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

                     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 March 31, 2003
                                                 --------------


                          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  by check mark  whether  the  Registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act):
YES     NO XX .
    --     --
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:

<TABLE>
<CAPTION>
Title of Each Class:                                  Shares Outstanding:
--------------------                                  -------------------

<S>                                                   <C>
Class A Common Stock, $1.00 par value per share       4,348,087 Outstanding at April 25, 2003
-----------------------------------------------       ---------------------------------------

Class B Common Stock, $1.00 par value per share          355,000 Outstanding at April 25, 2003
-----------------------------------------------       ----------------------------------------
</TABLE>

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

<PAGE>


                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q
                                 March 31, 2003
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION                                                            Page
                                                                                         ----

   Item 1.      Financial Statements

<S>                                                                                        <C>
       Condensed Consolidated Balance Sheets
          as of March 31, 2003 (Unaudited) and December 31, 2002.........................  2

       Condensed Consolidated Statements of Earnings (Unaudited)
          for the Quarters Ended March 31, 2003 and 2002.................................  3

       Condensed Consolidated Statements of Comprehensive Income (Unaudited)
          for the Quarters Ended March 31, 2003 and 2002.................................  4

       Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
          for the Quarters Ended March 31, 2003 and 2002.................................  5

       Condensed Consolidated Statements of Cash Flows (Unaudited)
          for the Quarters Ended March 31, 2003 and 2002.................................  6

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

       Review by Independent Certified Public Accountants ...............................  9

       Report on Reviews by Independent Certified Public Accountants .................... 10

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

   Item 3.      Quantitative and Qualitative Disclosures about Market Risk............... 22

   Item 4.      Controls and Procedures ................................................. 22

PART II. OTHER INFORMATION

   Item 1.      Legal Proceedings........................................................ 22

   Item 2.      Changes in Securities and Use of Proceeds................................ 22

   Item 3.      Defaults Upon Senior Securities.......................................... 22

   Item 4.      Submission of Matters to a Vote of Security Holders...................... 22

   Item 5.      Other Information........................................................ 22

   Item 6.      Exhibits and Reports on Form 8-K ........................................ 22



Signatures............................................................................... 23

Certification............................................................................ 24
</TABLE>

Private Securities Litigation Reform Act Safe Harbor Statement

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

                                       1

<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                      Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                                   March 31,        December 31,
($ in thousands, except par value)                                                                    2003              2002
-------------------------------------------------------------------------------------------------------------------------------
ASSETS                                                                                          (Unaudited)
<S>                                                                                                 <C>                <C>
Cash and due from banks                                                                             $ 8,005            $10,351
Federal funds sold                                                                                   17,812              9,114
Commercial paper                                                                                      8,600              7,950
Other short-term investments                                                                          3,313              3,434
                                                                                               --------------------------------
    Total cash and cash equivalents                                                                  37,730             30,849
Time deposits with banks                                                                              2,000              2,000
Securities held to maturity, net (estimated fair value of $137,967 and $146,560,                    137,243            145,694
respectively)
Federal Reserve Bank stock, at cost                                                                   1,114              1,108
Loans receivable (net of allowance for loan losses of $4,955 and $4,611, respectively)              527,637            485,301
Accrued interest receivable                                                                           4,606              4,263
Loan fees receivable                                                                                  4,139              3,706
Premises and equipment, net                                                                           6,029              6,098
Foreclosed real estate                                                                                1,081              1,081
Deferred income tax asset                                                                             2,245              1,997
Deferred debenture offering costs, net                                                                3,807              3,498
Other assets                                                                                            314                384
-------------------------------------------------------------------------------------------------------------------------------
Total assets                                                                                       $727,945           $685,979
-------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits:
   Noninterest-bearing demand deposit accounts                                                      $ 4,597            $ 5,924
   Interest-bearing deposit accounts:
      Checking (NOW) accounts                                                                        14,370             10,584
      Savings accounts                                                                               32,848             30,174
      Money market accounts                                                                         139,930            134,293
      Certificate of deposit accounts                                                               346,353            324,983
                                                                                               --------------------------------
Total deposit accounts                                                                              538,098            505,958
Subordinated debentures payable                                                                      90,530             84,430
Guaranteed preferred beneficial interest in junior subordinated debentures                           15,000             15,000
Note payable                                                                                            263                266
Accrued interest payable on all debentures                                                           14,345             13,872
Accrued interest payable on deposits                                                                    929                895
Mortgage escrow funds payable                                                                         8,959              5,894
Official checks outstanding                                                                           2,117              4,373
Other liabilities                                                                                     2,704              2,165
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                                                                   672,945            632,853
-------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock (300,000 shares authorized, none issued)                                                  -                  -
Class A common stock ($1.00 par value, 9,500,000 shares authorized,
    4,348,087 shares issued and outstanding)                                                          4,348              4,348
Class B common stock ($1.00 par value, 700,000 shares authorized,
    355,000 shares issued and outstanding)                                                              355                355
Additional paid-in-capital, common                                                                   24,207             24,134
Retained earnings                                                                                    26,090             24,289
-------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                                           55,000             53,126
===============================================================================================================================
Total liabilities and stockholders' equity                                                         $727,945           $685,979
===============================================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.

                                       2

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                          Quarter Ended
                                                                                                            March 31,
                                                                                                    ------------ -------------
($ in thousands, except per share data)                                                                 2003          2002
------------------------------------------------------------------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME
<S>                                                                                                     <C>            <C>
Loans receivable                                                                                        $10,670        $8,820
Securities                                                                                                  887           842
Other interest-earning assets                                                                                68            49
------------------------------------------------------------------------------------------------------------------------------
Total interest and dividend income                                                                       11,625         9,711
------------------------------------------------------------------------------------------------------------------------------

INTEREST EXPENSE
Deposits                                                                                                  4,453         3,922
Subordinated debentures                                                                                   1,957         1,773
Junior debentures - capital securities                                                                      374           374
Note payable                                                                                                  4             2
Federal funds purchased                                                                                       -             2
------------------------------------------------------------------------------------------------------------------------------
Total interest expense                                                                                    6,788         6,073
------------------------------------------------------------------------------------------------------------------------------

Net interest and dividend income                                                                          4,837         3,638
Provision for loan loss reserves                                                                            344           346
------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income after provision for loan loss reserves                                   4,493         3,292
------------------------------------------------------------------------------------------------------------------------------

NONINTEREST INCOME
Customer service fees                                                                                        38            35
Income from mortgage lending activities                                                                     153           102
Income from the early repayment of mortgage loans                                                           141           137
All other                                                                                                    (3)            -
------------------------------------------------------------------------------------------------------------------------------
Total noninterest income                                                                                    329           274
------------------------------------------------------------------------------------------------------------------------------

NONINTEREST EXPENSES
Salaries and employee benefits                                                                              867           716
Occupancy and equipment, net                                                                                320           315
Data processing                                                                                             148           118
Advertising and promotion                                                                                    15             7
Professional fees and services                                                                              107            80
Stationery, printing and supplies                                                                            42            33
FDIC and general insurance                                                                                   57            42
Postage and delivery                                                                                         25            24
All other                                                                                                   203           127
------------------------------------------------------------------------------------------------------------------------------
Total noninterest expenses                                                                                1,784         1,462
------------------------------------------------------------------------------------------------------------------------------
Earnings before taxes                                                                                     3,038         2,104
Provision for income taxes                                                                                1,237           856
==============================================================================================================================
Net earnings                                                                                            $ 1,801       $ 1,248
==============================================================================================================================

Basic earnings per share                                                                                 $ 0.38        $ 0.32
Diluted earnings per share                                                                               $ 0.32        $ 0.30
Dividends per share                                                                                      $    -        $    -
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.

                                       3

<PAGE>


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

<TABLE>
<CAPTION>
                                                                                                              Quarter Ended
                                                                                                                March 31,
                                                                                                          -----------------------
($ in thousands)                                                                                             2003        2002
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                           <C>         <C>
Net earnings                                                                                                  $1,801      $1,248
---------------------------------------------------------------------------------------------------------------------------------

Net unrealized holding losses on available-for-sale securities                                                     -         (46)

Provision for income taxes related to unrealized losses on available-for-sale securities                           -         (20)
---------------------------------------------------------------------------------------------------------------------------------
Other comprehensive loss, net of tax
                                                                                                                   -         (26)
---------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income, net of tax                                                                        $1,801      $1,222
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.

                                       4

<PAGE>


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

<TABLE>
<CAPTION>
                                                                                                 Quarter Ended
                                                                                                   March 31,
                                                                                          -----------------------------
($ in thousands)                                                                                 2003           2002
-----------------------------------------------------------------------------------------------------------------------

CLASS A COMMON STOCK
<S>                                                                                             <C>            <C>
Balance at beginning of period                                                                  $ 4,348        $ 3,545
Issuance of 11,500 shares upon the exercise of warrants in 2002                                       -             11
-----------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                          4,348          3,556
-----------------------------------------------------------------------------------------------------------------------

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

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of period                                                                   24,134         19,001
Compensation related to vesting of certain Class B stock warrants                                     6              6
Compensation related to certain Class A stock warrants modified in 2002                              67              -
Issuance of 11,500 shares upon the exercise of Class A stock warrants in 2002,
     inclusive of tax benefits                                                                        -             65
-----------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                         24,207         19,072
-----------------------------------------------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of period                                                                   24,289         17,383
Net earnings for the period                                                                       1,801          1,248
-----------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                         26,090         18,631
-----------------------------------------------------------------------------------------------------------------------

ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance at beginning of period                                                                        -            111
Net change in accumulated other comprehensive income, net                                             -            (26)
-----------------------------------------------------------------------------------------------------------------------
Balance at end of period                                                                              -             85
-----------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity at end of period                                                     $55,000        $41,699
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.

                                       5

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                                Quarter Ended
                                                                                                                   March 31,
                                                                                                         ---------------------------
($ in thousands)                                                                                               2003          2002
------------------------------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                                                        <C>             <C>
Net earnings                                                                                               $  1,801        $  1,248
Adjustments to reconcile net earnings to net cash provided by
      operating activities:
Depreciation and amortization                                                                                   131             151
Provision for loan loss reserves                                                                                344             346
Deferred income tax benefit                                                                                    (248)           (155)
Amortization of deferred debenture offering costs                                                               245             218
Compensation expense related to common stock and warrants                                                        73               6
Amortization of premiums, fees and discounts, net                                                              (197)           (280)
Net increase in accrued interest payable on debentures                                                          473             994
Net decrease in official checks outstanding                                                                  (2,256)         (1,616)
Net change in all other assets and liabilities                                                                1,097             663
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                                                     1,463           1,575
------------------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Net decrease in interest-earning time deposits with banks                                                         -             100
Maturities and calls of securities held to maturity                                                          27,665          18,000
Purchases of securities held to maturity                                                                    (19,815)        (14,158)
Net increase in loans receivable                                                                            (43,112)        (36,989)
Purchases of Federal Reserve Bank stock, net                                                                     (6)           (450)
Purchases of premises and equipment, net                                                                        (62)           (521)
------------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                                                       (35,330)        (34,018)
------------------------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Net increase in demand, savings, NOW and money market deposits                                               10,770          36,287
Net increase in certificates of deposit                                                                      21,370           5,295
Net increase in mortgage escrow funds payable                                                                 3,065           2,832
Principal repayments of debentures                                                                           (1,400)              -
Principal repayments of note payable                                                                             (3)              -
Proceeds from issuance of debentures, net of issuance costs                                                   6,946           5,325
Proceeds from issuance of common stock, net of issuance costs                                                     -              76
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                                                    40,748          49,815
------------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents                                                                     6,881          17,372
Cash and cash equivalents at beginning of period                                                             30,849          24,409
====================================================================================================================================
Cash and cash equivalents at end of period                                                                 $ 37,730        $ 41,781
====================================================================================================================================
SUPPLEMENTAL DISCLOSURES Cash paid during the period for:
   Interest                                                                                                $  6,036        $  4,880
   Income taxes                                                                                                 963           1,000
Noncash activities:
   Accumulated other comprehensive income,
      change in unrealized loss on securities available for sale, net of tax                                      -             (26)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.

                                       6

<PAGE>

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

Note 1 - General

The  condensed   consolidated   financial  statements  of  Intervest  Bancshares
Corporation and Subsidiaries in this report have not been audited except for the
information derived from the audited  Consolidated  Balance Sheet as of December
31, 2002. The financial  statements in this report should be read in conjunction
with the consolidated financial statements and related notes thereto included in
the  Company's  Annual  Report to  Stockholders  on Form 10-K for the year ended
December 31, 2002.

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

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

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

Intervest  Statutory Trust I was formed in December 2001 for the sole purpose of
issuing  $15,000,000 of capital  securities as more fully described in note 9 to
the  consolidated  financial  statements  in  the  Company's  Annual  Report  to
Stockholders on Form 10-K for the year ended December 31, 2002.

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

Note 2 - Allowance for Loan Loss Reserves

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

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

                                                          Quarter Ended
                                                              March 31,
                                                  ------------------------------
($ in thousands)                                          2003            2002
--------------------------------------------------------------------------------
Balance at beginning of period                           $4,611          $3,380
Provision charged to operations                             344             346
Recoveries of previous chargeoffs (1)                         -             107
--------------------------------------------------------------------------------
Balance at end of period                                 $4,955          $3,833
--------------------------------------------------------------------------------

(1)  Represents  proceeds  received from the sale of collateral from a loan that
     was charged off prior to 1997.

                                       7

<PAGE>

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

Note 3 - Earnings Per Share (EPS)

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

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

<TABLE>
<CAPTION>
                                                                                                            Quarter Ended
                                                                                                              March 31,
                                                                                                      --------------------------
($ in thousands, except share and per share amounts)                                                     2003          2002
--------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share:
<S>                                                                                                        <C>           <C>
  Net earnings applicable to common stockholders                                                           $1,801        $1,248
  Average number of common shares outstanding                                                           4,703,087     3,901,290
--------------------------------------------------------------------------------------------------------------------------------
Basic net earnings per share amount                                                                         $0.38         $0.32
--------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share:
  Net earnings applicable to common stockholders                                                           $1,801        $1,248
  Adjustment to net earnings from assumed conversion of debentures (1)                                        114             -
                                                                                                      --------------------------
  Adjusted net earnings for diluted earnings per share computation                                         $1,915        $1,248
                                                                                                      --------------------------
Average number of common shares outstanding:
  Common shares outstanding                                                                             4,703,087     3,901,290
  Potential dilutive shares resulting from exercise of warrants (2)                                       230,516       263,944
  Potential dilutive shares resulting from conversion of debentures (3)                                 1,010,803             -
                                                                                                      --------------------------
Total average number of common shares outstanding used for dilution                                     5,944,406     4,165,234
--------------------------------------------------------------------------------------------------------------------------------
Diluted net earnings per share amount                                                                       $0.32         $0.30
--------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Represents interest expense on dilutive convertible debentures, net of tax,
     that would not occur if they were assumed converted.

(2)  Diluted EPS includes  shares that would be outstanding  if dilutive  common
     stock   warrants   and   convertible   debentures   were   assumed   to  be
     exercised/converted  during the period. Certain warrants are not considered
     in diluted EPS computations because their exercise price per share exceeded
     the average  market price of Class A common  stock during those  periods as
     follows:  Warrants to purchase  1,134,000  shares of common stock at prices
     ranging  from  $10.00 to $10.01 per share were not  considered  in the 2002
     quarterly  computation.  All outstanding warrants of 1,750,000 for the 2003
     quarterly computation were considered.

(3)  Convertible  debentures  outstanding  at  March  31,  2002  (consisting  of
     principal and accrued interest for this purpose)  totaling  $9,348,000 were
     convertible  into common stock at a price of $10.01 per share, but were not
     considered in the  computations of diluted EPS for the 2002 quarter because
     they were not dilutive.  For the 2003 computation,  convertible  debentures
     outstanding at March 31, 2003 totaling  $10,118,000  were  convertible into
     common stock at a price of $10.01 per share and were  considered  dilutive,
     which resulted in additional common shares.
</FN>
</TABLE>

Note 4 - Bank Regulatory Capital

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

The following is a summary at March 31, 2003 of the minimum  regulatory  capital
requirements and the actual capital of the Bank on a percentage basis:

<TABLE>
<CAPTION>
                                                               Actual            Minimum              To Be Considered
                                                               Ratios            Requirement           Well Capitalized
                                                               ------            -----------           ----------------
<S>                                                            <C>                  <C>                      <C>
Total capital to risk-weighted assets                          11.82%               8.00%                    10.00%
Tier 1 capital to risk-weighted assets                         10.83%               4.00%                     6.00%
Tier 1 capital to total average assets - leverage ratio         8.72%               4.00%                     5.00%
</TABLE>

                                       8

<PAGE>

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

Note 5 - Common Stock Warrants

The Holding  Company has common  stock  warrants  outstanding  that  entitle the
registered  holders  thereof  to  purchase  one share of  common  stock for each
warrant.  All warrants are exercisable  when issued,  except for certain Class B
common stock  warrants.  The warrants have been issued in connection with public
stock offerings,  to directors and employees of the Company and to outside third
parties for performance of services.  In 2001, the Holding Company  modified the
terms of its Class A and Class B warrants as follows: the expiration date of all
warrants  exercisable  at $6.67 per share were  extended  one year beyond  their
original  expiration dates effective  October 4, 2001, and the exercise price of
certain  Class A  warrants  (exercisable  at $12.50  and  $16.00 per share as of
December 31, 2001) were reduced to $10.01 per share  commencing  January 1, 2002
until their original  expiration  date of December 31, 2002. In 2002, the $10.01
per share warrants were further  modified by extending their  expiration date to
December 31, 2003.

Data concerning common stock warrants is as follows:

<TABLE>
<CAPTION>
                                                                  Exercise Price Per Warrant
                                                                  --------------------------            Total          Wtd-Avg
Class A Common Stock Warrants:                               $6.67           $10.01       $10.01     Warrants     Exercise Price
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>              <C>          <C>           <C>             <C>
Outstanding at December 31, 2002 and March 31, 2003         501,465          931,545      122,000       1,555,010       $ 8.93
-------------------------------------------------------------------------------------------------------------------------------
Remaining contractual life in years at March 31, 2003  (1)      3.8              0.8          0.8             1.7
-------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  The Holding Company may, at its sole discretion,  set an earlier expiration
     date.
</FN>
</TABLE>

<TABLE>
<CAPTION>
                                                                      Exercise Price Per Warrant
                                                                      --------------------------        Total          Wtd-Avg
Class B Common Stock Warrants:                                           $6.67        $10.00(1)      Warrants    Exercise Price
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>            <C>             <C>               <C>
Outstanding at December 31, 2002 and March 31, 2003                    145,000        50,000          195,000           $ 7.52
-------------------------------------------------------------------------------------------------------------------------------
Remaining contractual life in years at March 31, 2003                      4.8           4.8              4.8
-------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  At March 31, 2003 and  December  31, 2002,  35,500 of these  warrants  were
     immediately  exercisable.  An  additional  7,100  warrants  vest and become
     exercisable  on April  27th of 2003 and the  remaining  7,400 on April  27,
     2004. The warrants,  which expire on January 31, 2008,  become fully vested
     earlier upon certain conditions.
</FN>
</TABLE>

The Company uses the intrinsic  value-based  method prescribed under APB Opinion
No. 25,  "Accounting for Stock Issued to Employees," in accounting for its stock
warrants.  Under this method,  compensation  expense  related to stock  warrants
granted to employees is the excess,  if any, of the market price of the stock as
of the grant or modification date or over the exercise price of the warrant.  In
accordance  with  APB 25,  approximately  $6,000  of  compensation  expense  was
included in salaries and employee  benefits  expense for the quarter ended March
31, 2003 and 2002 in  connection  with Class B warrants that vested during these
periods.  For warrants  granted to employees whose exercise price was reduced to
$10.01 effective January 1, 2002 and whose expiration date was extended in 2002,
compensation expense of $67,000 was recorded in the quarter ended March 31, 2003
under variable rate accounting as prescribed under APB 25. No other compensation
expense was recorded  during the first quarter of 2003 and 2002  associated with
common stock warrants.

Had  compensation  expense been determined  based on the estimated fair value of
the  warrants in  accordance  with SFAS No.  123,  "Accounting  for  Stock-Based
Compensation,"  the Company's net earnings and earnings per share would not have
been different from the amounts reported for the periods included in this report
on Form 10-Q.

                                       9

<PAGE>

                Intervest Bancshares Corporation and Subsidiaries

               Review by Independent Certified Public Accountants

     Hacker,  Johnson & Smith,  P.A., P.C. the Company's  independent  certified
public accountants, have made a limited review of the financial data as of March
31, 2003 and for the three-month periods ended March 31, 2003 and 2002 presented
in this  document,  in accordance  with  standards  established  by the American
Institute of Certified Public Accountants.  As part of Hacker,  Johnson & Smith,
P.A.,  P.C.'s  review,  Eisner,  LLP was relied upon for their limited review of
Intervest Mortgage Corporation, a wholly owned subsidiary of the Company.

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

                                       10

<PAGE>


          Report on Review by Independent Certified Public Accountants



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

     We have reviewed the accompanying  condensed  consolidated balance sheet of
Intervest  Bancshares  Corporation and Subsidiaries  (the "Company") as of March
31,  2003  and  the  related  condensed  consolidated  statements  of  earnings,
comprehensive  income,  changes in  stockholders'  equity and cash flows for the
three-month periods ended March 31, 2003 and 2002 included in this report. These
financial statements are the responsibility of the Company's management.

     We were furnished with the report of other  accountants on their reviews of
the interim financial information of Intervest Mortgage Corporation, whose total
assets as of March 31, 2003 constituted 14.3% of the related consolidated total,
and whose net  interest  income,  noninterest  income and net  earnings  for the
three-month period then ended, constituted 9.0%, 18.5%, and 15.8%, respectively,
and  whose  net  interest  income,  noninterest  income  and  net  loss  for the
three-month  period ended March 31, 2002,  constituted  13.5%,  25.2% and 21.2%,
respectively, of the related consolidated totals.

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

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

     We have previously audited, in accordance with auditing standards generally
accepted in the United States of America,  the consolidated  balance sheet as of
December  31,  2002,  and  the  related  consolidated  statements  of  earnings,
comprehensive  income,  changes in  stockholders'  equity and cash flows for the
year then ended (not  presented  herein);  and in our report  dated  January 24,
2003,  we,  based on our audits and the report of other  auditors,  expressed an
unqualified opinion on those consolidated financial statements.  In our opinion,
the information set forth in the  accompanying  condensed  consolidated  balance
sheet as of December 31, 2002 is fairly  stated,  in all material  respects,  in
relation to the consolidated balance sheet from which it has been derived.


/s/ Hacker, Johnson & Smith, P.A., P.C.
---------------------------------------
HACKER, JOHNSON & SMITH, P.A.,P.C.
Tampa, Florida
April 25, 2003

                                       11

<PAGE>

          Report on Review by Independent Certified Public Accountants



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

     We have  reviewed the  condensed  consolidated  balance  sheet of Intervest
Mortgage  Corporation and subsidiaries (the "Company") as of March 31, 2003, and
the  related  condensed  consolidated  statements  of  operations,   changes  in
stockholder's  equity and cash flows for the three-month periods ended March 31,
2003 and 2002 (not presented separately herein).  These financial statements are
the responsibility of the Company's management.

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

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

     We previously  audited,  in accordance  with auditing  standards  generally
accepted in the United States of America,  the consolidated balance sheet of the
Company as of  December  31,  2002 and the related  consolidated  statements  of
operations,  changes  in  stockholder's  equity and cash flows for the year then
ended (not  presented  separately  herein),  and in our report dated January 23,
2003,  we  expressed  an  unqualified  opinion on those  consolidated  financial
statements.  In  our  opinion,  the  information  set  forth  in  the  condensed
consolidated  balance  sheet as of  December  31,  2002 is fairly  stated in all
material  respects in relation to the  consolidated  balance sheet from which it
has been derived.



/s/ Eisner, LLP
---------------
EISNER,LLP
New York, New York
April 18, 2003

                                       12

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

                                     General

Intervest Bancshares Corporation has three wholly owned subsidiaries - Intervest
National Bank,  Intervest Mortgage  Corporation and Intervest  Statutory Trust I
(hereafter  referred to collectively as the "Company" on a consolidated  basis).
Intervest Bancshares  Corporation and Intervest National Bank may be referred to
individually as the "Holding Company" and the "Bank," respectively.

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

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

Intervest  Mortgage  Corporation  is a mortgage  investment  company  located in
Rockefeller  Center in New York City. It is engaged in the real estate business,
including the origination and purchase of real estate mortgage loans, consisting
of first  mortgage,  junior mortgage and wraparound  mortgage loans.  Its wholly
owned  subsidiaries,  Intervest  Distribution  Corporation and Intervest  Realty
Servicing  Corporation  are  nonoperating  entities that provide  administrative
services to Intervest Mortgage Corporation.

Intervest  Statutory  Trust I was formed in December 2001 in connection with the
issuance of $15,000,000 of capital securities. For a further discussion, See the
section entitled "Debentures Payable and Accrued Interest Payable on Debentures"
on page 30 of the Company's  Annual Report to  Stockholders on Form 10-K for the
year ended December 31, 2002.

As previously  announced,  in December 2002,  Intervest  Bancshares  Corporation
entered  into an  agreement  to acquire  Intervest  Securities  Corporation,  an
affiliated  entity that is a  broker/dealer  registered in nine states and is an
NASD and SIPC member firm.  Intervest Securities  Corporation  participates as a
selected  dealer  from  time to  time in  offerings  of debt  securities  of the
Company,  primarily those of Intervest  Mortgage  Corporation.  Pursuant to this
agreement,  Intervest Bancshares  Corporation will acquire all the capital stock
of Intervest Securities  Corporation for 30,000 shares of its newly issued Class
B common stock. At December 31, 2002,  Intervest  Securities  Corporation's  net
assets amounted to  approximately  $200,000 and consisted of cash. In connection
with this transaction,  Intervest Bancshares Corporation was approved by the FRB
to become a financial  holding company under Regulation Y effective  January 23,
2003.  The  transaction  is awaiting the approval of the NASD and is expected to
close in the  second  quarter of 2003.  Intervest  Securities  Corporation  will
become a wholly owned subsidiary of Intervest Bancshares Corporation.

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

The Company's  profitability  is also  affected by the level of its  noninterest
income and expenses,  provision for loan loss reserves and effective  income tax
rate.  Noninterest  income  consists  primarily of loan and other  banking fees.
Noninterest  expense  consists  of  compensation  and  benefits,  occupancy  and
equipment  related  expenses,  data processing  expenses,  advertising  expense,
deposit  insurance  premiums  and  other  operating   expenses.   The  Company's
profitability is also significantly affected by general economic and competitive
conditions, changes in market interest rates, government policies and actions of
regulatory authorities.  Since the properties underlying the Company's mortgages
are  concentrated  in the New York  City  area and the  State  of  Florida,  the
economic  conditions  in those  areas can also  have an impact on the  Company's
operations.

                                       13

<PAGE>

    Comparison of Financial Condition at March 31, 2003 and December 31, 2002
    -------------------------------------------------------------------------

Overview

Total assets at March 31, 2003 increased to $727,945,000,  from  $685,979,000 at
December  31,  2002.   Total   liabilities   at  March  31,  2003  increased  to
$672,945,000,  from  $632,853,000  at December  31, 2002.  Stockholders'  equity
increased to $55,000,000 at March 31, 2003,  from  $53,126,000 at year-end 2002.
Book value per common  share  rose to $11.69 per share at March 31,  2003,  from
$11.30 at December 31, 2002.

Selected balance sheet information as of March 31, 2003 follows:

<TABLE>
<CAPTION>
                                                                      Intervest     Intervest    Intervest      Inter-
                                                           Holding     National      Mortgage    Statutory     Company
($ in thousands)                                           Company         Bank   Corporation      Trust I    Balances  Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>          <C>          <C>              <C>     <C>          <C>
Cash and cash equivalents                                 $   1,788    $  24,855    $  12,959        $   -   $  (1,872)   $  37,730
Time deposits with banks                                          -            -        2,000            -           -        2,000
Securities held to maturity, net                                  -      137,243            -       15,464     (15,464)     137,243
Federal Reserve Bank stock                                        -        1,114            -            -           -        1,114
Loans receivable, net of deferred fees                       15,073      431,964       85,555            -           -      532,592
Allowance for loan loss reserves                                (75)      (4,722)        (158)           -           -       (4,955)
Investment in subsidiaries                                   66,536            -            -            -     (66,536)           -
Foreclosed real estate                                            -        1,081            -            -           -        1,081
All other assets                                              1,408       15,237        4,615          441        (561)      21,140
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                              $  84,730    $ 606,772    $ 104,971    $  15,905   $ (84,433)   $ 727,945
------------------------------------------------------------------------------------------------------------------------------------
Deposits                                                      $   -    $ 540,277        $   -        $   -   $  (2,179)   $ 538,098
Subordinated debentures payable                              25,894            -       80,100            -     (15,464)      90,530
Junior debentures payable-capital securities                      -            -            -       15,000           -       15,000
Note payable                                                      -          263            -            -           -          263
Accrued interest payable on all debentures                    3,704            -       10,654          428        (441)      14,345
All other liabilities                                           132       12,859        1,518           13         187       14,709
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                            29,730      553,399       92,272       15,441     (17,897)     672,945
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                         55,000       53,373       12,699          464     (66,536)      55,000
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                $  84,730    $ 606,772    $ 104,971    $  15,905   $ (84,433)   $ 727,945
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

A comparison of the consolidated balance sheets as of March 31, 2003 and
December 31, 2002 follows:


<TABLE>
<CAPTION>
                                                                        At March 31, 2003                  At December 31, 2002
                                                                        -----------------                  --------------------
                                                                      Carrying        % of              Carrying          % of
($ in thousands)                                                        Value      Total Assets           Value       Total Assets
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                <C>             <C>                <C>
Cash and cash equivalents                                             $ 37,730           5.2%            $ 30,849           4.4%
Time deposits with banks                                                 2,000           0.3                2,000           0.3
Securities held to maturity, net                                       137,243          18.9              145,694          21.2
Federal Reserve Bank stock                                               1,114           0.2                1,108           0.2
Loans receivable, net of deferred fees and loan loss reserves          527,637          72.4              485,301          70.7
Foreclosed real estate                                                   1,081           0.1                1,081           0.2
All other assets                                                        21,140           2.9               19,946           3.0
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                                          $727,945         100.0%            $685,979         100.0%
------------------------------------------------------------------------------------------------------------------------------------
Deposits                                                              $538,098          73.9%            $505,958          73.8%
Subordinated debentures payable                                         90,530          12.4               84,430          12.3
Junior debentures payable-capital securities                            15,000           2.1               15,000           2.2
Note payable                                                               263           -                    266           0.1
Accrued interest payable on all debentures                              14,345           2.0               13,872           2.0
All other liabilities                                                   14,709           2.0               13,327           1.9
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                                      672,945          92.4              632,853          92.3
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                                    55,000           7.6               53,126           7.7
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                            $727,945         100.0%            $685,979         100.0%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       14

<PAGE>

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

Cash and cash  equivalents  increased to  $37,730,000  at March 31,  2003,  from
$30,849,000  at December  31, 2002,  due to a higher level of overnight  federal
fund  investments.  Cash and cash  equivalents  include  federal  funds sold and
interest-bearing  and  noninterest-bearing  cash balances with banks,  and other
short-term  investments  that have original  maturities of three months or less.
The 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,  calls of securities,
repayments of borrowed funds and alternative investment opportunities.

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

Securities  held to maturity  decreased to  $137,243,000 at March 31, 2003, from
$145,694,000  at December 31, 2002. The decrease was due to maturities and early
calls  exceeding  new  purchases  during  the  period.  At March 31,  2003,  the
portfolio consisted of debt obligations of FNMA, FHLB, FHLMC, SLMA and FFCB with
a weighted-average yield of approximately 2.32% and a weighted-average remaining
maturity  of  1.7  years.   At  December  31,   2002,   the   portfolio   had  a
weighted-average yield of 2.39% and a weighted-average remaining maturity of 1.6
years.  The  securities  are fixed  rate or have  predetermined  scheduled  rate
increases,  and some  have  call  features  that  allow  the  issuer to call the
security  before its stated  maturity  without  penalty.  The  Company  normally
invests in short-to-medium term security investments to emphasize liquidity.

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

In order for the Bank to be a member of the Federal Reserve Banking System,  the
Bank  maintains an investment in the capital stock of the Federal  Reserve Bank,
which pays a dividend that is currently 6%. The  investment,  which  amounted to
$1,114,000  at March 31, 2003 and  $1,108,000  at December 31, 2002,  fluctuates
based on the Bank's capital level.

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

Loans receivable, net of deferred fees and the allowance for loan loss reserves,
increased to $527,637,000  at March 31, 2003, from  $485,301,000 at December 31,
2002.  The growth  reflected  new  originations  of  commercial  real estate and
multifamily mortgage loans, partially offset by principal repayments. Commercial
real estate and multifamily real estate properties  collateralized almost all of
the loans in the Company's  loan  portfolio.  At March 31, 2003 and December 31,
2002, there were no loans classified as nonaccrual or impaired.

At March 31, 2003, the allowance for loan loss reserves  amounted to $4,955,000,
compared to $4,611,000 at December 31, 2002. The allowance  represented 0.93% of
total loans (net of deferred fees)  outstanding  at March 31, 2003,  compared to
0.94% at December 31, 2002. The Company monitors its loan portfolio to determine
the  appropriate  level of the allowance for loan loss reserves based on various
factors. These factors include: the type and level of loans outstanding;  volume
of loan originations;  overall portfolio quality; loan concentrations;  specific
problem loans,  historical  chargeoffs and recoveries;  adverse situations which
may affect the borrowers'  ability to repay; and management's  assessment of the
current and anticipated  economic  conditions in the Company's  lending regions.
The increase in the allowance was due to a provision for loan losses of $344,000
in the first quarter of 2003 (resulting from loan growth).

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

At March  31,  2003 and  year-end  2002,  foreclosed  real  estate  amounted  to
$1,081,000 and represented  one commercial  real estate property  located in the
State of Florida.  This  property was acquired by the Bank through  foreclosure.
The property continues to be actively marketed for sale.  Foreclosed real estate
is  carried  at the lower of the new cost  basis or  estimated  fair  value less
estimated selling costs. Revenue and expenses from operations and changes in the
valuation  allowance of the property are included in the consolidated  statement
of earnings.

                                       15

<PAGE>




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

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

                                               At March 31,      At December 31,
($ in thousands)                                   2003                2002
--------------------------------------------------------------------------------
Accrued interest receivable                      $4,606              $4,263
Loans fee receivable                              4,139               3,706
Premises and equipment, net                       6,029               6,098
Deferred income tax asset                         2,245               1,997
Deferred debenture offering costs, net            3,807               3,498
All other                                           314                 384
--------------------------------------------------------------------------------
                                                $21,140             $19,946
--------------------------------------------------------------------------------

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

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

Premises  and  equipment  is  detailed in note 5 to the  consolidated  financial
statements in the Company's  Annual Report to  Stockholders on Form 10-K for the
year ended December 31, 2002.

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

Deferred debenture offering costs consist primarily of underwriters' commissions
and are  amortized  over the terms of the  debentures.  The  increase was due to
additional costs ($554,000)  incurred in the first quarter of 2003 in connection
with the sale of Series 01/21/03  debentures by Intervest Mortgage  Corporation,
partially offset by normal amortization during the period.

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

Deposit   liabilities   increased  to  $538,098,000  at  March  31,  2003,  from
$505,958,000  at December  31,  2002,  primarily  reflecting  increases in money
market and  certificate  of deposit  accounts  of  $5,637,000  and  $21,370,000,
respectively.  At March  31,  2003,  certificate  of  deposit  accounts  totaled
$346,353,000  and  demand  deposit,  savings,  NOW  and  money  market  accounts
aggregated  $191,745,000.  The  same  categories  of  deposit  accounts  totaled
$324,983,000 and $180,975,000,  respectively,  at December 31, 2002. Certificate
of deposit  accounts  represented  64% of total  deposits  at March 31, 2003 and
December 31, 2002.

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

At March 31,  2003,  debentures  payable  amounted to  $90,530,000,  compared to
$84,430,000  at year-end  2002.  The increase was due to the sale of  additional
debentures  by  Intervest   Mortgage   Corporation   (Series  01/21/03  totaling
$7,500,000  in principal  amount and maturing at various  times  through July 1,
2010) as part of its normal funding of its mortgage loan originations, partially
offset by the  repayment of $1,400,000 of its Series  11/10/98  debentures.  The
sale of the debentures,  after all underwriter's  commissions and other issuance
costs,  resulted in net proceeds of  $6,935,000.  At March 31,  2003,  Intervest
Mortgage  Corporation had  $80,100,000  principal  amount of debentures  payable
outstanding  and  the  Holding  Company  had  $10,430,000  principal  amount  of
debentures  payable  outstanding,  of which $6,930,000 were convertible into the
Holding  Company's Class A common stock at a current  conversion price of $10.01
per share through December 31, 2003.

At March 31, 2003 and December 31, 2002, the Holding Company, through its wholly
owned  subsidiary  Intervest  Statutory Trust I, has Trust Preferred  Securities
(Junior Debentures  Payable)  outstanding  totaling  $15,000,000 that qualify as
regulatory capital.

                                       16

<PAGE>

At March 31,  2003,  accrued  interest  payable on all  debentures  amounted  to
$14,345,000, compared to $13,872,000 at year-end 2002. Nearly all of the accrued
interest payable is due and payable at the maturity of various debentures. For a
further  discussion  of all the  debentures,  including  conversion  prices  and
redemption premiums,  see notes 7 and 9 to the consolidated financial statements
included in the  Company's  Annual Report to  Stockholders  on Form 10-K for the
year ended December 31, 2002.

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

At March 31, 2003 and December 31, 2002,  the note payable  amounted to $263,000
and $266,000,  respectively.  The note was issued by the Bank in connection with
the  purchase  of  property  in 2002 by the Bank that is  across  from its Court
Street  branch  office in Florida.  The Bank issued a note payable to the seller
that matures in February of 2017 and calls for monthly payments of principal and
interest at 7% per annum.

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

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

                                            At March 31,      At December 31,
                                            ------------      ---------------
($ in thousands)                                2003                2002
--------------------------------------------------------------------------------
Mortgage escrow funds payable                 $8,959              $5,894
Official checks outstanding                    2,117               4,373
Accrued interest payable on deposits             929                 895
Income taxes payable                           1,048                 526
All other                                      1,656               1,639
--------------------------------------------------------------------------------
                                             $14,709             $13,327
--------------------------------------------------------------------------------

Mortgage escrow funds payable  represent  advance payments made by borrowers for
taxes and  insurance  that are  remitted  by the Company to third  parties.  The
increase  reflects the timing of payments to taxing  authorities  as well as the
growth in the loan portfolio.  The level of official checks  outstanding  varies
and  fluctuates  based on banking  activity.  The level of income taxes  payable
fluctuates based on the Company's earnings, effective tax rate and timing of tax
payments.  All other is  comprised  mainly of accrued  expenses  as well as fees
received on loan commitments that have not yet been funded.

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

Stockholders'   equity   increased  to  $55,000,000  at  March  31,  2003,  from
$53,126,000  at December 31, 2002.  The increase was due to the  following:  net
earnings of  $1,801,000  and the  recording of $67,000 of  compensation  expense
related to stock  warrants  held by  employees  and  directors.  For  additional
discussion of employee stock warrants, see the section "Comparison of Results of
Operations for the Quarters Ended March 31, 2003 and 2002"

The Bank is a  well-capitalized  institution  as defined in  applicable  banking
regulations,  which  require  minimum  Tier 1  leverage  and  Tier  1 and  total
risk-based  ratios of 5%, 6% and 10%,  respectively.  Management  believes  that
there are no current  conditions  or events  outstanding  which would change the
Bank's  designation  as a  well-capitalized  institution.  See  note  4  to  the
condensed  consolidated  financial  statements  in this  report  for the  Bank's
capital ratios.

                         Asset and Liability Management
                         ------------------------------

Interest  rate risk  arises  from  differences  in the  repricing  of assets and
liabilities  within a given time period.  The primary objective of the Company's
asset/liability  management strategy is to limit, within established guidelines,
the adverse  impact of changes in interest  rates on the  Company's net interest
income  and  capital.  The  Company  uses "gap  analysis,"  which  measures  the
difference between interest-earning assets and interest-bearing liabilities that
mature or reprice  within a given time  period,  to monitor  its  interest  rate
sensitivity. The Company's one-year positive interest rate sensitivity gap was a
positive  $143,639,000,  or 19.7% at March  31,  2003,  compared  to a  positive
$107,681,000,  or 15.7% at December 31, 2002.  The increase was primarily due to
existing loans moving into the less than one-year maturity  timeframe as well as
the addition of new floating-rate loans and short-term  investments funded by an
increase in deposits and borrowed funds with a term of over one year.

In computing the gap, the Company treats its interest checking, money market and
savings deposit accounts as immediately  repricing.  Further,  the Company has a
"floor," or minimum rate, on many of its floating-rate  loans that is determined
in relation to prevailing  market rates on the date of  origination.  This floor
only adjusts upwards in the event of increases in the loan's interest rate. This
feature reduces the effect on interest income in a falling rate environment. For

                                       17

<PAGE>

a further  discussion of interest  rate risk and gap analysis,  including all of
the  assumptions  used in developing  the one-year  gap, see the Company's  2002
Annual Report to Stockholders on Form 10-K, pages 32 and 33.

The table that follows summarizes the Company's interest-earning assets and
interest-bearing liabilities as of March 31, 2003, that are scheduled to mature
or reprice within the periods shown.

<TABLE>
<CAPTION>
($ in thousands)                                            0-3             4-12         Over 1-4          Over 4
                                                           Months          Months          Years           Years            Total
------------------------------------------------------------------------------------------------------------------------------------
<S>   <C>                                                <C>             <C>             <C>             <C>              <C>
Loans (1)                                                $ 158,793       $ 230,130       $ 109,171       $  40,320        $ 538,414
Securities held to maturity (2)                             17,673          65,631          53,939               -          137,243
Short-term investments                                      29,725               -               -               -           29,725
Federal Reserve Bank stock                                       -               -               -           1,114            1,114
Interest-earning time deposits                               2,000               -               -               -            2,000
------------------------------------------------------------------------------------------------------------------------------------
Total rate-sensitive assets                              $ 208,191       $ 295,761       $ 163,110       $  41,434        $ 708,496
------------------------------------------------------------------------------------------------------------------------------------
Deposit accounts (3):
  Interest checking deposits                             $  14,370          $    -          $    -          $    -        $  14,370
  Savings deposits                                          32,848               -               -               -           32,848
  Money market deposits                                    139,930               -               -               -          139,930
  Certificates of deposit                                   29,475          94,782         120,116         101,980          346,353
------------------------------------------------------------------------------------------------------------------------------------
  Total deposits                                           216,623          94,782         120,116         101,980          533,501
Debentures payable                                          41,500               -          17,600          31,430           90,530
Debentures payable- capital securities                           -               -               -          15,000           15,000
Accrued interest on all debentures                           7,408               -           3,294           3,643           14,345
Note payable                                                     -               -               -             263              263
------------------------------------------------------------------------------------------------------------------------------------
Total rate-sensitive liabilities                         $ 265,531       $  94,782       $ 141,010       $ 152,316        $ 653,639
------------------------------------------------------------------------------------------------------------------------------------
GAP (repricing differences)                              $ (57,340)      $ 200,979       $  22,100       $(110,882)       $  54,857
------------------------------------------------------------------------------------------------------------------------------------
Cumulative GAP                                           $ (57,340)      $ 143,639       $ 165,739       $  54,857        $  54,857
------------------------------------------------------------------------------------------------------------------------------------
Cumulative GAP to total assets                               -7.9%            19.7%           22.8%            7.5%             7.5%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Significant assumptions used in preparing the table above:


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

                         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  commitments,  deposit
withdrawals and the repayment of borrowed funds.  The Company's  primary sources
of funds consist of: retail deposits  obtained through the Bank's branch offices
and through the mail;  amortization,  satisfactions and repayments of loans; the
maturities  and calls of  securities;  sales of  debentures;  borrowings  in the
federal  funds market and cash  provided by operating  activities.  The Bank has
agreements with correspondent banks whereby it may borrow up to $8,000,000 on an
unsecured basis. There were no outstanding borrowings under these agreements. In
April 2003,  the Bank was  approved to become a member of the Federal  Home Loan
Bank of New York.

The Company is party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financing  needs of its  customers.  These
financial  instruments  are in the form of commitments to extend credit,  unused
lines of credit  and  standby  letters of credit,  and may  involve,  to varying
degrees,  elements  of credit and  interest  rate risk in excess of the  amounts
recognized in the  consolidated  balance sheets.  The contract  amounts of these
instruments reflect the extent of involvement the Company has in these financial
instruments.   The   Company's   exposure   to  credit  loss  in  the  event  of
nonperformance by the other party to the off-balance sheet financial instruments
is represented by the contractual amount of those instruments.  The Company uses
the same credit policies in making  commitments as it does for on-balance  sheet
instruments.

                                       18

<PAGE>

Commitments  to extend credit are agreements to lend funds to a customer as long
as there is no violation of any  condition  established  in the  contract.  Such
commitments  generally have fixed expiration dates or other termination  clauses
and  require  payment of fees.  Since some of the  commitments  are  expected to
expire  without  being  drawn  upon,  the  total  commitment   amount  does  not
necessarily  represent  future cash  requirements.  The Company  evaluates  each
customer's credit  worthiness on a case-by-case  basis. The amount of collateral
obtained,  if deemed necessary by the Company upon extension of credit, is based
on management's credit evaluation of the counterparty. Standby letters of credit
are conditional  commitments  issued by the Company to guarantee the performance
of a customer to a third party.  The credit risk involved in issuing  letters of
credit is essentially the same as that involved in extending loans to customers.
The Company believes that it can fund all of its commitments from the sources of
funds noted above.

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

                                                      At Mar 31,     At Dec 31,
                                                      ----------     ----------
($ in thousands)                                            2003           2002
--------------------------------------------------------------------------------
Unfunded loan commitments                                $84,342        $68,244
Available lines of credit                                    826            533
Standby letters of credit                                  1,267          1,267

 Comparison of Results of Operations for the Quarters Ended March 31, 2003 and
 -----------------------------------------------------------------------------
                                      2002
                                      ----

Overview
--------

Consolidated  net earnings in the first quarter of 2003 increased to $1,801,000,
from  $1,248,000 in the first  quarter of 2002.  Earnings per share on a diluted
basis  increased to $0.32 in the first quarter of 2003,  from $0.30 in the first
quarter  of 2002.  The  earnings  per  share  computation  for the 2003  quarter
included a higher number of common shares  resulting from the exercise of common
stock  warrants in the latter part of 2002 and the inclusion of dilutive  shares
from convertible debentures outstanding.  The Company's return on average assets
and equity increased to 1.03% and 13.40%, respectively,  in the first quarter of
2003, up from 0.95% and 12.23% in the first quarter of 2002.

The  improvement  in  quarterly  earnings  was  attributable  to  growth  in the
Company's net interest and dividend income, which increased by $1,199,000 due to
an increase in the Company's  loan  portfolio.  This  improvement  was partially
offset by a $322,000 increase in noninterest  expenses (a large portion of which
was attributable to the Company's  growth in assets) and a $381,000  increase in
the provision for income taxes due to higher pre-tax income.

Selected information regarding results of operations for the first quarter of
2003 follows:

<TABLE>
<CAPTION>
                                                                      Intervest    Intervest  Intervest    Inter-
                                                            Holding    National     Mortgage  Statutory   Company
($ in thousands)                                            Company        Bank   Corporation  Trust I    Balances     Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>         <C>         <C>        <C>        <C>             <C>
Interest and dividend income                                $   269     $ 9,302     $ 2,092    $   382    $  (420)        $11,625
Interest expense                                                684       4,495       1,659        370       (420)          6,788
                                                            ------------------------------------------------------------------------
Net interest and dividend income (expense)                     (415)      4,807         433         12          -           4,837
Provision  (credit) for loan loss reserves                       29         258          57          -          -             344
Noninterest income                                               49         268         539          -       (527)            329
Noninterest expenses                                            148       1,760         391         12       (527)          1,784
                                                            ------------------------------------------------------------------------
Earnings (loss) before taxes                                   (543)      3,057         524          -          -           3,038
Provision (credit) for income taxes                            (246)      1,244         239          -          -           1,237
------------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss)                                         $  (297)    $ 1,813     $   285        $ -       $  -         $ 1,801
------------------------------------------------------------------------------------------------------------------------------------
Intercompany dividends received (paid) (1)                  $   375     $  (375)       $  -        $ -       $  -         $     -
------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  The Bank pays a monthly  dividend of  $125,000  to the  Holding  Company in
     order   to   provide   funds   for  the   debt   service   on  the   Junior
     Debentures-Capital  Securities  (the proceeds of which were  contributed to
     the Bank as capital in December 2001).
</FN>
</TABLE>


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

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

Net interest and dividend income increased to $4,837,000 in the first quarter of
2003,   from  $3,638,000  in  the  first  quarter  of  2002.  The  increase  was
attributable to growth of $174,145,000 in the Company's average interest-earning
assets.  The growth in average  earning  assets was due to  $121,792,000  in new
mortgage loans and a net increase in security and other  short-term  investments
aggregating  $52,353,000.  These  increases were funded by  $148,249,000  of new
deposits, $11,766,000 of additional borrowed funds and a $12,924,000 increase in
stockholders' equity.

                                       19

<PAGE>

The  Company's net interest  margin  remained  nearly  unchanged at 2.85% in the
first  quarter  of 2003,  compared  to 2.87% in the same  period  of 2002.  In a
declining interest rate environment, the yield on the Company's interest-earning
assets  decreased 81 basis  points to 6.86% in the first  quarter of 2003 due to
lower  rates  on  new  mortgage  loans  originated   (resulting  from  increased
competition  to make  loans),  prepayments  of  higher-yielding  loans and lower
yields earned on security and other short-term  investments.  The Company's cost
of funds  decreased 88 basis points to 4.37% in the first quarter of 2003 due to
lower  rates paid on  deposit  accounts  and a rate  decrease  on  floating-rate
debentures.  The floating-rate debentures are indexed to the JPMorgan Chase Bank
prime rate,  which decreased by a total of 50 basis points from April 1, 2002 to
March 31, 2003.

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

<TABLE>
<CAPTION>
                                                                                  Quarter Ended
                                                  -----------------------------------------------------------------------------
                                                            March 31, 2003                           March 31, 2002
                                                  -----------------------------------------------------------------------------
                                                     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                                               $509,189     $10,670    8.50%           $387,397      $8,820     9.23%
   Securities                                           158,120         887    2.28             114,764         842     2.98
   Other interest-earning assets                         20,040          68    1.38              11,043          49     1.80
------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                           687,349     $11,625    6.86%            513,204      $9,711     7.67%
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                               15,084                                  14,100
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                           $702,433                                $527,304
------------------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
   Interest checking deposits                           $11,831        $ 56    1.92%            $ 9,563        $ 61     2.60%
   Savings deposits                                      31,174         162    2.11              26,841         192     2.90
   Money market deposits                                138,880         722    2.11              89,227         636     2.89
   Certificates of deposit                              333,768       3,513    4.27             241,773       3,033     5.09
------------------------------------------------------------------------------------------------------------------------------------
Total deposit accounts                                  515,653       4,453    3.50             367,404       3,922     4.33
------------------------------------------------------------------------------------------------------------------------------------
   Federal funds purchased                                    -           -       -                 344           2     1.96
   Debentures and related interest payable               98,641       1,957    8.05              86,652       1,773     8.30
   Junior debentures - capital securities                15,000         374   10.10              15,000         374    10.10
   Note payable                                             265           4    6.87                 144           2     6.91
------------------------------------------------------------------------------------------------------------------------------------
Total borrowed funds                                    113,906       2,335    8.31             102,140       2,151     8.54
------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                      629,559      $6,788    4.37%            469,544      $6,073     5.25%
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                              5,109                                   6,151
Noninterest-bearing liabilities                          14,015                                  10,783
Stockholders' equity                                     53,750                                  40,826
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity             $702,433                                $527,304
------------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                              $4,837    2.49%                         $3,638     2.42%
------------------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                      $57,790                2.85%            $43,660                 2.87%
------------------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
   to total interest-bearing liabilities                   1.09                                   1.09x
------------------------------------------------------------------------------------------------------------------------------------
Other Ratios:
  Return on average assets (1)                             1.03%                                   0.95%
  Return on average equity  (1)                           13.40%                                  12.23%
  Noninterest expense to average assets (1)                1.02%                                   1.11%
  Efficiency ratio (2)                                       35%                                     37%
  Average stockholders' equity to average assets           7.65%                                   7.74%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Annualized
(2)  Defined as  noninterest  expenses as a percentage  of net  interest  income
     before the provision for loan losses plus noninterest income.
</FN>
</TABLE>

                                       20

<PAGE>

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

In the first quarter of 2003,  the Company  recorded a provision for loan losses
of $344,000,  compared to $346,000 in the same quarter of 2002. The provision is
based on  management's  ongoing  assessment of the adequacy of the allowance for
loan loss reserves for each subsidiary,  which takes into consideration a number
of  factors as  discussed  on page 15 of this  report.  The  provision  for each
quarter was a function of net loan growth,  which amounted to $42,680,000 during
the 2003 first quarter,  versus $36,529,000 in the first quarter of 2002. In the
first quarter of 2003, a larger percentage of the growth was attributable to the
Holding  Company and  Intervest  Mortgage  Corporation  whose  internal  reserve
percentages are lower than those of the Bank.

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

Noninterest  income  includes fees from customer  service  charges,  income from
mortgage  lending  activities  (which  consists mostly of fees from expired loan
commitments and loan servicing, maintenance and inspections charges), and income
from the early  repayment  of  mortgage  loans  (which  consists  largely of the
recognition  of unearned fees  associated  with such loans at the time of payoff
and the receipt of prepayment penalties in certain cases). The amount and timing
of, as well as income from,  loan  prepayments,  if any, cannot be predicted and
can fluctuate significantly.  Normally, the number of instances of prepayment of
mortgage loans tends to increase during periods of declining  interest rates and
tends to decrease  during  periods of  increasing  interest  rates.  Many of the
Company's  mortgage loans include  prepayment  provisions,  and others  prohibit
prepayment of indebtedness entirely.

Noninterest  income increased  $55,000 to $329,000 in the first quarter of 2003,
from $274,000 in the first quarter of 2002.  The increase was due to an increase
in income from expired loan commitments and loan service charge income resulting
from growth in the loan portfolio.

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

Noninterest  expenses increased to $1,784,000 in the first quarter of 2003, from
$1,462,000  in the  comparable  quarter of 2002.  The  increase of $322,000  was
largely  due to a $151,000  increase in  compensation  and  benefits,  a $30,000
increase in data processing expenses, a $27,000 increase in professional fees, a
$15,000  increase  in  insurance  expense  and the  addition  of  $43,000 of net
expenses associated with foreclosed real estate.

The increase in compensation and benefits expense was due to $122,000  resulting
from additional staff (60 full-time  employees at March 31, 2003 vs. 54 at March
31, 2002), salary increases and a higher cost of employee benefits. Compensation
for the first quarter of 2002 included bonus payments of $37,000 to the Chairman
of the Company.  Compensation  for the first quarter of 2003 included $67,000 of
expense  associated  with certain  common stock  warrants  held by employees and
directors as a result of an increase in the Company's Class A common stock price
during the  quarter.  (In 2001,  the Company  modified  the terms of its Class A
common  stock  warrants  -  exercisable  at $12.50  and  $16.00  per share as of
December  31,  2001 - and  reduced  the  exercise  price  to  $10.01  per  share
commencing  January 1, 2002 and  extended  the  expiration  date to December 31,
2002. In September 2002, the Company further  modified the warrants by extending
the  expiration  date to December  31,  2003.  For these  warrants,  which total
138,500,  compensation  expense is being  recorded in the  statement of earnings
with the  corresponding  credit to paid in capital in  accordance  with variable
rate accounting as prescribed in APB Opinion No. 25 and related interpretations.
Future  compensation  related to these  warrants will fluctuate up or down until
December 31, 2003 and will be a function of the  Company's  Class A common stock
price and number of warrants outstanding and exercised).

The increase in data processing expenses was due to growth in the Bank's assets.
The Bank engages a third-party servicer for its main data processing and the fee
is a function of the Bank's total assets,  which  increased to  $606,772,000  at
March  31,  2003,  from   $463,930,000  at  March  31,  2002.  The  increase  in
professional  fees and  insurance  expense was  primarily  due to the  Company's
growth.

The  foreclosed  real  estate  expenses  relate to one  commercial  real  estate
property  located in the State of Florida  that was acquired by the Bank through
foreclosure.  Foreclosed real estate expenses, net of any rental income, consist
mostly of real estate taxes,  insurance,  utilities,  maintenance,  professional
fees and other  charges  required  to  protect  the  Company's  interest  in the
property.

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

The provision  for income taxes  increased to $1,237,000 in the first quarter of
2003,  from $856,000 in the first quarter of 2002, due to higher pre-tax income.
The Company's  effective tax rate  (inclusive of state and local taxes) amounted
to 40.7% in both periods.

                                       21

<PAGE>

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Market  risk is the risk of loss  from  adverse  changes  in market  prices  and
interest rates.  The Company's  market risk arises  primarily from interest rate
risk inherent in its lending and deposit-taking  activities, and the issuance of
its  debentures.  The  Company has not  engaged in and  accordingly  has no risk
related to trading accounts, commodities or foreign exchange. The measurement of
market risk  associated  with financial  instruments is meaningful only when all
related and offsetting on-and off-balance sheet transactions are aggregated, and
the resulting net positions are identified.  Disclosures about the fair value of
financial  instruments as of December 31, 2002,  which reflect changes in market
prices  and  rates,  can be  found  in  note  20 to the  consolidated  financial
statements  included in the Company's Annual Report to Stockholders on Form 10-K
for the year ended December 31, 2002.

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, 2002.

ITEM 4. Controls and Procedures

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

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

PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings
         Not Applicable
ITEM 2.  Changes in Securities and Use of Proceeds
(a)      Not Applicable
(b)      Not Applicable
(c)      Not Applicable
(d)      Not Applicable
ITEM 3.  Defaults Upon Senior Securities
         Not Applicable
ITEM 4.  Submission of Matters to a Vote of Security Holders
         Not Applicable
ITEM 5.  Other Information
         Not Applicable
ITEM 6.  Exhibits and Reports on Form 8-K
(a)      The following exhibit is filed as part of this report.

          99.1 Certification  pursuant  to 18 U.S.C.  Section  1350,  as adopted
               pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

(b)      No reports on Form 8-K were filed during the  reporting  period covered
         by this report.

                                       22

<PAGE>

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: April 25, 2003    By: /s/ Lowell S. Dansker
                        -------------------------
                              Lowell S. Dansker, President and Treasurer
                              (Principal Executive and Financial Officer)

Date: April 25, 2003    By: /s/ Lawrence G. Bergman
                        ---------------------------
                              Lawrence G. Bergman, Vice President and Secretary

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<PAGE>

                                  CERTIFICATION

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

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

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

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

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

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

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

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

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

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

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

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





     /s/ Lowell S. Dansker
     ---------------------
     Lowell S. Dansker, President and Treasurer
     (Principal Executive and Financial Officer)
     April 25, 2003

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