related to common stock warrants                                                           93               20
Amortization of premiums, fees and discounts, net                                                             (534)          (1,777)
Net increase in accrued interest payable on debentures                                                       1,903            1,947
Net decrease in official checks outstanding                                                                   (825)            (670)
Net (increase) decrease in all other assets and liabilities                                                   (976)           2,544
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                                                    6,338            5,504
------------------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Purchases of interest-earning time deposits with banks                                                           -             (350)
Maturities of interest-earning time deposits with banks                                                        250                -
Maturities and calls of securities available for sale                                                          500           66,789
Maturities and calls of securities held to maturity                                                         69,285           31,284
Purchases of securities held to maturity                                                                  (117,905)         (80,975)
Net increase in loans receivable                                                                           (85,691)         (85,229)
Purchases of Federal Reserve Bank stock, net                                                                  (450)             (49)
Purchases of premises and equipment, net                                                                      (352)            (619)
------------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                                                     (134,363)         (69,149)
------------------------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Net increase in demand, savings, NOW and money market deposits                                              54,812           25,310
Net increase in certificates of deposit                                                                     69,374           16,174
Net increase in mortgage escrow funds payable                                                                5,431            3,747
Principal repayments of debentures                                                                          (2,500)          (1,400)
Principal repayments of note payable                                                                            (6)               -
Proceeds from issuance of debentures, net of issuance costs                                                 12,490            9,932
Proceeds from issuance of common stock                                                                       1,656                -
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                                                  141,257           53,763
------------------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                                                        13,232           (9,882)
Cash and cash equivalents at beginning of period                                                            24,409           42,938
------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                                               $  37,641        $  33,056
------------------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
   Interest                                                                                              $  16,844        $  16,263
   Income taxes                                                                                              3,955            1,896
Noncash activities:
   Transfer of loans to foreclosed real estate, net of chargeoffs                                            1,081                -
   Purchase of premises with note payable                                                                      275                -
   Accumulated other comprehensive income,
      change in unrealized gain on securities available for sale, net of tax                                   (22)             391
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

   See accompanying notes to condensed consolidated financial statements.


                                       6
<PAGE>

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

Note 1 - General

The  condensed   consolidated   financial  statements  of  Intervest  Bancshares
Corporation and Subsidiaries in this report have not been audited except for the
information derived from the audited  Consolidated  Balance Sheet as of December
31, 2001. The financial  statements in this report should be read in conjunction
with the consolidated financial statements and related notes thereto included in
the  Company's  Annual  Report to  Stockholders  on Form 10-K for the year ended
December 31, 2001.

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

Intervest National Bank has its headquarters and full-service  banking office in
Rockefeller  Center in New York City, and a total of five  full-service  banking
offices  in  Clearwater  and  Pinellas  County,  Florida.  The Bank  conducts  a
full-service commercial banking business,  which consists of attracting deposits
from the general public and investing  those funds,  together with other sources
of funds,  primarily  through the origination of commercial and multifamily real
estate loans, and through the purchase of security investments.

Intervest  Mortgage  Corporation  and its wholly owned  subsidiaries,  Intervest
Distribution Corporation and Intervest Realty Servicing Corporation, are located
in  Rockefeller  Center in New York  City.  Intervest  Mortgage  Corporation  is
engaged in the real estate  business,  including the origination and purchase of
real estate  mortgage loans,  consisting of first mortgage,  junior mortgage and
wraparound mortgage loans.

Intervest  Statutory Trust I was formed in December 2001 for the sole purpose of
issuing  $15,000,000 of capital  securities as more fully described in note 9 to
the  consolidated  financial  statements  in  the  Company's  Annual  Report  to
Stockholders on Form 10-K for the year ended December 31, 2001.

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

Note 2 - Allowance for Loan Loss Reserves

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

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

<TABLE>
                                                                              Quarter Ended                    Nine-Months Ended
                                                                               September 30,                      September 30,
                                                                           ---------------------            ------------------------
($ in thousands)                                                             2002          2001               2002           2001

------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>            <C>               <C>             <C>
Balance at beginning of period                                             $4,109         $2,868            $3,380          $2,768
Provision charged to operations                                               192            264               964             364
Recoveries of previous chargeoffs (1)                                           -              -               107               -
Chargeoffs (2)                                                                  -              -              (150)              -
------------------------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                   $4,301         $3,132            $4,301          $3,132
------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Represents  proceeds  received from the sale of collateral from a loan that
     was charged off prior to 1997.
(2)  Represents a chargeoff in connection  with the transfer of a  nonperforming
     loan to foreclosed real estate.
</FN>
</TABLE>


                                       7
<PAGE>


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

Note 2 - Allowance for Loan Loss Reserves, Continued

In the second quarter of 2002, the property  collateralizing  a commercial  real
estate loan with a principal balance of $1,243,000 that was on nonaccrual status
and considered  impaired under the criteria of SFAS No.114 at March 31, 2002 and
December  31,  2001,  was  acquired  through   foreclosure  and  transferred  to
Foreclosed  Real Estate at estimated fair value less estimated  selling costs. A
loan charge off of $150,000 was  recorded  against the  allowance  for loan loss
reserves in connection with this transfer.  At September 30, 2002, there were no
nonaccrual or impaired loans. At December 31, 2001, the  aforementioned  loan of
$1,243,000 was on nonaccrual  status and considered  impaired.  Interest  income
that  was not  accrued  on this  loan  under  its  contractual  terms  prior  to
foreclosure amounted to $31,000.

Note 3 - Earnings Per Share (EPS)

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

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

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

<TABLE>
                                                                                         Quarter Ended           Nine-Months Ended
                                                                                         September 30,              September 30,
                                                                                   -------------------------------------------------
                                                                                      2002          2001         2002         2001
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>          <C>          <C>          <C>
BASIC EARNINGS PER SHARE
Net earnings                                                                       $2,104,000   $  929,000   $4,996,000   $2,388,000
Average number of common shares outstanding                                         4,067,433    3,899,629    3,976,700    3,899,629
------------------------------------------------------------------------------------------------------------------------------------
  Basic net earnings per share                                                     $     0.52   $     0.24   $     1.26   $     0.61
------------------------------------------------------------------------------------------------------------------------------------

DILUTED EARNINGS PER SHARE
Adjusted net earnings for diluted earnings per share computation (1)               $2,214,000   $  929,000   $5,319,000   $2,388,000
Average number of common shares outstanding for dilution:
  Common shares outstanding per above                                               4,067,443    3,899,629    3,976,700    3,899,629
  Potential dilutive shares resulting from exercise of warrants (2)                   426,366       45,868      338,722            -
  Potential  dilutive  shares  resulting from conversion of debentures (3)            971,552            -      971,552            -
                                                                                   -------------------------------------------------
  Total average number of common shares outstanding                                 5,465,361    3,945,497    5,286,974    3,899,629
------------------------------------------------------------------------------------------------------------------------------------
  Diluted net earnings per share                                                   $     0.41   $     0.24   $     1.01   $     0.61
------------------------------------------------------------------------------------------------------------------------------------

<FN>
(1)  Adjusted net earnings  represents  net earnings  plus  interest  expense on
     dilutive convertible  debentures,  net of tax, that would not occur if they
     were assumed converted.

(2)  Common  stock  warrants to  purchase  1,134,000  shares of common  stock at
     prices ranging from $10.00 to $16.00 per share and common stock warrants to
     purchase  2,650,000  shares of common stock at prices ranging from $6.67 to
     $16.00 per share were not  considered in the 2001  quarterly and nine-month
     computations of diluted EPS, respectively, because their exercise price per
     share  exceeded  the average  market  price of Class A common  stock during
     those periods.

(3)  Convertible  debentures  outstanding in 2001 totaling $8,985,000 (principal
     and accrued  interest)  were  convertible  into common  stock at a price of
     $14.00 per share,  but were not considered in both  computations of diluted
     EPS for 2001 because  they were not  dilutive.  For the 2002  computations,
     convertible  debentures  outstanding  totaling  $9,725,000  (principal  and
     accrued  interest) were  convertible into common stock at a price of $10.01
     per share and were considered dilutive, which resulted in additional common
     shares.
</FN>
</TABLE>



                                       8
<PAGE>




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

Note 4 - Regulatory Capital

The  Bank  is  required  to  maintain   certain   minimum   regulatory   capital
requirements.  The Bank is a  well-capitalized  institution  as  defined  in the
regulations,  which  require  minimum  Tier 1  leverage  and  Tier  1 and  total
risk-based  ratios of 5%, 6% and 10%,  respectively.  Management  believes  that
there are no current  conditions  or events  outstanding  which would change the
Bank's designation as a well-capitalized institution.

The  following  is a summary at  September  30, 2002 of the  minimum  regulatory
capital requirements and the actual capital of the Bank on a percentage basis:

<TABLE>
                                                                       Actual              Minimum               To Be Considered
                                                                       Ratios            Requirement             Well Capitalized
                                                                       ------            -----------             ----------------

<S>                                                                    <C>                  <C>                        <C>
         Total capital to risk-weighted assets                         12.54%               8.00%                      10.00%
         Tier 1 capital to risk-weighted assets                        11.55%               4.00%                       6.00%
         Tier 1 capital to total average assets - leverage ratio        8.96%               4.00%                       5.00%

</TABLE>














                                       9
<PAGE>


                Intervest Bancshares Corporation and Subsidiaries

               Review by Independent Certified Public Accountants

     Hacker,  Johnson & Smith,  P.A., P.C. the Company's  independent  certified
public  accountants,  have made a limited  review  of the  financial  data as of
September 30, 2002,  and for the three- and nine-month  periods ended  September
30, 2002 and 2001  presented in this  document,  in  accordance  with  standards
established by the American Institute of Certified Public Accountants.

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




















                                       10
<PAGE>



          Report on Review by Independent Certified Public Accountants



The 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,  2002,  and the  related  condensed  consolidated  statements  of
earnings and  comprehensive  income for the three- and nine-month  periods ended
September 30, 2002 and 2001, and the related condensed  consolidated  statements
of changes in  stockholders'  equity and cash flows for the  nine-month  periods
ended  September  30, 2002 and 2001  included in this  report.  These  financial
statements are the responsibility of the Company's management.

     We were furnished with the report of other  accountants on their reviews of
the interim financial  information of Intervest Mortgage  Corporation  (formerly
known as Intervest  Corporation of New York), whose total assets as of September
30, 2002  constituted  14.3% 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  11.7%, 26.5% and 24.7%; and 14.2%,
25.2% and 25.5%, respectively, and whose net interest income, noninterest income
and net earnings for the three- and nine-month periods ended September 30, 2001,
constituted 13.2%,  16.9% and 14.4%; and 9.1%, 41.7% and 10.9%,  respectively of
the related consolidated totals.

     We conducted our reviews in accordance  with  standards  established by the
American  Institute  of  Certified  Public  Accountants.  A  review  of  interim
financial  information consists principally of applying analytical procedures to
financial  data and making  inquiries of persons  responsible  for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing  standards  generally  accepted in the United States of
America,  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 report of other accountants,  we are not aware
of any material  modifications that should be made to the condensed consolidated
financial  statements  referred  to  above  for  them to be in  conformity  with
accounting principles generally accepted in the United States of America.

     We have previously audited, in accordance with auditing standards generally
accepted in the United States of America,  the consolidated  balance sheet as of
December  31,  2001,  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  January 21,
2002,  we  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, 2001 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 4, 2002



                                       11
<PAGE>





          Report on Review by Independent Certified Public Accountants



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

     We have  reviewed the  condensed  consolidated  balance  sheet of Intervest
Mortgage Corporation (formerly known as "Intervest  Corporation of New York" and
subsidiaries (the "Company") as of September 30, 2002, and the related condensed
consolidated  statements of  operations  for the three- and  nine-month  periods
ended  September  30,  2002 and 2001,  and the  related  condensed  consolidated
statements of changes in stockholder's  equity and cash flows for the nine-month
periods  ended  September  30,  2002 and 2001  (all of which  are not  presented
separately  herein).  These financial  statements are the  responsibility of the
Company's management.

     We conducted our review in accordance  with  standards  established  by the
American  Institute  of  Certified  Public  Accountants.  A  review  of  interim
financial  information consists principally of applying analytical procedures to
financial  data and making  inquiries of persons  responsible  for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing  standards  generally  accepted in the United States of
America,  the objective of which is the  expression of an opinion  regarding the
financial  statements taken as a whole.  Accordingly,  we do not express such an
opinion.

     Based on our review,  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 accounting principles generally accepted
in the United States of America.

     We previously  audited,  in accordance  with auditing  standards  generally
accepted in the United States of America,  the consolidated  balance sheet as of
December 31, 2001 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 January 21, 2002, we 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, 2001 is fairly stated in all material respects in relation to
the consolidated balance sheet from which it has been derived.



/s/ Eisner, LLP
---------------
ESINER,LLP
New York, New York
October 23, 2002




                                       12
<PAGE>





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

                                     General
                                     -------

Intervest Bancshares Corporation has three wholly owned subsidiaries - Intervest
National  Bank,  Intervest  Mortgage  Corporation  (formerly  known as Intervest
Corporation of New York) and Intervest  Statutory Trust I (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.

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 sells debentures to raise funds for working capital purposes.

The Bank is a nationally  chartered,  full-service  commercial bank that has its
headquarters and full-service  banking office in Rockefeller Center, in New York
City,  and a total  of five  full-service  banking  offices  in  Clearwater  and
Pinellas  County,  Florida.  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 a variety of 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  located in
Rockefeller  Center in New York City. It is engaged in the real estate business,
including the origination and purchase of real estate mortgage loans, consisting
of first  mortgage,  junior mortgage and wraparound  mortgage loans.  Its wholly
owned  subsidiaries,  Intervest  Distribution  Corporation and Intervest  Realty
Servicing  Corporation  are  nonoperating  entities that provide  administrative
services to Intervest Mortgage Corporation.

Intervest  Statutory  Trust I was formed in December 2001 in connection with the
issuance of $15,000,000 of capital securities. For a further discussion, See the
section entitled "Debentures Payable and Accrued Interest Payable on Debentures"
on page 30 of the Company's  Annual Report to  Stockholders on Form 10-K for the
year ended December 31, 2001.

The Company has previously  announced that it intends to explore  further growth
through the acquisition of other banks or thrifts. It will consider  acquisition
of  banks/thrifts  with operations  compatible with its own, with a view towards
consolidating  selected lines of business,  operations and support  functions in
order  to  achieve  economies  of  scale,  greater  efficiency  and  operational
consistency.  The  Company  anticipates  that  any such  banks/thrifts  would be
located in the eastern United  States.  The Company  emphasizes  that it has not
entered into any agreements or identified any  institutions  for acquisition and
there  can be no  assurances  that any such  acquisitions  will be  successfully
completed.

The Company's  profitability  depends primarily on 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,  the provision  for loan loss  reserves,  and its effective
income tax rate. Noninterest income consists primarily of loan and other banking
fees.  Noninterest expense consists of compensation and benefits,  occupancy and
equipment  related  expenses,  data processing  expenses,  advertising  expense,
deposit  insurance  premiums  and  other  operating   expenses.   The  Company's
profitability is also significantly affected by general economic and competitive
conditions, changes in market interest rates, government policies and actions of
regulatory authorities.  Since the properties underlying the Company's mortgages
are  concentrated  in the New York  City  area and the  State  of  Florida,  the
economic  conditions  in those  areas can also  have an impact on the  Company's
operations.  While  none  of the  properties  underlying  these  mortgages  were
directly  impacted by the  terrorist act of September 11, 2001, it is impossible
to predict the impact such events will have on real estate generally in the City
of New York.



                                       13
<PAGE>

  Comparison of Financial Condition at September 30, 2002 and December 31, 2001
  -----------------------------------------------------------------------------

Overview
--------

Total assets at September 30, 2002 increased to $661,721,000,  from $512,622,000
at December 31, 2001.  Total  liabilities  at  September  30, 2002  increased to
$614,603,000,  from  $472,227,000  at December  31, 2001.  Stockholders'  equity
increased to  $47,118,000  at September 30, 2002,  from  $40,395,000 at year-end
2001.  Book value per common  share  rose to $11.44 per share at  September  30,
2002, from $10.36 at December 31, 2001.

Selected balance sheet information as of September 30, 2002 follows:

<TABLE>
                                                                       Intervest    Intervest    Intervest      Inter-
                                                            Holding     National     Mortgage    Statutory     Company
($ in thousands)                                            Company         Bank  Corporation      Trust I    Balances  Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>          <C>          <C>              <C>     <C>          <C>
Cash and cash equivalents                                 $   4,848    $  13,610    $  24,978        $   -   $  (5,795)   $  37,641
Securities available for sale                                     -        5,654            -            -           -        5,654
Securities held to maturity, net                                  -      146,400            -       15,464     (15,464)     146,400
Federal Reserve Bank stock                                        -        1,104            -            -           -        1,104
Loans receivable, net of deferred fees                        8,403      378,594       67,394            -           -      454,391
Allowance for loan loss reserves                                (42)      (4,175)         (84)           -           -       (4,301)
Investment in subsidiaries                                   61,847            -            -            -     (61,847)           -
Foreclosed real estate                                            -        1,081            -            -           -        1,081
All other assets                                              1,482       14,435        4,087          441        (694)      19,751
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                              $  76,538    $ 556,703    $  96,375    $  15,905   $ (83,800)   $ 661,721
------------------------------------------------------------------------------------------------------------------------------------
Deposits                                                      $   -    $ 492,726        $   -        $   -   $  (6,103)   $ 486,623
Subordinated debentures payable                              25,894            -       74,000            -     (15,464)      84,430
Junior debentures payable-capital securities                      -            -            -       15,000           -       15,000
Note payable                                                      -          269            -            -           -          269
Accrued interest payable on all debentures                    3,311            -       10,085          428        (441)      13,383
All other liabilities                                           215       13,445        1,170           13          55       14,898
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                            29,420      506,440       85,255       15,441     (21,953)     614,603
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                         47,118       50,263       11,120          464     (61,847)      47,118
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                $  76,538    $ 556,703    $  96,375    $  15,905   $ (83,800)   $ 661,721
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

A comparison  of the  consolidated  balance  sheets as of September 30, 2002 and
December 31, 2001 follows:


<TABLE>
                                                                    At September 30, 2002              At December 31, 2001
                                                                    Carrying      % of                Carrying        % of
($ in thousands)                                                     Value     Total Assets            Value      Total Assets
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>              <C>              <C>              <C>
Cash and cash equivalents                                           $37,641          5.7%             $24,409          4.8%
Time deposits with banks                                                  -            -                  250          0.1
Securities available for sale at estimated fair value                 5,654          0.9                6,192          1.2
Securities held to maturity, net                                    146,400         22.1               99,157         19.3
Federal Reserve Bank stock                                            1,104          0.2                  654          0.1
Loans receivable, net of deferred fees and loan loss reserves       450,090         68.0              365,146         71.2
Foreclosed real estate                                                1,081          0.1                    -            -
All other assets                                                     19,751          3.0               16,814          3.3
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                                       $661,721        100.0%            $512,622        100.0%
------------------------------------------------------------------------------------------------------------------------------------
Deposits                                                           $486,623         73.5%            $362,437         70.7%
Subordinated debentures payable                                      84,430         12.8               73,430         14.3
Junior debentures payable-capital securities                         15,000          2.3               15,000          2.9
Note payable                                                            269          0.1                    -            -
Accrued interest payable on all debentures                           13,383          2.0               11,480          2.3
All other liabilities                                                14,898          2.2                9,880          1.9
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                                   614,603         92.9              472,227         92.1
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                                 47,118          7.1               40,395          7.9
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                         $661,721        100.0%            $512,622        100.0%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       14
<PAGE>

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

Cash and cash  equivalents  amounted  to  $37,641,000  at  September  30,  2002,
compared to  $24,409,000 at December 31, 2001, and consisted of cash on hand and
due  from  banks,  overnight  federal  funds  and  short-term  commercial  paper
investments.  The level of cash and cash equivalents fluctuates based on various
factors,  including  liquidity needs,  loan  prepayments,  loan demand,  deposit
flows,  calls of  securities,  repayments  of  borrowed  funds  and  alternative
investment opportunities.

Securities Available for Sale
-----------------------------

Securities  available  for sale  amounted to  $5,654,000  at September 30, 2002,
compared to $6,192,000 at December 31, 2001. The decrease was due to maturities.
At September 30, 2002,  the portfolio  had an  unrealized  gain,  net of tax, of
$89,000,  compared to $111,000 at December 31, 2001. Unrealized gains and losses
on securities available for sale, net of related income taxes, are reported as a
separate component of comprehensive income and included in stockholders' equity.

Securities Held to Maturity, Net
--------------------------------

Securities  held to maturity  increased to  $146,400,000  at September 30, 2002,
from  $99,157,000  at December 31, 2001.  The increase was due to new  purchases
exceeding  maturities  and calls during the period.  The  portfolio  consists of
short-term   debt   obligations   of  FNMA,   FHLB,   FHLMC   and  FFCB  with  a
weighted-average yield of approximately 2.61% and a weighted-average term of 1.5
years. The securities are predominately  fixed rate and some have call features,
which allow the issuer to call the security before its stated  maturity  without
penalty.

Federal Reserve Bank Stock
--------------------------

In order for the Bank to be a member of the Federal Reserve Banking System,  the
Bank  maintains an investment in the capital stock of the Federal  Reserve Bank,
which pays a dividend that is currently 6%. The  investment,  which  amounted to
$1,104,000 at September  30, 2002 and $654,000 at December 31, 2001,  fluctuates
based on the Bank's capital level.

Loans Receivable, Net of Deferred Fees and Allowance for Loan Loss Reserves
---------------------------------------------------------------------------

Loans receivable, net of deferred fees and the allowance for loan loss reserves,
increased to $450,090,000  at September 30, 2002, from  $365,146,000 at December
31, 2001. The growth  reflected new  originations  of commercial real estate and
multifamily mortgage loans, partially offset by principal repayments. Commercial
real estate and multifamily real estate properties  collateralized almost all of
the loans in the Company's loan portfolio.

At  September  30,  2002,  the  allowance  for loan loss  reserves  amounted  to
$4,301,000,   compared  to  $3,380,000  at  December  31,  2001.  The  allowance
represented 0.95% of total loans (net of deferred fees) outstanding at September
30, 2002,  compared to 0.92% at December 31, 2001. The Company monitors its loan
portfolio to determine  the  appropriate  level of the  allowance  for loan loss
reserves based on various factors.  These factors include: the type and level of
loans outstanding; volume of loan originations;  overall portfolio quality; loan
concentrations;  specific problem loans,  historical  chargeoffs and recoveries;
adverse  situations  which may  affect  the  borrowers'  ability  to repay;  and
management's  assessment of the current and anticipated  economic  conditions in
the  Company's  lending  regions.  The  increase in the  allowance  was due to a
provision  for loan  losses of  $964,000  (due to loan  growth)  and a  $107,000
recovery from the sale of  collateral  from a loan that was charged off prior to
1997. These additions were partially offset by a $150,000 charge off recorded in
connection with a nonperforming loan as discussed below.

In the second quarter of 2002, the property  collateralizing  a commercial  real
estate loan with a principal balance of $1,243,000 that was on nonaccrual status
and considered  impaired under the criteria of SFAS No.114 at March 31, 2002 and
December  31,  2001,  was  acquired  through   foreclosure  and  transferred  to
Foreclosed  Real Estate at estimated fair value less estimated  selling costs. A
loan charge off of $150,000 was  recorded  against the  allowance  for loan loss
reserves in connection with this transfer.  At September 30, 2002, there were no
nonaccrual or impaired loans. At December 31, 2001, the  aforementioned  loan of
$1,243,000 was the only loan on nonaccrual status and considered impaired.



                                       15
<PAGE>


Foreclosed Real Estate
----------------------

At  September  30,  2002,  foreclosed  real estate  amounted to  $1,081,000  and
represented one commercial real estate property  located in the State of Florida
that was  acquired by the Bank as  discussed  in the  preceding  paragraph.  The
property is actively being marketed for sale.  Foreclosed real estate is carried
at the  lower of the new cost  basis or  estimated  fair  value  less  estimated
selling costs. Revenue and expenses from operations and changes in the valuation
allowance  of the  property  are  included  in  the  consolidated  statement  of
earnings.

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

The following  table sets forth the composition of all other assets in the table
on page 14:

                                              At September 30,   At December 31,
  ($ in thousands)                                  2002              2001
  ------------------------------------------------------------------------------
  Accrued interest receivable                      $4,557            $3,202
  Loans fee receivable                              3,327             2,679
  Premises and equipment, net                       6,196             6,042
  Deferred income tax asset                         1,685             1,236
  Deferred debenture offering costs, net            3,729             3,396
  All other                                           257               259
  ------------------------------------------------------------------------------
                                                  $19,751           $16,814
  ------------------------------------------------------------------------------

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 a higher level of the aforementioned
interest-earning assets.

Loan fees receivable are fees due to the Company in accordance with the terms of
mortgage  loans.  These fees 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. The increase
was due to an  increase  in  mortgage  loan  originations,  partially  offset by
payments received.

Premises and equipment  increased due to the purchase of property,  at a cost of
$350,000,  by the Bank that is across  from its Court  Street  branch  office in
Florida. This property was purchased primarily to provide additional parking for
the  branch.  This  increase  was  largely  offset  by normal  amortization  and
depreciation.

The deferred income tax asset relates primarily to the unrealized tax benefit on
the Company's allowance for loan loss reserves, depreciation, and organizational
start-up  costs.  These  charges  have been  expensed  for  financial  statement
purposes,  but are not all currently  deductible  for income tax  purposes.  The
ultimate  realization of the deferred tax asset is dependent upon the generation
of sufficient  taxable  income by the Company  during the periods in which these
temporary  differences become deductible for tax purposes.  Management  believes
that it is more likely than not that the  Company's  deferred  tax asset will be
realized and accordingly,  a valuation  allowance for deferred tax assets is not
maintained.

Deferred debenture offering costs consist primarily of underwriters' commissions
and are  amortized  over the terms of the  debentures.  The  increase was due to
additional  costs  ($1,010,000)  incurred  with  the sale of new  debentures  by
Intervest Mortgage Corporation, partially offset by normal amortization.

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

Deposit  liabilities  increased  to  $486,623,000  at September  30, 2002,  from
$362,437,000  at December  31,  2001,  primarily  reflecting  increases in money
market and  certificate  of deposit  accounts of  $51,750,000  and  $69,374,000,
respectively.  At September 30, 2002,  certificate of deposit  accounts  totaled
$310,839,000  and  demand  deposit,  savings,  NOW  and  money  market  accounts
aggregated  $175,784,000.  The  same  categories  of  deposit  accounts  totaled
$241,465,000 and $120,972,000,  respectively,  at December 31, 2001. Certificate
of deposit  accounts  represented  64% of total  deposits at September 30, 2002,
compared to 67% at year-end 2001.

Debentures Payable and Related Accrued Interest Payable
-------------------------------------------------------

At September 30, 2002,  debentures payable amounted to $84,430,000,  compared to
$73,430,000  at year-end  2001.  The increase was due to the sale of  additional
debentures  by  Intervest  Mortgage  Corporation  (Series  1/17/02  and  8/05/02
totaling  $13,500,000 in principal  amount and maturing at various times through
January  1,  2010)  as  part  of  its  normal   funding  of  its  mortgage  loan
originations,  partially  offset by the  repayment of  $2,500,000  of its Series
06/28/99 debentures. The sale of the debentures, after underwriter's commissions
and other issuance costs, resulted in net proceeds of $12,490,000.  At September


                                       16
<PAGE>

30, 2002,  Intervest  Mortgage  Corporation had $74,000,000  principal amount of
debentures payable outstanding and the Holding Company had $10,430,000 principal
amount of debentures payable  outstanding,  of which $6,930,000 were convertible
into the Holding Company's Class A common stock at a current conversion price of
$10.01 per share.

At September 30, 2002 and December 31, 2001,  the Holding  Company,  through its
wholly  owned  subsidiary  Intervest  Statutory  Trust  I, has  Trust  Preferred
Securities (Junior Debentures  Payable)  outstanding  totaling  $15,000,000 that
qualify as regulatory capital.

At September 30, 2002,  accrued interest  payable on all debentures  amounted to
$13,383,000, compared to $11,480,000 at year-end 2001. Nearly all of the accrued
interest payable is due and payable at the maturity of various debentures. For a
further  discussion  of all the  debentures,  including  conversion  prices  and
redemption premiums,  see notes 7 and 9 to the consolidated financial statements
included in the  Company's  Annual Report to  Stockholders  on Form 10-K for the
year ended December 31, 2001.

Note Payable
------------

In connection  with the purchase of property by the Bank that is across from its
Court Street branch office in Florida as described previously, the Bank issued a
note  payable to the seller for  $275,000.  The note matures in February of 2017
and calls for monthly payments of principal and interest at 7% per annum.

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

The following table shows the composition of all other  liabilities in the table
on page 14:

                                             At September 30,    At December 31,
   ($ in thousands)                               2002                  2001
   -----------------------------------------------------------------------------
   Mortgage escrow funds payable                 $9,684               $4,253
   Official checks outstanding                    2,394                3,219
   Accrued interest payable on deposits             853                  817
   Income taxes payable                             464                  772
   All other                                      1,503                  819
   -----------------------------------------------------------------------------
                                                $14,898               $9,880
   -----------------------------------------------------------------------------

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

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

Stockholders'  equity  increased  to  $47,118,000  at September  30, 2002,  from
$40,395,000  at December 31, 2001.  The increase was due to the  following:  net
earnings of  $4,996,000;  the issuance of 219,450 shares of Class A common stock
upon the exercise of common stock warrants for total proceeds, including related
tax benefits,  of $1,656,000;  and the recording of $93,000 of net  compensation
expense  related to stock  warrants held by employees and  directors;  partially
offset by a $22,000  decrease in  unrealized  gains,  net of tax, on  securities
available for sale. For additional  discussion of employee stock  warrants,  see
the  section  "Comparison  of  Results  of  Operations  for the  Quarters  Ended
September  30,  2002 and 2001." The Bank is a  well-capitalized  institution  as
defined in applicable banking regulations, which require minimum Tier 1 leverage
and  Tier 1 and  total  risk-based  ratios  of 5%,  6%  and  10%,  respectively.
Management  believes that there are no current  conditions or events outstanding
which would change the Bank's designation as a well-capitalized institution. See
note 4 to the condensed consolidated financial statements in this report for the
Bank's capital ratios.

                         Liquidity and Capital Resources
                         -------------------------------

The Company manages its liquidity position on a daily basis to assure that funds
are  available to meet  operations,  loan and  investment  funding  commitments,
deposit  withdrawals and the repayment of borrowed funds. The Company's  primary
sources of funds consist of retail deposits  obtained through the Bank's offices
and through the mail,  satisfactions and repayments of loans, the maturities and
calls of securities,  and cash provided by operating activities. The Company may
also borrow funds  through the federal funds market or sale of  debentures.  For
information  about the cash flows from the  Company's  operating,  investing and
financing activities, see the condensed consolidated statements of cash flows in
this report.  At September  30, 2002,  the  Company's  total  commitment to lend


                                       17
<PAGE>

aggregated approximately  $62,500,000.  Based on its cash flow projections,  the
Company  believes that it can fund all of its outstanding  commitments  from the
aforementioned sources of funds.

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

Interest  rate risk  arises  from  differences  in the  repricing  of assets and
liabilities  within a given time period.  The primary objective of the Company's
asset/liability  management strategy is to limit, within established guidelines,
the adverse  impact of changes in interest  rates on the  Company's net interest
income  and  capital.  The  Company  uses "gap  analysis,"  which  measures  the
difference between interest-earning assets and interest-bearing liabilities that
mature or reprice  within a given time  period,  to monitor  its  interest  rate
sensitivity.  At  September  30,  2002,  the  Company's  one-year  interest-rate
sensitivity gap was a positive  $100,617,000 or 15.2% of total assets,  compared
to a positive  $31,738,000,  or 6.2%, at December 31, 2001.  The increase in the
gap was  primarily  due to an  increase  in  variable  rate  loans  funded by an
increase in certificate of deposits with a term of over one year.

In computing the gap, the Company treats its interest checking, money market and
savings deposit accounts as immediately  repricing.  Further,  the Company has a
"floor," or minimum rate, on many of its floating-rate  loans that is determined
in relation to prevailing  market rates on the date of  origination.  This floor
only adjusts upwards in the event of increases in the loan's interest rate. This
feature reduces the effect on interest income in a falling rate environment. For
a further  discussion of interest  rate risk and gap analysis,  including all of
the  assumptions  used in developing  the one-year  gap, see the Company's  2001
Annual Report to Stockholders on Form 10-K, pages 31and 32.

              Comparison of Results of Operations for the Quarters
              ----------------------------------------------------

                        Ended September 30, 2002 and 2001
                        ---------------------------------


Overview
--------

Consolidated  net  earnings  in the  third  quarter  of 2002  increased  126% to
$2,104,000, from $929,000, in the third quarter of 2001. Earnings per share on a
fully diluted basis  increased to $0.41 in the third quarter of 2002, from $0.24
in the third  quarter of 2001.  The earnings per share  computation  in the 2002
quarter  included a higher amount of common shares largely due to an increase in
dilutive common stock warrants and convertible  debentures outstanding resulting
from an increase in the Company's  average stock price.  Earnings growth was due
to an improved  net interest  margin and a higher level of income from  mortgage
loan prepayments. Net interest and dividend income increased by $1,603,000 while
noninterest  income  rose  by  $499,000  (of  which  $404,000  was  due to  loan
prepayments). These improvements were partially offset by a $718,000 increase in
the  provision  for  income  taxes due to higher  pre-tax  income and a $281,000
increase in noninterest  expenses,  a large portion of which was attributable to
the Company's growth in assets.

Selected  information  regarding  results of operations for the third quarter of
2002 follows:

<TABLE>
                                                                         Intervest      Intervest  Intervest    Inter-
                                                               Holding    National       Mortgage  Statutory   Company
($ in thousands)                                               Company        Bank    Corporation   Trust I   Balances  Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>         <C>         <C>        <C>        <C>         <C>
Interest and dividend income                                   $   250     $ 9,052     $ 2,114    $   381    $  (401)    $11,396
Interest expense                                                   677       4,627       1,584        370       (401)      6,857
                                                               ---------------------------------------------------------------------
Net interest and dividend income (expense)                        (427)      4,425         530         11          -       4,539
Provision  (credit) for loan loss reserves                          (8)        191           9          -          -         192
Noninterest income                                                  63         525         662          -       (514)        736
Noninterest expenses                                                65       1,694         338         11       (514)      1,594
                                                               ---------------------------------------------------------------------
Earnings (loss) before taxes                                      (421)      3,065         845          -          -       3,489
Provision (credit) for income taxes                               (198)      1,258         325          -          -       1,385
------------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss)                                            $  (223)    $ 1,807     $   520        $ -       $  -     $ 2,104
------------------------------------------------------------------------------------------------------------------------------------
Intercompany dividends received (paid) (1)                     $   375     $  (375)       $  -        $ -       $  -        $  -
------------------------------------------------------------------------------------------------------------------------------------

<FN>
(1)  The Bank pays a monthly  dividend of  $125,000  to the  Holding  Company in
     order   to   provide   funds   for  the   debt   service   on  the   Junior
     Debentures-Capital  Securities  (the proceeds of which were  contributed to
     the Bank as capital in December 2001).
</FN>
</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 $4,539,000 in the third quarter of 2002, from
$2,936,000 in the third quarter of 2001. The increase was attributable to growth
of $199,713,000 in the Company's average interest-earning assets and an increase
in the net interest  margin from 2.70% in the third quarter of 2001, to 2.85% in
the third  quarter  of 2002.  The growth in  average  earning  assets was due to
$123,247,000  in new  mortgage  loans and a net  increase in security  and other
short-term investments aggregating  $76,466,000.  These increases were funded by


                                       18
<PAGE>

$162,876,000  of new deposits,  $28,220,000  of additional  borrowed funds and a
$6,919,000 increase in stockholders' equity.

The increase in the margin was due to the Company's cost of funds  decreasing at
a faster pace than its yield  earned on  interest-earning  assets in a declining
interest rate environment.  The yield on  interest-earning  assets decreased 106
basis  points to 7.16% in the third  quarter  of 2002 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
143 basis points to 4.68% in the third  quarter of 2002  primarily  due to lower
rates paid on deposit accounts and rate decreases on  floating-rate  debentures.
The floating-rate  debentures are indexed to the JPMorgan Chase Bank prime rate,
which  decreased  by a total of 475 basis  points from January 2001 to September
2002.

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>
                                                                                        Quarter Ended
                                                       -----------------------------------------------------------------------------
                                                                 September 30, 2002                      September 30, 2001
                                                       -----------------------------------------------------------------------------
                                                        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                                               $460,792       $10,254      8.83%           $337,545      $8,050    9.46%
   Securities                                           152,944         1,064      2.76              44,129         463    4.16
   Other interest-earning assets                         17,992            78      1.72              50,341         437    3.44
------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                           631,728       $11,396      7.16%            432,015      $8,950    8.22%
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                               14,395                                      11,897
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                           $646,123                                    $443,912
------------------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   Interest checking deposits                          $  9,404       $    53      2.24%           $  8,036      $   62    3.06%
   Savings deposits                                      30,719           193      2.49              20,292         206    4.03
   Money market deposits                                131,775           826      2.49              67,070         682    4.03
   Certificates of deposit                              303,196         3,531      4.62             216,820       3,243    5.93
------------------------------------------------------------------------------------------------------------------------------------
Total deposit accounts                                  475,094         4,603      3.84             312,218       4,193    5.33

------------------------------------------------------------------------------------------------------------------------------------
   Debentures and related interest payable               91,321         1,874      8.14              78,372       1,821    9.22
   Junior debentures - capital securities                15,000           375      9.92                   -           -       -
   Note payable                                             271             5      7.00                   -           -       -
------------------------------------------------------------------------------------------------------------------------------------
Total borrowed funds                                    106,592         2,254      8.39              78,372       1,821    9.22
------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                      581,686       $ 6,857      4.68%            390,590      $6,014    6.11%
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                              4,424                                       5,134
Noninterest-bearing liabilities                          14,691                                       9,785
Stockholders' equity                                     45,322                                      38,403
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity             $646,123                                    $443,912
------------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                               $ 4,539      2.48%                         $2,936    2.11%
------------------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                     $ 50,042                    2.85%           $ 41,425                2.70%
------------------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                   1.09                                        1.11x
------------------------------------------------------------------------------------------------------------------------------------
Other Ratios:
  Return on average assets (1)                             1.30%                                       0.84%
  Return on average equity  (1)                           18.57%                                       9.68%
  Noninterest expense to average assets (1)                0.99%                                       1.18%
  Efficiency ratio (2)                                    30.22%                                      41.38%
  Average stockholders' equity to average assets           7.01%                                       8.65%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Annualized
(2)  Defined as  noninterest  expenses as a percentage  of net  interest  income
     before the provision for loan losses plus noninterest income.
</FN>
</TABLE>




                                       19
<PAGE>

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

In the third quarter of 2002,  the Company  recorded a provision for loan losses
of $192,000  compared to $264,000 in the same quarter of 2001.  The provision is
based on  management's  ongoing  assessment of the adequacy of the allowance for
loan loss  reserves,  which  takes  into  consideration  a number of  factors as
discussed on page 15 of this report.  The lower  provision  for the 2002 quarter
was a function  of net loan  growth,  which  amounted to  $4,648,000  during the
current quarter, versus $38,070,000 in the third quarter of 2001.

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

Noninterest  income includes fees from customer  service charges and income from
mortgage  lending  activities,  which is  comprised  mostly of income  from loan
prepayments,  fees  earned  on  expired  loan  commitments,  and  loan  service,
inspection and maintenance charges.

Noninterest  income  increased  to $736,000 in the third  quarter of 2002,  from
$237,000 in the third quarter of 2001. The increase was due to higher income and
fees  ($404,000)  from the  prepayment  of mortgage  loans and increases in fees
earned on expired loan  commitments  and loan service charge income.  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.

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

Noninterest  expenses increased to $1,594,000 in the third quarter of 2002, from
$1,293,000  in  the  comparable  quarter  of  2001,   exclusive  of  $20,000  of
nonrecurring  expenses  associated  with  the  merger  of  Intervest  Bank  into
Intervest  National Bank in 2001. The resulting increase of $301,000 was largely
due to a $103,000  increase in compensation and benefits,  a $81,000 increase in
occupancy  and  equipment  expenses,  a  $41,000  increase  in  data  processing
expenses, a $13,000 increase in advertising expenses and the addition of $29,000
of net expenses  associated with foreclosed real estate during the third quarter
of 2002.

The increase in  compensation  and benefits was due to $110,000  resulting  from
additional staff,  salary increases and a higher cost of employee benefits,  and
bonus  payments  of $37,000 to the  Chairman  of the  Company.  These items were
partially  offset by the  reversal of $44,000 in  compensation  associated  with
certain common stock warrants held by employees as a result of a decrease in the
Company's  Class A common stock price during the quarter.  (In 2001, the Company
modified the terms of its Class A common stock  warrants - exercisable at $12.50
and $16.00 per share as of December 31, 2001 - and reduced the exercise price to
$10.01 per share commencing  January 1, 2002 and extended the expiration date to
December 31, 2002.) In September 2002, the Company further modified the warrants
by extending the expiration date to December 31, 2003. For these warrants, which
total  138,500,  compensation  expense is being  recorded  in the  statement  of
earnings with the  corresponding  credit to paid in capital in  accordance  with
variable  rate  accounting  as  prescribed  in APB  Opinion  No. 25 and  related
interpretations.  Future  compensation  amounts  related to these  warrants will
fluctuate up or down (but not less than the $73,000 recorded year to date) until
December 31, 2003 and will be a function of the  Company's  Class A common stock
price and number of warrants outstanding and exercised.

The increase in data processing expenses was due to growth in the Bank's assets.
The Bank engages a third-party servicer for its main data processing and the fee
is a function of the Bank's total assets,  which  increased to  $556,703,000  at
September 30, 2002, compared to $385,928,000 at September 30, 2001.

The increase in occupancy and equipment  expenses was primarily due to increased
depreciation  expense  and higher  real estate  taxes and  maintenance  charges,
including insurance and security protection expenses.

The  increase in  advertising  expenses  was due to  additional  advertising  to
support loan and deposit growth.

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

The provision  for income taxes  increased to $1,385,000 in the third quarter of
2002,  from $667,000 in the third quarter of 2001, due to higher pre-tax income.
The Company's  effective tax rate  (inclusive of state and local taxes) amounted
to 39.7% in the 2002 period, compared to 41.8% in the 2001 period.



                                       20
<PAGE>

             Comparison of Results of Operations for the Nine-Months
             -------------------------------------------------------

                        Ended September 30, 2002 and 2001
                        ---------------------------------

Overview
--------

Consolidated net earnings for the nine-months ended September 30, 2002 more than
doubled to $4,996,000,  or $1.01 per fully diluted share,  from  $2,388,000,  or
$0.61  per fully  diluted  share,  in the same  period  of 2001.  The  growth in
earnings  was due to a $5,307,000  increase in net interest and dividend  income
and a $357,000 increase in noninterest income,  partially offset by a $1,686,000
increase in the provision for income taxes,  a $770,000  increase in noninterest
expenses,  and a $600,000 increase in the provision for loan loss reserves.  The
earnings per share  computation in the 2002 period  included  additional  common
shares  resulting from common stock  warrants and  convertible  debentures  that
became dilutive during the period.

Selected  information  regarding results of operations for the nine-months ended
September 30, 2002 follows:

<TABLE>
                                                                 Intervest      Intervest  Intervest      Inter-
                                                      Holding     National       Mortgage  Statutory     Company
($ in thousands)                                      Company         Bank    Corporation    Trust I    Balances   Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>          <C>          <C>          <C>         <C>            <C>
Interest and dividend income                         $    751     $ 25,040     $  6,390     $  1,145    $ (1,211)      $ 32,115
Interest expense                                        2,015       12,952        4,593        1,111      (1,211)        19,460
                                                     -------------------------------------------------------------------------------
Net interest and dividend income (expense)             (1,264)      12,088        1,797           34           -         12,655
Provision (credit) for loan loss reserves                  (6)         905           65            -           -            964
Noninterest income                                        163        1,022        1,477            -      (1,274)         1,388
Noninterest expenses                                      390        4,611          975           34      (1,274)         4,736
                                                     -------------------------------------------------------------------------------
Earnings (loss) before taxes                           (1,485)       7,594        2,234            -           -          8,343
Provision (credit) for income taxes                      (681)       3,067          961            -           -          3,347
------------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss)                                  $   (804)    $  4,527     $  1,273         $  -       $   -       $  4,996
------------------------------------------------------------------------------------------------------------------------------------
Intercompany dividends received (paid) (1)           $  1,125     $ (1,125)        $  -         $  -       $   -           $  -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  The Bank pays a monthly  dividend of  $125,000  to the  Holding  Company in
     order   to   provide   funds   for  the   debt   service   on  the   Junior
     Debentures-Capital  Securities  (the proceeds of which were  contributed to
     the Bank as capital in December 2001).
</FN>
</TABLE>

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

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

Net interest  and dividend  income  increased to  $12,655,000  in the first nine
months of 2002,  from  $7,348,000 in the first nine months of 2001. The increase
was   attributable  to  growth  of   $155,903,000   in  the  Company's   average
interest-earning assets and an increase in the net interest margin from 2.34% in
the first nine months of 2001, to 2.94% in the first nine months of 2002.

The growth in average  earning  assets was due to  $128,799,000  in new mortgage
loans  and  a  net  increase  in  security  and  other  short-term   investments
aggregating  $27,104,000.  These  increases were funded by  $120,691,000  of new
deposits,  $28,402,000 of additional borrowed funds and a $5,488,000 increase in
stockholders' equity.

The increase in the margin was due to the Company's cost of funds  decreasing at
a faster pace than its yield  earned on  interest-earning  assets in a declining
interest rate  environment.  The yield on  interest-earning  assets decreased 84
basis  points to 7.46%,  while the cost of funds  decreased  166 basis points to
4.92% in the  first  nine  months  of 2002.  The  reasons  for the  changes  are
substantially  the same as those  discussed  in the  "Comparison  of  Results of
Operations for the Quarters Ended September 30, 2002 and 2001."

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.


                                       21
<PAGE>



<TABLE>
                                                                                   Nine-Months Ended
                                                       -----------------------------------------------------------------------------
                                                              September 30, 2002                       September 30, 2001
                                                       -----------------------------------------------------------------------------
                                                       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                                               $428,206     $29,046    9.07%           $299,407      $21,637    9.66%
   Securities                                           133,491       2,889    2.89              66,224        2,643    5.34
   Other interest-earning assets                         13,761         180    1.75              53,924        1,758    4.36
------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                           575,458     $32,115    7.46%            419,555      $26,038    8.30%
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                               14,654                                  11,721
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                           $590,112                                $431,276
------------------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   Interest checking deposits                          $  9,535     $   173    2.43%           $  7,373        $ 165    2.99%
   Savings deposits                                      28,958         590    2.72              18,079          591    4.37
   Money market deposits                                115,010       2,318    2.69              61,448        2,042    4.44
   Certificates of deposit                              271,517       9,791    4.82             217,429       10,170    6.25
------------------------------------------------------------------------------------------------------------------------------------
Total deposit accounts                                  425,020      12,872    4.05             304,329       12,968    5.70
------------------------------------------------------------------------------------------------------------------------------------
   Federal funds purchased                                  114           2    1.96                   -            -       -
   Debentures and related interest payable               88,644       5,451    8.22              75,586        5,722   10.12
   Junior debentures - capital securities                15,000       1,123   10.01                   -            -       -
   Note payable                                             230          12    7.00                   -            -       -
------------------------------------------------------------------------------------------------------------------------------------
Total borrowed funds                                    103,988       6,588    8.47              75,586        5,722   10.12
------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                      529,008     $19,460    4.92%            379,915      $18,690    6.58%
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                              5,200                                   6,586
Noninterest-bearing liabilities                          12,953                                   7,312
Stockholders' equity                                     42,951                                  37,463
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity             $590,112                                $431,276
------------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                             $12,655    2.54%                         $ 7,348    1.72%
------------------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                     $ 46,450                2.94%           $ 39,640                 2.34%
------------------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                   1.09x                                   1.10x
------------------------------------------------------------------------------------------------------------------------------------
Other Ratios:
  Return on average assets (1)                             1.13%                                   0.74%
  Return on average equity  (1)                           15.51%                                   8.50%
  Noninterest expense to average assets (1)                1.07%                                   1.23%
  Efficiency ratio (2)                                    33.72%                                  47.33%
  Average stockholders' equity to average assets           7.28%                                   8.69%
------------------------------------------------------------------------------------------------------------------------------------

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

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

In the first nine  months of 2002,  the Company  recorded a  provision  for loan
losses of $964,000,  compared to $364,000 in the first nine months of 2001.  The
provision for loan loss reserves is based on management's  ongoing assessment of
the  adequacy  of the  allowance  for  loan  loss  reserves,  which  takes  into
consideration  a number of factors as discussed  on page 15 of this report.  The
increase  in  provision  for the 2002  period  was due to the growth in the loan
portfolio of $86,934,000 during 2002.

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

Noninterest  income includes fees from customer  service charges and income from
mortgage  lending  activities,  which is  comprised  mostly of income  from loan
prepayments,  fees  earned  on  expired  loan  commitments,  and  loan  service,
inspection and maintenance  charges.  Noninterest income increased to $1,388,000
in the first nine months of 2002,  from  $1,031,000  in the first nine months of
2001.  The  increase  was due to  higher  income  and fees  ($214,000)  from the
prepayment  of  mortgage  loans and  increases  in fees  earned on expired  loan
commitments and loan service charge income. The amount and timing of, as well as
income from,  loan  prepayments,  if any,  cannot be predicted and can fluctuate


                                       22
<PAGE>

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.

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

Noninterest  expenses  increased to $4,736,000 in the first nine months of 2002,
from  $3,791,000  in the  comparable  period of 2001,  exclusive  of $175,000 of
nonrecurring  expenses  associated  with  the  merger  of  Intervest  Bank  into
Intervest  National Bank in 2001. The resulting increase of $945,000 was largely
due to a $429,000 increase in compensation and benefits,  a $212,000 increase in
data  processing  expenses,  a $136,000  increase  in  occupancy  and  equipment
expenses, a $33,000 increase in advertising expenses and the addition of $76,000
of net expenses associated with foreclosed real estate during 2002.

The increase in  compensation  and benefits was due to $243,000  resulting  from
additional staff, salary increases and a higher cost of employee benefits, bonus
payments of $113,000 to the Chairman of the Company and $73,000  associated with
certain common stock warrants held by employees.

For a  further  discussion  of the  compensation  expense  associated  with  the
warrants as well as the reasons for the changes for the remaining expenses noted
above (which are substantially the same as those for the quarterly period),  see
the  section  "Comparison  of  Results  of  Operations  for the  Quarters  Ended
September 30, 2002 and 2001."

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

The provision for income taxes  increased to $3,347,000 in the first nine months
of 2002, from $1,661,000 in the first nine months of 2001, due to higher pre-tax
income.  The Company's  effective tax rate  (inclusive of state and local taxes)
amounted to 40.1% in the 2002 period, compared to 41.0% in the 2001 period.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Market  risk is the risk of loss  from  adverse  changes  in market  prices  and
interest rates.  The Company's  market risk arises  primarily from interest rate
risk inherent in its lending and deposit-taking  activities, and the issuance of
its  debentures.  The  Company has not  engaged in and  accordingly  has no risk
related to trading accounts, commodities or foreign exchange. The measurement of
market risk  associated  with financial  instruments is meaningful only when all
related and offsetting on-and off-balance sheet transactions are aggregated, and
the resulting net positions are identified.  Disclosures about the fair value of
financial  instruments as of December 31, 2001,  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 to Stockholders on Form 10-K
for the year ended December 31, 2001.

Management  actively  monitors  and manages  the  Company's  interest  rate risk
exposure.  The primary  objective  in managing  interest  rate risk is to limit,
within established  guidelines,  the adverse impact of changes in interest rates
on the Company's net interest income and capital,  while adjusting the Company's
asset-liability structure to obtain the maximum yield versus cost spread on that
structure.  Management  relies  primarily  on its  asset-liability  structure to
control  interest  rate risk.  However,  a sudden and  substantial  increase  in
interest rates could adversely impact the Company's earnings, to the extent that
the  interest  rates borne by assets and  liabilities  do not change at the same
speed, to the same extent, or on the same basis.  Management believes that there
have been no  significant  changes in the Company's  market risk exposure  since
December 31, 2001.

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.


                                       23
<PAGE>


PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings
         Not Applicable

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

ITEM 3.  Defaults Upon Senior Securities
         Not Applicable
ITEM 4.  Submission of Matters to a Vote of Security Holders

         Not Applicable

ITEM 5.  Other Information
         Not Applicable


ITEM 6.  Exhibits and Reports on Form 8-K

(a)      The following exhibit is filed as part of this report.
         99.1  Certification  pursuant  to 18 U.S.C.  Section  1350,  as adopted
         pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
(b)      No reports on Form 8-K were filed during the reporting  period  covered
         by this report.

                                   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 8, 2002        By:  /s/ Lowell S. Dansker
                              --------------------------
                                      Lowell S. Dansker, President and Treasurer
                                     (Principal Executive and Financial Officer)


Date: November 8, 2002        By:  /s/ Lawrence G. Bergman
                              ----------------------------
                                     Lawrence G. Bergman, Vice President
                                     and Secretary




                                       24
<PAGE>






                                  CERTIFICATION
                                  -------------

     I, Lowell S. Dansker,  as the principal  executive and principal  financial
officer of Intervest  Bancshares  Corporation and Subsidiaries  (the "Company"),
certify, that:

     1.     I have reviewed this quarterly report on Form 10-Q of the Company;

     2.     Based on my knowledge,  this  quarterly  report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such  statements  were made, not misleading with respect
            to the period covered by this quarterly report;

     3.     Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the Company as of, and for,  the periods  presented in
            this quarterly report;

     4.     I  am  responsible  for  establishing  and  maintaining   disclosure
            controls and procedures (as defined in Exchange Act Rules 13a-14 and
            15d-14) for the Company and I have:

            (a)   designed  such  disclosure  controls and  procedures to ensure
                  that material information  relating to the Company,  including
                  its consolidated  subsidiaries,  is made known to me by others
                  within those entities, particularly during the period in which
                  this quarterly report is being prepared;

            (b)   evaluated  the  effectiveness  of  the  Company's   disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing  date of this  quarterly  report  (the  "Evaluation
                  Date"); and

            (c)   presented in this quarterly  report my  conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on my evaluation as of the Evaluation Date;

     5.     I  have  disclosed,  based  on my  most  recent  evaluation,  to the
            Company's auditors and the Audit Committee of the Company's Board of
            Directors:

            (a)   all significant deficiencies in the design or operation of the
                  internal  controls which could adversely  affect the Company's
                  ability to record,  process,  summarize  and report  financial
                  data  and  have  identified  for the  Company's  auditors  any
                  material weaknesses in internal controls; and

            (b)   any fraud,  whether or not material,  that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  Company's internal controls; and

     6.     I have indicated in this quarterly  report whether or not there were
            significant  changes in internal  controls or in other  factors that
            could  significantly  affect the internal controls subsequent to the
            date of my most recent evaluation,  including any corrective actions
            with regard to significant deficiencies and material weaknesses.





/s/ Lowell S. Dansker
---------------------
Lowell S. Dansker, President and Treasurer
(Principal Executive and Financial Officer)
November 8, 2002



                                       25