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

                                    FORM 10-K

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
                                             -----------------

                        Commission File Number 000-23377
                                               ---------

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


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


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

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

 Securities registered pursuant to Section 12(b) of the Securities  Exchange Act
 of 1934

                                      None
                             ----------------------
                                (Title of class)

 Securities registered pursuant to Section 12(g) of the Securities  Exchange Act
 of 1934

                 Class A Common Stock, par value $1.00 per share
           -----------------------------------------------------------
                                (Title of class)

Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  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 if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendments to this Form 10-K. [X]

As of February 4, 2002 there were 3,544,629 shares of the  Registrant's  Class A
common stock and 355,000 shares of the Registrant's  Class B common stock issued
and  outstanding.  The  aggregate  market  value  of  1,202,729  shares  of  the
Registrant's  Class A common stock on February 4, 2002, which excludes 2,341,900
shares held by affiliates as a group, was $11,498,000 This value is based on the
average bid and asked prices of $9.56 per share on February 4, 2002 of the Class
A common stock on the NASDAQ Small Cap Market.



                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

Portions of the Proxy Statement for the 2002 Annual Meeting of Stockholders  are
incorporated    by    reference    into   Part   III   of   this   Form    10-K.

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<PAGE>

                Intervest Bancshares Corporation and Subsidiaries

                         2001 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS

PART I
                                                                            Page
                                                                            ----

Item 1   Description of Business .............................................2

Item 2   Description of Properties...........................................12

Item 3   Legal Proceedings...................................................13

Item 4   Submission of Matters to a Vote of Security Holders.................13

Item 4A  Executive Officers and Other Key Employees..........................13


PART II

Item 5   Market for Common Equity and Related Stockholder Matters............15

Item 6   Selected Consolidated Financial and Other Data......................16

Item 7   Management's Discussion and Analysis of Financial Condition
              and Results of Operations......................................17

Item7A   Quantitative and Qualitative Disclosures About Market Risk..........34

Item 8   Financial Statements and Supplementary Data.........................34

Item 9   Changes In and Disagreements with Accountants on
              Accounting and Financial Disclosure............................66

PART III

Item 10  Directors and Executive Officers....................................66

Item 11  Executive Compensation..............................................66

Item 12  Security Ownership of Certain Beneficial Owners and Management......66

Item 13  Certain Relationships and Related Transactions......................66


PART IV

Item 14  Exhibits, Financial Statements Schedules and Reports on Form 8-K....66

Signatures...................................................................68


                                       1
<PAGE>

                                     PART I

Item 1. Description of Business

General

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-K 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.

Intervest Bancshares Corporation
--------------------------------

Intervest  Bancshares  Corporation  is a registered  bank  holding  company (the
"Holding Company") incorporated in 1993 under the laws of the State of Delaware.
Its principal office is located at 10 Rockefeller  Plaza,  Suite 1015, New York,
New York 10020, and its telephone number is 212-218-2800.  The Holding Company's
Class A common  stock was  approved  for listing on the NASDAQ  SmallCap  Market
(Symbol:  IBCA) in November 1997.  Prior to then,  there had been no established
trading market for the securities of the Holding Company.  At December 31, 2001,
the Holding  Company  owned 100% of the  outstanding  capital stock of Intervest
National Bank, Intervest Corporation of New York and Intervest Statutory Trust I
(hereafter referred to collectively as the "Company," on a consolidated  basis).
On July 20,  2001,  Intervest  Bank (the  Holding  Company's  other wholly owned
banking  subsidiary prior to this date) merged into Intervest National Bank. The
merger was accounted for at historical cost similar to the  pooling-of-interests
method of  accounting.  Under this method of  accounting,  the recorded  assets,
liabilities,  shareholders'  equity,  income  and  expenses  of both  banks  are
combined and recorded at their  historical  cost amounts.  Hereafter,  Intervest
National Bank may be referred to as the "Bank."

At December 31, 2001, the Company had total assets of $512,622,000, net loans of
$368,526,000, deposits of $362,437,000,  debentures and related interest payable
of  $99,910,000,  and  stockholders'  equity of  $40,395,000,  compared to total
assets of  $416,927,000,  net loans of  $266,326,000,  deposits of $300,241,000,
debentures and related interest payable of $72,813,000, and stockholders' equity
of $36,228,000 at December 31, 2000.

The Holding Company's primary business is the operation of its subsidiaries.  It
does not  engage in any  other  substantial  business  activities  other  than a
limited amount of real estate mortgage  lending.  From time to time, the Holding
Company  sells  debentures  to raise funds for  working  capital  purposes.  The
Holding  Company is subject to examination and regulation by the Federal Reserve
Board (FRB).

Intervest National Bank
-----------------------

Intervest National Bank is a nationally chartered bank that has its headquarters
and full-service  banking office at One Rockefeller Plaza, in New York City, and
a total of five full-service banking offices in Pinellas County,  Florida - four
in Clearwater and one in South Pasadena.


                                       2
<PAGE>

At December 31, 2001,  the Bank had total assets of  $421,152,000,  net loans of
$296,255,000, deposits of $365,978,000, and stockholder's equity of $46,749,000,
compared to total assets of $335,788,000, net loans of $208,399,000, deposits of
$302,072,000 and stockholder's equity of $27,606,000, at December 31, 2000.

The Bank  provides a wide range of banking  services to small and  middle-market
businesses and individuals.  It conducts a personalized  commercial and consumer
banking business, which consists of attracting deposits from the areas served by
its banking  offices.  The Bank also provides  internet  banking through its web
site: www.intervestnatbank.com,  which can attract deposit customers from within
as well as 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  residential and commercial real estate lending and also
offers commercial and consumer loans.

The revenues of the Bank are  primarily  derived from interest and fees received
from originating loans, and from interest and dividends earned on securities and
other  short-term  investments.  The  principal  sources of funds for the Bank's
lending  activities  are deposits,  repayment of loans,  maturities and calls of
securities  and cash  flow  generated  from  operating  activities.  The  Bank's
principal  expenses are interest  paid on deposits and operating and general and
administrative expenses.

Deposit  flows and the rates paid thereon are  influenced  by interest  rates on
competing  investments  available  to  depositors  and general  market  rates of
interest.  Lending  activities  are  affected  by the demand for real estate and
other  types of loans,  interest  rates at which such  loans may be offered  and
other factors affecting the availability of funds to lend. The Bank faces strong
competition in the attraction of deposits and in the  origination of loans.  The
Bank's deposits are insured by the Federal Deposit Insurance  Corporation (FDIC)
to the extent permitted by law.

As is the case with banking  institutions  generally,  the Bank's operations are
significantly  influenced by general economic conditions and by related monetary
and fiscal policies of banking regulatory agencies,  including the FRB and FDIC.
The Bank is also subject to the  supervision,  regulation and examination of the
Office of the Comptroller of the Currency of the United States of America (OCC).
In June 2001,  the OCC  terminated a Memorandum of  Understanding  with the Bank
that was in  effect  since  June  2000.  The  memorandum  was a  formal  written
agreement  whereby,  among other  things,  the Bank had been required to review,
revise,  develop and implement  various  policies and procedures with respect to
its lending and credit underwriting.  Management  implemented various actions in
order for the Bank to be in full compliance with the memorandum.

Intervest Corporation of New York
---------------------------------

Intervest  Corporation of New York is in the business of investing  primarily in
commercial  and  multifamily  real  estate  mortgage  loans on income  producing
properties, such as office and commercial properties and multifamily residential
apartment  buildings.  It also makes loans on other types of properties  and may
resell mortgages. Intervest Corporation of New York is located at 10 Rockefeller
Plaza in New York City.

Intervest Corporation of New York was acquired on March 10, 2000, by the Holding
Company.  In the  acquisition,  all the  outstanding  capital stock of Intervest
Corporation  of New York was  acquired in exchange for  1,250,000  shares of the
Holding  Company's  Class A  common  stock.  Former  shareholders  of  Intervest
Corporation  of New York are officers and directors of Intervest  Corporation of
New  York  and  the  Holding  Company.  The  acquisition  was  accounted  for at
historical cost similar to the pooling-of-interests method of accounting.  Under
this method of  accounting,  the  recorded  assets,  liabilities,  shareholders'
equity, income and expenses of both companies are combined and recorded at their
historical cost amounts.

At December  31,  2001,  Intervest  Corporation  of New York had total assets of
$83,083,000,  net loans of $62,665,000,  debentures and related interest payable
of $72,113,000, and stockholder's equity of $9,847,000, compared to total assets
of  $74,860,000,  net loans of  $51,992,000,  debentures  and  related  interest
payable of $64,347,000,  and stockholder's equity of $9,269,000, at December 31,
2000.


                                       3
<PAGE>

Intervest  Corporation of New York's operations are significantly  influenced by
the movement of interest rates and by general economic conditions,  particularly
those in the New York City  metropolitan  area where most of the properties that
secure its mortgage loans are concentrated.


Intervest Statutory Trust I
---------------------------

Intervest  Statutory  Trust I was formed in December 2001 in connection with the
issuance of $15,000,000 of capital securities. It is not authorized and does not
conduct  any trade or  business,  and was  formed  for the sole  purpose  of the
issuance,  sale and administration of the capital securities.  See note 9 to the
consolidated   financial  statements  for  further  discussion  of  the  capital
securities.

Market Area

The primary  market area of the Bank's New York office is  considered  to be the
New York City  metropolitan  region,  and Manhattan in  particular.  The primary
market area of the Bank's Florida  offices is considered to be Pinellas  County,
which is the most populous county in the Tampa Bay area of Florida. The area has
many more seasonal residents. The Tampa Bay area is located on the West Coast of
Florida, midway up the Florida peninsula. The major cities in the area are Tampa
(Hillsborough  County) and St. Petersburg and Clearwater  (Pinellas County). The
Bank's deposit gathering and lending markets are concentrated in the communities
surrounding  its offices.  Management  believes that all the Bank's  offices are
located in areas serving small and mid-sized  businesses  and serving middle and
upper income communities.  The Bank's deposit-gathering market also includes its
web  site on the  internet:  www.intervestnatbank.com,  which  attracts  deposit
customers from both within and outside the Bank's primary market areas.

Intervest Corporation of New York's lending activities have been concentrated in
the New York City  metropolitan  region.  It also makes  loans in other  states,
including  Connecticut,  Florida,  New  Jersey,  North  Carolina,  Pennsylvania,
Virginia and Washington D.C.

Competition

The deregulation of the banking  industry and the widespread  enactment of state
laws that permit multi-bank holding companies, as well as an increasing level of
interstate banking, have created a highly competitive environment for commercial
banking.  In one or more aspects of its  business,  the Bank competes with other
commercial  banks,  savings  and  loan  associations,   credit  unions,  finance
companies,  mutual funds, insurance companies,  brokerage and investment banking
companies, and other financial intermediaries.  Most of these competitors,  some
of which are affiliated with large bank holding  companies,  have  substantially
greater resources and lending limits,  and may offer services that the Bank does
not currently provide. In addition,  many of the Bank's non-bank competitors are
not subject to the same extensive  federal  regulations that govern bank holding
companies and federally insured banks.

Competition among financial institutions is based upon interest rates offered on
deposit  accounts,  interest rates charged on loans and other credit and service
charges,  the quality and scope of the services  rendered,  the  convenience  of
banking facilities and, in the case of loans to commercial  borrowers,  relative
lending limits.  Management  believes that a community bank is better positioned
to establish  personalized banking  relationships with both commercial customers
and individual  households.  The Bank's community  commitment and involvement in
their  primary  market  areas,   as  well  as  its  commitment  to  quality  and
personalized  banking  services  are  factors  that  contribute  to  the  Bank's
competitiveness.  Management believes a locally-based bank is often perceived by
the local  business  community as  possessing a clearer  understanding  of local
commerce and their needs.  Consequently,  management  believes that the Bank can
compete  successfully  in its primary  market  areas by making  prudent  lending
decisions   quickly  and  more  efficiently   than  its   competitors,   without
compromising asset quality or profitability, although no assurances can be given
that such  factors  will assure  success.  In  addition,  management  believes a
personalized  service  approach  enables  the Bank to attract  and  retain  core
deposits.


                                       4
<PAGE>

In making its  investments,  Intervest  Corporation of New York also experiences
significant  competition  from  banks,  insurance  companies,  savings  and loan
associations,  mortgage bankers,  pension funds, real estate investment  trusts,
limited  partnerships  and other  lenders and  investors  engaged in  purchasing
mortgages or making real property investments with investment objectives similar
in whole or part to its own. An increase  in the general  availability  of funds
may increase  competition  in the making of  investments  in mortgages  and real
property, and may reduce the yields available therefrom.

Asset Quality

The Bank  seeks to  maintain  a high  level of asset  quality  when  considering
investments in securities and the  originations of loans. In originating  loans,
the Bank places  emphasis  on the  borrower's  ability to generate  cash flow to
support its debt obligations and other cash related expenses. The Bank's lending
activities  are  conducted  pursuant to written  policies  and  defined  lending
limits.  Depending  on their type and size,  certain  loans must be reviewed and
approved  by a Loan  Committee  comprised  of  certain  members  of the Board of
Directors prior to being  originated.  As part of its loan portfolio  management
strategy,  loan-to-value ratios (the ratio that the original principal amount of
the loan  bears to the lower of the  purchase  price or  appraised  value of the
property  securing the loan at the time of origination) on new loans  originated
by the Bank  typically do not exceed 80%. In addition,  physical  inspections of
properties  being considered for mortgage loans are made as part of the approval
process.

The  Bank's  Loan  Committee,  as  well as its  senior  management  and  lending
officers,   concentrate   their   efforts  and  resources  on  loan  review  and
underwriting procedures. Internal controls include ongoing reviews of loans made
to monitor  documentation and ensure the existence and valuations of collateral.
The Bank  also  has in place a review  process  with the  objective  of  quickly
identifying,  evaluating and  initiating  necessary  corrective  actions for any
problem loans.

Intervest  Corporation of New York does not have formal  policies  regarding the
percentage of its assets that may be invested in any single  mortgage,  the type
of  mortgage  loans and  investments  it can make,  the  geographic  location of
properties  collateralizing  those mortgages,  limits as to loan-to-value ratios
and the loan approval process.

At  December  31,  2001,  the Bank had one  commercial  real  estate loan with a
principal balance of $1,243,000  classified as nonperforming  and impaired.  The
Company  did not have any  nonperforming  assets or  impaired  loans at any time
during 2000 or 1999.  There can be no  assurance  that a downturn in real estate
values, as well as other economic  factors,  would not have an adverse impact on
the Company's future level of nonperforming assets and profitability.

Lending Activities

The Company's  lending  activities  include real estate loans and commercial and
consumer loans. Real estate loans include primarily the origination of loans for
commercial  and  multifamily  properties.  While the Bank's  lending  activities
include  single-family   residential  mortgages,   such  lending  has  not  been
emphasized.  Commercial  loans  are  originated  for  working  capital  funding.
Consumer  loans  include  those for the  purchase of  automobiles,  boats,  home
improvements  and  investments.  At December 31, 2001,  the  Company's  net loan
portfolio  amounted to  $368,526,000,  compared to  $266,326,000 at December 31,
2000.

Commercial and Multifamily Real Estate Mortgage Lending
-------------------------------------------------------

Almost all of the Company's current loan portfolio is comprised of loans secured
by commercial and  multifamily  real estate,  including  rental and  cooperative
apartment buildings, office buildings and shopping centers.

Commercial and multifamily mortgage lending generally involves greater risk than
1-4 family  residential  lending.  Such lending  typically  involves larger loan
balances to single  borrowers and repayment of loans secured by income producing
properties  is  typically  dependent  upon  the  successful   operation  of  the
underlying real estate.


                                       5
<PAGE>

Mortgage loans on commercial and multifamily  properties are normally originated
for terms of no more than 20 years,  many with variable  interest rates that are
based on the prime rate.  Additionally,  many loans have an interest  rate floor
which resets upward along with any increase in the loan's  interest  rate.  This
feature  reduces  the loan's  interest  rate  exposure  to periods of  declining
interest rates.

Mortgage loans on commercial and multifamily  properties  typically  provide for
periodic  payments of interest and  principal  during the term of the  mortgage,
with  the  remaining  principal  balance  and any  accrued  interest  due at the
maturity  date. The majority of the mortgages  owned by the Company  provide for
balloon payments at maturity,  which means that a substantial part or the entire
original principal amount is due in one lump sum payment at maturity. If the net
revenue from the property is not  sufficient  to make all debt service  payments
due on the mortgage  or, if at maturity or the due date of any balloon  payment,
the owner of the  property  fails to raise the  funds (by  refinancing,  sale or
otherwise) to make the lump sum payment, the Company could sustain a loss on its
investment in the mortgage loan. The Company's  mortgage loans are generally not
personal  obligations  of the  borrower  and are not  insured or  guaranteed  by
governmental agencies or otherwise.

Commercial Lending
------------------

The Bank offers a variety of  commercial  loan  services  including  term loans,
lines of credit and equipment financing.  Short-to-medium term commercial loans,
both collateralized and  uncollateralized,  are made available to businesses for
working  capital needs  (including  those secured by inventory,  receivables and
other assets),  business  expansion  (including  acquisitions of real estate and
improvements), and the purchase of equipment and machinery. Commercial loans are
typically  underwritten on the basis of the borrower's ability to make repayment
from the  cash  flow of  their  business  and are  generally  collateralized  as
discussed  above.  As a result,  the  availability of funds for the repayment of
commercial loans may be  substantially  dependent on the success of the business
itself.  Further, the collateral  underlying the loans may depreciate over time,
cannot be appraised with as much precision as residential  real estate,  and may
fluctuate in value based on the success of the business.

Consumer Lending
----------------

The Bank offers consumer loans including those for: the purchase of automobiles,
recreation vehicles and boats; second mortgages; home improvements;  home equity
lines of credit; and personal loans (both collateralized and  uncollateralized).
Consumer  loans  typically  have a shorter term and carry higher  interest rates
than other types of loans. In addition,  consumer loans have additional risks of
collectability when compared to traditional types of loans granted by commercial
banks  such as  residential  mortgage  loans.  In many  instances,  the  Bank is
required  to rely on the  borrower's  ability  to repay the loan  from  personal
income  sources,  since the  collateral  may be of reduced  value at the time of
collection.

Loan Solicitation and Processing
--------------------------------

Loan originations are derived from the following:  advertising in newspapers and
trade  journals;   referrals  from  mortgage  brokers;  existing  customers  and
borrowers;  walk-in customers;  and through direct solicitation by the Company's
officers.

The Company's underwriting  procedures normally require the following:  physical
inspections by management of properties  being  considered  for mortgage  loans;
mortgage title  insurance;  hazard  insurance;  and an appraisal of the property
securing the loan to determine the property's  adequacy as security performed by
an appraiser approved by the Company. In addition, the Company analyzes relevant
real property and  financial  factors,  which in certain cases may include:  the
condition  and use of the  subject  property;  the  property's  income-producing
capacity;  and the quality,  experience and  creditworthiness  of the property's
owner.

For commercial and consumer  loans,  upon receipt of a loan  application  from a
prospective  borrower,  a credit report and other  verifications are obtained to
substantiate specific information relating to the applicant's  employment income
and credit standing.


                                       6
<PAGE>

Real Estate Investing Activities

The Company,  from time to time, may purchase equity  interests in real property
or it may  acquire  such an equity  interest  pursuant to a  foreclosure  upon a
mortgage in the normal course of business. With respect to such equity interests
in real estate,  the Company may acquire and retain title to  properties  either
directly  or through a  subsidiary.  While no such  transactions  are  presently
pending,  the Company  would  consider the  expansion  of its  business  through
investments  in or  acquisitions  of other  companies  engaged in real estate or
mortgage  business  activities.  While  the  Company  has  not  previously  made
acquisitions  of real  property  (other than  purchases in  connection  with the
operation of its offices) or managed  income-producing  property, its management
has had  substantial  experience in the acquisition and management of properties
and, in particular, multifamily residential properties.

Investment Activities

The Bank's  investment  policies and strategies are reviewed and approved by its
Board of  Directors  and  Investment  Committee.  The Company  has  historically
purchased  securities that are issued directly by the U.S.  government or one of
its agencies.  Accordingly,  the  Company's  investments  in securities  carry a
significantly lower credit risk than its loan portfolio. To manage interest rate
risk, the Company  normally  purchases  securities that have adjustable rates or
securities  with fixed  rates that have short- to  intermediate-maturity  terms.
From time to time, a securities  available-for-sale  portfolio may be maintained
to  provide   flexibility  for  implementing  asset  and  liability   management
strategies. The Company does not engage in trading activities.

Securities held to maturity totaled  $99,157,000 at December 31, 2001,  compared
to  $20,970,000  at December 31, 2000.  On December  31,  2000,  Intervest  Bank
transferred U.S.  government  agency  securities with an estimated fair value of
$74,789,000  from  the  held-to-maturity  to the  available-for-sale  portfolio.
Securities  available  for sale  amounted to  $6,192,000  at December  31, 2001,
compared to  $74,789,000  at December  31,  2000.  The decrease was due to early
redemptions by various  agencies brought about from the steady decline in market
interest rates during 2001.

The  Company  also  invests  in  various  money  market  instruments,  including
overnight  and  term  federal  funds,   short-term  bank  commercial  paper  and
certificate  of  deposits.  These  instruments  are used to  temporarily  invest
available funds resulting from deposit-gathering activities and normal cash flow
from operations.  Cash and short-term  investments at December 31, 2001 amounted
to $24,409,000, compared to $42,938,000 at December 31, 2000.

Sources of Funds

The Bank's primary  sources of funds consist of the following:  retail  deposits
obtained  through  its  branch  offices  and  through  the  mail;  amortization,
satisfactions and repayments of loans;  maturities and calls of securities;  and
cash generated by operating activities.  In addition,  the Bank has from time to
time received capital contributions from the Holding Company.

Deposit   accounts  are  solicited  from   individuals,   small  businesses  and
professional  firms located  throughout  the Bank's primary market areas through
the offering of a broad variety of deposit services.  The Bank also uses its web
site on the internet: www.intervestnatbank.com, which attracts deposit customers
from both within and outside its primary  market  areas.  At December  31, 2001,
consolidated deposit liabilities totaled $362,437,000,  compared to $300,241,000
at December 31, 2000.

Deposit  services  include the  following:  certificates  of deposit  (including
denominations of $100,000 or more); individual retirement accounts (IRAs); other
time deposits;  checking and other demand deposit accounts;  negotiable order of
withdrawal (NOW) accounts; savings accounts; and money market accounts. Interest
rates  offered by the Bank on deposit  accounts  are normally  competitive  with
those in the principal market areas of the Bank. In addition,  the determination
of rates and terms also  considers  the Bank's  liquidity  requirements,  growth
goals, capital levels and federal regulations.  Maturity terms, service fees and
withdrawal  penalties on deposit  products are reviewed and  established  by the
Bank on a periodic basis.


                                       7
<PAGE>

The Bank offers internet  banking  services,  ATM services with access to local,
state and  national  networks,  wire  transfers,  direct  deposit of payroll and
social security checks and automated drafts for various  accounts.  In addition,
the Bank  offers  safe  deposit  boxes to its  customers  in  Florida.  The Bank
periodically  reviews the scope of the banking  products  and services it offers
consistent with market opportunities and available resources.

The Bank  purchases  federal  funds  from time to time to manage  its  liquidity
needs. At December 31, 2001 and 2000, there were no such funds outstanding,  and
such funding has not been emphasized. 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 at December 31, 2001 or 2000.

Intervest  Corporation  of New  York's  principal  sources  of funds  consist of
borrowings  (through the sale of its debentures),  mortgage  repayments and cash
flow generated from operations.  At December 31, 2001, Intervest  Corporation of
New York had debentures  outstanding of $63,000,000,  compared to $57,150,000 at
December  31, 2000.  The Holding  Company has also sold  debentures  for working
capital  purposes.   The  Holding  Company's   debentures   outstanding  totaled
$10,430,000 at December 31, 2001, and $6,930,000 at December 31, 2000.

On December 18, 2001, the Holding Company's wholly-owned  subsidiary,  Intervest
Statutory Trust I, sold 9.875% Trust Preferred  Securities due December 18, 2031
in the aggregate principal amount of $15,000,000,  referred to in this report as
the Capital Securities.  The net proceeds from the sale were paid to the Holding
Company in exchange for $15,000,000 of its 9.875% Junior Subordinated Debentures
(the "Junior  Subordinated  Debentures")  due  December  18,  2031.  The Holding
Company then invested  $15,000,000  as a capital  contribution  in the Bank. The
sole asset of the Trust,  the obligor on the Capital  Securities,  is the Junior
Subordinated Debentures.

For a further discussion of all the debentures,  including conversion prices and
redemption  premiums,  see  note  7 and  note 9 to  the  consolidated  financial
statements.

Employees

At December 31, 2001, the Company  employed 53 full-time  equivalent  employees.
The  employees  are not covered by a  collective  bargaining  agreement  and the
Company believes its employee relations are good.

Federal and State Taxation

The Company and its subsidiaries  file a consolidated  federal income tax return
and  combined  state and city income tax returns in New York.  The Company  also
files a state  income tax return in New  Jersey  and a  franchise  tax return in
Delaware.  The Bank also files a state  income tax return in Florida.  Intervest
Corporation  of New York files state income tax returns in various  states.  All
the returns are filed on a calendar year basis.

Consolidated returns have the effect of eliminating intercompany  distributions,
including dividends, from the computation of consolidated taxable income for the
taxable year in which the distributions  occur. In accordance with an income tax
sharing  agreement,  income tax charges or credits are, for financial  reporting
purposes,  allocated to the Holding Company and its subsidiaries on the basis of
their  respective  taxable  income or taxable loss included in the  consolidated
income tax return.

Banks and bank holding  companies  are subject to federal and state income taxes
in the same  manner as other  corporations.  Florida  taxes banks under the same
provisions as other corporations, while New York State and New York City taxable
income is calculated under  applicable  sections of the Internal Revenue Code of
1986, as amended (the "Code"), with some modifications required by state law.

Although the Bank's federal income tax liability is determined  under provisions
of the Code,  which is applicable to all taxpayers,  Sections 581 through 597 of
the Code apply specifically to financial institutions.  The two primary areas in
which the  treatment of  financial  institutions  differs from the  treatment of
other  corporations under the Code are in the areas of bond gains and losses and
bad debt  deductions.  Bond gains and losses generated from the sale or exchange


                                       8
<PAGE>

of portfolio  instruments  are generally  treated for financial  institutions as
ordinary  gains and  losses as  opposed  to  capital  gains and losses for other
corporations,  as the  Code  considers  bond  portfolios  held  by  banks  to be
inventory in a trade or business rather than capital assets. Banks are allowed a
statutory method for calculating a reserve for bad debt deductions. Based on its
asset size, a bank is permitted to maintain a bad debt reserve  calculated on an
experience  method,  based on  chargeoffs  and  recoveries  for the  current and
preceding  five years,  or a  "grandfathered"  base year reserve,  if larger.  `

Investment in Subsidiaries


<TABLE>
                                             At December 31, 2001
                                             --------------------                               Subsidiaries
($ in thousands)                                    % of              Equity in               Earnings for the
                                             Voting       Total       Underlying          Year Ended  December  31,
Subsidiary                                   Stock      Investment    Net Assets          2001       2000       1999
----------                                   -----      ----------    ----------          ----       ----       ----
<S>                                           <C>        <C>           <C>               <C>        <C>        <C>
Intervest  National  Bank                     100%       $46,749       $46,749           $3,404     $2,619     $1,135
Intervest  Corporation of New York            100%       $ 9,847       $ 9,847           $  577     $  129     $  572
Intervest Statutory Trust I                   100%       $   464       $   464           $    -     $    -     $    -

</TABLE>

Effective December 2001, the Bank began paying a monthly dividend of $125,000 to
the  Holding  Company  in order to  provide  funds for the debt  service  on the
Capital  Securities  (the  proceeds  of which  were  contributed  to the Bank as
capital).  In 2000, Intervest Corporation of New York paid a $3,000,000 dividend
to  the  Holding  Company,  which  was  reinvested  in  the  Bank  as a  capital
contribution.

Supervision and Regulation

Bank holding  companies and banks are  extensively  regulated under both federal
and state laws and regulations that are intended to protect  depositors.  To the
extent  that  the  following  information  describes  statutory  and  regulatory
provisions,  it is qualified  in its  entirety by  reference  to the  particular
statutory  and  regulatory  provisions.  Any  change  in the  applicable  law or
regulation  may have a material  effect on the  business  and  prospects  of the
Holding Company and its subsidiaries.

Bank Holding Company Regulation
-------------------------------

As a bank holding company  registered under the Bank Holding Company Act of 1956
(BHCA),  the Holding Company is subject to the regulation and supervision of the
FRB. The Holding  Company is required to file with the FRB periodic  reports and
other   information   regarding  its  business   operations  and  those  of  its
subsidiaries.  Under the BHCA, the Holding Company's activities and those of its
subsidiaries are limited to banking,  managing or controlling banks,  furnishing
services to or performing services for its subsidiaries or engaging in any other
activity  which the FRB  determines  to be so  closely  related  to  banking  or
managing or controlling banks as to be properly incident thereto.

As a bank holding  company,  the Holding Company is required to obtain the prior
approval of the FRB before acquiring direct or indirect  ownership or control of
more than 5% of the voting  shares of a bank or bank  holding  company.  The FRB
will not  approve any  acquisition,  merger or  consolidation  that would have a
substantial  anti-competitive result, unless the anti-competitive effects of the
proposed  transaction are outweighed by a greater public interest in meeting the
needs and convenience of the public. The FRB also considers managerial,  capital
and other financial factors in acting on acquisition or merger  applications.  A
bank holding company may not engage in, or acquire direct or indirect control of
more than 5% of the voting  shares of any  company  engaged  in any  non-banking
activity,  unless such  activity  has been  determined  by the FRB to be closely
related to banking or  managing  banks.  The FRB has  identified  by  regulation
various  non-banking  activities in which a bank holding company may engage with
notice to, or prior approval by, the FRB.

The FRB  monitors  the  capital  adequacy  of bank  holding  companies  and uses
risk-based  capital adequacy  guidelines to evaluate bank holding companies on a
consolidated basis. The guidelines require a ratio of Tier 1 or Core Capital, as
defined in the guidelines,  to total  risk-weighted  assets of at least 4% and a
ratio of total capital to  risk-weighted  assets of at least 8%. At December 31,
2001, the Company's  consolidated ratio of total capital to risk-weighted assets


                                       9
<PAGE>

was 14.11% and its risk-based  Tier 1 capital ratio was 12.89%.  At December 31,
2000, the Company's  consolidated ratio of total capital to risk-weighted assets
was 12.63% and its  risk-based  Tier 1 capital ratio was 11.72%.  The guidelines
also require a ratio of Tier 1 capital to adjusted  total average  assets of not
less than 3%. The Company's consolidated leverage ratio at December 31, 2001 and
2000, was 10.67% and 8.75%, respectively.

The  federal  banking  agencies'  risk-based  and  leverage  ratios are  minimum
supervisory  ratios  generally  applicable  to banking  organizations  that meet
certain  specified  criteria,  assuming  that they have the  highest  regulatory
rating. Banking organizations not meeting these criteria are expected to operate
with capital  positions well above the minimum  ratios.  The FRB guidelines also
provide  that  banking  organizations  experiencing  internal  growth  or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels, without significant reliance on intangible
assets.  In addition,  the regulations of the FRB provide that  concentration of
credit risk and certain risk arising from nontraditional  activities, as well as
an  institution's  ability to manage these risks,  are  important  factors to be
taken into account by regulatory agencies in assessing an organization's overall
capital adequacy.

The FRB and the other federal banking agencies have adopted  amendments to their
risk-based capital regulations to provide for the consideration of interest rate
risk in the agency's  determination of a banking institution's capital adequacy.
The amendments  require such  institutions  to  effectively  measure and monitor
their interest rate risk and to maintain capital adequate for that risk.

Bank Regulation
---------------

The Bank is a nationally  chartered banking  corporation subject to supervision,
examination  and regulation of the FRB, FDIC and OCC. These  regulators have the
power to: enjoin "unsafe or unsound  practices;"  require  affirmative action to
correct any  conditions  resulting  from any  violation  or  practice;  issue an
administrative  order that can be  judicially  enforced;  direct an  increase in
capital;  restrict the growth of a bank;  assess civil monetary  penalties;  and
remove officers and directors.

The  operations  of the Bank are subject to numerous  statutes and  regulations.
Such statutes and  regulations  relate to required  reserves  against  deposits,
investments, loans, mergers and consolidations,  issuance of securities, payment
of  dividends,  establishment  of  branches,  and other  aspects  of the  Bank's
operations.  Various consumer laws and regulations also affect the operations of
the Bank,  including state usury laws,  laws relating to  fiduciaries,  consumer
credit and equal credit, and fair credit reporting.

The Bank is subject to Sections 23A and 23B of the Federal  Reserve  Act,  which
governs certain transactions,  such as loans, extensions of credit,  investments
and purchases of assets  between  member banks and their  affiliates,  including
their parent holding  companies.  These restrictions limit the transfer of funds
to the Holding Company in the form of loans, extensions of credit, investment or
purchases of assets ("Transfers"), and they require that the Bank's transactions
with  the  Holding  Company  be on  terms no less  favorable  to the  Bank  than
comparable transactions between the Bank and unrelated third parties.  Transfers
by the Bank to the  Holding  Company  are limited in amount to 10% of the Bank's
capital  and  surplus,  and  transfers  to all  affiliates  are  limited  in the
aggregate to 20% of the Bank's capital and surplus.  Furthermore, such loans and
extensions of credit are also subject to various collateral requirements.  These
regulations and restrictions may limit the Holding  Company's  ability to obtain
funds from the Bank for its cash needs,  including funds for  acquisitions,  and
the payment of dividends, interest and operating expenses.

The Bank is prohibited from engaging in certain tying arrangements in connection
with any  extension  of  credit,  lease or sale of  property  or  furnishing  of
services.  For example,  the Bank may not generally require a customer to obtain
other  services  from the Bank or the Holding  Company,  and may not require the
customer  to  promise  not to  obtain  other  services  from a  competitor  as a
condition  to an  extension  of  credit.  The Bank is also  subject  to  certain
restrictions  imposed by the  Federal  Reserve  Act on  extensions  of credit to
executive officers, directors, principal stockholders or any related interest of
such persons.  Extensions of credit (i) must be made on  substantially  the same


                                       10
<PAGE>

terms  (including  interest  rates and  collateral)  as,  and  following  credit
underwriting procedures that are not less stringent than those prevailing at the
time for, comparable transactions with persons not covered above and who are not
employees  and (ii) must not involve  more than the normal risk of  repayment or
present other unfavorable  features.  In addition,  extensions of credit to such
persons  beyond limits set by FRB  regulations  must be approved by the Board of
Directors.  The Bank is also subject to certain lending limits and  restrictions
on overdrafts to such persons.  A violation of these  restrictions may result in
the  assessment  of  substantial  civil  monetary  penalties  on the Bank or any
officer, director,  employee, agent or other person participating in the conduct
of the  affairs  of the Bank or the  imposition  of a cease  and  desist  order.
Applicable law provides the federal  banking  agencies with broad powers to take
prompt corrective action to resolve problems of insured depository institutions.
The extent of those powers  depends upon whether the  institution in question is
"well capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," or "critically  undercapitalized." Under federal regulations,
a bank is considered "well capitalized" if it has (i) a total risk-based capital
ratio  of 10% or  greater,  (ii) a Tier  1  risk-based  capital  ratio  of 6% or
greater,  (iii) a leverage ratio of 5% or greater and (iv) is not subject to any
order or written directive to meet and maintain a specific capital level for any
capital measure. An "adequately capitalized" bank is defined as one that has (i)
a total  risk-based  capital  ratio of 8% or greater,  (ii) a Tier 1  risk-based
capital ratio of 4% or greater,  and (iii) a leverage ratio of 4% or greater (or
3% or greater in the case of a bank with a composite CAMELS rating of 1). A bank
is considered (a)  "undercapitalized  " if it has (i) a total risk-based capital
ratio of less than 8%, (ii) a Tier 1 risk-based  capitalized  ratio of less than
4%, or (iii) a leverage  ratio of less than 4% (or 3% in the case of a bank with
a composite CAMELS rating of 1); (b) "significantly  undercapitalized" if a bank
has  (i) a  total  risk-based  capital  ratio  of less  than  6%,  (ii) a Tier 1
risk-based  capital ratio of less than 3% or (iii) a leverage ratio of less than
3%,  and (c)  "critically  undercapitalized"  if a bank has a ratio of  tangible
equity to total  assets equal to or less than 2%. At December 31, 2001 and 2000,
the Bank met the definition of a well-capitalized institution.

The deposits of the Bank are insured by the FDIC through the Bank Insurance Fund
(the "BIF") to the extent provided by law. Under the FDIC's risk-based insurance
system, BIF-insured institutions are currently assessed premiums of between zero
and $0.27 per $100 of eligible deposits, depending upon the institutions capital
position  and  other   supervisory   factors.   Legislation  also  provides  for
assessments  against BIF insured  institutions  that will be used to pay certain
financing  corporation  ("FICO")  obligations.  In addition to any BIF insurance
assessments,  BIF-insured  banks  are  expected  to make  payments  for the FICO
obligations  currently  equal  to an  estimated  $0.0182  per  $100 of  eligible
deposits each year. The assessment is determined quarterly.

Regulations  promulgated by the FDIC pursuant to the Federal  Deposit  Insurance
Corporation  Improvement  Act of 1991 ("1991 Banking Law") place  limitations on
the  ability of certain  insured  depository  institutions  to accept,  renew or
rollover deposits by offering rates of interest which are  significantly  higher
than the prevailing  rates of interest on deposits  offered by other  depository
institutions  having the same type of charter  in such  depository  institutions
normal market area. Under these regulations,  well-capitalized  institutions may
accept,  renew or rollover such deposits without  restriction,  while adequately
capitalized  institutions  may accept,  renew or rollover  such  deposits with a
waiver  from the FDIC  (subject  to certain  restrictions  on payment of rates).
Undercapitalized institutions may not accept, renew or rollover such deposits.

Under the Financial  Institutions  Reform,  Recovery and Enforcement Act of 1989
("FIRREA"),  a depository institution insured by the FDIC can be held liable for
any loss  incurred  by, or  reasonably  expected to be incurred  by, the FDIC in
connection with (i) the default of a commonly controlled FDIC-insured depository
institution or (ii) any assistance provided by the FDIC to a commonly controlled
FDIC-insured institution in danger of default. "Default" is defined generally as
the  appointment  of a  conservator  or  receiver  and "in danger of Default" is
defined  generally as the  existence  of certain  conditions  indicating  that a
"default"  is likely  to occur in the  absence  of  regulatory  assistance.  The
Federal Community  Reinvestment Act of 1977 ("CRA"),  among other things, allows
regulators to withhold  approval of an  acquisition  or the  establishment  of a
branch  unless  the  applicant  has  performed  satisfactorily  under  the  CRA.
Satisfactory  performance  means  adequately  meeting  the  credit  needs of the
communities the institution serves, including low and moderate income areas. The
applicable  federal  regulators now regularly conduct CRA examinations to assess


                                       11
<PAGE>

the   performance   of   financial   institutions.   The  Bank  has  received  a
"satisfactory" rating in its most recent CRA examination.

The federal  regulators  have adopted  regulations  and  examination  procedures
promoting the safety and soundness of individual  institutions  by  specifically
addressing,  among other things: (i) internal controls;  information systems and
internal audit systems; (ii) loan documentation; (iii) credit underwriting; (iv)
interest rate  exposure;  (v) asset growth;  (vi) ratio of classified  assets to
capital;  (vii) minimum earnings; and (viii) compensation and benefits standards
for management officials.

The FRB, OCC and other federal banking agencies have broad  enforcement  powers,
including the power to terminate deposit insurance, and impose substantial fines
and other civil and criminal  penalties and appoint a  conservator  or receiver.
Failure to comply with applicable laws,  regulations and supervisory  agreements
could  subject  the  Holding  Company  or its  banking  subsidiary,  as  well as
officers,   directors   and  other   institution-affiliated   parties  of  these
organizations,  to  administrative  sanctions  and  potentially  civil  monetary
penalties.

Interstate Banking and Other Recent Legislation
-----------------------------------------------

The  Riegle-Neal  Interstate  Banking  and  Branching  Efficiency  Act  of  1994
facilitates the interstate expansion and consolidation of banking  organizations
by permitting bank holding companies that are adequately capitalized and managed
to acquire  banks  located in states  outside  their home states  regardless  of
whether such  acquisitions  are authorized  under the law of the host state. The
Act also permits  interstate  mergers of banks,  with some  limitations  and the
establishment  of new branches on an interstate  basis provided that such action
is authorized by the law of the host state. The  Gramm-Leach-Bliley  Act of 1999
permits banks,  securities  firms and insurance  companies to affiliate  under a
common holding company structure. In addition to allowing new forms of financial
services  combinations,  this Act clarifies how financial services conglomerates
will be  regulated by the  different  federal and state  regulators.  Additional
legislative and regulatory  proposals have been made and others can be expected.
These include proposals designed to improve the overall the financial  stability
of the United  States  banking  system,  and to provide for other changes in the
bank regulatory  structure,  including proposals to reduce regulatory burdens on
banking  organizations  and to expand the nature of products and services  banks
and bank holding  companies may offer.  It is not possible to predict whether or
in what form these proposals may be adopted in the future and, if adopted,  what
their effect will be on the Company.

Monetary Policy and Economic Control
------------------------------------

The  commercial  banking  business in which the Company  engages is affected not
only by general economic  conditions,  but also by the monetary  policies of the
FRB.  Changes in the discount  rate on member bank  borrowing,  availability  of
borrowing at the "discount  window," open market  operations,  the imposition of
changes in reserve  requirements  against  member banks'  deposits and assets of
foreign  branches  and the  imposition  of and  changes in reserve  requirements
against  certain  borrowings  by  banks  and  their  affiliates  are some of the
instruments of monetary policy available to the FRB. These monetary policies are
used in varying  combinations to influence  overall growth and  distributions of
bank loans,  investments  and deposits,  and this use may affect  interest rates
charged on loans or paid on deposits.  The monetary policies of the FRB have had
a  significant  effect on the  operating  results  of  commercial  banks and are
expected  to continue to do so in the  future.  The  monetary  policies of these
agencies are influenced by various factors,  including inflation,  unemployment,
short-term and long-term changes in the  international  trade balance and in the
fiscal policies of the United States  Government.  Future monetary  policies and
the effect of such  policies on the future  business and earnings of the Company
cannot be predicted.

Item 2. Description of Properties

The office of the  Holding  Company  and  Intervest  Corporation  of New York is
located in leased premises (of  approximately  4,000 sq. ft.) on the tenth floor
of 10 Rockefeller  Plaza,  New York, N.Y, 10020.  The lease expires in September
2004.


                                       12
<PAGE>

The Bank's  headquarters and banking office is located in leased premises on the
third floor of One Rockefeller  Plaza, New York, N.Y, 10020. The office consists
of approximately  7,000 sq. ft. and has been leased through May 2008. The Bank's
principal office in Florida is located at 625 Court Street, Clearwater, Florida,
33756. In addition,  the Bank operates an additional four branch offices;  three
of which are in Clearwater,  Florida,  at 1875 Belcher Road North,  2175 Nursery
Road and 2575 Ulmerton Road, and one is at 6750 Gulfport Blvd,  South  Pasadena,
Florida.  With the exception of the Belcher Road office, which is leased through
June 2007, the Bank owns all its offices in Florida.

The  Bank's  office  at  625  Court  Street  consists  of a  two-story  building
containing  approximately  22,000  sq. ft. The Bank  occupies  the ground  floor
(approximately  8,500 sq.  ft.) and leases the 2nd floor to a single  commercial
tenant.  The branch office at 1875 Belcher Road is a two-story building in which
the Bank  leases  approximately  5,100 sq. ft. on the ground  floor.  The branch
office at 2175 Nursery  Road is a one-story  building  containing  approximately
2,700 sq. ft., which is entirely occupied by the Bank. The branch office at 2575
Ulmerton Road is a three-story building containing  approximately 17,000 sq. ft.
The Bank occupies the ground floor  (approximately 2,500 sq. ft.) and leases the
upper floors to commercial tenants.  The branch office at 6750 Gulfport Blvd. is
a one-story building  containing  approximately 2,800 sq. ft., which is entirely
occupied by the Bank. In addition,  each of the Bank's Florida  offices  include
drive-through teller facilities. The Bank also owns a two-story building located
on property  contiguous  to its Court  Street  office in Florida.  The  building
contains approximately 12,000 sq. ft. and is leased to commercial tenants.

Item 3. Legal Proceedings

The  Company  is  periodically  a  party  to  or  otherwise  involved  in  legal
proceedings arising in the normal course of business,  such as claims to enforce
liens,  claims  involving the making and servicing of mortgage loans,  and other
issues  incident to the  Company's  business.  Management  does not believe that
there is any pending or threatened  proceeding  against the Company,  which,  if
determined adversely,  would have a material effect on the business,  results of
operations, or financial position of the Company.

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

No matter  was  submitted  during the  fourth  quarter of the fiscal  year ended
December 31,  2001,  to a vote of security  holders of the Company,  through the
solicitation of proxies or otherwise.

Item 4A. Executive Officers and Other Key Employees

     Jerome  Dansker,  age 83,  serves as Chairman of the Board of Directors and
Executive Vice President of Intervest Bancshares  Corporation.  He has served as
Executive Vice President since 1994 and as Chairman of the Board since 1996. Mr.
Dansker  received a  Bachelor  of Science  degree  from the New York  University
School  of  Commerce,  Accounts  and  Finance,  a Law  degree  from the New York
University  School of Law,  and is  admitted  to  practice as an attorney in the
State of New York. Mr. Dansker also serves as Chairman of the Board of Directors
and  Chairman of the Loan  Committee  of  Intervest  National  Bank.  He is also
Chairman of the Board of Directors  and  Executive  Vice  President of Intervest
Corporation of New York.

     Lowell S. Dansker, age 51, serves as a Director, President and Treasurer of
Intervest Bancshares Corporation and has served in that capacity since 1993. Mr.
Dansker  received a Bachelor of Science in Business  Administration  from Babson
College,  a Law  degree  from the  University  of Akron  School  of Law,  and is
admitted to practice as an attorney in New York, Ohio,  Florida and the District
of Columbia. Mr. Dansker also serves as Chief Executive Officer,  Director and a
member of the Loan Committee of Intervest  National Bank. He is also a Director,
President and Treasurer of Intervest Corporation of New York.

     Lawrence G.  Bergman,  age 57,  serves as a Director,  Vice  President  and
Secretary of Intervest  Bancshares  Corporation  and has served in that capacity
since 1993.  Mr.  Bergman  received a Bachelor of Science degree and a Master of
Engineering  (Electrical) degree from Cornell University and a Master of Science
in Engineering and a Ph.D. degree from The Johns Hopkins University. Mr. Bergman
also  serves as a  Director  and a member  of the Loan  Committee  of  Intervest
National Bank. He is also a Director,  Vice-President and Secretary of Intervest


                                       13
<PAGE>

Corporation of New York.

     Keith A. Olsen,  age 48,  serves as President  of the Florida  Division and
Director of Intervest  National Bank and has served in such capacity  since July
2001.  Prior to that,  Mr. Olsen was the  President of Intervest  Bank from 1994
until it merged into Intervest National Bank in July 2001. Prior to that, he was
Senior Vice  President  of  Intervest  Bank since 1991.  Mr.  Olsen  received an
Associates  degree from St.  Petersburg Junior College and a Bachelors degree in
Business Administration and Finance from the University of Florida, Gainesville.
He is also a graduate  of the  Florida  School of Banking of the  University  of
Florida,  Gainesville,  the National School of Real Estate Finance of Ohio State
University  and the Graduate  School of Banking of the South of Louisiana  State
University.  Mr. Olsen has been in banking for more than 15 years and has served
as a senior bank officer for more than 10 years.

     Raymond C. Sullivan,  age 55, serves as President and Director of Intervest
National Bank and has served in that capacity  since April 1999.  Prior to that,
Mr. Sullivan was an employee of Intervest Bancshares Corporation from March 1998
to March 1999. Mr. Sullivan received an MBA degree from Fordham  University,  an
M.S.  degree from City  College of New York and a B.A.  degree from St.  Francis
College.  Mr.  Sullivan also has a  Certificate  in Advanced  Graduate  Study in
Accounting  from Pace  University  and is a graduate of the  National  School of
Finance and Management.  Mr.  Sullivan has over 27 years of banking  experience.
Prior to joining the Company, Mr. Sullivan was the Operations Manager of the New
York  Agency  Office  of Banco  Mercantile,  C.A.  from  1994 to 1997,  a Senior
Associate at LoBue  Associates,  Inc. from 1992 to 1993,  and an Executive  Vice
President, Chief Operations Officer and Director of Central Federal Savings Bank
from 1985 to 1992.

     John J. Arvonio,  age 39, serves as Senior Vice President,  Chief Financial
Officer and Secretary of Intervest National Bank and has served in such capacity
since  September  2000.  Prior to that, Mr.  Arvonio  served as Vice  President,
Controller and Secretary of Intervest  National Bank since April 1999.  Prior to
that, Mr. Arvonio was an employee of Intervest Bancshares Corporation from April
1998 to March 1999. Mr. Arvonio  received a B.B.A.  degree from Iona College and
is a  Certified  Public  Accountant.  Mr.  Arvonio  has over 13 years of banking
experience.  Prior to joining the  Company,  Mr.  Arvonio  served as Second Vice
President,  Technical Advisor and Assistant  Controller for The Greater New York
Savings  Bank from 1992 to 1997.  Prior to that,  Mr.  Arvonio  was a Manager of
Financial  Reporting  for  the  Leasing  and  Investment  Banking  Divisions  of
Citibank.



























                                       14
<PAGE>
                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Market for Securities

The Holding Company's Class A common stock is traded over the counter and quoted
on the NASDAQ  SmallCap  Market  under the symbol:  IBCA.  At December 31, 2001,
there were  3,544,629  and  355,000  shares of Class A and Class B common  stock
outstanding, respectively. There were approximately 700 holders of record of the
Class A common stock,  which includes  persons or entities that hold their stock
in nominee form or in street name through various  brokerage  firms. At December
31, 2001, there were four holders of record of Class B common stock. There is no
public-trading market for the Class B common stock.

The high and low sales prices listed below represent  actual sales  transactions
as reported by the NASDAQ for the Class A common  stock by calendar  quarter for
2001 and 2000 are as follows:

                              2001                      2000
                              ----                      ----
                         High       Low           High         Low
                        -----------------        -------------------
     First quarter      $ 6.50     $ 3.75        $ 7.00       $ 5.50
     Second quarter     $ 7.28     $ 5.30        $ 8.00       $ 4.75
     Third quarter      $ 7.75     $ 5.25        $ 7.00       $ 4.75
     Fourth quarter     $ 8.65     $ 6.25        $ 5.50       $ 3.38

Dividends

Class A and Class B common  stockholders are entitled to receive  dividends when
and if declared by the Board of Directors  out of funds  legally  available  for
such  purposes.  The Holding  Company has not paid any  dividends on its capital
stock and currently is not contemplating the payment of a dividend.

The Holding  Company's ability to pay dividends is generally limited to earnings
from  the  prior  year,  although  retained  earnings  and  dividends  from  its
subsidiaries may also be used to pay dividends under certain circumstances.  The
primary  source of funds for  dividends  payable by the  Holding  Company to its
shareholders  is the dividends  received from its  subsidiaries.  The payment of
dividends  by  a  subsidiary  to  the  Holding  Company  is  determined  by  the
subsidiary's  Board of  Directors  and is  dependent  upon a number of  factors,
including the subsidiary's capital requirements, regulatory limitations, results
of operations and financial condition.

There are also various legal limitations with respect to the Bank's financing or
otherwise supplying funds to the Holding Company.  In particular,  under federal
banking law, the Bank may not declare a dividend that exceeds undivided profits.
In addition,  the approval of the FRB and OCC is required if the total amount of
all  dividends  declared in any calendar year exceeds the Bank's net profits for
that year,  combined  with its retained net profits for the preceding two years.
The FRB also has the  authority to limit further the payment of dividends by the
Bank under certain circumstances.  In addition, federal banking laws prohibit or
restrict the Bank from  extending  credit to the Holding  Company  under certain
circumstances.  The FRB and OCC have established  certain  financial and capital
requirements that affect the ability of banks to pay dividends and also have the
general authority to prohibit banks from engaging in unsafe or unsound practices
in conducting business.  Depending upon the financial condition of the Bank, the
payment  of cash  dividends  could be  deemed  to  constitute  such an unsafe or
unsound practice.

Under FRB  policy,  a bank  holding  company is  expected  to act as a source of
financial  strength to its subsidiary  banks and to commit  resources to support
each such bank.  Consistent  with this  policy,  the FRB has stated  that,  as a
matter of prudent banking,  a bank holding company generally should not pay cash
dividends  unless the  available  net  earnings of the bank  holding  company is
sufficient to fully fund the  dividends,  and the  prospective  rate of earnings
retention appears to be consistent with a holding company's capital needs, asset
quality and overall financial condition.

                                       15
<PAGE>

Item 6. Selected Consolidated Financial and Other Data

<TABLE>

------------------------------------------------------------------------------------------------------------------------------------
                                                                                At or For The Year Ended December 31,
                                                                  -----------  ------------ ------------  -----------  -----------
($ in thousands, except per share amounts)                            2001         2000         1999         1998         1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>           <C>          <C>          <C>          <C>
Financial Condition Data:
Total assets.....................................................  $512,622      $416,927     $340,481     $300,080     $245,262
Cash and cash equivalents........................................    24,409        42,938       32,095       40,977       24,043
Securities available for sale....................................     6,192        74,789            -            -            -
Securities held to maturity, net.................................    99,157        20,970       83,132       82,338       58,821
Loans receivable, net............................................   368,526       266,326      212,937      164,986      150,832
Deposits.........................................................   362,437       300,241      201,080      170,420      130,412
Federal funds purchased..........................................         -             -        6,955            -            -
Debentures and related accrued interest payable..................    99,910        72,813       92,422       93,090       82,966
Stockholders' equity.............................................    40,395        36,228       33,604       31,112       28,142
Nonaccrual loans.................................................     1,243             -            -            -            -
Allowance for loan loss reserves.................................     3,380         2,768        2,493        1,662        1,173
Loan chargeoffs..................................................         -             -            -            -            -
Loan recoveries..................................................         -             -            1           10           10
------------------------------------------------------------------------------------------------------------------------------------
Operations Data:
Interest and dividend income.....................................  $ 35,462      $ 31,908     $ 25,501     $ 24,647     $ 19,807
Interest expense.................................................    24,714        23,325       18,419       17,669       15,008
                                                                   -----------------------------------------------------------------
Net interest and dividend income.................................    10,748         8,583        7,082        6,978        4,799
Provision for loan loss reserves.................................       612           275          830          479          352
                                                                   -----------------------------------------------------------------
Net interest and dividend income after
     provision for loan loss reserves............................    10,136         8,308        6,252        6,499        4,447
Noninterest income...............................................     1,655           983          900          700          382
Noninterest expenses.............................................     5,303         4,568        4,059        3,077        2,679
                                                                   -----------------------------------------------------------------
Earnings before income taxes, extraordinary item
     and change in accounting principle..........................     6,488         4,723        3,093        4,122        2,150
Provision for income taxes.......................................     2,710         1,909        1,198        1,740          860
                                                                   -----------------------------------------------------------------
Earnings before extraordinary item and
     change in accounting principle..............................     3,778         2,814        1,895        2,382        1,290
Extraordinary item, net of tax (1)...............................         -          (206)           -            -            -

Cumulative effect of accounting change, net of tax (2)...........         -             -         (128)           -            -
                                                                   -----------------------------------------------------------------
Net earnings.....................................................  $  3,778      $  2,608     $  1,767     $  2,382     $  1,290
------------------------------------------------------------------------------------------------------------------------------------
Per Share Data:
Basic earnings per share.........................................  $   0.97      $   0.67     $   0.47     $   0.64     $   0.44
Diluted earnings per share.......................................      0.97          0.67         0.44         0.54         0.39
Common book value per share......................................     10.36          9.29         8.76         8.33         7.66
Dividends per share..............................................         -             -            -            -            -
------------------------------------------------------------------------------------------------------------------------------------
Other Data and Ratios:
Common shares outstanding........................................ 3,899,629     3,899,629    3,836,879    3,734,515    3,674,415
Average common shares used to calculate:
     Basic earnings per share.................................... 3,899,629     3,884,560    3,760,293    3,707,113    2,962,292
     Diluted earnings per share.................................. 3,899,629     3,884,560    4,020,118    4,723,516    3,322,459
Adjusted net earnings for diluted earnings per share...........    $  3,778      $  2,608     $  1,767       $2,554     $  1,290
Full-service banking offices.....................................         6             6            6            5            5
Return on average assets.........................................     0.85%         0.69%        0.57%        0.87%        0.59%
Return on average equity.........................................     9.94%         7.48%        5.48%        8.05%        6.00%
Loans, net of unearned income to deposits.....................       101.7%        88.70%      105.90%       96.81%      115.66%
Allowance for loan losses to total net loans.....................     0.92%         1.04%        1.17%        1.01%        0.78%
Average stockholders' equity to average total assets...........       8.50%         9.18%       10.37%       10.82%        9.86%
Stockholders' equity to total assets.............................     7.88%        8.69%        9.87%       10.37%        11.47%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents a charge, net of taxes, from the early retirement of debentures.
(2) Represents  a  charge,  net of taxes,  from the  adoption  of  Statement  of
    Position 98-5, "Reporting on the Costs of Start-Up Activities."

                                       16
<PAGE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

General

Management's  discussion  and  analysis of  financial  condition  and results of
operations  that follows  should be read in  conjunction  with the  Consolidated
Financial Statements and Notes included in this report on Form 10-K.

Intervest Bancshares Corporation has three wholly owned subsidiaries - Intervest
National Bank, Intervest Corporation of New York and Intervest Statutory Trust I
(hereafter  referred to collectively as the "Company" on a consolidated  basis).
Intervest Bancshares  Corporation and Intervest National Bank may be referred to
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.  The Holding Company also sells
debentures to raise funds for working capital purposes.

Intervest National Bank is a nationally chartered,  full-service commercial bank
that opened for business on April 1, 1999. On July 20, 2001, Intervest Bank (the
Holding  Company's  other wholly owned  banking  subsidiary  prior to this date)
merged  into  Intervest  National  Bank.  Intervest  Bank  was a  Florida  state
chartered  commercial  bank.  The merger was accounted  for at  historical  cost
similar to the pooling-of-interests  method of accounting.  Under this method of
accounting, the recorded assets,  liabilities,  shareholders' equity, income and
expenses  of both banks are  combined  and  recorded  at their  historical  cost
amounts.  Intervest National Bank has its headquarters and full-service  banking
office in Rockefeller Center, in New York City, and a total of five full-service
banking offices in Clearwater and Pinellas County,  Florida. The Bank conducts a
personalized  commercial  and  consumer  banking  business,  which  consists  of
attracting  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

                                       17
<PAGE>

loans and to purchase investment securities. The Bank emphasizes multifamily and
commercial real estate lending.

Intervest  Corporation of New York is also located in Rockefeller  Center in New
York City and is in the business of  originating  and acquiring  commercial  and
multifamily  loans.  On March 10,  2000,  the Holding  Company  acquired all the
outstanding  capital stock of Intervest  Corporation of New York in exchange for
1,250,000  shares of the Holding  Company's Class A common stock. As a result of
the  acquisition,  Intervest  Corporation  of New York  became  a  wholly  owned
subsidiary of the Holding Company.  Former shareholders of Intervest Corporation
of New York are officers and directors of both the Holding Company and Intervest
Corporation  of New York. The  acquisition  was also accounted for at historical
cost similar to the pooling-of-interests method of accounting.

Intervest  Statutory  Trust I was formed in December 2001 in connection with the
issuance  of  $15,000,000  of  Capital  Securities.  See  the  section  entitled
"Debentures  Payable and Accrued  Interest  Payable on  Debentures"  for further
discussion.

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

The Company's  profitability  is also  affected by the level of its  noninterest
income and expenses,  the provision  for loan loss  reserves,  and its effective
income tax rate. Noninterest income consists primarily of loan and other banking
fees.  Noninterest expense consists of compensation and benefits,  occupancy and
equipment  related  expenses,  data processing  expenses,  advertising  expense,
deposit  insurance  premiums  and  other  operating   expenses.   The  Company's
profitability is also significantly affected by general economic and competitive
conditions, changes in market interest rates, government policies and actions of
regulatory authorities.

Comparison of  Results of Operations for the Years  Ended December 31, 2001  and
2000.

General
-------

Consolidated net earnings for the full year 2001 increased 45% to $3,778,000, or
$0.97 per fully  diluted  share,  from  $2,608,000,  or $0.67 per fully  diluted
share,  for 2000.  Net earnings for 2001 represent the highest level of earnings
reported by the Company  since its  inception in 1993.  The growth was due to an
increase of  $2,165,000  in net interest and dividend  income and an increase of
$672,000 in noninterest income. These items were partially offset by an $801,000
increase in the provision for income taxes,  a $735,000  increase in noninterest
expense,  and a $337,000 increase in the provision for loan losses.  Results for
2000 included an extraordinary  charge, net of taxes, of $206,000, in connection
with the early retirement of various debentures.

Selected information regarding results of operations for the Holding Company and
its subsidiaries for 2001 follows:


<TABLE>
                                                                             Intervest      Intervest        Inter-
                                                               Holding       National      Corporation      company
($ in thousands)                                             Company (1)       Bank        of New York      Balances    Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>             <C>            <C>             <C>          <C>
Interest and dividend income                                  $   818         $27,126        $  7,624        $  (106)     $  35,462
Interest expense                                                1,124          17,185           6,511           (106)        24,714
                                                            ------------------------------------------------------------------------
Net interest and dividend (expense) income                       (306)          9,941           1,113              -         10,748
Provision for loan loss reserves                                   19             575              18              -            612
Noninterest income                                                176             925           1,152           (598)         1,655
Noninterest expenses                                              226           4,500           1,175           (598)         5,303
                                                            ------------------------------------------------------------------------
(Loss) earnings before taxes                                     (375)          5,791           1,072              -          6,488
(Credit) provision for income taxes                              (172)          2,387             495              -          2,710
------------------------------------------------------------------------------------------------------------------------------------
Net (loss) earnings                                           $  (203)        $ 3,404        $    577        $     -      $   3,778
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the net activity of Intervest Statutory Trust I.

                                       18
<PAGE>

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  $10,748,000  in 2001,  from
$8,583,000 in 2000. The improvement was  attributable to growth in the Company's
balance  sheet and a higher net  interest  margin.  The average  loan  portfolio
increased by $64,207,000  during 2001,  funded by a similar  increase in average
deposits. The net interest margin increased to 2.47% in 2001, from 2.34% in 2000
due to the Company's cost of funds decreasing at a faster pace than the yield on
its interest-earning assets.

The  Company's  yield on  interest-earning  assets  decreased 53 basis points to
8.15% in 2001 due to the steady decline in market  interest rates resulting from
the  Federal  Reserve  Board  decreasing  the  federal  funds  target rate on 11
occasions  during  2001  for a  total  of  475  basis  points.  The  lower  rate
environment  resulted  in  originations  of new loans with lower  rates than the
average  yield of the loan  portfolio in 2000,  prepayments  of  higher-yielding
loans,  early calls of security  investments  by the issuers with the  resulting
proceeds being invested in lower yielding securities,  and lower rates earned on
overnight and short-term investments.

The Company's cost of funds  decreased 77 basis points to 6.27% in 2001 also due
to the lower rate  environment,  which  resulted  in lower rates paid on deposit
accounts and variable-rate debentures indexed to the prime rate.

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 2001 and 2000. The yields and rates shown
are based on a computation of  income/expense  (including any related fee income
or   expense)    for   each   year    divided   by   average    interest-earning
assets/interest-bearing  liabilities  during  each year.  Average  balances  are
derived mainly 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 year.

<TABLE>
                                                                         For the Year Ended December 31,
                                                                         --------------------------------
                                                                   2001                                    2000
                                                    -----------------------------------    ------------------------------------
                                                      Average     Interest    Yield/         Average      Interest    Yield/
 ($ in thousands)                                     Balance    Inc./Exp.     Rate          Balance     Inc./Exp.     Rate
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>          <C>         <C>           <C>          <C>          <C>
                      Assets
 Interest-earning assets:
    Loans                                             $315,148     $30,187     9.58%         $250,941     $24,923      9.93%
    Securities                                          75,117       3,423     4.56           101,532       6,056      5.96
    Other interest-earning assets                       44,848       1,852     4.13            14,925         929      6.22
-------------------------------------------------------------------------------------------------------------------------------
 Total interest-earning assets                         435,113     $35,462     8.15%          367,398     $31,908      8.68%
-------------------------------------------------------------------------------------------------------------------------------
 Noninterest-earning assets                             11,973                                 12,257
-------------------------------------------------------------------------------------------------------------------------------
 Total assets                                         $447,086                               $379,655
-------------------------------------------------------------------------------------------------------------------------------
       Liabilities and Stockholders' Equity
 Interest-bearing liabilities:
    Interest checking  deposits                       $   8,089    $    238    2.94%         $  7,611     $   232      3.05%
    Savings deposits                                     19,629         778    3.96            17,070         897      5.25
    Money market deposits                                65,581       2,640    4.03            52,182       2,832      5.43
    Certificates of deposit                             222,743      13,423    6.03           175,552      10,892      6.20
                                                    ---------------------------------------------------------------------------
    Total deposit accounts                              316,042      17,079    5.40           252,415      14,853      5.88
    Federal funds purchased                                   -           -       -             2,544         150      5.90
    Debentures and accrued interest payable              78,257       7,635    9.76            76,546       8,322     10.87
-------------------------------------------------------------------------------------------------------------------------------
 Total interest-bearing liabilities                     394,299    $ 24,714    6.27%          331,505     $23,325      7.04%
-------------------------------------------------------------------------------------------------------------------------------
 Noninterest-bearing deposits                             6,338                                 5,696
 Noninterest-bearing liabilities                          8,460                                 7,599
 Stockholders' equity                                    37,989                                34,855
-------------------------------------------------------------------------------------------------------------------------------
 Total liabilities and stockholders' equity           $ 447,086                              $379,655
-------------------------------------------------------------------------------------------------------------------------------
 Net interest and dividend income/spread                           $ 10,748    1.88%                      $ 8,583      1.64%
-------------------------------------------------------------------------------------------------------------------------------
 Net interest-earning assets/margin                   $  40,814                2.47%         $ 35,893                  2.34%
-------------------------------------------------------------------------------------------------------------------------------
 Ratio of total interest-earning assets
    to total interest-bearing liabilities                 1.10x                                 1.11x
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       19
<PAGE>

The  following  table  provides  information  regarding  changes in interest and
dividend  income and interest  expense.  For each  category of  interest-earning
assets and  interest-bearing  liabilities,  information  is  provided on changes
attributable to (1) changes in rate (change in rate multiplied by prior volume),
(2)  changes  in volume  (change  in volume  multiplied  by prior  rate) and (3)
changes in rate-volume (change in rate multiplied by change in volume).

<TABLE>

                                                              For the Year Ended December 31, 2001 vs. 2000
                                                              ---------------------------------------------
                                                                   Increase (Decrease) Due To Change In:
                                                                   -------------------------------------
($ in thousands)                                               Rate        Volume         Rate/Volume      Total
-----------------------------------------------------------------------------------------------------------------
<S>                                                           <C>           <C>             <C>           <C>
Interest-earning assets:
   Loans                                                      $  (886)      $  6,377        $  (227)      $ 5,264
   Securities                                                  (1,429)        (1,576)           372        (2,633)
   Other interest-earning assets                                 (313)         1,863           (627)          923
-----------------------------------------------------------------------------------------------------------------
Total interest-earning assets                                  (2,628)         6,664           (482)        3,554
-----------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
   Interest checking deposits                                      (8)            15             (1)            6
   Savings deposits                                              (220)           134            (33)         (119)
   Money market deposits                                         (731)           727           (188)         (192)
   Certificates of deposit                                       (313)         2,928            (84)        2,531
                                                              ---------------------------------------------------
   Total deposit accounts                                      (1,272)         3,804           (306)        2,226
   Federal funds purchased                                       (150)          (150)           150          (150)
   Debentures and accrued interest payable                       (854)           186            (19)         (687)
-----------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                             (2,276)         3,840           (175)        1,389
-----------------------------------------------------------------------------------------------------------------
Net change in interest and dividend income                    $  (352)      $  2,824        $  (307)      $ 2,165
-----------------------------------------------------------------------------------------------------------------

</TABLE>

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

The provision for loan loss reserves is based on management's ongoing assessment
of the  adequacy  of the  allowance  for loan loss  reserves,  which  takes into
consideration a number of factors, including the level of outstanding loans. See
the section  "Comparison of Financial  Condition at December 31, 2001 and 2000,"
for a discussion of these factors.  The provision  amounted to $612,000 in 2001,
compared to $275,000 in 2000.  The increase was  primarily  due to the growth in
the loan portfolio.

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

Noninterest  income,  which is comprised  mainly of fees from  customer  service
charges and income from mortgage lending activities,  increased to $1,655,000 in
2001,  from  $983,000 in 2000.  The increase was due to a higher level of income
($631,000) from the early repayment of loans,  which consists of the recognition
of unearned  fees and  discounts  associated  with such loans and the receipt of
prepayment  penalties in certain cases. 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,  although the
amount and  timing of  prepayments,  if any,  cannot be  predicted.  Many of the
Company's  mortgage loans include  prepayment  provisions,  and others  prohibit
prepayment of indebtedness entirely.

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

Noninterest  expenses  increased to $5,303,000 in 2001, from $4,568,000 in 2000.
Expenses  for the 2001 period  include  approximately  $150,000 of  nonrecurring
expenses  associated  with the merger of Intervest Bank into Intervest  National
Bank.   Expenses  for  the  2000  period  include   approximately   $210,000  of
nonrecurring  expenses (consisting of $51,000 of attorney fees,  consulting fees

                                       20
<PAGE>

and printing  costs,  and $159,000 of stock  compensation)  associated  with the
acquisition of Intervest Corporation of New York.

Absent the aforementioned  expenses,  noninterest expenses totaled $5,153,000 in
2001,  compared  to  $4,358,000  in 2000.  The  increase  was due to a  $382,000
increase in  compensation  and  benefits  (of which  $254,000  was the result of
salary  increases,  additional  staff and increased  benefit  expenses,  and the
remainder due to a lower amount of SFAS No. 91 deferred  origination  costs),  a
$212,000 increase in data processing  expenses (due to Intervest National Bank's
growth in assets) and a $87,000  increase in occupancy  expenses  (due to higher
taxes and other  charges),  and a  $145,000  increase  in all other  noninterest
expenses  (primarily  due to  $40,000  of higher  FDIC  insurance  premiums  and
increases in general  insurance,  telephone  and director  expenses  aggregating
$47,000).  These increases were partially offset by lower  advertising  expenses
and professional fees aggregating $28,000.

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

The provision for income taxes  increased to $2,710,000 in 2001, from $1,909,000
in 2000,  largely due to higher pre-tax  earnings.  The Company's  effective tax
rate (inclusive of state and local taxes) amounted to 41.8% in 2001, compared to
40.4% in 2000.  The  increase in the  effective  tax rate was  primarily  due to
higher earnings generated from the Company's New York operations, which is taxed
at a higher rate than Florida.

Extraordinary Item
------------------

In  2000,  Intervest  Corporation  of  New  York  redeemed  debentures  totaling
$24,000,000 in principal prior to maturity for the outstanding  principal amount
plus  accrued  interest  aggregating   $3,970,000.   In  connection  with  these
redemptions,  $382,000 of  unamortized  deferred  debenture  offering  costs was
charged to expense and reported as an extraordinary charge, net of a tax benefit
of  $176,000,  in the  consolidated  statement  of  earnings  for the year ended
December 31, 2000.

Comparison  of Results of Operations  for the Years Ended  December 31, 2000 and
1999.

General
-------

Consolidated  net earnings for 2000 increased to $2,608,000,  or $0.67 per fully
diluted share,  from $1,767,000,  or $0.44 per fully diluted share in 1999, or a
48%  year-to-year  increase.  The  growth in  earnings  was  primarily  due to a
$1,501,000  increase in net interest and dividend income and a $555,000 decrease
in the provision for loan loss reserves.  These items were partially offset by a
$711,000  increase in the provision  for income taxes,  an increase in operating
expenses of $299,000  resulting  largely from a full year of  operations  of the
Bank's  New York  office  (which  opened on April 1,  1999),  and  approximately
$210,000 of nonrecurring  expenses  associated with the acquisition of Intervest
Corporation of New York in March of 2000.

Selected information regarding results of operations for the Holding Company and
its subsidiaries for 2000 follows:


<TABLE>
                                                                              Intervest    Intervest       Inter-
                                                                  Holding     National    Corporation      company
($ in thousands)                                                  Company       Bank      of New York     Balances     Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>        <C>           <C>            <C>            <C>
Interest and dividend income                                       $ 672      $ 22,982      $ 8,519        $ (265)        $ 31,908
Interest expense                                                     686        15,268        7,636          (265)          23,325
                                                                 -------------------------------------------------------------------
Net interest and dividend (expense) income                           (14)        7,714          883            -             8,583
Provision for loan loss reserves                                      17           258            -            -               275
Noninterest income                                                   165           479          563          (224)             983
Noninterest expenses                                                 405         3,564          823          (224)           4,568
                                                                 -------------------------------------------------------------------
(Loss) earnings before taxes and extraordinary item                 (271)        4,371          623            -             4,723
(Credit) provision for income taxes                                 (131)        1,752          288            -             1,909
Extraordinary item, net of tax                                         -            -          (206)           -              (206)
------------------------------------------------------------------------------------------------------------------------------------
Net (loss) earnings                                                $(140)     $  2,619      $   129            -          $  2,608
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       21
<PAGE>

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 $8,583,000 in 2000,  from $7,082,000 in 1999.
The improvement was  attributable to a $74,961,000  increase in the average loan
portfolio,  partially offset by a decline in the Company's  interest rate spread
from 1.69% to 1.64%.  The growth in the loan portfolio was funded primarily by a
$78,008,000 increase in average deposits.

The  Company's  cost of funds  increased 16 basis points to 7.04% in 2000 due to
the rising interest rate environment,  as evidenced by the Federal Reserve Board
increasing the federal funds target rate on six occasions  between June 1999 and
June 2000,  for a total of 175 basis points.  This resulted in higher rates paid
for deposit  accounts and  floating-rate  debentures,  as well as an increase in
depositors' preference for certificates of deposit accounts, which normally have
higher rates than savings and money market accounts.

The Company's  yield on earning assets in 2000 increased 11 basis point to 8.68%
due to  higher  yields  earned on  investment  securities  and other  short-term
investments,  partially  offset by a decline in the yield on the loan portfolio.
Despite the higher rate  environment,  the average  yield on the loan  portfolio
declined to 9.93% from 10.68%,  due to  competitive  lending  conditions  (which
resulted in originations of new loans with lower rates than the average yield of
the portfolio in 1999, as well as prepayments  of  higher-yielding  loans).  The
effect of the preceding was partially  offset by rate increases on floating-rate
loans.

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 2000 and 1999. The yields and rates shown
are based on a computation of  income/expense  (including any related fee income
or   expense)    for   each   year    divided   by   average    interest-earning
assets/interest-bearing  liabilities  during  each year.  Average  balances  are
derived mainly 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 year.

<TABLE>

                                                                         For the Year Ended December 31,
                                                                         --------------------------------
                                                                   2000                                    1999
                                                    -----------------------------------    ------------------------------------
                                                      Average     Interest    Yield/         Average      Interest    Yield/
 ($ in thousands)                                     Balance    Inc./Exp.     Rate          Balance     Inc./Exp.     Rate
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>          <C>          <C>            <C>         <C>         <C>
                      Assets
 Interest-earning assets:
    Loans                                            $ 250,941    $ 24,923     9.93%          $175,980    $ 18,794    10.68%
    Securities                                         101,532       6,056     5.96            108,336       6,123     5.65
    Other interest-earning assets                       14,925         929     6.22             13,089         584     4.46
-------------------------------------------------------------------------------------------------------------------------------
 Total interest-earning assets                          367,398   $ 31,908     8.68%           297,405    $ 25,501     8.57%
-------------------------------------------------------------------------------------------------------------------------------
 Noninterest-earning assets                              12,257                                 13,610
-------------------------------------------------------------------------------------------------------------------------------
 Total assets                                        $  379,655                              $ 311,015
-------------------------------------------------------------------------------------------------------------------------------
       Liabilities and Stockholders' Equity
 Interest-bearing liabilities:
    Interest checking  deposits                      $    7,611   $    232     3.05%         $   7,687    $    238     3.10%
    Savings deposits                                     17,070        897     5.25             25,160       1,059     4.21
    Money market deposits                                52,182      2,832     5.43             42,078       1,882     4.47
    Certificates of deposit                             175,552     10,892     6.20             99,482       5,524     5.55
                                                     --------------------------------------------------------------------------
    Total deposit accounts                              252,415      14,853    5.88             174,407       8,703    4.99
    Federal funds purchased                               2,544         150    5.90                 517          29    5.61
    Debentures and accrued interest payable              76,546       8,322   10.87              92,888       9,687   10.43
-------------------------------------------------------------------------------------------------------------------------------
 Total interest-bearing liabilities                     331,505   $  23,325    7.04%            267,812   $  18,419    6.88%
-------------------------------------------------------------------------------------------------------------------------------
 Noninterest-bearing deposits                             5,696                                   4,436
 Noninterest-bearing liabilities                          7,599                                   6,529
 Stockholders' equity                                    34,855                                  32,238
-------------------------------------------------------------------------------------------------------------------------------
 Total liabilities and stockholders' equity          $  379,655                              $  311,015
-------------------------------------------------------------------------------------------------------------------------------
 Net interest and dividend income/spread                          $   8,583    1.64%                      $   7,082    1.69%
-------------------------------------------------------------------------------------------------------------------------------
 Net interest-earning assets/margin                  $   35,893                2.34%         $   29,593                2.38%
-------------------------------------------------------------------------------------------------------------------------------
 Ratio of total interest-earning assets
    to total interest-bearing liabilities                 1.11x                                   1.11x
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       22
<PAGE>

The  following  table  provides  information  regarding  changes in interest and
dividend  income and interest  expense.  For each  category of  interest-earning
assets and  interest-bearing  liabilities,  information  is  provided on changes
attributable to (1) changes in rate (change in rate multiplied by prior volume),
(2)  changes  in volume  (change  in volume  multiplied  by prior  rate) and (3)
changes in rate-volume (change in rate multiplied by change in volume).


<TABLE>
                                                                   For the Year Ended December 31, 2000 vs. 1999
                                                                   ---------------------------------------------
                                                                       Increase (Decrease) Due To Change In:
                                                                       -------------------------------------
     ($ in thousands)                                          Rate         Volume         Rate/Volume        Total
-------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>           <C>             <C>              <C>
     Interest-earning assets:
        Loans                                                $ (1,320)     $ 8,006         $   (557)        $  6,129
        Securities                                                336         (384)             (19)             (67)
        Other interest-earning assets                             230           82               33              345
-------------------------------------------------------------------------------------------------------------------------
     Total interest-earning assets                               (754)       7,704             (543)           6,407
-------------------------------------------------------------------------------------------------------------------------
     Interest-bearing liabilities:
        Interest checking deposits                                 (4)          (2)               -               (6)
        Savings deposits                                          262         (341)             (83)            (162)
        Money market deposits                                     404          452               94              950
        Certificates of deposit                                   647        4,222              499            5,368
                                                             ------------------------------------------------------------
        Total deposit accounts                                  1,309        4,331              510            6,150
        Federal funds purchased                                     1          114                6              121
        Debentures and accrued interest payable                   409       (1,704)             (70)          (1,365)
-------------------------------------------------------------------------------------------------------------------------
     Total interest-bearing liabilities                         1,719        2,741              446            4,906
-------------------------------------------------------------------------------------------------------------------------
     Net change in interest and dividend income              $ (2,473)     $ 4,963         $   (989)        $  1,501
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

The provision for loan loss reserves is based on management's ongoing assessment
of the  adequacy  of the  allowance  for loan loss  reserves,  which  takes into
consideration a number of factors, including the level of outstanding loans. See
the section  "Comparison of Financial  Condition at December 31, 2001 and 2000,"
for a discussion of these factors.  The provision  amounted to $275,000 in 2000,
compared to $830,000 in 1999. The 1999 provision  included an initial  provision
of $444,000 recorded by the Bank in conjunction with  approximately  $42,000,000
of new loan originations generated by its New York office in 1999.

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

Noninterest  income,  which is comprised  mainly of fees from  customer  service
charges and income from mortgage  lending  activities,  increased to $983,000 in
2000,  from  $900,000 in 1999.  The increase was due to a higher level of income
from the early repayment of loans, which consists of the recognition of unearned
fees and  discounts  associated  with such loans and the  receipt of  prepayment
penalties in certain  cases.  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,  although the amount and
timing  of  prepayments,  if any  cannot  be  predicted.  Many of the  Company's
mortgage loans include prepayment provisions,  and others prohibit prepayment of
indebtedness entirely.


                                       23
<PAGE>

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

Noninterest  expenses  increased to $4,568,000 in 2000, from $4,059,000 in 1999.
The  increase  was  due  to  approximately  $210,000  of  nonrecurring  expenses
(consisting of $51,000 of attorney fees, consulting fees and printing costs, and
$159,000 of stock  compensation)  associated  with the  acquisition of Intervest
Corporation  of New York.  The  remaining  $299,000  increase  was due to higher
compensation,  occupancy and equipment  expenses  resulting  from a full year of
operations  of the Bank's New York  office in 2000,  compared  to nine months of
operations in 1999.

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

The provision for income taxes  increased to $1,909,000 in 2000, from $1,198,000
in 1999,  due to higher  pre-tax  earnings.  The  Company's  effective  tax rate
(inclusive  of state and local  taxes)  amounted  to 40.4% in 2000,  compared to
38.7% in 1999.  The  increase in the  effective  tax rate was  primarily  due to
higher earnings generated from the Company's New York operations, which is taxed
at a higher rate than Florida.

Extraordinary Item
------------------

In  2000,  Intervest  Corporation  of  New  York  redeemed  debentures  totaling
$24,000,000 in principal prior to maturity for the outstanding  principal amount
plus  accrued  interest  aggregating   $3,970,000.   In  connection  with  these
redemptions,  $382,000 of  unamortized  deferred  debenture  offering  costs was
charged to expense and reported as an extraordinary charge, net of a tax benefit
of  $176,000,  in the  consolidated  statement  of  earnings  for the year ended
December 31, 2000.

Cumulative Effect of Change in Accounting Principle
---------------------------------------------------

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

Comparison of Financial Condition at December 31, 2001 and December 31, 2000.

Overview
--------

Total assets at December 31, 2001 increased to $512,622,000,  from  $416,927,000
at December  31,  2000.  The  increase  was  reflected in the growth in mortgage
loans.  Total  liabilities at December 31, 2001 increased to $472,227,000,  from
$380,699,000  at December  31,  2000,  due to growth in deposit  accounts and an
increase in debentures payable. Stockholders' equity increased to $40,395,000 at
December 31, 2001,  from  $36,228,000 at year-end  2000, due almost  entirely to
earnings for 2001.  Book value per common share increased to $10.36 per share at
December 31, 2001, from $9.29 at December 31, 2000.


                                       24
<PAGE>

Selected balance sheet  information for the Holding Company and its subsidiaries
as of December 31, 2001 follows:


<TABLE>

                                                              Intervest      Intervest      Intervest     Inter-
($ in thousands)                                   Holding     National     Corporation     Statutory     Company
                                                   Company       Bank       of New York      Trust I      Balances     Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>        <C>           <C>             <C>           <C>            <C>
Cash and cash equivalents                          $   861    $  10,134     $   16,752      $     -       $ (3,338)      $  24,409
Time deposits with banks                                -           250             -             -              -             250
Securities available for sale                           -         6,192             -             -              -           6,192
Securities held to maturity, net                        -        99,157             -         15,464       (15,464)         99,157
Federal Reserve Bank stock                              -           654             -             -              -             654
Loans receivable, net of deferred fees               9,606      296,255         62,665            -              -         368,526
Allowance for loan loss reserves                       (48)      (3,314)           (18)           -              -          (3,380)
Investment in subsidiaries                          57,060           -              -             -        (57,060)             -
All other assets                                     1,347       11,824          3,684            -            (41)         16,814
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                       $68,826    $421,152      $   83,083      $ 15,464      $(75,903)      $ 512,622
------------------------------------------------------------------------------------------------------------------------------------
Deposits                                           $    -     $365,978      $       -       $     -       $ (3,541)      $ 362,437
Debentures payable                                  25,894          -           63,000            -        (15,464)         73,430
Debentures payable - capital securities                 -           -               -         15,000            -           15,000
Accrued interest payable on debentures               2,367          -            9,113            -             -           11,480
All other liabilities                                  170       8,425           1,123            -            162           9,880
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                   28,431     374,403          73,236        15,000       (18,843)        472,227
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                40,395      46,749           9,847           464       (57,060)         40,395
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity         $68,826    $421,152      $   83,083      $ 15,464      $(75,903)      $ 512,622
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

A comparison of the Company's  consolidated  balance  sheet  as of December 31,
2001 and 2000 follows:

<PAGE>

<TABLE>
                                                                   At December 31, 2001                At December 31, 2000
                                                                   --------------------                --------------------
                                                                  Carrying          % of               Carrying         % of
($ in thousands)                                                    Value       Total Assets             Value       Total Assets
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                 <C>              <C>               <C>
Cash and cash equivalents                                        $   24,409          4.8%             $  42,938         10.3%
Time deposits with banks                                                250          0.1                     -             -
Securities available for sale at estimated fair value                 6,192          1.2                 74,789         17.9
Securities held to maturity, net                                     99,157         19.3                 20,970          5.0
Federal Reserve Bank stock                                              654          0.1                    605          0.2
Loans receivable,  net of deferred fees and loan loss reserves      365,146         71.2                263,558         63.2
All other assets                                                     16,814          3.3                 14,067          3.4
------------------------------------------------------------------------------------------------------------------------------------
Total assets                                                     $  512,622        100.0%             $ 416,927        100.0%
------------------------------------------------------------------------------------------------------------------------------------
Deposits                                                         $  362,437         70.7%             $ 300,241         72.0%
Debentures payable                                                   73,430         14.3                 64,080         15.4
Debentures payable - capital securities                              15,000          2.9                     -             -
Accrued interest payable on debentures                               11,480          2.3                  8,733          2.1
All other liabilities                                                 9,880          1.9                  7,645          1.8
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                                   472,227         92.1                380,699         91.3
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                                 40,395          7.9                 36,228          8.7
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                       $  512,622        100.0%             $ 416,927        100.0%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

Cash and cash  equivalents  decreased to $24,409,000 at December 31, 2001,  from
$42,938,000  at December  31,  2000,  due to a lower level of federal  funds and
short-term commercial paper investments  outstanding.  Cash and cash equivalents
include federal funds and interest-bearing and noninterest-bearing cash balances
with banks,  and other short-term  investments that have original  maturities of
three months or less.  These  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 Available for Sale and Held to Maturity
--------------------------------------------------

The Company invests in securities after satisfying its liquidity  objectives and
lending commitments. The Company has historically only purchased debt securities
that are  issued  by the U.S.  government  or one of its  agencies  [such as the
Federal Home Loan Bank (FHLB), Federal Farm Credit Bank (FFCB), Federal National
Mortgage  Association  (FNMA),  and the Federal Home Loan  Mortgage  Corporation
(FHLMC)].  The Company's  security  investments  have lower yields than its loan
portfolio. To manage interest rate risk, the Company normally purchases

                                       25
<PAGE>

securities that have  adjustable  rates or securities with fixed rates that have
short to  intermediate  maturity  terms.  The Company does not engage in trading
activities.

Securities that are held for indefinite periods of time which management intends
to use as part of its asset/liability  management strategy,  or that may be sold
in response to changes in interest  rates or other  factors,  are  classified as
available  for sale and are carried at  estimated  fair value.  On December  31,
2000,  Intervest Bank  transferred  U.S.  government  agency  securities with an
estimated  fair  value  of  $74,789,000   from  the   held-to-maturity   to  the
available-for-sale  portfolio.   Securities  available  for  sale  decreased  to
$6,192,000  at December 31, 2001,  from  $74,789,000  at December 31, 2000.  The
decrease was due to early redemptions by various agencies brought about from the
steady decline in market interest rates during 2001. The resulting proceeds from
the redemptions  were used to partially fund new mortgage loan  originations and
the remainder was reinvested in shorter-term  U.S.  government agency securities
classified as held to maturity.  There were no sales of securities  during 2001,
2000  and  1999,  and no  transfers  of  securities  to  the  available-for-sale
portfolio in 2001.

At December 31, 2001, the  available-for-sale  portfolio consisted of fixed-rate
debt  obligations  of FNMA and FHLB with a  weighted-average  yield of 5.59% and
maturing at various times through 2003. At December 31, 2001,  the portfolio had
an unrealized  gain, net of tax, of $111,000,  compared to a net unrealized loss
of $252,000 at December  31,  2000.  Unrealized  gains and losses on  securities
available for sale, net of income taxes, are reported as a separate component of
comprehensive income and included in stockholders' equity.

Securities  for which the Company has the intent and ability to hold to maturity
are  classified  as held  to  maturity  and  carried  at  amortized  cost.  Such
securities totaled  $99,157,000 at December 31, 2001, compared to $20,970,000 at
December 31, 2000. The increase was due to purchases exceeding maturities during
the year.  At December 31, 2001,  the  portfolio  consisted of  short-term  debt
obligations  of FNMA,  FHLB,  FHLMC  and FFCB with a  weighted-average  yield of
approximately  2.89% and a weighted average term of approximately  one year. The
securities are predominately fixed rate and some have call features, which allow
the issuer to call the security before its stated maturity without  penalty.  At
December 31, 2001 and 2000, the portfolio's estimated fair value was $99,404,000
and $20,978,000, respectively.

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
$654,000 at December  31, 2001 and  $605,000 at December  31,  2000,  fluctuates
based on the Bank's capital level.

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

Loans receivable, net of deferred fees and the allowance for loan loss reserves,
increased to $365,146,000  at December 31, 2001,  from  $263,558,000 at December
31, 2000. The growth  reflected new  originations  of commercial real estate and
multifamily  mortgage  loans,  partially  offset  by  principal  repayments.  At
December 31, 2001,  the loan  portfolio  consisted of  $94,084,000 of fixed-rate
loans and $278,190,000 of adjustable-rate  loans. At December 31, 2001 and 2000,
the loan portfolio was  concentrated  in commercial  real estate and multifamily
mortgage loans.  Such loans  represented 99% and 98% of the total loan portfolio
in 2001 and 2000,  respectively.  Loan  concentrations  are  defined  as amounts
loaned to a number of borrowers engaged in similar activities, which would cause
the loans to be similarly impacted by economic or other conditions. Credit risk,
which represents the possibility of the Company not recovering  amounts due from
its borrowers,  is  significantly  related to local  economic  conditions in the
areas  the  properties  are  located,  as  well  as the  Company's  underwriting
standards.  Economic  conditions  affect  the  market  value  of the  underlying
collateral  as well as the levels of  occupancy of  income-producing  properties
(such as office buildings, shopping centers and rental and cooperative apartment
buildings).

The following table sets forth information concerning the loan portfolio:


                                       26
<PAGE>

<TABLE>
                                                  At December 31, 2001                   At December 31, 2000
                                                  --------------------                   --------------------
                                             # of                    % of          # of                     % of
($ in thousands)                             Loans      Amount       Total         Loans      Amount        Total
----------------------------------------------------------------------------------------------------------------------
<S>                                            <C>    <C>             <C>           <C>      <C>             <C>
Residential multifamily loans                  153    $182,569        49.0%         137      $144,916        54.0%
Commercial real estate loans                   142     185,652        49.9          124       118,368        44.1
Residential 1-4 family loans                    33       2,404         0.6           39         3,034         1.1
Commercial loans                                26       1,363         0.4           39         1,781         0.7
Consumer loans                                  15         286         0.1           18           206         0.1
----------------------------------------------------------------------------------------------------------------------
Total gross loans receivable                   369     372,274       100.0%         357       268,305       100.0%
Deferred loan fees                                      (3,748)                                (1,979)
----------------------------------------------------------------------------------------------------------------------
Loans, net of deferred fees                            368,526                                266,326
Allowance for loan loss reserves                        (3,380)                                (2,768)
----------------------------------------------------------------------------------------------------------------------
Loans receivable, net                                 $365,146                               $263,558
----------------------------------------------------------------------------------------------------------------------

</TABLE>

The following table sets forth the scheduled contractual principal repayments of
the loan portfolio:


                                                       At December 31,
($ in thousands)                                   2001              2000
--------------------------------------------------------------------------------
Within one year                                $ 85,447          $ 120,258
Over one to five years                          221,435            107,490
Over five years                                  65,392             40,557
--------------------------------------------------------------------------------
                                               $372,274          $ 268,305
--------------------------------------------------------------------------------

At  December  31,  2001,   $220,776,000  of  loans  with  adjustable  rates  and
$66,051,000 of loans with fixed rates were due after one year.

The following table sets forth the activity in the loan portfolio:

                                                 For the Year Ended December 31,
                                                 -------------------------------
($ in thousands)                                      2001             2000
--------------------------------------------------------------------------------
Loans receivable, net, at beginning of year         $263,558         $210,444
  Loans originated                                   195,754          124,669
  Principal repayments                               (91,785)         (71,046)
  Increase in deferred loan fees                      (1,769)            (234)
  Increase in allowance for loan loss reserves          (612)            (275)
--------------------------------------------------------------------------------
Loans receivable, net, at end of year               $365,146         $263,558
--------------------------------------------------------------------------------

Nonaccrual Loans and Allowance for Loan Loss Reserves
-----------------------------------------------------

Loans are placed on nonaccrual status when principal or interest becomes 90 days
or more past due. Accrued interest receivable  previously recognized is reversed
when a loan is placed on  nonaccrual  status.  Amortization  of net deferred fee
income is discontinued for loans placed on nonaccrual status.  Interest payments
received on loans in nonaccrual  status are recognized as income on a cash basis
unless future collections of principal are doubtful,  in which case the payments
received are applied as a reduction  of  principal.  Loans remain on  nonaccrual
status until principal and interest payments are current.

The allowance for loan loss reserves is established  through a provision charged
to operations.  Loans are charged against the allowance when management believes
that the collectability of the principal is unlikely.  Subsequent recoveries are
added to the  allowance.  The adequacy of the allowance is evaluated  monthly or
more  frequently  when  necessary  with  consideration  given to: the nature and
volume of the loan portfolio;  overall portfolio quality;  loan  concentrations;
specific  problem loans and  commitments  and  estimates of fair value  thereof;
historical  chargeoffs and recoveries;  adverse  situations which may affect the
borrowers'  ability to repay;  and  management's  perception  of the current and
anticipated  economic  conditions  in  the  Company's  lending  areas.  Although
management   believes   it  uses  the  best   information   available   to  make
determinations  with respect to the  allowance  for loan loss  reserves,  future

                                       27
<PAGE>

adjustments may be necessary if economic  conditions,  or other factors,  differ
from those assumed in the determination of the level of the allowance.

In  addition,  SFAS No. 114  specifies  the  manner in which the  portion of the
allowance for loan loss reserves  related to impaired loans is computed.  A loan
is normally deemed impaired when, based upon current  information and events, it
is probable  that the Company will be unable to collect both full  principal and
interest  due  according  to  the  contractual  terms  of  the  loan  agreement.
Impairment  for  larger  balance  loans  such  as  commercial  real  estate  and
multifamily  loans are measured  based on: the present value of expected  future
cash flows,  discounted at the loan's effective interest rate; or the observable
market price of the loan; or the estimated fair value of the loan's  collateral,
if payment of the principal and interest is dependent upon the collateral.  When
the fair value of the property is less than the recorded investment in the loan,
this  deficiency  is  recognized  as a  valuation  allowance  within the overall
allowance  for loan loss  reserves and a charge  through the  provision for loan
loss reserves. The Company's policy is to charge off any portion of the recorded
investment  in the loan that exceeds the fair value of the  collateral.  The net
carrying  amount of an impaired  loan does not at any time  exceed the  recorded
investment in the loan.

The  Company  considers  a variety of factors in  determining  whether a loan is
impaired,  including  (i) any notice from the borrower that the borrower will be
unable to repay all principal and interest amounts  contractually  due under the
loan agreement,  (ii) any delinquency in the principal and/or interest  payments
other than minimum delays or shortfalls in payments, and (iii) other information
known by  management  that would  indicate the full  repayment of principal  and
interest  is not  probable.  In  evaluating  loans  for  impairment,  management
generally  considers  delinquencies of 60 days or less to be minimum delays, and
accordingly  does not  consider  such  delinquent  loans to be  impaired  in the
absence  of other  indications.  Impaired  loans  normally  consist  of loans on
nonaccrual  status.  Generally,  all loans are  evaluated  for  impairment  on a
loan-by-loan  basis,  except for  smaller  balance  homogeneous  loans,  such as
consumer loans,  whose  evaluation for impairment is done on an aggregate basis.
For consumer loans,  historical  charge-off experience as well as the charge off
experience  of peer groups and  industry  statistics  are used to  evaluate  the
adequacy of the allowance for loan loss reserves.  The Company's regulators,  as
an integral part of their examination process, periodically review the allowance
for loan loss reserves. Accordingly, the Company may be required to take certain
chargeoffs and/or recognize  additions to the allowance based on the regulators'
judgment concerning information available to them during their examination.

At December 31, 2001, one commercial  real estate loan with a principal  balance
of  $1,243,000  was on a nonaccrual  status and  considered  impaired  under the
criteria of SFAS  No.114.  Interest  that was not accrued on this loan under its
contractual  terms amounted to $51,000 in 2001. The average  balance of impaired
loans for 2001 was  approximately  $104,000.  At December 31, 2001, there was no
valuation  allowance  recorded for impaired  loans.  There were no nonaccrual or
impaired loans during 2000 and 1999.

At  December  31,  2001,  the  allowance  for loan loss  reserves  increased  to
$3,380,000,  from $2,768,000 at December 31, 2000, due to the growth in the loan
portfolio.  At December 31, 2001 and 2000,  the allowance for loan loss reserves
was predominately allocated to commercial real estate and multifamily loans.

The  following  table sets forth  information  with respect to the allowance for
loan loss reserves:

                                             For the Year Ended December 31,
                                             -------------------------------
($ in thousands)                                  2001               2000
--------------------------------------------------------------------------------
Allowance at beginning of year                $   2,768           $   2,493
Provision charged to operations                     612                 275
--------------------------------------------------------------------------------
Allowance at end of year                      $   3,380           $   2,768
--------------------------------------------------------------------------------
Ratio of allowance to total loans,
net of deferred fees                              0.92%               1.04%
Total loans, net of deferred fees
at year end                                   $ 368,526           $ 266,326
Average loans outstanding during the year     $ 315,148           $ 250,941
--------------------------------------------------------------------------------


                                       28
<PAGE>

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

During 2001 and 2000, the Company did not have any foreclosed real estate.

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

The following table sets forth the composition of all other assets:

                                                         At  December 31,
                                                         ----------------
 ($ in thousands)                                       2001          2000
----------------------------------------------------------------------------
 Accrued interest receivable                          $3,202        $2,961
 Loans fee receivable                                  2,679         1,276
 Premises and equipment, net                           6,042         5,731
 Deferred income tax asset                             1,236         1,105
 Deferred debenture offering costs, net                3,396         2,835
 All other                                               259           159
----------------------------------------------------------------------------
                                                     $16,814       $14,067
----------------------------------------------------------------------------

Accrued interest receivable fluctuates based on the amount of loans, investments
and  other  interest-earning  assets  outstanding  and the  timing  of  interest
payments received.

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. The increase
was due to an increase in mortgage loan originations.

Premises  and  equipment  is  detailed in note 5 to the  consolidated  financial
statements.

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  incurred with the sale of new  debentures in 2001,  partially
offset by normal amortization.

Deposits
--------

Consolidated deposit liabilities increased to $362,437,000 at December 31, 2001,
from  $300,241,000  at December 31, 2000. At December 31, 2001,  certificate  of
deposit accounts totaled $241,465,000 and demand deposit, savings, NOW and money
market accounts aggregated $120,972,000. The same categories of deposit accounts
totaled  $217,656,000  and  $82,585,000,  respectively,  at December  31,  2000.
Certificate of deposit  accounts  represented  67% of total deposits at December
31, 2001, compared to 73% at year-end 2000.

Management believes that the Bank does not have a concentration of deposits from
any one source and that a large portion of its  depositors  are residents in the
Bank's  primary  market areas  (although  there has been growth in deposits from
outside the primary areas resulting from the Bank's deposit-gathering activities
through its web site on the internet:  www.intervestnatbank.com).  The Bank does
not accept brokered deposits.

                                       29
<PAGE>

The following table sets forth the distribution of deposit accounts by type:

<TABLE>

                                           At December 31, 2001          At December 31, 2000
                                           --------------------         ---------------------
($ in thousands)                            Amount   % of Total          Amount   %  of Total
-----------------------------------------------------------------------------------------------
<S>                                       <C>             <C>          <C>              <C>
Demand deposits                           $  5,550        1.5%        $   5,035         1.7%
Interest checking deposits                  10,204        2.8             9,188         3.1
Savings deposits                            24,624        6.8            15,743         5.2
Money market deposits                       80,594       22.2            52,619        17.5
Certificates of deposit                    241,465       66.7           217,656        72.5
-----------------------------------------------------------------------------------------------
Total deposit accounts (1)                $362,437      100.0%        $300,241       100.0%
-----------------------------------------------------------------------------------------------
</TABLE>
(1) Includes individual retirement accounts totaling $28,193,000 and $22,307,000
    at  December  31,  2001  and  2000,  respectively,   nearly   all  of  which
    are certificates of deposit.

The  following  table sets forth  certificates  of deposits by maturity  for the
periods indicated:

<TABLE>

                                           At December 31, 2001          At December 31, 2000
                                           --------------------         ----------------------
                                                       Wtd-Avg                      Wtd-Avg
($ in thousands)                            Amount   Stated Rate         Amount   Stated Rate
-----------------------------------------------------------------------------------------------
<S>                                       <C>            <C>          <C>             <C>
Within one year                           $144,739       5.00%        $133,433        6.44%
Over one to two years                       45,512       4.95           47,878        6.65
Over two to three years                     14,954       5.82            8,274        6.23
Over three to four years                    16,903       6.84            9,359        6.37
Over four years                             19,357       5.61           18,712        6.88
-----------------------------------------------------------------------------------------------
                                          $241,465       5.22%        $217,656        6.51%
-----------------------------------------------------------------------------------------------
</TABLE>

The  following  table sets forth the  maturities of  certificates  of deposit in
denominations of $100,000 or more:

                                                            At December 31,
                                                            ---------------
($ in thousands)                                          2001          2000
--------------------------------------------------------------------------------
Due within three months or less                         $10,332       $14,088
Due over three months to six months                       4,483         5,175
Due over six months to one year                          18,401        11,179
Due over one year                                        20,529        18,432
--------------------------------------------------------------------------------
                                                        $53,745       $48,874
--------------------------------------------------------------------------------
As a percentage of total deposits                         14.8%         16.3%
--------------------------------------------------------------------------------

The following table sets forth net deposit flows:

                                                 For the Year Ended December 31,
                                                 -------------------------------
($ in thousands)                                          2001          2000
--------------------------------------------------------------------------------
Net increase before interest credited                   $45,078       $84,289
Net interest credited                                    17,118        14,872
--------------------------------------------------------------------------------
Net deposit increase                                    $62,196       $99,161
--------------------------------------------------------------------------------

Federal Funds Purchased
-----------------------

Periodically, the Bank purchases federal funds to manage its liquidity needs. At
December 31, 2001 and 2000,  there were no funds  outstanding.  The Bank has not
emphasized these types of borrowings.

Debentures Payable and Accrued Interest Payable on Debentures
-------------------------------------------------------------

At December 31, 2001,  debentures  payable amounted to $73,430,000,  compared to
$64,080,000  at year-end  2000.  The increase was due to the sale of  additional
debentures by Intervest  Corporation of New York totaling $7,250,000 (as part of
its normal  funding of its  operations to originate and purchase  commercial and
multifamily  mortgage  loans) and the sale of  $3,500,000  of  debentures by the
Holding Company for working capital  purposes.  The sale of these debentures was
partially  offset by the maturity on January 1, 2001, of $1,400,000 of Intervest
Corporation  of  New  York's   debentures.   The  sale  of   debentures,   after
underwriter's  commissions and other issuance costs, resulted in net proceeds of
$6,670,000 for Intervest  Corporation of New York and $3,260,000 for the Holding
Company.

                                       30
<PAGE>
At  December  31,  2001,  Intervest  Corporation  of New  York  had  $63,000,000
principal amount of debentures  payable  outstanding and the Holding Company had
$10,430,000  principal  amount  of  debentures  payable  outstanding,  of  which
$6,930,000 were convertible into the Holding Company's Class A common stock.

On December 18, 2001, the Holding Company's wholly-owned  subsidiary,  Intervest
Statutory Trust I, sold 9.875% Trust Preferred  Securities due December 18, 2031
in the aggregate  principal amount of $15,000,000,  hereafter referred to as the
"Capital  Securities".  The net proceeds  from the sale were paid to the Holding
Company in exchange for $15,000,000 of its 9.875% Junior Subordinated Debentures
(the "Junior  Subordinated  Debentures")  due  December  18,  2031.  The Holding
Company then invested the $15,000,000 as a capital contribution in the Bank. The
sole asset of the Trust,  the obligor on the Capital  Securities,  is the Junior
Subordinated Debentures.

At December 31, 2001,  accrued  interest  payable on all debentures  amounted to
$11,480,000,  compared to $8,733,000 at year-end 2000. Nearly all of the accrued
interest  payable at December  31,  2001 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.

All Other Liabilities

The following table shows the composition of all other liabilities:

                                                             At December 31,
          ($ in thousands)
                                                         2001           2000
          --------------------------------------------------------------------
          Mortgage escrow funds payable                 $4,253         $3,397
          Official checks outstanding                    3,219          2,281
          Accrued interest payable on deposits             817            856
          Income taxes payable                             772            403
          All other                                        819            708
          --------------------------------------------------------------------
                                                        $9,880         $7,645
          --------------------------------------------------------------------

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.

Stockholders' Equity
--------------------

Stockholders'  equity  increased  to  $40,395,000  at December  31,  2001,  from
$36,228,000  at December  31,  2000.  The  increase  was due to net  earnings of
$3,778,000  and a  $363,000  increase  in  unrealized  gains,  net  of  tax,  on
securities available for sale.

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.  This  strategy is overseen in part through the direction of
the Asset and  Liability  Committee  ("ALCO") of the Board of  Directors  of the
Bank, which  establishes  policies and monitors results to control interest rate
sensitivity.

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.  An asset
or liability is normally  considered  to be  interest-rate  sensitive if it will
reprice or mature within one year or less. The interest-rate  sensitivity gap is
the difference between interest-earning assets and interest-bearing  liabilities
scheduled  to  mature  or  reprice  within  a  one-year  time  period.  A gap is


                                       31
<PAGE>

considered  positive when the amount of interest  rate-sensitive  assets exceeds
the  amount  of  interest  rate-sensitive  liabilities.  Conversely,  a  gap  is
considered negative when the opposite is true.

During a period of rising interest rates, a negative gap would tend to adversely
affect net  interest  income,  while a  positive  gap would tend to result in an
increase in net interest  income.  During a period of falling  interest rates, a
negative gap would tend to result in an increase in net interest income, while a
positive  gap  would  tend to  adversely  affect  net  interest  income.  If the
repricing of the  Company's  assets and  liabilities  were equally  flexible and
moved concurrently,  the impact of any increase or decrease in interest rates on
net interest income would be minimal.

A simple  interest rate gap analysis by itself may not be an accurate  indicator
of how net interest income will be affected by changes in interest rates for the
following  reasons.  Income  associated with  interest-earning  assets and costs
associated with  interest-bearing  liabilities may not be affected  uniformly by
changes in interest rates. In addition, the magnitude and duration of changes in
interest  rates  may have a  significant  impact  on net  interest  income.  For
example,  although certain assets and liabilities may have similar maturities or
periods of repricing,  they may react in different  degrees to changes in market
interest  rates.  Interest  rates on  certain  types of assets  and  liabilities
fluctuate in advance of changes in general market interest rates, while interest
rates on other  types may lag  behind  changes  in market  rates.  In  addition,
certain  assets,  such as  adjustable-rate  mortgage  loans,  may have  features
generally referred to as "interest rate caps or collars," which limit changes in
interest  rates on a  short-term  basis and over the life of the  asset.  In the
event  of a change  in  interest  rates,  asset  prepayment  and  early  deposit
withdrawal  levels  also  could  deviate  significantly  from  those  assumed in
calculating  the  interest-rate  gap.  The ability of many  borrowers to service
their debts also may decrease in the event of an interest-rate increase, and the
behavior of depositors may be different than those assumed in the gap analysis.

For purposes of creating the gap analysis that follows,  deposits with no stated
maturities are treated as readily  accessible  accounts.  Given this assumption,
the Company's  one-year  interest rate  sensitivity  gap was a positive 6.20% at
December 31, 2001, compared to a negative 3.0% at December 31, 2000. However, if
those deposits were treated differently,  then the interest-rate sensitivity gap
would change.  The behavior of core depositors may not necessarily result in the
immediate withdrawal of funds in the event deposit rates offered by the Bank did
not change as quickly and  uniformly  as changes in general  market  rates.  For
example,  if only 25% of deposits  with no stated  maturity  were  assumed to be
readily  accessible  (rather than 100%),  the Company's  one-year  interest-rate
sensitivity gap would have been a positive 23.1% at year-end 2001, compared to a
positive 11.0% at year-end 2000.

The Company has a "floor," or minimum rate, on many of its floating-rate  loans.
The floor for each specific  loan is  determined  in relation to the  prevailing
market rates on the date of origination  and most adjust upwards in the event of
increases in the loan's interest rate.

Notwithstanding  all of the above,  there can be no assurances that a sudden and
substantial  increase in interest  rates may not 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.

The  following   table   summarizes   information   relating  to  the  Company's
interest-earning  assets and  interest-bearing  liabilities  as of December  31,
2001, that are scheduled to mature or reprice within the periods shown.


                                       32
<PAGE>
<TABLE>

($ in thousands)                              0-3          4-12     Over 1-4        Over 4
                                              ---          ----     --------        ------
                                             Months       Months       Years         Years       Total
-------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>          <C>          <C>
Loans (1)                                  $105,489     $130,060     $106,885     $ 29,840     $372,274
Securities held to maturity (2)              17,965       66,446       14,746            -       99,157
Short-term investments                       13,350            -            -            -       13,350
Federal funds sold                            6,345            -            -            -        6,345
Securities available for sale (2)                 -        2,500        3,500            -        6,000
Federal Reserve Bank stock                        -            -            -          654          654
Interest-earning time deposits                  100          150            -            -          250
-------------------------------------------------------------------------------------------------------
Total rate-sensitive assets                $143,249     $199,156     $125,131     $ 30,494     $498,030
-------------------------------------------------------------------------------------------------------

Deposit accounts (3):
  Interest checking deposits               $ 10,204     $      -     $      -     $      -     $ 10,204
  Savings deposits                           24,624            -            -                    24,624
  Money market deposits                      80,594            -            -            -       80,594
  Certificates of deposit                    41,073      103,666       77,369       19,357      241,465
                                           ------------------------------------------------------------
  Total deposits                            156,495      103,666       77,369       19,357      356,887
Debentures payable                           41,500        2,500       10,000       19,430       73,430
Debentures payable- capital securities            -            -            -       15,000       15,000
Accrued interest on all debentures            5,922          584        1,841        3,133       11,480

-------------------------------------------------------------------------------------------------------
Total rate-sensitive liabilities           $203,917     $106,750     $ 89,210     $ 56,920     $456,797
-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
GAP (repricing differences)                $(60,668)    $ 92,406     $ 35,921     $(26,426)    $ 41,233
-------------------------------------------------------------------------------------------------------
Cumulative GAP                             $(60,668)    $ 31,738     $ 67,659     $ 41,233     $ 41,233
-------------------------------------------------------------------------------------------------------
Cumulative GAP to total assets
                                              -11.8%         6.2%        13.2%         8.0%         8.0%
-------------------------------------------------------------------------------------------------------
<FN>

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;   (2)  securities  are  scheduled  according  to  their
contractual  maturity dates,  which does not take into consideration the effects
of  possible  prepayments  that may  result  from the  issuer's  right to call a
security before its contractual  maturity date.  Additionally,  unrealized gains
and losses on securities  available for sale are ignored for this analysis;  (3)
money  market,  NOW and  savings  deposits  are  regarded  as  ready  accessible
withdrawable  accounts;  and certificates of deposit are scheduled through their
maturity dates.
</FN>
</TABLE>

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  and cash provided by
operating activities.  For additional  information concerning the Company's cash
flows, see the consolidated statements of cash flows included in this report.

At  December  31,  2001,  the  Company's  total  commitment  to lend  aggregated
$27,205,000.  The Company  believes that it can fund such  commitments  from the
aforementioned  sources of funds.  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 at December 31, 2001 or 2000.
The Bank is subject to various regulatory capital  requirements  administered by
the federal banking  agencies.  The FDIC  Improvement  Act of 1991,  among other
things,  established  five capital  categories  ranging from well capitalized to
critically undercapitalized. Such classifications are used by the FDIC and other
bank  regulatory  agencies  to  determine  various  matters,   including  prompt
corrective  action  and  each   institution's  FDIC  deposit  insurance  premium
assessments.  The capital categories involve  quantitative  measures of a bank's
assets,  liabilities,  and certain  off-balance-sheet  items as calculated under
regulatory accounting practices.  The Bank's capital amounts and classifications
are also subject to qualitative  judgments by the regulators  about  components,
risk weightings, and other factors. Failure to meet minimum capital requirements
can initiate certain mandatory and possibly additional  discretionary actions by
the regulators  that, if undertaken,  could have a direct material effect on the
Company's consolidated financial statements.


                                       33
<PAGE>

The Bank is  required to  maintain,  for  regulatory  compliance  and  reporting
purposes,  regulatory  defined  minimum  Tier 1  leverage  and Tier 1 and  total
risk-based  capital  ratio  levels of at least 4%, 4% and 8%,  respectively.  At
December 31, 2001 and 2000,  management  believes  that the Bank met its capital
adequacy 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.

In June 2001,  the OCC  terminated a Memorandum of  Understanding  with the Bank
that was in  effect  since  June  2000.  The  memorandum  was a  formal  written
agreement  whereby,  among other  things,  the Bank had been required to review,
revise,  develop and implement  various  policies and procedures with respect to
its lending and credit underwriting.  Management  implemented various actions in
order for the Bank to be in full compliance with the memorandum.
<TABLE>
Information  regarding  the Bank's  regulatory  capital  and  related  ratios is
summarized below:

                                                                                At December 31,
($ in thousands)                                                            2001              2000
----------------------------------------------------------------------------------------------------
<S>                                                                       <C>               <C>
Tier 1 Capital:
   Stockholder's equity                                                   $ 46,749          $ 27,606
   Disallowed portion of deferred tax asset                                   (946)             (777)
   Unrealized (gain) loss on debt securities, net of tax                      (111)              252
----------------------------------------------------------------------------------------------------
Total Tier 1 capital                                                        45,692            27,081
----------------------------------------------------------------------------------------------------
Tier 2 Capital:
   Allowable portion of allowance for loan loss reserves                     3,314             2,650
----------------------------------------------------------------------------------------------------
Total risk-based capital                                                  $ 49,006          $ 29,731

----------------------------------------------------------------------------------------------------
Net risk-weighted assets                                                  $326,030          $238,133
Average assets for regulatory purposes                                    $402,124          $327,648
Tier 1 capital to average assets
                                                                             11.36%             8.27%
Tier 1 capital to risk-weighted assets
                                                                             14.01%            11.37%
Total capital to risk-weighted assets
                                                                             15.03%            12.49%
----------------------------------------------------------------------------------------------------
</TABLE>

Recent Accounting Pronouncements

See note 1 to the  consolidated  financial  statements  for a discussion of this
topic.

Impact of Inflation and Changing Prices

The financial  statements  and related  financial  data  concerning  the Company
presented  herein have been prepared in accordance  with  accounting  principles
generally  accepted  in  the  United  States  of  America,   which  require  the
measurement of financial  position and operating  results in terms of historical
dollars without  considering  changes in the relative  purchasing power of money
over time due to inflation. The primary impact of inflation on the operations of
the Company is reflected  in increased  operating  costs.  Virtually  all of the
assets and  liabilities  of the  Company are  monetary  in nature.  As a result,
changes in interest rates have a more  significant  impact on the performance of
the Company than do the effects of changes in the general rate of inflation  and
changes in prices.  Interest rates do not necessarily move in the same direction
or in the  same  magnitude  as the  prices  of  goods  and  services.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

Market  risk is the risk of loss  from  adverse  changes  in market  prices  and
interest rates.  The Company's  market risk arises  primarily from interest rate
risk inherent in its lending and deposit-taking  activities, and the issuance of
its  debentures.  The  Company has not  engaged in and  accordingly  has no risk
related to trading accounts, commodities or foreign exchange. The measurement of
market risk  associated  with financial  instruments is meaningful only when all
related and offsetting on-and off-balance sheet transactions are aggregated, and
the resulting net positions are identified.  Disclosures about the fair value of
financial instruments as of December 31, 2001 and 2000, which reflect changes in
market prices and rates, can be found in note 20 to the  consolidated  financial
statements.


                                       34
<PAGE>

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. For a further discussion,  see
the section "Asset and Liability Management."

Item 8.  Financial Statements and Supplementary Data

Financial Statements

The  following   consolidated   financial  statements  of  Intervest  Bancshares
Corporation and Subsidiaries are included herein:

-  Independent Auditors' Report - Hacker, Johnson & Smith PA (page 36)
-  Independent  Auditors'  Report - Richard A.  Eisner & Company,  LLP (page 37)
   Consolidated Balance Sheets at December 31, 2001 and 2000 (page 38)
-  Consolidated  Statements  of Earnings for the Years Ended  December 31, 2001,
   2000 and 1999 (page 39)
-  Consolidated  Statements of Comprehensive Income for the Years Ended December
   31, 2001, 2000 and 1999 (page 40)
-  Consolidated  Statements  of  Changes in  Stockholders'  Equity for the Years
   Ended December 31, 2001, 2000 and 1999 (page 41)
-  Consolidated  Statements of Cash Flows for the Years Ended December 31, 2001,
   2000 and 1999  (page  42) - Notes to the  Consolidated  Financial  Statements
   (pages 43 to 65)

Supplementary Data

Securities Available for Sale
-----------------------------
<TABLE>

The following table sets forth, by maturity distribution, information pertaining
to securities available for sale:

                                                       After One Year to      After Five Years to
                                                       -----------------      -------------------
                                 One Year or Less          Five Years             Ten Years                  Total
                                 ----------------          ----------             ---------                  -----
                                 Carrying     Avg.       Carrying     Avg.     Carrying     Avg.       Carrying     Avg.
($ in thousands)                    Value   Yield           Value   Yield         Value   Yield           Value   Yield

------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>       <C>          <C>        <C>        <C>                     <C>        <C>
At December 31, 2001:
---------------------
U.S. government agencies           $2,571    5.78%        $ 3,621    5.46%      $    -        -%        $ 6,192    5.59%

At December 31, 2000:
---------------------
U.S. government agencies           $  998    5.42%        $63,809    5.70%      $9,982     6.56%        $74,789    5.81%
</TABLE>


                                       35
<PAGE>

Supplementary Data, Continued


Securities Held to Maturity
---------------------------
<TABLE>

The following table sets forth, by maturity distribution, information pertaining
to securities held to maturity:

                                                       After One Year to      After Five Years to
                                 One Year or Less          Five Years              Ten Years                  Total
                                 ----------------          ----------              ---------                  -----
                                Carrying      Avg.     Carrying      Avg.     Carrying        Avg.    Carrying        Avg.
($ in thousands)                   Value    Yield         Value    Yield         Value      Yield        Value      Yield
-----------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>         <C>        <C>         <C>        <C>                     <C>           <C>
At December 31, 2001:
---------------------
U.S. government agencies         $79,411     2.85%      $19,746     3.02%      $     -          -%     $99,157       2.89%

At December 31, 2000:
---------------------
U.S. government agencies         $20,970     6.52%      $     -        -%      $     -          -%     $20,970       6.52%

At December 31, 1999:
---------------------
U.S. government agencies         $ 7,907     5.72%      $58,013     5.65%      $17,212       6.36%     $83,132       5.80%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Loans and Allowance for Loan Loss Reserves
------------------------------------------
<TABLE>

The following table sets forth  information  with respect to loans receivable at
December 31:

                                                       2001          2000         1999         1998         1997
                                                       ----          ----         ----         ----         ----
                                                     Carrying      Carrying    Carrying      Carrying     Carrying
($ in thousands)                                        Value         Value       Value         Value        Value
------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>         <C>           <C>          <C>
Commercial real estate and multifamily loans         $368,221      $263,284    $210,022      $160,610     $146,375
Residential 1-4 family loans                            2,404         3,034       2,311         2,627        3,162
Construction loans                                          -             -           -             -          158
Commercial business loans                               1,363         1,781       2,107         2,875        2,641
Consumer loans                                            286           206         242           184           92
                                                 -----------------------------------------------------------------
Loans receivable                                      372,274       268,305     214,682       166,296      152,428
Deferred loan fees                                     (3,748)       (1,979)     (1,745)       (1,310)      (1,596)
                                                 -----------------------------------------------------------------
Loans receivable, net of deferred fees                368,526       266,326     212,937       164,986      150,832
Allowance for loan loss reserves                       (3,380)       (2,768)     (2,493)       (1,662)      (1,173)
------------------------------------------------------------------------------------------------------------------
Loans receivable, net                                $365,146      $263,558    $210,444      $163,324     $149,659
------------------------------------------------------------------------------------------------------------------

Loans included above that were
   on a nonaccrual status at year end                $  1,243      $      -    $      -      $      -     $      -
------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>

The  following  table sets forth  information  with respect to the allowance for
loan loss reserves at December 31:

($ in thousands)                                       2001          2000         1999         1998         1997
--------------------------------------------------------------- -------------- -----------------------------------
<S>                                                  <C>           <C>         <C>           <C>          <C>
Allowance at beginning of year                       $  2,768      $  2,493    $  1,662      $  1,173     $    811
Provision charged to operations                           612           275         830           479          352
Chargeoffs                                                  -             -           -             -            -
Recoveries                                                  -             -           1            10           10
------------------------------------------------------------------------------------------------------------------
Allowance at end of year                             $  3,380      $  2,768    $  2,493      $  1,662     $  1,173
------------------------------------------------------------------------------------------------------------------
Total loans, net of deferred fees                    $368,526      $266,326    $212,937      $164,986     $150,832
Average loans outstanding during the year            $315,148      $250,941    $175,980      $170,675     $141,612
Ratio of allowance to net loans receivable               0.92%         1.04%       1.17%         1.01%        0.78%
------------------------------------------------------------------------------------------------------------------
</TABLE>

Other financial  statement  schedules and  inapplicable  periods with respect to
schedules listed above are omitted because the conditions requiring their filing
do not exist or the  information  required  thereby is included in the financial
statements filed, including the notes thereto.



                                       36
<PAGE>




                          Independent Auditors' Report



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

         We  have  audited  the  accompanying  consolidated  balance  sheets  of
Intervest Bancshares Corporation and Subsidiaries (the "Company") as of December
31,  2001  and  2000  and  the  related  consolidated  statements  of  earnings,
comprehensive  income,  changes in stockholders' equity, and cash flows for each
of the years in the three-year  period ended December 31, 2001.  These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

         We did not audit the financial  statements of Intervest  Corporation of
New York, whose total assets as of December 31, 2001 and 2000, constituted 15.6%
and  17.8% of the  related  consolidated  totals,  respectively,  and  whose net
interest  income,  noninterest  income  and net  earnings  for the  years  ended
December  31,  2001,  2000  and  1999,   constituted  10.4%,  42.5%  and  15.3%,
respectively  in 2001,  10.3%,  48.6% and 5.0%,  respectively in 2000 and 21.2%,
49.3% and 32.4%, respectively in 1999, of the related consolidated totals. Those
statements were audited by other auditors whose report has been furnished to us,
and  our  opinion  insofar  as  it  relates  to  the  amounts  included  in  the
consolidated totals, are based solely on the report of the other auditors.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

         In our opinion,  based on our audits and the report of other  auditors,
the consolidated  financial  statements referred to above present fairly, in all
material  respects,  the financial  position of the Company at December 31, 2001
and 2000,  and the results of its  operations and its cash flows for each of the
years in the  three-year  period  ended  December  31, 2001 in  conformity  with
accounting principles generally accepted in the United States of America.


/s/ Hacker, Johnson & Smith PA
------------------------------
Hacker, Johnson & Smith PA
Tampa, Florida
January 21, 2002



                                       37
<PAGE>



                          Independent Auditors' Report


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

         We  have  audited  the   consolidated   balance   sheets  of  Intervest
Corporation of New York and  Subsidiaries  (the  "Company") at December 31, 2001
and 2000 and the  related  consolidated  statements  of  operations,  changes in
stockholder's  equity  and cash  flows for each of the  years in the  three-year
period  ended  December  31,  2001  (not  presented  separately  herein).  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
fairly present, in all material respects,  the financial position of the Company
at December 31, 2001 and 2000,  and the results of its  operations  and its cash
flows for each of the years in the three-year  period ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.


/s/ Richard A. Eisner & Company, LLP
------------------------------------
Richard A. Eisner & Company, LLP
New York, New York
January 21, 2002



                                       38
<PAGE>
<TABLE>


                Intervest Bancshares Corporation and Subsidiaries
                           Consolidated Balance Sheets

                                                                                                At December 31,
                                                                                           --------------------------
($ in thousands, except par value)                                                              2001          2000
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>           <C>
ASSETS
Cash and due from banks                                                                       $  4,714      $  5,016
Federal funds sold                                                                               6,345        20,268
Commercial paper                                                                                12,400        17,125
Other short-term investments                                                                       950           529
                                                                                           --------------------------
    Total cash and cash equivalents                                                             24,409        42,938
Time deposits with banks                                                                           250             -
Securities available for sale at estimated fair value                                            6,192        74,789
Securities held to maturity, net                                                                99,157        20,970
Federal Reserve Bank stock, at cost                                                                654           605
Loans receivable (net of allowance for loan losses of $3,380 in 2001 and $2,768 in 2000)       365,146       263,558
Accrued interest receivable                                                                      3,202         2,961
Premises and equipment, net                                                                      6,042         5,731
Deferred income tax asset                                                                        1,236         1,105
Deferred debenture offering costs                                                                3,396         2,835
Other assets                                                                                     2,938         1,435
---------------------------------------------------------------------------------------------------------------------
Total assets                                                                                  $512,622      $416,927
---------------------------------------------------------------------------------------------------------------------

LIABILITIES
Deposits:
   Noninterest-bearing demand deposit accounts                                                $  5,550      $  5,035
   Interest-bearing deposit accounts:
      Checking (NOW) accounts                                                                   10,204         9,188
      Savings accounts                                                                          24,624        15,743
      Money market accounts                                                                     80,594        52,619
      Certificate of deposit accounts                                                          241,465       217,656
                                                                                           --------------------------
Total deposit accounts                                                                         362,437       300,241
Subordinated debentures payable                                                                 73,430        64,080
Guaranteed preferred beneficial interest in junior subordinated debentures                      15,000             -
Accrued interest payable on debentures                                                          11,480         8,733
Accrued interest payable on deposits                                                               817           856
Mortgage escrow funds payable                                                                    4,253         3,397
Official checks outstanding                                                                      3,219         2,281
Other liabilities                                                                                1,591         1,111
---------------------------------------------------------------------------------------------------------------------
Total liabilities                                                                              472,227       380,699
---------------------------------------------------------------------------------------------------------------------

Commitments and contingencies (notes 5, 17 and 19)

STOCKHOLDERS' EQUITY
Preferred stock  (300,000 shares authorized, none issued)                                            -             -
Class A common stock  ($1.00 par value, 9,500,000 shares authorized,
      3,544,629 shares issued and outstanding)                                                   3,545         3,545
Class B common stock  ($1.00 par value, 700,000 shares authorized,
      355,000 shares issued and outstanding)                                                       355           355
Additional paid-in-capital, common                                                              19,001        18,975
Retained earnings                                                                               17,383        13,605
Accumulated other comprehensive income (loss):
    Net unrealized gain (loss) on securities available for sale, net of tax                        111          (252)
---------------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                                      40,395       36,228
---------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                                                    $512,622      $416,927
---------------------------------------------------------------------------------------------------------------------
     See accompanying notes to consolidated financial statements.
</TABLE>


                                       39
<PAGE>
<TABLE>


                Intervest Bancshares Corporation and Subsidiaries
                       Consolidated Statements of Earnings

                                                                                                   Year Ended December 31,
                                                                                          ---------------------------------------
($ in thousands, except per share data)                                                      2001          2000         1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>           <C>            <C>
INTEREST AND DIVIDEND INCOME
Loans receivable                                                                              $ 30,187      $ 24,923       $ 18,794
Securities                                                                                       3,423         6,056          6,123
Other interest-earning assets                                                                    1,852           929            584
------------------------------------------------------------------------------------------------------------------------------------
Total interest and dividend income                                                              35,462        31,908         25,501
------------------------------------------------------------------------------------------------------------------------------------

INTEREST EXPENSE
Deposits                                                                                        17,079        14,853          8,703
Federal funds purchased                                                                              -           150             29
Debentures payable                                                                               7,635         8,322          9,687
------------------------------------------------------------------------------------------------------------------------------------
Total interest expense                                                                          24,714        23,325         18,419
------------------------------------------------------------------------------------------------------------------------------------

Net interest and dividend income                                                                10,748         8,583          7,082
Provision for loan loss reserves                                                                   612           275            830
------------------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income after provision for loan loss reserves                         10,136         8,308          6,252
------------------------------------------------------------------------------------------------------------------------------------

NONINTEREST INCOME
Customer service fees                                                                              159           139            140
Income from mortgage lending activities                                                          1,490           809            744
All other                                                                                            6            35             16
------------------------------------------------------------------------------------------------------------------------------------
Total noninterest income                                                                         1,655           983            900
------------------------------------------------------------------------------------------------------------------------------------

NONINTEREST EXPENSES
Salaries and employee benefits                                                                   2,451         2,228          1,915
Occupancy and equipment, net                                                                     1,177         1,090            963
Data processing                                                                                    329           117             35
Advertising and promotion                                                                           25            35            142
Professional fees and services                                                                     341           410            258
Stationery, printing and supplies                                                                  137           140            165
All other                                                                                          843           548            581
------------------------------------------------------------------------------------------------------------------------------------
Total noninterest expenses                                                                       5,303         4,568          4,059
------------------------------------------------------------------------------------------------------------------------------------

Earnings before taxes, extraordinary item and change in accounting principle                     6,488         4,723          3,093
Provision for income taxes                                                                       2,710         1,909          1,198
                                                                                              --------------------------------------
Earnings before extraordinary item and change in accounting principle                            3,778         2,814          1,895
Extraordinary item, net of tax (note 7)                                                              -          (206)             -
Cumulative effect of change in accounting principle, net of tax (note 1)                             -             -           (128)
------------------------------------------------------------------------------------------------------------------------------------
Net earnings                                                                                  $  3,778      $  2,608       $  1,767
------------------------------------------------------------------------------------------------------------------------------------

Basic earnings per share:
    Earnings before extraordinary item and change in accounting principle                     $   0.97      $   0.72       $   0.50
    Extraordinary item, net of tax                                                                   -         (0.05)             -
    Cumulative effect of change in accounting principle, net of tax                                  -             -          (0.03)
------------------------------------------------------------------------------------------------------------------------------------
   Net earnings per share                                                                     $   0.97      $   0.67       $   0.47
------------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share:
    Earnings before extraordinary item and change in accounting principle                     $   0.97      $   0.72       $   0.47
    Extraordinary item, net of tax                                                                   -         (0.05)             -
    Cumulative effect of change in accounting principle, net of tax                                  -             -          (0.03)
------------------------------------------------------------------------------------------------------------------------------------
   Net earnings per share                                                                     $   0.97      $   0.67       $   0.44
------------------------------------------------------------------------------------------------------------------------------------
    See accompanying notes to consolidated financial statements.
</TABLE>


                                       40
<PAGE>
<TABLE>

                Intervest Bancshares Corporation and Subsidiaries
                 Consolidated Statements of Comprehensive Income


                                                                                                     Year Ended December 31,
                                                                                          ---------------------------------------
($ in thousands)                                                                                 2001          2000         1999
---------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                           <C>           <C>          <C>
Net earnings                                                                                  $  3,778      $  2,608     $  1,767
                                                                                              -----------------------------------
  Net unrealized gains (losses) on securities available for sale                                  596           (405)           -
  Provision for income taxes related to unrealized gains (losses)
        on securities available for sale                                                         (233)          153             -
---------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss), net of tax                                                     363           (252)           -
---------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income, net of tax                                                        $  4,141      $  2,356     $  1,767
---------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>



























                                       41
<PAGE>
<TABLE>

                Intervest Bancshares Corporation and Subsidiaries
           Consolidated Statements of Changes in Stockholders' Equity

                                                                                                   Year Ended December 31,
                                                                                         ---------------------------------------
($ in thousands)                                                                                2001          2000         1999
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>           <C>          <C>
CLASS A COMMON STOCK
Balance at beginning of year                                                                   $3,545        $3,532       $3,434
Issuance of 510 shares in exchange for common stock of minority stockholders                        -             -            1
Issuance of 7,554 shares upon the conversion of debentures                                          -             -            7
Issuance of 12,750 and 89,300 shares in 2000 and 1999, respectively,
     upon the exercise of warrants                                                                  -            13           90
--------------------------------------------------------------------------------------------------------------------------------
Balance at end of year                                                                          3,545         3,545        3,532
--------------------------------------------------------------------------------------------------------------------------------

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

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of year                                                                   18,975        18,770       18,148
Issuance of 510 shares in exchange for common stock of minority stockholders                        -             -            6
Issuance of 7,554 shares upon the conversion of debentures,
     net of issuance costs                                                                          -             -           56
Compensation related to issuance of Class B stock warrants                                         26            26           26
Issuance of 50,000 shares of restricted Class B stock compensation                                  -           109            -
Issuance of 12,750 and 94,300 shares in 2000 and 1999, respectively, upon
     exercise of stock warrants, inclusive of tax benefits                                          -            70          534
--------------------------------------------------------------------------------------------------------------------------------
Balance at end of year                                                                         19,001        18,975       18,770
--------------------------------------------------------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of year                                                                   13,605        10,997        9,230
Net earnings for the year                                                                       3,778         2,608        1,767
--------------------------------------------------------------------------------------------------------------------------------
Balance at end of year                                                                         17,383        13,605       10,997
--------------------------------------------------------------------------------------------------------------------------------

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance at beginning of year                                                                     (252)            -            -
Net change in accumulated other comprehensive income (loss), net                                  363          (252)           -
--------------------------------------------------------------------------------------------------------------------------------
Balance at end of year                                                                            111          (252)           -
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity at end of year                                                     $40,395       $36,228      $33,604
--------------------------------------------------------------------------------------------------------------------------------
  See accompanying notes to consolidated financial statements.
</TABLE>



                                       42
<PAGE>
<TABLE>


                Intervest Bancshares Corporation and Subsidiaries
                      Consolidated Statements of Cash Flows

                                                                                                 Year Ended December 31,
                                                                                   ---------------------------------------------
($ in thousands)                                                                             2001            2000         1999
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>             <C>          <C>
OPERATING ACTIVITIES
Net earnings                                                                                $ 3,778         $ 2,608      $ 1,767
Adjustments to reconcile net earnings to net cash provided by operating
    activities:
Depreciation and amortization                                                                   505             433          416
Provision for loan loss reserves                                                                612             275          830
Deferred income tax benefit                                                                    (364)            (16)        (327)
Amortization of deferred debenture offering costs                                               753           1,136          943
Compensation expense from awards of common stock and warrants                                    26             185           26
Amortization of premiums, fees and discounts, net                                            (1,823)         (1,814)      (1,000)
Net increase in accrued interest payable on debentures                                        2,747             641        2,302
Net increase in official checks outstanding                                                     938             460          249
Net change in all other assets and liabilities                                                2,118           1,912        1,240
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                                     9,290           5,820        6,446
--------------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Net (increase) decrease in interest-earning time deposits with banks                           (250)              -           99
Maturities and calls of securities available for sale                                        69,194               -            -
Maturities and calls of securities held to maturity                                          35,996          26,393       32,556
Purchases of securities held to maturity                                                   (114,013)        (39,160)     (33,278)
Net increase in loans receivable                                                           (103,969)        (53,623)     (48,386)
Purchases of Federal Reserve Bank stock, net                                                    (49)            (97)        (275)
Purchases of premises and equipment, net                                                       (816)           (301)      (1,362)
--------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                                      (113,907)        (66,788)     (50,646)
--------------------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Net increase in demand, savings, NOW and money market deposits                               38,387           4,299        6,904
Net increase in certificates of deposit                                                      23,809          94,862       23,761
Net increase in mortgage escrow funds payable                                                   856              22          470
(Repayments of) proceeds from federal funds purchased, net                                        -          (6,955)       6,955
Proceeds from sale of debentures, net of issuance costs                                      24,436           3,500        6,606
Principal repayments of debentures                                                           (1,400)        (24,000)     (10,000)
Net proceeds from issuance of common stock, net of issuance costs                                 -              83          622
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                                    86,088          71,811       35,318
--------------------------------------------------------------------------------------------------------------------------------

Net (decrease) increase in cash and cash equivalents                                        (18,529)         10,843       (8,882)
Cash and cash equivalents at beginning of year                                               42,938          32,095       40,977
--------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                                                   $ 24,409        $ 42,938     $ 32,095
--------------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES Cash paid during the year for:
   Interest                                                                                $ 21,253        $ 21,532     $ 15,074
   Income taxes                                                                               2,704           1,004        1,989
Noncash activities:
   Transfers of securities from held-to-maturity to available-for-sale                            -          74,789            -
   Accumulated other comprehensive income (loss) - change in unrealized gain
         (loss) on securities available for sale, net of tax                                    363            (252)           -
   Conversion of debentures into Class A common stock                                             -               -           70
   Issuance of common stock in exchange for common stock of minority
        stockholders                                                                              -               -            7
--------------------------------------------------------------------------------------------------------------------------------
 See accompanying notes to consolidated financial statements.
</TABLE>



                                       43
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

1.       Description of Business and Summary of Significant Accounting Policies

         Description of Business

         Intervest   Bancshares   Corporation   (the   "Holding   Company")  was
         incorporated in 1993 and is headquartered in Rockefeller  Center in New
         York City. Its wholly owned subsidiaries are Intervest National Bank, a
         nationally  chartered  bank,  Intervest  Corporation  of  New  York,  a
         mortgage investment company, and Intervest Statutory Trust I, a special
         purpose finance  subsidiary.  The Holding Company's primary business is
         the ownership of its  subsidiaries.  On July 20, 2001,  Intervest  Bank
         (the Holding  Company's other wholly owned banking  subsidiary prior to
         this date) merged into Intervest  National  Bank.  Intervest Bank was a
         Florida state  chartered  commercial  bank. The merger was treated as a
         reorganization  and  accounted  for at  historical  cost similar to the
         pooling-of-interests  method  of  accounting.   Under  this  method  of
         accounting,  the recorded assets,  liabilities,  shareholders'  equity,
         income and  expenses of both banks are  combined  and recorded at their
         historical  cost  amounts.  Hereafter,  Intervest  National Bank may be
         referred  to as the  "Bank"  and  all  the  entities  are  referred  to
         collectively as the "Company," on a consolidated basis.

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

         Intervest  Corporation  of New York and its wholly owned  subsidiaries,
         Intervest  Distribution  Corporation  and  Intervest  Realty  Servicing
         Corporation,  is 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. Intervest Corporation of
         New York was acquired on March 10, 2000, by the Holding Company. In the
         acquisition, all the outstanding capital stock of Intervest Corporation
         of New York was  acquired  in  exchange  for  1,250,000  shares  of the
         Holding  Company's  Class  A  common  stock.   Former  shareholders  of
         Intervest  Corporation  of New  York  are  officers  and  directors  of
         Intervest  Corporation  of  New  York  and  the  Holding  Company.  The
         acquisition  was also  accounted for at historical  cost similar to the
         pooling-of-interests method of accounting.

         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.

         Principles of Consolidation, Basis of Presentation and Use of Estimates

         The  consolidated  financial  statements  include  the  accounts of the
         Holding  Company and its  subsidiaries.  All  significant  intercompany
         balances  and  transactions  have  been  eliminated  in  consolidation.
         Certain  reclassifications  have been  made to prior  year  amounts  to
         conform  to  the  current  year's  presentation.   The  accounting  and
         reporting  policies of the  Company  conform to  accounting  principles
         generally  accepted  in the  United  States of  America  and to general
         practices  within the banking  industry.  In preparing the consolidated
         financial  statements,  management  is required to make  estimates  and
         assumptions that affect the reported amounts of assets and liabilities,
         and  disclosure  of  contingent  liabilities,  as of  the  date  of the
         financial  statements  and revenues and expenses  during the  reporting
         periods.  Actual  results could differ from those  estimates.  Material
         estimates that are  particularly  susceptible to significant  change in
         the near term relate to the  determination  of the  allowance  for loan
         loss reserves and deferred income tax assets.

         Cash Equivalents

         For purposes of the statements of cash flows, cash equivalents  include
         federal  funds  sold and  short-term  investments.  Federal  funds  are
         generally  sold for one-day  periods and  short-term  investments  have
         maturities of three months or less from the time of purchase.

                                       44
<PAGE>


                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

1.       Description of Business and Summary of Significant Accounting Policies,
         Continued

         Securities

         Securities  for which the  Company  has the  ability and intent to hold
         until  maturity are  classified as securities  held to maturity and are
         carried at cost,  adjusted for accretion of discounts and  amortization
         of  premiums,  which are  recognized  into  interest  income  using the
         interest  method over the period to maturity.  Securities that are held
         for indefinite  periods of time which management intends to use as part
         of its  asset/liability  management  strategy,  or that  may be sold in
         response to changes in interest rates or other factors,  are classified
         as available for sale and are carried at fair value.  Unrealized  gains
         and losses on  securities  available  for sale,  net of related  income
         taxes, are reported as a separate  component of  comprehensive  income.
         Realized gains and losses from sales of securities are determined using
         the specific identification method.

         Loans Receivable

         Loans  that the  Company  has the  intent  and  ability to hold for the
         foreseeable  future or until  maturity or  satisfaction  are carried at
         their outstanding  principal net of chargeoffs,  the allowance for loan
         loss reserves,  unamortized  discounts and deferred loan fees or costs.
         Loan  origination  and  commitment  fees,  net of  certain  costs,  are
         deferred and amortized to interest income as an adjustment to the yield
         of the related loans over the  contractual  life of the loans using the
         interest  method.  When a loan is paid off or sold,  or if a commitment
         expires unexercised, any unamortized net deferred amount is credited or
         charged to earnings accordingly.

         Loans are  placed on  nonaccrual  status  when  principal  or  interest
         becomes  90  days  or  more  past  due.  Accrued  interest   receivable
         previously  recognized  is reversed when a loan is placed on nonaccrual
         status.  Amortization  of net deferred fee income is  discontinued  for
         loans placed on nonaccrual status.  Interest payments received on loans
         in  nonaccrual  status are  recognized as income on a cash basis unless
         future  collections  of  principal  are  doubtful,  in  which  case the
         payments received are applied as a reduction of principal. Loans remain
         on nonaccrual status until principal and interest payments are current.

         Allowance for Loan Loss Reserves

         The allowance for loan loss reserves is netted against loans receivable
         and is increased by provisions  charged to operations  and decreased by
         chargeoffs  (net of  recoveries).  The  adequacy  of the  allowance  is
         evaluated monthly with consideration given to: the nature and volume of
         the loan portfolio;  overall portfolio  quality;  loan  concentrations;
         specific  problem  loans and  commitments  and  estimates of fair value
         thereof; historical chargeoffs and recoveries; adverse situations which
         may affect the borrowers' ability to repay; and management's perception
         of the current and  anticipated  economic  conditions  in the Company's
         lending areas. In addition, Statement of Financial Accounting Standards
         (SFAS)  No.  114  specifies  the  manner  in which the  portion  of the
         allowance for loan loss  reserves is computed  related to certain loans
         that are impaired.  A loan is normally deemed impaired when, based upon
         current  information  and events,  it is probable  the Company  will be
         unable to collect both  principal  and  interest  due  according to the
         contractual  terms  of the  loan  agreement.  Impaired  loans  normally
         consist of loans on  nonaccrual  status.  Interest  income on  impaired
         loans is recognized on a cash basis.  Impairment  for  commercial  real
         estate and residential loans is measured based on: the present value of
         expected future cash flows, discounted at the loan's effective interest
         rate; or the observable market price of the loan; or the estimated fair
         value  of the  loan's  collateral,  if  payment  of the  principal  and
         interest is dependent upon the  collateral.  When the fair value of the
         property  is less  than  the  recorded  investment  in the  loan,  this
         deficiency is recognized  as a valuation  allowance  within the overall
         allowance for loan loss reserves and a charge through the provision for
         loan  losses.  The  Company  normally  charges  off any  portion of the
         recorded  investment  in the loan that  exceeds  the fair  value of the
         collateral. The net carrying amount of an impaired loan does not at any
         time exceed the recorded investment in the loan.


                                       45
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

1.       Description of Business and Summary of Significant Accounting Policies,
         Continued

         Allowance for Loan Loss Reserves, Continued

         Lastly,  the  Company's  regulators,  as  an  integral  part  of  their
         examination  process,  periodically  review the allowance for loan loss
         reserves.  Accordingly,  the Company  may be  required to take  certain
         chargeoffs  and/or  recognize  additions to the allowance  based on the
         regulators'  judgment concerning  information  available to them during
         their examination.

         Premises and Equipment

         Land  is  carried  at  cost.  Buildings,   leasehold  improvements  and
         furniture, fixtures and equipment are carried at cost, less accumulated
         depreciation  and  amortization.  Depreciation  is  computed  using the
         straight-line  method  over the  estimated  useful  life of the  asset.
         Leasehold  improvements  are amortized using the  straight-line  method
         over the terms of the related leases,  or the useful life of the asset,
         whichever is shorter.  Maintenance,  repairs and minor improvements are
         expensed as incurred, while major improvements are capitalized.

         Deferred Debenture Offering Costs

         Costs  relating to offerings of debentures are amortized over the terms
         of  the  debentures.  The  costs  consist  primarily  of  underwriters'
         commissions.   Accumulated   amortization  amounted  to  $3,042,000  at
         December 31, 2001 and $2,331,000 at December 31, 2000.

         Foreclosed Real Estate

         Real  estate  properties   acquired  through,   or  in  lieu  of,  loan
         foreclosure  are to be sold.  Upon  foreclosure  of the  property,  the
         related loan is transferred  from the loan portfolio to foreclosed real
         estate  at the  lower  of the  loan's  carrying  value  at the  date of
         transfer,  or  estimated  fair  value of the  property  less  estimated
         selling costs.  Such amount becomes the new cost basis of the property.
         Adjustments  made to the  carrying  value at the time of  transfer  are
         charged to the allowance  for loan loss  reserves.  After  foreclosure,
         management  periodically performs market valuations and the real estate
         is carried at the lower of cost 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.

         Stock-Based Compensation

         The  Company  follows  APB No.  25,  "Accounting  for  Stock  Issued to
         Employees"   and  related   interpretations   in  accounting   for  its
         stock-based  compensation,  which  is  generally  in the  form of stock
         warrants.  SFAS No. 123,  "Accounting  for  Stock-Based  Compensation,"
         requires pro forma  disclosures  of net earnings and earnings per share
         determined as if the Company accounted for its stock warrants under the
         fair value method.

         Advertising Costs

         Advertising costs are expensed as incurred.

         Income Taxes

         Under SFAS No. 109,  "Accounting for Income Taxes," deferred tax assets
         and   liabilities   are  recognized   for  the  estimated   future  tax
         consequences   attributable  to  temporary   differences   between  the
         financial statement carrying amounts of existing assets and liabilities
         and their respective tax bases. Deferred tax assets and liabilities are
         measured using enacted tax rates expected to apply to taxable income in
         the  year in which  those  temporary  differences  are  expected  to be
         recovered or settled.  A valuation  allowance is recorded if it is more
         likely  than not that some  portion or all of the  deferred  tax assets
         will not be realized based on a review of available evidence.


                                       46
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

1.       Description of Business and Summary of Significant Accounting Policies,
         Continued

         Earnings Per Share (EPS)

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

         Comprehensive Income

         The Company  follows SFAS No. 130,  "Reporting  Comprehensive  Income."
         Accounting   principles  generally  require  that  recognized  revenue,
         expenses,  gains  and  losses be  included  in net  earnings.  However,
         certain changes in assets and liabilities, such as unrealized gains and
         losses on  available-for-sale  securities,  are  reported as a separate
         component of the equity section of the balance sheet,  such items along
         with net earnings, are components of comprehensive income.

         Off-Balance Sheet Financial Instruments

         In the ordinary course of business, the Company enters into off-balance
         sheet financial instruments consisting of commitments to extend credit,
         unused lines of credit and standby  letters of credit.  Such  financial
         instruments are recorded in the consolidated  financial statements when
         they are funded or related fees are incurred or received.

         Start-Up Costs

         The  Company  follows  the AICPA's  Statement  of Position  (SOP) 98-5,
         "Reporting on the Costs of Start-Up  Activities." The SOP requires that
         all start-up costs (except for those that are capitalizable under other
         accounting  principles  generally  accepted  in the  United  States  of
         America)  be  expensed as incurred  for  financial  statement  purposes
         effective January 1, 1999. Previously, a portion of start-up costs were
         generally capitalized and amortized over a period of time. The adoption
         of this  statement by the Company on January 1, 1999  resulted in a net
         charge of $128,000.  The charge represents the expensing,  net of a tax
         benefit,  of cumulative  start-up costs that had been incurred  through
         December 31, 1998 in  connection  with  organizing  Intervest  National
         Bank.

         Recent Accounting Pronouncements

         Accounting for Derivative Instruments and Hedging Activities.  SFAS No.
         133  "Accounting for Derivative  Instruments  and Hedging  Activities,"
         requires companies to record derivatives on the balance sheet as assets
         or liabilities, measured at fair value. Gains and losses resulting from
         changes  in the  values of those  derivatives  would be  accounted  for
         depending on the uses of the  derivatives  and whether they qualify for
         hedge  accounting.  The adoption of this statement had no effect on the
         Company's financial statements.


                                       47
<PAGE>



                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

1.       Description of Business and Summary of Significant Accounting Policies,
         Continued

         Recent Accounting Pronouncements, Continued

         Accounting  for  Business   Combinations.   SFAS  No.  141,   "Business
         Combinations,"   addresses  financial   accounting  and  reporting  for
         business   combinations   and   supersedes   APB  No.   16,   "Business
         Combinations",   and  SFAS  No.  38,   "Accounting  for  Preacquisition
         Contingencies of Purchased  Enterprises." All business  combinations in
         the scope of this  statement  are to be accounted for using one method,
         the purchase  method.  The  provisions of this  statement  apply to all
         business  combinations  initiated  after June 30, 2001. The adoption of
         this  statement  had no effect on the  Company's  financial  statements
         Accounting  for Goodwill  and Other  Intangible  Assets.  SFAS No. 142,
         "Goodwill and Other Intangible Assets," addresses financial  accounting
         and reporting  for acquired  goodwill and other  intangible  assets and
         supersedes APB No. 17, "Intangible Assets." It addresses how intangible
         assets that are acquired  individually  or with a group of other assets
         (but not those acquired in a business  combination) should be accounted
         for in financial statements upon their acquisition. This statement also
         addresses how goodwill and other intangible  assets should be accounted
         for  after  they  have  been  initially  recognized  in  the  financial
         statements. The provisions of this statement are required to be applied
         starting  with fiscal years  beginning  after  December  15,  2001,  or
         earlier upon certain circumstances. The adoption of this statement will
         not have any impact on the Company's financial statements.

         Accounting  for the Impairment or Disposal of Long-Lived  Assets.  SFAS
         No. 144,  "Accounting  for the  Impairment  or  Disposal of  Long-Lived
         Assets,"   addresses   financial   accounting  and  reporting  for  the
         impairment or disposal of long-lived assets. This statement  supersedes
         SFAS No. 121,  "Accounting for the Impairment of Long-Lived  Assets and
         for  Long-Lived  Assets to Be  Disposed  Of",  and the  accounting  and
         reporting   provisions  of  APB  No.  30,  "Reporting  the  Results  of
         Operations-Reporting  the  Effects  of  Disposal  of  a  Segment  of  a
         Business, and Extraordinary,  Unusual and Infrequently Occurring Events
         and  Transactions,"  for the  disposal  of a segment of a business  (as
         previously  defined  therein).  The  provisions  of this  statement are
         effective for financial  statements  issued for fiscal years  beginning
         after  December 15, 2001.  The adoption of this statement will not have
         any impact on the Company's financial statements.












                                       48
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

2.       Securities

         The  carrying  value  (estimated  fair  value)  and  amortized  cost of
         securities available for sale is as follows:
<TABLE>

                                                                    Gross          Gross
                                                                    -----          -----
                                                  Amortized    Unrealized     Unrealized     Carrying
                                                  ---------    ----------     ----------     --------
($ in thousands)                                       Cost         Gains         Losses        Value
------------------------------------------------------------------------------------------------------
<S>                                                  <C>             <C>             <C>       <C>
At December 31, 2001:
   U.S. government agency securities                $ 6,000          $192           $  -      $ 6,192
------------------------------------------------------------------------------------------------------

At December 31, 2000:
   U.S. government agency securities                $75,194          $  -           $405      $74,789
------------------------------------------------------------------------------------------------------
</TABLE>

         On  December  31,  2000,  $75,194,000  of  securities  held-to-maturity
         (consisting of U.S. government agency securities with an estimated fair
         value  of  $74,789,000)  were  transferred  to the  available  for sale
         portfolio by Intervest  Bank.  There were no transfers of securities to
         the  available-for-sale  portfolio  in 2001 or 1999,  and there were no
         sales of securities in 2001, 2000 or 1999.  During 2001,  nearly all of
         the securities in the  available-for-sale  portfolio were called by the
         issuers without prepayment penalty.  The early calls were brought about
         by the decline in market  interest  rates during 2001.  At December 31,
         2001, the  available-for-sale  portfolio  consisted of fixed-rate  debt
         obligations  of the Federal Home Loan Bank (FHLB) and Federal  National
         Mortgage  Association  (FNMA).  The   weighted-average   yield  of  the
         portfolio  was 5.59% at December  31,  2001 and 5.81% at  December  31,
         2000.

         The  amortized  cost and  carrying  value  (estimated  fair  value)  of
         securities  available for sale at December 31, 2001, by remaining  term
         to contractual maturity is as follows:
<TABLE>

                                                                              Amortized    Carrying
                                                                              ---------    --------
($ in thousands)                                                                   Cost       Value
---------------------------------------------------------------------------------------------------
<S>                                                                              <C>         <C>
Due in one year or less                                                          $2,500      $2,571
Due after one year through five years                                             3,500       3,621
---------------------------------------------------------------------------------------------------
                                                                                 $6,000      $6,192
---------------------------------------------------------------------------------------------------
</TABLE>

         The  carrying  value  (amortized  cost)  and  estimated  fair  value of
         securities held to maturity is as follows:
<TABLE>

                                                                    Gross          Gross    Estimated
                                                  Amortized    Unrealized     Unrealized         Fair
($ in thousands)                                       Cost         Gains         Losses        Value
-----------------------------------------------------------------------------------------------------
<S>                                                 <C>              <C>            <C>       <C>
At December 31, 2001:
   U.S. government agency securities                $99,157          $355           $108      $99,404
-----------------------------------------------------------------------------------------------------
At December 31, 2000:
   U.S. government agency securities                $20,970          $  8           $  -      $20,978
-----------------------------------------------------------------------------------------------------
</TABLE>

         At December 31,  2001,  securities  held to maturity  consisted of debt
         obligations  of the FHLB,  FNMA,  the Federal Home Loan Mortgage  Corp.
         (FHLMC)  and the Federal  Farm Credit Bank (FFCB) The  weighted-average
         yield of the  portfolio  was 2.89% at  December  31,  2001 and 6.52% at
         December  31,  2000.  At  December  31,  2001,   the   securities   are
         predominately  fixed rate and some have call features,  which allow the
         issuer to call the security before its stated maturity without penalty.

         The  amortized  cost and  estimated  fair value of  securities  held to
         maturity  at  December  31,  2001,  by  remaining  term to  contractual
         maturity is as follows:
<TABLE>

                                                                                  Estimated
                                                                      Amortized        Fair
($ in thousands)                                                           Cost       Value
--------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
Due in one year or less                                                 $ 9,411     $79,738
Due after one year through five years                                    19,746      19,666
--------------------------------------------------------------------------------------------
                                                                        $99,157     $99,404
--------------------------------------------------------------------------------------------
</TABLE>


                                       49
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

3.       Loans Receivable
<TABLE>

         Loans receivable is as follows:
                                                         At December 31, 2001         At December 31, 2000
                                                         --------------------         --------------------
         ($ in thousands)                              # of Loans        Amount     # of Loans        Amount
         ---------------------------------------------------------------------------------------------------
         <S>                                                  <C>       <C>                <C>      <C>
         Residential multifamily loans                        153       $182,569           137     $144,916
         Commercial real estate loans                         142        185,652           124      118,368
         Residential 1-4 family loans                          33          2,404            39        3,034
         Commercial business loans                             26          1,363            39        1,781
         Consumer loans                                        15            286            18          206
         ---------------------------------------------------------------------------------------------------
         Loans receivable                                     369        372,274           357      268,305
         ---------------------------------------------------------------------------------------------------
         Deferred loan fees
                                                                          (3,748)                    (1,979)
         Allowance for loan loss reserves
                                                                          (3,380)                    (2,768)
         ---------------------------------------------------------------------------------------------------
         Loans receivable, net                                          $365,146                   $263,558
         ---------------------------------------------------------------------------------------------------
</TABLE>


         At December 31,  2001,  a commercial  real estate loan with a principal
         balance of $1,243,000  was on nonaccrual  status and consider  impaired
         under the  criteria of SFAS  No.114.  Interest  that was not accrued on
         this loan under its contractual  terms amounted to $51,000 in 2001. The
         average balance of impaired loans for 2001 was approximately  $104,000.
         At December 31, 2001,  there was no  valuation  allowance  recorded for
         this impaired  loan.  There were no nonaccrual or impaired loans during
         2000 or 1999.

         Credit  risk,  which  represents  the  possibility  of the  Company not
         recovering amounts due from its borrowers,  is significantly related to
         local economic  conditions in the areas the properties are located,  as
         well  as the  Company's  underwriting  standards.  Economic  conditions
         affect the market  value of the  underlying  collateral  as well as the
         levels of  occupancy  of  income-producing  properties  (such as office
         buildings,  shopping  centers  and  rental  and  cooperative  apartment
         buildings).
<TABLE>

         The geographic distribution of the loan portfolio is as follows:


                                               At December 31, 2001       At December 31, 2000
                                               --------------------       --------------------
         ($ in thousands)                      Amount    % of Total       Amount    % of Total
         -------------------------------------------------------------------------------------
         <S>                                 <C>            <C>       <C>             <C>
         New York                            $192,256       51.7%     $134,905        50.3%
         Florida                              145,660       39.1       125,350        46.7
         Connecticut and New Jersey            24,875        6.7         5,263         2.0
         All other                              9,483        2.5         2,787         1.0
         -------------------------------------------------------------------------------------
                                             $372,274      100.0%     $268,305       100.0%
         -------------------------------------------------------------------------------------
</TABLE>


4.       Allowance for Loan Loss Reserves
<TABLE>

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

                                                                   For the Year Ended December 31,
                                                                  ---------------------------------
         ($ in thousands)                                         2001         2000          1999
         ------------------------------------------------------------------------------------------
         <S>                                                     <C>          <C>           <C>
         Allowance at beginning of year                          $2,768       $2,493        $1,662
         Provision charged to operations                            612          275           830
         Recoveries                                                   -            -             1
         ------------------------------------------------------------------------------------------
         Allowance at end of year                                $3,380       $2,768        $2,493
         ------------------------------------------------------------------------------------------
</TABLE>





                                       50
<PAGE>


                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

5.       Premises and Equipment, Lease Commitments and Rental Expense

         Premises and equipment is as follows:

                                                              At December 31,
                                                              ---------------
         ($ in thousands)
                                                            2001          2000
         -----------------------------------------------------------------------
         Land                                              $1,264        $1,264
         Buildings                                          4,575         4,294
         Leasehold improvements                               335           324
         Furniture, fixtures and equipment                  2,414         1,889
         -----------------------------------------------------------------------
         Total cost                                         8,588         7,771
         -----------------------------------------------------------------------
         Less accumulated deprecation and amortization     (2,546)       (2,040)
         -----------------------------------------------------------------------
         Net book value                                    $6,042        $5,731
         -----------------------------------------------------------------------

         The Bank  leases  its  headquarters  and branch  office at  Rockefeller
         Center in New York  City,  and its  branch  office at  Belcher  Road in
         Clearwater,  Florida. Intervest Corporation of New York also leases its
         office at  Rockefeller  Center in New York City. All the leases contain
         operating escalation clauses related to taxes and operating costs based
         upon  various  criteria  and  are  accounted  for as  operating  leases
         expiring in May 2008, June 2007, and September 2004, respectively.  All
         other offices are owned by the Bank.

         Total  future  minimum  annual  lease  rental  payments due under these
         noncancellable  operating  leases  as of  December  31,  2001  were  as
         follows: $554,000 in 2002; $558,000 in 2003; $541,000 in 2004; $400,000
         in 2005;  $403,000 in 2006;  and $607,000  thereafter  for an aggregate
         amount  of  $3,063,000.  Rent  expense  aggregated  $554,000  in  2001,
         $522,000 in 2000 and $461,000 in 1999.

         The Bank subleases certain of its offices in Florida to other companies
         under leases that expire at various  times through  August 2007.  Total
         future  sublease rental income due under such leases as of December 31,
         2001 were as follows:  $452,000 in 2002;  $422,000 in 2003; $399,000 in
         2004;  $355,000 in 2005;  $287,000 in 2006; and $120,000 thereafter for
         an aggregate  amount of $2,035,000.  Sublease rental income  aggregated
         $388,000 in 2001, 340,000 in 2000 and $338,000 in 1999.

6.       Deposits
<TABLE>

         Scheduled  maturities  of  certificates  of  deposit  accounts  are  as
         follows:

                                               At December 31, 2001       At December 31, 2000
                                               --------------------       --------------------
                                                            Wtd-Avg                    Wtd-Avg
        ($ in thousands)                     Amount     Stated Rate      Amount    Stated Rate
        --------------------------------------------------------------------------------------
        <S>                               <C>            <C>         <C>               <C>
        Within one year                   $144,739       5.00%       $133,433          6.44%
        Over one to two years               45,512       4.95          47,878          6.65
        Over two to three years             14,954       5.82           8,274          6.23
        Over three to four years            16,903       6.84           9,359          6.37
        Over four years                     19,357       5.61          18,712          6.88
        --------------------------------------------------------------------------------------
                                          $241,465       5.22%       $217,656          6.51%
        --------------------------------------------------------------------------------------
</TABLE>

         Certificate of deposit accounts of $100,000 or more totaled $53,745,000
         and  $48,874,000  at  December  31,  2001 and  2000,  respectively.  At
         December 31, 2001,  certificate of deposit accounts of $100,000 or more
         by remaining maturity were as follows: due within one year $33,216,000;
         over one to two years  $9,201,000,  over two to three years $3,211,000;
         over three to four years $3,992,000; and over four years $4,125,000.





                                       51
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

6.       Deposits, Continued
<TABLE>

         Interest expense on deposits is as follows:

                                                                            For the Year Ended December 31,
                                                                            -------------------------------
         ($ in thousands)                                                   2001          2000        1999
         ---------------------------------------------------------------------------------------------------
         <S>                                                                <C>           <C>       <C>
         Interest checking accounts                                       $   238       $   232    $    238
         Savings accounts                                                     778           897       1,059
         Money market accounts                                              2,640         2,832       1,882
         Certificates of deposit accounts                                  13,423        10,892       5,524
         ---------------------------------------------------------------------------------------------------
                                                                          $17,079       $14,853    $  8,703
         ---------------------------------------------------------------------------------------------------
</TABLE>


 7.      Debentures Payable and Extraordinary Item
<TABLE>

         Debentures payable is as follows:
                                                                                             At December 31,
                                                                                             ---------------
         ($ in thousands)                                                                   2001         2000
         -----------------------------------------------------------------------------------------------------
         INTERVEST CORPORATION OF NEW YORK (1):
         <S>                                                                              <C>          <C>
         Series 05/12/95 - interest at 2% above prime - due April 1, 2004                 $ 9,000      $ 9,000
         Series 10/19/95 - interest at 2% above prime - due October 1, 2004                 9,000        9,000
         Series 05/10/96 - interest at 2% above prime - due April 1, 2005                  10,000       10,000
         Series 10/15/96 - interest at 2% above prime - due October 1, 2005                 5,500        5,500
         Series 04/30/97 - interest at 1% above prime - due October 1, 2005                 8,000        8,000
         Series 11/10/98 - interest at 8% fixed       - due January 1, 2001                     -        1,400
         Series 11/10/98 - interest at 81/2% fixed    - due January 1, 2003                 1,400        1,400
         Series 11/10/98 - interest at 9% fixed       - due January 1, 2005                 2,600        2,600
         Series 06/28/99 - interest at 8% fixed       - due July 1, 2002                    2,500        2,500
         Series 06/28/99 - interest at 81/2% fixed    - due July 1, 2004                    2,000        2,000
         Series 06/28/99 - interest at 9% fixed       - due July 1, 2006                    2,000        2,000
         Series 09/18/00 - interest at 8% fixed       - due January 1, 2004                 1,250        1,250
         Series 09/18/00 - interest at 81/2% fixed    - due January 1, 2006                 1,250        1,250
         Series 09/18/00 - interest at 9% fixed       - due January 1, 2008                 1,250        1,250
         Series 08/01/01 - interest at 71/2% fixed    - due April 1, 2005                   1,750            -
         Series 08/01/01 - interest at 8% fixed       - due April 1, 2007                   2,750            -
         Series 08/01/01 - interest at 81/2% fixed    - due April 1, 2009                   2,750            -
                                                                                        ----------------------
                                                                                           63,000       57,150
         INTERVEST BANCSHARES CORPORATION:
         Series 05/14/98 - interest at 8% fixed       - due July 1, 2008                    6,930        6,930
         Series 12/15/00 - interest at 8% fixed       - due April 1, 2004                   1,000            -
         Series 12/15/00 - interest at 81/2% fixed    - due April 1, 2006                   1,250            -
         Series 12/15/00 - interest at 9% fixed       - due April 1, 2008                   1,250            -
                                                                                        ----------------------
                                                                                           10,430        6,930
         -----------------------------------------------------------------------------------------------------
                                                                                          $73,430      $64,080
         -----------------------------------------------------------------------------------------------------

<FN>
         (1) Prime  refers to the prime rate of  JPMorganChase  Bank,  which was
         4.75% on December 31, 2001 and 9.50% on December 31, 2000.
</FN>
</TABLE>

         In 2000, Intervest  Corporation of New York's Series 6/29/92,  9/13/93,
         1/28/94 and 10/28/94 debentures totaling  $24,000,000 in principal were
         redeemed prior to maturity for the  outstanding  principal  amount plus
         accrued interest aggregating $3,970,000. In connection with these early
         redemptions,  $382,000 of unamortized deferred debenture offering costs
         was charged to expense and reported as an extraordinary  charge, net of
         a tax benefit of $176,000,  in the  consolidated  statement of earnings
         for the year ended December 31, 2000.



                                       52
<PAGE>
                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

7.       Debentures Payable and Extraordinary Item, Continued

         Intervest  Corporation  of New  York's  floating-rate  Series  5/12/95,
         10/19/95,  5/10/96,  10/15/96  and  4/30/97  debentures  have a maximum
         interest  rate of 12%.  Interest on an aggregate of $6,400,000 of these
         debentures is accrued and compounded quarterly,  and is due and payable
         at maturity.  The payment of interest on the  remaining  debentures  is
         made quarterly. Any debenture holder in the aforementioned Series whose
         interest  accrues  and is due at  maturity  may at any  time  elect  to
         receive the accrued interest and subsequently  receive regular payments
         of interest.

         All of Intervest  Corporation of New York's Series  11/10/98,  6/28/99,
         09/18/00 and $770,000 of Series 08/01/01 debentures accrue and compound
         interest quarterly, with such interest due and payable at maturity. The
         holders of Series 11/10/98,  6/28/99 and 9/18/00 debentures can require
         Intervest Corporation of New York to repurchase the debentures for face
         amount plus accrued  interest each year (beginning July 1, 2002 for the
         Series  6/28/99 and January 1, 2004 for the Series  9/18/00)  provided,
         however that in no calendar year will Intervest Corporation of New York
         be required to purchase more than $100,000 in principal  amount of each
         maturity of debentures, on a non-cumulative basis.

         All of Intervest  Corporation of New York's debentures may be redeemed,
         in whole or in part, at any time at the option of Intervest Corporation
         of New York,  for face value,  except for Series  08/01/01  debentures,
         which would be at a premium of 1% if the redemption is prior to October
         1, 2002.  All the  debentures  are  unsecured  and  subordinate  to all
         present and future senior indebtedness, as defined.

         The Holding  Company's Series 5/14/98  subordinated  debentures are due
         July 1, 2008 and are  convertible  at the option of the  holders at any
         time prior to April 1, 2008, unless previously  redeemed by the Holding
         Company,  into shares of Class A common stock of the Holding Company at
         the following  conversion  prices per share effective  January 1, 2002:
         $10.01 in 2002 and  2003;  $12.00  in 2004;  $14.00 in 2005;  $16.00 in
         2006;  $18.00 in 2007 and $20.00 from January 1, 2008 through  April 1,
         2008. The Holding Company has the right to establish  conversion prices
         that are less than  those set forth  above for such  periods  as it may
         determine.  On January  13, 1999 and  October 4, 2002,  the  conversion
         prices were adjusted  downward from those set at the original  offering
         date  to  the  prices  shown  above.  During  1999,  debentures  in the
         aggregate  principal  amount of $70,000,  plus accrued  interest,  were
         converted  into shares of Class A common  stock at the  election of the
         debenture  holders.  The  conversion  price  was $10 per  share,  which
         resulted  in 7,554  shares  of Class A common  stock  being  issued  in
         connection with the  conversions.  Interest  accrues and compounds each
         calendar  quarter at 8%. All  accrued  interest  is due and  payable at
         maturity  whether  by  acceleration,   redemption  or  otherwise.   Any
         convertible  debenture  holder  may,  on or before  July 1 of each year
         commencing July 1, 2003,  elect to be paid all accrued  interest and to
         thereafter receive payments of interest quarterly.

         The Holding Company's debentures may be redeemed,  in whole or in part,
         at any time at the  option  of the  Holding  Company,  for face  value,
         except for Series 08/01/01  debentures,  which would be at a premium of
         1% if the redemption is prior to April 1, 2002.
<TABLE>

         Scheduled  contractual  maturities of all debentures as of December 31,
         2001 is as follows:

         ($ in thousands)                                                     Principal     Accrued Interest
         ---------------------------------------------------------------------------------------------------
         <S>                                                                  <C>                 <C>
         For the year ended December 31, 2002                                 $ 2,500             $ 1,461
         For the year ended December 31, 2003                                   1,400                 411
         For the year ended December 31, 2004                                  22,250               4,303
         For the year ended December 31, 2005                                  27,850               2,252
         For the year ended December 31, 2006                                   4,500                 607
         Thereafter                                                            14,930               2,388
         ---------------------------------------------------------------------------------------------------
                                                                              $73,430             $11,422
         ---------------------------------------------------------------------------------------------------
</TABLE>


                                       53
<PAGE>


                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

8.       Federal Funds Purchased and Lines of Credit

         From time to time, the Bank purchases overnight federal funds to manage
         its liquidity  needs. At December 31, 2001 and 2000, there were no such
         funds  outstanding.  During 2001, 2000 and 1999, federal fund purchased
         were not significant.  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 at December 31,
         2001 or 2000.

 9.      Guaranteed  Preferred  Beneficial  Interest  in   Junior   Subordinated
         Debentures

         On December 18, 2001, the Holding  Company's  wholly-owned  subsidiary,
         Intervest Statutory Trust I, sold 9.875% Trust Preferred Securities due
         December 18, 2031 in the  aggregate  principal  amount of  $15,000,000,
         hereafter  referred to as the  "Capital  Securities".  The net proceeds
         from  the  sale  were  paid to the  Holding  Company  in  exchange  for
         $15,000,000 of its 9.875% Junior  Subordinated  Debentures (the "Junior
         Subordinated  Debentures")  due December 18, 2031. The Holding  Company
         then invested  $15,000,000 as a capital  contribution  in the Bank. The
         sole asset of the Trust, the obligor on the Capital Securities,  is the
         Junior Subordinated Debentures.

         The Holding Company has guaranteed the Trust's payment of distributions
         on, payments on any  redemptions  of, and any liquidation  distribution
         with respect to, the Capital Securities. Cash distributions on both the
         Capital Securities and the Junior  Subordinated  Debentures are payable
         semi-annually  in arrears on December  18 and June 18 of each year.  At
         December 31, 2001, $58,000 of distributions was accrued and included in
         accrued  interest  payable on  debentures in the  consolidated  balance
         sheet.   Issuance  costs  of  $451,000   associated  with  the  Capital
         Securities  have been  capitalized by the Holding Company and are being
         amortized over the life of the securities.

         The Capital  Securities  are  subject to  mandatory  redemption  (i) in
         whole,  but not in part,  upon  repayment  of the  Junior  Subordinated
         Debentures at stated maturity or, at the option of the Holding Company,
         their  earlier  redemption  in whole  upon the  occurrence  of  certain
         changes  in the tax  treatment  or  capital  treatment  of the  Capital
         Securities,  or a  change  in the law  such  that  the  Trust  would be
         considered  an  investment  company and (ii) in whole or in part at any
         time on or after December 18, 2006  contemporaneously with the optional
         redemption by the Holding Company of the Junior Subordinated Debentures
         in whole or inpart. The Junior  Subordinated  Debentures are redeemable
         prior to maturity at the option of the Holding  Company (i) on or after
         December 18,  2006,  in whole at any time or in part from time to time,
         or (ii) in whole, but not in part, at any time within 90 days following
         the occurrence and continuation of certain changes in the tax treatment
         or capital treatment of the Capital Securities, or a change in law such
         that  the  Trust  would  be  considered  an  investment  company.   Any
         redemption would need prior regulatory approvals.

10.      Stockholders' Equity

         The Holding  Company's  Board of Directors is authorized to issue up to
         300,000  shares  of  preferred  stock of the  Holding  Company  without
         stockholder  approval.  The powers,  preferences  and  rights,  and the
         qualifications,  limitations, and restrictions thereof on any series of
         preferred  stock issued is  determined  by the Board of  Directors.  At
         December  31, 2001 and 2000,  there was no  preferred  stock issued and
         outstanding.

         Class A and B common stock have equal voting  rights as to all matters,
         except that,  so long as at least 50,000 shares of Class B common stock
         remain issued and outstanding, the holders of the outstanding shares of
         Class B  common  stock  are  entitled  to  vote  for  the  election  of
         two-thirds  of the Board of Directors  (rounded up to the nearest whole
         number),  and the holders of the  outstanding  shares of Class A common
         stock are entitled to vote for the  remaining  Directors of the Holding
         Company.  The  shares  of Class B common  stock are  convertible,  on a
         share-for-share basis, into Class A common stock at any time.


                                       54
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

11.      Asset and Dividend Restrictions

         The  Bank is  required  under  Federal  Reserve  Board  regulations  to
         maintain reserves,  generally consisting of cash or noninterest-earning
         accounts,  against its transaction  accounts.  At December 31, 2001 and
         2000, balances maintained as reserves were not significant.

         As a member  of the  Federal  Reserve  Banking  system,  the Bank  must
         maintain  an  investment  in the capital  stock of the Federal  Reserve
         Bank.  At December 31, 2001 and 2000,  such  investment,  which earns a
         dividend,  aggregated $654,000 and $605,000,  respectively. At December
         31, 2001, U.S.  government  agency  securities with a carrying value of
         $7,127,000 were pledged  against various deposit  accounts and lines of
         credit.

         The payment of dividends by the Holding Company to its shareholders and
         the payment of dividends by the Holding  Company's  subsidiaries to the
         Holding Company itself is subject to various  regulatory  restrictions.
         These  restrictions  take into  consideration  various  factors such as
         whether there are sufficient net earnings, as defined, liquidity, asset
         quality, capital adequacy and economic conditions. The holders of Class
         A common stock and Class B common stock share  ratably in any dividend.
         The Holding Company has not paid any dividends on its capital stock and
         currently is not contemplating the payment of a dividend.

12.      Profit Sharing Plans

         The Company sponsors tax-qualified,  profit sharing plans in accordance
         with the  provisions  of Section  401(k) of the Internal  Revenue Code,
         whereby   eligible   employees   meeting   certain    length-of-service
         requirements may make tax-deferred  contributions up to certain limits.
         The Company  makes  discretionary  matching  contributions  up to 3% of
         employee  compensation.  Total cash contributions to the plans included
         in the consolidated statements of earnings aggregated $37,000,  $26,000
         and $25,000 for 2001, 2000 and 1999, respectively.

13.      Related Party Transactions

         The Bank has deposit  accounts from directors,  executive  officers and
         members of their immediate  families and related business  interests of
         approximately  $8,412.000  at  December  31,  2001  and  $3,967,000  at
         December 31, 2000.  Intervest Securities  Corporation,  an affiliate of
         the Company, received commissions and fees aggregating $15,000 in 2001,
         $34,000 in 2000 and $35,700 in 1999, in  connection  with the placement
         of  debentures.  There are no loans to any directors or officers of the
         Holding Company or its subsidiaries.

14.      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  issued in 1998.  The  Holding
         Company's  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.

         During 2001, the 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 expiration date of December 31, 2002.

                                       55
<PAGE>


                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

14.      Common Stock Warrants, Continued
<TABLE>

         Data concerning common stock warrants is as follows:

                                                                  Exercise Price Per Warrant
                                                                  --------------------------       Total             Wtd-Avg
         Class A Common Stock Warrants:                  $6.67     $12.50 (1)    $16.00 (1)     Warrants      Exercise Price
         ---------------------------------------------------------------------------------------------------------------------
         <S>                                          <C>           <C>           <C>          <C>                    <C>
         Outstanding at December 31, 1998             1,472,565     961,703       122,000      2,556,268              $ 8.27
            Granted in 1999                                   -       1,000             -          1,000              $10.00
            Exercised in 1999                           (89,000)       (300)            -        (89,300)             $ 6.68
                                                    -----------------------------------------------------
         Outstanding at December 31, 1999             1,383,565     962,403       122,000      2,467,968              $ 8.33
            Exercised in 2000                           (12,750)          -             -        (12,750)             $ 6.67
         ------------------------------------------------------------------------------------------------
         Outstanding at December 31, 2000
              and 2001                                1,370,815     962,403       122,000      2,455,218              $ 9.42

         ---------------------------------------------------------------------------------------------------------------------
         Remaining contractual life in years
             at December 31, 2001                           2.5(2)      1.0           1.0            1.8
         ---------------------------------------------------------------------------------------------------------------------
<FN>
         (1)   The exercise  price per warrant  decreases to $10.01 per share in
               2002.

         (2)   The Holding Company may, at its sole  discretion,  set an earlier
               expiration date.
</FN>
</TABLE>


<TABLE>

                                                                 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, 1998                             150,000       50,000      200,000          $ 7.50
            Exercised in 1999                                          (5,000)           -       (5,000)         $ 6.67
         ----------------------------------------------------------------------------------------------
         Outstanding at December 31, 1999, 2000 and 2001              145,000       50,000      195,000          $ 7.52
         ----------------------------------------------------------------------------------------------
         Remaining contractual life in years at December 31, 2001         6.1          6.1          6.1
         ----------------------------------------------------------------------------------------------------------------
</TABLE>

         (1) At December 31, 2001,  28,400 of these  warrants  were  immediately
         exercisable.  An additional 7,100 warrants vest and become  exercisable
         on each April 27th of 2002,  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.

         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 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 Opinion No. 25,
         approximately  $26,000 of compensation expense was included in salaries
         and employee benefits expense for 2001, 2000 and 1999, respectively, in
         connection  with Class B warrants  (exercise  price $10.00)  granted in
         1998.  No  other  compensation  expense  was  recorded  related  to the
         remaining stock warrants granted because their exercise prices were the
         same or greater than the market price of the common  shares at the date
         of  grant  or  modification  (in  the  case  of  those  warrants  whose
         expiration  dates were  extended  in 2001).  For those  warrants  whose
         exercise price was reduced to $10.01 effective  January 1, 2002, future
         compensation expense will be recorded under variable rate accounting as
         prescribed under APB Opinion No.25.

         Had  compensation  expense been determined  based on the estimated fair
         value of the  warrants  at the grant date in  accordance  with SFAS No.
         123,  "Accounting  for  Stock-Based  Compensation,"  the  Company's net
         earnings  and  earnings  per share  would have been  reduced to the pro
         forma amounts as follows:
<TABLE>

                                                               For the Year Ended December 31,
                                                               -------------------------------
($ in thousands, except per share amounts)                    2001          2000          1999
--------------------------------------------------------------------------------------------------
<S>                                                          <C>           <C>           <C>
Reported net earnings                                        $3,778        $2,608        $1,767
Pro forma net earnings                                       $3,755        $2,585        $1,744
Reported basic earnings per share                            $ 0.97        $ 0.67        $ 0.47
Pro forma basic earnings per share                           $ 0.96        $ 0.66        $ 0.46
Reported diluted earnings per share                          $ 0.97        $ 0.67        $ 0.44
Pro forma diluted earnings per share                         $ 0.96        $ 0.66        $ 0.43
--------------------------------------------------------------------------------------------------
</TABLE>


                                       56
<PAGE>


                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

15.      Income Taxes

         The Company and its subsidiaries file a consolidated federal income tax
         return and combined  state and city income tax returns in New York. The
         Company  also  files a state  income  tax  return in New  Jersey  and a
         franchise  tax return in  Delaware.  The Bank also files a state income
         tax return in Florida.  Intervest  Corporation  of New York files state
         income tax  returns in various  states.  All the returns are filed on a
         calendar year basis.

         At December 31, 2001 and 2000, the Company had a net deferred tax asset
         of $1,236,000 and  $1,105,000,  respectively.  The asset relates to the
         unrealized benefit for: net temporary differences between the financial
         statement carrying amounts of existing assets and liabilities and their
         respective  tax bases  that will  result in future tax  deductions.  In
         assessing  the   realizability  of  deferred  tax  assets,   management
         considers  whether it is more likely than not that some  portion or all
         of  the  deferred  tax  assets  will  not  be  realized.  The  ultimate
         realization  of  such  assets  is  dependent  upon  the  generation  of
         sufficient  taxable income during the periods in which those  temporary
         differences  reverse.  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 was not
         maintained at any time during 2001, 2000 or 1999.
<TABLE>

         The total tax provision (benefit) is as follows:


                                                            For the Year Ended December 31,
                                                            -------------------------------
         ($ in thousands)                                     2001        2000         1999
         ----------------------------------------------------------------------------------
         <S>                                                 <C>         <C>        <C>
         Provision for income taxes                          $2,710      $1,909     $1,198
         Benefit from change in accounting principle              -           -        (65)
         Benefit from extraordinary item                          -        (176)         -
         ----------------------------------------------------------------------------------
                                                             $2,710      $1,733     $1,133
         ----------------------------------------------------------------------------------
</TABLE>

<TABLE>
         Allocation of federal, state and local income taxes between current and
         deferred portions is as follows:

         ($ in thousands)                                  Current     Deferred    Total
         --------------------------------------------------------------------------------
         <S>                                               <C>         <C>        <C>
         Year Ended December 31, 2001:
            Federal                                        $2,265      $(284)     $1,981
            State and Local                                   809        (80)        729
         --------------------------------------------------------------------------------
                                                           $3,074      $(364)     $2,710
         --------------------------------------------------------------------------------
         Year Ended December 31, 2000:
            Federal                                        $1,350      $ (10)     $1,340
            State and Local                                   399         (6)        393
         --------------------------------------------------------------------------------
                                                           $1,749      $ (16)     $1,733
         --------------------------------------------------------------------------------
         Year Ended December 31, 1999:
            Federal                                        $1,123      $(263)     $  860
            State and Local                                   337        (64)        273
         --------------------------------------------------------------------------------
                                                           $1,460      $(327)     $1,133
         --------------------------------------------------------------------------------
</TABLE>

<TABLE>
         The components of the deferred tax benefit is as follows:

                                                           For the Year Ended December 31,
                                                           -------------------------------
         ($ in thousands)                                  2001         2000        1999
         ---------------------------------------------------------------------------------
         <S>                                              <C>           <C>        <C>
         Allowance for loan loss reserves                 $(220)       $ 16        $(262)
         Organization and startup costs                      41         (10)         (99)
         Stock-based compensation                           (12)        (17)         (12)
         Depreciation                                       (18)        (33)          (3)
         Net operating loss carryforwards                     -           -           61
         Deferred income                                   (157)          -            -
         All other                                            2          28          (12)
         ---------------------------------------------------------------------------------
                                                          $(364)       $(16)       $(327)
         ---------------------------------------------------------------------------------
</TABLE>


                                       57
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

15.      Income Taxes, Continued
<TABLE>

         The tax  effects  of the  temporary  differences  that give rise to the
         deferred tax asset are as follows:

                                                                              At December 31,
                                                                              ---------------
         ($ in thousands)                                                    2001         2000
         -------------------------------------------------------------------------------------
         <S>                                                                <C>          <C>
         Allowance for loan loss reserves                                   $ 949        $ 729
         Unrealized  net (gain) loss on  securities  available for sale       (80)         153
         Organization and startup costs                                        68          109
         Stock-based compensation                                              56           44
         Depreciation                                                          73           55
         Deferred income                                                      157            -
         All other                                                             13           15
         -------------------------------------------------------------------------------------
         Total deferred tax asset                                          $1,236       $1,105
         -------------------------------------------------------------------------------------
</TABLE>

         The  reconciliation  between the statutory  federal income tax rate and
         the Company's  effective tax rate (including  state and local taxes) is
         as follows:
<TABLE>

                                                                    For the Year Ended December 31,
                                                                    -------------------------------
                                                                    2001         2000         1999
         ------------------------------------------------------------------------------------------
         <S>                                                        <C>         <C>           <C>
         Tax provision at statutory rate                            34.0%       34.0%         34.0%
         Increase (decrease) in taxes resulting from:
           State and local income taxes, net of federal benefit      7.6         6.4           6.3
            Other                                                    0.2           -          (1.6)
         ------------------------------------------------------------------------------------------
                                                                    41.8%       40.4%         38.7%
         ------------------------------------------------------------------------------------------
</TABLE>

16.      Earnings Per Share
<TABLE>

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

                                                                                          For the Year Ended December 31,
                                                                                          -------------------------------
         ($ in thousands, except share and per share amounts)                             2001          2000         1999
         ----------------------------------------------------------------------------------------------------------------
         <S>                                                                              <C>          <C>         <C>
         Basic earnings per share:
           Net earnings applicable to common stockholders                                 $3,778       $2,608      $1,767
           Average number of common shares outstanding                                 3,899,629    3,884,560   3,760,293
         ----------------------------------------------------------------------------------------------------------------
         Basic earnings per share amount                                                   $0.97        $0.67       $0.47
         ----------------------------------------------------------------------------------------------------------------

         Diluted earnings per share:
           Net earnings applicable to common stockholders                                 $3,778       $2,608      $1,767
           Adjustment to net earnings from assumed conversion of debentures                    -            -           -
                                                                                -----------------------------------------
           Adjusted net earnings for diluted earnings per share computation               $3,778       $2,608      $1,767
                                                                                -----------------------------------------
           Average number of common shares outstanding:
              Common shares outstanding                                                3,899,629    3,884,560   3,760,293
               Potential dilutive shares resulting from exercise of warrants                   -            -     259,825
               Potential dilutive shares resulting from conversion of debentures               -            -           -
                                                                                -----------------------------------------
           Total average number of common shares outstanding used for dilution         3,899,629    3,884,560   4,020,118
         ----------------------------------------------------------------------------------------------------------------
         Diluted earnings per share amount                                                 $0.97        $0.67       $0.44
         ----------------------------------------------------------------------------------------------------------------
</TABLE>

         In 2001 and 2000,  no common  stock  warrants  were  considered  in the
         computations  of diluted EPS  because  their  exercise  price per share
         exceeded  the average  market  price of Class A common stock during the
         year and as a  result,  they  were  not  dilutive.  In 1999,  1,134,000
         warrants  with exercise  prices  ranging from $10.00 to $14.00 were not
         considered   because  they  also  were  not   dilutive.   Additionally,
         convertible  debentures  totaling $6,930,000 and convertible (at $14.00
         per share in 2001,  $12.50  per share in 2000 and  $10.00  per share in
         1999) into Class A common  stock were  excluded  from all  diluted  EPS
         computations because they were not dilutive.


                                       58
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

17.      Contingencies

         The Company is  periodically a party to or otherwise  involved in legal
         proceedings arising in the normal course of business, such as claims to
         enforce  liens,  claims  involving the making and servicing of mortgage
         loans, and other issues incident to the Company's business.  Management
         does not  believe  that there is any pending or  threatened  proceeding
         against  the  Company  which,  if  determined  adversely,  would have a
         material  effect on the business,  results of operations,  or financial
         position of the Company.

18.      Regulatory Matters

         The Company is subject to regulation,  examination  and  supervision by
         the  Federal  Reserve  Bank.  The Bank is also  subject to  regulation,
         examination   and   supervision  by  the  Federal   Deposit   Insurance
         Corporation  and the Office of the  Comptroller  of the Currency of the
         United States of America ("OCC").

         The  Company  (on a  consolidated  basis)  and the Bank is  subject  to
         various  regulatory  capital  requirements  administered by the federal
         banking  agencies.  Failure to meet capital  requirements  can initiate
         certain mandatory and possibly  discretionary actions by the regulators
         that,  if  undertaken,  could  have a  direct  material  effect  on the
         Company's and the Bank's financial  statements.  Under capital adequacy
         guidelines and the regulatory  framework for prompt corrective  action,
         the Company and the Bank must meet  specific  capital  guidelines  that
         involve quantitative measures of their assets,  liabilities and certain
         off-balance  sheet  items as  calculated  under  regulatory  accounting
         practices.  These  capital  amounts  are also  subject  to  qualitative
         judgement by the regulators about components,  risk weighting and other
         factors. Prompt corrective action provisions are not applicable to bank
         holding companies. Quantitative measures established by the regulations
         to ensure capital adequacy require the Company and the Bank to maintain
         minimum amounts and ratios of total and Tier 1 capital to risk-weighted
         assets  and of Tier 1 capital  to  average  assets,  as  defined by the
         regulations.

         Management believes, as of December 31, 2001 and 2000, that the Company
         and the Bank met all capital  adequacy  requirements  to which they are
         subject. As of December 31, 2001, the most recent notification from the
         regulators categorized the Bank as a well-capitalized institution under
         the regulatory  framework for prompt corrective action,  which requires
         minimum Tier 1 leverage and Tier 1 and total risk-based  capital ratios
         of 5%, 6% and 10%, respectively.  Management believes that there are no
         current   conditions  or  events  outstanding  that  would  change  the
         designation from well capitalized.

         In June 2001, the OCC terminated a Memorandum of Understanding with the
         Bank that was in effect since June 2000.  The  memorandum  was a formal
         written  agreement  whereby,  among  other  things,  the  Bank had been
         required to review,  revise, develop and implement various policies and
         procedures  with  respect  to  its  lending  and  credit  underwriting.
         Management  implemented  various actions in order for the Bank to be in
         full compliance with the memorandum.

         The table that follows present information  regarding the Company's and
         the Bank's capital adequacy.






                                       59
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------
<TABLE>

18.      Regulatory Matters, Continued
                                                                                                       Minimum to Be Well
                                                                                                       ------------------
                                                                                                        Capitalized Under
                                                                                                        -----------------
                                                                                 Minimum Capital        Prompt Corrective
                                                                                 ---------------        -----------------
                                                               Actual              Requirements         Action Provisions
                                                               ------              ------------         -----------------
         ($ in thousands)                                Amount      Ratio      Amount      Ratio       Amount      Ratio
         ----------------------------------------------------------------------------------------------------------------
         <S>                                            <C>          <C>       <C>          <C>            <C>         <C>
         Consolidated as of December 31, 2001:
         -------------------------------------
            Total capital to risk-weighted assets       $57,457      14.11%    $32,581      8.00%          NA          NA
            Tier 1 capital to risk-weighted assets      $52,505      12.89%    $16,291      4.00%          NA          NA
            Tier 1 capital to average assets            $52,505      10.67%    $19,692      4.00%          NA          NA

         Consolidated as of December 31, 2000:
         -------------------------------------
            Total capital to risk-weighted assets       $38,382      12.63%    $24,309      8.00%          NA          NA
            Tier 1 capital to risk-weighted assets      $35,614      11.72%    $12,155      4.00%          NA          NA
            Tier 1 capital to average assets            $35,614       8.75%    $16,275      4.00%          NA          NA

         Intervest National Bank at December 31, 2001:
         ---------------------------------------------
            Total capital to risk-weighted assets       $49,006      15.03%    $26,082      8.00%     $32,603      10.00%
            Tier 1 capital to risk-weighted assets      $45,692      14.01%    $13,041      4.00%     $19,562       6.00%
            Tier 1 capital to average assets            $45,692      11.36%    $16,085      4.00%     $20,106       5.00%


         Intervest National Bank at December 31, 2000:
         ---------------------------------------------
            Total capital to risk-weighted assets       $29,731      12.49%    $19,051      8.00%     $23,813      10.00%
            Tier 1 capital to risk-weighted assets      $27,081      11.37%     $9,525      4.00%     $14,288       6.00%
            Tier 1 capital to average assets            $27,081       8.27%    $13,106      4.00%     $16,382       5.00%

         ----------------------------------------------------------------------------------------------------------------
</TABLE>

19.      Off-Balance Sheet Financial Instruments

         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.

         Commitments to extend credit are agreements to lend funds to a customer
         as long as there is no violation of any  condition  established  in the
         contract.  Such  commitments  generally have fixed  expiration dates or
         other  termination  clauses and may require payment of fees. Since some
         of the commitments are expected to expire without being drawn upon, the
         total  commitment  amount does not  necessarily  represent  future cash
         requirements.  The Company  evaluates each customer's 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.


                                       60
<PAGE>



                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

19.      Off-Balance Sheet Financial Instruments, Continued
<TABLE>
         The  notional  amounts of the  Company's  off-balance  sheet  financial
         instruments is as follows:

                                                            At December 31,
                                                            ---------------
         ($ in thousands)                                 2001          2000
         ---------------------------------------------------------------------
         <S>                                            <C>           <C>
         Unfunded loan commitments                      $26,375       $17,310
         Available lines of credit                          663           560
         Standby letters of credit                          167           167
         ---------------------------------------------------------------------
                                                        $27,205       $18,037
         ---------------------------------------------------------------------
</TABLE>

20.      Estimated Fair Value of Financial Instruments

         Fair  value  estimates  are made at a  specific  point in time based on
         available information about each financial instrument. Where available,
         quoted market prices are used.  However,  a significant  portion of the
         Company's  financial  instruments,  such as commercial  real estate and
         multifamily  loans, do not have an active marketplace in which they can
         be readily sold or purchased  to  determine  fair value.  Consequently,
         fair value estimates for such instruments are based on assumptions made
         by  management  that  include the  financial  instrument's  credit risk
         characteristics and future estimated cash flows and prevailing interest
         rates.  As a result,  these  fair value  estimates  are  subjective  in
         nature,  involve  uncertainties and matters of significant judgment and
         therefore, cannot be determined with precision. Accordingly, changes in
         any of management's assumptions could cause the fair value estimates to
         deviate substantially. The fair value estimates also do not reflect any
         additional  premium or discount  that could  result from  offering  for
         sale,  at one time,  the  Company's  entire  holdings  of a  particular
         financial instrument, nor estimated transaction costs. Further, the tax
         ramifications related to the realization of unrealized gains and losses
         can have a  significant  effect on and have not been  considered in the
         fair value estimates.  Finally,  fair value estimates do not attempt to
         estimate  the  value of  anticipated  future  business,  the  Company's
         customer  relationships,  branch  network,  and the value of assets and
         liabilities that are not considered financial instruments, such as core
         deposit intangibles and premises and equipment.
<TABLE>

         The  carrying  and  estimated  fair values of the  Company's  financial
         instruments are as follows:

                                                          At December 31, 2001      At December 31, 2000
                                                          --------------------      --------------------
                                                          Carrying        Fair      Carrying        Fair
          ($ in thousands)                                   Value       Value         Value       Value
          ----------------------------------------------------------------------------------------------
          <S>                                               <C>        <C>          <C>          <C>
          Financial Assets:
            Cash and cash equivalents                       $24,409    $24,409      $42,938      $42,938
            Time deposits with banks                            250        250            -            -
            Securities available for sale, net                6,192      6,192       74,789       74,789
            Securities held to maturity, net                 99,157     99,404       20,970       20,978
            Federal Reserve Bank stock                          654        654          605          605
            Loans receivable, net                           365,146    378,962      263,558      265,068
            Accrued interest receivable                       3,202      3,202        2,961        2,961
          Financial Liabilities:
            Deposit liabilities                             362,437    368,597      300,241      300,775
            Debentures payable plus accrued interest         99,910    101,264       72,813       72,813
            Accrued interest payable                            817        817          856          856
          Off -Balance Sheet Instruments:
             Commitments to lend                                180        180          114          114
          ----------------------------------------------------------------------------------------------
</TABLE>


                                       61
<PAGE>


                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

20.      Estimated Fair Value of Financial Instruments, Continued

         The following  methods and  assumptions  were used to estimate the fair
         value of each class of financial instruments:

         Securities.  The estimated fair value of securities  available for sale
         and held to maturity are based on quoted market  prices.  The estimated
         fair value of the Federal  Reserve Bank stock  approximates  fair value
         since the security does not present  credit  concerns and is redeemable
         at cost.

         Loans  Receivable.  The  estimated  fair  value  of loans is based on a
         discounted  cash flow analysis,  using interest rates  currently  being
         offered for loans with similar  terms to  borrowers  of similar  credit
         quality.

         Management can make no assurance that its perception and quantification
         of  credit  risk  would  be  viewed  in the  same  manner  as that of a
         potential   investor.   Therefore,   changes  in  any  of  management's
         assumptions  could cause the fair value  estimates  of loans to deviate
         substantially.

         Deposits. The estimated fair value of deposits with no stated maturity,
         such as savings, money market, checking and noninterest-bearing  demand
         deposit accounts  approximates carrying value. The estimated fair value
         of certificates  of deposit are based on the discounted  value of their
         contractual  cash flows.  The discount  rate used in the present  value
         computation  was  estimated by  comparison  to current  interest  rates
         offered by the Bank for certificates of deposit with similar  remaining
         maturities.

         Debentures and Accrued  Interest  Payable.  The estimated fair value of
         debentures  and  related  accrued   interest  payable  is  based  on  a
         discounted  cash flow  analysis.  The discount rate used in the present
         value  computation  was  estimated  by  comparison  to what  management
         believes to be the  Company's  incremental  borrowing  rate for similar
         arrangements.  For  2000,  management  believes  that  the  incremental
         borrowing  rate  approximated  the then  current  rates for each of the
         borrowings.

         All Other Financial Assets and Liabilities. The estimated fair value of
         cash and cash equivalents,  time deposits with banks,  accrued interest
         receivable and accrued  interest  payable  approximates  their carrying
         values since these instruments are payable on demand or have short-term
         maturities.

         Off-Balance Sheet  Instruments.  The carrying amounts of commitments to
         lend  approximated  estimated fair value. The fair value of commitments
         to lend is based  on fees  currently  charged  to  enter  into  similar
         agreements,  taking into account the remaining  terms of the agreements
         and the counter party's credit standing.



                                       62
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------
<TABLE>

21.      Holding Company Financial Information

                                   Condensed Balance Sheets
                                                                                       At December 31,
                                                                                       ---------------
         ($ in thousands)                                                              2001       2000
         ----------------------------------------------------------------------------------------------
         <S>                                                                          <C>        <C>
         ASSETS
         Cash and due from banks                                                      $  77      $  19
         Short-term investments                                                         784      1,428
                                                                                 ----------------------
            Total cash and cash equivalents                                             861      1,447
         Loans receivable, net  (net of allowance for loan loss reserves
              of  $49 and $30 at December 31, 2001 and 2000)                          9,557      5,905
         Investment in subsidiaries                                                  57,060     36,875
         Deferred debenture offering costs                                            1,047        438
         All other assets                                                               301        211
         ----------------------------------------------------------------------------------------------
         Total assets                                                               $68,826    $44,876
         ----------------------------------------------------------------------------------------------

         LIABILITIES
         Debentures payable                                                         $25,894     $6,930
         Accrued interest payable on debentures                                       2,367      1,536
         All other liabilities                                                          170        182
         ----------------------------------------------------------------------------------------------
         Total liabilities                                                           28,431      8,648
         ----------------------------------------------------------------------------------------------

         STOCKHOLDERS' EQUITY
         Common equity                                                               40,395     36,228
         ----------------------------------------------------------------------------------------------
         Total stockholders' equity                                                  40,395     36,228
         ----------------------------------------------------------------------------------------------
         Total liabilities and stockholders' equity                                 $68,826    $44,876
         ----------------------------------------------------------------------------------------------
</TABLE>

<TABLE>

                                   Condensed Statements of Earnings

                                                                       For the Year Ended December 31,
                                                                       -------------------------------
         ($ in thousands)                                                 2001      2000        1999
         ---------------------------------------------------------------------------------------------
         <S>                                                             <C>       <C>        <C>
         Interest income                                                 $  818    $ 672      $  744
         Interest expense                                                 1,124      686         637
                                                                     ---------------------------------
         Net interest (expense) income                                     (306)     (14)        107
         Provision (credit) for loan loss reserves                           19       17         (42)
         Noninterest income                                                 176      165         161
         Noninterest expenses                                               226      405         197
                                                                     ---------------------------------
         (Loss) earnings before income taxes                               (375)    (271)        113
         (Credit) provision for income taxes                               (172)    (131)         53
                                                                     ---------------------------------
         Net (loss) earnings before earnings of subsidiaries               (203)    (140)         60
         Equity in earnings of Intervest National Bank                    3,404    2,619       1,135
         Equity in earnings of Intervest Corporation of New York            577      129         572
         ---------------------------------------------------------------------------------------------
         Net earnings                                                    $3,778   $2,608      $1,767
         ---------------------------------------------------------------------------------------------

         Cash dividends received from subsidiaries                       $  125   $3,000      $    -
</TABLE>



                                       63
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------
<TABLE>

21.      Holding Company Financial Information, Continued

                                   Condensed Statements of Cash Flows

                                                                                For the Year Ended December 31,
         ($ in thousands)                                                          2001          2000         1999
         ----------------------------------------------------------------------------------------------------------
         <S>                                                                     <C>           <C>          <C>
         OPERATING ACTIVITIES
         Net earnings                                                            $ 3,778       $ 2,608      $ 1,767
         Adjustments to reconcile net earnings to net cash provided by
              operating activities:
         Equity in earnings of subsidiaries                                       (3,981)       (2,748)      (1,707)
         Provision (credit) for loan loss reserves                                    19            17          (42)
         Deferred income tax (benefit) expense                                       (16)          (41)           7
         Compensation expense from awards of Class B stock and warrants               26           185           26
         Increase in accrued interest payable on debentures                          831           644          637
         Change in all other assets and liabilities, net                              81            24          135
         ----------------------------------------------------------------------------------------------------------
         Net cash provided by operating activities                                   738           689          823
         ----------------------------------------------------------------------------------------------------------

         INVESTING ACTIVITIES
         Decrease in interest-earning time deposits with banks                         -             -          100
         Investment in subsidiaries, net                                         (15,500)       (4,000)      (9,018)
         Cash dividends received from subsidiaries                                   125         3,000            -
         Sale of loans to subsidiaries                                                 -             -        5,604
         Loan originations and principal repayments, net                          (3,738)       (3,368)       2,761
         ----------------------------------------------------------------------------------------------------------
         Net cash used in investing activities                                   (19,113)       (4,368)        (553)
         ----------------------------------------------------------------------------------------------------------

         FINANCING ACTIVITIES
         Net (decrease) increase in mortgage escrow funds payable                    (11)          157         (173)
         Proceeds from sale of debentures, net of issuance costs                  17,800             -            -
         Proceeds from issuance of common stock upon the exercise
             of stock warrants, net of issuance costs                                  -            83          622
         ----------------------------------------------------------------------------------------------------------
         Net cash provided by financing activities                                17,789           240          449
         ----------------------------------------------------------------------------------------------------------

         Net (decrease) increase in cash and cash equivalents                       (586)       (3,439)         719
         Cash and cash equivalents at beginning of year                            1,447         4,886        4,167
         ----------------------------------------------------------------------------------------------------------
         Cash and cash equivalents at end of year                                $   861       $ 1,447      $ 4,886
         ----------------------------------------------------------------------------------------------------------

         SUPPLEMENTAL DISCLOSURES
         Cash paid (received) during the year for:
            Interest                                                             $   202       $     -      $     -
            Income taxes                                                            (139)         (110)         142
         Noncash transactions:
            Accumulated other comprehensive income, change in
               subsidiary's unrealized gain (loss) on securities available for
               sale, net of tax                                                      363          (252)           -
            Conversion of debentures into Class A common stock                         -             -           70
            Issuance of common stock in exchange for common
              stock of minority stockholders of Subsidiary                             -             -            7
         ----------------------------------------------------------------------------------------------------------
</TABLE>


                                       64
<PAGE>

                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

22.      Acquisition of Intervest Corporation of New York

         On March 10, 2000,  the Holding  Company  acquired all the  outstanding
         capital  stock of  Intervest  Corporation  of New York in exchange  for
         1,250,000  shares of the Holding  Company's  Class A common stock. As a
         result of the acquisition,  Intervest  Corporation of New York became a
         wholly owned subsidiary of the Holding Company.  Former shareholders of
         Intervest  Corporation  of New York are officers and  directors of both
         the Holding Company and Intervest Corporation of New York (ICNY).

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

         A summary of the Company's  consolidated statement of earnings for 2000
         follows:

                                                                                       Excluding       As
         ($ in thousands)                                                                ICNY       Reported
         ---------------------------------------------------------------------------------------------------
         <S>                                                                             <C>         <C>
         Interest and dividend income                                                    $23,389     $31,908
         Interest expense                                                                 15,689      23,325
                                                                                   -------------------------
         Net interest and dividend income                                                  7,700       8,583
         Provision for loan loss reserves                                                    275         275
                                                                                   -------------------------
         Net interest and dividend income after provision for loan loss reserves           7,425       8,308
         Noninterest income                                                                  505         983
         Noninterest expenses                                                              3,830       4,568
                                                                                   -------------------------
         Earnings before taxes and extraordinary item                                      4,100       4,723
         Provision for income taxes                                                        1,621       1,909
         Extraordinary item, net of tax                                                        -        (206)
         ---------------------------------------------------------------------------------------------------
         Net earnings                                                                     $2,479      $2,608
         ---------------------------------------------------------------------------------------------------
         The  amounts  reported  in the table  above are  after  elimination  of
         intercompany revenue and expense.
</TABLE>

<TABLE>

         A pro forma summary of the Company's consolidated statement of earnings
         for 1999 follows indicated:

                                                                           Originally   Historical    Pro Forma
         ($ in thousands)                                                   Reported       ICNY      Adjustments    Adjusted
         --------------------------------------------------------------------------------------------------------------------
         <S>                                                                 <C>        <C>       <C>               <C>
         Interest and dividend income                                        $15,058    $10,552   $ (109)(a)        $25,501
         Interest expense                                                      9,478      9,050     (109)(a)         18,419
                                                                           --------------------------------------------------
         Net interest and dividend income                                      5,580      1,502            -          7,082
         Provision for loan loss reserves                                        830          -            -            830
                                                                           --------------------------------------------------
         Net interest and dividend income
               after provision for loan loss reserves                          4,750      1,502            -          6,252
         Noninterest income                                                      456        444            -            900
         Noninterest expenses                                                  3,165        894            -          4,059
                                                                           --------------------------------------------------
         Earnings before taxes and change in accounting principle              2,041      1,052            -          3,093
         Provision for income taxes                                              718        480            -          1,198
         Cumulative effect of change in accounting principle, net of tax        (128)         -            -           (128)
         --------------------------------------------------------------------------------------------------------------------
         Net earnings                                                        $ 1,195    $   572   $        -        $ 1,767
         --------------------------------------------------------------------------------------------------------------------

         Basic earnings per share                                            $  0.48          -            -        $  0.47
         Diluted earnings per share                                          $  0.43          -            -        $  0.44

         Average number of common shares outstanding - Basic               2,510,293          -    1,250,000      3,760,293
         Average number of common shares outstanding - Diluted             2,770,118          -    1,250,000      4,020,118
         --------------------------------------------------------------------------------------------------------------------
<FN>
         (a) Represents the elimination of certain intercompany  interest income
         and expense.
</FN>
</TABLE>

                                       65
<PAGE>


                Intervest Bancshares Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 2001, 2000 and 1999
--------------------------------------------------------------------------------

23.      Quarterly Financial Data (Unaudited)
<TABLE>

         The  condensed  consolidated  statements  of earnings by quarter are as
         follows:

                                                                                      For the Year Ended December 31, 2001
                                                                                      ------------------------------------
                                                                                      First     Second      Third    Fourth
         ($ in thousands, except per share amounts)                                 Quarter    Quarter    Quarter   Quarter
         -------------------------------------------------------------------------------------------------------------------
         <S>                                                                        <C>        <C>        <C>        <C>
         Interest and dividend income                                               $8,684     $8,404     $8,950     $9,424
         Interest expense                                                            6,621      6,055      6,014      6,024
                                                                                    ----------------------------------------
         Net interest and dividend income                                            2,063      2,349      2,936      3,400
         Provision for loan loss reserves                                                -        100        264        248
                                                                                    ----------------------------------------
         Net interest and dividend income after provision for loan loss reserves     2,063      2,249      2,672      3,152
         Noninterest income                                                            224        570        237        624
         Noninterest expenses                                                        1,324      1,329      1,313      1,337
                                                                                    ----------------------------------------
         Earnings before income taxes                                                  963      1,490      1,596      2,439
         Provision for income taxes                                                    382        612        667      1,049
         -------------------------------------------------------------------------------------------------------------------
         Net earnings                                                                $ 581      $ 878      $ 929     $1,390
         -------------------------------------------------------------------------------------------------------------------

         Basic earnings per share:                                                   $ .15      $ .23      $ .24      $ .35
         Diluted earnings per share:                                                 $ .15      $ .23      $ .24      $ .35
         -------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>


                                                                                      For the Year Ended December 31, 2000
                                                                                      ------------------------------------
                                                                                      First     Second      Third     Fourth
         ($ in thousands, except per share amounts)                                 Quarter    Quarter    Quarter    Quarter
         -------------------------------------------------------------------------------------------------------------------
         <S>                                                                        <C>        <C>        <C>        <C>
         Interest and dividend income                                               $7,256     $7,658     $8,324     $8,670
         Interest expense                                                            5,412      5,552      5,943      6,418
                                                                                    ----------------------------------------
         Net interest and dividend income                                            1,844      2,106      2,381      2,252
         Provision (credit) for loan loss reserves                                     155         90         47        (17)
                                                                                    ----------------------------------------
         Net interest and dividend income
                after provision (credit) for loan loss reserves                      1,689      2,016      2,334      2,269
         Noninterest income                                                            162        178        338        305
         Noninterest expenses                                                        1,251      1,130      1,081      1,106
                                                                                    ----------------------------------------
         Earnings before income taxes and extraordinary item                           600      1,064      1,591      1,468
         Provision for income taxes                                                    210        427        662        610
         Extraordinary item, net of tax                                                  -       (206)         -          -
         -------------------------------------------------------------------------------------------------------------------
         Net earnings                                                                $ 390      $ 431      $ 929      $ 858
         -------------------------------------------------------------------------------------------------------------------

         Basic earnings per share:
            Earnings before extraordinary item                                       $ .10      $ .16      $ .24      $ .22
            Extraordinary item, net of tax                                               -       (.05)         -          -
         -------------------------------------------------------------------------------------------------------------------
            Net earnings per share                                                   $ .10      $ .11      $ .24      $ .22
         -------------------------------------------------------------------------------------------------------------------
         Diluted earnings per share:
            Earnings before extraordinary item                                       $ .10      $ .16      $ .24      $ .22
            Extraordinary item, net of tax                                               -       (.05)         -          -
         -------------------------------------------------------------------------------------------------------------------
            Net earnings per share                                                   $ .10      $ .11      $ .24      $ .22

         -------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       66
<PAGE>



Item 9.   Changes  In  and  Disagreements  with  Accountants  on  Accounting and
          Financial Disclosure

None
                                    PART III

Item 10.  Directors and Executive Officers

a.  Directors.  The  information  required by this item is  contained  under the
    section  entitled  "Election of Directors" in the Company's  Proxy Statement
    for its 2002 Annual  Meeting  (the "Proxy  Statement")  and is  incorporated
    herein by reference.

b.  Executive  Officers.  The information  required by this item is set forth in
    Part I of this report  under the caption  Item 4A  "Executive  Officers  and
    Other Key Employees."

c.  Compliance with Section 16(a).  Information  contained in the section of the
    Proxy  Statement  entitled  "Section 16(a)  Beneficial  Ownership  Reporting
    Compliance" is incorporated herein by reference.

Item 11.  Executive Compensation

The information  contained in the section entitled  "Executive  Compensation" of
the Proxy Statement is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The information contained in the section entitled "Security Ownership of Certain
Beneficial Owners and Management" of the Proxy Statement is incorporated  herein
by reference.

Item 13.  Certain Relationships and Related Transactions

The information  contained in the section entitled  "Certain  Relationships  and
Related   Transactions"  of  the  Proxy  Statement  is  incorporated  herein  by
reference.

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) Documents Filed as Part of this Report

      (1)    Financial   Statements:   See  Item  8  "Financial  Statements  and
             Supplementary Data"

      (2)    Financial Statement Schedules: See Item 8 "Financial Statements and
             Supplementary Data"

      (3)    Exhibits:  The following  exhibits are filed herein as part of this
             Form 10-K:

Exhibit No.                Description of Exhibit
-----------                ----------------------

2.0                        Agreement  and Plan of Merger dated as of November 1,
                           1999 by and among Intervest  Bancshares  Corporation,
                           ICNY    Acquisition    Corporation    and   Intervest
                           Corporation of New York, incorporated by reference to
                           the  Company's  definitive  proxy  statement  for the
                           special  meeting of shareholders to be held March 10,
                           2000,  wherein such  document is identified as "Annex
                           A."

3.1                        Restated Certificate of Incorporation of the Company,
                           incorporated  by reference  to Amendment  No.1 to the
                           Company's  Registration  Statement  on Form  SB-2 (No
                           333-33419, the "Registration Statement"),  filed with
                           the   Securities   and   Exchange   Commission   (the
                           "Commission")  on September  22,  1997,  wherein such
                           document is identified as Exhibit 3.1.

3.2                        Bylaws of the Company,  incorporated  by reference to
                           the Registration Statement,  wherein such document is
                           identified as Exhibit 3.1.


                                       67
<PAGE>

Exhibit No.                Description of Exhibit
-----------                ----------------------

4.1                        Form of  Certificate  for  Shares  of  Class A common
                           stock,  incorporated  by reference  to the  Company's
                           Pre-Effective  Amendment  No.1  to  the  Registration
                           Statement on Form SB-2 (No. 33-82246), filed with the
                           Commission on September 15, 1994.

4.2                        Form of  Certificate  for  Shares  of  Class B common
                           stock,  incorporated  by reference  to the  Company's
                           Pre-Effective  Amendment  No.1  to  the  Registration
                           Statement on Form SB-2 (No. 33-82246), filed with the
                           Commission on September 15, 1994.

4.3                        Form  of  Warrant  issued  to  Mr.  Jerome   Dansker,
                           incorporated by reference to the Company's  Report on
                           Form  10-K  for the year  ended  December  31,  1995,
                           wherein such document is identified as Exhibit 4.2.

4.4                        Form  of   Warrant   for   Class  A   common   stock,
                           incorporated   by  reference   to  the   Registration
                           Statement,  wherein such  document is  identified  as
                           Exhibit 4.3.

4.5                        Form of Warrant Agreement between the Company and the
                           Bank of New York,  incorporated  by  reference to the
                           Registration  Statement,  wherein  such  document  is
                           identified as Exhibit 4.4.

4.6                        Form of Indenture between the Company and the Bank of
                           New York,  as Trustee,  incorporated  by reference to
                           the  Company's  Registration  Statement  on Form SB-2
                           (333-50113)   filed  with  the  Commission  on  April
                           15,1998.

4.7                        Form of Indenture between the Company and the Bank of
                           New  York,   as  Trustee,   dated  January  1,  2001,
                           incorporated by reference to the Company's  Report on
                           Form  10-K  for the year  ended  December  31,  2000,
                           wherein such document is identified as Exhibit 4.7.

4.8                        Form of Indenture between the Company, as Issuer, and
                           State Street Bank and Trust  Company of  Connecticut,
                           NA,  as  Trustee,  dated  as of  December  18,  2001,
                           related   to  the   Company's   Junior   Subordinated
                           Deferrable Interest Debentures.

12                         Statement  re:  computation  of ratios of earnings to
                           fixed charges.

21                         Subsidiaries

23.1                       Consent of Independent Accountants.
23.2                       Consent of Independent Accountants.

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





                                       68
<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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, on the date indicated.

INTERVEST BANCSHARES CORPORATION
(Registrant)

By: /s/ Lowell S. Dansker                        Date:     February 27, 2002
    --------------------------------                  --------------------------
        Lowell S. Dansker, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the date indicated.

Chairman of the Board, Executive Vice President and Director:

By: /s/ Jerome Dansker                           Date:     February 27, 2002
   -----------------------------------------          --------------------------
        Jerome Dansker

President, Treasurer and Director
(Principal Executive, Financial and Accounting Officer):

By: /s/ Lowell S. Dansker                        Date:     February 27, 2002
     -------------------------------                  --------------------------
        Lowell S. Dansker

Vice President, Secretary and Director:

By: /s/ Lawrence G. Bergman                      Date:     February 27, 2002
   -----------------------------------------          --------------------------
        Lawrence G. Bergman

Directors:

By: /s/ Michael A. Callen                        Date:     February 27, 2002
    --------------------------------                  --------------------------
        Michael A. Callen

By: /s/ Wayne F. Holly                           Date:     February 27, 2002
    ----------------------------------------          --------------------------
        Wayne F. Holly

By: /s/ Edward J. Merz                           Date:     February 27, 2002
    ----------------------------------------          --------------------------
        Edward J. Merz

By: /s/ Lawton Swan, III                         Date:     February 27, 2002
    --------------------------------                  --------------------------
        Lawton Swan, III

By: /s/ Thomas E. Willett                        Date:     February 27, 2002
    --------------------------------                  --------------------------
        Thomas E. Willett

By: /s/ David J. Willmott                        Date:     February 27, 2002
    --------------------------------                  --------------------------
        David J. Willmott

By: /s/ Wesley T. Wood                           Date:     February 27, 2002
    ----------------------------------------          --------------------------
        Wesley T. Wood

                                       69