U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-QSB

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

                 FOR THE QUARTERLY PERIOD ENDED March 31, 1999


                         Commission File No. 000-23377

                        INTERVEST BANCSHARES CORPORATION
       (Exact name of small business issuer 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
                    ----------------------------------------
                (Issuer's telephone number, including area code)





Check whether the issuer:  (1) 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 .

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

<TABLE>
<CAPTION>

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

<S>                                                       <C>                     
Class A Common Stock, $1.00 par value per share           2,186,088 Outstanding at April 30, 1999
-----------------------------------------------           ---------------------------------------

Class B Common Stock, $1.00 par value per share             305,000 Outstanding at April 30, 1999
-----------------------------------------------             -------------------------------------
</TABLE>

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





                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARY

                                  FORM 10-QSB
                                 March 31, 1999

                               TABLE OF CONTENTS

        PART I. FINANCIAL INFORMATION                               Page

Item 1. Financial Statements

        Condensed Consolidated Balance Sheets as of
          March 31, 1999 (Unaudited) and December 31, 1998 .......    1

                Condensed Consolidated Statements of
                    Earnings (Unaudited) for the Quarters
                    Ended March 31, 1999 and 1998 ................    2

                Condensed Consolidated Statements of
                    Changes in Stockholder's Equity (Unaudited)
                    for the Quarters Ended March 31, 1999 and 1998    3

                Condensed Consolidated Statements of
                    Cash Flows (Unaudited) for the Quarters
                    Ended March 31, 1999 and 1998 ................    4

                Notes (Unaudited) to Condensed Consolidated
                    Financial Statements .........................    5


Item 2. Management's Discussion and Analysis of Financial
               Condition and Results of Operations ...............    8


Item 3. Quantitative and Qualitative Disclosures About Market Risk   15


PART II. OTHER INFORMATION

Item 1. Legal Proceedings ........................................   15

Item 2. Changes in Securities and Use of Proceeds ................   15

Item 3. Defaults Upon Senior Securities ..........................   15

Item 4. Submission of Matters to a Vote of Security Holders ......   15

Item 5. Other Information ........................................   15

Item 6. Exhibits and Reports on Form 8-K .........................   15

Signatures .......................................................   15


<PAGE>


PART I. FINANCIAL INFORMATION
-----------------------------
   ITEM 1. Financial Statements
   ----------------------------

                Intervest Bancshares Corporation and Subsidiary
                      Condensed Consolidated Balance Sheets

                                           (Unaudited)
                                             March 31,  December 31,
($ in thousands, except par value)             1999        1998        Change
--------------------------------------------------------------------------------

ASSETS
Cash and due from banks                      $  3,171   $  2,876   $    295
Federal funds sold                                554      6,473     (5,919)
Short-term investments                          9,511      4,123      5,388
                                             --------   --------   -------- 
    Total cash and cash equivalents            13,236     13,472       (236)
Interest-bearing deposits with banks              100        199        (99)
Securities held to maturity, net
  (estimated fair value of
   $84,550 and $82,173, respectively)          85,327     82,338      2,989
Restricted security, Federal reserve
   bank stock, at cost                            233        233       --
Loans receivable (net of allowance
   for loan loss reserves of
   $1,775 and $1,662, respectively)            89,570     96,074     (6,504)
Accrued interest receivable                     1,808      1,800          8
Premises and equipment, net                     5,071      4,917        154
Deferred income tax asset                         669        579         90
Other assets                                    1,057        910        147
--------------------------------------------------------------------------------
Total assets                                 $197,071   $200,522   $ (3,451)
--------------------------------------------------------------------------------

LIABILITIES
Deposits:
  Demand deposits                            $  4,442   $  3,027   $  1,415
  NOW deposits                                  7,584      7,955       (371)
  Savings deposits                             27,289     26,823        466
  Money-market deposits                        35,828     33,629      2,199
  Time deposits                                91,140     99,033     (7,893)
                                             --------   --------   -------- 
Total deposits                                166,283    170,467     (4,184)
Convertible debentures                          6,990      7,000        (10)
Accrued interest on convertible debentures        444        299        145
Mortgage escrow funds                           1,101        870        231
Official checks outstanding                     1,532      1,572        (40)
Other liabilities                                 845        747         98
--------------------------------------------------------------------------------
Total liabilities                             177,195    180,955     (3,760)
--------------------------------------------------------------------------------
Minority interest                                  17         23         (6)

STOCKHOLDERS' EQUITY
Preferred stock (300,000 shares
     authorized, none issued)                    --         --         --
Class A common stock ($1.00 par value,
     7,500,000 shares  authorized,
     2,186,088 and 2,184,515 shares
     issued and outstanding, respectively)      2,186      2,184          2
Class B common stock ($1.00 par value,
     700,000 shares  authorized, 305,000
     and 300,000 issued and outstanding,
     respectively)                                305        300          5
Additional paid-in-capital, common             13,831     13,789         42
Retained earnings                               3,537      3,271        266
--------------------------------------------------------------------------------
Total stockholders' equity                     19,859     19,544        315
--------------------------------------------------------------------------------
Total liabilities, minority interest
     and stockholders' equity                 $197,071   $200,522   $ (3,451)
--------------------------------------------------------------------------------

See accompanying notes to condensed consolidated financial statements.
                                       1
<PAGE>

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


                                            For the Quarter Ended
                                                   March 31,
                                                   ---------
($ in thousands, except per share data)         1999       1998      Change
--------------------------------------------------------------------------------

INTEREST AND DIVIDEND INCOME
Loans receivable                              $ 2,141    $ 1,793    $   348
Securities                                      1,263      1,029        234
Other interest-earning assets                      72         70          2
--------------------------------------------------------------------------------
Total interest and dividend income              3,476      2,892        584
--------------------------------------------------------------------------------

INTEREST EXPENSE
Deposits                                        2,016      1,838        178
Convertible debentures                            155       --          155
--------------------------------------------------------------------------------
Total interest expense                          2,171      1,838        333
--------------------------------------------------------------------------------

Net interest and dividend income                1,305      1,054        251
Provision for loan loss reserves                  112        100         12

--------------------------------------------------------------------------------
Net interest and dividend income
     after provision for loan loss reserves     1,193        954        239
--------------------------------------------------------------------------------

NONINTEREST INCOME
Customer service fees                              32         26          6
Income from mortgage activities                    90         37         53
All other                                           1          2         (1)
--------------------------------------------------------------------------------
Total noninterest income                          123         65         58
--------------------------------------------------------------------------------

NONINTEREST EXPENSES
Salaries and employee benefits                    350        246        104
Occupancy and equipment, net                      107         97         10
Advertising and promotion                           7          8         (1)
Professional fees and services                     50         61        (11)
Stationery, printing and supplies                  40         27         13
All other                                          93         70         23
--------------------------------------------------------------------------------
Total noninterest expenses                        647        509        138
--------------------------------------------------------------------------------

Earnings before income taxes and
     change in accounting principle               669        510        159
Provision for income taxes                       (275)      (202)       (73)
Cumulative effect of change in
     accounting principle (note 6)               (128)      --         (128)
--------------------------------------------------------------------------------
Net earnings                                  $   266    $   308    $   (42)
--------------------------------------------------------------------------------

Basic earnings per share:
   Earnings before change in
     accounting principle                      $ 0.16    $  0.13    $  0.03
   Cumulative effect of change
     in accounting principle                    (0.05)      --        (0.05)
--------------------------------------------------------------------------------
   Net earnings per share                     $  0.11    $  0.13    $ (0.02)
--------------------------------------------------------------------------------

Diluted earnings per share:
   Earnings before change in
     accounting principle                     $ 0.14     $  0.09    $  0.05
   Cumulative effect of change in
     accounting principle                      (0.04)        --       (0.04)
--------------------------------------------------------------------------------
   Net earnings per share                     $  0.10    $  0.09    $  0.01
--------------------------------------------------------------------------------

See accompanying notes to condensed consolidated financial statements.
                                       2
<PAGE>

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



                                             For the Quarter Ended
                                                  March 31,
                                                  ---------
($ in thousands)                             1999            1998
--------------------------------------------------------------------------------
CLASS A COMMON STOCK
Balance at beginning of period               $ 2,184   $ 2,124
Issuance of 510 shares in exchange
     for common stock of minority
     stockholders of Intervest Bank                1        --
Issuance of 1,063 shares upon the
     conversion of debentures                      1        --
Issuance of 12,250 shares upon
     exercise of warrants in 1998                 --        12
--------------------------------------------------------------------------------
Balance at end of period                       2,186     2,136
--------------------------------------------------------------------------------

CLASS B COMMON STOCK
Balance at beginning of period                   300       300
Issuance of 5,000 shares upon
     the exercise of warrants                      5        --
--------------------------------------------------------------------------------
Balance at end of period                         305       300
--------------------------------------------------------------------------------

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of period                13,789    13,360
Issuance of 510 shares in exchange
     for common stock of minority
     stockholders of Intervest Bank                6        --
Issuance of 1,063 shares upon the
     conversion of a debenture,
     net of issuance costs                         2        --
Compensation related to issuance
     of stock warrants                             6        --
Issuance of 5,000 shares upon
     exercise of Class B stock warrants           28        --
Issuance of 12,250 shares upon
     exercise of Class A stock warrants           --        73
--------------------------------------------------------------------------------
Balance at end of period                      13,831    13,433
--------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of period                 3,271     1,836
Net earnings for the period                      266       308
--------------------------------------------------------------------------------
Balance at end of period                       3,537     2,144
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Total stockholders' equity
     at end of period                        $19,859   $18,013
--------------------------------------------------------------------------------

See accompanying notes to condensed consolidated financial statements.
                                       3

<PAGE>

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


                                                       For the Quarter Ended
                                                             March 31,
                                                             ---------
($ in thousands)                                         1999         1998
--------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings                                          $    266    $    308
Adjustments  to  reconcile  net  earnings  to
     net  cash  provided  by  operating activities:
Depreciation and amortization                               79          83
Provision for loan loss reserves                           112         100
Deferred income tax (benefit) expense                      (90)         29
Accrued interest expense on debentures                     155          --
Gain on sale of mortgage loans                             (56)         --
Compensation expense related to stock warrants               6          --
Amortization of premiums, fees and discounts, net          (99)          4
Increase in accrued interest
     receivable and other assets                          (167)       (225)
(Decrease) increase in official checks outstanding         (40)        169
Increase in other liabilities                               88          24
--------------------------------------------------------------------------------
Net cash provided by operating activities                  254         492
--------------------------------------------------------------------------------

INVESTING ACTIVITIES
Decrease in interest-earning deposits                       99          --
Maturities and calls of securities held to maturity     16,525      10,426
Purchases of securities held to maturity               (19,500)    (17,568)
Sales of mortgage loans                                  5,660          --
Repayments (originations) of loans receivable, net         886      (7,691)
Purchases of premises and equipment, net                  (233)       (270)
--------------------------------------------------------------------------------
Net cash provided (used) by investing activities         3,437     (15,103)
--------------------------------------------------------------------------------

FINANCING ACTIVITIES
Net increase in demand, savings,
     NOW and money-market deposits                       3,709       4,741
Net (decrease) increase in time deposits                (7,893)      7,501
Net increase in mortgage escrow funds                      231         675
Proceeds from purchases of Federal funds                    --       1,160
Proceeds from issuance of common stock,
     net of issuance costs                                  26          85
--------------------------------------------------------------------------------
Net cash (used) provided by financing activities        (3,927)     14,162
--------------------------------------------------------------------------------
Net decrease in cash and cash equivalents                 (236)       (449)
Cash and cash equivalents at beginning of period        13,472       9,176
--------------------------------------------------------------------------------
Cash and cash equivalents at end of period            $ 13,236    $  8,727
--------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
  Interest                                              $2,063      $1,822
  Income taxes                                             405          87
Noncash financing activities:
  Issuance of common stock to
     minority stockholders of Intervest Bank                 7          --
  Conversion of convertible debentures
     into common stock                                      11          --
  Compensation related to stock warrants                     6          --
  Interest on convertible debentures                       155          --
--------------------------------------------------------------------------------

See accompanying notes to condensed consolidated financial statements.
                                       4
<PAGE>

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

Note 1 - General
     The condensed  consolidated  financial  statements of Intervest  Bancshares
Corporation  and  Subsidiary in this report have not been audited except for the
information derived from the audited  Consolidated  Balance Sheet as of December
31, 1998. The financial  statements in this report should be read in conjunction
with the consolidated financial statements and related notes thereto included in
the Company's  Annual Report to  Stockholders  on Form 10-KSB for the year ended
December 31, 1998. The consolidated financial statements include the accounts of
Intervest  Bancshares   Corporation,   a  bank  holding  company  (the  "Holding
Company"), and its subsidiary,  Intervest Bank (the "Bank"). The Holding Company
and the Bank are hereafter  referred to as the Company on a consolidated  basis.
The Holding Company's primary business activity is the ownership of the Bank.

     On April 1, 1999,  the Office of the  Comptroller  of the Currency  granted
final approval of the Holding Company's  application to form "Intervest National
Bank", a newly chartered  commercial bank, which is a wholly owned subsidiary of
the Holding Company.  Intervest  National Bank received its national charter and
opened for business on April 1, 1999. It is located at One Rockefeller  Plaza in
New York City and provides full commercial banking services,  including internet
banking.  Intervest  National  Bank is a member of the Federal  Reserve  Banking
system and the Federal Deposit Insurance Corporation insures its deposits.

     All  intercompany   accounts  and  transactions  have  been  eliminated  in
consolidation.  In the opinion of management, all material adjustments necessary
for a fair presentation of financial condition and results of operations for the
interim  periods  presented 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 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 period's presentation.

Note 2 - Loan Impairment and Credit Losses
     The Company monitors its loan portfolio to determine the appropriate  level
of the  allowance  for loan loss  reserves  based on  various  factors  that are
discussed on pages 22 and 23 of the Company's 1998 Annual Report on Form 10-KSB.
No loans were  classified  as  nonaccrual  or impaired  during the 1999 and 1998
reporting periods in this report. The table below summarizes the activity in the
allowance for loan loss reserves:

--------------------------------------------------------------------------------
                                               For the Quarter Ended
                                                    March 31,
                                                    ---------
($ in thousands)                                   1999     1998
--------------------------------------------------------------------------------
Balance at beginning of period                    $1,662   $1,173
Provision for loan losses charged to operations      112      100
Recoveries                                             1        1
--------------------------------------------------------------------------------
Balance at end of period                          $1,775   $1,274
--------------------------------------------------------------------------------

                                       5
<PAGE>

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

Note 3 - Convertible Debentures
     In March 1999, a convertible  debenture in the principal  amount of $10,000
plus accrued interest was converted into 1,063 shares of Class A common stock at
the election of the debenture holder. The conversion price was $10 per share.

Note 4 - Earnings Per Share (EPS)
         Basic   EPS  is   calculated   by   dividing   net   earnings   by  the
weighted-average  number of shares of common stock  outstanding.  Diluted EPS is
calculated by dividing adjusted net earnings by the  weighted-average  number of
shares of common stock  outstanding and dilutive  potential  common stock shares
that may be outstanding in the future.  Potential  common stock shares may arise
from  outstanding  dilutive  common stock warrants (as computed by the "treasury
stock  method") and  convertible  debentures  (as computed by the "if  converted
method").  Diluted EPS considers the potential  dilution that could occur if the
Company's  outstanding stock warrants and convertible  debentures were converted
into  common  stock that then  shared in the  Company's  adjusted  earnings  (as
adjusted for interest  expense,  net of taxes, that would no longer occur if the
debentures were converted).

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

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
                                                               For the Quarter Ended
                                                                      March 31,
                                                                      ---------
                                                                 1999          1998
----------------------------------------------------------------------------------------
<S>                                                         <C>            <C>        
BASIC EARNINGS PER SHARE
Net earnings applicable to common stockholders:
    Earnings before change in accounting principle          $   394,000    $   308,000
    Cumulative effect of change
          in accounting principle                              (128,000)          --
----------------------------------------------------------------------------------------
    Net earnings applicable to common stockholders          $   266,000    $   308,000
----------------------------------------------------------------------------------------
Average number of common shares outstanding                   2,489,831      2,426,457
----------------------------------------------------------------------------------------
Per share amount:
     Earnings before change in accounting principle         $      0.16    $      0.13
    Cumulative effect of change in accounting principle           (0.05)          --
----------------------------------------------------------------------------------------
    Basic net earnings per share                            $      0.11    $      0.13
----------------------------------------------------------------------------------------
          DILUTED EARNINGS PER SHARE
Adjusted net earnings applicable to common stockholders:
    Net earnings applicable to common stockholders          $   266,000    $   308,000
    Adjustment to net earnings from
          assumed conversion of debentures                       84,000           --
----------------------------------------------------------------------------------------
    Adjusted net earnings for diluted
          earnings per share computation                    $   350,000    $   308,000
----------------------------------------------------------------------------------------
Average number of common shares outstanding:
    Common shares outstanding                                 2,489,831      2,426,457
    Potential dilutive shares from conversion of warrants       310,774        846,282
    Potential dilutive shares resulting
          from conversion of debentures                         743,433           --
----------------------------------------------------------------------------------------
    Total average number of common shares
          outstanding used for dilution                       3,544,038      3,272,739
----------------------------------------------------------------------------------------
Per share amount:
    Earnings before change in accounting principle          $      0.14    $      0.09
    Cumulative effect of change in accounting principle           (0.04)          --
----------------------------------------------------------------------------------------
    Diluted net earnings per share                          $      0.10    $      0.09
----------------------------------------------------------------------------------------
</TABLE>
                                       6
<PAGE>


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

Note 5 - Regulatory Capital
     The  Bank is  required  to  maintain  certain  minimum  regulatory  capital
requirements.  The  following  is a summary at March 31, 1999 of the  regulatory
capital requirements and the Bank's actual capital on a percentage basis:
<TABLE>
<CAPTION>

                                                         Ratios of   Minimum        To Be Considered
                                                          the Bank  Requirement     Well Capitalized
                                                          --------  -----------     ----------------
<S>                                                         <C>        <C>              <C>   
Total capital to risk-weighted assets                       11.62%     8.00%            10.00%
Tier 1 capital to risk-weighted assets                      10.36%     4.00%             6.00%
Tier 1 capital to total average assets-leverage ratio        6.06%     4.00%             5.00%
</TABLE>

Note 6  Cumulative Effect of Change in Accounting Principle
     On January 1, 1999, the Company  adopted as required the AICPA's  Statement
of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities". The SOP
requires that all start-up costs (except for those that are capitalizable  under
other  generally  accepted  accounting  principles)  be  expensed  as  incurred.
Previously, a portion of start-up costs were generally capitalized and amortized
over a period of time.

     The adoption of this statement  resulted in a net charge of $128,000 in the
first  quarter  of 1999.  The  charge  represents  the  expensing,  net of a tax
benefit,  of cumulative  start-up costs  associated  with  organizing  Intervest
National Bank that had been capitalized  through December 31, 1998, as discussed
in note 1 on page 5 of this report.













                                       7

<PAGE>


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

                                    General
                                    -------

     Intervest  Bancshares  Corporation and Subsidiary  (the  "Company")  earned
$266,000 in the first quarter of 1999, compared to $308,000 in the first quarter
of 1998. On a diluted basis, net earnings were $0.10 per common share,  compared
to $0.09 per common share in the first quarter of 1998.

     Results for the 1999 first quarter were effected by the Company's adoption,
on January 1, 1999, of the AICPA's Statement of Position (SOP) 98-5,  "Reporting
on the Costs of Start-Up  Activities".  The SOP requires that all start-up costs
(except  for  those  that  are  capitalizable  under  other  generally  accepted
accounting  principles)  be  expensed  as  incurred.  Previously,  a portion  of
start-up costs were generally  capitalized  and amortized over a period of time.
The adoption of this statement resulted in a net charge of $128,000 in the first
quarter of 1999. The charge represents the expensing,  net of a tax benefit,  of
cumulative  start-up costs that had been capitalized  through December 31, 1998,
associated  with  organizing   Intervest   National  Bank  that  are  no  longer
capitalizable for financial statement purposes as a result of SOP 98-5.

     Absent this change in accounting principle,  the Company's net earnings for
the first  quarter of 1999 would have been  $394,000,  an  increase  of 28% from
earnings reported in the same quarter last year. This increase was primarily due
to higher net interest and dividend  income,  partially offset by an increase in
noninterest expenses.

     On April 1, 1999,  the Office of the  Comptroller  of the Currency  granted
final approval of the Holding Company's  application to form "Intervest National
Bank", a newly chartered  commercial bank, which is a wholly owned subsidiary of
the Holding Company.  Intervest  National Bank received its national charter and
opened for business on April 1, 1999. It is located at One Rockefeller  Plaza in
New York City and provides full commercial banking services,  including internet
banking.  Intervest  National  Bank is a member of the Federal  Reserve  Banking
system and the Federal Deposit Insurance Corporation insures its deposits.

     The following  table shows selected  ratios of the Company at the end of or
for the period indicated:


--------------------------------------------------------------------------------
                                             At or For the Quarter Ended
                                                  March 31, March 31,
                                                     1999    1998
--------------------------------------------------------------------------------
Stockholder's equity to total assets               10.07%   10.89%
Average stockholder's equity to average assets      9.89%   11.77%
Return on average assets (1)                        0.54%    0.77%
Return on average equity (1)                        5.42%    6.55%
Average interest-earning assets to
  interest-bearing liabilities                      1.10x    1.12x
Net interest margin (1)                             2.75%    2.77%
Noninterest expenses to average assets (1)          1.30%    1.27%
--------------------------------------------------------------------------------
(1) Ratios have been annualized for the three months.

                                       8
<PAGE>


   Comparison of Financial Condition at March 31, 1999 and December 31, 1998
   -------------------------------------------------------------------------

     Overview.  Total assets at March 31, 1999  declined to  $197,071,000,  from
$200,522,000  at December 31, 1998.  The decrease was primarily due to a decline
in loans  receivable,  partially offset by additional  investments in securities
held to maturity.  Total liabilities decreased from $180,978,000 at December 31,
1998,  to  $177,212,000  at March 31,  1999,  reflecting  a decline  in  deposit
liabilities.

     The Company's balance sheet was comprised of the following:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
                                                At March 31, 1999           At December 31, 1998
                                                -----------------           --------------------
                                            Carrying       % of         Carrying       % of
($ in thousands)                              Value     Total Assets      Value    Total Assets
-------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>           <C>          <C>   
Cash and cash equivalents                   $ 13,236       6.7%        $ 13,472       6.7%
Securities held to maturity, net              85,327      43.3           82,338      41.1
Loans receivable, net                         89,570      45.5           96,074      47.9
All other assets                               8,938       4.5            8,638       4.3
-------------------------------------------------------------------------------------------------
Total assets                                $197,071     100.0%        $200,522     100.0%
-------------------------------------------------------------------------------------------------
Deposits                                    $166,283      84.4%        $170,467      85.0%
Convertible debentures                         6,990       3.5            7,000       3.5
All other liabilities                          3,939       2.0            3,511       1.8
-------------------------------------------------------------------------------------------------
Total liabilities                            177,212      89.9          180,978      90.3
-------------------------------------------------------------------------------------------------
Stockholders' equity                          19,859      10.1           19,544       9.7
-------------------------------------------------------------------------------------------------
Total liabilities and stockholder's equity  $197,071     100.0%        $200,522     100.0%
-------------------------------------------------------------------------------------------------
</TABLE>


     Securities Held to Maturity.  Securities held to maturity  increased due to
purchases of U.S.  government agency securities,  partially offset by maturities
and calls of securities.

     Loans  Receivable.  Loans  receivable  decreased  due to sale of four  real
estate loans (with an aggregate  principal  balance of  $5,604,000)  held by the
Holding Company,  as well as principal  repayments on the entire loan portfolio.
These reductions exceeded new loan originations during the quarter.  The sale of
the loans was made by the Holding  Company in order to increase its liquidity in
anticipation  of funding  Intervest  National Bank's initial capital on April 1,
1999. The loans were sold to Intervest Corporation of New York, a related party,
at estimated  fair value.  At March 31, 1999 and December 31, 1998,  the Company
did not have any loans on a nonaccrual status or classified as impaired.

     Allowance for Loan Loss Reserves.  The Company  monitors its loan portfolio
to determine the appropriate level of the allowance for loan loss reserves based
on various  factors that are discussed on pages 22 and 23 of the Company's  1998
Annual  Report on Form 10-KSB.  At March 31,  1999,  the  allowance  amounted to
$1,775,000,  compared to $1,662,000  at year-end  1998.  The increase  reflected
management's  intent to  maintain  the  allowance  at a level it  believes to be
adequate.

     All Other Assets.  All other assets  increased  largely due to purchases of
fixed assets and other assets in connection with organizing  Intervest  National
Bank, and a higher level of deferred tax benefits.

        Deposits.  Deposit  liabilities  decreased due to net deposit  outflows,
which  management  attributes  to a  decline  in rates  offered  by the Bank for
deposits.  At March 31, 1999,  time deposit  accounts  totaled  $91,140,000  and
demand deposit,  savings, NOW and money-market accounts aggregated  $75,143,000.
This  compared to deposits of  $99,033,000  and  $71,434,000,  respectively,  at
December 31, 1998. Time deposits  represented 55% of total deposits at March 31,
1999, compared to 58% at year-end 1998.

                                       9
<PAGE>


        All Other Liabilities.  All other liabilities increased largely due to a
higher level of mortgage  escrow  funds,  which  represent  advance  payments by
borrowers for taxes and insurance,  and an increase in accrued  interest payable
on convertible debentures outstanding.

     Stockholders' Equity and Regulatory Capital. Stockholders' equity increased
almost  entirely as a result of net income of  $266,000,  the  issuance of 1,063
shares of Class A common stock upon the  conversion of a convertible  debenture,
510 Class A shares in exchange  for the shares of minority  shareholders  of the
Bank,  and the  issuance  of 5,000  Class B shares  upon the  exercise  of stock
warrants.  The  issuance of such shares  resulted in, net of issuance  costs,  a
$43,000 aggregate increase in stockholders' equity.

     The  Bank's  Tier 1  leverage  capital  ratio was 6.06% at March 31,  1999,
compared to 6.04% at December 31,  1998.  The Bank's  total  risk-based  capital
ratio amounted to 11.62% at March 31, 1999, compared to 11.15% at year-end 1998.
The Bank is a well-capitalized institution.

                        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 branch
offices; amortization, satisfactions and repayments of loans; the maturities and
calls of securities;  and cash provided by operating activities.  For additional
information  about the cash flows from the  Company's  operating,  investing and
financing activities, see the condensed consolidated statements of cash flows on
page 4 of this report. At March 31, 1999, the Company's total commitment to lend
and  invest  aggregated  $5,600,000.  Based on its cash  flow  projections,  the
Company believes that it can fund all of its outstanding  commitments and future
capital expenditures from the aforementioned sources of funds.

     On April 1, 1999, the Holding Company  acquired all the outstanding  common
stock of Intervest  National Bank for $9,000,000 in cash,  which  represents the
new bank's initial capital base. For additional discussion of Intervest National
Bank, see page 8 of this report.

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

         Interest rate risk arises from  differences  in the repricing of assets
and  liabilities  within a given time  period.  The  principal  objective of the
Company's  asset/liability  management  strategy is to minimize  its exposure to
changes in interest  rates.  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 March 31, 1999, the Company's  one-year negative  interest-rate
sensitivity  gap  was  $81,283,000,  or  41.2%  of  total  assets,  compared  to
$73,637,000,  or 36.7%,  at  December  31,  1998.  For a further  discussion  of
interest  rate risk and gap  analysis,  including  all the  assumptions  used in
developing  the Company's  one-year gap position,  see the Company's 1998 Annual
Report on Form 10-KSB, pages 26 and 27.

                                       10
<PAGE>


                              Year 2000 Compliance
                              --------------------

     The Year 2000 issue is the result of computer programs,  which were written
using two digits  rather than four digits to define the  applicable  year.  As a
result,  such  programs may recognize a date using "00" as the year 1900 instead
of the year 2000, which could result in system failures or miscalculations.

     The Company is aware of the many areas  affected by the Year 2000  computer
issue, as addressed by the Federal Financial Institutions Examination Council in
its  interagency  statement,  which  provided  an outline  for  institutions  to
effectively manage the Year 2000 challenges. The Board of Directors has approved
a Year 2000 plan, which addresses Year 2000 issues therein, including awareness,
assessment,  renovation,  validation,  implementation,  testing and  contingency
planning.  The Company has formed a Year 2000 committee that is responsible  for
the oversight of completing the Year 2000 plan on a timely basis.

     The Company has completed its testing phase of mission critical systems and
has determined that the costs of making  modifications  to correct any Year 2000
issues will not materially  affect  reported  operating  results.  The Company's
contingency  plan  relative to Year 2000 issues has been  finalized  and will be
tested  prior to June 30,  1999.  During this  testing  phase,  management  will
determine if it is necessary to develop a worst case scenario  contingency  plan
resulting from the lack of electrical supply and or telephone service.  Based on
testing results,  the Company's  mission critical systems have been deemed to be
Year 2000 compliant and,  therefore,  a contingency  plan has not been developed
with respect to those  systems.  With regards to non-mission  critical  internal
systems, the Company's  contingency plans are to replace those systems that test
as being noncompliant.  Alternatively, some systems could be handled manually on
an  interim  basis.  Should  outside  service  providers  not be able to provide
compliant systems,  the Company will terminate those  relationships and transfer
to Year 2000 compliant vendors

     The  Company  also  recognizes  the  importance  of  determining  that  its
borrowers  are  facing  the  Year  2000  problem  in a  timely  manner  to avoid
deterioration  of the loan  portfolio  solely due to this  issue.  All  material
relationships  have been  identified and  questionnaires  have been completed to
assess the inherent risks.  Deposit customers have received  statement  stuffers
and  informational  material  in this  regard.  The  Company  plans to work on a
one-on-one  basis with any borrower who has been  identified as having high Year
2000 risk exposure.

     Although management believes that the Company will not incur material costs
associated  with  the Year  2000  issue,  there  can be no  assurances  that all
hardware  and software  that the Company  will use will be Year 2000  compliant.
Management cannot predict the amount of financial  difficulties it may incur due
to the Company's  customers and vendors  inability to perform according to their
agreements with the Company or the effects that other third parties may cause as
a result of this issue. Therefore, there can be no assurance that the failure or
delay of others to  address  the Year 2000 issue or that the costs  involved  in
such process will not have a material adverse effect on the Company's  business,
financial condition, and results of operations.

         It is  anticipated  that the  Company's  deposit  customers  will  have
increased demands for cash in the latter part of 1999 and  correspondingly,  the
Company will maintain its liquidity levels to meet any increased demand.

                                       11
<PAGE>


           Comparison of Results of Operations for the Quarters Ended
                            March 31, 1999 and 1998
--------------------------------------------------------------------------------

     Overview.  The Company had net earnings of $266,000 in the first quarter of
1999,  compared to $308,000 in the first quarter of 1998. On a diluted per share
basis, net earnings was $0.10, compared to $0.09 in the first quarter of 1998.

         Results for the 1999 first quarter  included a one-time  charge related
to the  Company's  adoption,  on January 1, 1999,  of the AICPA's  Statement  of
Position (SOP) 98-5,  "Reporting on the Costs of Start-Up  Activities".  The SOP
requires that all start-up costs (except for those that are capitalizable  under
other  generally  accepted  accounting  principles)  be  expensed  as  incurred.
Previously, a portion of start-up costs were generally capitalized and amortized
over a period of time. The adoption of this  statement  resulted in a net charge
of $128,000 in the first quarter of 1999.  The charge  represents the expensing,
net of a tax benefit,  of cumulative  start-up  costs that had been  capitalized
through December 31, 1998, associated with organizing Intervest National Bank, a
wholly owned subsidiary of Intervest Bancshares Corporation,  that are no longer
capitalizable for financial statement purposes as a result of SOP 98-5.

     Absent this change in accounting principle,  the Company's earnings for the
first quarter of 1999 would have been $394,000, an increase of 28% from earnings
reported in the same quarter last year.  This  increase was  primarily  due to a
$251,000  increase in net interest and dividend  income,  partially offset by an
increase in noninterest expenses of $138,000.

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

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



















                                       12


<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                        For the Quarter Ended
                                                  -------------------------------------------------------------------     
                                                         March 31, 1999                       March 31, 1998
                                                  --------------------------------   --------------------------------     
                                                  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                                            $ 96,686    $  2,141       8.86%    $ 79,499    $  1,793      9.02%
Securities                                         86,328       1,263       5.85       66,939       1,029      6.15
Other interest-earning assets                       6,725          72       4.28        5,664          70      4.94
----------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                     189,739    $  3,476       7.33%     152,102    $  2,892      7.61%
----------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                          8,591                               7,672
----------------------------------------------------------------------------------------------------------------------
Total assets                                     $198,330                            $159,774
----------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
NOW deposits                                     $  7,321    $     56       3.06%    $  4,852    $     44      3.63%
Savings deposits                                   26,942         279       4.14       14,422         173      4.80
Money-market deposits                              36,102         387       4.29       17,965         216      4.80
Time deposits                                      94,349       1,294       5.49       98,910       1,405      5.68
                                              ------------------------------------------------------------------------
Total deposit accounts                            164,714       2,016       4.90      136,149       1,838      5.40
                                              ------------------------------------------------------------------------
Convertible debentures and accrued interest         7,351         155       8.43          --          --        --
----------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                172,065    $  2,171       5.05%     136,149    $  1,838      5.40%
----------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                        3,737                               3,157
Noninterest-bearing liabilities                     2,909                               1,656
Stockholders' equity                               19,619                              18,812
----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity       $198,330                            $159,774
----------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                      $  1,305       2.28%                $  1,054      2.21%
----------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin               $ 17,674                   2.75%    $ 15,953                  2.77%
----------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
to total interest-bearing liabilities               1.10x                               1.12x
----------------------------------------------------------------------------------------------------------------------

</TABLE>


     Net interest  and dividend  income  increased  to  $1,305,000  in the first
quarter of 1999,  from  $1,054,000 in the 1998 first  quarter.  The increase was
entirely  due to  growth in the  Company's  balance  sheet.  The  Company's  net
interest  margin was 2.75% for the first quarter of 1999,  relatively  unchanged
from the same  period of 1998,  as an increase in the  Company's  interest  rate
spread  was  offset by a decline  in the ratio of its  average  interest-earning
assets to average interest-bearing liabilities.

         The yield on the Company's  earning assets  declined by 28 basis points
due to calls of  higher-yielding  securities,  new purchases of  securities  and
originations of loans at lower rates, rate resets downward on the loan portfolio
and an  increase  in the  percentage  of  earning  assets  held  as  securities.
Investments  in securities as well as other  short-term  investments  have lower
yields than the Company's loan  portfolio.  The Company's cost of funds declined
by 35 basis  points due to lower  rates paid on deposit  accounts  as well as an
increase in  lower-cost  deposits  held in  checking,  savings and  money-market
accounts.  These factors were partially offset by the higher-cost funds obtained
through the sale of convertible debentures in June 1998.

     The table that follows sets forth information regarding changes in interest
and  dividend  income  and  interest  expense  of the  Company  for the  periods
indicated.  For each category of  interest-earning  assets and  interest-bearing
liabilities,  information is provided on changes  attributable to (1) changes in
rate (change in rate multiplied by prior volume),  (2) changes in volume (change
in volume  multiplied by prior rate) and (3) changes in  rate-volume  (change in
rate multiplied by change in volume).

                                       13
<PAGE>

--------------------------------------------------------------------------------
                                   For the Quarter Ended March 31, 1999 vs. 1998
                                   ---------------------------------------------
                                           Increase (Decrease) Due to Change in:
                                           -------------------------------------
($ in thousands)                              Rate    Volume Rate/Volume Total
--------------------------------------------------------------------------------
Interest-earning assets:
Loans                                         $(32)   $ 388    $  (8)   $ 348
Securities                                     (50)     298      (14)     234
Other interest-earning assets                   (9)      13       (2)       2
--------------------------------------------------------------------------------
Total interest-earning assets                  (91)     699      (24)     584
--------------------------------------------------------------------------------
Interest-bearing liabilities:
NOW deposits                                    (7)      22       (3)      12
Savings deposits                               (24)     150      (20)     106
Money-market deposits                          (23)     218      (24)     171
Time deposits                                  (47)     (65)       1     (111)
                                           -------------------------------------
Total deposit accounts                        (101)     325      (46)     178
Convertible debentures                        --       --        155      155
--------------------------------------------------------------------------------
Total interest-bearing liabilities            (101)     325      109      333
--------------------------------------------------------------------------------
Net change in interest and dividend income   $  10    $ 374    $(133)   $ 251
--------------------------------------------------------------------------------

     Provision for Loan Loss  Reserves.  The provision for loan loss reserves is
based on  management's  ongoing  assessment of the adequacy of the allowance for
loan loss reserves.  The provision  amounted to $112,000 in the first quarter of
1999, compared to $100,000 in the first quarter of 1998.

     Noninterest  Income.  Total noninterest income increased to $123,000 in the
first quarter of 1999,  from $65,000 in the first quarter of 1998.  The increase
from last  year's  period was  entirely  due to a $56,000  gain from the sale of
mortgage loans (see page 9 under the caption Loans Receivable).

     Noninterest  Expenses.  Total noninterest expenses increased to $647,000 in
the first  quarter of 1999,  from  $509,000  in the first  quarter of 1998.  The
increase  over last year's period was largely due to an increase in salaries and
employee  benefits,  resulting  primarily from increased  staff due to Intervest
National Bank (which opened on April 1, 1999) and normal salary increases.

     Provision  for Income Taxes.  The  provision for income taxes  increased to
$275,000 in the first  quarter of 1999,  from  $202,000 in the first  quarter of
1998, due to higher pre-tax earnings. The Companys effective tax rate (inclusive
of state and  local  taxes)  amounted  to 41.1% in the  first  quarter  of 1999,
compared to 39.6% in the same quarter of 1998.

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

                                       14
<PAGE>

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk

For a discussion of the Company's asset and liability management  strategy,  the
fair value of its financial  instruments as well as the effects of interest rate
risk,  see pages 26 through 29 and 51 and 52 of the  Company's  Annual Report on
Form  10-KSB  for the Year Ended  December  31,  1998.  At March 31,  1999,  the
Company's one-year negative  interest-rate  sensitivity gap was $81,283,000,  or
41.2% of total assets, compared to $73,637,000,  or 36.7%, at December 31, 1998.
There  has been no  significant  change  in the  market  value of the  Company's
financial instruments at March 31, 1999.

PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings
        Not Applicable

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

ITEM 3.  Defaults Upon Senior Securities
        Not Applicable

ITEM 4.  Submission of Matters to a Vote of Security Holders
        Not Applicable

ITEM 5.  Other Information
        Not Applicable

ITEM 6.  Exhibits and Reports on Form 8-K
(a)     Exhibit Index  (numbered in accordance  with Item 601 of Regulation S-B)
        27- Financial Data Schedule (For SEC Purposes only)
(b)     No Reports on Form 8-K were filed  during the  quarter  ended  March 31,
        1999.

                                   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 SUBSIDIARY

Date:  May 9, 1999            By:    /s/ Lowell S. Dansker
                                     ---------------------
                              Lowell S. Dansker, President and Treasurer
                              (Chief Financial Officer)

Date:  May 9, 1999            By:    /s/ Lawrence G. Bergman
                                     ---------------------
                              Lawrence G. Bergman,  Vice President and Secretary

                                       15