U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED June 30, 2000

                          Commission File No. 000-23377

                        INTERVEST BANCSHARES CORPORATION

             (Exact name of registrant as specified in its charter)


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


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

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



Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 12, 13 or 15(d) of the  Securities  Exchange Act
of 1934  during  the  past 12  months  (or for  such  shorter  period  that  the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days:

YES  XX   NO
     ---     ---

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

  Title of Each Class:                                Shares Outstanding:

<S>                     <C>                           <C>                           <C> <C>
  Class A Common Stock, $1.00 par value per share     3,535,629 Outstanding at July 31, 2000
  -----------------------------------------------    ---------------------------------------

  Class B Common Stock, $1.00 par value per share     355,000 Outstanding at July 31, 2000
  -----------------------------------------------     ------------------------------------
</TABLE>


<PAGE>


                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q

                                  June 30, 2000

                                TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION                                               Page
                                                                            ----

  Item 1.      Financial Statements

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

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

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

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

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

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

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

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

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

 PART II. OTHER INFORMATION

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

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

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

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

  Item 5.      Other Information...........................................   26

  Item 6.      Exhibits and Reports on Form 8-K ...........................   26


Signatures.................................................................   26

Private Securities Litigation Reform Act Safe Harbor Statement

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

                                       1
<PAGE>
<TABLE>

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

                Intervest Bancshares Corporation and Subsidiaries
                      Condensed Consolidated Balance Sheets

                                                                                            (Unaudited)
                                                                                              June 30,         December 31,
      ($ in thousands, except par value)                                                        2000              1999
      --------------------------------------------------------------------------------- ---------------- ------------------
      ASSETS

<S>                                                                                             <C>                <C>
      Cash and due from banks                                                                   $ 3,557            $ 4,663
      Federal funds sold                                                                         16,162              3,900
      Short-term investments                                                                      2,856             23,532
                                                                                        ---------------- ------------------
          Total cash and cash equivalents                                                        22,575             32,095
      Securities held to maturity, net
         (estimated fair value of $83,337 and $79,882, respectively)                             86,404             83,132
      Federal Reserve Bank stock, at cost                                                           596                508
      Loans receivable  (net of allowance for loan loss reserves of
         $2,738 and $2,493, respectively)                                                       249,138            210,444
      Accrued interest receivable                                                                 2,698              1,995
      Premises and equipment, net                                                                 5,764              5,863
      Deferred income tax asset                                                                     972                936
      Deferred debenture offering costs                                                           2,921              3,721
      Other assets                                                                                1,940              1,787
      --------------------------------------------------------------------------------- ---------------- ------------------
      Total assets                                                                             $373,008           $340,481
      --------------------------------------------------------------------------------- ---------------- ------------------

      LIABILITIES
      Deposits:
         Noninterest-bearing demand deposit accounts                                            $ 5,406            $ 4,337
         Interest-bearing deposit accounts:
            Checking (NOW) accounts                                                               8,181              6,636
            Savings accounts                                                                     17,322             18,722
            Money-market accounts                                                                52,273             48,591
            Certificate of deposit accounts                                                     175,183            122,794
                                                                                        ---------------- ------------------
         Total deposits                                                                         258,365            201,080
      Federal funds purchased                                                                         -              6,955
      Subordinated debentures payable (note 5)                                                   60,330             84,330
      Accrued interest payable on debentures (note 5)                                             6,237              8,092
      Mortgage escrow funds payable                                                               5,185              3,375
      Official checks outstanding                                                                 6,784              1,821
      Other liabilities                                                                           1,485              1,224
      --------------------------------------------------------------------------------- ---------------- ------------------
      Total liabilities                                                                         338,386            306,877
      --------------------------------------------------------------------------------- ---------------- ------------------

      STOCKHOLDERS' EQUITY

      Preferred stock (300,000 shares authorized, none issued)                                        -                  -
      Class A common stock ($1.00 par value, 9,500,000 shares authorized,
        3,535,629 and 3,531,879 shares issued and outstanding, respectively)                      3,536              3,532
      Class B common stock ($1.00 par value, 700,000 shares authorized,
        355,000 and 305,000 shares issued and outstanding respectively)                             355                305
      Additional paid-in-capital                                                                 18,913             18,770
      Retained earnings                                                                          11,818             10,997
      --------------------------------------------------------------------------------- ---------------- ------------------
      Total stockholders' equity                                                                 34,622             33,604
      --------------------------------------------------------------------------------- ---------------- ------------------
      Total liabilities and stockholders' equity                                               $373,008           $340,481
      --------------------------------------------------------------------------------- ---------------- ------------------
         See accompanying notes to condensed consolidated financial statements.
</TABLE>


                                       2
<PAGE>

<TABLE>


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

                                                                                     Quarter Ended            Six-Months Ended
                                                                                        June 30,                  June 30,
                                                                                ----------- ------------- ------------ ------------
<S>                                                                                 <C>          <C>          <C>           <C>
($ in thousands, except per share data)                                             2000         1999         2000          1999
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
INTEREST AND DIVIDEND INCOME
Loans receivable                                                                    $6,030        $4,516      $11,676      $ 8,997
Securities                                                                           1,431         1,494        2,951        3,012
Other interest-earning assets                                                          197           141          287          271
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
Total interest and dividend income                                                   7,658         6,151       14,914       12,280
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
INTEREST EXPENSE
Deposits                                                                             3,469         1,969        6,313        3,984
Federal funds purchased                                                                  -             6          146            6
Subordinated debentures                                                              2,083         2,417        4,505        4,842
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
Total interest expense                                                               5,552         4,392       10,964        8,832
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
Net interest and dividend income                                                     2,106         1,759        3,950        3,448
Provision for loan loss reserves                                                        90           223          245          335
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
Net interest and dividend income after provision for loan loss                       2,016         1,536        3,705        3,113
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
NONINTEREST INCOME
Customer service fees                                                                   31            34           66           66
Income from mortgage lending activities                                                146           109          273          490
All other                                                                                1             -            1            1
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
Total noninterest income                                                               178           143          340          557
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
NONINTEREST EXPENSES
Salaries and employee benefits                                                         508           505        1,184          984
Occupancy and equipment, net                                                           278           260          549          411
Advertising and promotion                                                               12            43           25           80
Professional fees and services                                                         116            57          220          113
Stationery, printing and supplies                                                       35            50           73           92
All other                                                                              181           177          330          313
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
Total noninterest expenses                                                           1,130         1,092        2,381        1,993
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
Earnings before taxes, extraordinary item
          and change in accounting principle                                         1,064           587        1,664        1,677
Provision for income taxes                                                             427           248          637          716
                                                                                ----------- ------------- ------------ ------------
Earnings before extraordinary item
          and change in accounting principle                                           637           339        1,027          961
Extraordinary item, net of tax (note 5)                                               (206)            -         (206)           -
Cumulative effect of change in accounting principle, net of tax (note 6)                 -             -            -         (128)
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
Net earnings                                                                         $ 431          $339        $ 821         $833
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
Basic earnings per share:
   Earnings before extraordinary item and change in accounting principle            $ 0.16         $0.09       $ 0.26        $0.25
   Extraordinary item                                                                (0.05)            -        (0.05)           -
   Cumulative effect of change in accounting principle                                   -             -            -        (0.03)
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
   Net earnings per share                                                           $ 0.11         $0.09       $0. 21        $0.22
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
Diluted earnings per share:
   Earnings before extraordinary item and change in accounting principle            $ 0.16         $0.08       $ 0.26        $0.23
   Extraordinary item                                                                (0.05)            -        (0.05)           -
   Cumulative effect of change in accounting principle                                   -             -            -        (0.03)
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
   Net earnings per share                                                           $ 0.11         $0.08       $ 0.21        $0.20
------------------------------------------------------------------------------- ----------- ------------- ------------ ------------
See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                       3
<PAGE>
<TABLE>



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

                                                                                                 Six-Months Ended
                                                                                                     June 30,
                                                                                          -----------------------------
<S>                                                                                             <C>              <C>
($ in thousands)                                                                                2000             1999
----------------------------------------------------------------------------------------- -------------- --------------

CLASS A COMMON STOCK
Balance at beginning of period                                                                  $ 3,532        $ 3,434
Issuance of 510 shares in exchange for common stock of minority
   stockholders of Intervest Bank                                                                     -              1
Issuance of 6,455 shares upon the conversion of debentures                                            -              6
Issuance of 3,750 and 1,800 shares, respectively, upon exercise of warrants                           4              2
----------------------------------------------------------------------------------------- -------------- --------------
Balance at end of period                                                                          3,536          3,443
----------------------------------------------------------------------------------------- -------------- --------------

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

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of period                                                                   18,770         18,148
Issuance of 510 shares in exchange for common stock of minority
   stockholders of Intervest Bank                                                                     -              6
Issuance of 6,455 shares upon the conversion of debentures, net of
   issuance costs                                                                                     -             46
Compensation related to issuance of Class B common stock warrants                                    12             13
Issuance of 5,000 shares upon exercise of Class B stock warrants                                      -             28
Issuance of 50,000 shares of restricted Class B stock (note 2)                                      109              -
Issuance of 3,750 and 1,800 shares, respectively, upon
   exercise of Class A stock warrants                                                                22             11
----------------------------------------------------------------------------------------- -------------- --------------
Balance at end of period                                                                         18,913         18,252
----------------------------------------------------------------------------------------- -------------- --------------

RETAINED EARNINGS
Balance at beginning of period                                                                   10,997          9,229
Comprehensive income - net earnings for the period                                                  821            833
----------------------------------------------------------------------------------------- -------------- --------------
Balance at end of period                                                                         11,818         10,062
----------------------------------------------------------------------------------------- -------------- --------------

----------------------------------------------------------------------------------------- -------------- --------------
Total stockholders' equity at end of period                                                     $34,622        $32,062
----------------------------------------------------------------------------------------- -------------- --------------
     See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                       4
<PAGE>
<TABLE>

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

                                                                                             Six-Months Ended
                                                                                                 June 30,
                                                                                     ---------------- -----------------
<S>                                                                                             <C>           <C>
   ($ in thousands)                                                                             2000          1999
   --------------------------------------------------------------------------------- ---------------- -----------------
   OPERATING ACTIVITIES
   Net earnings                                                                                $ 821             $ 833
   Adjustments to reconcile net earnings to net cash provided by
       operating activities:
     Depreciation and amortization                                                               225               189
     Provision for loan loss reserves                                                            245               335
     Deferred income tax benefit                                                                 (36)              (99)
     Amortization of deferred debenture offering costs                                           800               476
     Compensation expense from awards of common stock and warrants                               171                13
     Amortization of premiums, fees and discounts, net                                          (821)             (648)
     (Decrease) increase in accrued interest payable on debentures                            (1,855)              816
     Increase (decrease) in official checks outstanding                                        4,963              (464)
     Change in all other assets and liabilities, net                                              14              (230)
   --------------------------------------------------------------------------------- ---------------- -----------------
   Net cash provided by operating activities                                                   4,527             1,221
   --------------------------------------------------------------------------------- ---------------- -----------------
   INVESTING ACTIVITIES
   Decrease in interest-earning time deposits with banks                                           -                99
   Maturities and calls of securities held to maturity                                        12,511            24,056
   Purchases of securities held to maturity                                                  (15,507)          (25,427)
   Originations of loans receivable, net of principal repayments                             (39,003)           (9,231)
   Purchases of Federal Reserve Bank stock, net                                                  (88)             (286)
   Purchases of premises and equipment, net                                                     (126)             (891)
   --------------------------------------------------------------------------------- ---------------- -----------------
   Net cash used by investing activities                                                     (42,213)          (11,680)
   --------------------------------------------------------------------------------- ---------------- -----------------
   FINANCING ACTIVITIES
   Net increase in demand, savings, NOW and money-market deposits                              4,896             5,718
   Net increase (decrease) in certificates of deposit accounts                                52,389            (6,652)
   Net increase in mortgage escrow funds payable                                               1,810             1,314
   (Repayments of) proceeds from federal funds purchased, net                                 (6,955)            1,325
   Repayments of debentures                                                                  (24,000)           (6,000)
   Proceeds from issuance of debentures, net of offering costs                                     -               488
   Proceeds from issuance of common stock                                                         26                39
   --------------------------------------------------------------------------------- ---------------- -----------------
   Net cash provided (used) by financing activities                                           28,166            (3,768)
   --------------------------------------------------------------------------------- ---------------- -----------------
   Net decrease in cash and cash equivalents                                                  (9,520)          (14,227)
   Cash and cash equivalents at beginning of period                                           32,095            40,977
   --------------------------------------------------------------------------------- ---------------- -----------------
   Cash and cash equivalents at end of period                                               $ 22,575          $ 26,750
   --------------------------------------------------------------------------------- ---------------- -----------------
   SUPPLEMENTAL DISCLOSURES
   Cash paid during the period for:
      Interest                                                                              $ 12,252           $ 7,585
      Income taxes                                                                               704             1,145
   Noncash financing activities:
      Issuance of common stock to minority stockholders of Intervest Bank                          -                60
      Conversion of convertible debentures into common stock                                       -                 7
   --------------------------------------------------------------------------------- ---------------- -----------------
         See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                       5
<PAGE>

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

-------------------------------------------------------------------------------
Note 1 - General

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

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

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

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

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

Note 2 - Acquisition of Intervest Corporation of New York

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

                                       6
<PAGE>

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

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

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

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

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

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

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

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

</TABLE>

                                       7
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 2 - Acquisition of Intervest Corporation of New York, Continued

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

                                                                          Originally   Historical    Pro Forma
($ in thousands)                                                           Reported       ICNY      Adjustments     Adjusted
------------------------------------------------------------------------ ------------- ----------- -------------- -------------
<S>                                                                            <C>         <C>       <C>               <C>
Interest and dividend income                                                   $3,389      $2,766    $  (4)  (a)       $6,151
Interest expense                                                                2,137       2,259       (4)  (a)        4,392
                                                                         ------------- ----------- -------------- -------------
Net interest and dividend income                                                1,252         507             -         1,759
Provision for loan loss reserves                                                  223           -             -           223
                                                                         ------------- ----------- -------------- -------------
Net interest and dividend income after provision for loan loss reserves         1,029         507             -         1,536

Noninterest income                                                                100          43             -           143
Noninterest expenses                                                              823         269             -         1,092
                                                                         ------------- ----------- -------------- -------------
Earnings before taxes                                                             306         281             -           587
Provision for income taxes                                                        120         128             -           248
------------------------------------------------------------------------ ------------- ----------- -------------- -------------
Net earnings                                                                   $  186       $ 153    $        -        $  339
------------------------------------------------------------------------ ------------- ----------- -------------- -------------

Basic earnings per share                                                       $ 0.07           -                      $ 0.09
Diluted earnings per share                                                     $ 0.07           -                      $ 0.08

Average number of common shares outstanding - Basic                         2,494,567           -     1,250,000     3,744,567
Average number of common shares outstanding - Diluted                       2,841,433           -     1,250,000     4,091,433
------------------------------------------------------------------------ ------------- ----------- ------------- --------------


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

                                                                          Originally   Historical    Pro Forma
($ in thousands)                                                           Reported       ICNY      Adjustments     Adjusted
------------------------------------------------------------------------ ------------- ----------- -------------- --------------
Interest and dividend income                                                   $6,865      $5,420    $ (5)  (a)         $12,280
Interest expense                                                                4,308       4,529      (5)  (a)           8,832
                                                                         ------------- ----------- -------------- --------------
Net interest and dividend income                                                2,557         891            -            3,448
Provision for loan loss reserves                                                  335           -            -              335
                                                                         ------------- ----------- -------------- --------------
Net  interest  and  dividend  income  after  provision  for  loan  loss         2,222         891            -            3,113
reserves

Noninterest income                                                                223         334            -              557
Noninterest expenses                                                            1,470         523            -            1,993
                                                                         ------------- ----------- -------------- --------------
Earnings before taxes and change in accounting principle                          975         702            -            1,677
Provision for income taxes                                                        395         321            -              716
Cumulative effect of change in accounting principle                              (128)          -            -             (128)
------------------------------------------------------------------------ ------------- ----------- -------------- --------------
Net earnings                                                                    $ 452       $ 381     $      -            $ 833
------------------------------------------------------------------------ ------------- ----------- -------------- --------------

Basic earnings per share                                                        $0.18           -                         $0.22
Diluted earnings per share                                                      $0.16           -                         $0.20

Average number of common shares outstanding - Basic                         2,492,212           -     1,250,000       3,742,212
Average number of common shares outstanding - Diluted                       2,823,056           -     1,250,000       4,073,056
------------------------------------------------------------------------ ------------- ----------- ------------- ---------------
(a)      Represents the elimination of certain intercompany interest expense.
</TABLE>

                                       8
<PAGE>





                Intervest Bancshares Corporation and Subsidiaries
        Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------------------
Note 2 - Acquisition of Intervest Corporation of New York, Continued

A summary of the Company's  consolidated  statements of earnings for the quarter
and six-months ended June 30, 2000 follows:
<TABLE>

                                                                          For the Quarter Ended      For the Six-Months Ended
                                                                              June 30, 2000               June 30, 2000
                                                                        ---------------------------  ------------- -------------
                                                                         Excluding         As        Excluding         As
($ in thousands)                                                            ICNY        Reported        ICNY        Reported
----------------------------------------------------------------------- ------------- ------------- ------------- -------------
<S>                                                                           <C>           <C>          <C>           <C>
Interest and dividend income                                                  $5,476        $7,658       $10,314       $14,914
Interest expense                                                               3,615         5,552         6,721        10,964
                                                                        ------------- ------------- ------------- -------------
Net interest and dividend income                                               1,861         2,106         3,593         3,950
Provision for loan loss reserves                                                  90            90           245           245
                                                                        ------------- ------------- ------------- -------------
Net interest and dividend income
     after provision for loan loss reserves                                    1,771         2,016         3,348         3,705
Noninterest income                                                               119           178           255           340
Noninterest expenses                                                             930         1,130         1,975         2,381
                                                                        ------------- ------------- ------------- -------------
Earnings before taxes and extraordinary item                                     960         1,064         1,628         1,664
Provision for income taxes                                                       379           427           622           637
Extraordinary item                                                                 -          (206)            -          (206)
----------------------------------------------------------------------- ------------- ------------- ------------- -------------
Net earnings                                                                   $ 581        $  431       $ 1,006       $   821
----------------------------------------------------------------------- ------------- ------------- ------------- -------------
The amounts  reported in the table above are after  elimination of  intercompany
revenue and expense.
</TABLE>

Note 3 - Allowance for Loan Loss Reserves

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

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

Activity in the allowance for loan loss reserves is summarized as follows:
<TABLE>
                                                                   For the Quarter Ended           For the Six-Months Ended
                                                                         June 30,                          June 30,
                                                                ----------------------------     ---------------------------
<S>                                                                      <C>           <C>               <C>            <C>
($ in thousands)                                                         2000          1999              2000           1999
--------------------------------------------------------------- -------------- -------------     ------------- -------------
Balance at beginning of period                                         $2,648        $1,774            $2,493         $1,662
Provision charged to operations                                            90           223               245            335
--------------------------------------------------------------- -------------- -------------     ------------- -------------
Balance at end of period                                               $2,738        $1,997            $2,738         $1,997
--------------------------------------------------------------- -------------- -------------     ------------- -------------
</TABLE>

Note 4 - Earnings Per Share (EPS)

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

                                       9
<PAGE>

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

Note 4 - Earnings Per Share (EPS), Continued

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

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

Net  earnings  applicable  to common  stock and the  weighted-average  number of
shares used for basic and diluted earnings per share computations are summarized
in the tables that follows:
<TABLE>
                                                                            For the Quarter Ended      For the Six-Months Ended
                                                                                  June 30,                     June 30,
                                                                          ------------- ------------ --------------- -------------
BASIC EARNINGS PER SHARE                                                      2000         1999           2000           1999
------------------------------------------------------------------------- ------------- ------------ --------------- -------------
<S>                                                                           <C>          <C>           <C>             <C>
Net earnings:
  Earnings before extraordinary item and change in accounting principle     $  637,000     $339,000      $1,027,000      $961,000
  Extraordinary item (1)                                                      (206,000)           -        (206,000)            -
  Cumulative effect of change in accounting principle (2)                            -            -               -      (128,000)
------------------------------------------------------------------------- ------------- ------------ --------------- -------------
 Net earnings                                                               $  431,000     $339,000       $ 821,000      $833,000
------------------------------------------------------------------------- ------------- ------------ --------------- -------------
Average number of common shares outstanding                                  3,890,629    3,744,567       3,871,007     3,742,212
Per share amounts:
  Earnings before extraordinary item and change in accounting principle          $0.16        $0.09           $0.26         $0.25
  Extraordinary item (1)                                                         (0.05)           -           (0.05)            -
  Cumulative effect of change in accounting principle (2)                            -            -               -         (0.03)
------------------------------------------------------------------------- ------------- ------------ --------------- -------------
  Basic net earnings per share                                                   $0.11        $0.09           $0.21         $0.22
------------------------------------------------------------------------- ------------- ------------ --------------- -------------

DILUTED EARNINGS PER SHARE

Average number of common shares outstanding for dilution:

  Common shares outstanding per above                                        3,890,629    3,744,567       3,871,007     3,742,212
  Potential dilutive shares resulting from exercise of warrants (3)                  -      346,866               -       330,844
  Potential dilutive shares resulting from conversion of debentures (3)              -            -               -             -
                                                                          ------------- ------------ --------------- -------------
  Total average number of common shares outstanding                          3,890,629    4,091,433       3,871,007     4,073,056
                                                                          ------------- ------------ --------------- -------------
Per share amounts:
  Earnings before extraordinary item and change in accounting principle          $0.16        $0.08           $0.26         $0.23
  Extraordinary item (1)                                                         (0.05)           -           (0.05)            -
  Cumulative effect of change in accounting principle (2)                            -            -               -         (0.03)
------------------------------------------------------------------------- ------------- ------------ --------------- -------------
  Diluted net earnings per share                                                 $0.11        $0.08           $0.21         $0.20
------------------------------------------------------------------------- ------------- ------------ --------------- -------------
<FN>
(1)  Represents a charge, net of taxes, from the early retirement of debentures.
(2)  Represents  a charge,  net of taxes,  from the  adoption  of  Statement  of
     Position 98-5, "Reporting on the Costs of Start-Up Activities."
(3)  A total of 2,659,000 of common stock warrants with exercise  prices ranging
     from $6.67 to $15.00 were not  included  in the  quarterly  and  six-months
     computation of diluted EPS for 2000 because they were not dilutive. A total
     of 1,134,000 common stock warrants with exercise prices ranging from $10.00
     to $14.00 were not included in the quarterly and six-months  computation of
     diluted  EPS  for 1999  because  they  were  not   dilutive   Additionally,
     convertible  debentures  were  excluded  from all diluted EPS  computations
     because they were not  dilutive and as a result,  adjusted net earnings for
     diluted EPS is the same as net earnings for basic EPS.
</FN>
</TABLE>

                                       10
<PAGE>


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

--------------------------------------------------------------------------------

Note 5 - Subordinated Debentures Payable and Extraordinary Item

Debentures outstanding are summarized as follows:
<TABLE>

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

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

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

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

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

All the  debentures  may be  redeemed,  in whole or in part,  at any time at the
option of the  Intervest  Corporation  of New York,  for face value,  except for
certain  debentures  issued in 1998,  which  would be at a premium  of 1% if the
redemption is prior to January 1, 2001 (for Series  11/10/98 due January 1, 2003
and 2005).  All the debentures are unsecured and  subordinate to all present and
future senior indebtedness, as defined.

                                       11
<PAGE>

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

--------------------------------------------------------------------------------

Note 5 - Subordinated Debentures Payable and Extraordinary Item, Continued

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

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

  ($ in thousands)                              Principal     Accrued Interest
  -------------------------------------------------------- -------------------
  For the six-months ended December 31, 2000      $     -              $     -
  For the year ended December 31, 2001              1,400                  184
  For the year ended December 31, 2002              2,500                  187
  For the year ended December 31, 2003              1,400                  197
  For the year ended December 31, 2004             20,000                2,914
  Thereafter                                       35,030                2,755
  -------------------------------------------------------- -------------------
                                                  $60,330               $6,237
  -------------------------------------------------------- -------------------

Note 6 - Cumulative Effect of Change in Accounting Principle

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

Note 7 - Regulatory Matters

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

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

                                       12
<PAGE>

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

--------------------------------------------------------------------------------

Note 7 - Regulatory Matters, Continued

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

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

<TABLE>
                                                                   Actual            Minimum         To Be Considered
                                                                   Ratios           Requirement      Well Capitalized
         Consolidated
<S>                                                                <C>                <C>
         Total capital to risk-weighted assets                     12.90%             8.00%                      NA
         Tier 1 capital to risk-weighted assets                    11.93%             4.00%                      NA
         Tier 1 capital to total average assets - leverage ratio    9.17%             4.00%                      NA

         Intervest Bank

         Total capital to risk-weighted assets                     10.97%             8.00%                     10.00%
         Tier 1 capital to risk-weighted assets                     9.72%             4.00%                      6.00%
         Tier 1 capital to total average assets - leverage ratio    6.53%             4.00%                      5.00%

         Intervest National Bank

         Total capital to risk-weighted assets                     15.95%             8.00%                     10.00%
         Tier 1 capital to risk-weighted assets                    15.03%             4.00%                      6.00%
         Tier 1 capital to total average assets - leverage ratio   13.69%             4.00%                      5.00%
</TABLE>

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

                                       13
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries

               Review by Independent Certified Public Accountants

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

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













                                       14
<PAGE>

          Report on Review by Independent Certified Public Accountants

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

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

         We were furnished with the report of other  accountants on their review
of the interim financial information of Intervest Corporation of New York, whose
total  assets as of June 30, 2000,  and whose  interest  income and  noninterest
income for the three- and six-month periods then ended, constituted 18.5%; 28.5%
and  30.8%;  and 33.1% and  25.0%,  respectively,  of the  related  consolidated
totals.  The net loss for  Intervest  Corporation  of New York  included  in the
consolidated totals for the three- and six-month periods ended June 30, 2000 was
$150,000 and $185,000, respectively.

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

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

HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
August 10, 2000






                                       15
<PAGE>

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

General

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

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

The Company's  earnings (before an extraordinary  charge) increased to $637,000,
or $0.16 per fully diluted share, for the second quarter of 2000, from $339,000,
or $0.08 per share,  for the second  quarter of 1999. The increase was primarily
due to growth in net interest and dividend income and a lower provision for loan
loss reserves, partially offset by a higher provision for income taxes.

In the second quarter of 2000, the Company  recorded a charge,  net of taxes, of
$206,000,  or $0.05  per  share,  in  connection  with the early  retirement  of
$17,000,000 of debentures by its subsidiary,  Intervest Corporation of New York.
This charge reduced  consolidated  net earnings to $431,000,  or $0.11 per fully
diluted share, for the second quarter of 2000.

Earnings from Intervest  National Bank and Intervest Bank, the Company's banking
subsidiaries,  increased  from the same  period a year ago.  Intervest  National
Bank's net earnings  increased to $139,000 in the second quarter of 2000, from a
net loss of $173,000 in the same quarter of 1999. Intervest National Bank opened
for  business  on April 1, 1999.  Intervest  Bank's net  earnings  increased  to
$471,000 in the second  quarter of 2000,  from $382,000 in the second quarter of
1999.

For the first six months of 2000, earnings (before extraordinary charges and the
effect  of  accounting  changes)  increased  to  $1,027,000,  or $0.26 per fully
diluted share,  from $961,000,  or $0.23 per share, for the same period of 1999.
The increase was due to higher net interest and dividend income,  largely offset
by   nonrecurring   expenses   associated  with  the  acquisition  of  Intervest
Corporation of New York, an increase in operating expenses due to the opening of
Intervest  National  Bank,  and a decline in  mortgage  prepayment  fee  income.
Including the one-time charges discussed above and on page 24, net earnings were
$821,000,  or $0.21 per fully diluted share, in the first half of 2000, compared
to $833,000, or $0.20 per share, for the same period of 1999.

Selected  information about the Holding Company and its subsidiaries at June 30,
2000 and for the  quarter and  six-months  ended June 30,  2000,  follows in the
table below:
<TABLE>

                                                                                                   Intervest
                                                                                      Intervest   Corporation
                                                            Holding      Intervest    National         of        Consolidated
  ($ in thousands)                                           Company       Bank         Bank        New York     Amounts (1)
  --------------------------------------------------------- ----------- ------------ ------------ ------------- ---------------
<S>                                                            <C>         <C>           <C>           <C>            <C>
  Total assets                                                 $42,878     $203,868      $96,225       $69,082        $373,008
  Total cash and cash equivalents                                2,129        6,905       13,392         4,835          22,575
  Total securities, net                                              -       75,451       11,549             -          87,000
  Total  loans,   net  of  unearned  fees  and  loan  loss       5,742      113,896       69,266        60,234         249,138
  Total deposit liabilities                                          -      186,445       81,916             -         258,365
  Total debentures payable and related accrued interest          8,138            -            -        58,429          66,567
  Total stockholders' equity                                    34,622       13,712       11,692         8,955          34,622
  Net earnings (loss) for the quarter                              (29)         471          139          (150)            431
  Net earnings (loss) for the six-months                          (159)         966          199          (185)            821
  Number of full-service banking offices                             -            5            1             -               6
  --------------------------------------------------------- ----------- ------------ ------------ ------------- ---------------
<FN>
(1)      Consolidated amounts exclude intercompany balances.
</FN>
</TABLE>

                                       16
<PAGE>


Comparison of Financial Condition at June 30, 2000 and December 31, 1999

Overview

Total assets at June 30, 2000 increased to  $373,008,000,  from  $340,481,000 at
December  31, 1999,  primarily  as a result of an increase in loans  receivable,
partially offset by a decline in cash and cash equivalents.

Total liabilities at June 30, 2000 increased to $338,386,000,  from $306,877,000
at December 31, 1999,  due to growth in  certificate  of deposit  accounts.  The
increase  in deposits  was  partially  offset by the  retirement  of  debentures
payable and the repayment of federal funds purchased.

Stockholders' equity increased to $34,622,000 at June 30, 2000, from $33,604,000
at year-end 1999. The increase  reflected earnings for the six-months ended June
30, 2000 and the issuance of common stock in  connection  with a stock award and
the  exercise of warrants.  Book value per common  share  increased to $8.90 per
share at June 30, 2000, from $8.76 at December 31, 1999.

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


<PAGE>
<TABLE>


                                                        At June 30, 2000                         At December 31, 1999
                                                 -------------- -----------------          ----------------- -----------------
                                                    Carrying          % of                      Carrying           % of
($ in thousands)                                      Value       Total Assets                   Value         Total Assets
------------------------------------------------ -------------- ----------------- -------- ----------------- -----------------
<S>                                                   <C>                   <C>                     <C>                 <C>
Cash and cash equivalents                             $ 22,575              6.1%                    $32,095             9.4%
Securities, net                                         87,000             23.3                      83,640            24.6
Loans receivable, net                                  249,138             66.8                     210,444            61.8
All other assets                                        14,295              3.8                      14,302             4.2
------------------------------------------------ -------------- ----------------- -------- ----------------- -----------------
Total assets                                          $373,008            100.0%                   $340,481           100.0%
------------------------------------------------ -------------- ----------------- -------- ----------------- -----------------
Deposits                                              $258,365             69.2%                   $201,080            59.1%
Federal funds purchased                                      -                -                       6,955             2.0
Debentures payable                                      60,330             16.2                      84,330            24.8
Accrued interest payable on debentures                   6,237              1.7                       8,092             2.3
All other liabilities                                   13,454              3.6                       6,420             1.9
------------------------------------------------ -------------- ----------------- -------- ----------------- -----------------
Total liabilities                                      338,386             90.7                     306,877            90.1
------------------------------------------------ -------------- ----------------- -------- ----------------- -----------------
Stockholders' equity                                    34,622              9.3                      33,604             9.9
------------------------------------------------ -------------- ----------------- -------- ----------------- -----------------
Total liabilities and stockholders' equity            $373,008            100.0%                   $340,481           100.0%
------------------------------------------------ -------------- ----------------- -------- ----------------- -----------------
</TABLE>

Cash and Cash Equivalents

Cash and cash equivalents include  interest-bearing and noninterest-bearing cash
balances,   investments  in  overnight   federal  funds  and  other   short-term
investments  that have original  maturities of three months or less.  Short-term
investments  are  normally   comprised  of  commercial  paper  issued  by  large
commercial banks, certificates of deposit and U.S. government securities.

The level of cash and cash  equivalents  fluctuates  based on  various  factors,
including  liquidity needs, loan demand,  deposit flows,  repayments of borrowed
funds and alternative security investment opportunities.

Securities

Securities  which the Company has the intent and ability to hold to maturity are
classified as held to maturity and carried at amortized cost. Securities held to
maturity  totaled  $86,404,000  at June 30,  2000,  compared to  $83,132,000  at
December 31, 1999. The portfolio  consists of fixed-rate debt obligations of the
Federal  Home Loan Bank,  Federal Farm Credit Bank,  Federal  National  Mortgage
Association  and  the  Federal  Home  Loan  Mortgage  Corporation.  Most  of the
securities  have  terms  that  allow the  issuer the right to call or prepay its
obligation without prepayment penalty.

                                       17
<PAGE>

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

Loans Receivable

Loans  receivable,  before the  allowance for loan loss  reserves,  increased to
$251,876,000  at June 30, 2000,  from  $212,937,000  at December  31, 1999.  The
increase  was  due  to  new   commercial  and   multifamily   real  estate  loan
originations,  partially offset by principal repayments.  Commercial real estate
and multifamily real estate properties collateralized almost all of the loans in
the Company's loan portfolio.

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

Allowance for Loan Loss Reserves

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

At June 30, 2000, the allowance  amounted to $2,738,000,  compared to $2,493,000
at  year-end   1999.  The  increase  in  the  allowance  was  due  to  new  loan
originations. The allowance represented 1.09% of total loans outstanding at June
30, 2000, compared to 1.17% at December 31, 1999.

All Other Assets

The following table shows the composition of all other assets:

                                                       At            At
                                                    June 30,     December 31,
         ($ in thousands)                             2000           1999
         ----------------------------------------- ----------- ----------------
         Accrued interest receivable                   $2,698           $1,995
         Loan fees receivable                           1,120              839
         Premises and equipment, net                    5,764            5,863
         Deferred income tax asset                        972              936
         Deferred debenture offering costs              2,921            3,721
         All other                                        820              948
         ----------------------------------------- ----------- ----------------
                                                      $14,295          $14,302
         ----------------------------------------- ----------- ----------------

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

Deposit Liabilities

Deposit   liabilities   increased  to   $258,365,000  at  June  30,  2000,  from
$201,080,000  at December  31,  1999,  due to growth in  certificate  of deposit
accounts. At June 30, 2000, certificate of deposit accounts totaled $175,183,000
and  demand  deposit,   savings,   NOW  and  money-market   accounts  aggregated
$83,182,000.  The same categories of deposit accounts  totaled  $122,794,000 and
$78,286,000, respectively, at December 31, 1999. Certificate of deposit accounts
represented 68% of total deposits at June 30, 2000,  compared to 61% at year-end
1999.

                                       18
<PAGE>
Federal Funds Purchased

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

Debentures Payable and Accrued Interest Payable on Debentures

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

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

At June 30, 2000, accrued interest payable on debentures amounted to $6,237,000,
compared  to  $8,092,000  at year-end  1999.  The  decline  reflected  the early
retirement of the debentures  discussed  above,  partially  offset by additional
accruals. The accrued interest is payable at the maturity of various debentures.
For a further  discussion of the  debentures,  including  conversion  prices and
redemption  premiums,  see  note  5  to  the  condensed  consolidated  financial
statements.

All Other Liabilities

The following table shows the composition of all other liabilities:

                                                       At              At
                                                    June 30,      December 31,
      ($ in thousands)                               2000              1999
      ---------------------------------------- --------------- ----------------
      Mortgage escrow funds payable                    $5,185           $3,375
      Accrued interest payable on deposits                610              461
      Official checks outstanding                       6,784            1,821
      All other                                           875              763
      ---------------------------------------- --------------- ----------------
                                                      $13,454           $6,420
      ---------------------------------------- --------------- ----------------

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

Stockholders' Equity and Regulatory Capital

Stockholders' equity increased to $34,622,000 at June 30, 2000, from $33,604,000
at December  31, 1999.  The increase was almost  entirely due to net earnings of
$821,000  and the  issuance of 53,750  shares of common  stock.  The issuance of
common stock resulted,  net of issuance costs, in a $185,000  aggregate increase
in  stockholders'  equity.  The shares were issued as follows:  3,750  shares of
Class A common stock upon the exercise of Class A warrants; and 50,000 shares of
Class B common stock issued in  connection  with the merger.  (See note 2 to the
condensed  consolidated  financial  statements  for a further  discussion of the
stock issued in connection with the merger.)

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

                                       19
<PAGE>

Liquidity and Capital Resources

The Company manages its liquidity position on a daily basis to assure that funds
are  available to meet  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 Banks'
offices;  satisfactions  and  repayments of loans;  the  maturities and calls of
securities;  and cash provided by operating  activities.  From time to time, the
Banks may also utilize the Federal funds market.

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

At  June  30,  2000,  the  Company's   total   commitment  to  lend   aggregated
approximately  $21,800,000.  Based on its cash  flow  projections,  the  Company
believes  that  it can  fund  all of its  outstanding  lending  commitments  and
maturing  liabilities from the aforementioned  sources of funds. For information
about the cash flows  from the  Company's  operating,  investing  and  financing
activities,  see the  condensed  consolidated  statements  of cash flows in this
report.

Interest Rate Risk

Interest  rate risk  arises  from  differences  in the  repricing  of assets and
liabilities within a given time period. The 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
June 30, 2000, the Company's one-year negative interest-rate sensitivity gap was
$53,914,000,  or 14.5% of total assets,  compared to  $80,693,000,  or 23.7%, at
December 31, 1999.

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

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

Overview

Net earnings (before an extraordinary  charge)  increased to $637,000,  or $0.16
per fully diluted share, for the second quarter of 2000, from $339,000, or $0.08
per share,  for the second  quarter of 1999. The increase was primarily due to a
$347,000  increase in net interest and dividend income and a $133,000 decline in
the provision for loan loss reserves, partially offset by a $179,000 increase in
the provision for income taxes.

In the second quarter of 2000, the Company  recorded a charge,  net of taxes, of
$206,000,  or $0.05  per  share,  in  connection  with the early  retirement  of
$17,000,000 of debentures by its subsidiary,  Intervest Corporation of New York.
This charge reduced  consolidated  net earnings to $431,000,  or $0.11 per fully
diluted share, for the second quarter of 2000.

Net Interest and Dividend Income

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

                                       20
<PAGE>
<TABLE>

                                                                             For the Quarter Ended
                                                  ------------------------------------ --- ------------------------------------
                                                             June 30, 2000                            June 30, 1999
                                                  ------------------------------------ --- ------------------------------------
                                                     Average      Interest    Yield/         Average      Interest    Yield/
($ in thousands)                                     Balance     Inc./Exp.     Rate          Balance     Inc./Exp.     Rate
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Assets
Interest-earning assets:
<S>                                                    <C>           <C>       <C>             <C>           <C>      <C>
   Loans                                               $245,685      $6,030    9.87%           $166,285      $4,516   10.89%
   Securities                                            96,423       1,431    5.97             105,984       1,494    5.65
   Other interest-earning assets                         13,348         197    5.94              12,256         141    4.61
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Total interest-earning assets                           355,456      $7,658    8.67%            284,525      $6,151    8.67%
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Noninterest-earning assets                               13,708                                  13,393
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Total assets                                           $369,164                                $297,918
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   Checking deposits                                    $ 7,768        $ 59    3.05%            $ 7,848        $ 62    3.17%
   Savings deposits                                      17,410         231    5.34              25,986         265    4.09
   Money-market deposits                                 53,425         711    5.35              37,941         407    4.30
   Certificates of deposit                              163,963       2,468    6.05              89,997       1,235    5.50
                                                  -------------- ----------- --------- --- ------------- ----------- ----------
   Total deposit accounts                               242,566       3,469    5.75             161,772       1,969    4.88
   Federal funds purchased                                    -           -       -                 440           6    5.47
   Debentures and accrued interest payable               77,173       2,083   10.86              92,661       2,417   10.46
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Total interest-bearing liabilities                      319,739      $5,552    6.98%            254,873      $4,392    6.91%
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Noninterest-bearing deposits                              9,225                                   4,276
Noninterest-bearing liabilities                           5,813                                   6,868
Stockholders' equity                                     34,387                                  31,901
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Total liabilities and stockholders' equity             $369,164                                $297,918
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Net interest and dividend income/spread                              $2,106    1.69%                         $1,759    1.76%
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Net interest-earning assets/margin                      $35,717                2.38%            $29,652                2.48%
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                  1.11x                                   1.12x
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Other Ratios:
  Return on average assets (1)                            0.47%                                   0.46%
  Return on average equity  (1)                           5.01%                                   4.25%
  Noninterest expense to average assets (1)               1.22%                                   1.47%
  Efficiency ratio                                       49.47%                                  57.41%
  Average stockholders' equity to average assets          9.31%                                  10.71%
--------------------------------------------------- ------------ ----------- --------- --- ------------- ----------- ----------
(1) Annualized
</TABLE>

Net interest and dividend  income  increased to $2,106,000 in the second quarter
of 2000,  from  $1,759,000  in the 1999  second  quarter.  The  improvement  was
attributable to a $79,400,000 increase in the average loan portfolio,  partially
offset by a decline in the interest rate spread from 1.76% to 1.69%.  The growth
in the loan portfolio was funded by a $80,794,000 increase in average deposits.

The Company's cost of funds  increased 7 basis points to 6.98% due to the rising
interest rate environment,  as evidenced by the Federal Reserve Board increasing
the Federal Funds target rate on six occasions  between June 1999 and June 2000,
for a total increase of 175 basis points.  The higher rate environment  resulted
in higher rates paid by the Company on its deposit  accounts  and  floating-rate
debentures,  as well as an increase in depositors' preference for certificate of
deposit  accounts.  Such  accounts  normally  pay a higher rate than savings and
money-market accounts.

The Company's  yield on earning assets  remained  unchanged at 8.67% despite the
rising  rate  environment.  This was the result of a decline in the yield on the
loan  portfolio  due  to  competitive  lending  conditions,  which  resulted  in
originations  of new loans with interest  rates that are lower than those in the
existing portfolio as well as prepayments of higher-yielding loans. This decline
was offset by higher yields earned on the Company's  investment  securities  and
other short-term investments.

                                       21
<PAGE>

Provision for Loan Loss Reserves

The provision is based on management's ongoing assessment of the adequacy of the
allowance for loan loss  reserves,  which takes into  consideration  a number of
factors that are  discussed in note 3 to the  condensed  consolidated  financial
statements.  The  provision  amounted to $90,000 in the second  quarter of 2000,
compared to $223,000 in the second quarter of 1999.

Noninterest Income

Noninterest  income was  $178,000  in the second  quarter of 2000,  compared  to
$143,000 in the second quarter of 1999.  Noninterest  income  includes fees from
customer service charges and income from mortgage lending activities,  which are
comprised of loan prepayment fees, fees earned on expired loan commitments,  and
loan service,  inspection and maintenance  charges.  The increase from the prior
year quarter was primarily due to higher prepayment fee income.

Noninterest Expenses

Noninterest  expenses were $1,130,000 in the second quarter of 2000, compared to
$1,092,000 in the second quarter of 1999.

Provision for Income Taxes

The  provision for income taxes  increased to $427,000 in the second  quarter of
2000, from $248,000 in the same period of 1999,  primarily due to higher pre-tax
earnings.  The Company's effective tax rate (inclusive of state and local taxes)
amounted to 40% in the 2000 period, compared to 42% in the 1999 period.

Extraordinary Item

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

Comparison of Results of Operations for the Six-Months Ended June 30, 2000 and
1999

Overview

For the first six months of 2000,  earnings  (before  the  extraordinary  charge
described  above and the effect of an  accounting  change  described on page 24)
increased to  $1,027,000,  or $0.26 per fully diluted share,  from $961,000,  or
$0.23 per  share,  for the same  period of 1999.  The  improvement  was due to a
$502,000  increase in net interest and dividend income and a $90,000 decrease in
the  provision  for loan loss  reserves.  These items were  largely  offset by a
$388,000 increase in noninterest  expenses and a $217,000 decline in noninterest
income.  Including  the  extraordinary  charge and the  effect of an  accounting
change,  net earnings were $821,000,  or $0.21 per fully diluted  share,  in the
first half of 2000,  compared  to  $833,000,  or $0.20 per  share,  for the same
period of 1999.

Net Interest and Dividend Income

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

The table that follows sets forth  information for the six-months ended June 30,
2000 and 1999, that is the same as the information  described above the table on
page 21.

                                       22
<PAGE>
<TABLE>

                                                                            For the Six-Months Ended
                                                  ------------------------------------ --- ------------------------------------
                                                             June 30, 2000                            June 30, 1999
                                                  ------------------------------------ --- ------------------------------------
                                                     Average      Interest    Yield/         Average      Interest    Yield/
($ in thousands)                                     Balance     Inc./Exp.     Rate          Balance     Inc./Exp.     Rate
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
<S>                                                    <C>          <C>        <C>             <C>           <C>      <C>
Assets
Interest-earning assets:
   Loans                                               $238,097     $11,676    9.86%           $165,744      $8,997   10.95%
   Securities                                           100,904       2,951    5.88             107,764       3,012    5.64
   Other interest-earning assets                          9,987         287    5.78              12,510         271    4.37
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Total interest-earning assets                           348,988     $14,914    8.59%            286,018     $12,280    8.66%
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Noninterest-earning assets                               14,052                                  12,463
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Total assets                                           $363,040                                $298,481
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   Checking deposits                                    $ 7,526       $ 114    3.05%            $ 7,590       $ 118    3.14%
   Savings deposits                                      17,423         445    5.14              26,462         544    4.15
   Money-market deposits                                 52,756       1,373    5.23              36,954         793    4.33
   Certificates of deposit                              148,245       4,381    5.94              92,160       2,529    5.53
                                                  -------------- ----------- --------- --- ------------- ----------- ----------
   Total deposit accounts                               225,950       6,313    5.62             163,166       3,984    4.92
   Federal funds purchased                                5,000         146    5.87                 219           6    5.52
   Debentures and accrued interest payable               84,023       4,505   10.78              93,270       4,842   10.47
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Total interest-bearing liabilities                      314,973     $10,964    7.00%            256,655      $8,832    6.94%
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Noninterest-bearing deposits                              8,358                                   4,215
Noninterest-bearing liabilities                           5,590                                   5,963
Stockholders' equity                                     34,119                                  31,648
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Total liabilities and stockholders' equity             $363,040                                $298,481
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Net interest and dividend income/spread                              $3,950    1.59%                        $ 3,448    1.72%
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Net interest-earning assets/margin                      $34,015                2.28%            $29,363                2.43%
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                  1.11x                                   1.11x
------------------------------------------------- -------------- ----------- --------- --- ------------- ----------- ----------
Other Ratios:
  Return on average assets (1)                            0.45%                                   0.56%
  Return on average equity  (1)                           4.81%                                   5.26%
  Noninterest expense to average assets (1)               1.31%                                   1.34%
  Effeciency ratio                                       55.50%                                  49.76%
  Average stockholders' equity to average assets          9.40%                                  10.60%
--------------------------------------------------- ------------ ----------- --------- --- ------------- ----------- ----------
<FN>
(1) Annualized
</FN>
</TABLE>

Net interest and dividend  income  increased to  $3,950,000 in the first half of
2000, from  $3,448,000 in the 1999 first half. The improvement was  attributable
to a $72,353,000  increase in the average loan portfolio,  partially offset by a
decline in the interest rate spread from 1.72% to 1.59%.  The growth in the loan
portfolio was funded primarily by a $62,784,000 increase in average deposits.

The Company's cost of funds  increased 6 basis points to 7.00% due to the rising
interest rate environment,  as evidenced by the Federal Reserve Board increasing
the Federal Funds target rate on six occasions  between June 1999 and June 2000,
for a total of 175 basis points. The higher rate environment  resulted in higher
rates paid by the Company on its deposit accounts and floating-rate  debentures,
as well as an increase in  depositors'  preference  for  certificate  of deposit
accounts. Such accounts normally pay a higher rate than savings and money-market
accounts.

The Company's  yield on earning assets  declined 7 basis points to 8.59% despite
the rising  rate  environment.  This was the result of a decline in the  overall
yield  on the  loan  portfolio  due to  competitive  lending  conditions,  which
resulted in  originations  of new loans with interest  rates that are lower than
those in the  existing  portfolio,  as well as  prepayments  of  higher-yielding
loans.  This  decline  was  partially  offset  by  higher  yields  earned on the
Company's investment securities and other short-term investments.

                                       23
<PAGE>

Provision for Loan Loss Reserves

The provision is based on management's ongoing assessment of the adequacy of the
allowance for loan loss  reserves,  which takes into  consideration  a number of
factors that are  discussed in note 3 to the  condensed  consolidated  financial
statements in this report.  The provision amounted to $245,000 in the first half
of 2000, compared to $335,000 in the first half of 1999.

Noninterest Income

Noninterest income declined to $340,000 in the first half of 2000, from $557,000
in the first half of 1999, primarily due to lower fee income from the prepayment
of loans.  Noninterest  income  includes fees from customer  service charges and
income from mortgage lending activities,  which are comprised of loan prepayment
fees, fees earned on expired loan commitments,  and loan service, inspection and
maintenance charges.

Noninterest Expenses

Noninterest  expenses  increased to $2,381,000  in the first half of 2000,  from
$1,993,000  in the first half of 1999.  The  increase  was due to  approximately
$210,000 of nonrecurring  expenses  associated with the acquisition of Intervest
Corporation of New York and increased  operating  expenses resulting from a full
six-months of operations from Intervest  National Bank (which opened on April 1,
1999).  The new bank required the addition of employees and increased  occupancy
and equipment  expenses.  The  nonrecurring  expenses  related to attorney fees,
consulting fees,  printing costs, and stock compensation  expense (see note 2 to
the condensed consolidated financial statements).

Provision for Income Taxes

The provision  for income taxes  amounted to $637,000 in the first half of 2000,
compared to $716,000 in the same period of 1999.  The  Company's  effective  tax
rate  (inclusive  of state and local taxes)  amounted to 38% in the 2000 period,
compared  to 43% in the 1999  period.  The  decline  in the  effective  tax rate
reflects  lower  New  York  State  and  City  taxes   generated  from  Intervest
Corporation of New York's and the Holding Company's operations.

Extraordinary Item

See the  discussion  under the same  heading  in the  Comparison  of  Results of
Operations for the Quarter Ended June 30, 2000 and 1999.

Cumulative Effect of Change in Accounting Principle

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

                                       24
<PAGE>

Year 2000 Issue

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

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Market  risk is the risk of loss  from  adverse  changes  in market  prices  and
interest rates.  The Company's  market risk arises  primarily from interest rate
risk inherent in its lending and deposit-taking  activities.  The Company has no
risk related to trading accounts, commodities or foreign exchange.

Management  actively  monitors  and manages  the  Company's  interest  rate risk
exposure.  The primary  objective  in managing  interest  rate risk is to limit,
within established  guidelines,  the adverse impact of changes in interest rates
on the Company's net interest income and capital,  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, 1999.

PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings
         Not Applicable

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

ITEM 3.  Defaults Upon Senior Securities
         Not Applicable

ITEM 4.  Submission of Matters to a Vote of Security Holders

(a)      An Annual Meeting of Stockholders was held on May 24, 2000.
(b)      Pursuant  to  the  Company's  charter  and  bylaws,  one-third  of  the
         directors  are  elected  by the  holders  of Class A common  stock  and
         two-thirds are elected by holders of Class B common stock. On all other
         matters,  Class A and Class B common  stockholders  vote  together as a
         single class.  Each of the persons named in the Proxy  Statement  dated
         April 17, 2000 as a nominee for Director was elected for one year terms
         expiring on the date of the next annual meeting (see Item 4-C).
(c)      The table that follows summarizes the voting results on the matter that
         was submitted to the Company's common stockholders:

                                       25
<PAGE>
<TABLE>

             ------------------------------------------- ------------------ ----------------------- ---------------------
                                                                For          Against or Withheld         Abstained
             ------------------------------------------- ------------------ ----------------------- ---------------------
             Election of Directors - Class A
<S>                                                          <C>                    <C>
             Michael A. Callen                               3,200,272              14,840                   -
             Milton F. Gidge                                 3,200,272              14,840                   -
             William F. Holly                                3,198,022              17,090                   -

             Election of Directors  - Class B

             Lawrence G. Bergman                              355,000                 -                      -
             Jerome Dansker                                   355,000                 -                      -
             Lowell S. Dansker                                355,000                 -                      -
             Edward J. Merz                                   355,000                 -                      -
             Thomas E. Willett                                355,000                 -                      -
             David J. Willmott                                355,000                 -                      -
             Wesley T. Wood                                   355,000                 -                      -
             ------------------------------------------- ------------------ ----------------------- ---------------------
</TABLE>

(d)      Not Applicable

ITEM 5.  Other Information
         Not Applicable

ITEM 6.  Exhibits and Reports on Form 8-K
(a)      Exhibit Index  (numbered in accordance with Item 601 of Regulation S-B)
         27 - Financial Data Schedule (For SEC Purposes only)
(b)      No reports on Form 8-K were filed during the quarter ended June 30,
         2000.

                                   Signatures

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

INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

Date:  August 11, 2000         By:    /s/ Lowell S. Dansker
                               ----------------------------
                               Lowell S. Dansker, President and Treasurer
                               (Chief Financial Officer)

Date:  August 11, 2000         By:    /s/ Lawrence G. Bergman
                               ------------------------------
                               Lawrence G. Bergman, Vice President and Secretary