================================================================================
                     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, 2004
                                             -----------------

                        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 identification no.)
        of incorporation)

                        ONE ROCKEFELLER PLAZA, SUITE 400
                          NEW YORK, NEW YORK 10020-2002
                    ----------------------------------------
                    (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.  [ ]

Indicate  by  check  mark  whether  the  Registrant  is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Exchange  Act):
Yes _  No X.
          -

On  the  close  of business on June 30, 2004, there were 5,663,075 shares of the
Registrant's Class A common stock and 385,000 shares of its Class B common stock
issued  and  outstanding.

The  aggregate  market  value  of  3,066,178  shares of the Registrant's Class A
common  stock  on  the close of business June 30, 2004, which excludes 2,596,897
shares  held  by affiliates as a group, was $51,971,717.  This value is based on
the  average  bid  and  asked  price of $16.95 per share on June 30, 2004 of the
Class A common stock on the NASDAQ Small Cap Market. All of the Class B stock is
held  by  affiliates.

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

Portions  of the Proxy Statement for the 2005 Annual Meeting of Stockholders are
incorporated  by  reference  into  Part  III  of  this  Form  10-K.


<PAGE>
<TABLE>
<CAPTION>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

                         2004 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS


PART I
                                                                         PAGE
                                                                         ----
<S>                                                                      <C>
ITEM 1 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2

ITEM 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . .    14

ITEM 3 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . .    14

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

ITEM 4A Executive Officers and Other Key Employees. . . . . . . . . . .    15

PART II

ITEM 5 Market for Common Equity, Related Stockholder Matters and Issuer
       Purchases of Equity Securities . . . . . . . . . . . . . . . . .    16

ITEM 6 Selected Consolidated Financial and Other Data . . . . . . . . .    18

ITEM 7 Management's Discussion and Analysis of Financial Condition
       and Results of Operations. . . . . . . . . . . . . . . . . . . .    19

ITEM7A Quantitative and Qualitative Disclosures About Market Risk . . .    38

ITEM 8 Financial Statements and Supplementary Data. . . . . . . . . . .    38

ITEM 9 Changes In and Disagreements with Accountants on
       Accounting and Financial Disclosure. . . . . . . . . . . . . . .    70

ITEM 9A Controls and Procedures . . . . . . . . . . . . . . . . . . . .    70

ITEM 9B Other Information . . . . . . . . . . . . . . . . . . . . . . .    70

PART III

ITEM 10  Directors and Executive Officers . . . . . . . . . . . . . . .    70

ITEM 11  Executive Compensation . . . . . . . . . . . . . . . . . . . .    70

ITEM 12  Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Transactions . . . . . . . . . . . . .    70

ITEM 13  Certain Relationships and Related Transactions . . . . . . . .    70

ITEM 14  Principal Accountant Fees and Services . . . . . . . . . . . .    70

PART IV

ITEM 15  Exhibits and Financial Statements Schedules. . . . . . . . . .    71

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    74
</TABLE>


                                        1
<PAGE>
                                     PART I
ITEM 1. 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 factors below are among those that
could  cause  actual  results  to  differ  materially  from  the forward-looking
statements.

Risk Factors
------------

The  Company's  business  is  affected by a number of factors, including but not
limited to the impact of: interest rates; loan demand; loan concentrations, loan
prepayments,  ability  to  raise  funds  for investment; competition; general or
local economic conditions; credit risk and the related adequacy of the allowance
for  loan losses; terrorist acts; natural disasters; armed conflicts; regulatory
supervision  and  regulation;  dependence  on key personnel; and voting control.
These  factors  together  with  other  matters  are described in this Form 10-K.

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

Intervest  Bancshares Corporation is a registered financial holding company (the
"Holding  Company") incorporated in 1993 under the laws of the State of Delaware
and  its  Class  A common stock is listed on the NASDAQ SmallCap Market (Symbol:
IBCA).

At  December 31, 2004, the Holding Company owned 100% of the outstanding capital
stock  of  Intervest  National Bank (the "Bank"), Intervest Mortgage Corporation
and  Intervest Securities Corporation, hereafter referred to collectively as the
"Company,"  on  a  consolidated  basis.  The  offices  of  the  Holding Company,
Intervest  Mortgage Corporation, Intervest Securities Corporation and the Bank's
headquarters  and  full-service  banking office are located on the entire fourth
floor  of  One  Rockefeller Plaza in New York City, New York, 10020-2002 and its
main  telephone number is 212-218-2800 At December 31, 2004, the Holding Company
also owned 100% of the outstanding capital stock of Intervest Statutory Trust I,
II,  III  and  IV,  all of which are unconsolidated entities as required by SFAS
Interpretation  No.  46-R,  "Consolidation  of Variable Interest Entities," (FIN
46-R).

At  December  31, 2004, the Company had total assets of $1,316,751,000, cash and
security  investments  of $278,579,000, net loans of $1,015,396,000, deposits of
$993,872,000,  borrowed  funds and related interest payable of $202,682,000, and
stockholders'  equity  of $90,094,000, compared to total assets of $911,523,000,
cash  and  security  investments  of  $220,026,000,  net  loans of $671,125,000,
deposits  of  $675,513,000,  borrowed  funds  and  related  interest  payable of
$140,383,000,  and  stockholders'  equity  of  $75,385,000 at December 31, 2003.

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  has  issued 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, Suite 400, 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.

At  December  31,  2004,  the  Bank had total assets of $1,183,509,000, cash and
security  investments  of  $269,816,000,  net loans of $900,798,000, deposits of
$1,007,862,000,  borrowed funds and related interest payable of $36,263,000, and
stockholder's  equity of $111,343,000, compared to total assets of $789,567,000,
cash  and


                                        2
<PAGE>
security  investments  of  $212,293,000,  net loans of $566,226,000, deposits of
$697,279,000  and  stockholder's  equity  of  $73,907,000, at December 31, 2003.

The  Bank's  primary business consists of multifamily residential and commercial
real  estate  lending. It also provides a variety of personalized commercial and
consumer banking services to small and middle-market businesses and individuals.
The  Bank  attracts  deposits  from the areas served by its banking offices. The
Bank  also  provides  internet  banking  through  its  web  site:
www.intervestnatbank.com,  which  attracts 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 loans and to purchase investment
securities.

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  operations.  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).

Intervest Mortgage Corporation
------------------------------

Intervest Mortgage Corporation is in the business of investing in mortgage loans
on  commercial  and  multifamily  residential  properties.  Intervest  Mortgage
Corporation  also makes loans on other types of properties, may resell mortgages
and  provides mortgage loan origination services to the Bank. Intervest Mortgage
Corporation  issues  debentures  to  provide funding for its mortgage investing.
Intervest  Mortgage  Corporation  has  two  wholly owned subsidiaries, Intervest
Distribution Corporation (which performs  record-keeping functions for Intervest
Mortgage  Corporation)  and  Intervest  Realty  Servicing  Corporation  (which
performs  certain  mortgage  servicing  activities).

At  December  31,  2004,  Intervest  Mortgage  Corporation  had  total assets of
$122,451,000,  cash  and  short-term  investments  of  $17,151,000, net loans of
$100,520,000,  debentures  and  related  interest  payable  of  $97,069,000, and
stockholder's  equity  of $23,527,000, compared to total assets of $119,578,000,
cash  and  short-term  investments  of  $25,801,000,  net  loans of $89,307,000,
debentures and related interest payable of $99,402,000, and stockholder's equity
of  $18,173,000,  at  December  31,  2003.

Intervest  Mortgage  Corporation's  business  is significantly influenced by the
movement  of  interest rates, general economic conditions, particularly those in
the New York City metropolitan area where most of the properties that secure its
mortgage  loans  are  concentrated, and by the volume of origination services it
provides  to  the  Bank,  whose  business  is  also affected by similar factors.
Intervest  Mortgage Corporation receives a fee from the Bank for the origination
services,  the  amount  of  which  is  eliminated  in the Company's consolidated
financial  statements.

Intervest Securities Corporation
--------------------------------

Intervest  Securities  Corporation is a broker/dealer and a NASD and SIPC member
firm  who's business activities to date have been insignificant and its revenues
have  been  derived from participating as a selected dealer from time to time in
offerings  of  debt  securities  of  the  Company,  primarily those of Intervest
Mortgage  Corporation.

In  June 2003, the Holding Company acquired all of the outstanding capital stock
of Intervest Securities Corporation in exchange for 30,000 shares of its Class B
common  stock  that  was  newly  issued  for  this  transaction.


                                        3
<PAGE>
Intervest  Securities  Corporation's  total  assets  consisted  of approximately
$218,000 of cash at the time of acquisition. Prior to the acquisition, Intervest
Securities  Corporation  was an affiliated entity in that it was wholly owned by
the  spouse  of  the  Chairman  of  the  Holding  Company. At December 31, 2004,
Intervest Securities Corporation had total assets of $484,000 (consisting mostly
of cash) and its stockholder's equity amounted to $481,000, compared to $455,000
of  cash  and  stockholder's  equity  of  $459,000  at  December  31,  2003.

Intervest Statutory Trusts
--------------------------

Intervest  Statutory  Trust  I,  II,  III  and  IV were formed in December 2001,
September 2003, March 2004 and September 2004, respectively. Each was formed for
the  sole  purpose  of  issuing and administering $15,000,000 of Trust Preferred
Securities  for  a  total of $60,000,000. The trusts do not conduct any trade or
business. See note 9 to the consolidated financial statements in this report for
a  further  discussion  of  the  trusts.

MARKET AREA

The  Bank's  primary market area for its 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 primary deposit gathering and lending markets are concentrated in the
communities  surrounding its offices. Management believes that all of 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  Mortgage Corporation's lending activities have also been concentrated
in  the  New York City metropolitan region. Both the Bank and Intervest Mortgage
Corporation  originate  loans  on properties in other states, including Alabama,
Connecticut,  Florida,  Georgia, Indiana, Kentucky, Massachusetts, Maryland, New
Jersey,  North  Carolina,  Ohio,  Pennsylvania,  Virginia  and  Washington  D.C.

COMPETITION

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  financial holding companies, have substantially greater
financial  and  marketing  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 financial 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.  An  increase  in  the  general  availability  of  funds  may  increase
competition  in  the  origination  of  mortgage  loans and may reduce the yields
available  therefrom.

In  making  its  mortgage  investments,  Intervest  Mortgage  Corporation  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. Most of these
competitors  also  have significantly greater financial and marketing resources.

In  addition,  certain  entities  owned  or  controlled by the principals of the
Company  are  engaged  in  limited  real  estate  lending  activities  involving
properties that are similar to those underlying the Company's mortgage loans and
in  that  regard,  are  also  competing  with  the  Company.


                                        4
<PAGE>
LENDING ACTIVITIES

The volume of the Company's loan originations is dependent on the interest rates
it  charges  on  loans, customer demand for loans, the supply of money available
for  lending  purposes,  the  rates offered by its competitors and the terms and
credit  risks  associated  with  the  loans.  The  Company's  lending activities
emphasize  the  origination  of  loans on commercial and multifamily real estate
properties.  The  Bank  also  offers  single-family  residential mortgage loans,
commercial  loans  and  consumer  loans,  none of which have been emphasized. At
December  31, 2004, the Company's loan portfolio, net of deferred fees, amounted
to  $1,015,396,000,  compared  to  $671,125,000  at  December  31,  2003.

The  Bank's  lending  activities  are conducted pursuant to written policies and
defined  lending  limits.  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. Generally, all loans must be reviewed and approved
by  the  Bank's  Loan  Committee  comprised  of  certain members of the Board of
Directors  prior  to  being originated. As part of its written policies for real
estate loans, 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%. Debt service coverage ratios (the ratio
of  the  net operating income generated by the property securing the loan to the
required  debt service) on new loans typically are not less than 1.2 times. As a
national  bank,  the  Bank  may  not make a loan or extend credit to a single or
related group of borrowers in excess of 15% of the Bank's unimpaired capital and
surplus.  Additional  amounts  may be loaned, not in excess of 10% of unimpaired
capital  and  surplus,  if  such  loans  or  extensions of credit are secured by
readily-marketable  collateral.

Intervest  Mortgage  Corporation  does  not  have  formal policies regarding the
percentage  of its assets that may be invested in any single or type of mortgage
loan,  the  geographic location of properties collateralizing those mortgages or
limits  to  amounts  to  any one borrower, loan-to-value ratios and debt service
coverage  ratios.  It  also  does  not  have  a  Loan Committee or a formal loan
approval process. Its real estate mortgage loans consist of first mortgage loans
and  junior  mortgage  loans.  Junior mortgages normally have greater risks than
first  mortgages. The Company also considers the borrower's experience in owning
or managing similar properties and its lending experience with the borrower when
originating  loans.

Real Estate Mortgage Lending
----------------------------

At December 31, 2004, nearly all of the Company's loan portfolio is comprised of
504  loans,  or  $1,024,323,000,  that are secured by commercial and multifamily
real  estate  (including  rental  and  cooperative  apartment  buildings, office
buildings,  mix-used properties, shopping centers, hotels, industrial properties
and vacant land) with an average principal size of $2,032,000. The portfolio has
40  loans  of  $5,000,000  or more that aggregate $302,291,000, with the largest
loan  amounting  to  $14,895,000.

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.  From time to time, the Company may originate loans on
vacant  land  which  typically  do  not  have  income  streams.

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 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 mortgage loans originated 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


                                        5
<PAGE>
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.

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

The  Bank  offers 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 that repayment will come from the cash
flow  of  the 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 these loans may depreciate over time, cannot be appraised
with  as  much precision as 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
--------------------------------

The  Company's  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 the properties being considered for mortgage loans;
mortgage  title  insurance;  hazard  insurance;  environmental  surveys;  and an
appraisal of the property securing the loan to determine the property's adequacy
as  collateral  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.

The  Bank  has  a  servicing  agreement  with  Intervest Mortgage Corporation to
provide  the Bank with mortgage loan origination services. The services include:
the  identification  of  potential  properties  and borrowers; the inspection of
properties  constituting collateral for such loans; the negotiation of the terms
and  conditions  of  such  loans  in  accordance  with  the  Bank's underwriting
standards;  preparing  commitment  letters;  and  coordinating  the loan closing
process.  The  services  are  performed  by  Intervest  Mortgage  Corporation's
personnel  and  the expenses associated with the services are borne by Intervest
Mortgage  Corporation.  The agreement renews each January 1 unless terminated by
either  party. The Bank paid $4,262,000, $2,343,000 and $1,597,000 in 2004, 2003
and  2002,  respectively,  to  Intervest Mortgage Corporation in connection with
this  servicing  agreement,  all  of  which  is  eliminated  in  the  Company's
consolidated  financial  statements.

Loan Origination, Loan Fees and Prepayment Income From the Early Repayment of
-----------------------------------------------------------------------------
Loans.
------

The Company normally charges loan origination fees on nearly all of the mortgage
loans  it  originates  based on a percentage of the principal amount. These fees
are  normally  comprised of a fee that is received from the borrower at the time
the  loan  is  originated and another similar fee that is contractually due when
the loan is repaid. The total fee, net of related direct loan origination costs,
is  deferred  and  amortized  over  the  contractual  life  of  the  loan  as an


                                        6
<PAGE>
adjustment  to  the  loan's  yield.  At  December  31,  2004,  the  Company  had
$11,347,000  of  net  deferred loan fees and $8,208,000 of loan fees receivable.
The  Company  also  earns  fees  from  the  servicing  of  its  loans.

Many  of  the Company's mortgage loans include provisions relating to prepayment
and others prohibit prepayment of indebtedness entirely. When a mortgage loan is
repaid  prior  to  maturity,  the Company may recognize prepayment income, which
consists  largely of the recognition of unearned fees associated with such loans
at the time of payoff and the receipt of additional prepayment fees and interest
in  certain  cases.  The  amount  and  timing  of,  as  well as income from loan
prepayments,  if  any,  cannot  be  predicted  and  can fluctuate significantly.
Normally,  the  number  of  instances  of  prepayment of mortgage loans tends to
increase during periods of declining interest rates and tends to decrease during
periods  of increasing interest rates. The Company earned prepayment income from
the  early  repayment  of  loans  of  $3,546,000 in 2004, $2,317,000 in 2003 and
$1,435,000  in  2002.

ASSET QUALITY

After  a loan is originated, the Company makes ongoing reviews of loans in order
to  monitor  documentation  and  valuations  of collateral with the objective of
quickly  identifying, evaluating and initiating corrective actions if necessary.

All  loans  are  subject to the risk of default, otherwise known as credit risk,
which  represents the possibility of the Company not recovering amounts due from
its  borrowers.  A borrower's ability to make payments due under a mortgage loan
is  related  to  the  Company's underwriting standards and is dependent upon the
risks  associated with real estate investments in general, including: general or
local  economic conditions in the areas the properties are located, neighborhood
values,  interest  rates,  real  estate  tax  rates,  operating  expenses of the
mortgaged  properties,  supply  of  and  demand  for rental units, supply of and
demand  for properties, ability to obtain and maintain adequate occupancy of the
properties,  zoning  laws,  governmental rules, regulations and fiscal policies.
Additionally, terrorist acts, such as those that occurred on September 11, 2001,
armed  conflicts,  such  as the war on terrorism, and natural disasters, such as
hurricanes,  may  have  an  adverse  impact  on  economic  conditions.  Economic
conditions  affect  the market value of the underlying collateral as well as the
levels  of  occupancy  of  income-producing  properties.

Loan  concentrations  are  defined  as  amounts  loaned to a number of borrowers
engaged  in  similar  activities.  The Company's loan portfolio has historically
been  concentrated  in  commercial  real  estate  and multifamily mortgage loans
(including  land  loans), which represented 99.8% of the total loan portfolio at
December  31,  2004.  The properties underlying the Company's mortgages are also
concentrated in New York State (71%) and the State of Florida (19%). Many of the
New York properties are located in New York City and are subject to rent control
and  rent  stabilization laws, which limit the ability of the property owners to
increase  rents.

Loans are placed on nonaccrual status when principal or interest becomes 90 days
or  more  past  due  unless  the  loan  is  well  secured  and in the process of
collection.  At  December  31,  2004,  $4,607,000  of loans were on a nonaccrual
status, compared to $8,474,000 at December 31, 2003. These loans were considered
impaired  under  the  criteria  of  SFAS  No.114  but no valuation allowance was
maintained  at any time since the Company believes that the estimated fair value
of  the  underlying properties exceeded its recorded investment. At December 31,
2004  and  2003, there were no other loans classified as nonaccrual, impaired or
ninety  days  past  due  and  still accruing interest. At December 31, 2004, the
allowance  for  loan  losses  amounted to $11,106,000, compared to $6,580,000 at
December  31,  2003.

In  the  last five years, the Company experienced only one loss from its lending
activities  amounting  to  $201,000  (which  was  related to one commercial real
estate  property  located  in the State of Florida that was acquired by the Bank
through  foreclosure  in  2002).  The  loss  was  comprised  of  a $150,000 loan
chargeoff  and  a  $51,000 loss from the subsequent sale of that property. There
can  be  no  assurance  however,  that a downturn in real estate values or local
economic  conditions, as well as other factors, would not have an adverse impact
on  the  Company's  asset  quality  and  future  level  of nonperforming assets,
chargeoffs  and  profitability.

REAL ESTATE INVESTING ACTIVITIES

The  Company  may  periodically purchase equity interests in real property or it
may  acquire  such an equity interest pursuant to a foreclosure of a mortgage in
the  normal  course  of  business.  As  a  result,  the  Company  may  acquire


                                        7
<PAGE>
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 properties acquired
through  foreclosure),  its  management  has  had  substantial experience in the
acquisition  and  management  of  properties.

INVESTMENT ACTIVITIES

The  Company's  investment policy is designed to provide and maintain liquidity,
without  incurring  undue interest and credit risk. The Company has historically
purchased  securities  that are issued directly by the U.S. government or one of
its  agencies.  These securities have a significantly lower credit risk than the
Company's  loan portfolio as well as lower yields. 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  additional  flexibility  for  implementing  asset  and  liability
management  strategies.  The  Company  does  not  engage  in trading activities.
Securities  held to maturity totaled $248,888,000 at December 31, 2004, compared
to  $152,823,000  at  December  31, 2003. There were no securities classified as
available  for  sale  at  December  31,  2004  or  2003.

The  Company  also  invests  in  various  money  market  instruments  (including
overnight  and  term  federal  funds,  short-term  bank  commercial  paper  and
certificate  of  deposits)  to  temporarily  invest  funds  resulting  from
deposit-gathering  activities,  normal  cash  flow  from operations and sales of
debentures.  Cash  and  short-term  investments at December 31, 2004 amounted to
$24,599,000,  compared  to  $64,128,000  at  December  31,  2003.

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 borrowed funds on a short-term basis from FHLB and the federal funds market
to  manage its liquidity needs. The Bank has also received capital contributions
from  the  Holding  Company.

The Bank's deposit accounts are solicited from individuals, small businesses and
professional  firms  located  throughout the Bank's primary market areas through
the  offering  of a variety of deposit services. The Bank also uses its web site
on the internet: www.intervestnatbank.com to attract deposit customers from both
within  and outside its primary market areas. The Bank believes it 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. The Bank also does
not  currently  accept  brokered  deposits.  At  December 31, 2004, consolidated
deposit  liabilities  totaled $993,872,000, compared to $675,513,000 at December
31,  2003.

The  Bank's  deposit  services  include  the  following: certificates of deposit
(including  denominations  of  $100,000 or more); individual retirement accounts
(IRAs);  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 on deposit accounts takes into account the Bank's liquidity
requirements, loan demand, 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.

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  its  available  resources.

At  December  31, 2004, the Bank had agreements with correspondent banks whereby
it may borrow on an overnight, unsecured basis up to $16,000,000. As a member of
the  FHLB  and  the  FRB,  the  Bank  can  borrow  from


                                        8
<PAGE>
these  institutions  on  a  secured  basis  up  to approximately $203,000,000 at
December  31,  2004.  There  were  $36,000,000  of  FHLB  short-term  borrowings
outstanding  at  December  31,  2004.

Intervest  Mortgage  Corporation's  principal  sources  of  funds  for investing
consist  of  borrowings  (through  the  issuance  of  its  debentures), mortgage
repayments  and  cash  flow generated from operations. From time to time, it has
also  received  capital  contributions from the Holding Company. At December 31,
2004,  Intervest Mortgage Corporation had debentures outstanding of $88,850,000,
compared  to  $87,350,000  at  December  31,  2003.

The  Holding  Company's principal sources of funds consist of dividends from the
Bank  to  service  Trust Preferred Securities, interest income from investments,
management fees from its subsidiaries and principal and interest repayments from
its  limited  portfolio  of  mortgage loans. The Holding Company has also issued
debentures  for  working  capital  purposes.  The  Holding  Company's debentures
outstanding  totaled  $5,580,000 at December 31, 2004, compared to $7,340,000 at
December  31,  2003.  In addition, the Holding Company, through its wholly owned
subsidiaries  (Intervest  Statutory  Trust  I,  II, III and IV) has issued Trust
Preferred Securities totaling $60,000,000.

EMPLOYEES

At  December  31,  2004, the Company employed 64 full-time equivalent employees,
compared  to  61  at  year-end 2003. The Company provides various benefit plans,
including group life, health and a 401(k) Plan. The employees are not covered by
a  collective  bargaining  agreement and the Company believes 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  franchise  tax  return  in Delaware. The Bank files a state income tax
return  in  Florida.  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  among the Holding Company and its subsidiaries on the basis
of  their  respective  taxable  income  or  taxable loss that is 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
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.
Commencing in 2002, due to its asset size, the Bank no longer qualified for this
method  and  began  using  the direct write-off method in computing its bad debt
deduction  for  tax  purposes.

As  a Delaware corporation not earning income in Delaware, the Company is exempt
from Delaware corporate income tax but is required to file an annual report with
and  pay an annual franchise tax to the State of Delaware. The tax is imposed as
a  percentage  of  the  capital  base  of  the  Company and is reported in other
expenses  on  the  Company's  consolidated  statement  of  earnings.


                                        9
<PAGE>
INVESTMENT IN SUBSIDIARIES

The  following  table  provides  information  regarding  the  Holding  Company's
subsidiaries:


<TABLE>
<CAPTION>
                                             At December 31, 2004         Subsidiaries
                                   -------------------------------------
($ in thousands)                                   % of        Equity in  Earnings (loss) for the
                                      Voting       Total      Underlying  Year Ended December 31,
Subsidiary                            Stock     Investment    Net Assets     2004           2003         2002
-----------------------            -----------  -----------  -----------  -----------  ------------  -----------
<S>                                <C>          <C>          <C>          <C>          <C>           <C>

Intervest National Bank                   100%  $   111,343  $   111,343  $    10,865  $     8,667   $     6,459
Intervest Mortgage Corporation            100%  $    23,527  $    23,527  $     2,354  $     1,759   $     1,567
Intervest Securities Corporation          100%  $       481  $       481  $        22  $        (6)  $         -
Intervest Statutory Trust I to IV         100%  $     1,856  $     1,856  $         -  $         -   $         -
</TABLE>

SUPERVISION  AND  REGULATION

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 financial 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,  and  is  required  to  file  with  the FRB periodic reports and other
information  regarding  its  business  operations and those of its subsidiaries.

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 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,
2004,  the Company's consolidated ratio of total capital to risk-weighted assets
was  14.23%  and  its risk-based Tier 1 capital ratio was 10.49%. 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, 2004 was
9.03%.

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
interest  rate  risk,  credit  risk and certain risk arising from nontraditional
activities,  as  well  as  an  institution's  ability to effectively measure and
manage these risks, are important factors to be taken into account by regulatory
agencies  in  assessing  an  organization's  overall  capital  adequacy.

The  Company  is  also  under  the  jurisdiction  of the Securities and Exchange
Commission (SEC) and various state securities commissions for matters related to
the  offering  and  sale  of its securities, and is subject to the SEC rules and
regulations  relating  to  periodic  reporting, reporting to shareholders, proxy
solicitation  and  insider  trading.

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


                                       10
<PAGE>
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
regarding  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 and
Regulation  W  thereunder,  which  govern  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
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, 2004 and 2003,
the  Bank  met  the  definition  of  a  well-capitalized  institution.


                                       11
<PAGE>
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
institution's  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 $0.0146 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 institution's
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
the  performance  of  financial institutions. The Bank received an "outstanding"
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, 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 potentially 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  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.
The  Gramm-Leach-Bliley  Act  amended  the  BHCA  and  expanded  the permissible
activities  of  certain  qualifying  bank  holding companies, known as financial
holding  companies.  In  addition  to  engaging  in


                                       12
<PAGE>
banking  and  activities closely related to banking, as determined by the FRB by
regulation  or  order, financial holding companies may engage in activities that
are  financial  in  nature  or  incidental  to  financial  activities  that  are
complementary  to a financial activity and do not pose a substantial risk to the
safety  and  soundness  of  depository  institutions  or  the  financial  system
generally.  Under  the  Gramm-Leach-Bliley  Act,  all  financial  institutions,
including  the  Company and the Bank, were required to develop privacy policies,
restrict  the  sharing of non-public customer data with nonaffiliated parties at
the  customer's  request,  and  establish  procedures  and  practices to protect
customer  data  from  unauthorized  access.

Under  the International Money Laundering Abatement and Anti-Terrorism Financing
Act  of  2001  (adopted  as  Title  III  of  the USA PATRIOT Act), all financial
institutions  are  subject  to  additional  requirements  to  collect  customer
information,  monitor  transactions  and  report certain information to U.S. law
enforcement  agencies  concerning  customers and their transactions. In general,
accounts  maintained  by or on behalf of "non-United States persons," as defined
in  the  Act, are subject to particular scrutiny.  Correspondent accounts for or
on  behalf  of  foreign banks with profiles that raise money-laundering concerns
are  subject  to  even  greater  scrutiny,  and correspondent accounts for or on
behalf  of  foreign  banks  with  no physical presence in any country are barred
altogether.  Additional  requirements  are  imposed  by  this  Act  on financial
institutions,  all  with  a  view  towards encouraging information sharing among
financial  institutions,  regulators  and  law  enforcement  agencies. Financial
institutions  are  also  required  to adopt and implement "anti-money-laundering
programs."

The  Sarbanes-Oxley  Act  of  2002  implements  legislative  reforms intended to
address  corporate  and  accounting  fraud.  In  addition  to establishing a new
accounting oversight board to enforce auditing, quality control and independence
standards,  the  bill  restricts  auditing and consulting services by accounting
firms.  To ensure auditor independence, any non-audit services being provided to
an  audit  client  will  require pre-approval by a company's audit committee. In
addition,  audit  partners must be rotated. The Act requires chief executive and
chief  financial  officers,  or  their equivalent, to certify to the accuracy of
reports  filed  with  the  SEC,  subject  to  civil  and  criminal penalties. In
addition,  under  the  Act, legal counsel will be required to report evidence of
material  violation  of  the  securities laws or a breach of fiduciary duty by a
company  to  its  chief  executive  officer  and,  if  such  officer  does  not
appropriately  respond,  to  report  such evidence to the audit committee of the
board  or  the board itself.  Executives are also prohibited from trading during
retirement  plan "blackout" periods, and loans to executives are restricted. The
Act  accelerates  the  time  frame  for  disclosures  by  public  companies, and
directors  and executive officers must also provide information for most changes
in  ownership  of company securities within two business days of the change. The
Act  also  prohibits  any  officer  or  director or any other person under their
direction  from  taking any action to fraudulently induce, coerce, manipulate or
mislead any independent public or certified accountant engaged in the audit of a
company's  financial  statements  for  the  purpose  of  rendering the financial
statement's  materially  misleading.  The Act also required the SEC to prescribe
rules requiring the inclusion of an internal report and assessment by management
in  the  annual  report  to  shareholders.

Additional legislative and regulatory proposals have been made and others can be
expected.  These  include  proposals  designed  to improve the overall 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
------------------------------------

Commercial banking 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


                                       13
<PAGE>
the  FRB, which have a significant effect on the operating results of commercial
banks,  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.

Non-Bank Subsidiaries
---------------------

Intervest  Mortgage  Corporation  is subject to regulation by the FRB. Intervest
Securities  Corporation  is  regulated  by  the SEC, the National Association of
Securities  Dealers,  Inc.,  or  "NASD,"  and  state  securities  regulators.

DEPENDENCE ON KEY PERSONNEL

The  Company  and  its  subsidiaries  are  dependent  upon the services of their
principal  officers.  If  the  services  of  any of these persons were to become
unavailable  for  any  reason, the operation of the Company and its subsidiaries
might  be  adversely  affected  in  a  material  manner.  The Company and/or its
subsidiaries  have  written  employment  agreements with its principal executive
officers.  Neither  the  Company nor any of its subsidiaries, however, maintains
key man life insurance policies on executives and they do not have any immediate
plans to obtain such policies. The Company's business is impacted by its ability
to  attract  and  retain  qualified  officers  and  employees.

VOTING CONTROL

The  three  original  shareholders  of the Company and two related parties own a
significant  percentage  of  the issued and outstanding shares of Class A Common
Stock,  and  all of the issued and outstanding shares of Class B Common Stock of
the  Company.  The  shares  of  Class  B  Common Stock, as a separate class, are
entitled  to  elect  two-thirds  of  the directors of the Company.  As a result,
voting  control  continues  to  rest  with  these  persons.

ITEM  2.   PROPERTIES

The  offices  of  the Holding Company, Intervest Mortgage Corporation, Intervest
Securities  Corporation  and  the  Bank's  headquarters and full-service banking
office  are  located in leased premises (of approximately 21,500 sq. ft.) on the
entire  fourth floor of One Rockefeller Plaza in New York City, New York, 10020.
The  Bank  occupies  approximately  one-half of this space. The lease expires in
March  2014.  The  Bank's  principal  office  in Florida is located at 625 Court
Street,  Clearwater,  Florida,  33756. In addition, the Bank operates four other
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. All
of  these  leases  contain  operating  escalation  clauses  related to taxes and
operating  costs  based upon various criteria and are accounted for as operating
leases.

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. The
Bank  also  owns property across from its Court Street branch office in Florida.
which  consists  of  an office building that contains approximately 1,400 sq.ft.
that  is  leased  to  one  commercial  tenant. This property provides additional
parking  for  the  Court  Street  branch.

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 foreclosure
proceedings. Management does not believe that there is any pending or threatened

                                       14
<PAGE>
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,  2004,  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 86, serves as Chairman of the Board of Directors and Chief
Executive  Officer  of  Intervest  Bancshares Corporation and has served in such
capacities since 1996 and 2004, respectively. 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 Loan Committee of Intervest
National  Bank,  Chairman of the Board of Directors and Executive Vice President
of  Intervest  Mortgage  Corporation,  and Chairman of the Board of Directors of
Intervest  Securities  Corporation.

LOWELL  S.  DANSKER,  age 54, serves as Vice Chairman of the Board of Directors,
and  as  President  and  Treasurer  of  Intervest Bancshares Corporation and has
served in such capacities since October 2003 and 1993, respectively. 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  Vice  Chairman  of the Board of Directors, Chief
Executive Officer and a member of the Loan Committee of Intervest National Bank,
Vice  Chairman  of  the Board of Directors, President and Treasurer of Intervest
Mortgage  Corporation,  and  Vice  Chairman  of the Board of Directors and Chief
Executive  Officer  of  Intervest  Securities  Corporation.

LAWRENCE  G. BERGMAN, age 60, serves as a Director, Vice President and Secretary
of  Intervest  Bancshares  Corporation  and  has served in such capacities 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,  Director,  Vice-President  and  Secretary of Intervest Mortgage
Corporation,  and Director, Vice-President and Secretary of Intervest Securities
Corporation.

KEITH  A.  OLSEN,  age  51, serves as President of the Florida Division and as a
Director of Intervest National Bank and has served in such capacities 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 30 years and has served
as  a  senior  bank  officer  for  more  than  20  years.

RAYMOND  C. SULLIVAN, age 58, serves as President and as a Director of Intervest
National Bank and has served in such capacities 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.


                                       15
<PAGE>
JOHN  J.  ARVONIO,  age  42,  serves  as  Senior Vice President, Chief Financial
Officer  and  Secretary  of  Intervest  National  Bank  and  has  served in such
capacities  since  September  2000.  Prior  to  that, Mr. Arvonio served as Vice
President,  Controller  and Secretary of Intervest National Bank from April 1999
to August 2000 and as an employee of Intervest Bancshares Corporation from April
1998  to  March  1999.  Mr. Arvonio also has been a registered representative of
Intervest  Securities  Corporation  since  December 2003. Mr. Arvonio received a
B.B.A.  degree  from  Iona  College  and  is  a Certified Public Accountant. Mr.
Arvonio  has  over 15 years of banking experience. Prior to joining the Company,
Mr.  Arvonio  served  as  Second Vice President Accounting Policy, and Technical
Advisor  to  the  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 from 1989 to 1992, and a
Senior  Auditor  for  Ernst  &  Young  from  1985  to  1989.

JOHN  H.  HOFFMANN, age 53, serves as Vice President and Controller of Intervest
Mortgage  Corporation  and  has  served in such capacities since August 2002 and
October  2000,  respectively.  Mr.  Hoffmann  received  a  B.B.A.  degree  from
Susquehanna  University  and  is a Certified Public Accountant. Mr. Hoffmann has
over  20 years of banking experience. Prior to joining the Company, Mr. Hoffmann
served  as Accounting Manager for Smart World Technologies from 1998 to 2000 and
as  Vice  President of Mortgage Accounting for The Greater New York Savings Bank
from  1987  to  1997.


                                     PART II

ITEM  5.   MARKET  FOR  COMMON  EQUITY,  RELATED  STOCKHOLDER MATTERS AND ISSUER
PURCHASES  OF  EQUITY  SECURITIES

MARKET FOR SECURITIES

The  Holding  Company's  Class  A  common stock is quoted on the NASDAQ SmallCap
Market under the symbol: IBCA. There is no public-trading market for the Holding
Company's  Class  B common stock. At December 31, 2004, there were 5,886,433 and
385,000 shares of Class A and Class B common stock outstanding, respectively. At
December 31, 2004, there were approximately 1,200 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,
2004,  there  were  five  holders  of  record  of  Class  B  common  stock.

The  high  and  low  sales  prices, which represent actual sales transactions as
reported  by  the  NASDAQ,  for the Class A common stock by calendar quarter for
2004  and  2003  are  as  follows:

<TABLE>
<CAPTION>
                               2004            2003
                               ----            ----
                           High    Low     High    Low
                          --------------  --------------
<S>                       <C>     <C>     <C>     <C>

          First quarter   $18.48  $14.42  $11.48  $10.05
          Second quarter  $17.76  $14.75  $12.77  $10.38
          Third quarter   $17.15  $14.45  $13.75  $12.05
          Fourth quarter  $19.74  $16.50  $15.48  $12.86
</TABLE>

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, financial condition and any restrictions arising from outstanding
indentures.


                                       16
<PAGE>
The  Bank  pays  a  monthly  dividend to the Holding Company in order to provide
funds  for  the  debt service on the Trust Preferred Securities, the proceeds of
which  were contributed to the Bank as capital. Dividends paid in 2004, 2003 and
2002  amounted  to  $3,429,000,  $1,695,000  and  $1,500,000,  respectively.

There  are  also  various  legal  limitations with respect to the Bank 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.


                                       17
<PAGE>
ITEM  6.   SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                                      At or For The Year Ended December 31,
($ in thousands, except per share data)                      2004         2003        2002          2001        2000
------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>          <C>          <C>          <C>          <C>
FINANCIAL CONDITION DATA:
Total assets (1). . . . . . . . . . . . . . . . . . . .  $1,316,751   $  911,523   $  686,443   $  513,086   $  416,927
Cash and cash equivalents . . . . . . . . . . . . . . .  $   24,599   $   64,128   $   30,849   $   24,409   $   42,938
Securities available for sale . . . . . . . . . . . . .  $        -   $        -   $        -   $    6,192   $   74,789
Securities held to maturity, net. . . . . . . . . . . .  $  248,888   $  152,823   $  145,694   $   99,157   $   20,970
Loans receivable, net of deferred fees. . . . . . . . .  $1,015,396   $  671,125   $  489,912   $  368,526   $  266,326
Deposits. . . . . . . . . . . . . . . . . . . . . . . .  $  993,872   $  675,513   $  505,958   $  362,437   $  300,241
Borrowed funds and related accrued interest payable (1)  $  202,682   $  140,383   $  114,032   $  100,374   $   72,813
Stockholders' equity. . . . . . . . . . . . . . . . . .  $   90,094   $   75,385   $   53,126   $   40,395   $   36,228
Nonaccrual loans. . . . . . . . . . . . . . . . . . . .  $    4,607   $    8,474   $        -   $    1,243   $        -
Foreclosed real estate                . . . . . . . . .  $        -   $        -   $    1,081   $        -   $        -
Allowance for loan losses . . . . . . . . . . . . . . .  $   11,106   $    6,580   $    4,611   $    3,380   $    2,768
Loan chargeoffs                  .. . . . . . . . . . .  $        -   $        -   $      150   $        -   $        -
Loan recoveries . . . . . . . . . . . . . . . . . . . .  $        -   $        -   $      107   $        -   $        -
------------------------------------------------------------------------------------------------------------------------
OPERATIONS DATA:
Interest and dividend income             .. . . . . . .  $   66,549   $   50,464   $   43,479   $   35,462   $   31,908
Interest expense (2). . . . . . . . . . . . . . . . . .      38,683       28,564       26,325       24,714       23,707
                                                         ---------------------------------------------------------------
Net interest and dividend income. . . . . . . . . . . .      27,866       21,900       17,154       10,748        8,201
Provision for loan losses . . . . . . . . . . . . . . .       4,526        1,969        1,274          612          275
                                                         ---------------------------------------------------------------
Net interest and dividend income after
  provision for loan losses . . . . . . . . . . . . . .      23,340       19,931       15,880       10,136        7,926
Noninterest income. . . . . . . . . . . . . . . . . . .       5,140        3,321        2,218        1,655          983
Noninterest expenses                . . . . . . . . . .       8,251        7,259        6,479        5,303        4,568
                                                         ---------------------------------------------------------------
Earnings before income taxes. . . . . . . . . . . . . .      20,229       15,993       11,619        6,488        4,341
Provision for income taxes (2). . . . . . . . . . . . .       8,776        6,873        4,713        2,710        1,733
                                                         ---------------------------------------------------------------
Net earnings. . . . . . . . . . . . . . . . . . . . . .  $   11,453   $    9,120   $    6,906   $    3,778   $    2,608
------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA (3):
Basic earnings per share. . . . . . . . . . . . . . . .  $     1.89   $     1.85   $     1.71   $     0.97   $     0.67
Diluted earnings per share              . . . . . . . .  $     1.71   $     1.53   $     1.37   $     0.97   $     0.67
Book value per share                . . . . . . . . . .  $    14.37   $    12.59   $    11.30   $    10.36   $     9.29
Market price per share. . . . . . . . . . . . . . . . .  $    19.74   $    14.65   $    10.80   $     7.40   $     3.75
------------------------------------------------------------------------------------------------------------------------
OTHER DATA AND RATIOS:
Common shares outstanding . . . . . . . . . . . . . . .   6,271,433    5,988,377    4,703,087    3,899,629    3,899,629
Common stock warrants outstanding          .. . . . . .     696,465      738,975    1,750,010    2,650,218    2,650,218
Average common shares used to calculate:
  Basic earnings per share. . . . . . . . . . . . . . .   6,068,755    4,938,995    4,043,619    3,899,629    3,884,560
  Diluted earnings per share. . . . . . . . . . . . . .   6,828,176    6,257,720    5,348,121    3,899,629    3,884,560
Adjusted net earnings for diluted earnings per share. .  $   11,707   $    9,572   $    7,342   $    3,778   $    2,608
Net interest margin . . . . . . . . . . . . . . . . . .        2.52%        2.90%        2.88%        2.47%        2.34%
Return on average assets. . . . . . . . . . . . . . . .        1.02%        1.19%        1.13%        0.85%        0.69%
Return on average equity. . . . . . . . . . . . . . . .       14.14%       15.34%       15.56%        9.94%        7.48%
Loans, net of unearned income to deposits . . . . . . .         102%          99%          97%         102%          89%
Loans, net of unearned income to deposits (Bank Only) .          86%          79%          76%          79%          67%
Efficiency ratio. . . . . . . . . . . . . . . . . . . .          25%          29%          33%          43%          50%
Allowance for loan losses to total net loans. . . . . .        1.09%        0.98%        0.94%        0.92%        1.04%
Average stockholders' equity to average total assets. .        7.23%        7.74%        7.27%        8.50%        9.18%
Stockholders' equity to total assets. . . . . . . . . .        6.84%        8.28%        7.74%        7.88%        8.69%
------------------------------------------------------------------------------------------------------------------------

<FN>
(1)  Amounts  at  December  31,  2003  and  prior have been adjusted where applicable from those previously reported for
     the effect of adopting FASB Interpretation No. 46-R, "Consolidation of Variable Interest Entities".

(2)  A charge of $206,000, net of taxes, from the early retirement of debentures that was previously reported in 2000 as
     an extraordinary item has been reclassified (a $382,000 increase to interest expense and a $176,000 decrease to the
     provision  for  income  taxes)  to give  effect  to SFAS No. 145," Rescission of SFAS Statements No. 4, 44, and 64,
     Amendment of SFAS Statement No. 13, and Technical Corrections."

(3)  The Company has never paid common dividends.
</TABLE>


                                       18
<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  thereto included in this report on Form 10-K.

Intervest Bancshares Corporation has three wholly owned subsidiaries - Intervest
National  Bank,  Intervest  Mortgage  Corporation  and  Intervest  Securities
Corporation  (hereafter  referred  to  collectively  as  the  "Company"  on  a
consolidated  basis).  Intervest  Bancshares  Corporation and Intervest National
Bank  may  be  referred to individually as the "Holding Company" and the "Bank,"
respectively.  Intervest  Bancshares  Corporation  also  has  four  wholly owned
unconsolidated  subsidiaries, Intervest Statutory Trust I, II, III and IV. For a
discussion  of  the  Company's business, see Item 1 "Business" in Part I of this
report.

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

The  Company's  profitability  is  also affected by the level of its noninterest
income  and  expenses,  provision  for  loan  losses  and  income  tax  expense.
Noninterest  income  consists  mostly  of loan and other banking fees as well as
income  from loan prepayments. The amount and timing of, as well as income from,
loan  prepayments,  if any, cannot be predicted and can fluctuate significantly.
Normally,  the  number  of  instances  of  prepayment of mortgage loans tends to
increase during periods of declining interest rates and tends to decrease during
periods  of  increasing  interest  rates.  Many  of the Company's mortgage loans
include  provisions  relating  to  prepayment  and others prohibit prepayment of
indebtedness entirely. Noninterest expense consists of compensation and benefits
expense, occupancy and equipment expenses, data processing expenses, advertising
expense,  professional  fees,  insurance  expense  and other operating expenses.

The  Company's  profitability  is significantly affected by general economic and
competitive  conditions,  changes  in market interest rates, government policies
and  actions  of  regulatory  authorities.  The  Company's  loan  portfolio  has
historically  been  concentrated  in  commercial  real  estate  and  multifamily
mortgage  loans, which represented 99.8% of the total loan portfolio at December
31,  2004.  The  properties  underlying  the  Company's  mortgages  are  also
concentrated in New York State (71%) and the State of Florida (19%). Many of the
New York properties are located in New York City and are subject to rent control
and  rent  stabilization laws, which limit the ability of the property owners to
increase rents. Credit risk, which represents the possibility of the Company not
recovering  amounts  due  from its borrowers, is significantly impacted by 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.  Additionally,  terrorist  acts,  such  as  those  that  occurred on
September  11,  2001, armed conflicts, such as the war on terrorism, and natural
disasters,  such  as  hurricanes,  may  have  an  adverse  impact  on  economic
conditions.

CRITICAL ACCOUNTING POLICIES

An  accounting  policy  is  deemed  to  be  "critical"  if  it is important to a
company's  results  of  operations  and  financial  condition,  and  requires
significant judgment and estimates on the part of management in its application.
The  preparation  of  financial statements and related disclosures in conformity
with  U.S.  generally accepted accounting principles requires management to make
estimates  and assumptions that affect certain amounts reported in the financial
statements  and  related  disclosures.  Actual  results  could differ from these
estimates  and  assumptions.  The  Company  believes  that  the  estimates  and
assumptions  used  in  connection  with  the  amounts  reported in its financial
statements  and  related disclosures are reasonable and made in good faith.  The
Company  believes  that currently its most critical accounting policy relates to
the  determination  of its allowance for loan losses, which is discussed in more
detail in the section entitled "Allowance for Loan Losses." For a summary of all
of the Company's significant accounting policies, see note 1 to the consolidated
financial  statements.


                                       19
<PAGE>
COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2004 AND DECEMBER 31, 2003.

Overview
--------

Total assets at December 31, 2004 increased to $1,316,751,000, from $911,523,000
at  December  31,  2003.  Total  liabilities  at  December 31, 2004 increased to
$1,226,657,000, from $836,138,000 at December 31, 2003, and stockholders' equity
increased  to  $90,094,000  at  December  31, 2004, from $75,385,000 at year-end
2003.  Book value per common share increased to $14.37 per share at December 31,
2004,  from  $12.59  at  December  31,  2003.

Selected balance sheet information as of December 31, 2004 follows:

<TABLE>
<CAPTION>
                                                                  Intervest    Intervest    Intervest     Inter-
                                                                  National     Mortgage    Securities    Company
($in thousands)                                Holding Company      Bank         Corp.        Corp.      Amts (1)    Combined
-------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                <C>          <C>          <C>          <C>         <C>

Cash and cash equivalents                     $          4,862   $   15,836   $   17,151   $       476  $ (13,726)  $   24,599
Security investments                                         -      253,980            -             -          -      253,980
Loans receivable, net of deferred fees                  14,078      900,798      100,520             -          -    1,015,396
Allowance for loan losses                                  (85)     (10,689)        (332)            -          -      (11,106)
Investment in consolidated subsidiaries                135,351            -            -             -   (135,351)           -
All other assets                                         5,316       23,584        5,112             8       (138)      33,882
-------------------------------------------------------------------------------------------------------------------------------
Total assets                                  $        159,522   $1,183,509   $  122,451   $       484  $(149,215)  $1,316,751
-------------------------------------------------------------------------------------------------------------------------------
Deposits                                      $              -   $1,007,862   $        -   $         -  $ (13,990)  $  993,872
Borrowed funds and related interest payable             69,350       36,263       97,069             -          -      202,682
All other liabilities                                       78       28,041        1,855             3        126       30,103
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                       69,428    1,072,166       98,924             3    (13,864)   1,226,657
-------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                    90,094      111,343       23,527           481   (135,351)      90,094
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity    $        159,522   $1,183,509   $  122,451   $       484  $(149,215)  $1,316,751
-------------------------------------------------------------------------------------------------------------------------------

<FN>
(1)  All  significant  intercompany  balances and transactions are eliminated in consolidation. Such amounts arise largely from
     intercompany deposit accounts and investments in subsidiaries.
</TABLE>

A comparison of the Company's consolidated balance sheet as of December 31, 2004
and  2003  follows:

<TABLE>
<CAPTION>
                                                                     At December 31, 2004          At December 31, 2003
                                                                 ----------------------------  ----------------------------
                                                                   Carrying         % of         Carrying         % of
($in thousands)                                                      Value      Total Assets       Value      Total Assets
---------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>            <C>            <C>            <C>
Cash and cash equivalents                                        $      24,599           1.9%  $      64,128           7.0%
Security investments                                                   253,980          19.3         155,898          17.1
Loans receivable, net of deferred fees and loan loss allowance       1,004,290          76.3         664,545          72.9
All other assets                                                        33,882           2.5          26,952           3.0
---------------------------------------------------------------------------------------------------------------------------
Total assets                                                     $   1,316,751         100.0%  $     911,523         100.0%
---------------------------------------------------------------------------------------------------------------------------
Deposits                                                         $     993,872          75.5%  $     675,513          74.1%
Borrowed funds and related interest payable                            202,682          15.4         140,383          15.4
All other liabilities                                                   30,103           2.2          20,242           2.2
---------------------------------------------------------------------------------------------------------------------------
Total liabilities                                                    1,226,657          93.1         836,138          91.7
---------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                                    90,094           6.9          75,385           8.3
---------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                       $   1,316,751         100.0%  $     911,523         100.0%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

Cash  and  cash  equivalents decreased to $24,599,000 at December 31, 2004, from
$64,128,000  at  December  31, 2003, primarily due to a lower level of overnight
federal  fund investments. The decrease reflected the deployment of a portion of
those funds into loans and securities. Cash and cash equivalents include federal
funds  sold  and  interest-bearing  and  noninterest-bearing  cash balances with
banks,  and  other short-term investments that have original maturities of three
months  or less. The short-term investments are normally comprised of commercial
paper  issued  by  large  commercial  banks,  certificates  of  deposit and U.S.
government  securities.  The level of cash and cash equivalents fluctuates based
on various factors, including liquidity needs, loan demand, deposit flows, calls
of  securities,  repayments  of  borrowed  funds  and  alternative  investment
opportunities.


                                       20
<PAGE>
Security Investments
--------------------

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. The Company's
investment  policy  is  designed  to  provide  and  maintain  liquidity, without
incurring  undue  interest  and  credit risk. The Company's security investments
have  lower  yields  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. The Company
does  not  engage  in  trading  activities.  The  Company continues to invest in
short-term  (1-5  year)  U.S  government  agency  debt  obligations to emphasize
liquidity  and  to  target  Intervest  National  Bank's loan-to-deposit ratio at
approximately  80%.

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. There were no
securities  classified  as  available  for  sale  at  December 31, 2004 or 2003.

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  $248,888,000 at December 31, 2004, compared to $152,823,000
at December 31, 2003. The increase was due to new purchases exceeding maturities
and  calls  of  securities  during the year. At December 31, 2004, the portfolio
consisted  of short-term debt obligations of the Federal Home Loan Bank, Federal
Farm  Credit  Bank,  Federal National Mortgage Association and Federal Home Loan
Mortgage  Corporation  with  a  weighted-average  yield  of  2.33%  and  a
weighted-average  remaining  maturity  of  1.4  years, compared to 1.75% and 1.1
years, respectively, at December 31, 2003. The securities are fixed rate or have
predetermined  scheduled  rate increases, and some have call features that allow
the  issuer  to call the security before its stated maturity without penalty. At
December  31,  2004  and  2003,  the  portfolio's  estimated  fair  value  was
$247,211,000  and  $152,995,000,  respectively.

In  order  for the Bank to be a member of the Federal Reserve Bank (FRB) and the
Federal  Home  Loan Bank of New York (FHLB), the Bank maintains an investment in
their  capital stock of $2,464,000 and $2,628,000, respectively, at December 31,
2004.  The  FRB  stock  currently  pays  a  dividend of 6%, while the FHLB stock
dividend  fluctuates  and  most  recently  was  3%.  The total investment, which
amounted  to $5,092,000 at December 31, 2004, compared to $3,075,000 at December
31,  2003,  fluctuates  based  on  the  Bank's capital level for the FRB and the
Bank's  loans  and  borrowings  for  the  FHLB.

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

Loans  receivable,  net  of  deferred  fees  and  the allowance for loan losses,
increased  to $1,004,290,000 at December 31, 2004, from $664,545,000 at December
31,  2003.  The  growth reflected new originations of commercial real estate and
multifamily  mortgage  loans,  partially  offset  by  principal  repayments.

The following table sets forth information concerning the loan portfolio:

<TABLE>
<CAPTION>
                                              At December 31, 2004                  At December 31, 2003
                                              --------------------                  --------------------
                                         # of                     % of       # of                    % of
($ in thousands)                         Loans      Amount        Total      Loans      Amount       Total
-------------------------------------------------------------------------------------------------------------
<S>                                    <C>        <C>          <C>         <C>        <C>          <C>
Commercial real estate loans                 244  $  601,512        58.6%        184  $  344,071        50.7%
Residential multifamily loans                249     403,613        39.3         210     310,650        45.8
Land development and other land loans         11      19,198         1.9           6      20,526         3.0
Residential 1-4 family loans                   4         984         0.1          26       1,628         0.2
Commercial loans                              23       1,215         0.1          28       1,662         0.2
Consumer loans                                12         221           -          16         319         0.1
-------------------------------------------------------------------------------------------------------------
Total gross loans receivable                 543   1,026,743       100.0%        470     678,856       100.0%
Deferred loan fees                                   (11,347)                             (7,731)
-------------------------------------------------------------------------------------------------------------
Loans, net of deferred fees                        1,015,396                             671,125
Allowance for loan losses                            (11,106)                             (6,580)
-------------------------------------------------------------------------------------------------------------
Loans receivable, net                             $1,004,290                          $  664,545
-------------------------------------------------------------------------------------------------------------
</TABLE>


                                       21
<PAGE>
Nearly  all  of  the  Company's  loan  portfolio  is  comprised of 504 loans, or
$1,024,323,000,  that  are  secured  by  commercial and multifamily real estate,
including rental and cooperative apartment buildings, office buildings, mix-used
properties, shopping centers, industrial properties and vacant land. These loans
have  an  average  principal  size  of $2,032,000. The portfolio has 40 loans of
$5,000,000  or more that aggregate $302,291,000, with the largest loan amounting
to  $14,895,000.

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

<TABLE>
<CAPTION>
                                            At December 31,
                                            ---------------
               ($ in thousands)              2004     2003
               ------------------------------------------------
<S>                                        <C>         <C>
               Within one year             $  227,889  $133,137
               Over one to five years (1)     645,050   430,783
               Over five years (1)            153,804   114,936
               ------------------------------------------------
                                           $1,026,743  $678,856
               ------------------------------------------------

<FN>
(1)  At  December  31,  2004,  $485,706,000  of  loans with adjustable rates and
     $313,148,000 of loans with fixed rates were due after one year.
</TABLE>


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

<TABLE>
<CAPTION>
                                                   For the Year Ended December 31,
                                                  ---------------------------------
     ($ in thousands)                                 2004         2003        2002
     --------------------------------------------------------------------------------
<S>                                               <C>          <C>         <C>
     Loans receivable, net, at beginning of year  $  664,545   $ 485,301   $ 365,146
       Loans originated                              626,252     378,630     233,689
       Principal repayments                         (278,365)   (195,076)   (110,661)
       Recoveries                                          -           -        (107)
       Chargeoffs                                          -           -         150
       Increase in deferred loan fees                 (3,616)     (2,341)     (1,642)
       Provision for loan losses                      (4,526)     (1,969)     (1,274)
     --------------------------------------------------------------------------------
     Loans receivable, net, at end of year        $ 1,004,290  $ 664,545   $ 485,301
     --------------------------------------------------------------------------------
</TABLE>

At  December 31, 2004, $4,607,000 of loans were on a nonaccrual status, compared
to  $8,474,000  at December 31, 2003. These loans were considered impaired under
the  criteria  of  SFAS No.114, but no valuation allowance was maintained at any
time  since the Company believes that the estimated fair value of the underlying
properties  exceeded the Company's recorded investment. At December 31, 2004 and
2003, there were no other impaired loans or loans ninety days past due and still
accruing  interest.

Allowance for Loan Losses
-------------------------

The  allowance  for  loan  losses increased to $11,106,000 at December 31, 2004,
from  $6,580,000  at December 31, 2003 and represented 1.09% of total loans (net
of  deferred  fees)  outstanding  at  December  31,  2004,  compared to 0.98% at
December  31, 2003. The increase in the allowance was due to provisions totaling
$4,526,000  resulting from loan growth and a decrease in the credit grade of two
loans  during  the year. At December 31, 2004 and 2003, the allowance was almost
all allocated to commercial real estate loans, multifamily loans and land loans.

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

<TABLE>
<CAPTION>
                                                              For the Year Ended December 31,
                                                              -------------------------------
     ($ in thousands)                                              2004       2003       2002
     ------------------------------------------------------------------------------------------
<S>                                                           <C>          <C>        <C>
     Allowance at beginning of year                             $  6,580     $4,611   $  3,380
     Provision charged to operations                               4,526      1,969      1,274
     Chargeoffs                                                        -          -       (150)
     Recoveries                                                        -          -        107
     ------------------------------------------------------------------------------------------
     Allowance at end of year                                 $   11,106   $  6,580   $  4,611
     ------------------------------------------------------------------------------------------
     Ratio of allowance to total loans, net of deferred fees        1.09%      0.98%      0.94%
     Total loans, net of deferred fees at year end            $1,015,396   $671,125   $489,912
     Average loans outstanding during the year                $  867,724   $585,556   $439,241
     ------------------------------------------------------------------------------------------
</TABLE>

The  allowance  for  loan  losses  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


                                       22
<PAGE>
necessary  with  consideration  given  to:  the  nature  and  size  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.  For  calculation  purposes, the
allowance  for  loan  losses  is  comprised  of an unallocated portion (which is
derived  from an estimated loss factor ranging from 0.30% to 1.35% multiplied by
the  principal amount of loans rated acceptable and higher percentages for loans
that  are assigned a credit grade of special mention or lower) and, from time to
time,  an  allocated  (or  specific)  portion on certain loans (particularly for
loans  that have been identified as being impaired as discussed below). Although
management  believes  it  uses  the  best  information  available  to  make
determinations with respect to the allowance for loan losses, future adjustments
may  be  necessary  if  economic conditions, or other factors, differ from those
previously  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  losses  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  losses and a charge through the provision for loan losses.
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  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.

Finally,  the  Company's  regulators,  as  an integral part of their examination
process,  periodically  review  the  allowance for loan losses. 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.

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

The following table sets forth the composition of the caption "All other assets"
in  the  table  on  page  20:

<TABLE>
<CAPTION>
                                                      At  December 31,
                                                     -----------------
          ($ in thousands)                             2004       2003
          ---------------------------------------------------------------
<S>                                                  <C>        <C>
          Accrued interest receivable                $   6,699  $   4,995
          Loan fees receivable                           8,208      5,622
          Premises and equipment, net                    6,636      5,752
          Deferred income tax asset                      5,095      2,960
          Deferred debenture offering costs, net         4,929      4,023
          Investment in unconsolidated subsidiaries      1,856        928
          All other assets                                 459      2,672
          ---------------------------------------------------------------
                                                     $  33,882  $  26,952
          ---------------------------------------------------------------
</TABLE>

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


                                       23
<PAGE>
Loan fees receivable are fees due to the Company in accordance with the terms of
mortgage  loans.  Such  amounts are generally due upon the full repayment of the
loan.  This  fee is recorded as deferred income at the time a loan is originated
and  is  then  amortized to interest income over the life of the loan as a yield
adjustment.  The  increase was due to an increase in mortgage loan originations.

Premises  and  equipment,  which  is  detailed  in  note  5  to the consolidated
financial  statements,  increased due to net additions of $1,477,000 (almost all
of  which  were  leasehold  improvements  associated  with  new  office  space),
partially  offset  by  depreciation  and  amortization.

The deferred income tax asset relates primarily to the unrealized tax benefit on
the  Company's  allowance  for  loan losses. The allowance has been expensed for
financial  statement  purposes but it is currently not deductible for income tax
purposes  until  actual  losses  are  incurred. The increase in the deferred tax
asset  is a function of the increase in the allowance for loan losses during the
period.

The  deferred  debenture  offering  costs  consist  primarily  of  underwriters'
commissions and are amortized over the terms of the debentures. The increase was
due  to  a  total of $2,217,000 of costs associated with issuing new debentures,
partially  offset  by  normal  amortization  during  the  period.

 The investment in unconsolidated subsidiaries consists of the Holding Company's
$464,000  common  stock  investment  in each of its unconsolidated subsidiaries,
Intervest  Statutory  Trust  I,  II,  II  and  IV.

The decrease in all other assets was due to the receipt of $2,535,000 in January
2004  from the exercise of common stock warrants at year-end 2003, the amount of
which  was  recorded  as  a  receivable  at  December  31,  2003.

Deposits
--------

Deposits  increased  to  $993,872,000 at December 31, 2004, from $675,513,000 at
December  31,  2003,  reflecting  increases  in  money market and certificate of
deposit  accounts  of  $38,335,000  and  $277,612,000,  respectively.

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

<TABLE>
<CAPTION>
                                          At December 31, 2004        At December 31, 2003
                                          --------------------        --------------------
          ($ in thousands)                 Amount    %  of Total     Amount     %  of Total
          -----------------------------------------------------------------------------------
<S>                                    <C>           <C>           <C>           <C>
          Demand deposits              $      6,142          0.6%  $      6,210          1.0%
          Interest checking deposits         15,051          1.5          9,146          1.4
          Savings deposits                   27,359          2.8         30,784          4.5
          Money market deposits             200,549         20.2        162,214         24.0
          Certificates of deposit           744,771         74.9        467,159         69.1
          -----------------------------------------------------------------------------------
          Total deposit accounts (1)   $    993,872        100.0%  $    675,513        100.0%
          -----------------------------------------------------------------------------------

<FN>
(1)  Includes  individual  retirement  accounts  totaling  $113,266,000  and  $74,170,000  at
     December 31, 2004 and 2003, respectively, nearly all of which are certificates of
     deposit.
</TABLE>

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

<TABLE>
<CAPTION>


                                        At December 31, 2004          December 31, 2003
                                        --------------------          -----------------
                                                      Wtd-Avg                     Wtd-Avg
          ($ in thousands)             Amount     Stated Rate      Amount     Stated Rate
          -------------------------------------------------------------------------------
<S>                                 <C>           <C>           <C>           <C>

          Within one year           $    269,553         2.84%  $    182,693         2.75%
          Over one to two years          119,780         3.43         90,936         3.64
          Over two to three years        134,409         4.48         30,094         4.43
          Over three to four years        75,317         4.06         89,085         4.83
          Over four years                145,712         4.48         74,351         4.20
          --------------------------------------------------------------------------------
                                    $    744,771         3.68%  $    467,159         3.66%
          --------------------------------------------------------------------------------
</TABLE>


                                       24
<PAGE>
The  following  table  sets  forth  the maturities of certificates of deposit in
denominations  of  $100,000  or  more:

<TABLE>
<CAPTION>
                                                  At December 31,
                                                  ---------------
          ($ in thousands)                        2004      2003
          ---------------------------------------------------------
<S>                                            <C>        <C>
          Due within three months or less      $ 15,761   $  7,514
          Due over three months to six months    24,450      7,446
          Due over six months to one year        40,351     31,459
          Due over one year                     135,314     76,644
          ---------------------------------------------------------
                                               $215,876   $123,063
          ---------------------------------------------------------
          As a percentage of total deposits        21.7%      18.2%
          ---------------------------------------------------------
</TABLE>

The following table sets forth net deposit flows:

<TABLE>
<CAPTION>
                                                     For the Year Ended December 31,
                                                     -------------------------------
          ($ in thousands)                            2004         2003        2002
          -------------------------------------------------------------------------------
<S>                                              <C>           <C>           <C>
          Net increase before interest credited  $    292,667  $    151,138  $    126,230
          Net interest credited                        25,692        18,417        17,291
          -------------------------------------------------------------------------------
          Net deposit increase                   $    318,359  $    169,555  $    143,521
          -------------------------------------------------------------------------------
</TABLE>

Borrowed Funds and Related Interest Payable
-------------------------------------------

The following table summarizes borrowed funds and related interest payable:

<TABLE>
<CAPTION>
                                                        At December 31, 2004  At December 31, 2003
                                                        --------------------  --------------------
                                                                    Accrued               Accrued
     ($ in thousands)                                   Principal   Interest  Principal   Interest
     ---------------------------------------------------------------------------------------------
<S>                                                          <C>        <C>        <C>        <C>
     Debentures - Intervest Mortgage Corporation        $  88,850  $   8,219  $  87,350  $  12,052
     Debentures - Holding Company                           5,580      1,749      7,340      2,361
     Debentures - Capital Securities - Holding Company     61,856        165     30,928         97
     FHLB advances - Intervest National Bank               36,000         21          -          -
     Mortgage note payable - Intervest National Bank          242          -        255          -
     ---------------------------------------------------------------------------------------------
                                                        $ 192,528  $  10,154  $ 125,873  $  14,510
     ---------------------------------------------------------------------------------------------
</TABLE>

Intervest  Mortgage  Corporation  had  $88,850,000  of debentures outstanding at
December  31,  2004,  compared  to  $87,350,000 at December 31, 2003. The slight
increase  was  due  to  the  issuance  of  Series 11/28/03 and 6/7/04 debentures
totaling  $21,500,000 (with fixed rates ranging from 6.25% to 6.75% and maturing
at  various  times through January 1, 2012), largely offset by the repayments of
Series  5/12/95  6.00% (prime based) debentures due April 1, 2004 ($9,000,000 of
principal  and  $2,749,000 of accrued interest), Series 6/28/99 8.50% debentures
due  July  1,  2004  ($2,000,000 of principal and $980,000), and Series 10/19/95
6.25%  (prime based) debentures due October 1, 2004 ($9,000,000 of principal and
$2,244,000 of accrued interest). Proceeds from the issuance of debentures, after
underwriter's  commissions  and  other  issuance costs, amounted to $19,924,000.

Intervest  Mortgage Corporation has filed a registration statement related to an
offering  of  additional  debentures.  It  is  anticipated that debentures in an
aggregate  principal  amount  of  up  to $14,000,000 will be issued in the first
quarter  of  2005.

The  Holding  Company  had  a  total of $67,436,000 of debentures outstanding at
December  31,  2004,  compared to $38,268,000 at December 31, 2003. The increase
was  due  to  the  issuance  of  a total of $30,928,000 of its debentures to its
wholly  owned  unconsolidated  subsidiaries,  Intervest  Statutory  III  and IV,
partially  offset  by  the  conversion  of  its convertible debentures. In 2004,
$2,883,000  of convertible debentures ($1,760,000 of principal and $1,123,000 of
accrued  related interest) were converted into shares of Class A common stock at
the  election  of  the  debenture  holders.

The  Bank from time to time may borrow funds on an overnight or short-term basis
to  manage  its liquidity needs.  At December 31, 2004, the Bank had $36,000,000
of  FHLB  borrowings  outstanding, of which $19,000,000 were due in January 2005
and  $17,000,000  in February 2005. These borrowings were repaid through deposit
inflows.  The  Bank  also  has  a mortgage note payable outstanding amounting to
$242,000  at  December  31, 2004, compared to $255,000 at December 31, 2003. The
note  was issued in connection with the Bank's purchase in 2002 of property that
is  located  across  from  its  Court  Street  branch  office  in  Florida.


                                       25
<PAGE>
Accrued  interest  payable on borrowed funds amounted to $10,154,000 at year-end
2004,  compared  to  $14,510,000  at  year-end  2003.  The  decrease  was due to
repayments  of interest as well as the decrease resulting from the conversion of
debentures,  partially  offset  by  new accruals. A large portion of the accrued
interest payable is due and payable at the maturity of various debentures. For a
further  discussion  of  borrowed  funds,  see notes 7 and 9 to the consolidated
financial  statements  in  this  report.

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

The  table  below  sets  forth  the  composition  of  the  caption  "All  other
liabilities"  in  the  table  on  page  20  as  follows:

<TABLE>
<CAPTION>
                                                     At December 31,
                                                     ---------------
               ($ in thousands)                       2004       2003
               --------------------------------------------------------
<S>                                                  <C>       <C>
               Mortgage escrow funds payable         $ 14,533  $ 10,540
               Official checks outstanding             12,061     6,122
               Accrued interest payable on deposits     1,718     1,080
               Income taxes payable                        81       807
               All other liabilities                    1,710     1,693
               --------------------------------------------------------
                                                     $ 30,103  $ 20,242
               --------------------------------------------------------
</TABLE>

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

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

Stockholders'  equity increased to $90,094,000 from $75,385,000 at year-end 2003
as  follows:

<TABLE>
<CAPTION>
          ($in thousands)                                                     Amount    Shares    Per Share
          --------------------------------------------------------------------------------------------------
<S>                                                                           <C>      <C>        <C>
          Stockholders' equity at December 31, 2003                           $75,385  5,988,377  $    12.59
          Net earnings for the year                                            11,453          -           -
          Class A common stock warrants exercised                                 426     42,510       10.01
          Convertible debentures converted at election of debenture holders     2,821    240,546       11.73
          Compensation expense on warrants held by the Chairman (1)                 9          -           -
          --------------------------------------------------------------------------------------------------
          Stockholders' equity at December 31, 2004                           $90,094  6,271,433  $    14.37
          --------------------------------------------------------------------------------------------------

<FN>
         (1)  For  discussion  of  compensation  related  to stock warrants, see note 14 to the consolidated
              financial statements in this report.
</TABLE>

OFF-BALANCE SHEET AND OTHER FINANCING ARRANGEMENTS

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. For a
further  discussion  of  these  financial  instruments,  see  note  19  to  the
consolidated  financial  statements  in  this  report.

LIQUIDITY

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; issuance of debentures; borrowings from the
federal  funds  market, FHLB advances 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.

The  Company  believes that it can fund its contractual obligations (a detail of
which  follows)  from the aforementioned sources of funds. At December 31, 2004,
the  Bank has agreements with correspondent banks whereby it may borrow up to an
additional $16,000,000 of federal funds on an unsecured basis. In addition, as a
member of the FHLB and the FRB, the Bank can also borrow from these institutions
on a secured basis that aggregated approximately $203,000,000 based on available
collateral  at  December  31,  2004.


                                       26
<PAGE>
CONTRACTUAL OBLIGATIONS

The  table below summarizes the Company's contractual obligations as of December
31,  2004.

<TABLE>
<CAPTION>
                                                                                Due In
                                                                --------------------------------------
                                                                          2006 and  2008 and  2010 and
($ in thousands)                                       Total      2005      2007      2009      Later
------------------------------------------------------------------------------------------------------
<S>                                                 <C>         <C>       <C>       <C>       <C>
Subordinated debentures and mortgage note payable   $   94,672  $ 29,116  $ 17,291  $ 25,635  $ 22,630
Subordinated debentures - capital securities            61,856         -         -         -    61,856
FHLB advances                                           36,000    36,000         -         -         -
Accrued interest payable on all borrowed funds          10,154     5,445     1,960     2,538       211
Deposits with no stated maturities                     249,101   249,101         -         -         -
Deposits with stated maturities                        744,771   269,553   254,189   204,100    16,929
Operating lease payments                                 8,243       907     1,763     1,734     3,839
Unfunded loan commitments (1)                          159,697   154,085     5,612         -         -
Available lines of credit (1)                              789       789         -         -         -
Standby letters of credit (1)                              750       750         -         -         -
------------------------------------------------------------------------------------------------------
                                                    $1,366,033  $745,746  $280,815  $234,007  $105,465
------------------------------------------------------------------------------------------------------

<FN>
(1)  Since  some  of  the  commitments  are  expected  to  expire  without being drawn upon, the total
     commitment amount does not necessarily represent future cash requirements.
</TABLE>

REGULATORY CAPITAL

The  Bank  is  subject  to various regulatory capital requirements. The FDIC and
other  bank  regulatory  agencies  use five capital categories ranging from well
capitalized  to  critically  undercapitalized  to  determine  various  matters,
including prompt corrective action and each institution's FDIC deposit insurance
premiums.  These  categories  involve  quantitative measures of a bank's assets,
liabilities,  and certain off-balance-sheet items as calculated under regulatory
accounting  practices.  The 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.

The  Bank is required to maintain regulatory defined minimum Tier 1 leverage and
Tier  1and  total  risk-based  capital  ratio  levels of at least 4%, 4% and 8%,
respectively.  At  December 31, 2004 and 2003, management believes  the Bank met
its  capital  adequacy  requirements  and  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 that would change the Bank's
designation  as  a  well-capitalized  institution.

Information  regarding  the  Bank's  regulatory  capital  and  related ratios is
summarized  as  follows:

<TABLE>
<CAPTION>
                                                                              At December 31,
                                                                              ---------------
     ($ in thousands)                                                         2004        2003
     -------------------------------------------------------------------------------------------
<S>                                                                       <C>          <C>
     Tier 1 Capital:   Stockholder's equity                               $  111,343   $ 73,907
                       Disallowed portion of deferred tax asset               (4,619)    (2,508)
                                                                          ----------------------
                                                                             106,724     71,399
     Tier 2 Capital:   Allowable portion of allowance for loan losses         10,689      6,310
     -------------------------------------------------------------------------------------------
     Total risk-based capital                                             $  117,413   $ 77,709
     -------------------------------------------------------------------------------------------
     Net risk-weighted assets                                             $  971,823   $620,155
     Average assets for regulatory purposes                               $1,140,624   $739,234
     -------------------------------------------------------------------------------------------
     Tier 1 capital to average assets                                           9.36%      9.66%
     Tier 1 capital to risk-weighted assets                                    10.98%     11.51%
     Total capital to risk-weighted assets                                     12.08%     12.53%
     -------------------------------------------------------------------------------------------
</TABLE>

The  Holding  Company  on  a consolidated basis is subject to minimum regulatory
capital  requirements  administered by the FRB. These 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%.  The  guidelines  also  require a ratio of Tier 1 capital to adjusted
total  average  assets  of  not  less  than  3%.  At December 31, 2004 and 2003,
management  believes  that  the  Holding  Company  met  its  capital  adequacy
requirements.


                                       27
<PAGE>
Information  regarding  the  Holding  Company's  regulatory  capital and related
ratios  is  summarized  below:

<TABLE>
<CAPTION>
                                                                                       At December 31,
                                                                                       ---------------
     ($ in thousands)                                                                   2004       2003
     ----------------------------------------------------------------------------------------------------
<S>                                                                                <C>          <C>
     Tier 1 Capital:   Stockholder's equity                                        $   90,094   $ 75,385
                       Capital Securities limited to 25% of core capital               30,032     25,122
                                                                                   ----------------------
     Total core capital elements                                                      120,126    100,507
                       Disallowed portion of deferred tax asset                        (5,095)    (2,936)
     ----------------------------------------------------------------------------------------------------
     Total Tier 1 Capital                                                             115,031     97,571
     ----------------------------------------------------------------------------------------------------
     Tier 2 Capital :  Excess Capital Securities                                       29,968      4,878
                       Allowable portion of allowance for loan losses                  11,106      6,580
     ----------------------------------------------------------------------------------------------------
     Total Tier 2 Capital                                                              41,074     11,458
     ----------------------------------------------------------------------------------------------------
     Total risk-based capital                                                      $  156,105   $109,029
     ----------------------------------------------------------------------------------------------------
     Net risk-weighted assets                                                      $1,096,711   $734,839
     Average assets for regulatory purposes                                        $1,273,770   $862,873
     ----------------------------------------------------------------------------------------------------
     Tier 1 capital to average assets                                                    9.03%     11.31%
     Tier 1 capital to risk-weighted assets                                             10.49%     13.28%
     Total capital to risk-weighted assets                                              14.23%     14.84%
     ----------------------------------------------------------------------------------------------------
</TABLE>

On  January  1  2004,  the  Company adopted FIN 46-R, "Consolidation of Variable
Interest  Entities,"  which  requires  bank  holding  companies  that  have used
controlled  business  trusts  to  raise  financing  by  issuing  trust preferred
securities  to  deconsolidate  their  investments in those trusts. For a further
discussion of FIN 46-R and the regulatory implications, see the section entitled
"Recent  Accounting  and  Regulatory Developments" in note 1 to the consolidated
financial  statements.

Intervest  Securities  Corporation  is  subject to the SEC's Uniform Net Capital
Rule  [15c3-1  (a)  (2)  (vi)],  which  requires  the maintenance of minimum net
capital  of  $5,000.  At  December  31,  2004  and  2003,  Intervest  Securities
Corporation's  net  capital  was  $481,000  and  $459,000,  respectively.

ASSET AND LIABILITY MANAGEMENT

Interest  rate  risk  arises  from  differences  in  the repricing of assets and
liabilities  within a given time period. The Company does note engage in trading
or  hedging activities, nor does it invest in interest rate derivatives or enter
into  interest  rate  swaps.  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 its net interest income and
capital.

The  Company  uses  "gap  analysis,"  which  measures  the  difference  between
interest-earning  assets and interest-bearing liabilities that mature or reprice
within  a  given time period, to monitor its interest rate sensitivity. 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 one-year. A gap is 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.

In  a  period  of  rising interest rates, a negative gap would tend to adversely
affect  net  interest  income,  while  a positive gap would tend to increase net
interest  income.  In  a  period of falling interest rates, a negative gap would
tend  to  increase  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


                                       28
<PAGE>
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.

The  Company's  one-year  positive  interest  rate  sensitivity  gap  remained
relatively  unchanged  at $114,022,000, or 8.7% of total assets, at December 31,
2004,  compared  to $118,124,000, or 13.0% at December 31, 2003. For purposes of
computing the gap, all deposits with no stated maturities are treated as readily
accessible  accounts.  However,  if  such deposits were treated differently, the
one-year  gap  would  then  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, the one-year gap would have been
a  positive  22.5%  at  year-end  2004, compared to a positive 29.6% at year-end
2003.

Many  of the Company's floating-rate loans have a "floor," or minimum rate, that
is determined in relation to prevailing market rates on the date of origination.
This floor only adjusts upwards in the event of increases in the loan's interest
rate.  This  feature  reduces  the  effect  on interest income of a falling rate
environment  because  the  interest  rates  on such loans do not reset downward.
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  table  below  summarizes  interest-earning  assets  and  interest-bearing
liabilities  as  of  December  31, 2004, that are scheduled to mature or reprice
within  the  periods  shown.

<TABLE>
<CAPTION>
                                                    0-3       4-12      Over 1-4    Over 4
                                                 ---------  ---------  ----------  ---------
     ($in thousands)                              Months     Months      Years       Years       Total
     ----------------------------------------------------------------------------------------------------
<S>                                              <C>        <C>        <C>         <C>        <C>
     Loans (1)                                   $281,578   $283,239   $ 305,890   $156,036   $1,026,743
     Securities held to maturity (2)               34,343     82,716     130,712      1,117      248,888
     Short-term investments                        12,573          -           -          -       12,573
     FRB and FHLB stock                             2,628          -           -      2,464        5,092
     ----------------------------------------------------------------------------------------------------
     Total rate-sensitive assets                 $331,122   $365,955   $ 436,602   $159,617   $1,293,296
     ----------------------------------------------------------------------------------------------------
     Deposit accounts (3):
       Interest checking deposits                $ 15,051   $      -   $       -   $      -   $   15,051
       Savings deposits                            27,359          -           -          -       27,359
       Money market deposits                      200,549          -           -          -      200,549
       Certificates of deposit                     57,327    212,225     329,506    145,713      744,771
     ----------------------------------------------------------------------------------------------------
     Total deposits                               300,286    212,225     329,506    145,713      987,730
     ----------------------------------------------------------------------------------------------------
     FHLB advances                                 36,000          -           -          -       36,000
     Debentures and mortgage note payable (1)      26,100      3,000      49,794     77,634      156,528
     Accrued interest on all borrowed funds (1)     5,327        117       4,322        388       10,154
     ----------------------------------------------------------------------------------------------------
     Total borrowed funds                          67,427      3,117      54,116     78,022      202,682
     ----------------------------------------------------------------------------------------------------
     Total rate-sensitive liabilities            $367,713   $215,342   $ 383,622   $223,735   $1,190,412
     ----------------------------------------------------------------------------------------------------
     GAP (repricing differences)                 $(36,591)  $150,613   $  52,980   $(64,118)  $  102,884
     ----------------------------------------------------------------------------------------------------
     Cumulative GAP                              $(36,591)  $114,022   $ 167,002   $102,884   $  102,884
     ----------------------------------------------------------------------------------------------------
     Cumulative GAP to total assets                  -2.8%       8.7%       12.7%       7.8%         7.8%
     ----------------------------------------------------------------------------------------------------
<FN>
     Significant  assumptions  used  in  preparing  the  gap  table  above:
     (1) Floating-rate  loans  and  debentures payable are included in the period in which their interest
     rates  are next scheduled to adjust rather than in the period in which they mature. Fixed-rate loans
     and  debentures  payable  are  scheduled,  including  repayments,  according  to  their  contractual
     maturities.  Deferred  loan  fees are  excluded  from  this  analysis;  (2) securities are scheduled
     according  to  the  earlier  of their contractual maturity or the date in which the interest rate is
     scheduled  to  increase. The effects of possible prepayments that may result from the issuer's right
     to  call  a security before its contractual maturity date are not considered; (3) interest checking,
     savings  and  money  market  deposits  are  regarded  as ready accessible withdrawable accounts; and
     certificates of deposit are scheduled through their maturity dates.
</TABLE>


                                       29
<PAGE>
COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2004 AND
2003.

General
-------

Consolidated  net  earnings  for  2004  increased  by  $2,333,000,  or  26%,  to
$11,453,000,  or  $1.71 per diluted share, from $9,120,000, or $1.53 per diluted
share,  reported  in 2003. The $2,333,000 increase in earnings was due to growth
in  net interest and dividend income of $5,966,000 and an increase of $1,819,000
in  noninterest  income.  These  revenue  increases  were  partially offset by a
$2,557,000  increase  in the provision for loan losses, a $1,903,000 increase in
income  tax  expense  and  a  $992,000  increase  in  noninterest  expenses. The
Company's  return  on  average  assets  and  equity  was  1.02%  and  14.14%,
respectively,  in 2004, compared to 1.19% and 15.34% in 2003, and its efficiency
ratio  (which is a measure of its ability to control expenses as a percentage of
its revenues) stood at 25% for 2004.

Selected information regarding results of operations by entity for 2004 follows:

<TABLE>
<CAPTION>
                                             Intervest   Intervest    Intervest                Inter-
                                             National     Mortgage    Securities    Holding    Company
($in thousands)                                Bank        Corp.        Corp.       Company   Amts (2)   Combined
------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>         <C>           <C>        <C>        <C>
Interest and dividend income                $   55,770   $    9,896  $         6   $  1,087   $   (210)  $  66,549
Interest expense                                26,597        7,945            -      4,351       (210)     38,683
                                            ----------------------------------------------------------------------
Net interest and dividend income                29,173        1,951            6     (3,264)         -      27,866
Provision for loan losses                        4,379          140            -          7          -       4,526
Noninterest income                               4,272        4,915          119        389     (4,555)      5,140
Noninterest expenses                             9,935        2,347           84        440     (4,555)      8,251
                                            ----------------------------------------------------------------------
Earnings before taxes                           19,131        4,379           41     (3,322)         -      20,229
Provision for income taxes                       8,266        2,025           19     (1,534)         -       8,776
------------------------------------------------------------------------------------------------------------------
Net earnings                                $   10,865   $    2,354  $        22   $ (1,788)  $      -   $  11,453
------------------------------------------------------------------------------------------------------------------
Intercompany dividends (1)                      (3,429)           -            -      3,429   $      -           -
------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany dividends   $    7,436   $    2,354  $        22   $  1,641              $  11,453
------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany
    dividends for 2003                      $    6,972   $    1,759  $        (6)  $    395   $      -   $   9,120
------------------------------------------------------------------------------------------------------------------

<FN>
(1)  Dividends  to  the  Holding  Company  provide  funds for the debt service on the Capital Securities, which is
     included in the Holding Company's interest expense.
(2)  All significant intercompany balances and transactions are eliminated in consolidation. Such amounts arise
     from intercompany deposit accounts and management and service agreements.
</TABLE>

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

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

Net interest and dividend income increased by $5,966,000 to $27,866,000 in 2004,
from  $21,900,000  in  2003.  The improvement was attributable to a $350,742,000
increase  in  average interest-earning assets resulting from continued growth in
loans  of $282,168,000 and a higher level of security and short-term investments
aggregating $68,574,000. The growth in average assets was funded by $287,439,000
of  new  deposits,  $34,429,000  of  additional borrowed funds and a $21,553,000
increase  in  stockholders'  equity (resulting from earnings and the issuance of
shares  upon the exercise of common stock warrants and conversion of convertible
debentures).

The Company's net interest margin decreased to 2.52% in 2004 from 2.90% in 2003.
The  decrease  was  due  to  the  Company's  yield  on  interest-earning  assets
decreasing  at  a  faster  pace  than  its cost of funds. In a low interest rate
environment,  the  yield on interest-earning assets decreased 67 basis points to
6.02%  in  2004  due  to  lower  rates  on  new  mortgage  loans  originated and
prepayments  of  higher-yielding  loans.  The  cost  of funds decreased 33 basis
points  to  3.84%  in  2004  due to lower rates paid on deposit accounts and the
addition of new debentures with lower rates than existing ones, partially offset
by  rate  increases  on floating-rate debentures. These floating-rate debentures
are indexed to the JPMorgan Chase Bank prime rate, which increased by a total of
125  basis  points  from  year-end  2003.


                                       30
<PAGE>
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 2004 and 2003. 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  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>
<CAPTION>
                                                                     For the Year Ended December 31,
                                                                     -------------------------------
                                                                   2004                           2003
                                                   --------------------------------  ------------------------------
                                                     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 (1)                                        $  867,724   $   61,928    7.14%  $585,556   $   47,223    8.06%
  Securities                                          207,557        4,259    2.05    143,766        2,965    2.06
  Other interest-earning assets                        29,766          362    1.22     24,983          276    1.10
-------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                       1,105,047   $   66,549    6.02%   754,305   $   50,464    6.69%
-------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                             15,505                          13,686
-------------------------------------------------------------------------------------------------------------------
Total assets                                       $1,120,552                        $767,991
-------------------------------------------------------------------------------------------------------------------
       Liabilities and Stockholders' Equity
Interest-bearing liabilities:
  Interest checking deposits                       $   12,052   $      187    1.55%  $ 11,120   $      182    1.64%
  Savings deposits                                     30,803          550    1.79     31,782          601    1.89
  Money market deposits                               191,495        3,583    1.87    146,509        2,763    1.89
  Certificates of deposit                             612,735       22,010    3.59    370,235       14,891    4.02
-------------------------------------------------------------------------------------------------------------------
  Total deposit accounts                              847,085       26,330    3.11    559,646       18,437    3.29
-------------------------------------------------------------------------------------------------------------------
  Federal funds purchased and FHLB advances             1,914           40    2.09          -            -       -
  Debentures and accrued interest payable             109,697        8,801    8.02    105,347        8,316    7.89
  Debentures - capital securities                      47,533        3,495    7.35     19,356        1,793    9.26
  Mortgage note payable                                   249           17    7.00        261           18    7.00
-------------------------------------------------------------------------------------------------------------------
  Total borrowed funds                                159,393       12,353    7.75    124,964       10,127    8.10
-------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                  1,006,478   $   38,683    3.84%   684,610   $   28,564    4.17%
-------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                            6,599                           5,666
Noninterest-bearing liabilities                        26,471                          18,264
Stockholders' equity                                   81,004                          59,451
-------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity         $1,120,552                        $767,991
-------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                         $   27,866    2.18%             $   21,900    2.52%
-------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                 $   98,569                 2.52%  $ 69,695                 2.90%
-------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
  to total interest-bearing liabilities                 1.10x                           1.10x
-------------------------------------------------------------------------------------------------------------------
Other Ratios:
  Return on average assets                               1.02%                           1.19%
  Return on average equity                              14.14%                          15.34%
  Noninterest expense to average assets                  0.74%                           0.95%
  Efficiency ratio (2)                                  25.00%                          28.78%
  Average stockholders' equity to average assets         7.23%                           7.74%
-------------------------------------------------------------------------------------------------------------------

<FN>
(1)  Includes  nonaccrual  loans.
(2) Defined  as  noninterest expenses (excluding the provision for loan losses) as a percentage of net interest and
    dividend income plus noninterest income.
</TABLE>

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).

                                       31
<PAGE>
<TABLE>
<CAPTION>
                                                For the Year Ended December 31, 2004 vs. 2003
                                                ---------------------------------------------
                                                Increase (Decrease) Due To Change In:
                                                -------------------------------------
     ($ in thousands)                                  Rate          Volume     Rate/Volum e     Total
     ------------------------------------------------------------------------------------------------------
<S>                                              <C>            <C>            <C>            <C>
     Interest-earning assets:
       Loans                                     $     (5,387)  $     22,743   $     (2,651)  $     14,705
       Securities                                         (14)         1,314             (6)         1,294
       Other interest-earning assets                       30             53              3             86
     ------------------------------------------------------------------------------------------------------
     Total interest-earning assets                     (5,371)        24,110         (2,654)        16,085
     ------------------------------------------------------------------------------------------------------
     Interest-bearing liabilities:
       Interest checking deposits                         (10)            15              -              5
       Savings deposits                                   (32)           (19)             -            (51)
       Money market deposits                              (29)           850             (1)           820
       Certificates of deposit                         (1,592)         9,749         (1,038)         7,119
     ------------------------------------------------------------------------------------------------------
     Total deposit accounts                            (1,663)        10,595         (1,039)         7,893
     ------------------------------------------------------------------------------------------------------
     Total borrowed funds                                (233)         2,951           (492)         2,226
     ------------------------------------------------------------------------------------------------------
     Total interest-bearing liabilities                (1,896)        13,546         (1,531)        10,119
     ------------------------------------------------------------------------------------------------------
     Net change in interest and dividend income  $     (3,475)  $     10,564   $     (1,123)  $      5,966
     ------------------------------------------------------------------------------------------------------
</TABLE>

Provision for Loan Losses
-------------------------

The provision for loan losses increased to $4,526,000 in 2004 from $1,969,000 in
2003.  The  higher  provision  was  a function of loan growth, which amounted to
$347,887,000  in  2004 versus $183,554,000 in 2003, as well as a decrease in the
credit  grade  of  two  loans  during  the  third  quarter  of  2004.

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

Noninterest  income  increased  by  $1,819,000  to  $5,140,000  in  2004  and is
summarized  as  follows:

<TABLE>
<CAPTION>
                                                               For the Year Ended December 31,
                                                               -------------------------------
     ($ in thousands)                                              2004            2003
     -----------------------------------------------------------------------------------------
<S>                                                            <C>            <C>
     Customer service fees                                     $          252  $          187
     Income from mortgage lending activities (1)                        1,221             824
     Income from the early repayment of mortgage loans (2)              3,546           2,317
     Commissions and fees                                                 119              38
     Gain (loss) from early call of investment securities (3)               2             (51)
     All other noninterest income                                           -               6
     -----------------------------------------------------------------------------------------
                                                               $        5,140  $        3,321
     -----------------------------------------------------------------------------------------

<FN>
(1)     Consists  mostly  of  fees  from  expired  loan  commitments  and  loan
servicing,  maintenance  and  inspections  charges.
(2)     Consists  of  the recognition of any unearned fees at the time of payoff
and  the  receipt  of  prepayment  income  in  certain  cases.
(3)     Consists  of  the  recognition of any unamortized premium or discount at
time  of  call.
</TABLE>

The increase of $1,819,000 was primarily due to higher income of $1,229,000 from
the  prepayment  of  mortgage loans, a $321,000 increase in loan service charges
and $76,000 of additional fee income from loan commitments that expired and were
not  funded.

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

Noninterest  expenses  increased  by  $992,000  to  $8,251,000  in  2004  and is
summarized  as  follows:

<TABLE>
<CAPTION>
                                            For the Year Ended December 31,
                                            -------------------------------
          ($ in thousands)                        2004          2003
     ----------------------------------------------------------------------
<S>                                          <C>            <C>
          Salaries and employee benefits     $       4,046  $       3,655
          Occupancy and equipment, net               1,659          1,270
          Data processing                              428            533
          Professional fees and services               411            364
          Stationery, printing and supplies            180            152
          Postage and delivery                         111            101
          FDIC and general insurance                   264            225
          Director and committee fees                  397            229
          Advertising and promotion                    110             35
          All other expenses                           645            695
     ----------------------------------------------------------------------
                                             $       8,251  $       7,259
     ----------------------------------------------------------------------
</TABLE>


                                       32
<PAGE>
Salaries  and employee benefits expense increased due to the following: $589,000
from  salary increases, a higher cost of employee benefits and additional staff;
$350,000  from bonus payments to certain executives of the Company in connection
with  the  sale  of  capital securities and leasing of new space; and $41,000 of
additional commission expense. The increases were partially offset by a $435,000
decrease  in  compensation from common stock warrants and a $154,000 decrease in
compensation resulting from a higher level of SFAS No. 91 direct fee income (due
to  more  loan  originations). The Company had 64 fulltime employees at December
31,  2004  versus  61  at  December  31,  2003.  See note 14 to the consolidated
financial  statements  in this report for additional information on common stock
warrants.

Occupancy  and  equipment  expense increased due to the leasing of larger office
space.  In  May,  Intervest  Bancshares  Corporation  and  its  wholly  owned
subsidiaries,  Intervest  National  Bank  (New  York office), Intervest Mortgage
Corporation  and Intervest Securities Corporation, completed their move to newly
constructed  offices  on the entire fourth floor at One Rockefeller Plaza in New
York  City.  Intervest  Mortgage Corporation's lease obligation of approximately
$22,000  per  month  on  its  former  space  at  10 Rockefeller Plaza expired in
September  2004.

Professional  fees  and services, stationery, printing and supplies, postage and
delivery,  and  FDIC and general insurance expenses increased largely due to the
Company's  growth.

Data processing expense decreased due to lower fees incurred by the Bank despite
an  increase  in  its assets. The Bank renegotiated its data processing contract
during  late  2003  by  extending  the  expiration date to 2010 and reducing the
processing fee to a fixed amount until its assets reach $1.1 billion. Thereafter
the  fee  becomes  variable and is calculated based on total assets. Previously,
the data processing fee was entirely variable and a function of the Bank's total
assets.

Director  and  committee fees increased due to higher fees paid to directors for
each  board and committee meeting attended. The fees were increased in June 2003
and  October  2004.

Advertising  expense increased due to additional advertising to support loan and
deposit  growth.

All  other  expenses  were  lower  due  to  a decrease of $49,000 in losses from
transactional  accounts  and  a  decrease  in foreclosed real estate expenses of
$64,000,  partial  offset  by  increased  travel,  telephone  and  franchise tax
expense.

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

The  provision  for  income taxes increased by $1,903,000 to $8,776,000 in 2004,
from  $6,873,000  in 2003, due to higher pre-tax income. The Company's effective
tax  rate  (inclusive  of  state  and  local  taxes)  amounted to 43.4% in 2004,
compared  to  43.0%  in  2003.

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2003 AND
2002.

General
-------

Consolidated  net  earnings  for  2003 increased 32% to $9,120,000, or $1.53 per
fully  diluted  share,  from  $6,906,000,  or $1.37 per fully diluted share, for
2002.  The  growth  in earnings was due to a $4,746,000 increase in net interest
and  dividend  income and a $1,103,000 increase in noninterest income, partially
offset  by  a  $2,160,000 increase in the provision for income taxes, a $780,000
increase  in  noninterest expenses, and a $695,000 increase in the provision for
loan  losses.

The  diluted  per  share computation for 2003 included a higher number of common
shares  outstanding  resulting  from  the  exercise  of  common  stock warrants,
conversion  of debentures and a higher stock price. Return on average assets and
equity  was  1.19%  and  15.34%,  respectively,  for 2003, compared to 1.13% and
15.56%  for  2002.


                                       33
<PAGE>
Selected information regarding results of operations by entity for 2003 follows:

<TABLE>
<CAPTION>
                                                                  Intervest    Intervest                Inter-
                                             Intervest National    Mortgage    Securities    Holding    Company
($in thousands)                                     Bank             Corp       Corp (2)     Company   Amts (3)   Combined
---------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                   <C>         <C>           <C>        <C>        <C>
Interest and dividend income                $            40,232   $    9,269  $         3   $  1,125   $   (165)  $  50,464
Interest expense                                         18,620        7,140            -      3,024       (220)     28,564
                                            -------------------------------------------------------------------------------
Net interest and dividend income                         21,612        2,129            3     (1,899)        55      21,900
Provision for loan losses                                 1,846           91            -         32          -       1,969
Noninterest income                                        2,687        2,799           38        346     (2,549)      3,321
Noninterest expenses                                      7,372        1,582           51        748     (2,494)      7,259
                                            -------------------------------------------------------------------------------
Earnings before taxes                                    15,081        3,255          (10)    (2,333)         -      15,993
Provision for income taxes                                6,414        1,496           (4)    (1,033)         -       6,873
---------------------------------------------------------------------------------------------------------------------------
Net earnings                                $             8,667   $    1,759  $        (6)  $ (1,300)  $      -   $   9,120
---------------------------------------------------------------------------------------------------------------------------
Intercompany dividends (1)                               (1,695)           -            -      1,695          -           -
---------------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany dividends   $             6,972   $    1,759  $        (6)  $    395   $      -   $   9,120
---------------------------------------------------------------------------------------------------------------------------
Net earnings after intercompany
   dividends for 2002                       $             4,959   $    1,567  $         -   $    380   $      -   $   6,906
---------------------------------------------------------------------------------------------------------------------------

<FN>
(1)     Dividends  to  the Holding Company provide funds for the debt service on
the  Capital  Securities,  which  is  included in the Holding Company's interest
expense.
(2)     Results  are from date of acquisition, June 2, 2003 through December 31,
2003.
(3)     All significant intercompany balances and transactions are eliminated in
consolidation.  Such  amounts  arise  from  intercompany  deposit  accounts  and
management  and  service  agreements.
</TABLE>

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

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

Net interest and dividend income increased by $4,746,000 to $21,900,000 in 2003,
from  $17,154,000  in  2002.  The  increase  was  attributable  to  growth  of
$158,223,000  in  average  interest-earning  assets  and  a  slightly higher net
interest  margin.  The  growth  in  assets is reflected in new mortgage loans of
$146,315,000  and  new  security  and  short-term  investments  aggregating
$11,908,000.  The  growth  in  assets  was  funded  primarily by $118,602,000 of
interest-bearing  deposits,  $18,832,000  of  additional  borrowed  funds  and a
$15,067,000  increase  in  stockholders' equity (resulting from earnings and the
issuance  of shares upon the exercise of common stock warrants and conversion of
convertible  debentures).

The Company's net interest margin increased to 2.90% in 2003 from 2.88% in 2002.
The  increase was due to the Company's cost of funds decreasing at a faster pace
than  its  yield  on  interest-earning  assets  in  a  declining  interest  rate
environment.  The  yield on interest-earning assets decreased 60 basis points to
6.69%  in  2003  primarily  due to lower rates on new mortgage loans originated,
prepayments  of  higher-yielding  loans  and lower yields earned on security and
other  short-term investments (including the effect of early calls of securities
with  the  resulting  proceeds being invested in lower yielding securities). The
cost  of  funds  decreased 64 basis points to 4.17% in 2003 largely due to lower
rates  paid on deposit accounts and $41,500,000 of floating-rate debentures. The
debentures are indexed to the JPMorgan Chase Bank prime rate, which decreased by
a  total  of  25  basis  points  from  year-end  2002.

The  following  table  provides  information  on average assets, liabilities and
stockholders'  equity;  yields earned on interest-earning assets; and rates paid
on  interest-bearing  liabilities  for 2003 and 2002. 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  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.


                                       34
<PAGE>
<TABLE>
<CAPTION>
                                                                       For the Year Ended December 31,
                                                                       -------------------------------
                                                                   2003                                2002
                                                    ----------------------------------  -----------------------------------
                                                    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 (1)                                        $  585,556   $   47,223       8.06%  $  439,241   $   39,273       8.94%
  Securities                                          143,766        2,965       2.06      142,840        3,964       2.78
  Other interest-earning assets                        24,983          276       1.10       14,001          242       1.73
---------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets                         754,305   $   50,464       6.69%     596,082   $   43,479       7.29%
---------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                             13,686                               14,586
---------------------------------------------------------------------------------------------------------------------------
Total assets                                       $  767,991                           $  610,668
---------------------------------------------------------------------------------------------------------------------------
       Liabilities and Stockholders' Equity
Interest-bearing liabilities:
  Interest checking deposits                       $   11,120   $      182       1.64%  $    9,521   $      221       2.32%
  Savings deposits                                     31,782          601       1.89       29,221          762       2.61
  Money market deposits                               146,509        2,763       1.89      119,582        3,082       2.58
  Certificates of deposit                             370,235       14,891       4.02      282,720       13,304       4.71
---------------------------------------------------------------------------------------------------------------------------
  Total deposit accounts                              559,646       18,437       3.29      441,044       17,369       3.94
---------------------------------------------------------------------------------------------------------------------------
  Federal funds purchased                                   -            -          -          116            2       1.87
  Debentures and accrued interest payable             105,347        8,316       7.89       90,777        7,440       8.20
  Debentures - capital securities                      19,356        1,793       9.26       15,000        1,497       9.98
  Mortgage note payable                                   261           18       7.00          239           17       7.00
---------------------------------------------------------------------------------------------------------------------------
  Total borrowed funds                                124,964       10,127       8.10      106,132        8,956       8.44
---------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                    684,610   $   28,564       4.17%     547,176   $   26,325       4.81%
---------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                            5,666                                5,277
Noninterest-bearing liabilities                        18,264                               13,831
Stockholders' equity                                   59,451                               44,384
---------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity         $  767,991                           $  610,668
---------------------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                         $   21,900       2.52%               $   17,154       2.48%
---------------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                 $   69,695                    2.90%  $   48,906                    2.88%
---------------------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
to total interest-bearing liabilities                   1.10x                                1.09x
---------------------------------------------------------------------------------------------------------------------------
Other Ratios:
  Return on average assets                               1.19%                                1.13%
  Return on average equity                              15.34%                               15.56%
  Noninterest expense to average assets                  0.95%                                1.06%
  Efficiency ratio (2)                                  28.78%                               33.45%
  Average stockholders' equity to average assets         7.74%                                7.27%
---------------------------------------------------------------------------------------------------------------------------

<FN>
(1)  Includes  nonaccrual  loans.
(2) Defined as noninterest expenses (excluding the provision for loan losses) as
a percentage of net interest and dividend income plus noninterest income.
</TABLE>

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).


                                       35
<PAGE>
<TABLE>
<CAPTION>
                                                 For the Year Ended December 31, 2003 vs. 2002
                                                 ---------------------------------------------
                                                 Increase (Decrease) Due To Change In:
                                                 -------------------------------------
     ($ in thousands)                                Rate          Volume      Rate/Volume      Total
     -----------------------------------------------------------------------------------------------------
<S>                                              <C>            <C>           <C>            <C>
     Interest-earning assets:
       Loans                                     $     (3,850)  $     13,082  $     (1,282)  $      7,950
       Securities                                      (1,018)            26            (7)          (999)
       Other interest-earning assets                      (87)           190           (69)            34
     -----------------------------------------------------------------------------------------------------
     Total interest-earning assets                     (4,955)        13,298        (1,358)         6,985
     -----------------------------------------------------------------------------------------------------
     Interest-bearing liabilities:
       Interest checking deposits                         (65)            37           (11)           (39)
       Savings deposits                                  (209)            67           (19)          (161)
       Money market deposits                             (827)           694          (186)          (319)
       Certificates of deposit                         (1,933)         4,118          (598)         1,587
     -----------------------------------------------------------------------------------------------------
     Total deposit accounts                            (3,034)         4,916          (814)         1,068
     -----------------------------------------------------------------------------------------------------
     Total borrowed funds                                (384)         1,629           (73)         1,172
     -----------------------------------------------------------------------------------------------------
     Total interest-bearing liabilities                (3,418)         6,545          (887)         2,240
     -----------------------------------------------------------------------------------------------------
     Net change in interest and dividend income  $     (1,537)  $      6,753  $       (471)  $      4,745
     -----------------------------------------------------------------------------------------------------
</TABLE>

Provision for Loan Losses
-------------------------

The provision for loan losses increased to $1,969,000 in 2003 from $1,274,000 in
2002.  The  higher provision was a function of loan growth ($183,554,000 in 2003
versus  $123,028,000  in  2002).

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

Noninterest  income  increased  by  $1,103,000  to  $3,321,000  in  2003  and is
summarized  as  follows:

<TABLE>
<CAPTION>
                                                              For the Year Ended December 31,
                                                              -------------------------------
     ($ in thousands)                                             2003         2002
     ----------------------------------------------------------------------------------------
<S>                                                            <C>             <C>
     Customer service fees                                     $         187   $          171
     Income from mortgage lending activities (1)                         824              485
     Income from the early repayment of mortgage loans (2)             2,317            1,435
     Gain from the sale of securities available for sale                   -              120
     Commissions and fees                                                 38                -
     (Loss) gain from early call of investment securities (3)            (51)               7
     All other noninterest income                                          6                -
     ----------------------------------------------------------------------------------------
                                                               $       3,321   $        2,218
     ----------------------------------------------------------------------------------------

<FN>
(1)     Consists  mostly  of  fees  from  expired  loan  commitments  and  loan
servicing,  maintenance  and  inspections  charges.
(2)     Consists  of  the recognition of any unearned fees at the time of payoff
and  the  receipt  of  prepayment  income  in  certain  cases.
(3)     Consists  of  the  recognition of any unamortized premium or discount at
time  of  call.
</TABLE>

The  increase  of  $1,103,000  was  due  to  higher  income of $882,000 from the
prepayment  of  mortgage  loans  and  increases  in  fees earned on expired loan
commitments  and  loan  service  charge income aggregating $339,000. These items
were partially offset by a gain of $120,000 from the sale of securities in 2002.

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

Noninterest  expenses  increased  by  $780,000  to  $7,259,000  in  2003  and is
summarized  as  follows:

<TABLE>
<CAPTION>
                                             For the Year Ended December 31,
                                             -------------------------------
          ($ in thousands)                        2003          2002
          ------------------------------------------------------------------
<S>                                          <C>              <C>
          Salaries and employee benefits     $         3,655  $        3,016
          Occupancy and equipment, net                 1,270           1,318
          Data processing                                533             564
          Professional fees and services                 364             350
          Stationery, printing and supplies              152             141
          Postage and delivery                           101              93
          FDIC and general insurance                     225             179
          Director and committee fees                    229              95
          Advertising and promotion                       35              69
          All other expenses                             695             654
          ------------------------------------------------------------------
                                             $         7,259  $        6,479
          ------------------------------------------------------------------
</TABLE>


                                       36
<PAGE>
Salaries  and employee benefits expense increased due to the following: $613,000
from  additional  staff  (61  employees  at  year-end 2003 versus 56 at year-end
2002),  salary  increases  and  a higher cost of employee benefits; and $309,000
from  common  stock  warrants.  These  items were partially offset by a $133,000
increase in SFAS No. 91 direct fee income (due to more loan originations as well
as  a higher amount recognized per loan) and bonus payments totaling $150,000 to
the  Chairman  of the Company in 2002 that did not recur in 2003. See note 14 to
the  consolidated financial statements in this report for additional information
on  common  stock  warrants.

Occupancy  and equipment expense was lower due to an increase in sublease rental
income  ($40,000)  from  the  Bank's  Florida  branches  as well as depreciation
expense  ($50,000)  recorded  in 2002 in connection with the disposal of various
equipment  by  the  Bank  that did not recur in 2003. These items were partially
offset  by  rent expense incurred by Intervest Mortgage Corporation from leasing
additional  space  in  2003.

Data  processing  expense  decreased slightly to lower fees incurred by the Bank
despite  an  increase  in  its assets. The Bank renegotiated its data processing
contract  during late 2003 by extending the expiration date to 2010 and reducing
the  processing  fee  to  a  fixed  amount  until its assets reach $1.1 billion.
Thereafter  the  fee  becomes  variable and is calculated based on total assets.
Previously,  the data processing fee was entirely variable and a function of the
Bank's  total  assets.

Professional  fees  and services, stationery, printing and supplies, and postage
and  delivery  expenses  increased  largely  due  to  the  Company's  growth.

FDIC and general insurance expense increased due to higher FDIC premiums (due to
deposit  growth)  and  general  insurance  premiums  (due  to  rate  increases).

Director  and  committee fees increased due to higher fees paid to directors for
each board and committee meeting attended. The fees were increased in June 2003.

Advertising  and  promotion  expense decreased due to less advertising for loans
and  deposits.

All  other  expenses  were  higher  primarily  due to an increase in operational
losses  of  $23,000  (resulting  from growth in transactional deposit accounts).

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

The  provision  for  income taxes increased by $2,160,000 to $6,873,000 in 2003,
from  $4,713,000  in 2002, due to higher pre-tax income. The Company's effective
tax  rate  (inclusive  of  state  and  local  taxes)  amounted to 43.0% in 2003,
compared  to  40.6%  in  2002.  The  higher  rate  is due to a larger portion of
consolidated  taxable income being generated from New York operations, which has
a  higher  income  tax  rate  than  Florida.

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
in  prices.  Interest  rates do not necessarily move in the same direction or in
the  same  magnitude  as  the  prices  of  goods  and  services.


                                       37
<PAGE>
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,  interest  rate  hedges 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,
2004 and 2003, which reflect changes in market prices and rates, can be found in
note  20  to  the  consolidated  financial  statements.

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 entitled "Asset and Liability Management" in Item 7 of this report.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS

The  following  consolidated  financial  statements  of the Company are included
herein:

-  Report  of  Independent Registered Public Accounting Firm - Hacker, Johnson &
   Smith,  P.A.,  P.C.  (PAGE  40)
-  Report of Independent Registered Public Accounting Firm - Eisner LLP
   (PAGE 41)
-  Consolidated  Balance  Sheets  at  December  31,  2004  and  2003  (PAGE  42)
-  Consolidated  Statements  of  Earnings for the Years Ended December 31, 2004,
   2003  and  2002  (PAGE  43)
-  Consolidated  Statements  of  Comprehensive  Income  for  the  Years  Ended
        December  31,  2004,  2003  and  2002  (PAGE  44)
- Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
        December  31,  2004,  2003  and  2002  (PAGE  45)
-  Consolidated  Statements of Cash Flows for the Years Ended December 31, 2004,
   2003  and  2002  (PAGE  46)
-  Notes  to  the  Consolidated  Financial  Statements  (PAGES  47  TO  69)

SUPPLEMENTARY DATA

Securities Held to Maturity
---------------------------

The  following  table  sets  forth  information  regarding  securities  held  to
maturity:

<TABLE>
<CAPTION>
                                               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>       <C>
At December 31, 2004:
---------------------
U.S. government agencies  $ 84,586      1.81%  $164,302      2.59%  $      -       -  %  $248,888      2.33%
At December 31, 2003:
---------------------
U.S. government agencies  $ 70,026      1.68%  $ 82,797      1.81%  $      -       -  %  $152,823      1.75%
At December 31, 2002:
---------------------
U.S. government agencies  $ 75,566      2.52%  $ 70,128      2.25%  $      -       -  %  $145,694      2.39%
------------------------------------------------------------------------------------------------------------
</TABLE>


                                       38
<PAGE>
SUPPLEMENTARY DATA, CONTINUED

Loans and Allowance for Loan Losses
-----------------------------------

The  following  table  sets  forth  information  regarding  loans  receivable at
December  31:

<TABLE>
<CAPTION>
                                                  2004         2003        2002        2001        2000
                                               -----------  ----------  ----------  ----------  ----------
                                                Carrying     Carrying    Carrying    Carrying    Carrying
($in thousands)                                   value       value       value       value       value
----------------------------------------------------------------------------------------------------------
<S>                                            <C>          <C>         <C>         <C>         <C>

Commercial real estate and multifamily loans   $1,005,125   $ 654,721   $ 489,611   $ 365,736   $ 260,753
Land development and other land loans              19,198      20,526       1,890       2,485       2,531
Residential 1-4 family loans                          984       1,628       1,953       2,404       3,034
Commercial business loans                           1,215       1,662       1,608       1,363       1,781
Consumer loans                                        221         319         240         286         206
                                               -----------------------------------------------------------
Loans receivable                                1,026,743     678,856     495,302     372,274     268,305
Deferred loan fees                                (11,347)     (7,731)     (5,390)     (3,748)     (1,979)
                                               -----------------------------------------------------------
Loans receivable, net of deferred fees          1,015,396     671,125     489,912     368,526     266,326
Allowance for loan losses                         (11,106)     (6,580)     (4,611)     (3,380)     (2,768)
----------------------------------------------------------------------------------------------------------
Loans receivable, net                          $1,004,290   $ 664,545   $ 485,301   $ 365,146   $ 263,558
----------------------------------------------------------------------------------------------------------
Loans included above that were
   on a nonaccrual status at year end          $    4,607   $   8,474   $       -   $   1,243   $       -
----------------------------------------------------------------------------------------------------------
</TABLE>

The  following  table  sets  forth  information regarding the allowance for loan
losses  at  December  31:

<TABLE>
<CAPTION>
($in thousands)                                 2004        2003       2002       2001       2000
----------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>        <C>        <C>        <C>

Allowance at beginning of year               $    6,580   $  4,611   $  3,380   $  2,768   $  2,493
Provision charged to operations                   4,526      1,969      1,274        612        275
Chargeoffs                                            -          -       (150)         -          -
Recoveries                                            -          -        107          -          -
----------------------------------------------------------------------------------------------------
Allowance at end of year                     $   11,106   $  6,580   $  4,611   $  3,380   $  2,768
----------------------------------------------------------------------------------------------------
Total loans, net of deferred fees            $1,015,396   $671,125   $489,912   $368,526   $266,326
Average loans outstanding during the year    $  867,724   $585,556   $439,241   $315,148   $250,941
Ratio of allowance to net loans receivable         1.09%      0.98%      0.94%      0.92%      1.04%
----------------------------------------------------------------------------------------------------
</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 consolidated
financial  statements  filed,  including  the  notes  thereto.


                                       39
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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, 2004
and  2003  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, 2004. 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  were  furnished  the  reports  of  the  other auditor on their audits of the
consolidated financial statements of Intervest Mortgage Corporation, whose total
assets  as  of  December  31,  2004  and 2003, constituted 8.6% and 11.1% of the
related  consolidated  totals,  respectively,  and  whose  net  interest income,
noninterest  income  and  net  earnings,  constituted  7.0%,  14.3%  and  20.6%,
respectively  in  2004,  9.7%,  14.8% and 19.3%, respectively in 2003 and 12.4%,
21.9%  and  22.7%, respectively in 2002, of the related consolidated totals. Our
opinion,  insofar  as  it  relates  to  the amounts included in the consolidated
totals,  are  based  solely  on  the  reports  of  the  other  auditors.

We  conducted  our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 another independent
registered  public  accounting  firm,  the  consolidated  financial  statements
referred  to  above  present  fairly,  in  all  material respects, the financial
position  of  the  Company at December 31, 2004 and 2003, and the results of its
operations  and  its  cash  flows for each of the years in the three-year period
ended  December  31,  2004 in conformity with U.S. generally accepted accounting
principles.

As discussed in Note 1 to the accompanying consolidated financial statements, in
2004,  the  Company  adopted Financial Accounting Standards Board Interpretation
No.  46  "Consolidation  of  Variable  Interest Entities" as revised in December
2003.  In accordance with this Interpretation, Intervest Statutory Trusts I, II,
III  and IV are not consolidated in the financial statements of the Company. The
Company  has  also  elected to adopt this Interpretation on a retroactive basis.


/s/  Hacker,  Johnson  &  Smith,  P.A.,  P.C.
---------------------------------------------
Hacker,  Johnson  &  Smith,  P.A.,  P.C.
Tampa,  Florida
March  11,  2005


                                       40
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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

We  have  audited  the  consolidated  balance  sheets  of  Intervest  Mortgage
Corporation  and  subsidiaries  as of December 31, 2004 and 2003 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, 2004
(all  of  which are 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 the standards of the Public Company
Accounting Oversight Board (United States). 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 financial statements referred to above fairly present, in
all material respects, the consolidated financial position of Intervest Mortgage
Corporation  and  subsidiaries  as  of  December  31,  2004  and  2003,  and the
consolidated  results  of  their operations and their cash flows for each of the
years  in  the three-year period ended December 31, 2004 in conformity with U.S.
generally  accepted  accounting  principles.

/s/  Eisner  LLP
----------------
Eisner  LLP
New  York,  New  York
February  10,  2005


                                       41
<PAGE>
<TABLE>
<CAPTION>
                               INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                                          CONSOLIDATED BALANCE SHEETS

                                                                                            AT DECEMBER 31,
                                                                                         ---------------------
($in thousands, except par value)                                                           2004       2003
<S>                                                                                      <C>         <C>
--------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks                                                                  $   12,026  $   8,833
Federal funds sold                                                                            9,948     36,816
Commercial paper and other short-term investments                                             2,625     18,479
                                                                                         ---------------------
  Total cash and cash equivalents                                                            24,599     64,128
Securities held to maturity, net                                                            248,888    152,823
Federal Reserve Bank and Federal Home Loan Bank stock, at cost                                5,092      3,075
Loans receivable (net of allowance for loan losses of $11,106 and $6,580, respectively)   1,004,290    664,545
Accrued interest receivable                                                                   6,699      4,995
Loan fees receivable                                                                          8,208      5,622
Premises and equipment, net                                                                   6,636      5,752
Deferred income tax asset                                                                     5,095      2,960
Deferred debenture offering costs, net                                                        4,929      4,023
Other assets                                                                                  2,315      3,600
--------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                                             $1,316,751  $ 911,523
--------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits:
  Noninterest-bearing demand deposit accounts                                            $    6,142  $   6,210
  Interest-bearing deposit accounts:
   Checking (NOW) accounts                                                                   15,051      9,146
    Savings accounts                                                                         27,359     30,784
    Money market accounts                                                                   200,549    162,214
    Certificate of deposit accounts                                                         744,771    467,159
                                                                                         ---------------------
Total deposit accounts                                                                      993,872    675,513
Borrowed funds:
    Federal Home Loan Bank advances                                                          36,000          -
    Subordinated debentures                                                                  94,430     94,690
    Subordinated debentures - capital securities                                             61,856     30,928
    Accrued interest payable on all borrowed funds                                           10,154     14,510
    Mortgage note payable                                                                       242        255
                                                                                         ---------------------
Total borrowed funds                                                                        202,682    140,383
Accrued interest payable on deposits                                                          1,718      1,080
Mortgage escrow funds payable                                                                14,533     10,540
Official checks outstanding                                                                  12,061      6,122
Other liabilities                                                                             1,791      2,500
--------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                                         1,226,657    836,138
--------------------------------------------------------------------------------------------------------------

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,
    5,886,433 and 5,603,377shares issued and outstanding, respectively)                       5,886      5,603
Class B common stock  ($1.00 par value, 700,000 shares authorized,
    and 385,000 shares issued and outstanding)                                                  385        385
Additional paid-in-capital, common                                                           38,961     35,988
Retained earnings                                                                            44,862     33,409
--------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                                                   90,094     75,385
--------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                               $1,316,751  $ 911,523
--------------------------------------------------------------------------------------------------------------

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


                                       42
<PAGE>
<TABLE>
<CAPTION>
                         INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF EARNINGS

                                                                       YEAR ENDED DECEMBER 31,
                                                                   -------------------------------
($in thousands, except per share data)                               2004       2003       2002
--------------------------------------------------------------------------------------------------
<S>                                                                <C>        <C>        <C>

INTEREST AND DIVIDEND INCOME
Loans receivable                                                   $  61,928  $ 47,223   $  39,273
Securities                                                             4,259     2,965       3,964
Other interest-earning assets                                            362       276         242
--------------------------------------------------------------------------------------------------
TOTAL INTEREST AND DIVIDEND INCOME                                    66,549    50,464      43,479
--------------------------------------------------------------------------------------------------
INTEREST EXPENSE

Deposits                                                              26,330    18,437      17,369
Subordinated debentures                                                8,801     8,316       7,440
Subordinated debentures - capital securities                           3,495     1,793       1,497
Other borrowed funds                                                      57        18          19
--------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE                                                38,683    28,564      26,325
--------------------------------------------------------------------------------------------------
NET INTEREST AND DIVIDEND INCOME                                      27,866    21,900      17,154
Provision for loan losses                                              4,526     1,969       1,274
--------------------------------------------------------------------------------------------------
NET INTEREST AND DIVIDEND INCOME AFTER PROVISION FOR LOAN LOSSES      23,340    19,931      15,880
--------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Customer service fees                                                    252       187         171
Income from mortgage lending activities                                1,221       824         485
Income from the early repayment of mortgage loans                      3,546     2,317       1,435
Commissions and fees                                                     119        38           -
Gain from the sales of securities available for sale                       -         -         120
Gain (loss) from early call of investment securities                       2       (51)          7
All other                                                                  -         6           -
--------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME                                               5,140     3,321       2,218
--------------------------------------------------------------------------------------------------
NONINTEREST EXPENSES
Salaries and employee benefits                                         4,046     3,655       3,016
Occupancy and equipment, net                                           1,659     1,270       1,318
Data processing                                                          428       533         564
Professional fees and services                                           411       364         350
Stationery, printing and supplies                                        180       152         141
Postage and delivery                                                     111       101          93
FDIC and general insurance                                               264       225         179
Director and committee fees                                              397       229          95
Advertising and promotion                                                110        35          69
All other                                                                645       695         654
--------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSES                                             8,251     7,259       6,479
--------------------------------------------------------------------------------------------------
Earnings before income taxes                                          20,229    15,993      11,619
Provision for income taxes                                             8,776     6,873       4,713
--------------------------------------------------------------------------------------------------
NET EARNINGS                                                       $  11,453  $  9,120   $   6,906
--------------------------------------------------------------------------------------------------

BASIC EARNINGS PER SHARE                                           $    1.89  $   1.85   $    1.71
DILUTED EARNINGS PER SHARE                                         $    1.71  $   1.53   $    1.37
DIVIDENDS PER SHARE                                                $       -  $      -   $       -
--------------------------------------------------------------------------------------------------

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


                                       43
<PAGE>
<TABLE>
<CAPTION>
                         INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


                                                                      YEAR ENDED DECEMBER 31,
                                                                   -------------------------------
($in thousands)                                                      2004      2003       2002
--------------------------------------------------------------------------------------------------
<S>                                                                <C>       <C>       <C>
--------------------------------------------------------------------------------------------------
NET EARNINGS                                                       $ 11,453  $  9,120  $    6,906
--------------------------------------------------------------------------------------------------
  Net unrealized holding losses on available-for-sale securities          -         -         (72)
  Reclassification adjustment for gains realized in earnings              -         -        (120)
                                                                   -------------------------------
  Net unrealized losses on available-for-sale securities                  -         -        (192)
  Credit for income taxes related to unrealized losses
    on available-for-sale securities                                      -         -          81
                                                                   -------------------------------
Other comprehensive loss, net of tax                                      -         -        (111)
--------------------------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME, NET OF TAX                             $ 11,453  $  9,120  $    6,795
--------------------------------------------------------------------------------------------------

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


                                       44
<PAGE>
<TABLE>
<CAPTION>
                               INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


                                                                                   YEAR ENDED DECEMBER 31,
                                                                               -------------------------------
($in thousands)                                                                  2004      2003        2002
--------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>       <C>        <C>

CLASS A COMMON STOCK
Balance at beginning of year                                                   $  5,603  $   4,348  $   3,545
Issuance of 42,510, 945,717 and 803,458 shares upon the exercise of warrants         43        946        803
Issuance of 240,546 and 309,573 shares upon the conversion of debentures            240        309          -
--------------------------------------------------------------------------------------------------------------
Balance at end of year                                                            5,886      5,603      4,348
--------------------------------------------------------------------------------------------------------------

CLASS B COMMON STOCK
Balance at beginning of year                                                        385        355        355
Issuance of 30,000 shares to acquire Intervest Securities Corporation                 -         30          -
--------------------------------------------------------------------------------------------------------------
Balance at end of year                                                              385        385        355
--------------------------------------------------------------------------------------------------------------

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of year                                                     35,988     24,134     19,001
Compensation related to vesting of certain Class B stock warrants                     9         26         26
Compensation related to the modification of certain Class A stock warrants            -        418        109
Issuance of 30,000 shares of Class B stock to acquire
  Intervest Securities Corporation                                                    -        185          -
Issuance of 42,510, 945,717 and 803,458 shares of Class A stock upon the
  exercise of Class A stock warrants, inclusive of tax benefits                     383      8,520      4,998
Issuance of 240,546 and 309,573 shares of Class A stock
  upon the conversion of debentures                                               2,581      2,705          -
--------------------------------------------------------------------------------------------------------------
Balance at end of year                                                           38,961     35,988     24,134
--------------------------------------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of year                                                     33,409     24,289     17,383
Net earnings for the year                                                        11,453      9,120      6,906
--------------------------------------------------------------------------------------------------------------
Balance at end of year                                                           44,862     33,409     24,289
--------------------------------------------------------------------------------------------------------------

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

==============================================================================================================
TOTAL STOCKHOLDERS' EQUITY AT END OF YEAR                                      $ 90,094  $  75,385  $  53,126
==============================================================================================================

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


                                       45
<PAGE>
<TABLE>
<CAPTION>
                                    INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                             YEAR ENDED DECEMBER 31,
                                                                                      ----------------------------------
($in thousands)                                                                          2004        2003        2002
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>         <C>         <C>

OPERATING ACTIVITIES
Net earnings                                                                          $  11,453   $   9,120   $   6,906
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization                                                               593         568         606
Provision for loan losses                                                                 4,526       1,969       1,274
Deferred income tax benefit                                                              (2,135)       (963)       (681)
Amortization of deferred debenture offering costs                                         1,249       1,084         919
Compensation expense related to common stock warrants                                         9         444         135
Amortization of premiums (accretion) of discounts and deferred loan fees, net            (3,539)     (1,610)       (588)
Gain from sales of securities available for sale                                              -           -        (120)
Net loss from sale of foreclosed real estate                                                  -          51           -
Net (decrease) increase in accrued interest payable on debentures                        (3,254)      1,648       2,392
Net increase in official checks outstanding                                               5,939       1,749       1,154
Net increase in loan fees receivable                                                      2,586       1,916       1,027
Net change in all other assets and liabilities                                            2,051       2,951       1,775
------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                19,478      18,927      14,799
------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net decrease (increase) in interest-earning time deposits with banks                          -       2,000      (1,750)
Maturities and calls of securities available for sale                                         -           -       2,500
Sales of securities available for sale                                                        -           -       3,620
Maturities and calls of securities held to maturity                                      88,880     117,755     104,785
Purchases of securities held to maturity                                               (187,089)   (127,221)   (153,335)
Net increase in loans receivable                                                       (347,887)   (182,674)   (124,271)
Sale of foreclosed real estate                                                                -         150           -
Cash acquired through acquisition of Intervest Securities Corporation                         -         218           -
Purchases of Federal Reserve Bank and Federal Home Loan Bank stock                       (2,017)     (1,967)       (454)
Purchases of premises and equipment, net                                                 (1,477)       (222)       (387)
Investment in unconsolidated subsidiaries                                                  (928)       (464)          -
------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                                                  (450,518)   (192,425)   (169,292)
------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in deposits                                                                318,359     169,555     143,521
Net increase in mortgage escrow funds payable                                             3,993       4,646       1,641
Net increase in FHLB advances                                                            36,000           -           -
Principal repayments of debentures and mortgage note payable                            (20,013)     (3,661)     (2,509)
Gross proceeds from issuance of debentures                                               52,428      31,000      13,500
Debentures issuance costs                                                                (2,217)     (1,694)     (1,021)
Proceeds from issuance of common stock                                                    2,961       6,931       5,801
------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                               391,511     206,777     160,933
------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents                                    (39,529)     33,279       6,440
Cash and cash equivalents at beginning of year                                           64,128      30,849      24,409
========================================================================================================================
CASH AND CASH EQUIVALENTS AT END OF YEAR                                              $  24,599   $  64,128   $  30,849
========================================================================================================================
SUPPLEMENTAL DISCLOSURES
  Cash paid during the year for interest                                              $  40,050   $  25,647   $  22,936
  Cash paid during the year for income taxes                                             11,637       7,557       5,301
  Transfer of loan to foreclosed real estate, net of chargeoff                                -           -       1,081
  Loan to finance sale of foreclosed real estate                                              -         880           -
  Purchase of premises with mortgage note payable                                             -           -         275
  Conversion of debentures and accrued interest into Class A common stock                 2,821       3,015           -
  Issue Class B common stock to purchase Intervest Securities Corporation                     -         215           -
  Accumulated other comprehensive income - change in unrealized
    loss on securities available for sale, net of tax                                         -           -        (111)
------------------------------------------------------------------------------------------------------------------------

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


                                       46
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

1.   DESCRIPTION  OF  BUSINESS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING
     POLICIES

     DESCRIPTION OF BUSINESS

     Intervest  Bancshares  Corporation  is  a  registered  financial  holding
     company  referred  to  by itself as the "Holding Company." Its subsidiaries
     are:  Intervest National Bank (the "Bank"); Intervest Mortgage Corporation;
     and  Intervest  Securities  Corporation.  The  entities  are  referred  to
     collectively  as  the  "Company"  on  a  consolidated  basis.  The  Holding
     Company's  primary  business  is the operation of its subsidiaries. It does
     not  engage  in  any  other  substantial  business  activities other than a
     limited  amount  of  real  estate  mortgage lending. From time to time, the
     Holding  Company  also  issues  debt  securities to raise funds for working
     capital  purposes.  The  Company's  primary business segment is banking and
     real estate lending.

     Intervest  Statutory  Trust  I,  II,  III  and  IV  are  wholly  owned
     subsidiaries  of  the  Holding  Company that are unconsolidated entities as
     required by FASB Interpretation No. 46, "Consolidation of Variable Interest
     Entities,"  as  revised  in  December  2003. FIN 46-R requires bank holding
     companies  that  have used controlled business trusts to raise financing by
     issuing  trust  preferred  securities to deconsolidate their investments in
     those  trusts.  On  January  1,  2004,  the  Company  adopted  FIN 46-R and
     deconsolidated  Intervest Statutory Trust I and II, which were formed prior
     to  FIN 46-R. The deconsolidation increased both the Company's total assets
     and  borrowed  funds  previously reported at December 31, 2003 by $928,000,
     but  had  no  effect  on  net  income,  stockholders' equity and regulatory
     capital.

     The  offices  of  the  Holding  Company,  Intervest  Mortgage  Corporation,
     Intervest  Securities  Corporation  and  the  Bank's  headquarters  and
     full-service  banking  office are located on the entire fourth floor of One
     Rockefeller Plaza in New York City, New York, 10020-2002.

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

     Intervest  Mortgage  Corporation  is  a  mortgage  investment  company
     engaged in the real estate business, including the origination and purchase
     of  real  estate  mortgage  loans,  consisting of first mortgage and junior
     mortgage  loans.  Intervest  Mortgage  Corporation  also  provides  loan
     origination  services  to  the Bank. Intervest Mortgage Corporation has two
     wholly owned subsidiaries, Intervest Distribution Corporation and Intervest
     Realty  Servicing  Corporation  that  provide  administrative  services  to
     Intervest  Mortgage  Corporation.  Intervest  Mortgage  Corporation  issues
     debentures  to provide funding for its lending business. Intervest Mortgage
     Corporation's  mortgage  loans  are comprised of multifamily and commercial
     real estate loans.

     Intervest  Securities  Corporation  is  a  broker/dealer  and  a  NASD  and
     SIPC  member firm whose business activities to date have been insignificant
     and  its  only  revenues have been derived from participating as a selected
     dealer  from  time  to time in offerings of debt securities of the Company,
     primarily  those  of  Intervest  Mortgage Corporation. Intervest Securities
     Corporation  was  acquired by the Holding Company in June 2003 as discussed
     in note 22 herein.

     Intervest  Statutory  Trust  I,  II,  III  and  IV  were formed in December
     2001, September 2003, March 2004 and September 2004, respectively. Each was
     formed for the sole purpose of issuing and administering capital securities
     as  discussed  in  note  9  herein.  The Trusts do not conduct any trade or
     business.


                                       47
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

1.   DESCRIPTION  OF  BUSINESS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING
     POLICIES, CONTINUED

     PRINCIPLES  OF  CONSOLIDATION,  BASIS  OF PRESENTATION AND USE OF ESTIMATES

     The  consolidated  financial  statements  include  the  accounts  of  the
     Holding  Company  and  its  subsidiaries  -  the  Bank,  Intervest Mortgage
     Corporation  and  Intervest  Securities  Corporation.  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  U.S. generally accepted accounting
     principles 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  consolidated  financial  statements,  and  revenues and
     expenses  during  the  reporting  periods. Actual results could differ from
     those estimates. Estimates that are particularly susceptible to significant
     change  relate  to  the  determination of the allowance for loan losses and
     real  estate  acquired through foreclosure and the estimated fair values of
     the Company's financial instruments.

     CASH  EQUIVALENTS

     For  purposes  of  the  consolidated  statements  of  cash  flows,  cash
     equivalents include federal funds sold (generally sold for one-day periods)
     and  commercial paper and other short-term investments that have maturities
     of three months or less from the time of purchase.

     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. The Company does not acquire securities for the purpose of engaging
     in trading activities.

     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 losses,
     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 unless the loan is well secured and in the
     process of collection. 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.


                                       48
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

1.   DESCRIPTION  OF  BUSINESS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING
     POLICIES, CONTINUED

     ALLOWANCE  FOR  LOAN  LOSSES

     The  allowance  for  loan  losses  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 losses
     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 losses and a
     charge  through  the provision for loan losses. The Company 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.

     Lastly,  the  Company's  regulators,  as  an  integral  part  of  their
     examination  process,  periodically  review  the allowance for loan losses.
     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 $4,360,000 at December
     31, 2004 and $4,794,000 at December 31, 2003.

     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  losses.  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 statements of earnings.


                                       49
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

1.   DESCRIPTION  OF  BUSINESS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING
     POLICIES, CONTINUED

     STOCK-BASED  COMPENSATION

     The  Company  follows  APB  No.25,  "Accounting  for  Stock  Issued  to
     Employees"  and  related  interpretations  in  accounting  for compensation
     related  to  its stock warrants. Under APB No. 25, if the exercise price of
     the  Company's  stock  warrants issued to employees or directors equals the
     market  price  of  the  underlying  stock  on  the  date  of  the  grant or
     modification,  no  compensation  expense  is  recognized.  SFAS  No.123,
     "Accounting  for  Stock-Based  Compensation,"  as  amended  by  SFAS No.148
     "Accounting  for  Stock-Based  Compensation  Transition  and  Disclosure,"
     collectively  "SFAS No.123," 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.  Had  compensation  expense been
     determined  based  on  estimated fair value, the Company's net earnings and
     earnings per share would have not have been materially different than those
     reported.

     ADVERTISING  COSTS

     Advertising  costs  are  expensed  as  incurred.

     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.

     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

     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
     stockholders'  equity section of the consolidated 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 financial statements when they
     are funded or related fees are incurred or received.


                                       50
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

1.   DESCRIPTION  OF  BUSINESS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING
     POLICIES, CONTINUED

     RECENT  ACCOUNTING  AND  REGULATORY  DEVELOPMENTS

     ACCOUNTING  FOR  LOAN  COMMITMENTS.  In  March  2004,  the SEC issued Staff
     Accounting  Bulletin No. 105, "Application of Accounting Principles to Loan
     Commitments"  (SAB 105). SAB 105 provides recognition guidance for entities
     that  issue  loan  commitments  that  are  required  to be accounted for as
     derivative instruments. Currently, loan commitments that the Company enters
     into  would  not  be required to be accounted for as derivative instruments
     under  SAB  105.

     IMPAIRMENT.  Emerging  Issues  Task  Force  Issue  No.  3-1 "The Meaning of
     Other-Than-Temporary Impairment and Its Application to Certain Investments"
     ("EITF  3-1")  was  issued  and  became effective March 31, 2004. This EITF
     provides  guidance  for  determining the meaning of "other-than-temporarily
     impaired"  and its application to certain debt and equity securities within
     the  scope  of SFAS No. 115 "Accounting for Certain Investments in Debt and
     Equity  Securities,"  and  investments accounted for under the cost method.
     The  guidance requires that investments which have declined in value due to
     credit concerns or solely due to changes in interest rates must be recorded
     as  other-than-temporarily  impaired  unless  the  Company  can  assert and
     demonstrate  its  intention  to  hold  the  security  for  a period of time
     sufficient  to  allow for a recovery of fair value up to or beyond the cost
     of  the  investment  which  might  mean  maturity. This issue also requires
     disclosures  assessing  the  ability  and  intent  to  hold  investments in
     instances  in  which  an investor determines that an investment with a fair
     value  less  than cost is not other-than-temporarily impaired. On September
     30,  2004,  the  Financial  Accounting Standards Board decided to delay the
     effective  date  for  the measurement and recognition guidance contained in
     Issue  03-1.  This  delay  does  not  suspend  the requirement to recognize
     other-than-temporary  impairments  as  required  by  existing authoritative
     literature. The disclosure guidance in Issue 3-1 was not delayed.

     CONSOLIDATION  OF  VARIABLE  INTEREST  ENTITIES.  On  January  1  2004, the
     Company  adopted  FASB  Interpretation  No.  46, "Consolidation of Variable
     Interest  Entities,"  as  revised  in  December 2003 ("FIN 46-R"). FIN 46-R
     changes  the  method  of  determining  whether  certain  entities should be
     included in the Company's financial statements. An entity is subject to FIN
     46-R  and is called a variable interest entity ("VIE") if it has (1) equity
     that is insufficient to permit the entity to finance its activities without
     additional subordinated financial support from other parties, or (2) equity
     investors  that  cannot  make  significant  decisions  about  the  entity's
     operations,  or  that  do  not  absorb  the  expected losses or receive the
     expected  returns  of  the  entity.  A  VIE  is consolidated by its primary
     beneficiary,  which  is the party involved with the VIE that has a majority
     of  the  expected  losses or a majority of the expected residual returns or
     both.  FIN  46-R  requires bank holding companies that have used controlled
     business trusts to raise financing by issuing trust preferred securities to
     deconsolidate their investments in those trusts.

     The  adoption  of  FIN  46-R  resulted  in the deconsolidation of Intervest
     Statutory  Trust  I and II (both formed prior to FIN 46-R), which increased
     both  the  Company's total assets and borrowed funds previously reported at
     December  31,  2003  by  $928,000,  but  had  no  effect on its net income,
     stockholders' equity and regulatory capital.

     In  response  to  FIN  46-R,  the Federal Reserve on March 1, 2005 issued a
     final  rule  that  would  retain  trust  preferred securities in the Tier 1
     capital  of  bank  holding  companies (BHC), but with stricter quantitative
     limits  and  clearer  qualitative  standards.  The  new  rule  provides  a
     transition  period  for  BHCs  to meet the new, stricter limitations within
     regulatory  capital  by  allowing  the  limits  on  restricted core capital
     elements to become fully effective as of March 31, 2009.


                                       51
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

1.   DESCRIPTION  OF  BUSINESS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING
     POLICIES, CONTINUED

     RECENT ACCOUNTING AND REGULATORY DEVELOPMENTS, CONTINUED

     Until  March  31,  2009,  BHCs  generally must comply with the current Tier
     1  capital  limits.  That  is, BHCs generally should calculate their Tier 1
     capital  on  a  basis  that  limits  the  aggregate  amount  of  qualifying
     cumulative  perpetual  preferred  stock  and  qualifying  trust  preferred
     securities  to  25  percent  of  the sum of qualifying common stockholder's
     equity,  qualifying  noncumulative and cumulative perpetual preferred stock
     (including  related  surplus),  qualifying  minority interest in the equity
     accounts  of  consolidated  subsidiaries,  and  qualifying  trust preferred
     securities.  Amounts of qualifying cumulative perpetual preferred stock and
     qualifying  trust  preferred  securities  in  excess  of  this limit may be
     included in Tier 2 capital.

     Beginning  March  31,  2009,  qualifying  cumulative  perpetual  preferred
     stock  and trust preferred securities, as well as certain types of minority
     interest, are limited to 25 percent of the sum of core capital elements net
     of goodwill. The Holding Company currently does not have any goodwill.

     Beginning  March  31,  2009,  the  excess  amounts  of  restricted  core
     capital  elements  in  the  form  of  qualifying trust preferred securities
     included in Tier 2 capital are limited to 50 percent of Tier 1 capital (net
     of  goodwill).  Amounts  in  excess  of this limit will still be taken into
     account  in  the  overall  assessment  of  an  organization's  funding  and
     financial  condition.  The  final  rule also provides that in the last five
     years before the underlying subordinated note matures, the associated trust
     preferred securities must be treated as limited-life preferred stock. Thus,
     in  the  last five years of the life of the note, the outstanding amount of
     trust  preferred  securities  will  be  excluded  from  Tier  1 capital and
     included  in  Tier  2 capital, subject, together with subordinated debt and
     other  limited-life  preferred  stock,  to  a limit of 50 percent of Tier 1
     capital.  During  this  period,  the  trust  preferred  securities  will be
     amortized  out  of Tier 2 capital by one-fifth of the original amount (less
     redemptions)  each year and excluded totally from Tier 2 capital during the
     last year of life of the underlying note.

     As  of  December  31,  2004,  assuming  the  Company no longer included its
     trust  preferred  securities  in  Tier  1  Capital, the Company would still
     exceed  the  well  capitalized threshold under the regulatory framework for
     prompt corrective action.

     SHARE-BASED  COMPENSATION.  In  December  2004,  the  FASB  issued SFAS No.
     123  (revised  2004), "Share-Based Payment," SFAS No. 123-R. SFAS No. 123-R
     requires companies to recognize in the income statement the grant-date fair
     value  of  stock  options  and  other  equity-based  compensation issued to
     employees,  but expresses no preference for a type of valuation model. SFAS
     No. 123-R eliminates the intrinsic value-based method prescribed by APB No.
     25,  "Accounting  for  Stock  Issued  to  Employees",  and  related
     interpretations,  that  the Company currently uses. The Company is required
     to  adopt  the  new  statement  in  the  third  quarter of 2005 and the new
     statement  will  impact  its financial statements if and when any new stock
     warrants and/or options are issued in the future.

     CERTAIN  LOANS  AND  DEBT  SECURITIES  ACQUIRED  IN A TRANSFER. In December
     2003,  the  American  Institute  of  Certified  Public  Accountants  issued
     Statement  of  Position  03-3,  "Accounting  for  Certain  Loans  and  Debt
     Securities  Acquired  in  a  Transfer"  (SOP  03-3).  SOP  03-3  addresses
     accounting  for  differences  between contractual cash flows expected to be
     collected  and an investor's initial investment in loans or debt securities
     acquired  in  a transfer if those differences are attributable, at least in
     part,  to  credit  quality.  SOP  03-3  also  prohibits  "carrying over" or
     creation  of  valuation  allowances  in the initial accounting of all loans
     acquired  in  a  transfer  that  are  within  the  scope  of  SOP 03-3. The
     prohibition of the valuation allowance carryover applies to the purchase of
     an  individual  loan, a pool of loans, a group of loans, and loans acquired
     in  a  purchase  business  combination.  SOP  03-3  is  effective for loans
     acquired  in  fiscal  years  beginning after December 15, 2004. The Company
     does  not  anticipate  that  the  adoption of SOP 03-3 will have a material
     impact on its financial condition or result of operations.


                                       52
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

1.   DESCRIPTION  OF  BUSINESS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING
     POLICIES, CONTINUED

     RECENT ACCOUNTING AND REGULATORY DEVELOPMENTS, CONTINUED

     NONMONETARY  ASSETS.  In  December  2004,  the  FASB  issued  SFAS No. 153,
     "Exchanges  of Nonmonetary Assets-an Amendment to APB opinion No. 29." This
     Statement addresses the measurement of exchanges of nonmonetary assets. The
     statement  is  effective  for fiscal periods beginning after June 15, 2005.
     Management  believes  this Statement will not have a material effect on the
     Company's financial statements.

2.   SECURITIES

     The  carrying  value  (amortized  cost)  and  estimated  fair  value  of
     securities held to maturity are as follows:

<TABLE>
<CAPTION>
                                      Gross        Gross     Estimated              Wtd-Avg
                                   -----------  -----------  ----------            ---------
                       Amortized   Unrealized   Unrealized      Fair     Wtd-Avg   Remaining
                       ----------  -----------  -----------  ----------  --------
($in thousands)           Cost        Gains       Losses       Value      Yield    Maturity
--------------------------------------------------------------------------------------------
<S>                    <C>         <C>          <C>          <C>         <C>       <C>
At December 31, 2004   $  248,888  $        12  $     1,689  $  247,211     2.33%  1.4 Years
At December 31, 2003   $  152,823  $       278  $       106  $  152,995     1.75%  1.1 Years
--------------------------------------------------------------------------------------------
</TABLE>

     All  the  securities  at  December  31, 2004 and 2003 were debt obligations
     of  either  the  FHLB, FNMA, FHLMC, SLMA or FFCB. The securities have fixed
     rates  or  have  predetermined scheduled rate increases, and some have call
     features  that  allow  the  issuer  to  call the security before its stated
     maturity without penalty.

     At  December  31,  2004,  the  portfolio  consisted  of  177  securities of
     which  173  had  an  unrealized  loss.  Substantially all of the unrealized
     losses  were  for  a  continuous  period of less than 12 months. Management
     believes  that  the  cause  of the unrealized losses is directly related to
     changes  in  interest  rates.  In general, as interest rates rise, the fair
     value of fixed rate securities will decrease; as interest rates fall, their
     fair value will increase.

     The  Company  views  the  unrealized  losses  noted  above  to be temporary
     based  on  the  impact  of  interest  rates,  the  very  short  life of the
     investments and their high credit quality. In addition, the Company has the
     ability  and intent to hold its investments for a period of time sufficient
     for  the  fair  value  of  the  securities to recover. Management evaluates
     securities  for  other-than-temporary  impairment  at  least on a quarterly
     basis,  and  more  frequently when economic or market concerns warrant such
     evaluation.

     The  amortized  cost  and  estimated  fair  value  of  securities  held  to
     maturity at December 31, 2004, by remaining term to contractual maturity is
     as follows:

<TABLE>
<CAPTION>
($in thousands)                         Amortized Cost   Estimated Fair Value   Average Yield
----------------------------------------------------------------------------------------------
<S>                                     <C>              <C>                    <C>
Due in one year or less                 $        84,586  $              84,235           1.81%
Due after one year through five years           164,302                162,976           2.59%
----------------------------------------------------------------------------------------------
                                        $       248,888  $             247,211           2.33%
----------------------------------------------------------------------------------------------
</TABLE>

     The  Company  did  not  have  any  securities  classified  as available for
     sale  during  2004  and  2003.  In  2002, there were sales of $3,500,000 of
     securities  available  for  sale  and  gross  realized  gains  amounted  to
     $120,000. There were no sales of securities in 2004 or 2003.


                                       53
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

3.   LOANS RECEIVABLE

     Loans  receivable  is  as  follows:

<TABLE>
<CAPTION>
                                             At Decem ber 31, 2004       At December 31, 2003
                                         --------------------------  --------------------------
($in thousands)                          # of Loans      Amount      # of Loans      Amount
-----------------------------------------------------------------------------------------------
<S>                                      <C>         <C>             <C>         <C>
Commercial real estate loans                    244  $     601,512          184  $     344,071
Residential multifamily loans                   249        403,613          210        310,650
Land development and other land loans            11         19,198            6         20,526
Residential 1-4 family loans                      4            984           26          1,628
Commercial business loans                        23          1,215           28          1,662
Consumer loans                                   12            221           16            319
-----------------------------------------------------------------------------------------------
Loans receivable                                543      1,026,743          470        678,856
-----------------------------------------------------------------------------------------------
Deferred loan fees                                         (11,347)                     (7,731)
-----------------------------------------------------------------------------------------------
Loans receivable, net of deferred fees                   1,015,396                     671,125
-----------------------------------------------------------------------------------------------
Allowance for loan losses                                  (11,106)                     (6,580)
-----------------------------------------------------------------------------------------------
Loans receivable, net                                $   1,004,290               $     664,545
-----------------------------------------------------------------------------------------------
</TABLE>

     At  December  31,  2004,  $4,607,000  of loans were on a nonaccrual status,
     compared  to  $8,474,000  at December 31, 2003. These loans were considered
     impaired  under the criteria of SFAS No.114. but no valuation allowance was
     maintained  at  any time since the Company believes that the estimated fair
     value  of  the  underlying  properties  exceeded  the  Company's  recorded
     investment.

     At  December  31,  2004  and  2003, there were no other loans classified as
     nonaccrual,  impaired  or ninety days past due and still accruing interest.
     Interest  income  that  was  not  recorded  on nonaccrual loans under their
     contractual  terms  amounted  to  $236,000  in  2004,  $339,000 in 2003 and
     $29,000  in  2002.  The  average balance of nonaccrual (impaired) loans for
     2004, 2003 and 2002 was $3,162,000, $4,568,000 and $310,000, respectively.

     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 geographic distribution of the loan portfolio is as follows:

<TABLE>
<CAPTION>
                                At December 31, 2004      At December 31, 2003
                             ------------------------  ------------------------
($in thousands)               Amount     % of Total     Amount     % of Total
-------------------------------------------------------------------------------
<S>                          <C>          <C>          <C>         <C>
New York                     $   729,301        71.0%  $  435,790         64.2%
Florida                          198,823        19.4      189,802         28.0
Connecticut and New Jersey        51,186         5.0       39,681          5.8
All other                         47,433         4.6       13,583          2.0
-------------------------------------------------------------------------------
                             $ 1,026,743       100.0%  $  678,856        100.0%
-------------------------------------------------------------------------------
</TABLE>

4.   ALLOWANCE FOR LOAN LOSSES

     Activity  in  the  allowance  for  loan  losses  is  as  follows:

<TABLE>
<CAPTION>
                                       For the Year Ended December 31,
                                  ---------------------------------------
($in thousands)                      2004          2003          2002
-------------------------------------------------------------------------
<S>                               <C>          <C>           <C>
Allowance at beginning of year    $     6,580  $      4,611  $     3,380
Provision charged to operations         4,526         1,969        1,274
Chargeoffs (1)                              -             -         (150)
Recoveries (2)                              -             -          107
-------------------------------------------------------------------------
Allowance at end of year          $    11,106  $      6,580  $     4,611
-------------------------------------------------------------------------------
</TABLE>

(1)  Represents  a  chargeoff  taken  in  connection  with  the  transfer  of  a
     nonperforming loan to foreclosed real estate.
(2)  Represents  proceeds  received  from  the  sale  of  collateral from a loan
     that was charged off prior to 1997.


                                       54
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

5.   PREMISES AND EQUIPMENT, LEASE COMMITMENTS AND RENTAL EXPENSE
     Premises and equipment is as follows:

<TABLE>
<CAPTION>
                                                   At December 31,
                                                ---------------------
($in thousands)                                   2004        2003
---------------------------------------------------------------------
<S>                                             <C>        <C>
Land                                            $  1,516   $   1,516
Buildings                                          4,979       4,913
Leasehold improvements                             1,355         346
Furniture, fixtures and equipment                  2,276       2,137
---------------------------------------------------------------------
Total cost                                        10,126       8,912
---------------------------------------------------------------------
Less accumulated deprecation and amortization     (3,490)     (3,160)
---------------------------------------------------------------------
Net book value                                  $  6,636   $   5,752
---------------------------------------------------------------------
</TABLE>

     The  offices  of  the  Holding  Company,  Intervest  Mortgage  Corporation,
     Intervest  Securities  Corporation  and  the  Bank's  headquarters  and
     full-service  banking  office  are located in leased premises on the entire
     fourth  floor  of  One Rockefeller Plaza in New York City. In addition, the
     Bank  leases  its  Belcher  Road  office in Clearwater, Florida. The leases
     expire  in March 2014 and June 2007, respectively. The Bank owns all of its
     remaining  offices  in  Florida.  Both  leases contain operating escalation
     clauses  related  to  taxes and operating costs based upon various criteria
     and  are  accounted  for  as  operating leases. Total future minimum annual
     lease  payments  due  under  these non-cancelable leases as of December 31,
     2004  are as follows: $907,000 in 2005; $911,000 in 2006; $852,000 in 2007;
     $856,000  in  2008;  $878,000  in  2009;  and  $3,839,000 thereafter for an
     aggregate  amount  of $8,243,000. Rent expense aggregated $986,000 in 2004,
     $654,000 in 2003 and $618,000 in 2002.

     The  Bank  leases  certain  of  the  space  in  its  office  buildings  in
     Florida  that  is  not used for banking operations to other companies under
     leases  that  expire  at  various  times through October 2009. Future lease
     rental  income  due under these non-cancelable subleases as of December 31,
     2004  are as follows: $489,000 in 2005; $380,000 in 2006; $213,000 in 2007;
     $45,000 in 2008; and $24,000 in 2009 for an aggregate amount of $1,151,000.
     Lease  rental  income  aggregated  $498,000  in  2004, $462,000 in 2003 and
     $421,000 in 2002.

6.   DEPOSITS

     Scheduled  maturities  of  certificates of deposit accounts are as follows:

<TABLE>
<CAPTION>
                             At December 31, 2004      At December 31, 2003
                           ------------------------  ------------------------
                                         Wtd-Avg                   Wtd-Avg
($in thousands)             Amount     Stated Rate    Amount     Stated Rate
-----------------------------------------------------------------------------
<S>                        <C>        <C>            <C>        <C>
Within one year            $ 269,553          2.84%  $ 182,693          2.75%
Over one to two years        119,780          3.43      90,936          3.64
Over two to three years      134,409          4.48      30,094          4.43
Over three to four years      75,317          4.06      89,085          4.83
Over four years              145,712          4.48      74,351          4.20
-----------------------------------------------------------------------------
                           $ 744,771          3.68%  $ 467,159          3.66%
-----------------------------------------------------------------------------
</TABLE>

     Certificate  of  deposit  accounts  of  $100,000  or  more  totaled
     $215,876,000  and $123,063,000 at December 31, 2004 and 2003, respectively.
     At  December  31, 2004, certificate of deposit accounts of $100,000 or more
     by  remaining  maturity  were  as follows: due within one year $80,561,000;
     over  one  to  two  years $28,555,000; over two to three years $40,084,000;
     over three to four years $19,840,000; and over four years $46,836,000.

     Interest  expense  on  deposits  is  as  follows:

<TABLE>
<CAPTION>
                                      For the Year Ended December 31,
                                   -------------------------------------
($in thousands)                          2004        2003           2002
------------------------------------------------------------------------
<S>                                <C>         <C>         <C>
Interest checking accounts         $      187  $      182  $         221
Savings accounts                          550         601            762
Money market accounts                   3,583       2,763          3,082
Certificates of deposit accounts       22,010      14,891         13,304
------------------------------------------------------------------------
                                   $   26,330  $   18,437  $      17,369
------------------------------------------------------------------------
</TABLE>


                                       55
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

7.   SUBORDINATED DEBENTURES AND MORTGAGE NOTE PAYABLE

     Subordinated  debentures  and  mortgage  note  payable  are  summarized  as
     follows:

<TABLE>
<CAPTION>
                                                                             At December 31,
                                                                           -------------------
($in thousands)                                                              2004       2003
----------------------------------------------------------------------------------------------
<S>                                                                        <C>        <C>
INTERVEST MORTGAGE CORPORATION (1) :
Series 05/12/95 - interest at 2% above prime     - due April 1, 2004       $       -  $  9,000
Series 10/19/95 - interest at 2% above prime     - due October 1, 2004             -     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 9% fixed           - due January 1, 2005         2,600     2,600
Series 06/28/99 - interest at 8 1/2% fixed       - due July 1, 2004                -     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 1/2% 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 7 1/2% fixed       - due April 1, 2005           1,750     1,750
Series 08/01/01 - interest at 8% fixed           - due April 1, 2007           2,750     2,750
Series 08/01/01 - interest at 8 1/2% fixed       - due April 1, 2009           2,750     2,750
Series 01/17/02 - interest at 7 1/4% fixed       - due October 1, 2005         1,250     1,250
Series 01/17/02 - interest at 7 1/2% fixed       - due October 1, 2007         2,250     2,250
Series 01/17/02 - interest at 7 3/4% fixed       - due October 1, 2009         2,250     2,250
Series 08/05/02 - interest at 7 1/4 % fixed      - due January 1, 2006         1,750     1,750
Series 08/05/02 - interest at 7 1/2 % fixed      - due January 1, 2008         3,000     3,000
Series 08/05/02 - interest at 7 3/4 % fixed      - due January 1, 2010         3,000     3,000
Series 01/21/03 - interest at 6 3/4 % fixed      - due July 1, 2006            1,500     1,500
Series 01/21/03 - interest at 7% fixed           - due July 1, 2008            3,000     3,000
Series 01/21/03 - interest at 7 1/4 % fixed      - due July 1, 2010            3,000     3,000
Series 07/25/03 - interest at 6 1/2 % fixed      - due October 1, 2006         2,500     2,500
Series 07/25/03 - interest at 6 3/4 % fixed      - due October 1, 2008         3,000     3,000
Series 07/25/03 - interest at 7% fixed           - due October 1, 2010         3,000     3,000
Series 11/28/03 - interest at 6 1/4 % fixed      - due April 1, 2007           2,000         -
Series 11/28/03 - interest at 6 1/2 % fixed      - due April 1, 2009           3,500         -
Series 11/28/03 - interest at 6 3/4 % fixed      - due April 1, 2011           4,500         -
Series 06/07/04 - interest at 6 1/4 % fixed      - due January 1, 2008         2,500         -
Series 06/07/04 - interest at 6 1/2 % fixed      - due January 1, 2010         4,000         -
Series 06/07/04 - interest at 6 3/4 % fixed      - due January 1, 2012         5,000         -
                                                                           -------------------
                                                                              88,850    87,350

INTERVEST BANCSHARES CORPORATION:
Series 05/14/98 - interest at 8% fixed           - due July 1, 2008            3,080     4,840
Series 12/15/00 - interest at 8 1/2% fixed       - due April 1, 2006           1,250     1,250
Series 12/15/00 - interest at 9% fixed           - due April 1, 2008           1,250     1,250
                                                                           -------------------
                                                                               5,580     7,340

INTERVEST NATIONAL BANK:
Mortgage note payable (2) - interest at 7% fixed  - due February 1, 2017         242       255
----------------------------------------------------------------------------------------------
                                                                           $  94,672  $ 94,945
----------------------------------------------------------------------------------------------

<FN>
     (1)  Prime  represents  prime  rate  of  JPMorganChase  Bank,  which  was
          5.25%  at  December  31,  2004  and  4.00%  at  December 31, 2003. The
          floating-rate debentures have a maximum interest rate of 12%.
     (2)  The  note  cannot  be  prepaid  except  during  the  last  year of its
          term.
</TABLE>

     In  January  2004,  Intervest  Mortgage  Corporation  issued $10,000,000 of
     its  Series  11/28/03 debentures for net proceeds, after offering costs, of
     $9,252,000. In July 2004, Intervest Mortgage Corporation issued $11,500,000
     of  its Series 6/7/04 debentures for net proceeds, after offering costs, of
     $10,672,000.


                                       56
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------
7.   SUBORDINATED DEBENTURES AND MORTGAGE NOTE PAYABLE, CONTINUED

     In  2004,  Intervest  Mortgage  Corporation  redeemed  the  following
     debentures:  Series  5/12/95  due April 1, 2004 for $9,000,000 of principal
     and  $2,749,000  of accrued interest; Series 6/28/99 debentures due July 1,
     2004  for  $2,000,000  of  principal  and $980,000 of accrued interest; and
     Series  10/19/95 debentures due October 1, 2004 for $9,000,000 of principal
     and $2,244,000 of accrued interest.

     Interest  is  paid  quarterly  on  Intervest  Mortgage  Corporation's
     debentures  except  for:  $1,980,000  of  Series  5/10/96;  all  of  Series
     11/10/98,  6/28/99, 9/18/00; $770,000 of Series 8/01/01; $270,000 of Series
     1/17/02;  $1,520,000  of Series 8/05/02; $1,750,000 of Series 11/28/03; and
     $1,910,000  of  Series  6/7/04,  all  of which accrue and compound interest
     quarterly, with such interest due and payable at maturity.

     The  holders  of  Intervest  Mortgage  Corporation's  Series  11/10/98
     through  9/18/00  and  Series 1/17/02 through 6/7/04 debentures can require
     Intervest Mortgage Corporation to repurchase the debentures for face amount
     plus  accrued  interest  each  year  (beginning  October 1, 2005 for Series
     1/17/02,  January  1,  2006  for  Series  8/05/02,  July 1, 2006 for Series
     1/21/03,  October  1,  2006  for Series 7/25/03, January 1, 2007 for Series
     11/28/03  and  January  1, 2008 for Series 6/7/04). However, in no calendar
     year  can  the required purchases be more than $100,000 in principal amount
     of each maturity, in each series of debentures, on a non-cumulative basis.

     Intervest  Mortgage  Corporation's  debentures  may  be  redeemed  at  its
     option  at any time, in whole or in part, for face value, except for Series
     6/7/04, which would be at a premium of 1% if it were redeemed prior to July
     1,  2005.  All  the debentures are unsecured and subordinate to all present
     and future senior indebtedness, as defined in the indenture related to each
     debenture.

     Intervest  Mortgage  Corporation  has  filed  a  registration  statement
     related  to  an  offering  of additional debentures. It is anticipated that
     debentures  in  an  aggregate principal amount of up to $14,000,000 will be
     issued in the first quarter of 2005.

     The  Holding  Company's  Series  5/14/98  subordinated  debentures  are
     convertible along with accrued interest at the option of the holders at any
     time  prior to April 1, 2008 into shares of its Class A common stock at the
     following  conversion  prices  per  share:  $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. In 2004,
     $2,883,000 of debentures ($1,760,000 of principal and $1,123,000 of accrued
     interest)  were converted into shares of Class A common stock at $12.00 per
     share.  In  2003,  $3,100,000  of  debentures  ($2,090,000 of principal and
     $1,010,000  of  accrued  interest)  were  converted  into shares of Class A
     common stock at $10.01 per share.

     At  December  31,  2004,  interest  accrues  and  compounds  quarterly  on
     $2,480,000 of the convertible debentures at the rate of 8% per annum, while
     $600,000  of  the  debentures  pay interest quarterly at the rate of 8% per
     annum.  All  accrued  interest of $1,694,000 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, elect to be paid all accrued
     interest  and to thereafter receive regular payments of interest quarterly.
     The  Holding Company may redeem any of its debentures, in whole or in part,
     at any time for face value.

     Scheduled  contractual  maturities  of  as  of  December  31,  2004  are as
     follows:

<TABLE>
<CAPTION>
($in thousands)                        Principal   Accrued Interest
--------------------------------------------------------------------
<S>                                    <C>         <C>
For the year ended December 31, 2005   $   29,116  $           5,259
For the year ended December 31, 2006       10,269              1,833
For the year ended December 31, 2007        7,022                127
For the year ended December 31, 2008       17,105              2,362
For the year ended December 31, 2009        8,530                176
Thereafter                                 22,630                211
--------------------------------------------------------------------
                                       $   94,672  $           9,968
--------------------------------------------------------------------
</TABLE>


                                       57
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

8.   FEDERAL  FUNDS PURCHASED, FEDERAL HOME LOAN BANK ADVANCES AND LINES OF
     CREDIT

     From  time  to  time,  the  Bank  may  borrow  funds  on  an  overnight  or
     short-term  basis  to manage its liquidity needs. At December 31, 2004, the
     Bank  has  agreements  with correspondent banks whereby it may borrow up to
     $16,000,000  of  federal  funds  on  an  unsecured basis. In addition, as a
     member  of  the  Federal  Home Loan Bank of New York (FHLB) and the Federal
     Reserve  Bank  of  New  York  (FRB),  the  Bank  can also borrow from these
     institutions  on a secured basis that aggregated approximately $203,000,000
     based on available collateral at December 31, 2004.

     The  following  is  a  summary  of certain information regarding short-term
     borrowings in the aggregate:

<TABLE>
<CAPTION>
($in thousands)                                         2004     2003    2002
-------------------------------------------------------------------------------
<S>                                                   <C>       <C>     <C>
   Balance at year end (1)                            $36,000   $    -  $    -
   Maximum amount outstanding at any month end        $36,000   $    -  $    -
   Average outstanding balance for the year           $ 1,914   $    -  $  116
   Weighted-average interest rate paid for the year      2.08%       -%   1.87%
   Weighted-average interest rate at year end            2.56%       -%      -%
-------------------------------------------------------------------------------

<FN>
(1)  The  balance  at  year-end  2004  represents  FHLB  advances of $19,000,000
     due in January 2005 and $17,000,000 in February 2005.
</TABLE>

9.   SUBORDINATED DEBENTURES - CAPITAL SECURITIES

     Capital  Securities  (commonly  referred  to  as  Trust  Preferred
     Securities) are summarized as follows:

<TABLE>
<CAPTION>
                                                               At December 31, 2004     At December 31, 2003
                                                            -------------------------  ------------------------
                                                                           Accrued                   Accrued
($in thousands)                                             Principal     Interest     Principal     Interest
---------------------------------------------------------------------------------------------------------------
<S>                                                         <C>         <C>            <C>         <C>
Capital Securities I -  debentures due December 18, 2031    $   15,464  $          59  $   15,464  $         58
Capital Securities II - debentures due September 17, 2033       15,464             41      15,464            39
Capital Securities III - debentures due March 17, 2034          15,464             36           -             -
Capital Securities IV - debentures due September 20, 2034       15,464             29           -             -
---------------------------------------------------------------------------------------------------------------
                                                            $   61,856  $         165  $   30,928  $         97
---------------------------------------------------------------------------------------------------------------
</TABLE>

     The  Capital  Securities  are  obligations  of the Holding Company's wholly
     owned  statutory  business trusts, Intervest Statutory Trust I, II, III and
     IV.  Each Trust was formed with a capital contribution of $464,000 from the
     Holding  Company  and for the sole purpose of issuing and administering the
     Capital  Securities.  The  proceeds  from  the  issuance  of  the  Capital
     Securities  together with the capital contribution for each Trust were used
     to  acquire  the  Holding Company's Junior Subordinated Debentures that are
     due  concurrently  with  the  Capital  Securities.  The  Capital Securities
     qualify as regulatory capital (see note 1 herein).

     The  sole  assets  of  the  Trusts, the obligors on the Capital Securities,
     are  the  Junior  Subordinated Debentures. In addition, for each Trust, the
     Holding Company has guaranteed the payment of distributions on, payments on
     any  redemptions  of,  and any liquidation distribution with respect to the
     Capital  Securities.  Issuance  costs  of  $469,000, $444,000, $444,000 and
     $220,000  associated  with  Capital  Securities  I,  II,  III  and  IV,
     respectively,  have  been  capitalized by the Holding Company and are being
     amortized over the life of the securities using the straight-line method.

     Interest  payments  on  the  Junior  Subordinated  Debentures  (and  the
     corresponding  distributions  on  the  Capital  Securities)  are payable in
     arrears  as follows: Capital Securities I - semi-annually at the fixed rate
     of 9.875% per annum; Capital Securities II - quarterly at the fixed rate of
     6.75%  per  annum  until  September  17, 2008 and thereafter at the rate of
     2.95%  over  3 month libor; Capital Securities III - quarterly at the fixed
     rate  of 5.88% per annum until March 17, 2009 and thereafter at the rate of
     2.79%  over  3  month  libor;  and Capital Securities IV - quarterly at the
     fixed  rate  of  6.20% per annum until September 20, 2009 and thereafter at
     the rate of 2.40% over 3 month libor.


                                       58
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

9.   SUBORDINATED DEBENTURES - CAPITAL SECURITIES, CONTINUED

     Interest  payments  may  be  deferred  at  any  time  and from time to time
     during  the  term  of the Junior Subordinated Debentures at the election of
     the  Company for up to 20 consecutive quarterly periods (5 years). There is
     no  limitation  on  the  number of extension periods the Company may elect;
     provided,  however,  no deferral period may extend beyond the maturity date
     of  the Junior Subordinated Debentures. During an interest deferral period,
     interest  will continue to accrue on the Junior Subordinated Debentures and
     interest  on  such  accrued interest will accrue at an annual rate equal to
     the  interest rate in effect for such deferral period, compounded quarterly
     from  the  date such interest would have been payable were it not deferred.
     At the end of the deferral period, the Company will be obligated to pay all
     interest then accrued and unpaid.

     All  of  the  Capital  Securities  are  subject  to mandatory redemption as
     follows:  (i)  in  whole,  but  not  in  part, upon repayment of the Junior
     Subordinated Debentures at stated maturity or earlier, at the option of the
     Holding  Company,  within 90 days following the occurrence and continuation
     of  certain  changes  in  the  tax  or  capital  treatment  of  the Capital
     Securities,  or  a change in law such that the Trust would be considered an
     investment  company,  contemporaneously  with the redemption by the Holding
     Company of the Junior Subordinated Debentures; and (ii) in whole or in part
     at  any  time  on  or  after  December  18,  2006 for Capital Securities I,
     September  17,  2008  for Capital Securities II, March 17, 2009 for Capital
     Securities  III,  and  September  20,  2009  for  Capital  Securities  IV
     contemporaneously  with  the  optional redemption by the Holding Company of
     the  Junior  Subordinated  Debentures  in  whole or in part. Any redemption
     would be subject to the receipt of 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. There is 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.

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, 2004 and 2003,
     balances maintained as reserves were approximately $1,190,000 and $691,000,
     respectively.

     As  a  member  of  the  Federal  Reserve  Banking  and  Federal  Home  Loan
     Banking  systems, the Bank must maintain an investment in the capital stock
     of  the  FRB and FHLB. At December 31, 2004 and 2003, the total investment,
     which  earns  a dividend, aggregated $5,092,000 and $3,075,000. At December
     31,  2004 and 2003, U.S. government agency securities with a carrying value
     of  $82,218,000  and $5,835,000, respectively, were pledged against various
     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 are subject to various regulatory restrictions, as
     well  as  restrictions  that  may  arise from outstanding indentures. 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.


                                       59
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

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,
     which vest to the employees over a period of time. Total cash contributions
     to the plans included in the consolidated statements of earnings aggregated
     $68,000, $55,000 and $47,000 in 2004, 2003 and 2002, respectively.

13.  RELATED  PARTY  TRANSACTIONS

     The  Bank  has  deposit  accounts  from  affiliated  companies,  directors,
     executive  officers  and  members  of  their immediate families and related
     business  interests  of  approximately $32,000,000 at December 31, 2004 and
     $35,000,000  at  December  31, 2003. There are no loans to any directors or
     executive officers of the Holding Company or its subsidiaries.

     The  Company  paid  fees  of  approximately  $177,000  in 2004, $262,000 in
     2003  and  $157,000  in  2002  for legal services rendered by a law firm, a
     principal  of  which  is  a  director  of  the  Company.  The  Company paid
     commissions  and  fees  in  connection  with the placement of debentures of
     approximately  $680,000 in 2004, $531,000 in 2003 and $515,000 in 2002 to a
     broker/dealer, a principal of which is a director of the Company.

14.  COMMON STOCK WARRANTS

     At  December  31,  2004,  the  Holding  Company  had  696,465  common stock
     warrants  outstanding  that entitle its holder, the Chairman of the Holding
     Company,  to  purchase  one  share  of  common  stock for each warrant. All
     warrants are currently exercisable.

     Data concerning common stock warrants is as follows:

<TABLE>
<CAPTION>
                                                              Exercise Price Per Warrant       Total         Wtd-Avg
                                                          -------------------------------
CLASS A COMMON STOCK WARRANTS:                                  $6.67           $10.01       Warrants    Exercise Price
------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>               <C>            <C>          <C>
Outstanding at December 31, 2001                                 1,370,815      1,084,403    2,455,218   $          9.42
  Exercised in 2002                                               (772,600)       (30,858)    (803,458)  $          9.88
  Expired in 2002                                                  (96,750)             -      (96,750)  $          6.67
-------------------------------------------------------------------------------------------------------
Outstanding at December 31, 2002                                   501,465      1,053,545    1,555,010   $          8.93
-------------------------------------------------------------------------------------------------------
  Exercised in 2003                                                      -       (945,717)    (945,717)  $         10.01
  Expired in 2003                                                        -        (65,318)     (65,318)  $         10.01
-------------------------------------------------------------------------------------------------------
Outstanding at December 31, 2003 (1)                               501,465         42,510      543,975   $          6.93
-------------------------------------------------------------------------------------------------------
  Exercised in 2004                                                      -        (42,510)      (42,510) $         10.01
-------------------------------------------------------------------------------------------------------
Outstanding at December 31, 2004                                   501,465              -       501,465  $         6.67
-------------------------------------------------------------------------------------------------------
Remaining contractual life in years at December 31, 2004               2.1              -           2.1
------------------------------------------------------------------------------------------------------------------------

<FN>
(1)  The  holders  of  the  42,510  warrants  outstanding  at  December 31, 2003
     presented  these  warrants  to  the  Company  for  exercise  prior  to  the
     expiration  date  of December 31, 2003. The resulting shares were issued in
     January 2004.
</TABLE>

<TABLE>
<CAPTION>
                                                            Exercise Price Per Warrant    Total        Wtd-Avg
                                                            --------------------------
<S>                                                       <C>              <C>           <C>       <C>
CLASS B COMMON STOCK WARRANTS:                            $          6.67  $      10.00  Warrants  Exercise Price
------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 2002, 2003 and 2004                   145,000        50,000   195,000  $          7.52
-------------------------------------------------------------------------------------------------
Remaining contractual life in years at December 31, 2004              3.1           3.1       3.1
------------------------------------------------------------------------------------------------------------------
</TABLE>

     The  Company  elects  to  use  the  intrinsic value-based method prescribed
     under  APB  Opinion  No. 25, "Accounting for Stock Issued to Employees," in
     accounting  for its stock warrants. Under this method, compensation expense
     related  to  stock  warrants granted to employees is the excess, if any, of
     the market price of the stock as of the grant or modification date over the
     exercise price of the warrant.


                                       60
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

14.  COMMON STOCK WARRANTS, CONTINUED

     For  warrants  granted  to  employees  whose  exercise price was reduced to
     $10.01  effective January 1, 2002 and whose expiration date was extended in
     2002,  compensation  expense was recorded under variable rate accounting as
     prescribed by APB 25 and related interpretations. For these warrants, which
     originally  totaled  138,500, compensation expense was recorded in salaries
     and  employee  benefits  expense  with  a  corresponding  credit to paid in
     capital in the consolidated financial statements.

     Compensation  expense  recorded  in  connection  with common stock warrants
     is summarized as follows:

<TABLE>
<CAPTION>
                                                                 For the Year Ended December 31,
                                                              -------------------------------------
($in thousands)                                                  2004        2003         2002
---------------------------------------------------------------------------------------------------
<S>                                                           <C>         <C>         <C>
Compensation expense recorded in connection with vesting
     of Class B common stock warrants during the period       $        9  $       26  $          26
Compensation expense recorded in connection with
    Class A common stock warrants whose terms were modified            -         418            109
---------------------------------------------------------------------------------------------------
                                                              $        9  $      444  $         135
---------------------------------------------------------------------------------------------------
</TABLE>

     In  December  2004,  the  FASB  issued  SFAS  No.  123  (revised  2004),
     "Share-Based  Payment,"  SFAS No. 123-R). SFAS No. 123-R requires companies
     to  recognize  in  the  income statement the grant-date fair value of stock
     options  and  other  equity-based  compensation  issued  to  employees  and
     directors,  but expresses no preference for a type of valuation model. SFAS
     No.  123-R  eliminates  the  intrinsic  value-based method that the Company
     currently  uses.  The Company is required to adopt the new statement in the
     third  quarter  of  2005  and  the  new statement will impact its financial
     statements  if and when any new stock warrants and/or options are issued in
     the future.

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  franchise tax return in Delaware. The Bank files a
     state  income  tax  return  in Florida. All returns are filed on a calendar
     year basis.

     At  December  31,  2004  and  2003,  the  Company  had  a  net deferred tax
     asset  of $5,095,000 and $2,960,000, 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 based on available evidence. 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 .

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

<TABLE>
<CAPTION>
($in thousands)                 Current    Deferred   Total
------------------------------------------------------------
<S>                             <C>       <C>         <C>
Year Ended December 31, 2004:
------------------------------
   Federal                      $  7,707  $  (1,742)  $5,965
   State and Local                 3,204       (393)   2,811
------------------------------------------------------------
                                $ 10,911  $  (2,135)  $8,776
------------------------------------------------------------
Year Ended December 31, 2003:
------------------------------
   Federal                      $  5,576  $    (782)  $4,794
   State and Local                 2,260       (181)   2,079
------------------------------------------------------------
                                $  7,836  $    (963)  $6,873
------------------------------------------------------------
Year Ended December 31, 2002:
------------------------------
   Federal                      $  4,004  $    (547)  $3,457
   State and Local                 1,390       (134)   1,256
------------------------------------------------------------
                                $  5,394  $    (681)  $4,713
------------------------------------------------------------
</TABLE>


                                       61
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

15.  INCOME TAXES, CONTINUED

     The  components  of  the  deferred  tax  benefit  are  as  follows:

<TABLE>
<CAPTION>
                                      For the Year Ended December 31,
                                 ----------------------------------------
($in thousands)                     2004         2003           2002
-------------------------------------------------------------------------
<S>                              <C>          <C>          <C>
Allowance for loan losses        $   (2,073)  $     (896)  $        (623)
Organization and startup costs           11           29              28
Stock-based compensation                 (4)          45             (62)
Depreciation                            (88)         (65)            (41)
Deferred income                          19          (75)             13
All other                                 -           (1)              4
-------------------------------------------------------------------------
                                 $   (2,135)  $     (963)  $        (681)
-------------------------------------------------------------------------
</TABLE>

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

<TABLE>
<CAPTION>
                                    At December 31,
                                 -------------------
($in thousands)                    2004      2003
----------------------------------------------------
<S>                              <C>       <C>
Allowance for loan losses        $  4,541  $   2,468
Organization and startup costs          -         11
Stock-based compensation               77         73
Depreciation                          267        179
Deferred income                       200        219
All other                              10         10
----------------------------------------------------
Total deferred tax asset         $  5,095  $   2,960
----------------------------------------------------
</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>
<CAPTION>
                                                          For the Year Ended December 31,
                                                      -------------------------------------
                                                         2004        2003         2002
-------------------------------------------------------------------------------------------
<S>                                                   <C>         <C>         <C>

Tax provision at statutory rate                            35.0%       35.0%          34.0%
Increase in taxes resulting from:
State and local income taxes, net of federal benefit        8.4         8.2            6.6
   Other                                                      -        (0.2)             -
-------------------------------------------------------------------------------------------
                                                           43.4%       43.0%          40.6%
-------------------------------------------------------------------------------------------
</TABLE>

16.  EARNINGS  PER  SHARE

     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:

<TABLE>
<CAPTION>
                                                                            For the Year Ended December 31,
                                                                        -------------------------------------
($in thousands, except share and per share amounts)                        2004        2003         2002
-------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>         <C>
Basic earnings per share:
  Net earnings applicable to common stockholders                        $   11,453  $    9,120  $       6,906
  Average number of common shares outstanding                            6,068,755   4,938,995      4,043,619
-------------------------------------------------------------------------------------------------------------
Basic earnings per share amount                                         $     1.89  $     1.85  $        1.71
-------------------------------------------------------------------------------------------------------------
Diluted earnings per share:
  Net earnings applicable to common stockholders                        $   11,453  $    9,120  $       6,906
  Adjustment to net earnings from assumed conversion of debentures             254         452            436
                                                                        -------------------------------------
  Adjusted net earnings for diluted earnings per share computation      $   11,707  $    9,572  $       7,342
                                                                        -------------------------------------
  Average number of common shares outstanding:
    Common shares outstanding                                            6,068,755   4,938,995      4,043,619
    Potential dilutive shares resulting from exercise of warrants          255,171     356,339        313,519
    Potential dilutive shares resulting from conversion of debentures      504,250     962,386        990,983
                                                                        -------------------------------------
  Total average number of common shares outstanding used for dilution    6,828,176   6,257,720      5,348,121
-------------------------------------------------------------------------------------------------------------
Diluted earnings per share amount                                       $     1.71  $     1.53  $        1.37
-------------------------------------------------------------------------------------------------------------
</TABLE>


                                       62
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

16.  EARNINGS  PER  SHARE,  CONTINUED

     All  warrants  and  convertible  debentures  outstanding were considered in
     the computation of diluted EPS because they were dilutive.

17.  CONTINGENCIES

     The  Company  is  periodically  a  party  to or otherwise involved in legal
     proceedings  arising  in the normal course of business, such as foreclosure
     proceedings.  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,
     financial position or liquidity of the Company.

18.  REGULATORY  CAPITAL

     The  Holding  Company  is  subject  to  regulation,  examination  and
     supervision by the FRB. The Bank is also subject to regulation, examination
     and supervision by the Federal Deposit Insurance Corporation (FDIC) and the
     Office  of  the Comptroller of the Currency of the United States of America
     (OCC).  Intervest  Securities  Corporation  is  subject  to  regulation,
     examination  and supervision by the U.S. Securities and Exchange Commission
     (SEC) and the National Association of Securities Dealers (NASD).

     The  Company  (on  a  consolidated  basis)  and  the  Bank  are  subject to
     various regulatory capital requirements administered by the federal banking
     agencies.  Failure to meet them 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,  2004  and  2003,  that  the
     Company  and  the  Bank met all capital adequacy requirements to which they
     are subject. As of December 31, 2004, 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.

     Intervest  Securities  Corporation  is  subject  to  the  SEC's Uniform Net
     Capital  Rule  [15c3-1  (a)  (2)  (vi)],  which requires the maintenance of
     minimum  net  capital  of  $5,000. At December 31, 2004 and 2003, Intervest
     Securities  Corporation's  net  capital  was  $481,000  and  $459,000,
     respectively.

     On  January  1  2004,  the  Company  adopted  FASB  Interpretation  No. 46,
     "Consolidation  of  Variable Interest Entities" ("FIN 46-R"), as revised in
     December  2003.  FIN 46-R changes the method of determining whether certain
     entities  should  be  included  in  the  Company's financial statements. It
     requires  bank  holding companies that have used controlled business trusts
     to  raise  financing by issuing trust preferred securities to deconsolidate
     their investments in those trusts. For a further discussion of FIN 46-R and
     its  regulatory  implications,  see the section entitled "Recent Accounting
     and Regulatory Developments" in note 1 herein.


                                       63
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

18.  REGULATORY  CAPITAL,  CONTINUED

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

<TABLE>
<CAPTION>
                                                                                        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, 2004:
----------------------------------------------
  Total capital to risk-weighted assets         $156,105  14.23%  $87,737       8.00%  NA          NA
  Tier 1 capital to risk-weighted assets        $115,031  10.49%  $43,868       4.00%  NA          NA
  Tier 1 capital to average assets              $115,031   9.03%  $50,951       4.00%  NA          NA

Consolidated as of December 31, 2003:
----------------------------------------------
  Total capital to risk-weighted assets         $109,029  14.84%  $58,787       8.00%  NA          NA
  Tier 1 capital to risk-weighted assets        $ 97,571  13.28%  $29,394       4.00%  NA          NA
  Tier 1 capital to average assets              $ 97,571  11.31%  $34,515       4.00%  NA          NA

Intervest National Bank at December 31, 2004:
----------------------------------------------
  Total capital to risk-weighted assets         $117,413  12.08%  $77,746       8.00%  $   97,182      10.00%
  Tier 1 capital to risk-weighted assets        $106,724  10.98%  $38,873       4.00%  $   58,309       6.00%
  Tier 1 capital to average assets              $106,724   9.36%  $45,625       4.00%  $   57,031       5.00%

Intervest National Bank at December 31, 2003:
----------------------------------------------
  Total capital to risk-weighted assets         $ 77,709  12.53%  $49,612       8.00%  $   62,016      10.00%
  Tier 1 capital to risk-weighted assets        $ 71,399  11.51%  $24,806       4.00%  $   37,209       6.00%
  Tier 1 capital to average assets              $ 71,399   9.66%  $29,569       4.00%  $   36,962       5.00%
-------------------------------------------------------------------------------------------------------------
</TABLE>

19.  OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

     The  Company  is  a  party  to financial instruments with off-balance sheet
     risk  in  the  normal course of business to meet the financing needs of its
     customers.  These  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 financial statements. The Company's
     maximum exposure to credit risk 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  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. Management is not aware of any
     trends,  known  demand,  commitments or uncertainties which are expected to
     have  a  material  impact on future operating results, liquidity or capital
     resources.

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

<TABLE>
<CAPTION>
                              At December 31,
                            -------------------
($in thousands)               2004      2003
-----------------------------------------------
<S>                         <C>       <C>
Unfunded loan commitments   $159,697  $ 123,791
Available lines of credit        789        825
Standby letters of credit        750        100
-----------------------------------------------
                            $161,236  $ 124,716
-----------------------------------------------
</TABLE>


                                       64
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

20.  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

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

<TABLE>
<CAPTION>
                                                     At December 31, 2004      At December 31, 2003
                                                 -------------------------  ------------------------
                                                  Carrying       Fair       Carrying       Fair
($in thousands)                                    Value         Value        Value        Value
----------------------------------------------------------------------------------------------------
<S>                                              <C>         <C>            <C>        <C>
Financial Assets:
  Cash and cash equivalents                      $   24,599  $      24,599  $  64,128  $      64,128
  Securities held to maturity, net                  248,888        247,211    152,823        152,995
  FRB and FHLB stock                                  5,092          5,092      3,075          3,075
  Loans receivable, net                           1,004,290      1,011,559    664,545        700,855
  Accrued interest receivable                         6,699          6,699      4,995          4,995
Financial Liabilities:
  Deposit liabilities                               993,872        997,939    675,513        687,135
  Borrowed funds plus accrued interest payable      202,682        204,578    139,455        143,939
  Accrued interest payable on deposits                1,718          1,718      1,080          1,080
Off -Balance Sheet Instruments:
    Commitments to lend                                 920            920        868            868
----------------------------------------------------------------------------------------------------
</TABLE>

     Fair  value  estimates  are  made  at  a  specific  point  in time based on
     available  information.  Where  available,  quoted  market prices are used.
     However, a significant portion of the Company's financial instruments, such
     as  mortgage  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  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.

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

     SECURITIES.  The  estimated  fair  value  of securities held to maturity is
     based on quoted market prices. The estimated fair value of the FRB and FHLB
     stock  approximates  carrying  value  since  the  securities do not present
     credit concerns and are 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.


                                       65
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

20.   FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS,  CONTINUED

     BORROWED  FUNDS  AND  ACCRUED  INTEREST  PAYABLE.  The estimated fair value
     of  borrowed  funds  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.

     ALL  OTHER  FINANCIAL  ASSETS  AND  LIABILITIES.  The  estimated fair value
     of  cash  and  cash  equivalents,  accrued  interest receivable and accrued
     interest payable on deposits 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.

21.  BUSINESS  SEGMENT  INFORMATION

     The  Company  follows  the  provisions  of SFAS No. 131, "Disclosures about
     Segments of an Enterprise and Related Information". An operating segment is
     defined as a component of an enterprise that engages in business activities
     from which it may earn revenues and incur expenses whose separate financial
     information  is available and is evaluated regularly by the Company's chief
     operating  decision  makers to perform resource allocations and performance
     assessments.

     The  Company  is  a  registered  financial  holding  company  whose primary
     business  is banking and real estate lending as described in note 1 herein.
     The  Company's  day-to-day  operating  decisions  are  normally made by the
     members  of  its  Executive  Committee  of the Board of Directors, which is
     comprised of the Chairman, Vice Chairman and Vice President of the Company.
     The  Executive Committee generally uses revenue and earnings performance of
     each  segment  to  determine  operating,  strategic and resource allocation
     decisions.

     The  following  table  presents  certain  information  regarding  the
     Company's operations by business segment:

<TABLE>
<CAPTION>
                         Revenues, Net of Interest Expense            Net Earnings (Loss)            Total Assets
                     -------------------------------------------  ---------------------------  -----------------------
($in thousands)          2004           2003           2002        2004     2003      2002        2004         2003
----------------------------------------------------------------------------------------------------------------------
<S>                  <C>            <C>           <C>             <C>      <C>      <C>        <C>          <C>

Banking (1)          $     30,016   $    22,604   $      16,906   $ 7,436  $6,972   $   4,959  $1,183,509   $ 789,567
Non-Bank Mortgage
  Investments               6,866         4,928           4,189     2,354   1,759       1,567     122,451     119,578
Broker/dealer                 125            41               -        22      (6)          -         484         455
Holding Company (1)           554           142              (2)    1,641     395         380     159,522     116,184
Intersegment (2)           (4,555)       (2,494)         (1,721)        -       -           -    (149,215)   (114,261)
----------------------------------------------------------------------------------------------------------------------
Consolidated         $     33,006   $    25,221   $      19,372   $11,453  $9,120   $   6,906  $1,316,751   $ 911,523
----------------------------------------------------------------------------------------------------------------------

<FN>
(1)  For  purposes  of  this  table,  revenues,  net of interest expense and net
     earnings  (loss)  amounts  are  shown  after  intercompany  dividends  of
     $3,429,000  in  2004,  $1,695,000  in 2003 and $1,500,000 in 2002 that were
     paid by the Bank to the Holding Company for debt service on trust preferred
     securities, the proceeds of which are invested in the capital of the Bank.
(2)  Intersegment  revenues,  net  of  interest  expense,  arise  from
     intercompany  management  and  loan  origination  service  agreements.  All
     significant  intercompany  balances  and  transactions  are  eliminated  in
     consolidation.
</TABLE>

22.  ACQUISITION  OF  INTERVEST  SECURITIES  CORPORATION

     In  June  2003,  the  Holding  Company  acquired  all  of  the  outstanding
     capital  stock  of  Intervest  Securities Corporation (ISC) in exchange for
     30,000  shares  of  its Class B common stock that was newly issued for this
     transaction. ISC's total assets consisted of approximately $218,000 of cash
     at the time of acquisition. Prior to the acquisition, ISC was an affiliated
     entity  in  that  it  was wholly owned by the spouse of the Chairman of the
     Holding  Company.  The acquisition was accounted for at historical cost and
     accordingly,  the  recorded assets, liabilities and shareholders' equity of
     both companies were combined and recorded at their historical cost amounts.
     No  restatements  of  the  Company's  prior  period-consolidated  financial
     statements  in  this report have been made because the financial results of
     ISC were diminimus.


                                       66
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------
23.  HOLDING  COMPANY  FINANCIAL  INFORMATION

<TABLE>
<CAPTION>
                           CONDENSED BALANCE SHEETS
                                                                 At December 31,
                                                               -------------------
($in thousands)                                                  2004      2003
----------------------------------------------------------------------------------
<S>                                                            <C>       <C>
ASSETS
Cash and due from banks                                        $     74  $     286
Short-term investments                                            4,788      2,682
                                                               -------------------
  Total cash and cash equivalents                                 4,862      2,968
Loans receivable, net  (net of allowance for loan losses
  of $85 and $78 at December 31, 2004 and 2003)                  13,993     15,514
Investment in consolidated subsidiaries                         135,351     92,539
Investment in unconsolidated subsidiaries - Statutory Trusts      1,856        928
Deferred debenture offering costs, net of amortization            1,658      1,172
Stock proceeds receivable from warrant conversions                    -      2,535
Premises and equipment, net                                       1,132         12
All other assets                                                    670        516
----------------------------------------------------------------------------------
TOTAL ASSETS                                                   $159,522  $ 116,184
----------------------------------------------------------------------------------

LIABILITIES
Debentures payable                                             $  5,580  $   7,340
Debentures payable - capital securities                          61,856     30,928
Accrued interest payable on all debentures                        1,914      2,461
All other liabilities                                                78         70
----------------------------------------------------------------------------------
TOTAL LIABILITIES                                                69,428     40,799
----------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
Common equity                                                    90,094     75,385
----------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                       90,094     75,385
----------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $159,522  $ 116,184
----------------------------------------------------------------------------------
</TABLE>

                        CONDENSED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
                                                                                    For the Year Ended December 31,
                                                                              ----------------------------------------
($in thousands)                                                                   2004         2003          2002
----------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>           <C>         <C>
Interest income                                                               $     1,087   $   1,125   $         988
Dividend income from subsidiary (1)                                                 3,429       1,695           1,500
Interest expense                                                                    4,351       3,024           2,695
                                                                              ----------------------------------------
Net interest and dividend income (expense)                                            165        (204)           (207)
Provision (credit) for loan losses                                                      7          32              (2)
Noninterest income                                                                    389         346             205
Noninterest expenses                                                                  440         748             544
                                                                              ----------------------------------------
Income (loss) before income taxes                                                     107        (638)           (544)
Credit for income taxes (2)                                                        (1,534)     (1,033)           (924)
                                                                              ----------------------------------------
Net earnings before earnings of subsidiaries                                        1,641         395             380
Equity in undistributed earnings of Intervest National Bank                         7,436       6,972           4,959
Equity in undistributed earnings of Intervest Mortgage Corporation                  2,354       1,759           1,567
Equity in undistributed earnings (loss) of Intervest Securities Corporation            22          (6)              -
----------------------------------------------------------------------------------------------------------------------
NET CONSOLIDATED EARNINGS                                                     $    11,453   $   9,120   $       6,906
----------------------------------------------------------------------------------------------------------------------
<FN>

(1)  Represent  dividends  to  the  Holding  Company  from  the  Bank to provide
     funds  for the debt service on the debentures payable - capital securities.
     This  debt  service  is included in the Holding Company's interest expense.
     The proceeds from the capital securities are invested in the capital of the
     Bank.
(2)  Dividends  from  subsidiaries  are  eliminated  in  consolidation  and  are
     not  included  in  the  Holding  Company's  pre -tax income for purposes of
     computing income taxes.
</TABLE>


                                       67
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

23.  HOLDING  COMPANY  FINANCIAL  INFORMATION,  CONTINUED

<TABLE>
<CAPTION>
                                  CONDENSED STATEMENTS OF CASH FLOWS

                                                                       For the Year Ended December 31,
                                                                       -------------------------------
($in thousands)                                                           2004       2003       2002
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>        <C>        <C>
OPERATING ACTIVITIES
Net earnings                                                            $ 11,453   $  9,120   $ 6,906
Adjustments to reconcile net earnings to net cash
  provided by operating activities:
Equity in earnings of subsidiaries                                       (13,241)   (10,420)   (8,026)
Cash dividends received from subsidiary                                    3,429      1,695     1,500
Provision (credit) for loan losses                                             7         32        (2)
Depreciation and amortization                                                 86          1         1
Amortization of deferred debenture costs                                     115        131       114
Amortization of deferred loan fees, net                                      (35)       (50)      (69)
Deferred income tax (benefit) expense                                         (3)        38       (55)
Compensation expense from awards/modifications of stock warrants               9        444       135
Increase in accrued interest payable on debentures                           576        347       756
Change in all other assets and liabilities, net                              (97)        93      (411)
------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                  2,299      1,431       849
------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Investment in subsidiaries, net                                          (33,928)   (20,715)     (338)
Cash acquired through acquisition of Intervest Securities Corporation          -        218         -
Purchase of equipment and leasehold improvements                          (1,206)       (11)       (2)
Loan principal repayments and (originations), net                          1,519     (6,316)      389
------------------------------------------------------------------------------------------------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES                      (33,615)   (26,824)       49
------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Net decrease in mortgage escrow funds payable                                (16)       (75)      (64)
Gross proceeds from issuance of debentures                                30,928     15,464         -
Debenture offering costs                                                    (663)      (446)       (9)
Principal repayments of debentures                                             -     (1,000)        -
Proceeds from issuance of common stock upon the exercise
  of stock warrants                                                        2,961      6,931     5,801
------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                 33,210     20,874     5,728
------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                       1,894     (4,519)    6,626
Cash and cash equivalents at beginning of year                             2,968      7,487       861
------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                $  4,862   $  2,968   $ 7,487
------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES
Cash paid (received) during the year for:
  Interest                                                              $  3,658   $  2,545   $ 1,825
  Income taxes                                                            (1,621)    (1,136)     (617)
Noncash transactions:
  Conversion of debentures into Class A common stock:
    Principal converted                                                    1,760      2,090         -
    Accrued interest converted                                             1,123      1,009         -
    Unamortized debenture offering costs converted                           (62)       (84)        -
  Class B stock issued to acquire Intervest Securities Corporation             -        215         -
  Accumulated other comprehensive income, change in  subsidiary's
    unrealized loss on securities available for sale, net of tax               -          -      (111)
------------------------------------------------------------------------------------------------------
</TABLE>


                                       68
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

24.  SELECTED  QUARTERLY  FINANCIAL  DATA  (UNAUDITED)

     The  following  information  is  as  of  or  for  the  period  ended:

<TABLE>
<CAPTION>
                                                                                       2004
                                                                                       ----
                                                                     First      Second        Third       Fourth
($in thousands, except per share amounts)                           Quarter     Quarter      Quarter      Quarter
-------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>        <C>          <C>          <C>
Interest and dividend income                                       $ 14,593   $   15,391   $   17,655   $   18,910
Interest expense                                                      8,215        8,866       10,348       11,254
                                                                   ------------------------------------------------
Net interest and dividend income                                      6,378        6,525        7,307        7,656
Provision for loan losses                                             1,077        1,284        1,067        1,098
                                                                   ------------------------------------------------
Net interest and dividend income after provision for loan losses      5,301        5,241        6,240        6,558
Noninterest income                                                    1,456        1,225        1,477          982
Noninterest expenses                                                  1,918        2,045        2,141        2,147
                                                                   ------------------------------------------------
Earnings before income taxes                                          4,839        4,421        5,576        5,393
Provision for income taxes                                            2,104        1,916        2,424        2,332
-------------------------------------------------------------------------------------------------------------------
NET EARNINGS                                                       $  2,735   $    2,505   $    3,152   $    3,061
-------------------------------------------------------------------------------------------------------------------

BASIC EARNINGS PER SHARE:                                          $    .45   $      .42   $      .52   $      .50
DILUTED EARNINGS PER SHARE:                                        $    .41   $      .37   $      .47   $      .46
-------------------------------------------------------------------------------------------------------------------

Return on average assets                                               1.15%        0.95%        1.05%        0.96%
Return on average equity                                              14.32%       12.58%       15.32%       14.30%
Total assets                                                       $993,010   $1,119,266   $1,269,256   $1,316,751
Total cash and investment securities                               $210,747   $  220,653   $  307,120   $  278,579
Total loans, net of unearned fees                                  $763,108   $  877,296   $  939,001   $1,015,396
Total deposits                                                     $737,150   $  852,852   $  976,392   $  993,872
Total borrowed funds and related interest payable                  $155,034   $  155,640   $  180,368   $  202,682
Total stockholders' equity                                         $ 78,751   $   81,259   $   84,410   $   90,094
-------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
                                                                                      2003
                                                                                      ----
                                                                     First     Second      Third     Fourth
($in thousands, except per share amounts)                           Quarter    Quarter    Quarter    Quarter
-------------------------------------------------------------------------------------------------------------
<S>                                                                <C>        <C>        <C>        <C>
Interest and dividend income                                       $ 11,625   $ 12,470   $ 12,845   $ 13,524
Interest expense                                                      6,788      6,964      7,079      7,733
                                                                   ------------------------------------------
Net interest and dividend income                                      4,837      5,506      5,766      5,791
Provision for loan losses                                               344        430        602        593
                                                                   ------------------------------------------
Net interest and dividend income after provision for loan losses      4,493      5,076      5,164      5,198
Noninterest income                                                      329      1,176      1,038        778
Noninterest expenses                                                  1,784      1,879      1,812      1,784
                                                                   ------------------------------------------
Earnings before income taxes                                          3,038      4,373      4,390      4,192
Provision for income taxes                                            1,237      1,807      1,859      1,970
-------------------------------------------------------------------------------------------------------------
NET EARNINGS                                                       $  1,801   $  2,566   $  2,531   $  2,222
-------------------------------------------------------------------------------------------------------------

BASIC EARNINGS PER SHARE:                                          $    .38   $    .55   $    .52   $    .41
DILUTED EARNINGS PER SHARE:                                        $    .32   $    .45   $    .42   $    .35
-------------------------------------------------------------------------------------------------------------

Return on average assets                                               1.03%      1.40%      1.32%      1.03%
Return on average equity                                              13.40%     18.33%     16.76%     13.17%
Total assets                                                       $728,409   $750,241   $823,828   $911,523
Total cash and investment securities                               $178,087   $158,043   $174,664   $220,026
Total loans, net of unearned fees                                  $532,592   $575,975   $631,361   $671,125
Total deposits                                                     $538,098   $553,388   $594,832   $675,513
Total borrowed funds and related interest payable                  $120,602   $120,988   $145,291   $140,383
Total stockholders' equity                                         $ 55,000   $ 58,009   $ 63,745   $ 75,385
-------------------------------------------------------------------------------------------------------------
</TABLE>


                                       69
<PAGE>
ITEM  9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
          FINANCIAL  DISCLOSURE

None

ITEM  9A.  CONTROLS  AND  PROCEDURES

The  Company's  management  evaluated,  with  the participation of its Principal
Executive  and Financial Officers, the effectiveness of the Company's disclosure
controls  and  procedures  (as  defined in Rule 13a-15(e) or 15d-15(e) under the
Securities  Exchange  Act  of  1934) as of the end of the period covered by this
report. Based on such evaluation, the Principal Executive and Financial Officers
have  concluded  that  the  Company's  disclosure  controls  and  procedures are
designed  to ensure that information required to be disclosed in the reports the
Company  files or submits under the Securities Exchange Act of 1934 is recorded,
processed,  summarized  and  reported  within  the time periods specified in the
SEC's  rules  and  regulations,  and  are  operating in an effective manner. The
Company made no significant changes in its internal controls or in other factors
that  could significantly affect these controls subsequent to December 31, 2004.

ITEM  9B.  OTHER  INFORMATION

Not  Applicable

                                    PART III

ITEM  10.  DIRECTORS  AND  EXECUTIVE  OFFICERS

     DIRECTORS.  The  information  required  by this item is contained under the
section  entitled  "Proposal  One: Election of Directors" in the Company's Proxy
Statement  for  its  2005  Annual  Meeting  (the  "Proxy  Statement")  and  is
incorporated  herein  by  reference.

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

     COMPLIANCE  WITH  SECTION  16(A).  The information required by this item is
contained  under  the  section  entitled  "Compliance  with Section 16(a) of the
Securities  Exchange  Act  of  1934"  in the Proxy Statement and is incorporated
herein  by  reference.

     AUDIT  COMMITTEE  FINANCIAL  EXPERT.  Information  regarding  the  audit
committee  of  the Company's Board of Directors, including information regarding
audit committee financial experts serving on the audit committee is contained in
the section of the Proxy Statement entitled "Corporate Governance Principles and
Board  Matters"  and  is  incorporated  herein  by  reference.

     CODE  OF  BUSINESS  CONDUCT  AND ETHICS.  The Company has adopted a written
code  of business conduct and ethics that applies to its directors, officers and
employees.  In  addition,  the  Company's  Audit  Committee  has  also  adopted
procedures  for  the  submission  of  complaints or concerns regarding financial
statement  disclosures and other matters. A copy of these documents are attached
as  Exhibits to this annual report on Form 10-K.  Additionally, a copy of any of
these  documents will be furnished upon request and without charge to beneficial
holders  of  the Class A Common Stock of the Company. Written requests should be
directed  to:  Intervest  Bancshares  Corporation,  Attention:  Secretary,  One
Rockefeller  Plaza,  Suite  400,  New  York,  New  York  10020.

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 AND
           RELATED STOCKHOLDER  TRANSACTIONS

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.

ITEM  14.  PRINCIPAL  ACCOUNTING  FEES  AND  SERVICES

The  information  contained  in  the  section  entitled  "Independent  Public
Accountants"  of  the  Proxy  Statement  is  incorporated  herein  by reference.


                                       70
<PAGE>
                                     PART IV

ITEM  15.  EXHIBITS  AND  FINANCIAL  STATEMENT  SCHEDULES

(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:

<TABLE>
<CAPTION>
<S>          <C>
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.

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, as Trustee,
             dated as of December 18, 2001, incorporated by reference to the Company's Report on Form 10-K for the
             year ended December 31, 2001, wherein such document is identified as Exhibit 4.8.

4.9          Form of Indenture between the Company, as Issuer, and U.S Bank National Association, as Trustee, dated
             as of September 17, 2003, incorporated by reference to the Company's Report on Form 10-K for the year
             ended December 31, 2003, wherein such document is identified as Exhibit 4.9.

4.10         Form of Indenture between the Company, as Issuer, and U.S Bank National Association, as Trustee,
             dated as of March 17, 2004, incorporated by reference to the Company's Report on Form 10-Q for the
             quarter ended September 30, 2004, wherein such document is identified as Exhibit 4.10.


                                       71
<PAGE>
EXHIBIT NO.  DESCRIPTION OF EXHIBIT
-----------  ----------------------

4.11         Form of Indenture between the Company, as Issuer, and Wilmington Trust Company, as Trustee,
             dated as of September 20, 2004, incorporated by reference to the Company's Report on Form 10-Q for
             the quarter ended September 30, 2004, wherein such document is identified as Exhibit 4.11.

4.12         Form of Indenture between the Company's subsidiary, Intervest Mortgage Corporation, and The Bank of
             New York dated as of June 1, 2004, incorporated by reference to Intervest Mortgage Corporation's
             quarterly report on Form 10-Q filed for the quarter ended September 30, 2004, wherein such document is
             identified as Exhibit 4.23.

10.0         Employment and Supplemental Benefits Agreement between the Company and Jerome Dansker dated as
             of July 1, 2004, incorporated by reference to the Company's Report on Form 10-Q for the quarter ended
             September 30, 2004, wherein such document is identified as Exhibit 10.0.

10.1         Employment and Supplemental Benefits Agreement between the Company and Lowell S. Dansker  dated
             as of July 1, 2004, incorporated by reference to the Company's Report on Form 10-Q for the quarter
             ended September 30, 2004, wherein such document is identified as Exhibit 10.1.

10.2         Employment and Supplemental Benefits Agreement between the Company and Lawrence G. Bergman
             dated as of July 1, 2004, incorporated by reference to the Company's Report on Form 10-Q for the
             quarter ended September 30, 2004, wherein such document is identified as Exhibit 10.2.

10.3         Employment Agreement between Intervest National Bank, the Company's subsidiary and Keith A. Olsen
             dated as of November 9, 2004, incorporated by reference to the Company's Report on Form 10-Q for the
             quarter ended September 30, 2004, wherein such document is identified as Exhibit 10.3.

10.4         Employment Agreement between Intervest National Bank, the Company's subsidiary and Raymond C.
             Sullivan dated as of November 10, 2004, incorporated by reference to the Company's Report on Form
             10-Q for the quarter ended September 30, 2004, wherein such document is identified as Exhibit 10.4.

10.5         Employment Agreement between Intervest National Bank, the Company's subsidiary and John J.
             Arvonio dated as of November 10, 2004, incorporated by reference to the Company's Report on Form
             10-Q for the quarter ended September 30, 2004, wherein such document is identified as Exhibit 10.5.

10.6         Mortgage Servicing Agreement dated as of April 1, 2002, as supplemented on October 21, 2004 for the
             purpose of clarification of the intent of the original agreement between the Company's subsidiaries,
             Intervest Mortgage Corporation and Intervest National Bank, incorporated by reference to Intervest
             Mortgage Corporation's quarterly report on Form 10-Q for the quarter ended September 30, 2004,
             wherein such document is identified as Exhibit 10.1.

10.7         Employment Agreement between the Company's subsidiary, Intervest Mortgage Corporation and
             John H. Hoffmann dated as of November 10, 2004, incorporated by reference to Intervest Mortgage
             Corporation's quarterly report on Form 10-Q for the quarter ended September 30, 2004, wherein such
             document is identified as Exhibit 10.2.

10.8         Amendment to Employment Agreement between the Company's subsidiary, Intervest Mortgage
             Corporation and Jerome Dansker dated as of July 1, 2004, incorporated by reference to Intervest
             Mortgage Corporation's quarterly report on Form 10-Q for the quarter ended September 30, 2004,
             wherein such document is identified as Exhibit 10.0.

12.0         Computation of ratios of earnings to fixed charges.

14.1         Code of Business Conduct

14.2         Code of Ethics


                                       72
<PAGE>
EXHIBIT NO.  DESCRIPTION OF EXHIBIT
-----------  ----------------------

14.3         Procedures for Submissions Regarding Questionable Accounting, Internal Accounting Controls and
             Auditing Matters

21.0         Subsidiaries

31.0         Certification of the principal executive officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

31.1         Certification of the principal financial officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

32.0         Certification of the principal executive and financial officers pursuant to Section 906 of The Sarbanes-
                                                                                                     -Oxley Act of 2002.
</TABLE>


                                       73
<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)

<TABLE>
<CAPTION>
<S>                                            <C>
By: /s/ Lowell S. Dansker                      Date: March 11, 2005
---------------------------------------------  --------------------
    Lowell S. Dansker, Vice Chairman,
    President and Treasurer
</TABLE>

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  AND  CHIEF  EXECUTIVE  OFFICER:
(PRINCIPAL  EXECUTIVE  OFFICER):

<TABLE>
<CAPTION>
<S>                                            <C>
By: /s/ Jerome Dansker                         Date: March 11, 2005
---------------------------------------------  --------------------
    Jerome Dansker

VICE CHAIRMAN, PRESIDENT AND TREASURER:
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER):

By: /s/ Lowell S. Dansker                      Date: March 11, 2005
---------------------------------------------  --------------------
    Lowell S. Dansker

VICE PRESIDENT, SECRETARY AND DIRECTOR:

By: /s/ Lawrence G. Bergman                    Date: March 11, 2005
---------------------------------------------  --------------------
    Lawrence G. Bergman

DIRECTORS:

By: /s/ Michael A. Callen                      Date: March 11, 2005
---------------------------------------------  --------------------
    Michael A. Callen

By: /s/ Paul R. DeRosa                         Date: March 11, 2005
---------------------------------------------  --------------------
    Paul R. DeRosa

By: /s/ Stephen A. Helman                      Date: March 11, 2005
---------------------------------------------  --------------------
    Stephen A. Helman

By: /s/ Wayne F. Holly                         Date: March 11, 2005
---------------------------------------------  --------------------
    Wayne F. Holly

By: /s/ Lawton Swan, III                       Date: March 11, 2005
---------------------------------------------  --------------------
    Lawton Swan, III

By: /s/ Thomas E. Willett                      Date: March 11, 2005
---------------------------------------------  --------------------
    Thomas E. Willett

By: /s/ David J. Willmott                      Date: March 11, 2005
---------------------------------------------  --------------------
    David J. Willmott

By: /s/ Wesley T. Wood                         Date: March 11, 2005
---------------------------------------------  --------------------
    Wesley T. Wood
</TABLE>


                                       74
<PAGE>