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

                                    FORM 10-K
                                Amendment No. 1

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
                                             -----------------

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

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

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


                        10 ROCKEFELLER PLAZA, SUITE 1015
                          NEW YORK, NEW YORK 10020-1903
                    ----------------------------------------
                    (Address of principal executive offices)

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

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

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

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

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

Indicate  by  check  mark  whether  the  registrant:  (1)  has filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or  for  such shorter period that the
registrant  was required to file such reports), and (2) has been subject to such
filing  requirements  for  the  past  90  days:  Yes  XX  No  .
                                                      --    --

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  the  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part  III  of this Form 10-K or any
amendments to this Form 10-K. [ ]

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, 2003, there were 4,359,235 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  1,771,785  shares of the Registrant's Class A
common  stock  on  the close of business June 30, 2003, which excludes 2,587,450
shares  held  by affiliates as a group, was $21,792,956.  This value is based on
the  average  bid  and  asked  price of $12.30 per share on June 30, 2003 of the
Class  A  common  stock  on  the  NASDAQ  Small  Cap  Market.

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

Portions  of the Proxy Statement for the 2004 Annual Meeting of Stockholders are
incorporated  by  reference  into  Part  III  of  this  Form  10-K.

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


<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES

                         2003 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS

     PART  I
                                                                            PAGE
                                                                            ----
     ITEM 1  Business . . . . . . . . . . . . . . . . . . . . . . . . . .     2

     ITEM 2  Properties . . . . . . . . . . . . . . . . . . . . . . . . .    13

     ITEM 3  Legal Proceedings. . . . . . . . . . . . . . . . . . . . . .    13

     ITEM 4  Submission of Matters to a Vote of Security Holders. . . . .    14

     ITEM 4A Executive Officers and Other Key Employees . . . . . . . . .    14

     PART II

     ITEM 5 Market for Common Equity, Related Stockholder Matters and Issuer
              Purchases of Equity Securities. . . . . . . . . . . . . . .    15

     ITEM 6 Selected Consolidated Financial and Other Data. . . . . . . .    17

     ITEM 7 Management's Discussion and Analysis of Financial Condition
               and Results of Operations. . . . . . . . . . . . . . . . .    18

     ITEM7A Quantitative and Qualitative Disclosures About Market Risk. .    36

     ITEM 8 Financial Statements and Supplementary Data . . . . . . . . .    37

     ITEM 9 Changes In and Disagreements with Accountants on
               Accounting and Financial Disclosure. . . . . . . . . . . .    68

     ITEM 9A Controls and Procedures. . . . . . . . . . . . . . . . . . .    68


     PART III

     ITEM 10 Directors and Executive Officers . . . . . . . . . . . . . .    68

     ITEM 11 Executive Compensation . . . . . . . . . . . . . . . . . . .    68

     ITEM 12 Security Ownership of Certain Beneficial Owners and
                Management. . . . . . . . . . . . . . . . . . . . . . . .    68

     ITEM 13 Certain Relationships and Related Transactions . . . . . . .    68

     ITEM 14 Principal Accountant Fees and Services . . . . . . . . . . .    68

     PART IV

     ITEM 15 Exhibits, Financial Statements Schedules and Reports on
                Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . .    68

     SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    70


                                        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 following factors are among those
that  could  cause  actual results to differ materially from the forward-looking
statements:  changes  in general economic, market and regulatory conditions; the
development  of  an  interest  rate  environment  that  may adversely affect the
Company's  interest  rate spread, other income or cash flow anticipated from the
Company's operations, investment and lending activities; and changes in laws and
regulations  affecting  banks  and  bank  holding  companies.

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

Intervest  Bancshares Corporation is a registered financial holding company (the
"Holding Company") incorporated in 1993 under the laws of the State of Delaware.
Its  principal  office is located at 10 Rockefeller Plaza, Suite 1015, New York,
NY  10020, and its telephone number is 212-218-2800. The Holding Company's Class
A  common  stock  is  listed  on  the  NASDAQ SmallCap Market (Symbol: IBCA). At
December  31,  2003,  the  Holding Company owned 100% of the outstanding capital
stock  of  Intervest National Bank (the "Bank"), Intervest Mortgage Corporation,
Intervest  Securities  Corporation,  Intervest  Statutory  Trust I and Intervest
Statutory  Trust  II  (hereafter referred to collectively as the "Company," on a
consolidated  basis). The Company expects to be moving from its present New York
locations  to  the entire fourth floor of One Rockefeller Plaza in New York City
in  the  second  quarter  of  2004.

At  December  31,  2003,  the Company had total assets of $910,595,000, 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 $139,455,000, and
stockholders'  equity  of $75,385,000, compared to total assets of $685,979,000,
cash  and  security  investments  of  $179,651,000,  net  loans of $489,912,000,
deposits  of  $505,958,000,  borrowed  funds  and  related  interest  payable of
$113,568,000,  and  stockholders'  equity  of  $53,126,000 at December 31, 2002.

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 300, 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,  2003,  the  Bank  had  total assets of $789,567,000, cash and
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, compared to total assets
of  $581,435,000,  cash  and  security investments of $163,167,000, net loans of
$407,128,000,  deposits of $517,209,000 and stockholder's equity of $51,936,000,
at  December  31,  2002.

The  Bank  provides  a wide range of banking services to small and middle-market
businesses  and  individuals. It conducts a personalized commercial and consumer
banking  business  and  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


                                        2
<PAGE>
with  funds  derived from other sources, are used to originate a variety of real
estate, commercial and consumer loans and to purchase investment securities. The
Bank  emphasizes  multifamily residential and commercial real estate lending and
also  offers  commercial  and  consumer  loans.

The  revenues  of the Bank are primarily derived from interest and fees received
from originating loans, and from interest and dividends earned on securities and
other  short-term  investments.  The  principal  sources of funds for the Bank's
lending  activities  are  deposits,  repayment of loans, maturities and calls of
securities  and  cash  flow  generated  from  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 located at 10 Rockefeller Plaza in New York
City. It is in the business of investing primarily in commercial and multifamily
real  estate  mortgage  loans on income producing properties, such as office and
commercial  properties  and multifamily residential apartment buildings. It also
makes  loans  on  other  types of properties and may resell mortgages. Intervest
Mortgage  Corporation  issues  debentures  to  provide funding for its business.

At  December  31,  2003,  Intervest  Mortgage  Corporation  had  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, compared to total assets of $97,311,000,
cash  and  short-term  investments  of  $19,946,000,  net  loans of $73,499,000,
debentures and related interest payable of $84,751,000, and stockholder's equity
of  $11,413,000,  at  December  31,  2002.

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

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

Intervest  Securities  Corporation is a broker/dealer and a NASD and SIPC member
firm  located  at  10  Rockefeller  Plaza,  Suite  1015,  in  New  York City. It
participates  as  a  selected  dealer  from  time  to  time in offerings of debt
securities of the Company, primarily those of Intervest Mortgage Corporation. On
June  2, 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. 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, 2003, Intervest Securities
Corporation  had  total  assets  of  $455,000  consisting  of  cash  and  its
stockholder's  equity  amounted  to  $459,000.

Intervest  Statutory  Trust  I  and  Intervest  Statutory  Trust  II
--------------------------------------------------------------------

Intervest  Statutory Trust I was formed in December 2001 and Intervest Statutory
Trust  II  was formed in September 2003. Each was formed for the sole purpose of
issuing  and administering $15,000,000 of Trust Preferred Securities for a total
of  $30,000,000.  The Trusts do not conduct any trade or business. The Financial
Accounting  Standards  Board  has  issued  new accounting guidelines for special
purpose  entities,  such as the Trusts, which will result in the


                                        3
<PAGE>
deconsolidation of the Trusts from the Company's financials statements beginning
in  2004. See note 1 to the consolidated financial statements in this report for
a  further  discussion.

MARKET  AREA

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

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

COMPETITION

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

Competition among financial institutions is based upon interest rates offered on
deposit  accounts,  interest rates charged on loans and other credit and service
charges,  the  quality  and  scope  of the services rendered, the convenience of
banking  facilities  and, in the case of loans to commercial borrowers, relative
lending  limits.

Management  believes  a  locally-based  bank  is  often  perceived  by the local
business  community  as possessing a clearer understanding of local commerce and
their  needs.  Consequently,  management  believes  that  the  Bank  can compete
successfully  in  its  primary  market areas by making prudent lending decisions
quickly  and  more  efficiently than its competitors, without compromising asset
quality  or profitability, although no assurances can be given that such factors
will  assure  success.  In  addition, management believes a personalized service
approach  enables  the  Bank  to  attract  and  retain  core  deposits.

In  making  its  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 engaged in purchasing
mortgages or making real property investments with investment objectives similar
in  whole  or part to its own. Most of these competitors also have significantly
greater  financial  and  marketing  resources.  An  increase  in  the  general
availability  of  funds may increase competition in the making of investments in
mortgages  and  real  property,  and  may reduce the yields available therefrom.

LENDING  ACTIVITIES

The  Company's  lending  activities  emphasize  the  origination  of  loans  on
commercial  and  multifamily  real  estate properties. Single-family residential
mortgage  lending  has  not been emphasized. The Bank also offers commercial


                                        4
<PAGE>
and  consumer  loans. At December 31, 2003, the Company's loan portfolio, net of
deferred  fees,  amounted  to $671,125,000, compared to $489,912,000 at December
31,  2002.

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.  Depending on their type and size, certain 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%, and debt
service  coverage  ratios  on  new  loans  typically  are  not  less  than 1.2x.

Intervest  Mortgage  Corporation  does  not  have  formal policies regarding the
percentage  of  its assets that may be invested in any single mortgage, the type
of  mortgage  loans  and  investments  it  can  make, the geographic location of
properties  collateralizing  those  mortgages  or limits as to loan-to-value 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,
junior  mortgage  and wraparound mortgage loans. Junior and wraparound mortgages
normally  have  greater  risks  than  first  mortgages.

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

Nearly  all  of  the  Company's  loan portfolio is comprised of loans secured by
commercial  and  multifamily  real  estate,  including  rental  and  cooperative
apartment buildings, office buildings, mix-used properties, shopping centers and
vacant  land.

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.

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 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  a  variety  of commercial loan services including term loans,
lines  of credit and equipment financing. Short-to-medium term commercial loans,
both  collateralized  and uncollateralized, are made available to businesses for
working  capital  needs  (including  those secured by inventory, receivables and
other  assets),  business  expansion  (including acquisitions of real estate and
improvements),  and  the  purchase of equipment and machinery.  Commercial loans
are  typically  underwritten  on  the  basis  of  the borrower's ability to make
repayment  from the cash flow of their business and are generally collateralized
as  discussed above. As a result, the availability of funds for the repayment of
commercial  loans  may be substantially dependent on the success of the business
itself.


                                        5
<PAGE>
Further, the collateral underlying the loans may depreciate over time, cannot be
appraised  with  as much precision as residential real estate, and may fluctuate
in  value  based  on  the  success  of  the  business.

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

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

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

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

The  Company's  underwriting procedures normally require the following: physical
inspections  by  management  of  properties being considered for mortgage loans;
mortgage  title  insurance;  hazard  insurance; and an appraisal of the property
securing  the  loan to determine the property's adequacy as 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.

ASSET  QUALITY

After  a loan is originated, the Company makes ongoing reviews of loans so as to
monitor documentation and valuations of collateral with the objective of quickly
identifying,  evaluating  and  initiating  corrective actions for problem loans.

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,
which  represented  97%  of  the  total loan portfolio at December 31, 2003. The
properties  underlying the Company's mortgages are also concentrated in New York
State  (64%) and the State of Florida (28%). 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 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.
Additionally, terrorist acts, such as those that occurred on September 11, 2001,
and  armed conflicts, such as the recent Gulf War, may have an adverse impact on
economic  conditions.

At  December  31,  2003, the Company had two real estate loans with an aggregate
principal  balance  of  $8,474,000  on  nonaccrual  status.  These  loans  were
considered  impaired  under  the criteria of SFAS No.114. The Company's recorded
investment in these loans totaled $8,499,000. The Company believes the estimated
fair  value  of each of the underlying properties (which are located in New York
City)  is  greater  than  its  recorded  investment.  As  a result, there was no
specific  valuation  allowance maintained. During March 2004, the aforementioned
loans  were  brought  current and returned to an accrual status. At December 31,
2003  and  2002, there were no other loans classified as nonaccrual, impaired or
ninety  days  past  due  and  still  accruing  interest.

At year-end 2002, foreclosed real estate amounted to $1,081,000. and represented
one  commercial  real  estate  property located in the State of Florida that was
acquired  by  the  Bank  through foreclosure. In the second quarter of


                                        6
<PAGE>
2003,  the  property  was  sold  for  net  proceeds  of approximately $1,030,000
(consisting of cash, after selling costs, of $150,000 and a mortgage of $880,000
provided  by  the  Bank).

From  1999  to  2003,  the  Company  experienced  only one loss from its lending
activities amounting to $201,000, which related to the aforementioned foreclosed
real  estate  and  was comprised of a $150,000 loan chargeoff and a $51,000 loss
from  the  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 upon a mortgage in
the  normal  course  of  business. With respect to such equity interests in real
estate,  the  Company may acquire and retain title to properties either directly
or  through  a subsidiary. While no such transactions are presently pending, the
Company  would  consider the expansion of its business through investments in or
acquisitions  of  other  companies  engaged  in real estate or mortgage business
activities.  While  the  Company  has  not  previously made acquisitions of real
property  (other  than purchases in connection with the operation of its offices
or  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  which  have  a significantly lower credit risk than the Company's
loan  portfolio.  To  manage  interest rate risk, the Company normally purchases
securities  that  have adjustable rates or securities with fixed rates that have
short-  to  intermediate-maturity  terms.  From  time  to  time,  a  securities
available-for-sale portfolio may be maintained to provide additional flexibility
for implementing asset and liability management strategies. The Company does not
engage  in  trading activities. Securities held to maturity totaled $152,823,000
at  December 31, 2003, compared to $145,694,000 at December 31, 2002. There were
no  securities  classified  as  available for sale at December 31, 2003 or 2002.

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, 2003 amounted to
$64,128,000,  compared  to  $30,849,000  at  December  31,  2002.

SOURCES  OF  FUNDS

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

Deposit  accounts  are  solicited  from  individuals,  small  businesses  and
professional  firms  located  throughout the Bank's primary market areas through
the  offering of a broad variety of deposit services. The Bank also uses its web
site on the internet: www.intervestnatbank.com, which attracts deposit customers
from  both  within  and  outside its primary market areas. At December 31, 2003,
consolidated  deposit liabilities totaled $675,513,000, compared to $505,958,000
at  December  31,  2002.

Deposit  services  include  the  following:  certificates  of deposit (including
denominations of $100,000 or more); individual retirement accounts (IRAs); other
time  deposits;  checking and other demand deposit accounts; negotiable order of
withdrawal (NOW) accounts; savings accounts; and money market accounts. Interest
rates  offered  by  the  Bank  on deposit accounts are normally competitive with
those  in the principal market areas of the Bank. In addition, the determination
of  rates  and  terms  also  considers  the  Bank's liquidity requirements, loan


                                        7
<PAGE>
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  available  resources.

The  Bank  purchases  federal  funds  from  time to time to manage its liquidity
needs. The Bank has agreements with correspondent banks whereby it may borrow on
an  overnight, unsecured basis of up to $16,000,000. As a member of the FHLB and
the  FRB,  the  Bank  can borrow from these institutions on a secured basis that
amounted  to  approximately  $145,000,000  at December 31, 2003. At December 31,
2003 and 2002, there were no outstanding borrowings under any of these lines and
such  funding  has  not  been  emphasized  to  date.

Intervest  Mortgage  Corporation's  principal  sources  of  funds  consist  of
borrowings  (through  the  issuance of its  debentures), mortgage repayments and
cash  flow generated from operations. From time to time, it has received capital
contributions from the Holding Company. At December 31, 2003, Intervest Mortgage
Corporation  had  debentures outstanding of $87,350,000, compared to $74,000,000
at  December  31,  2002.

The Holding Company has also issued debentures for working capital purposes. The
Holding  Company's  debentures  outstanding  totaled  $7,340,000 at December 31,
2003,  compared  to  $10,430,000  December  31,  2002.  In addition, the Holding
Company,  through  its wholly owned subsidiaries Intervest Statutory Trust I and
Intervest  Statutory  Trust  II,  has issued Trust Preferred Securities (Capital
Securities)  totaling  $30,000,000  to  date.

EMPLOYEES

At  December  31,  2003, the Company employed 61 full-time equivalent employees,
compared  to  57  at  year-end 2002. 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 to the Holding Company and its subsidiaries on the basis of
their  respective  taxable  income  or taxable loss included in the consolidated
income  tax  return.

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

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


                                        8
<PAGE>
years,  or  a  "grandfathered" base year reserve, if larger. 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.

INVESTMENT  IN  SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                       At December 31, 2003
                                  ---------------------------------   Subsidiaries
($in thousands                     % of                  Equity in    Earnings (loss) for the
                                  Voting      Total     Underlying    Year Ended December 31,
Subsidiary                         Stock   Investment   Net Assets    2003    2002    2001
--------------------------------  -------  -----------  -----------  ------  ------  ------
<S>                               <C>      <C>          <C>          <C>      <C>     <C>
Intervest National Bank              100%  $    73,907  $    73,907  $8,667   $6,459  $3,404
Intervest Mortgage Corporation       100%  $    18,173  $    18,173  $1,759   $1,567  $  577
Intervest Securities Corporation     100%  $       459  $       459  $  (6)   $    -  $    -
Intervest Statutory Trust I          100%  $       464  $       464  $   -    $    -  $    -
Intervest Statutory Trust II         100%  $       464  $       464  $   -    $    -  $    -
</TABLE>


The  Bank  pays  a  monthly  dividend to the Holding Company in order to provide
funds for the debt service on the Capital Securities, the proceeds of which were
contributed  to  the Bank as capital. Such dividends paid in 2003, 2002 and 2001
to  the  Holding  Company  amounted  to  $1,695,000,  $1,500,000  and  $125,000,
respectively.


SUPERVISION  AND  REGULATION

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

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

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

The  FRB  monitors  the  capital  adequacy  of  bank  holding companies and uses
risk-based  capital  adequacy guidelines to evaluate bank holding companies on a
consolidated basis. The guidelines require a ratio of Tier 1 or Core Capital, as
defined  in  the  guidelines, to total risk-weighted assets of at least 4% and a
ratio  of  total capital to risk-weighted assets of at least 8%. At December 31,
2003,  the Company's consolidated ratio of total capital to risk-weighted assets
was  14.84%  and its risk-based Tier 1 capital ratio was 13.28%. At December 31,
2002,  the same ratios were 13.06% and 12.21%, respectively. 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, 2003 and
2002,  was  11.31%  and  9.88%,  respectively.

The  federal  banking  agencies'  risk-based  and  leverage  ratios  are minimum
supervisory  ratios  generally  applicable  to  banking  organizations that meet
certain  specified  criteria,  assuming  that  they  have the highest regulatory
rating. Banking organizations not meeting these criteria are expected to operate
with  capital  positions  well above the


                                        9
<PAGE>
minimum  ratios.  The  FRB  guidelines  also  provide that banking organizations
experiencing internal growth or making acquisitions will be expected to maintain
strong  capital  positions  substantially  above the minimum supervisory levels,
without  significant reliance on intangible assets. In addition, the regulations
of  the  FRB  provide that concentration of credit risk and certain risk arising
from  nontraditional  activities,  as well as an institution's ability to manage
these  risks,  are  important  factors  to  be  taken into account by regulatory
agencies  in  assessing  an  organization's  overall  capital  adequacy.

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

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

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

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

The  Bank  is  subject  to  Sections  23A and 23B of the Federal Reserve Act 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.


                                       10
<PAGE>
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, 2003 and 2002,
the  Bank  met  the  definition  of  a  well-capitalized  institution.

The deposits of the Bank are insured by the FDIC through the Bank Insurance Fund
(the  "BIF")  to  the  extent  provided  by  law.  Under  the  FDIC's risk-based
insurance  system,  BIF-insured  institutions are currently assessed premiums of
between  zero  and  $0.27  per  $100  of  eligible  deposits, depending upon the
institutions  capital  position  and other supervisory factors. Legislation also
provides  for  assessments against BIF insured institutions that will be used to
pay  certain  financing corporation ("FICO") obligations. In addition to any BIF
insurance  assessments,  BIF-insured banks are expected to make payments for the
FICO  obligations  currently  equal to an estimated $0.0152 per $100 of eligible
deposits  each  year.  The  assessment  is  determined  quarterly.

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

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


                                       11
<PAGE>
The  FRB,  OCC and other federal banking agencies have broad enforcement powers,
including the power to terminate deposit insurance, and impose substantial fines
and  other  civil  and criminal penalties and appoint a conservator or receiver.
Failure  to  comply with applicable laws, regulations and supervisory agreements
could  subject  the  Holding  Company  or  its  banking  subsidiary,  as well as
officers,  directors  and  other  institution-affiliated  parties  of  these
organizations,  to  administrative  sanctions  and  potentially  civil  monetary
penalties.

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

The  Riegle-Neal  Interstate  Banking  and  Branching  Efficiency  Act  of  1994
facilitates  the interstate expansion and consolidation of banking organizations
by permitting bank holding companies that are adequately capitalized and managed
to  acquire  banks  located  in  states  outside their home states regardless of
whether  such  acquisitions are authorized under the law of the host state.  The
Act  also  permits  interstate  mergers  of banks, with some limitations and the
establishment  of  new branches on an interstate basis provided that such action
is  authorized by the law of the host state.  The Gramm-Leach-Bliley Act of 1999
permits  banks,  securities  firms  and insurance companies to affiliate under a
common  holding  company  structure.  In  addition  to  allowing  new  forms  of
financial  services  combinations,  this  Act  clarifies  how financial services
conglomerates  will  be regulated by the different federal and state regulators.
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 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."

On  July  30, 2002, the President signed into law the Sarbanes-Oxley Act of 2002
implementing  legislative  reforms  intended to address corporate and accounting
fraud.  In addition to establishing a new accounting oversight board, which will
enforce auditing, quality control and independence standards, the bill restricts
provision  of  both  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 the 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 other their direction from taking any
action  to  fraudulently  induce,  coerce, manipulate or mislead any independent
public  or  certified accountant engaged in the audit of the company's financial
statements  for  the  purpose  of rendering the financial statement's materially
misleading.  The


                                       12
<PAGE>
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 the financial
stability  of the United States banking system, and to provide for other changes
in  the  bank  regulatory  structure,  including  proposals to reduce regulatory
burdens  on  banking  organizations  and  to  expand  the nature of products and
services  banks  and  bank  holding  companies may offer.  It is not possible to
predict  whether  or  in  what form these proposals may be adopted in the future
and,  if  adopted,  what  their  effect  will  be  on  the  Company.

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

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

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

The  Company's  non-banking  subsidiary, Intervest Mortgage Corporation, is also
subject  to regulation by the FRB. Intervest Securities Corporation is regulated
by the Securities and Exchange Commission, or "SEC", the National Association of
Securities  Dealers,  Inc.,  or  "NASD,"  and  state  securities  regulators.

ITEM  2.  PROPERTIES

The  office of the Holding Company, Intervest Mortgage Corporation and Intervest
Securities Corporation is located in leased premises (of approximately 5,000 sq.
ft.) on the tenth floor of 10 Rockefeller Plaza, New York, N.Y, 10020. The lease
expires in September 2004. The Bank's headquarters and banking office is located
in  leased  premises on the third floor of One Rockefeller Plaza, New York, N.Y,
10020.  The office consists of approximately 7,000 sq. ft. and the lease expires
in  May  2008.

In  October  2003,  the  Holding Company entered into a new lease for the entire
fourth floor (consisting of approximately 21,400 square feet) of One Rockefeller
Plaza,  New York, N.Y, 10020 through March 2014. The Holding Company, the Bank's
headquarters  and  banking  office, Intervest Mortgage Corporation and Intervest
Securities Corporation will be moving from their present locations to the fourth
floor  upon completion of renovations, with the Bank expected to occupy one-half
of  this  space. Upon relocation, the Bank's current lease of the third floor of
One  Rockefeller  Plaza  will be canceled, while the current lease for the tenth
floor of 10 Rockefeller plaza will continue to run until it expires in September
2004,  or earlier if such space is rented by the landlord prior thereto. All the
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  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.

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


                                       13
<PAGE>
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
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,  2003,  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  85,  serves  as  Chairman  of  the Board of Directors and
Executive  Vice  President  of  Intervest  Bancshares Corporation since 1996 and
1994,  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 53, serves as Vice Chairman of the Board of Directors,
and as President and Treasurer of Intervest Bancshares Corporation 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 59, serves as a Director, Vice President and Secretary
of  Intervest Bancshares Corporation 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 and Vice-President of
Intervest  Securities  Corporation.

KEITH  A.  OLSEN,  age  50, 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


                                       14
<PAGE>
University.  Mr. Olsen has been in banking for more than 15 years and has served
as  a  senior  bank  officer  for  more  than  10  years.

RAYMOND  C. SULLIVAN, age 57, 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.


JOHN  J.  ARVONIO,  age  41,  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 since April 1999
and  as an employee of Intervest Bancshares Corporation from April 1998 to March
1999.  Mr.  Arvonio  also is 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,  Technical Advisor and Assistant Controller for The Greater New
York Savings Bank from 1992 to 1997. Prior to that, Mr. Arvonio was a Manager of
Financial Reporting for the Leasing and Investment Banking Divisions of Citibank
from  1989  to  1992,  and a Senior Auditor for Ernst & Young from 1985 to 1989.


                                     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, 2003, there were 5,603,377 and
385,000 shares of Class A and Class B common stock outstanding, respectively. At
December 31, 2003, 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,
2003,  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
2003  and  2002  are  as  follows:

<TABLE>
<CAPTION>
                               2003           2002
                               ----           ----
                           High    Low     High    Low
                          --------------  -------------
<S>                       <C>     <C>     <C>     <C>
          First quarter   $11.48  $10.05  $ 9.99  $7.20
          Second quarter  $12.77  $10.38  $11.05  $8.79
          Third quarter   $13.75  $12.05  $11.50  $7.46
          Fourth quarter  $15.48  $12.86  $11.25  $8.99
</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


                                       15
<PAGE>
determined by the subsidiary's Board of Directors and is dependent upon a number
of  factors,  including  the  subsidiary's  capital  requirements,  regulatory
limitations,  results  of  operations  and  financial  condition.

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


                                       16
<PAGE>
<TABLE>
<CAPTION>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
-----------------------------------------------------------------------------------------------------------------------------
                                                                          At or For The Year Ended December 31,
                                                              ---------------------------------------------------------------
($in thousands, except per share data)                           2003         2002         2001         2000         1999
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>          <C>          <C>          <C>          <C>
FINANCIAL CONDITION DATA:
Total assets . . . . . . . . . . . . . . . . . . . . . . . .  $  910,595   $  685,979   $  512,622   $  416,927   $  340,481
Cash and cash equivalents. . . . . . . . . . . . . . . . . .  $   64,128   $   30,849   $   24,409   $   42,938   $   32,095
Securities available for sale. . . . . . . . . . . . . . . .  $        -   $        -   $    6,192   $   74,789   $        -
Securities held to maturity, net . . . . . . . . . . . . . .  $  152,823   $  145,694   $   99,157   $   20,970   $   83,132
Loans receivable, net of deferred fees . . . . . . . . . . .  $  671,125   $  489,912   $  368,526   $  266,326   $  212,937
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . .  $  675,513   $  505,958   $  362,437   $  300,241   $  201,080
Borrowed funds and related accrued interest payable. . . . .  $  139,455   $  113,568   $   99,910   $   72,813   $   99,377
Stockholders' equity . . . . . . . . . . . . . . . . . . . .  $   75,385   $   53,126   $   40,395   $   36,228   $   33,604
Nonaccrual loans . . . . . . . . . . . . . . . . . . . . . .  $    8,474   $        -   $    1,243   $        -   $        -
Foreclosed real estate . . . . . . . . . . . . . . . . . . .  $        -   $    1,081   $        -   $        -   $        -
Allowance for loan losses. . . . . . . . . . . . . . . . . .  $    6,580   $    4,611   $    3,380   $    2,768   $    2,493
Loan chargeoffs. . . . . . . . . . . . . . . . . . . . . . .  $        -   $      150   $        -   $        -   $        -
Loan recoveries. . . . . . . . . . . . . . . . . . . . . . .  $        -   $      107   $        -   $        -   $        1
-----------------------------------------------------------------------------------------------------------------------------
OPERATIONS DATA:
Interest and dividend income . . . . . . . . . . . . . . . .  $   50,464   $   43,479   $   35,462   $   31,908   $   25,501
Interest expense . . . . . . . . . . . . . . . . . . . . . .      28,564       26,325       24,714       23,325       18,419
                                                              ---------------------------------------------------------------
Net interest and dividend income . . . . . . . . . . . . . .      21,900       17,154       10,748        8,583        7,082
Provision for loan losses. . . . . . . . . . . . . . . . . .       1,969        1,274          612          275          830
                                                              ---------------------------------------------------------------
Net interest and dividend income after
     provision for loan losses . . . . . . . . . . . . . . .      19,931       15,880       10,136        8,308        6,252
Noninterest income . . . . . . . . . . . . . . . . . . . . .       3,321        2,218        1,655          983          900
Noninterest expenses . . . . . . . . . . . . . . . . . . . .       7,259        6,479        5,303        4,568        4,059
                                                              ---------------------------------------------------------------
Earnings before income taxes, extraordinary item
     and change in accounting principle. . . . . . . . . . .      15,993       11,619        6,488        4,723        3,093
Provision for income taxes . . . . . . . . . . . . . . . . .       6,873        4,713        2,710        1,909        1,198
                                                              ---------------------------------------------------------------
Earnings before extraordinary item and
     change in accounting principle. . . . . . . . . . . . .       9,120        6,906        3,778        2,814        1,895
Extraordinary item, net of tax (1) . . . . . . . . . . . . .           -            -            -         (206)           -
Cumulative effect of accounting change, net of tax (2) . . .           -            -            -            -         (128)
                                                              ---------------------------------------------------------------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . .  $    9,120   $    6,906   $    3,778   $    2,608   $    1,767
-----------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA (3):
Basic earnings per share . . . . . . . . . . . . . . . . . .  $     1.85   $     1.71   $     0.97   $     0.67   $     0.47
Diluted earnings per share . . . . . . . . . . . . . . . . .  $     1.53   $     1.37   $     0.97   $     0.67   $     0.44
Book value per share . . . . . . . . . . . . . . . . . . . .  $    12.59   $    11.30   $    10.36   $     9.29   $     8.76
Market price per share . . . . . . . . . . . . . . . . . . .  $    14.65   $    10.80   $     7.40   $     3.75   $     6.25
-----------------------------------------------------------------------------------------------------------------------------
OTHER DATA AND RATIOS:
Common shares outstanding. . . . . . . . . . . . . . . . . .   5,988,377    4,703,087    3,899,629    3,899,629    3,836,879
Average common shares used to calculate:
     Basic earnings per share. . . . . . . . . . . . . . . .   4,938,995    4,043,619    3,899,629    3,884,560    3,760,293
     Diluted earnings per share. . . . . . . . . . . . . . .   6,257,720    5,348,121    3,899,629    3,884,560    4,020,118
Adjusted net earnings for diluted earnings per share . . . .  $    9,572   $    7,342   $    3,778   $    2,608   $    1,767
Full-service banking offices . . . . . . . . . . . . . . . .           6            6            6            6            6
Net interest margin. . . . . . . . . . . . . . . . . . . . .        2.90%        2.88%        2.47%        2.34%        2.38%
Return on average assets . . . . . . . . . . . . . . . . . .        1.19%        1.13%        0.85%        0.69%        0.57%
Return on average equity . . . . . . . . . . . . . . . . . .       15.34%       15.56%        9.94%        7.48%        5.48%
Loans, net of unearned income to deposits. . . . . . . . . .       99.35%       96.83%       101.7%       88.70%      105.90%
Allowance for loan losses to total net loans . . . . . . . .        0.98%        0.94%        0.92%        1.04%        1.17%
Average stockholders' equity to average total assets . . . .        7.74%        7.27%        8.50%        9.18%       10.37%
Stockholders' equity to total assets . . . . . . . . . . . .        8.28%        7.74%        7.88%        8.69%        9.87%
-----------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Represents a charge, net of taxes, from the early retirement of debentures.
(2)  Represents a charge, net of taxes, from the adoption of Statement of Position 98-5, "Reporting on the Costs of Start-Up
     Activities."
(3)  The Company has never paid common dividends.
</TABLE>


                                       17
<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 five wholly owned subsidiaries - Intervest
National Bank, Intervest Mortgage Corporation, Intervest Securities Corporation,
Intervest Statutory Trust I and Intervest Statutory Trust II (hereafter referred
to  collectively as the "Company" on a consolidated basis). Intervest Bancshares
Corporation  and  Intervest National Bank may be referred to individually as the
"Holding  Company"  and  the  "Bank,"  respectively.

The  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  prepayment  provisions,  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 97% of the total loan portfolio at December
31,  2003.  The  properties  underlying  the  Company's  mortgages  are  also
concentrated in New York State (64%) and the State of Florida (28%). 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 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.  Additionally,  terrorist  acts,  such  as  those  that  occurred on
September  11, 2001, and armed conflicts, such as the recent Gulf War, may  have
an  adverse  impact  on  economic  conditions.

The  Company  has  also  previously announced that it intends to explore further
growth  through  the  acquisition  of  other  banks  or  thrifts with operations
compatible  with its own and with a view towards consolidating selected lines of
business,  operations  and  support  functions  in order to achieve economies of
scale,  greater  efficiency and operational consistency. The Company anticipates
that  any  such banks/thrifts would be located in the Eastern United States. The
Company  has  not entered into any agreements or identified any institutions for
acquisition  and  there  can be no assurances that any such acquisitions will be
successfully  completed.

COMPARISON  OF  FINANCIAL  CONDITION AT DECEMBER 31, 2003 AND DECEMBER 31, 2002.

Overview
--------

Total  assets  at December 31, 2003 increased to $910,595,000, from $685,979,000
at  December  31,  2002.  Total  liabilities  at  December 31, 2003 increased to
$835,210,000,  from  $632,853,000 at December 31, 2002, and stockholders' equity
increased  to  $75,385,000  at  December  31, 2003, from $53,126,000 at year-end
2002.  Book value per common share increased to $12.59 per share at December 31,
2003,  from  $11.30  at  December  31,  2002.


                                       18
<PAGE>
<TABLE>
<CAPTION>
Selected balance sheet information as of December 31, 2003 follows:

                                                           Intervest    Intervest   Intervest    Intervest      Inter-
                                               Holding     National     Mortgage    Statutory    Securities    Company
($in thousands)                                Company       Bank         Corp        Trusts        Corp       Amts (1)
------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>          <C>          <C>         <C>           <C>
Cash and cash equivalents                    $    2,968   $   56,395   $   25,801   $        -  $       455   $ (21,491)
Security investments                                  -      155,898            -       30,928            -     (30,928)
Loans receivable, net of deferred fees           15,592      566,226       89,307            -            -           -
Allowance for loan losses                           (78)      (6,310)        (192)           -            -           -
Investment in subsidiaries                       93,467            -            -            -            -     (93,467)
All other assets                                  4,235       17,358        4,662          100            -        (331)
------------------------------------------------------------------------------------------------------------------------
Total assets                                 $  116,184   $  789,567   $  119,578   $   31,028  $       455   $(146,217)
------------------------------------------------------------------------------------------------------------------------
Deposits                                     $        -   $  697,279   $        -   $        -  $         -   $ (21,766)
Borrowed funds and interest payable              40,729          255       99,402       30,097            -     (31,028)
All other liabilities                                70       18,126        2,003            3           (4)         44
------------------------------------------------------------------------------------------------------------------------
Total liabilities                                40,799      715,660      101,405       30,100           (4)    (52,750)
------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                             75,385       73,907       18,173          928          459     (93,467)
------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity   $  116,184   $  789,567   $  119,578   $   31,028  $       455   $(146,217)
------------------------------------------------------------------------------------------------------------------------



($in thousands)                               Combined
-------------------------------------------------------
<S>                                          <C>
Cash and cash equivalents                    $  64,128
Security investments                           155,898
Loans receivable, net of deferred fees         671,125
Allowance for loan losses                      ( 6,580)
Investment in subsidiaries                           -
All other assets                                26,024
-------------------------------------------------------
Total assets                                 $ 910,595
-------------------------------------------------------
Deposits                                     $ 675,513
Borrowed funds and interest payable            139,455
All other liabilities                           20,242
-------------------------------------------------------
Total liabilities                              835,210
-------------------------------------------------------
Stockholders' equity                            75,385
-------------------------------------------------------
Total liabilities and stockholders' equity   $ 910,595
-------------------------------------------------------
<FN>
(1)  All  significant  intercompany  balances and transactions are eliminated in
     consolidation.  Such  amounts  arise largely from intercompany deposit accounts,
     investments  and  borrowed  funds
</TABLE>

A comparison of the Company's consolidated balance sheet as of December 31, 2003
and  2002  follows:

<TABLE>
<CAPTION>
                                                                   At December 31, 2003      At December 31, 2002
                                                                 ------------------------  ------------------------
                                                                 Carrying       % of       Carrying       % of
($in thousands)                                                    Value    Total Assets     Value    Total Assets
-------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>        <C>            <C>        <C>
Cash, cash equivalents and time deposits with banks              $  64,128           7.0%  $  32,849           4.8%
Security investments                                               155,898          17.1     146,802          21.4
Loans receivable, net of deferred fees and loan loss allowance     664,545          73.0     485,301          70.7
All other assets                                                    26,024           2.9      21,027           3.1
-------------------------------------------------------------------------------------------------------------------
Total assets                                                     $ 910,595         100.0%  $ 685,979         100.0%
-------------------------------------------------------------------------------------------------------------------
Deposits                                                         $ 675,513          74.2%  $ 505,958          73.8%
Borrowed funds and interest payable                                139,455          15.3     113,568          16.6
All other liabilities                                               20,242           2.2      13,327           1.9
-------------------------------------------------------------------------------------------------------------------
Total liabilities                                                  835,210          91.7     632,853          92.3
-------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                                75,385           8.3      53,126           7.7
-------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                       $ 910,595         100.0%  $ 685,979         100.0%
-------------------------------------------------------------------------------------------------------------------
</TABLE>

Cash  and  Cash  Equivalents  and  Time  Deposits  with  Banks
--------------------------------------------------------------

Cash  and  cash  equivalents increased to $64,128,000 at December 31, 2003, from
$30,849,000  at  December 31, 2002, primarily due to a higher level of overnight
federal  fund  investments  The  increase  reflected the temporary investment of
deposit  inflows  during  December 2003. A significant portion of these funds is
expected to fund new loans. Time deposits (greater than 3 month maturities) with
banks  amounted to $2,000,000 at December 31, 2002, compared to none outstanding
at  year-end  2003  due  to  the  maturity  of  the  deposit  during  2003.

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.

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


                                       19
<PAGE>
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.

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, 2003 or 2002.

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  $152,823,000 at December 31, 2003, compared to $145,694,000
at December 31, 2002. The increase was due to new purchases exceeding maturities
and  calls  of  securities  during the year. At December 31, 2003, the portfolio
consisted  of short-term debt obligations of the Federal Home Loan Bank, Federal
Farm  Credit  Bank,  Federal  National  Mortgage  Association, Federal Home Loan
Mortgage  Corporation  and  Student  Loan  Marketing  Association  with  a
weighted-average yield of 1.75% and a weighted-average remaining maturity of 1.7
years,  compared to 2.39% and 1.6 years, respectively, at December 31, 2002. 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, 2003 and 2002, the portfolio's
estimated  fair  value  was  $152,995,000  and  $146,560,000,  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 $1,384,000 and $1,691,000, respectively. The FRB stock
currently  pays a dividend of 6%, while the FHLB stock dividend was suspended in
September  2003 and then re-instituted in the first quarter of 2004 at a rate of
1.45%.  The total investment, which amounted to $3,075,000 at December 31, 2003,
compared  to  $1,108,000  at  December  31,  2002,  fluctuates based on specific
factors  (the  Bank's  capital  level  for  the FRB and the Bank's loans for the
FHLB).  The  Bank became a member of the FHLB during the second quarter of 2003.

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  $664,545,000  at December 31, 2003, from $485,301,000 at December
31,  2002.  The  growth reflected new originations of commercial real estate and
multifamily  mortgage  loans,  partially  offset  by  principal  repayments.

The  following  table  sets  forth  information  concerning  the loan portfolio:

<TABLE>
<CAPTION>
                                           At December 31, 2003       At December 31, 2002
                                        ---------------------------  ------------------------
                                          # of                % of    # of             % of
($in thousands)                           Loans     Amount    Total   Loans   Amount   Total
---------------------------------------------------------------------------------------------
<S>                                     <C>        <C>        <C>     <C>    <C>       <C>
Commercial real estate loans                 184   $344,071    50.7%    162  $275,096   55.5%
Residential multifamily loans                210    310,650    45.8     168   214,515   43.3
Land development and other land loans          6     20,526     3.0       3     1,890    0.4
Residential 1-4 family loans                  26      1,628     0.2      28     1,953    0.4
Commercial loans                              28      1,662     0.2      27     1,608    0.3
Consumer loans                                16        319     0.1      16       240    0.1
---------------------------------------------------------------------------------------------
Total gross loans receivable                 470    678,856   100.0%    404   495,302  100.0%
Deferred loan fees                                   (7,731)                   (5,390)
---------------------------------------------------------------------------------------------
Loans, net of deferred fees                         671,125                   489,912
Allowance for loan losses                            (6,580)                   (4,611)
---------------------------------------------------------------------------------------------
Loans receivable, net                              $664,545                  $485,301
---------------------------------------------------------------------------------------------
</TABLE>


                                       20
<PAGE>
The following table sets forth the scheduled contractual principal repayments of
the  loan  portfolio:

<TABLE>
<CAPTION>
                                                        At December 31,
                                                     ------------------
          ($in thousands)                               2003      2002
          -------------------------------------------------------------
<S>                                                  <C>       <C>
          Within one year                            $133,137  $103,398
          Over one to five years (1)                  430,783   305,013
          Over five years (1)                         114,936    86,891
          -------------------------------------------------------------
                                                     $678,856  $495,302
          -------------------------------------------------------------
</TABLE>

(1) At December 31, 2003, $401,692,000 of loans with adjustable rates and
$144,027,000 of loans with fixed rates were due after one year.

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

<TABLE>
<CAPTION>
                                                    For the Year Ended December 31,
                                                   ---------------------------------
     ($in thousands)                                  2003        2002       2001
     -------------------------------------------------------------------------------
<S>                                                <C>         <C>         <C>
     Loans receivable, net, at beginning of year   $ 485,301   $ 365,146   $263,558
       Loans originated                              378,630     233,689    195,754
       Principal repayments                         (195,076)   (110,661)   (91,785)
       Recoveries                                          -        (107)         -
       Chargeoffs                                          -         150          -
       Increase in deferred loan fees                 (2,341)     (1,642)    (1,769)
       Provision for loan losses                      (1,969)     (1,274)      (612)
     -------------------------------------------------------------------------------
     Loans receivable, net, at end of year         $ 664,545   $ 485,301   $365,146
     -------------------------------------------------------------------------------
</TABLE>

At  December 31, 2003, two real estate loans with an aggregate principal balance
of  $8,474,000  were  on nonaccrual status. These loans were considered impaired
under the criteria of SFAS No.114 and the Company's recorded investment in these
loans  totaled $8,499,000. The Company believes the estimated fair value of each
of  the  underlying  properties  (which are located in New York City) is greater
than  its  recorded  investment.  As  a  result, there was no specific valuation
allowance  maintained.  During March 2004, the aforementioned loans were brought
current and returned to an accrual status.  At December 31, 2003 and 2002, there
were  no  other loans classified as nonaccrual, impaired or ninety days past due
and  still  accruing  interest.

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

At December 31, 2003, the allowance for loan losses increased to $6,580,000 from
$4,611,000  at  December  31, 2002  and represented 0.98% of total loans (net of
deferred  fees)  outstanding at December 31, 2003, compared to 0.94% at December
31,  2002.  The  increase  in  the  allowance  was due to provisions aggregating
$1,969,000  resulting from loan growth of $183,554,000. At December 31, 2003 and
2002,  the allowance for loan losses was almost all allocated to commercial real
estate,  multifamily  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)                                             2003       2002       2001
     -----------------------------------------------------------------------------------------
<S>                                                            <C>        <C>        <C>
     Allowance at beginning of year                            $  4.611   $  3,380   $  2,768
     Provision charged to operations                              1,969      1,274        612
     Chargeoffs                                                       -       (150)         -
     Recoveries                                                       -        107          -
     -----------------------------------------------------------------------------------------
     Allowance at end of year                                  $  6,580   $  4,611   $  3,380
     -----------------------------------------------------------------------------------------
     Ratio of allowance to total loans, net of deferred fees       0.98%      0.94%      0.92%
     Total loans, net of deferred fees at year end             $671,125   $489,912   $368,526
     Average loans outstanding during the year                 $585,556   $439,241   $315,148
     -----------------------------------------------------------------------------------------
</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  necessary  with  consideration  given to: the nature and
volume  of  the  loan portfolio; overall portfolio quality; loan concentrations;
specific  problem  loans  and  commitments  and estimates of fair value thereof;
historical  chargeoffs  and  recoveries; adverse situations which may affect the
borrowers'  ability  to  repay;  and  management's perception


                                       21
<PAGE>
of  the  current  and  anticipated  economic conditions in the Company's lending
areas.  Although  management  believes it uses the best information available to
make  determinations  with  respect  to  the  allowance  for loan losses, future
adjustments  may  be  necessary if economic conditions, or other factors, differ
from  those  assumed  in  the  determination  of  the  level  of  the allowance.

In  addition,  SFAS  No.  114  specifies  the manner in which the portion of the
allowance  for  loan  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  19:

<TABLE>
<CAPTION>
                                                   At December 31,
                                                  -----------------
          ($in thousands)                           2003     2002
          ---------------------------------------------------------
<S>                                                <C>      <C>
          Accrued interest receivable              $ 4,995  $ 4,263
          Loans fee receivable                       5,622    3,706
          Premises and equipment, net                5,752    6,098
          Foreclosed real estate                         -    1,081
          Deferred income tax asset                  2,960    1,997
          Deferred debenture offering costs, net     4,023    3,498
          All other                                  2,672      384
          ---------------------------------------------------------
                                                   $26,024  $21,027
          ---------------------------------------------------------
</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.

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

Premises  and  equipment  is  detailed  in  note 5 to the consolidated financial
statements.  Premises  and  equipment  decreased  due  to  depreciation  and
amortization,  partially  offset  by  net  additions  of  $222,000.


                                       22
<PAGE>
Foreclosed  real  estate  at  December  31, 2002 represented one commercial real
estate  property  located  in  the  State  of  Florida  with a carrying value of
$1,081,000.  In  the second quarter of 2003, the Bank sold this property for net
proceeds  of  approximately $1,030,000 (consisting of cash, after selling costs,
of  $150,000  and  a mortgage of $880,000 provided by the Bank). The net loss of
$51,000  from  the  sale  was  included in noninterest expenses (foreclosed real
estate  expense)  in  the  consolidated  statement  of  earnings.

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 deductible for income tax
purposes. Management believes that it is more likely than not that the Company's
deferred  tax  asset will be realized and accordingly, a valuation allowance for
deferred  tax  assets  is  not  maintained.

Deferred debenture offering costs consist primarily of underwriters' commissions
and  are  amortized  over  the  terms of the debentures. The increase was due to
$1,163,000  from Intervest Mortgage Corporation's issuance of its Series 1/21/03
and  7/25/03  debentures,  $85,000  incurred  by  Intervest Mortgage Corporation
through  December  31,  2003 on a new series that was issued in January 2004 and
$446,000  incurred  by  the  Holding  Company in connection with the issuance of
Capital  Securities.  These  items were partially offset by normal amortization.

The  increase  in  all  other assets was due to the recording of a receivable of
$2,535,000  from  the  exercise  of  common stock warrants at year-end 2003. The
proceeds  were  received  in  January  2004.

Deposits
--------

Deposits  increased  to  $675,513,000 at December 31, 2003, from $505,958,000 at
December  31,  2002,  reflecting  increases  in  money market and certificate of
deposit  accounts  of  $27,921,000  and  $142,176,000,  respectively. Management
believes  that  the  Bank does not have a concentration of deposits from any one
source  and  that  a large portion of its depositors are residents in the Bank's
primary  market  areas  (although there has been growth in deposits from outside
the primary areas resulting from the Bank's deposit-gathering activities through
its  web site on the internet: www.intervestnatbank.com). The Bank also does not
accept  brokered  deposits.

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

<TABLE>
<CAPTION>
                                        At December 31, 2003    At December 31, 2002
                                       ----------------------  ----------------------
          ($in thousands)               Amount   %  of Total    Amount   %  of Total
          ---------------------------------------------------------------------------
<S>                                    <C>       <C>           <C>       <C>
          Demand deposits              $  6,210          1.0%  $  5,924          1.2%
          Interest checking deposits      9,146          1.4     10,584          2.1
          Savings deposits               30,784          4.5     30,174          6.0
          Money market deposits         162,214         24.0    134,293         26.5
          Certificates of deposit       467,159         69.1    324,983         64.2
          ---------------------------------------------------------------------------
          Total deposit accounts (1)   $675,513        100.0%  $505,958        100.0%
          ---------------------------------------------------------------------------
</TABLE>
          (1)  Includes  individual retirement accounts totaling $74,170,000 and
               $53,340,000  at  December 31, 2003 and 2002, respectively, nearly
               all  of  which  are  certificates  of  deposit.

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

<TABLE>
<CAPTION>
                                      At December 31, 2003    At December 31, 2002
                                     ----------------------  ----------------------
                                                 Wtd-Avg                 Wtd-Avg
          ($in thousands)             Amount   Stated Rate    Amount   Stated Rate
          -------------------------------------------------------------------------
<S>                                  <C>       <C>           <C>       <C>
          Within one year            $182,693         2.75%  $122,890         3.51%
          Over one to two years        90,936         3.64     57,895         4.18
          Over two to three years      30,094         4.43     31,281         5.53
          Over three to four years     89,085         4.83     17,730         5.32
          Over four years              74,351         4.20     95,187         4.92
          -------------------------------------------------------------------------
                                     $467,159         3.66%  $324,983         4.33%
          -------------------------------------------------------------------------
</TABLE>


                                       23
<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)                         2003       2002
          ---------------------------------------------------------
<S>                                             <C>        <C>
          Due within three months or less       $  7,514   $ 7,508
          Due over three months to six months      7,446     6,122
          Due over six months to one year         31,459    13,033
          Due over one year                       76,644    46,209
          ---------------------------------------------------------
                                                $123,063   $72,872
          ---------------------------------------------------------
          As a percentage of total deposits         18.2%     14.4%
          ---------------------------------------------------------
</TABLE>

The  following  table  sets  forth  net  deposit  flows:

<TABLE>
<CAPTION>
                                                For the Year Ended December 31,
                                                  ---------------------------
          ($in thousands)                           2003      2002     2001
          -------------------------------------------------------------------
<S>                                               <C>       <C>       <C>
          Net increase before interest credited   $151,138  $126,230  $45,078
          Net interest credited                     18,417    17,291   17,118
          -------------------------------------------------------------------
          Net deposit increase                    $169,555  $143,521  $62,196
          -------------------------------------------------------------------
</TABLE>

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

The  following  table  summarizes  borrowed  funds  and  interest  payable:

<TABLE>
<CAPTION>
                                                            At December 31, 2003   At December 31, 2002
                                                            ---------------------  ---------------------
                                                                        Accrued                Accrued
          ($in thousands)                                   Principal   Interest   Principal   Interest
          ----------------------------------------------------------------------------------------------
<S>                                                         <C>         <C>        <C>         <C>
          Debentures - Intervest Mortgage Corporation       $   87,350  $  12,052  $   74,000  $  10,751
          Debentures - Holding Company                           7,340      2,361      10,430      3,064
          Capital Securities - Intervest Statutory Trusts       30,000         97      15,000         57
          Mortgage note payable - Intervest National Bank          255          -         266          -
          ----------------------------------------------------------------------------------------------
                                                            $  124,945  $  14,510  $   99,696  $  13,872
          ----------------------------------------------------------------------------------------------
</TABLE>

Intervest  Mortgage  Corporation  had  $87,350,000  of debentures outstanding at
December  31,  2003,  compared to $74,000,000 at December 31, 2002. The increase
was  due  to  the issuance of its Series 1/21/03 and 7/25/03 debentures totaling
$16,000,000  (with  fixed  rates  of  interest  ranging  from  6.5% to 7.25% and
maturing at various times through October 1, 2010) as part of its normal funding
of  its  mortgage loan originations. The new debentures were partially offset by
the  repayment  of  $1,400,000 of its Series 11/10/98 debentures that matured on
January  1,  2003  and the early redemption on November 1, 2003 of $1,250,000 of
its Series 9/18/00 debentures due January 1, 2004. Proceeds from the issuance of
debentures,  after  underwriter's commissions and other issuance costs, amounted
to  $14,826,000.  In  January 2004, Intervest Mortgage Corporation completed the
issuance  of its Series 11/28/03 debentures in the aggregate principal amount of
$10,000,000. Intervest Mortgage Corporation intends to file an offering to issue
additional  subordinated  debentures.  It  is  anticipated that debentures in an
aggregate  principal  amount  of  up to $11,500,000 will be issued in the second
quarter  of  2004.

The  Holding  Company  had  $7,340,000 of debentures outstanding at December 31,
2003,  compared to $10,430,000 at December 31, 2002. The decrease was due to the
early  redemption  on  November  1,  2003  of  $1,000,000 of its Series 12/15/00
non-convertible  debentures  due  April  1,  2004  and  the  conversion  of  its
convertible  debentures  in  the  aggregate  principal amount of $2,090,000 into
shares  of  Class  A  common stock at the election of the debenture holders at a
conversion  price  of  $10.01  per  share.  At  December  31,  2003, convertible
debentures outstanding totaled $4,840,000 and are convertible along with accrued
interest  into  its  Class A common stock at the following conversion prices per
share: $12.00 in 2004; $14.00 in 2005; $16.00 in 2006; $18.00 in 2007 and $20.00
from  January  1  through  April  1,  2008.

Intervest  Statutory  Trust  I  and  Intervest  Statutory  Trust II have Capital
Securities outstanding aggregating $30,000,000 at December 31, 2003, compared to
$15,000,000  at  December  31,  2002.  These  securities  qualify  as regulatory
capital.  The  increase  was  due  the  issuance of an additional $15,000,000 of
Capital  Securities. The Holding Company has invested the $30,000,000 at various
times  as  capital  contributions  to  the  Bank.


                                       24
<PAGE>
Accrued  interest  payable on borrowed funds amounted to $14,510,000 at year-end
2003, compared to $13,872,000 at year-end 2002. The increase was due to accruals
less  repayments of interest, as well as a decrease of $1,010,000 resulting from
the  conversion  of  convertible  debentures. Nearly all of the accrued interest
payable  is due and payable at the maturity of various debentures. For a further
discussion  of  the  debentures  and  Capital  Securities,  including redemption
premiums,  see  notes  7  and 9 to the consolidated financial statements in this
report.

Intervest  National  Bank  has  a  mortgage  note  payable  outstanding totaling
$255,000 at December 31, 2003, compared to $266,000 at December 31, 2002, issued
in  connection  with  the  Bank's  purchase  in 2002 of property that is located
across  from  its  Court  Street  branch  office in Florida. The note matures in
February  of  2017 and requires monthly payments of principal and interest at 7%
per  annum.

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

The  table  below  sets  forth  the  composition  of  the  caption  "All  other
liabilities"  in  the  table  on  page  19  as  follows:

<TABLE>
<CAPTION>
                                                       At December 31,
                                                      ----------------
               ($in thousands)                         2003     2002
               -------------------------------------------------------
<S>                                                   <C>      <C>
               Mortgage escrow funds payable           10,540    5,894
               Official checks outstanding              6,122    4,373
               Accrued interest payable on deposits     1,080      895
               Income taxes payable                       807      526
               All other                                1,693    1,639
               -------------------------------------------------------
                                                      $20,242  $13,327
               -------------------------------------------------------
</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 as well as the timing of payments to taxing
authorities.  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 $75,385,000 from $53,126,000 at year-end 2002
as  follows:

<TABLE>
<CAPTION>
          ($in thousands)                                                            Amount    Shares
          ---------------------------------------------------------------------------------------------
<S>                                                                                  <C>      <C>
          Stockholders' equity at December 31, 2002                                  $53,126  4,703,087
          Net earnings for the year                                                    9,120          -
          Class A common stock warrants exercised                                      9,466    945,717
          Convertible debentures converted at election of debenture holders            3,014    309,573
          Class B common stock issued to purchase Intervest Securities Corporation       215     30,000
          Compensation expense on warrants held by employee and directors (1)            444          -
          ---------------------------------------------------------------------------------------------
          Stockholders' equity at December 31, 2003                                  $75,385  5,988,377
          ---------------------------------------------------------------------------------------------
<FN>
          (1)  For  discussion  of  compensation  related  to  stock  warrants, see note 14 to the
               consolidated  financial  statements  in  this  report.
</TABLE>

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 in the
federal  funds  market 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  from the aforementioned sources of funds.  As a member
of  the  FHLB  and  the  FRB,  the  Bank can borrow from these institutions on a
secured  basis  of up to $145,000,000 in aggregate at December 31, 2003 based on
available  collateral.  The  Bank  also  has agreements with correspondent banks
whereby it can borrow on an overnight, unsecured basis of up to $16,000,000.  On
March  17, 2004, the Holding Company completed the issuance of an additional $15
million  of  trust  preferred  capital  securities.


                                       25
<PAGE>
OFF-BALANCE  SHEET  AND  OTHER  FINANCING  ARRANGEMENTS

The  Company  currently  does  not  have  any  non-consolidated  special purpose
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.

CONTRACTUAL  OBLIGATIONS

The  table below summarizes the Company's contractual obligations as of December
31,  2003.

<TABLE>
<CAPTION>
                                                                               Due In
                                                               ---------------------------------------
                                                                         2005 and  2007 and   2009 and
($in thousands)                                       Total      2004      2006      2008      Later
------------------------------------------------------------------------------------------------------
<S>                                                 <C>        <C>       <C>       <C>        <C>
Subordinated debentures and mortgage note payable   $  94,945  $ 20,013  $ 39,385  $  21,387  $ 14,160
Subordinated debentures - capital securities           30,000         -         -          -    30,000
Accrued interest payable on all debentures             14,510     6,808     4,707      2,838       157
Deposits with no stated maturities                    208,354   208,354         -          -         -
Deposits with stated maturities                       467,159   182,693   121,030    152,667    10,769
Operating lease payments                                9,245     1,002     1,818      1,708     4,717
Unfunded loan commitments (1)                         123,791   122,109     1,682          -         -
Available lines of credit (1)                             825       825         -          -         -
Standby letters of credit (1)                             100         -       100          -         -
------------------------------------------------------------------------------------------------------
                                                    $ 948,929  $541,804  $168,722  $ 178,600  $ 59,803
------------------------------------------------------------------------------------------------------
<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, 2003 and 2002, 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 outstanding which 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)                                                         2003       2002
     ------------------------------------------------------------------------------------------
<S>                                                                        <C>        <C>
     Tier 1 Capital:   Stockholder's equity                                $ 73,907   $ 51,936
                       Disallowed portion of deferred tax asset              (2,508)    (1,623)
                                                                           --------------------
                                                                             71,399     50,313
     Tier 2 Capital:   Allowable portion of allowance for loan losses         6,310      4,464
     ------------------------------------------------------------------------------------------
     Total risk-based capital                                              $ 77,709   $ 54,777
     ------------------------------------------------------------------------------------------
     Net risk-weighted assets                                              $620,155   $450,599
     Average assets for regulatory purposes                                $739,234   $569,204
     ------------------------------------------------------------------------------------------
     Tier 1 capital to average assets                                          9.66%      8.84%
     Tier 1 capital to risk-weighted assets                                   11.51%     11.17%
     Total capital to risk-weighted assets                                    12.53%     12.16%
     ------------------------------------------------------------------------------------------
</TABLE>


                                       26
<PAGE>
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, 2003 and 2002,
management  believes  that  the  Holding  Company  met  its  capital  adequacy
requirements.

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

<TABLE>
<CAPTION>
                                                                             At December 31,
                                                                          --------------------
     ($in thousands)                                                        2003       2002
     -----------------------------------------------------------------------------------------
<S>                                                                       <C>        <C>
     Tier 1 Capital:  Stockholder's equity                                $ 75,385   $ 53,126
                      Capital Securities limited to 25% of core capital     25,122     15,000
                                                                          --------------------
     Total core capital elements                                           100,507     68,126
                      Disallowed portion of deferred tax asset              (2,936)    (1,973)
     -----------------------------------------------------------------------------------------
     Total Tier 1 Capital                                                   97,571     66,153
     -----------------------------------------------------------------------------------------
     Tier 2 Capital : Excess Capital Securities                              4,878          -
                      Allowable portion of allowance for loan losses         6,580      4,611
     -----------------------------------------------------------------------------------------
     Total Tier 2 Capital                                                   11,458      4,611
     -----------------------------------------------------------------------------------------
     Total risk-based capital                                             $109,029   $ 70,764
     -----------------------------------------------------------------------------------------
     Net risk-weighted assets                                             $734,839   $541,776
     Average assets for regulatory purposes                               $862,873   $669,693
     -----------------------------------------------------------------------------------------
     Tier 1 capital to average assets                                        11.31%      9.88%
     Tier 1 capital to risk-weighted assets                                  13.28%     12.21%
     Total capital to risk-weighted assets                                   14.84%     13.06%
     -----------------------------------------------------------------------------------------
</TABLE>

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,  2003  and  2002,  Intervest  Securities
Corporation's  net  capital  was  $459,000  and  $208,000,  respectively.

ASSET  AND  LIABILITY  MANAGEMENT

Interest  rate  risk  arises  from  differences  in  the repricing of assets and
liabilities  within  a given time period. The primary objective of the Company's
asset/liability  management strategy is to limit, within established guidelines,
the  adverse  impact  of changes in interest rates on the Company's net interest
income  and  capital.

The  Company  uses  "gap  analysis,"  which  measures  the  difference  between
interest-earning  assets and interest-bearing liabilities that mature or reprice
within  a  given time period, to monitor its interest rate sensitivity. 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 features
generally referred to as "interest rate caps or collars," which limit changes in
interest  rates  on  a  short-term


                                       27
<PAGE>
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 $118,124,000, or 13.0% of total assets, at December 31,
2003,  compared  to $107,681,000, or 15.7% at December 31, 2002. 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, then
the gap would change. The behavior of core depositors may not necessarily result
in  the  immediate withdrawal of funds in the event deposit rates offered by the
Bank did not change as quickly and uniformly as changes in general market rates.
For  example, if only 25% of deposits with no stated maturity were assumed to be
readily  accessible,  the  one-year  gap  would  have  been  a positive 29.6% at
year-end  2003,  compared  to  a  positive  34.8%  at  year-end  2002.

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, 2003, 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)                                   $203,097   $217,979   $ 173,273   $ 84,507   $678,856
Securities held to maturity (2)               20,360     56,654      75,809          -    152,823
Short-term investments                        55,295          -           -          -     55,295
FRB and FHLB stock                             1,691          -           -      1,384      3,075
--------------------------------------------------------------------------------------------------
Total rate-sensitive assets                 $280,443   $274,633   $ 249,082   $ 85,891   $890,049
--------------------------------------------------------------------------------------------------
Deposit accounts (3):
  Interest checking deposits                $  9,146   $      -   $       -   $      -   $  9,146
  Savings deposits                            30,784          -           -          -     30,784
  Money market deposits                      162,214          -           -          -    162,214
  Certificates of deposit                     33,558    149,135     210,115     74,351    467,159
--------------------------------------------------------------------------------------------------
Total deposits                               235,702    149,135     210,115     74,351    669,303
--------------------------------------------------------------------------------------------------
Debentures and mortgage note payable (1)      41,500      2,000      20,850     30,595     94,945
Debentures payable- capital securities (1)         -          -           -     30,000     30,000
Accrued interest on all debentures             7,659        956       2,966      2,929     14,510
--------------------------------------------------------------------------------------------------
Total borrowed funds                          49,159      2,956      23,816     63,524    139,455
--------------------------------------------------------------------------------------------------
Total rate-sensitive liabilities            $284,861   $152,091   $ 233,931   $137,875   $808,758
--------------------------------------------------------------------------------------------------
GAP (repricing differences)                 $ (4,418)  $122,542   $  15,151   $(51,984)  $ 81,291
--------------------------------------------------------------------------------------------------
Cumulative GAP                              $ (4,418)  $118,124   $ 133,275   $ 81,291   $ 81,291
--------------------------------------------------------------------------------------------------
Cumulative GAP to total assets                  -0.5%      13.0%       14.6%       8.9%       8.9%
--------------------------------------------------------------------------------------------------
</TABLE>

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.


                                       28
<PAGE>
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.  Net earnings for 2003 represent the highest level of earnings reported by
the  Company  since  its  inception in 1993. 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.

Selected information regarding results of operations by entity for 2003 follows:

<TABLE>
<CAPTION>
                                    Intervest   Intervest   Intervest    Intervest               Inter-
                                    National     Mortgage   Statutory    Securities    Holding   Company
($in thousands)                       Bank         Corp       Trusts      Corp (2)     Company   Amts (3)   Combined
---------------------------------------------------------------------------------------------------------------------
<S>                                <C>          <C>         <C>         <C>           <C>        <C>        <C>
Interest and dividend income       $   40,232   $    9,269  $    1,829  $         3   $  1,125   $ (1,994)  $  50,464
Interest expense                       18,620        7,140       1,774            -      3,024     (1,994)     28,564
                                   ----------------------------------------------------------------------------------
Net interest and dividend income       21,612        2,129          55            3     (1,899)         -      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          55           51        748     (2,549)      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 for 2002              $    6,459   $    1,567  $        -  $         -   $ (1,120)  $      -   $   6,906
---------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Dividends  to  the  Holding  Company  provide  funds  for the debt service on the Capital Securities which is
     included  in  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, investments,  borrowed  funds  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 $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.

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 (bp)
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 bp 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  bp  from  year-end  2002.


                                       29
<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 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.


<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).


                                       30
<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  and  is  based  on  management's ongoing assessment of the adequacy of the
allowance for loan losses that takes into consideration a number of factors. See
the  caption  "Allowance for Loan Losses" in the section entitled "Comparison of
Financial  Condition  at  December  31,  2003  and  2002"  in  this report for a
discussion  of these factors. 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 $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             (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  penalties  in  certain  cases.
</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.

The  amount  and  timing  of,  as well as income from, loan prepayments, if any,
cannot  be  predicted  and  can fluctuate significantly. Normally, the number of
instances  of  prepayment  of mortgage loans tends to increase during periods of
declining  interest  rates  and  tends  to decrease during periods of increasing
interest  rates.  Many  of  the  Company's  mortgage  loans  include  prepayment
provisions,  and  others  prohibit  prepayment  of  indebtedness  entirely.


                                       31
<PAGE>
Noninterest  Expenses
---------------------

Noninterest  expenses increased $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
Advertising and promotion                         35                 69
Professional fees and services                   364                350
Stationery, printing and supplies                152                141
Postage and delivery                             101                 93
FDIC and general insurance                       225                179
All other                                        924                749
-----------------------------------------------------------------------
                                    $          7,259  $           6,479
-----------------------------------------------------------------------
</TABLE>


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  held by employees and directors. 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 expenses 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  expenses  decreased  slightly from 2002. In December 2003, the
Bank  renegotiated its data processing contract by extending the expiration date
to 2010 and reducing the processing fee to a fixed amount until its assets reach
$1.1  billion  and  thereafter  the  fee  is  calculated  based on total assets.
Previously,  the  data  processing  fee  was variable and function of the Bank's
total  assets.

Advertising  and  promotion expenses decreased due to less advertising for loans
and  deposits.  FDIC  and general insurance expense increased due to higher FDIC
premiums  (due  to  deposit  growth) and general insurance premiums (due to rate
increases).

All other expenses were higher primarily due to increases in director expense of
$134,000  (resulting  from  higher  director  and  committee  fees  per  meeting
beginning June 2003) and operational losses of $23,000 (resulting from growth in
transactional  deposit  accounts).

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

The  provision for income taxes increased $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.


                                       32
<PAGE>
COMPARISON  OF  RESULTS  OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002 AND
2001.

General
-------

Consolidated  net  earnings  for  2002 increased 83% to $6,906,000, or $1.37 per
fully  diluted  share,  from  $3,778,000,  or $0.97 per fully diluted share, for
2001.  Net  earnings for 2002 represented the highest level of earnings reported
by  the Company since its inception in 1993. The growth in earnings was due to a
$6,406,000  increase in net interest and dividend income and a $563,000 increase
in  noninterest  income,  partially  offset  by  a  $2,003,000  increase  in the
provision for income taxes, a $1,176,000 increase in noninterest expenses, and a
$662,000  increase  in the provision for loan losses. The fully diluted earnings
per  share  computation  in  2002  included  a  higher  number  of common shares
resulting from common stock warrants and convertible debentures outstanding that
became  dilutive  during the year. Return on average assets and equity increased
to  1.13%  and 15.56%, respectively, for 2002, up from 0.85% and 9.94% for 2001.

Selected  information  regarding  results  of  operations  for  2002  follows:


<TABLE>
<CAPTION>
                                            Intervest    Intervest    Intervest              Inter-
                                            National      Mortgage    Statutory    Holding   Company
($in thousands)                               Bank      Corporation    Trust I     Company   Amts (2)   Combined
-----------------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>           <C>         <C>        <C>        <C>
Interest and dividend income               $   34,197   $      8,420  $    1,527  $    988   $ (1,653)  $  43,479
Interest expense                               17,514          6,288       1,481     2,695     (1,653)     26,325
                                           ----------------------------------------------------------------------
Net interest and dividend income               16,683          2,132          46    (1,707)         -      17,154
Provision for loan losses                       1,193             83           -        (2)         -       1,274
Noninterest income                              1,723          2,057           -       205     (1,767)      2,218
Noninterest expenses                            6,324          1,332          46       544     (1,767)      6,479
                                           ----------------------------------------------------------------------
Earnings before taxes                          10,889          2,774           -    (2,044)         -      11,619
Provision for income taxes                      4,430          1,207           -      (924)         -       4,713
-----------------------------------------------------------------------------------------------------------------
Net earnings                               $    6,459   $      1,567  $        -  $ (1,120)  $      -   $   6,906
-----------------------------------------------------------------------------------------------------------------
Intercompany dividends (1)                 $   (1,500)  $          -  $        -  $  1,500   $      -   $       -
Net earnings for 2001                      $    3,404   $        577  $        -  $   (203)  $      -   $   3,778
-----------------------------------------------------------------------------------------------------------------
<FN>
(1)  Dividends  to  the  Holding Company provide funds for the debt service on the Capital Securities which is
     included  in  interest  expense.
(2)  All  significant  intercompany  balances  and  transactions are eliminated in consolidation. Such amounts
     arise from intercompany deposit accounts, investments, borrowed funds and management and service agreements.
</TABLE>


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

Net  interest  and  dividend  income  increased  to  $17,154,000  in  2002, from
$10,748,000  in 2001. The increase was attributable to growth of $160,969,000 in
average  interest-earning assets and an increase in the net interest margin from
2.47% in 2001, to 2.88% in 2002. The growth in assets was due to $124,093,000 in
new  mortgage  loans  and  a  net  increase  in  security  and  other short-term
investments aggregating $36,876,000. These increases were funded by $125,002,000
of  deposit  growth,  $27,875,000  of additional borrowed funds and a $6,395,000
increase  in  stockholders'  equity.

The  increase  in the margin was due to the cost of funds decreasing at a faster
pace  than  the  yield earned on interest-earning assets in a declining interest
rate environment. The yield on interest-earning assets decreased 86 basis points
to  7.29%  in  2002  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  146  basis points to 4.81% in 2002, primarily due to
lower  rates  paid  on  deposit  accounts  and  rate  decreases on floating-rate
debentures.  The floating-rate debentures are indexed to the JPMorgan Chase Bank
prime  rate, which decreased by a total of 525 basis points from January 2001 to
December  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 2002 and 2001. The yields and rates shown
are  based  on a computation of income/expense (including any related fee income
or  expense)  for  each  year  divided  by  average  interest-earning
assets/interest-bearing  liabilities  during  each  year.  Average  balances are
derived  mainly from daily balances. Net interest margin is computed by dividing
net interest and dividend income by the average of total interest-earning assets
during  each  year.


                                       33
<PAGE>
<TABLE>
<CAPTION>
                                                                  For the Year Ended December 31,
                                                                  -------------------------------
                                                                2002                           2001
                                                   ------------------------------  ------------------------------
                                                    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)                                        $439,241   $   39,273    8.94%  $315,148   $   30,187    9.58%
  Securities                                        142,840        3,964    2.78     75,117        3,423    4.56
  Other interest-earning assets                      14,001          242    1.73     44,848        1,852    4.13
-----------------------------------------------------------------------------------------------------------------
Total interest-earning assets                       596,082   $   43,479    7.29%   435,113   $   35,462    8.15%
-----------------------------------------------------------------------------------------------------------------
Noninterest-earning assets                           14,586                          11,973
-----------------------------------------------------------------------------------------------------------------
Total assets                                       $610,668                        $447,086
-----------------------------------------------------------------------------------------------------------------
      Liabilities and Stockholders' Equity
Interest-bearing liabilities:
  Interest checking deposits                       $  9,521   $      221    2.32%  $  8,089   $      238    2.94%
  Savings deposits                                   29,221          762    2.61     19,629          778    3.96
  Money market deposits                             119,582        3,082    2.58     65,581        2,640    4.03
  Certificates of deposit                           282,720       13,304    4.71    222,743       13,423    6.03
-----------------------------------------------------------------------------------------------------------------
  Total deposit accounts                            441,044       17,369    3.94    316,042       17,079    5.40
-----------------------------------------------------------------------------------------------------------------
  Federal funds purchased                               116            2    1.87          -            -       -
  Debentures and accrued interest payable            90,777        7,440    8.20     77,671        7,577    9.76
  Debentures - capital securities                    15,000        1,497    9.98        586           58    9.90
  Mortgage note payable                                 239           17    7.00          -            -       -
-----------------------------------------------------------------------------------------------------------------
  Total borrowed funds                              106,132        8,956    8.44     78,257        7,635    9.76
-----------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities                  547,176   $   26,325    4.81%   394,299   $   24,714    6.27%
-----------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits                          5,277                           6,338
Noninterest-bearing liabilities                      13,831                           8,460
Stockholders' equity                                 44,384                          37,989
-----------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity         $610,668                        $447,086
-----------------------------------------------------------------------------------------------------------------
Net interest and dividend income/spread                       $   17,154    2.48%             $   10,748    1.88%
-----------------------------------------------------------------------------------------------------------------
Net interest-earning assets/margin                 $ 48,906                 2.88%  $ 40,814                 2.47%
-----------------------------------------------------------------------------------------------------------------
Ratio of total interest-earning assets
  to total interest-bearing liabilities               1.09x                           1.10x
-----------------------------------------------------------------------------------------------------------------
Other Ratios:
  Return on average assets                             1.13%                           0.85%
  Return on average equity                            15.56%                           9.94%
  Noninterest expense to average assets                1.06%                           1.19%
  Efficiency ratio (2)                                33.45%                          42.76%
  Average stockholders' equity to average assets       7.27%                           8.50%
-----------------------------------------------------------------------------------------------------------------
<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).


                                       34
<PAGE>
<TABLE>
<CAPTION>
                                           For the Year Ended December 31, 2002 vs. 2001
                                           ---------------------------------------------
                                           Increase (Decrease) Due To Change In:
                                           -------------------------------------
($in thousands)                                Rate     Volume    Rate/Volume    Total
----------------------------------------------------------------------------------------
<S>                                          <C>       <C>       <C>            <C>
Interest-earning assets:
  Loans                                      $(2,017)  $11,886   $       (783)  $ 9,086
  Securities                                  (1,337)    3,086         (1,208)      541
  Other interest-earning assets               (1,076)   (1,274)           740    (1,610)
----------------------------------------------------------------------------------------
Total interest-earning assets                 (4,430)   13,698         (1,251)    8,017
----------------------------------------------------------------------------------------
Interest-bearing liabilities:
  Interest checking deposits                     (50)       42             (9)      (17)
  Savings deposits                              (267)      380           (129)      (16)
  Money market deposits                         (951)    2,174           (781)      442
  Certificates of deposit                     (2,940)    3,614           (793)     (119)
----------------------------------------------------------------------------------------
  Total deposit accounts                      (4,208)    6,210         (1,712)      290
----------------------------------------------------------------------------------------
  Total borrowed funds                        (1,212)    2,706           (173)    1,321
----------------------------------------------------------------------------------------
Total interest-bearing liabilities            (5,420)    8,916         (1,885)    1,611
----------------------------------------------------------------------------------------
Net change in interest and dividend income   $   990   $ 4,782   $        634   $ 6,406
----------------------------------------------------------------------------------------
</TABLE>

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

The  provision  for loan losses increased to $1,274,000 in 2002 from $612,000 in
2001  due largely to loan growth (of $123,028,000 in 2002 versus $103,969,000 in
2001), as well as an increase in the Bank's internal reserve percentages used in
calculating  the  allowance.

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

Noninterest income increased $563,000 to $2,218,000 in 2002 and is summarized as
follows:

<TABLE>
<CAPTION>
                                                   For the Year Ended December 31,
                                                   -------------------------------
     ($in thousands)                                                   2002    2001
     -------------------------------------------------------------------------------
<S>                                                                   <C>     <C>
     Customer service fees                                            $  171  $  159
     Income from mortgage lending activities (1)                         485     341
     Income from the early repayment of mortgage loans (2)             1,435   1,149
     Gain form the sale of securities available for sale                 120       -
     Gain from early call of investment securities                         7       6
     -------------------------------------------------------------------------------
                                                                      $2,218  $1,655
     -------------------------------------------------------------------------------
<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  penalties  in  certain  cases.
</TABLE>

The  increase  of  $563,000  was  due  to  higher  income  of  $286,000 from the
prepayment  of  mortgage  loans  and  increases  in  fees earned on expired loan
commitments  and  loan service charge income aggregating $144,000. In  2002, the
Bank  sold  securities  available  for sale totaling $3,500,000 and recognized a
gain  of  $120,000.

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

Noninterest  expenses  increased  $1,176,000  to  $6,479,000  in  2002  and  is
summarized  as  follows:

<TABLE>
<CAPTION>
                                     For the Year Ended December 31,
                                     -------------------------------
          ($in thousands)                                2002    2001
          ------------------------------------------------------------
<S>                                                     <C>     <C>
          Salaries and employee benefits                $3,016  $2,451
          Occupancy and equipment, net                   1,318   1,177
          Data processing                                  564     329
          Advertising and promotion                         69      25
          Professional fees and services                   350     341
          Stationery, printing and supplies                141     137
          FDIC and general insurance                       179     177
          Postage and delivery                              93      91
          All other                                        749     575
          ------------------------------------------------------------
                                                        $6,479  $5,303
          ------------------------------------------------------------
</TABLE>


                                       35
<PAGE>
Salaries  and employee benefits expense increased due to the following: $306,000
from  additional staff, salary increases and a higher cost of employee benefits;
bonus payments aggregating $150,000 to the Chairman of the Company; and $109,000
of  compensation  expense  from  common  stock  warrants  held  by employees and
directors.  See  note 14 to the consolidated financial statements in this report
for  information  on  common  stock  warrants.

Occupancy  and  equipment  expenses  increased  primarily  due  to  increased
depreciation  expense  and  higher  real  estate  taxes and maintenance charges,
including  insurance  and  security  protection  expenses.

Data  processing expenses increased due to growth in the Bank's assets. The Bank
engages a third-party servicer for its data processing and the fee is a function
of  the  Bank's  total  assets,  which increased to $581,435,000 at December 31,
2002, from $421,152,000 at December 31, 2001. Advertising expenses increased due
to  additional  advertising  to  support  loan  and  deposit  growth.

All  other  expenses  was  higher primarily due to the following: an increase in
operational  losses  of  $100,000  (which was a direct function of growth in the
Bank's transactional deposit accounts); the addition of $114,000 of net expenses
associated with foreclosed real estate (which consist, net of any rental income,
mostly  of  real  estate  taxes, insurance, utilities, maintenance, professional
fees  and  other  charges  required  to  protect  the  Company's interest in the
property  acquired  through  foreclosure);  and  increases  in telephone expense
($22,000);  franchise  taxes  ($36,000);  and  registrar  fees  ($20,000). These
increases  were  partially  offset by approximately $150,000 of expenses in 2001
associated  with  the merger of Intervest Bank into Intervest National Bank that
did  not  recur  in  2002.

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

The  provision for income taxes increased to $4,713,000 in 2002, from $2,710,000
in  2001,  due  to  higher  pre-tax  earnings.  The Company's effective tax rate
(inclusive  of  state  and  local  taxes) amounted to 40.6% in 2002, compared to
41.8% in 2001. The decrease in the effective rate was largely due to a lower New
York  State  tax  rate.

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.

ITEM  7A.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

Market  risk  is  the  risk  of  loss  from adverse changes in market prices and
interest  rates.  The  Company's market risk arises primarily from interest rate
risk  inherent in its lending and deposit-taking activities, and the issuance of
its  debentures.  The  Company  has  not  engaged in and accordingly has no risk
related to trading accounts, commodities or foreign exchange. The measurement of
market  risk  associated  with financial instruments is meaningful only when all
related and offsetting on-and off-balance sheet transactions are aggregated, and
the  resulting net positions are identified. Disclosures about the fair value of
financial instruments as of December 31, 2003 and 2002, 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  "Asset  and  Liability  Management."


                                       36
<PAGE>
ITEM  8.  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

FINANCIAL  STATEMENTS

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

- Independent Auditors' Report - Hacker, Johnson & Smith, P.A., P.C. (PAGE 39)
- Independent Auditors' Report - Eisner LLP (PAGE 40)
- Consolidated Balance Sheets at December 31, 2003 and 2002 (PAGE 41)
- Consolidated Statements of Earnings for the Years Ended December 31, 2003,
     2002 and 2001 (PAGE 42)
- Consolidated Statements of Comprehensive Income for the Years Ended December
     31, 2003, 2002 and 2001 (PAGE 43)
- Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
     December 31, 2003, 2002 and 2001 (PAGE 44)
- Consolidated Statements of Cash Flows for the Years Ended December 31, 2003,
     2002 and 2001 (PAGE 45)
- Notes to the Consolidated Financial Statements (PAGES 46 TO 67)

SUPPLEMENTARY  DATA

Securities  Available  for  Sale
--------------------------------

The  following  table  sets forth information regarding securities available for
sale:

<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, 2001:
---------------------
U.S. government agencies   $   2,571   5.78%  $   3,621   5.46%  $       -    -  %  $   6,192   5.59%
-----------------------------------------------------------------------------------------------------
</TABLE>

There  were  no  securities  available  for  sale at December 31, 2003 and 2002.

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, 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%
At December 31, 2001:
---------------------
U.S. government agencies   $  79,411   2.85%  $  19,746   3.02%  $       -    -  %  $  99,157   2.89%
-----------------------------------------------------------------------------------------------------
</TABLE>




                                       37
<PAGE>
SUPPLEMENTARY  DATA,  CONTINUED

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

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

<TABLE>
<CAPTION>
                                                  2003        2002        2001        2000        1999
                                               ----------  ----------  ----------  ----------  ----------
                                                Carrying    Carrying    Carrying    Carrying    Carrying
($in thousands)                                  value       value       value       value       value
---------------------------------------------------------------------------------------------------------
<S>                                            <C>         <C>         <C>         <C>         <C>
Commercial real estate and multifamily loans   $ 654,721   $ 489,611   $ 365,736   $ 260,753   $ 207,521
Land development and other land loans             20,526       1,890       2,485       2,531       2,501
Residential 1-4 family loans                       1,628       1,953       2,404       3,034       2,311
Commercial business loans                          1,662       1,608       1,363       1,781       2,107
Consumer loans                                       319         240         286         206         242
                                               ----------------------------------------------------------
Loans receivable                                 678,856     495,302     372,274     268,305     214,682
Deferred loan fees                                (7,731)     (5,390)     (3,748)     (1,979)     (1,745)
                                               ----------------------------------------------------------
Loans receivable, net of deferred fees           671,125     489,912     368,526     266,326     212,937
Allowance for loan losses                         (6,580)     (4,611)     (3,380)     (2,768)     (2,493)
---------------------------------------------------------------------------------------------------------
Loans receivable, net                          $ 664,545   $ 485,301   $ 365,146   $ 263,558   $ 210,444
---------------------------------------------------------------------------------------------------------
Loans included above that were
   on a nonaccrual status at year end          $   8,474   $       -   $   1,243   $       -   $       -
---------------------------------------------------------------------------------------------------------
</TABLE>

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

<TABLE>
<CAPTION>
($in thousands)                                2003       2002       2001       2000       1999
--------------------------------------------------------------------------------------------------
<S>                                          <C>        <C>        <C>        <C>        <C>
Allowance at beginning of year               $  4,611   $  3,380   $  2,768   $  2,493   $  1,662
Provision charged to operations                 1,969      1,274        612        275        830
Chargeoffs                                          -       (150)         -          -          -
Recoveries                                          -        107          -          -          1
--------------------------------------------------------------------------------------------------
Allowance at end of year                     $  6,580   $  4,611   $  3,380   $  2,768   $  2,493
--------------------------------------------------------------------------------------------------
Total loans, net of deferred fees            $671,125   $489,912   $368,526   $266,326   $212,937
Average loans outstanding during the year    $585,556   $439,241   $315,148   $250,941   $175,980
Ratio of allowance to net loans receivable       0.98%      0.94%      0.92%      1.04%      1.17%
--------------------------------------------------------------------------------------------------
</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.




                                       38
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


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

          We  have  audited  the  accompanying  consolidated  balance  sheets of
Intervest Bancshares Corporation and Subsidiaries (the "Company") as of December
31,  2003  and  2002  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, 2003. These financial
statements  are  the  responsibility  of  the  Company's  management.  Our
responsibility  is  to express an opinion on these financial statements based on
our  audits.

          We  did  not  audit the consolidated financial statements of Intervest
Mortgage  Corporation  whose  total  assets  as  of  December 31, 2003 and 2002,
constituted  11.1%  and  13.6% of the related consolidated totals, respectively,
and  whose net interest income, noninterest income and net earnings, constituted
9.7%,  14.8%  and  19.3%,  respectively  in  2003,  12.4%,  21.9%  and  22.7%,
respectively  in  2002  and 10.4%, 42.5% and 15.3%, respectively in 2001, of the
related  consolidated  totals.  Those  statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to
the  amounts included in the consolidated totals, are based solely on the report
of  the  other  auditors.

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

          In  our opinion, based on our audits and the report of other auditors,
the  consolidated  financial statements referred to above present fairly, in all
material  respects,  the  financial position of the Company at December 31, 2003
and  2002,  and the results of its operations and its cash flows for each of the
years  in  the  three-year  period  ended  December  31, 2003 in conformity with
accounting  principles  generally  accepted  in  the  United  States of America.


/s/ Hacker, Johnson & Smith, P.A., P.C.
---------------------------------------
Hacker, Johnson & Smith, P.A., P.C.
Tampa, Florida
February 6, 2004


With respect to Note 3
March 16, 2004


                                       39
<PAGE>
                             INDEPENDENT AUDITORS' REPORT


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, 2003 and 2002 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, 2003
(not  presented  separately  herein).  These  financial  statements  are  the
responsibility  of the Company's management. Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.

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

          In  our  opinion,  the  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, 2003 and
2002,  and the consolidated results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 2003 in conformity
with  accounting  principles generally accepted in the United States of America.

/s/  Eisner  LLP
----------------
Eisner  LLP
New  York,  New  York
February  3,  2004

With respect to Note 3
March 16, 2004



                                       40
<PAGE>
<TABLE>
<CAPTION>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                                                            AT DECEMBER 31,
                                                                                            ---------------
($ in thousands, except par value)                                                          2003       2002
-----------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>       <C>
ASSETS
Cash and due from banks                                                                 $  8,833  $  10,351
Federal funds sold                                                                        36,816      9,114
Commercial paper                                                                           5,580      7,950
Other short-term investments                                                              12,899      3,434
                                                                                        --------  ---------
    Total cash and cash equivalents                                                       64,128     30,849
Time deposits with banks                                                                       -      2,000
Securities held to maturity, net                                                         152,823    145,694
Federal Reserve Bank and Federal Home Loan Bank stock, at cost                             3,075      1,108
Loans receivable (net of allowance for loan losses of $6,580 and $4,611, respectively)   664,545    485,301
Accrued interest receivable                                                                4,995      4,263
Loan fees receivable                                                                       5,622      3,706
Premises and equipment, net                                                                5,752      6,098
Foreclosed real estate                                                                         -      1,081
Deferred income tax asset                                                                  2,960      1,997
Deferred debenture offering costs, net                                                     4,023      3,498
Other assets                                                                               2,672        384
===========================================================================================================
TOTAL ASSETS                                                                            $910,595  $ 685,979
===========================================================================================================
LIABILITIES
Deposits:
Noninterest-bearing demand deposit accounts                                             $  6,210  $   5,924
Interest-bearing deposit accounts:
   Checking (NOW) accounts                                                                 9,146     10,584
   Savings accounts                                                                       30,784     30,174
   Money market accounts                                                                 162,214    134,293
   Certificate of deposit accounts                                                       467,159    324,983
                                                                                        --------  ---------
Total deposit accounts                                                                   675,513    505,958
Subordinated debentures                                                                   94,690     84,430
Subordinated debentures - capital securities                                              30,000     15,000
Accrued interest payable on all debentures                                                14,510     13,872
Mortgage note payable                                                                        255        266
Accrued interest payable on deposits                                                       1,080        895
Mortgage escrow funds payable                                                             10,540      5,894
Official checks outstanding                                                                6,122      4,373
Other liabilities                                                                          2,500      2,165
-----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                                        835,210    632,853
-----------------------------------------------------------------------------------------------------------

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,
      5,603,377 and 4,348,087 shares issued and outstanding, respectively)                 5,603      4,348
Class B common stock  ($1.00 par value, 700,000 shares authorized,
      385,000 and  355,000 shares issued and outstanding, respectively)                      385        355
Additional paid-in-capital, common                                                        35,988     24,134
Retained earnings                                                                         33,409     24,289
-----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                                                75,385     53,126
===========================================================================================================
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                              $910,595  $ 685,979
===========================================================================================================
</TABLE>
      See accompanying notes to consolidated financial statements.


                                       41
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
                                                                         YEAR ENDED DECEMBER 31,
                                                                   -------------------------------
($ in thousands, except per share data)                                2003        2002       2001
--------------------------------------------------------------------------------------------------
<S>                                                                <C>        <C>        <C>
INTEREST AND DIVIDEND INCOME
Loans receivable                                                   $ 47,223   $  39,273  $  30,187
Securities                                                            2,965       3,964      3,423
Other interest-earning assets                                           276         242      1,852
--------------------------------------------------------------------------------------------------
TOTAL INTEREST AND DIVIDEND INCOME                                   50,464      43,479     35,462
--------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits                                                             18,437      17,369     17,079
Subordinated debentures                                               8,316       7,440      7,577
Subordinated debentures - capital securities                          1,793       1,497         58
Mortgage note payable                                                    18          17          -
Federal funds purchased                                                   -           2          -
--------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE                                               28,564      26,325     24,714
--------------------------------------------------------------------------------------------------
NET INTEREST AND DIVIDEND INCOME                                     21,900      17,154     10,748
Provision for loan losses                                             1,969       1,274        612
--------------------------------------------------------------------------------------------------
NET INTEREST AND DIVIDEND INCOME AFTER PROVISION FOR LOAN LOSSES     19,931      15,880     10,136
--------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Customer service fees                                                   187         171        159
Income from mortgage lending activities                                 824         485        341
Income from the early repayment of mortgage loans                     2,317       1,435      1,149
Commissions and fees                                                     38           -          -
Gain from the sales of securities available for sale                      -         120          -
(Loss) gain from early call of investment securities                    (51)          7          4
All other                                                                 6           -          2
--------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME                                              3,321       2,218      1,655
--------------------------------------------------------------------------------------------------
NONINTEREST EXPENSES
Salaries and employee benefits                                        3,655       3,016      2,451
Occupancy and equipment, net                                          1,270       1,318      1,177
Data processing                                                         533         564        329
Advertising and promotion                                                35          69         25
Professional fees and services                                          364         350        341
Stationery, printing and supplies                                       152         141        137
Postage and delivery                                                    101          93         91
FDIC and general insurance                                              225         179        177
All other                                                               924         749        575
--------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSES                                            7,259       6,479      5,303
--------------------------------------------------------------------------------------------------
Earnings before income taxes                                         15,993      11,619      6,488
Provision for income taxes                                            6,873       4,713      2,710
==================================================================================================
NET EARNINGS                                                       $  9,120   $   6,906  $   3,778
==================================================================================================
BASIC EARNINGS PER SHARE                                           $   1.85   $    1.71  $    0.97
DILUTED EARNINGS PER SHARE                                         $   1.53   $    1.37  $    0.97
DIVIDENDS PER SHARE                                                $      -   $       -  $       -
--------------------------------------------------------------------------------------------------
</TABLE>
See  accompanying  notes  to  consolidated  financial  statements.


                                       42
<PAGE>

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

                                                                                   YEAR ENDED DECEMBER 31,
                                                                             --------------------------------
($ in thousands)                                                                 2003       2002        2001
-------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>       <C>         <C>
-------------------------------------------------------------------------------------------------------------
NET EARNINGS                                                                 $  9,120  $   6,906   $   3,778
-------------------------------------------------------------------------------------------------------------
  Net unrealized holding (losses) gains on available-for-sale securities            -        (72)        596
  Reclassification adjustment for gains realized in earnings                        -       (120)          -
                                                                             --------------------------------
  Net unrealized (losses) gains on available-for-sale securities                    -       (192)        596
  Credit (provision) for income taxes related to unrealized (losses) gains
        on available-for-sale securities                                            -         81        (233)
-------------------------------------------------------------------------------------------------------------
Other comprehensive (loss) income, net of tax                                       -       (111)        363
=============================================================================================================
TOTAL COMPREHENSIVE INCOME, NET OF TAX                                       $  9,120  $   6,795   $   4,141
=============================================================================================================
</TABLE>
See  accompanying  notes  to  consolidated  financial  statements.


                                       43
<PAGE>
<TABLE>
<CAPTION>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                                               YEAR ENDED DECEMBER 31,
                                                                         --------------------------------
($ in thousands)                                                             2003       2002        2001
---------------------------------------------------------------------------------------------------------
<S>                                                                      <C>       <C>         <C>
CLASS A COMMON STOCK
Balance at beginning of year                                             $  4,348  $   3,545   $   3,545
Issuance of 945,717 and 803,458 shares in 2003 and 2002, respectively,
     upon the exercise of warrants                                            946        803           -
Issuance of 309,573 shares upon the conversion of debentures                  309          -           -
---------------------------------------------------------------------------------------------------------
Balance at end of year                                                      5,603      4,348       3,545
---------------------------------------------------------------------------------------------------------

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

ADDITIONAL PAID-IN-CAPITAL, COMMON
Balance at beginning of year                                               24,134     19,001      18,975
Compensation related to vesting of certain Class B stock warrants              26         26          26
Compensation related to certain Class A stock warrants modified               418        109           -
Issuance of 30,000 shares of Class B stock to acquire
     Intervest Securities Corporation                                         185          -           -
Issuance of 945,717 and 803,458 shares in 2003 and 2002, respectively,
    upon the exercise of stock warrants, inclusive of tax benefits          8,520      4,998           -
Issuance of 309,573 shares of Class A stock upon the
     conversion of debentures                                               2,705          -           -
---------------------------------------------------------------------------------------------------------
Balance at end of year                                                     35,988     24,134      19,001
---------------------------------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of year                                               24,289     17,383      13,605
Net earnings for the year                                                   9,120      6,906       3,778
---------------------------------------------------------------------------------------------------------
Balance at end of year                                                     33,409     24,289      17,383
---------------------------------------------------------------------------------------------------------

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

=========================================================================================================
TOTAL STOCKHOLDERS' EQUITY AT END OF YEAR                                $ 75,385  $  53,126   $  40,395
=========================================================================================================
</TABLE>
See  accompanying  notes  to  consolidated  financial  statements.


                                       44
<PAGE>
<TABLE>
<CAPTION>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                              YEAR ENDED DECEMBER 31,
                                                                                      ----------------------------------
($ in thousands)                                                                           2003        2002        2001
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>         <C>         <C>
OPERATING ACTIVITIES
Net earnings                                                                          $   9,120   $   6,906   $   3,778
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization                                                               568         606         505
Provision for loan losses                                                                 1,969       1,274         612
Deferred income tax benefit                                                                (963)       (681)       (364)
Amortization of deferred debenture offering costs                                         1,084         919         753
Compensation expense related to common warrants                                             444         135          26
Amortization of premiums, fees and discounts, net                                        (1,610)       (588)     (1,823)
Gain from sales of securities available for sale                                              -        (120)          -
Net loss from sale of foreclosed real estate                                                 51           -           -
Net increase in accrued interest payable on debentures                                    1,648       2,392       2,747
Net increase in official checks outstanding                                               1,749       1,154         938
Net change in all other assets and liabilities                                            4,403       2,802       2,118
------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                18,463      14,799       9,290
------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net decrease (increase) in interest-earning time deposits with banks                      2,000      (1,750)       (250)
Maturities and calls of securities available for sale                                         -       2,500      69,194
Sales of securities available for sale                                                        -       3,620           -
Maturities and calls of securities held to maturity                                     117,755     104,785      35,996
Purchases of securities held to maturity                                               (127,221)   (153,335)   (114,013)
Net increase in loans receivable                                                       (182,674)   (124,271)   (103,969)
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, net                  (1,967)       (454)        (49)
Purchases of premises and equipment, net                                                   (222)       (387)       (816)
------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                                                  (191,961)   (169,292)   (113,907)
------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in deposits                                                                169,555     143,521      62,196
Net increase in mortgage escrow funds payable                                             4,646       1,641         856
Principal repayments of debentures and mortgage note payable                             (3,661)     (2,509)     (1,400)
Gross proceeds from issuance of debentures                                               31,000      13,500      25,750
Debentures issuance costs                                                                (1,694)     (1,021)     (1,314)
Proceeds from issuance of common stock                                                    6,931       5,801           -
------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                               206,777     160,933      86,088
------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                                     33,279       6,440     (18,529)
Cash and cash equivalents at beginning of year                                           30,849      24,409      42,938
========================================================================================================================
CASH AND CASH EQUIVALENTS AT END OF YEAR                                              $  64,128   $  30,849   $  24,409
========================================================================================================================
SUPPLEMENTAL DISCLOSURES
  Cash paid during the year for interest                                              $  25,647   $  22,936   $  21,253
  Cash paid during the year for income taxes                                              7,557       5,301       2,704
  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                 3,015           -           -
  Issue Class B common stock to purchase Intervest Securities Corporation                   215
  Accumulated other comprehensive income - change in unrealized
      (loss) gain on securities available for sale, net of tax                                -        (111)        363
------------------------------------------------------------------------------------------------------------------------
</TABLE>
See  accompanying  notes  to  consolidated  financial  statements.


                                       45
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

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;
     Intervest Securities Corporation; Intervest Statutory Trust I and Intervest
     Statutory  Trust  II.  The  entities  are  referred  to collectively as the
     "Company"  on  a  consolidated  basis.

     The Holding Company is located at 10 Rockefeller Plaza in New York City and
     its  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  business  segment  is  banking.

     The  Bank  is a nationally chartered, full-service commercial bank that has
     its  headquarters  and full-service banking office at One Rockefeller Plaza
     in  New  York  City,  and  a  total of five full-service banking offices in
     Pinellas  County,  Florida  - four in Clearwater and one in South Pasadena.
     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 also
     located at 10 Rockefeller Plaza in New York City. It is engaged in the real
     estate  business,  including  the  origination  and purchase of real estate
     mortgage  loans,  consisting  of  first  mortgage,  junior  mortgage  and
     wraparound  mortgage  loans.  Its  wholly  owned  subsidiaries,  Intervest
     Distribution Corporation and Intervest Realty Servicing Corporation provide
     administrative  services  to  Intervest  Mortgage  Corporation.  Intervest
     Mortgage Corporation issues debentures to provide funding for its business.

     Intervest  Securities  Corporation  is  a broker/dealer and a NASD and SIPC
     member  firm  located  at  10  Rockefeller  Plaza  in  New  York  City.  It
     participates  as  a  selected dealer from time to time in offerings of debt
     securities  of  the  Company,  primarily  those  of  Intervest  Mortgage
     Corporation.  On  June  2,  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. 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.  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
     Intervest  Securities  Corporation  were  diminimus.

     Intervest  Statutory  Trust  I  was  formed  in December 2001 and Intervest
     Statutory  Trust  II  was formed in September 2003. Each was formed for the
     sole purpose of issuing and administering $15,000,000 of capital securities
     for a total of $30,000,000 as more fully described in note 9. The Trusts do
     not  conduct  any  trade  or  business.

     The Company expects to be moving from its present New York locations to the
     entire fourth floor of One Rockefeller Plaza in New York City in the second
     quarter  of  2004.


                                       46
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

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.  All significant intercompany balances and
     transactions  have  been  eliminated  in  consolidation.  Certain
     reclassifications  have  been  made to prior year amounts to conform to the
     current  year's  presentation. The accounting and reporting policies of the
     Company  conform  to accounting principles generally accepted in the United
     States  of  America  and  to general practices within the banking industry.

     In  preparing the consolidated financial statements, management is required
     to  make  estimates  and  assumptions  that  affect the reported amounts of
     assets and liabilities, and disclosure of contingent liabilities, as of the
     date  of  the  financial  statements  and  revenues and expenses during the
     reporting  periods.  Actual  results  could  differ  from  those estimates.
     Estimates that are particularly susceptible to significant change relate to
     the  determination  of  the  allowance  for  loan losses and the need for a
     valuation  allowance  for  deferred  tax  assets  and  real estate acquired
     through  foreclosure.

     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.


                                       47
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------


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 $4,794,000 at December 31, 2003 and
     $3,793,000  at  December  31,  2002.

     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.


                                       48
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

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 its stock-based compensation,
     which has been in the form of stock warrants. 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
     the  estimated fair value of the warrants at the grant or modification date
     in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation,"
     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.


                                       49
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

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

     RECENT  ACCOUNTING  DEVELOPMENTS

     ACCOUNTING  FOR  COSTS  ASSOCIATED  WITH  EXIT  OR  DISPOSAL ACTIVITIES. On
     January  1,  2003,  the Company adopted SFAS No. 146, "Accounting for Costs
     Associated  with  Exit  or  Disposal Activities," which addresses financial
     accounting  and  reporting  for  costs  associated  with  exit  or disposal
     activities  and  nullifies  EITF Issue No. 94-3, "Liability Recognition for
     Certain  Employee  Termination Benefits and Other Costs to Exit an Activity
     (including  Certain  Costs Incurred in a Restructuring)." The new statement
     requires  that  a  liability for a cost associated with an exit or disposal
     activity  be  recognized and measured initially at fair value only when the
     liability  is  incurred.  Under Issue 94-3, a liability for an exit cost as
     defined  therein was recognized at the date of an entity's commitment to an
     exit  plan.  The  provisions  of  this  statement are effective for exit or
     disposal  activities  that  are  initiated  after  December  31,  2002. The
     adoption  of  this  statement  had  no impact on the Company's consolidated
     financial  statements.

     ACCOUNTING  FOR  GUARANTEES.  On  January 1, 2003, the Company adopted FASB
     Interpretation  No. 45, "Guarantor's Accounting and Disclosure Requirements
     for  Guarantees,  Including Indirect Guarantees of Indebtedness to Others,"
     ("FIN  45"),  which  expands  previously  issued  accounting  guidance  and
     disclosure requirements for certain guarantees. FIN 45 requires the Company
     to  recognize  an  initial  liability  for  the fair value of an obligation
     assumed  by  issuing a guarantee. The provision for initial recognition and
     measurement  of  the  liability  are  to  applied on a prospective basis to
     guarantees  issued or modified after December 31, 2002. The adoption of FIN
     45  had  no  impact  on  the  Company's  consolidated financial statements.

     CONSOLIDATION  OF  VARIABLE  INTEREST  ENTITIES.  In January 2003, the FASB
     released  Interpretation  No.  46,  "Consolidation  of  Variable  Interest
     Entities"  ("FIN  46").  FIN  46,  as revised in December 2003, changes the
     method  of  determining  whether certain entities should be included in the
     Company's  financial  statements.  An  entity  is  subject to FIN 46 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  requires bank holding companies that have used controlled business
     trusts  to  raise  financing by issuing trust preferred securities (Capital
     Securities),  to  deconsolidate  their  investments  in  those  trusts. The
     Company  will  be  required  to  adopt FIN 46 in the first quarter of 2004.
     Deconsolidation  would  increase  the  Company's  total assets and borrowed
     funds  each  by  $968,000  upon  adoption reflecting the investments in the
     Trusts,  which  will  no  longer  be  eliminated  in  consolidation.

     In July 2003, the Board of Governors of the Federal Reserve System issued a
     supervisory  letter  instructing  bank  holding  companies  to  continue to
     include  the  trust  preferred  securities  (Capital  Securities) in Tier I
     capital  for  regulatory capital purposes until further notice. The Federal
     Reserve  intends  to  review  the regulatory implications of any accounting
     treatment  changes and, if necessary, provide further appropriate guidance.
     However,  there  can be no assurance that the Federal Reserve will continue
     to  allow  institutions  to  include  trust  preferred securities in Tier I
     capital  for regulatory capital purposes. As of December 31, 2003, assuming
     the  Company  was  not  allowed to include the Capital Securities issued by
     Intervest  Statutory  Trust I and Intervest Statutory Trust II, the Company
     would  still  exceed  the  regulatory  threshold  for  capital  adequacy.


                                       50
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

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

     RECENT  ACCOUNTING  DEVELOPMENTS,  CONTINUED

     ACCOUNTING  FOR  DERIVATIVE  INSTRUMENTS  AND  HEDGING ACTIVITIES. In April
     2003,  the  FASB  issued  SFAS  No.  149,  "Amendment  of  Statement 133 on
     Derivative  Instruments  and  Hedging  Activities"  ("SFAS  149"). SFAS 149
     amends  and  clarifies  financial  accounting  and reporting for derivative
     instruments,  including  certain  derivative  instruments embedded in other
     contracts  (collectively  referred  to  as  derivatives),  and  for hedging
     activities  under  SFAS No. 133, "Accounting for Derivative Instruments and
     Hedging  Activities."  In  particular,  SFAS  149  clarifies  under  what
     circumstances  a  contract  with  an  initial  net  investment  meets  the
     characteristic  of  a derivative and clarifies when a derivative contains a
     financing  component  that  warrants  special reporting in the statement of
     cash  flows.  SFAS  149 is effective for contracts entered into or modified
     after  June  30,  2003.  The  adoption  of  SFAS  149  had no impact on the
     Company's  consolidated  financial  statements.

     ACCOUNTING  FOR  CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
     LIABILITIES  AND  EQUITY.  In  May  2003,  the  FASB  issued  SFAS No. 150,
     "Accounting  for Certain Financial Instruments with Characteristics of Both
     Liabilities  and  Equity"  ("SFAS 150"). SFAS 150 establishes standards for
     how  an  issuer  classifies and measures certain financial instruments with
     characteristics  of both liabilities and equity. It requires that an issuer
     classify a financial instrument that is within its scope as a liability (or
     an  asset in some circumstances). Many of those instruments were previously
     classified  as  equity.  SFAS  150  is  effective for financial instruments
     entered into or modified after May 31, 2003. However, the effective date of
     the statement's provisions related to the classification and measurement of
     certain  mandatorily  redeemable noncontrolling interests has been deferred
     indefinitely  by  the  FASB,  pending further Board action. The adoption of
     SFAS  150 had no impact on the Company's consolidated financial statements.

2.   SECURITIES

     The Company did not have any securities classified as available for sale at
     December  31,  2003  or  2002.  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  2003  or  2001.

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

<TABLE>
<CAPTION>
                                                       Gross        Gross   Estimated
                                                 -----------  -----------  ----------
                                      Amortized   Unrealized   Unrealized        Fair
                                     ----------  -----------  -----------  ----------
($ in thousands)                           Cost        Gains       Losses       Value
-------------------------------------------------------------------------------------
<S>                                  <C>         <C>          <C>          <C>
U.S. government agency securities:
  At December 31, 2003               $  152,823  $       278  $       106  $  152,995
  At December 31, 2002               $  145,694  $       881  $        15  $  146,560
-------------------------------------------------------------------------------------
</TABLE>
     Securities held to maturity consist of debt obligations of the Federal Home
     Loan  Bank,  Federal  National  Mortgage  Association,  Federal  Home  Loan
     Mortgage  Corporation,  Federal Farm Credit Bank and Student Loan Marketing
     Association.  At December 31, 2003 and 2002, the weighted-average yield and
     remaining  maturity of the portfolio was 1.75% and 1.7 years, and 2.39% and
     1.6  years,  respectively.  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.

     The  amortized cost and estimated fair value of securities held to maturity
     at  December  31,  2003,  by  remaining  term to contractual maturity is as
     follows:
<TABLE>
<CAPTION>
                                                             Estimated
                                                            ----------
                                                 Amortized        Fair   Average
                                                ----------  ----------  --------
($ in thousands)                                      Cost       Value     Yield
--------------------------------------------------------------------------------
<S>                                             <C>         <C>            <C>
Due in one year or less                         $   70,026  $   70,171     1.68%
Due after one year through five years               82,797      82,824     1.81%
--------------------------------------------------------------------------------
                                                $  152,823  $  152,995     1.75%
--------------------------------------------------------------------------------
</TABLE>


                                       51
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

3.   LOANS  RECEIVABLE

     Loans  receivable  is  as  follows:
<TABLE>
<CAPTION>
                                           At December 31, 2003      At December 31, 2002
                                         -----------------------  --------------------------
($ in thousands)                         # of Loans      Amount    # of Loans       Amount
--------------------------------------------------------------------------------------------
<S>                                      <C>        <C>            <C>         <C>
Commercial real estate loans                   184  $    344,071          162  $    275,096
Residential multifamily loans                  210       310,650          168       214,515
Land development and other land loans            6        20,526            3         1,890
Residential 1-4 family loans                    26         1,628           28         1,953
Commercial business loans                       28         1,662           27         1,608
Consumer loans                                  16           319           16           240
--------------------------------------------------------------------------------------------
Loans receivable                               470       678,856          404       495,302
--------------------------------------------------------------------------------------------
Deferred loan fees                                        (7,731)                    (5,390)
Allowance for loan losses                                 (6,580)                    (4,611)
--------------------------------------------------------------------------------------------
Loans receivable, net                               $    664,545               $    485,301
--------------------------------------------------------------------------------------------
</TABLE>
     At  December  31,  2003,  two real estate loans with an aggregate principal
     balance  of  $8,474,000  were  on  nonaccrual  status.  These  loans  were
     considered  impaired  under  the  criteria  of  SFAS  No.114. The Company's
     recorded investment in these loans totaled $8,499,000. The Company believes
     the  estimated  fair  value of each of the underlying properties (which are
     located  in  New  York  City) is greater than its recorded investment. As a
     result,  there was no specific valuation allowance maintained. During March
     2004,  the  aforementioned  loans  were  brought current and returned to an
     accrual  status.  At  December 31, 2003 and 2002, 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 $339,000 in 2003, 29,000 in
     2002  and  $51,000  in  2001.  The average balance of nonaccrual (impaired)
     loans  for  2003,  2002  and  2001  was  $4,568,000, $310,000 and $204,000,
     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, 2003      At December 31, 2002
                             ------------------------  -------------------------
($ in thousands)                 Amount    % of Total    Amount      % of Total
--------------------------------------------------------------------------------
<S>                          <C>           <C>         <C>               <C>
New York                     $  435,790         64.2%  $  278,280         56.2%
Florida                         189,802         28.0      184,257         37.2
Connecticut and New Jersey       39,681          5.8       21,991          4.4
All other                        13,583          2.0       10,774          2.2
--------------------------------------------------------------------------------
                             $  678,856        100.0%  $  495,302        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)                              2003         2002          2001
--------------------------------------------------------------------------------
<S>                                      <C>           <C>           <C>
Allowance at beginning of year           $      4,611  $     3,380   $     2,768
Provision charged to operations                 1,969        1,274           612
Chargeoffs (1)                                      -         (150)            -
Recoveries (2)                                      -          107             -
--------------------------------------------------------------------------------
Allowance at end of year                 $      6,580  $     4,611   $     3,380
--------------------------------------------------------------------------------
</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.


                                       52
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

5.   PREMISES  AND  EQUIPMENT,  LEASE  COMMITMENTS  AND  RENTAL  EXPENSE
     Premises  and  equipment  is  as  follows:
<TABLE>
<CAPTION>
                                                    At December 31,
                                                ---------------------
($ in thousands)                                  2003        2002
---------------------------------------------------------------------
<S>                                             <C>        <C>
Land                                            $  1,516   $   1,516
Buildings                                          4,913       4,810
Leasehold improvements                               346         335
Furniture, fixtures and equipment                  2,137       2,435
---------------------------------------------------------------------
Total cost                                         8,912       9,096
---------------------------------------------------------------------
Less accumulated deprecation and amortization     (3,160)     (2,998)
---------------------------------------------------------------------
Net book value                                  $  5,752   $   6,098
---------------------------------------------------------------------
</TABLE>
     The  office  of  the  Holding  Company,  Intervest Mortgage Corporation and
     Intervest Securities Corporation is located in leased premises on the tenth
     floor of 10 Rockefeller Plaza in New York City. The Bank's headquarters and
     branch  office  is  located  in  leased  premises on the third 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 September
     2004,  May  2008  and  June  2007,  respectively.  The Bank owns all of its
     remaining  offices  in Florida. In October 2003, the Holding Company leased
     the  entire  fourth  floor of One Rockefeller Plaza through March 2014. The
     Holding  Company,  the  Bank's  headquarters  and  branch office, Intervest
     Mortgage  Corporation  and  Intervest Securities Corporation will be moving
     from  their  present  locations  to  the  fourth  floor  upon completion of
     renovations,  with the Bank expected to occupy one-half of this space. Upon
     relocation,  the  Bank's current lease of the third floor will be canceled,
     while  the  current  lease for the tenth floor of 10 Rockefeller plaza will
     continue  to  run  until  it  expires in September 2004, or earlier if such
     space  is  rented  by  the  landlord  prior thereto. All the leases contain
     operating  escalation  clauses  related  to taxes and operating costs based
     upon  various  criteria  and  are  accounted  for  as  operating  leases.

     Future  minimum  annual  lease  rental  payments  due  under noncancellable
     operating  leases  as  of  December  31, 2003 are as follows: $1,002,000 in
     2004;  $907,000  in  2005;  $911,000 in 2006; $852,000 in 2007; $856,000 in
     2008; and $4,717,000 thereafter for an aggregate amount of $9,245,000. Rent
     expense aggregated $654,000 in 2003, $618,000 in 2002 and $554,000 in 2001.
     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 July 2008. Future lease rental income
     due  under  such leases as of December 31, 2003 are as follows: $477,000 in
     2004;  $435,000 in 2005; $358,000 in 2006; $188,000 in 2007; and $17,000 in
     2008  for an aggregate amount of $1,475,000. Lease rental income aggregated
     $462,000  in  2003,  $421,000  in  2002  and  $388,000  in  2001.

6.   DEPOSITS

     Scheduled  maturities  of  certificates of deposit accounts are as follows:
<TABLE>
<CAPTION>
                              At December 31, 2003       At December 31, 2002
                           -------------------------  --------------------------
                                           Wtd-Avg                   Wtd-Avg
($ in thousands)               Amount    Stated Rate     Amount    Stated Rate
--------------------------------------------------------------------------------
<S>                        <C>           <C>         <C>           <C>
Within one year            $  182,693         2.75%  $  122,890         3.51%
Over one to two years          90,936         3.64       57,895         4.18
Over two to three years        30,094         4.43       31,281         5.53
Over three to four years       89,085         4.83       17,730         5.32
Over four years                74,351         4.20       95,187         4.92
--------------------------------------------------------------------------------
                           $  467,159         3.66%  $  324,983         4.33%
--------------------------------------------------------------------------------
</TABLE>
     Certificate  of  deposit  accounts of $100,000 or more totaled $123,063,000
     and  $72,872,000  at  December 31, 2003 and 2002, respectively. At December
     31,  2003, certificate of deposit accounts of $100,000 or more by remaining
     maturity  were as follows: due within one year $46,419,000; over one to two
     years  $25,252,000,  over two to three years $7,516,000; over three to four
     years  $23,721,000;  and  over  four  years  $20,155,000.


                                       53
<PAGE>
                   INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------
6.   DEPOSITS,  CONTINUED
     Interest  expense  on  deposits  is  as  follows:
<TABLE>
<CAPTION>
                                       For the Year Ended December 31,
                                   --------------------------------------
($ in thousands)                       2003         2002          2001
-------------------------------------------------------------------------
<S>                                <C>          <C>          <C>
Interest checking accounts         $       182  $       221  $        238
Savings accounts                           601          762           778
Money market accounts                    2,763        3,082         2,640
Certificates of deposit accounts        14,891       13,304        13,423
-------------------------------------------------------------------------
                                   $    18,437  $    17,369  $     17,079
-------------------------------------------------------------------------
</TABLE>

7.   SUBORDINATED  DEBENTURES  AND  MORTGAGE  NOTE  PAYABLE

     Subordinated  debentures  and  mortgage  note  payable  are  summarized  as
     follows:


<TABLE>
<CAPTION>
                                                                             At December 31,
                                                                           -------------------
($ in thousands)                                                             2003      2002
----------------------------------------------------------------------------------------------
<S>                                                                        <C>       <C>
INTERVEST MORTGAGE CORPORATION (1) :
Series 05/12/95 - interest at 2% above prime - due April 1, 2004           $  9,000  $   9,000
Series 10/19/95 - interest at 2% above prime - due October 1, 2004            9,000      9,000
Series 05/10/96 - interest at 2% above prime - due April 1, 2005             10,000     10,000
Series 10/15/96 - interest at 2% above prime - due October 1, 2005            5,500      5,500
Series 04/30/97 - interest at 1% above prime - due October 1, 2005            8,000      8,000
Series 11/10/98 - interest at 8 1/2% fixed   - due January 1, 2003                -      1,400
Series 11/10/98 - interest at 9% fixed       - due January 1, 2005            2,600      2,600
Series 06/28/99 - interest at 8 1/2% fixed   - due July 1, 2004               2,000      2,000
Series 06/28/99 - interest at 9% fixed       - due July 1, 2006               2,000      2,000
Series 09/18/00 - interest at 8% fixed       - due January 1, 2004                -      1,250
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          -
Series 01/21/03 - interest at 7 % fixed      - due July 1, 2008               3,000          -
Series 01/21/03 - interest at 7 1/4% fixed   - due July 1, 2010               3,000          -
Series 07/25/03 - interest at 6 1/2% fixed   - due October 1, 2006            2,500          -
Series 07/25/03 - interest at 6 3/4% fixed   - due October 1, 2008            3,000          -
Series 07/25/03 - interest at 7 % fixed      - due October 1, 2010            3,000          -
                                                                           -------------------
                                                                             87,350     74,000

INTERVEST BANCSHARES CORPORATION:
Series 05/14/98 - interest at 8% fixed       - due July 1, 2008               4,840      6,930
Series 12/15/00 - interest at 8% fixed       - due April 1, 2004                  -      1,000
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
                                                                           -------------------
                                                                              7,340     10,430

INTERVEST NATIONAL BANK:
Mortgage note payable - interest at 7% fixed - due February 1, 2017             255        266
----------------------------------------------------------------------------------------------
                                                                           $ 94,945  $  84,696
----------------------------------------------------------------------------------------------
<FN>
(1)  Prime  represents  prime  rate  of  JPMorganChase  Bank, which was 4.00% on
     December  31,  2003  and  4.25%  on  December  31,  2002.
</TABLE>



                                       54
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------
7.   SUBORDINATED  DEBENTURES  AND  MORTGAGE  NOTE  PAYABLE,  CONTINUED

     In  January  2004,  Intervest  Mortgage  Corporation issued Series 11/28/03
     debentures  totaling  $10,000,000  in principal amount, of which $1,750,000
     accrue  and  pay  interest  quarterly  and  $8,250,000  accrue and compound
     interest  quarterly  until  maturity.

     In  2003,  Intervest Mortgage Corporation issued Series 1/21/03 and 7/25/03
     debentures  totaling  $16,000,000  in  principal  amount.  The sales, after
     underwriter's  commissions  and  other  issuance  costs,  resulted  in  net
     proceeds  of  $14,826,000. In 2003, Intervest Mortgage Corporation's Series
     11/10/98 debentures maturing on January 1, 2003 were redeemed for principal
     of  $1,400,000  and  accrued  interest  of  $570,000,  and  Series  9/18/00
     debentures  maturing  on  January 1, 2004 were redeemed on November 1, 2003
     for  principal  of  $1,250,000  and  accrued  interest  of  $335,000.

     Intervest  Mortgage  Corporation's  floating-rate  Series  5/12/95  through
     4/30/97  debentures  have  a  maximum  interest rate of 12%. Interest on an
     aggregate of $6,330,000 of these debentures at December 31, 2003 is accrued
     and  compounded  quarterly, and is due and payable at maturity. The payment
     of  interest  on the remaining debentures in this Series is made quarterly.
     Additionally,  any  debenture  holder  whose interest accrues and is due at
     maturity  may  at  any  time  elect  to  receive  the  accrued interest and
     subsequently  receive  regular  payments  of  interest.

     Intervest  Mortgage  Corporation's  Series  11/10/98,  6/28/99,  9/18/00,
     $770,000  of  Series  8/01/01, $270,000 of Series 1/17/02 and $1,520,000 of
     Series 8/05/02 debentures accrue and compound interest quarterly, with such
     interest  due  and  payable  at maturity. Interest is paid quarterly on the
     remaining  debentures in Series 8/01/01, 1/17/02, 8/5/02 and all debentures
     in  Series  1/21/03  and  7/25/03. The holders of Series 11/10/98, 6/28/99,
     9/18/00,  01/17/02,  08/05/02, 1/21/03, 7/25/03 and 11/28/03 debentures can
     require  Intervest  Mortgage  Corporation  to repurchase the debentures for
     face  amount plus accrued interest each year (beginning October 1, 2005 for
     Series  01/17/02,  January  1,  2006  for Series 08/05/02, July 1, 2006 for
     Series  1/21/03,  October  1, 2006 for Series 7/25/03 and April 1, 2007 for
     Series  11/28/03)  provided,  however,  in  no calendar year will Intervest
     Mortgage  Corporation  be  required  to  purchase  more  than  $100,000  in
     principal  amount  of  each  maturity,  in  each series of debentures, on a
     non-cumulative  basis.

     At  any  time,  all  of  Intervest Mortgage Corporation's debentures may be
     redeemed  at  its  option,  in whole or in part, for face value, except for
     Series  1/21/03, 7/25/03 and 11/28/03. Redemptions would be a premium of 1%
     if  the  redemption is prior to April 1, 2004 for Series 01/21/03, prior to
     July  1,  2004  for Series 07/25/03 and prior to January 1, 2005 for Series
     11/28/03.  All  the debentures are unsecured and subordinate to all present
     and future senior indebtedness, as defined in the indenture related to each
     debenture.

     The  Holding  Company's Series 5/14/98 subordinated debentures are due July
     1,  2008 and are convertible at the option of the holders at any time prior
     to  April  1, 2008, unless previously redeemed by the Holding Company, into
     shares  of  its Class A common stock at the following conversion prices per
     share:  $12.00  in 2004; $14.00 in 2005; $16.00 in 2006; $18.00 in 2007 and
     $20.00  from January 1, 2008 through April 1, 2008. The Holding Company has
     the right to establish conversion prices that are less than those set forth
     above  for  such  periods  as  it  may  determine.  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.

     Interest  accrues  and compounds each calendar quarter on $4,170,000 of the
     convertible  debentures  at the rate of 8% per annum, while $670,000 of the
     debentures  pay interest each calendar quarter at the rate of 8% per annum.
     All  accrued  interest  is  due  and  payable  at  maturity  whether  by
     acceleration,  redemption  or  otherwise.  Any convertible debenture holder
     may, on or before July 1 of each year elect to be paid all accrued interest
     and  to  thereafter  receive  payments  of  interest  quarterly. All of the
     Holding  Company's  debentures may be redeemed, in whole or in part, at any
     time  at  the  option  of  the  Holding  Company  for  face  value.

     The  mortgage note payable cannot be prepaid except during the last year of
     its  term.


                                       55
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------
7.   SUBORDINATED  DEBENTURES  AND  MORTGAGE  NOTE  PAYABLE,  CONTINUED

     Scheduled  contractual  maturities  as of December 31, 2003 are as follows:

<TABLE>
<CAPTION>
($ in thousands)                            Principal   Accrued Interest
-------------------------------------------------------------------------
<S>                                    <C>               <C>
For the year ended December 31, 2004   $       20,013    $        6,711
For the year ended December 31, 2005           29,116             3,325
For the year ended December 31, 2006           10,269             1,382
For the year ended December 31, 2007            5,022                66
For the year ended December 31, 2008           16,365             2,772
Thereafter                                     14,160               157
-------------------------------------------------------------------------
                                       $       94,945    $       14,413
-------------------------------------------------------------------------
</TABLE>
8.   FEDERAL  FUNDS  PURCHASED  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.  The  Bank  has  agreements  with
     correspondent banks whereby it may borrow up to $16,000,000 on an unsecured
     basis.  As  a  member  of  the  Federal  Home Loan Bank of New York and the
     Federal  Reserve  Bank of New York, the Bank also has the ability to borrow
     from  these  institutions on a secured basis that amounted to approximately
     $145,000,000  at  December  31,  2003  based  on  available  collateral. At
     December  31, 2003 and 2002, there were no outstanding borrowings under any
     of  these  lines.

9.   SUBORDINATED  DEBENTURES  -  CAPITAL  SECURITIES

     Intervest  Statutory  Trust  I  was  formed  in  December 2001 for the sole
     purpose  of issuing and administering 9.875% Trust Preferred Securities due
     December  18,  2031  in  the  aggregate  principal  amount  of $15,000,000,
     hereafter  referred to as "Capital Securities I". The net proceeds from the
     sale,  in addition to the initial capital contribution of $464,000 from the
     Holding  Company  to the Trust, were reinvested into the Holding Company in
     exchange  for  $15,464,000  of  the  Holding  Company's  9.875%  Junior
     Subordinated Debentures due December 18, 2031. Intervest Statutory Trust II
     was  formed  in  September  2003  for  the  sole  purpose  of  issuing  and
     administering  6.75%  Trust  Preferred Securities due September 17, 2033 in
     the aggregate principal amount of $15,000,000, hereafter referred to as the
     "Capital Securities II". The net proceeds from the sale, in addition to the
     initial  capital  contribution  of $464,000 from the Holding Company to the
     Trust, were reinvested into the Holding Company in exchange for $15,464,000
     of the Holding Company's 6.75% Junior Subordinated Debentures due September
     17,  2033.

     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. Cash distributions are payable semi-annually in arrears
     at  the  fixed  rate of 9.875% per annum on December 18 and June 18 of each
     year  for  the  Capital  Securities  I  and  the 9.875% Junior Subordinated
     Debentures. For the Capital Securities II and the 6.75% Junior Subordinated
     Debentures,  cash  distributions  are payable quarterly in arrears on March
     17,  June  17,  September  17 and December 17 of each year based on a fixed
     rate  of  6.75%  per  annum for the first five years, and thereafter at the
     rate of 2.95% over 3 month libor until maturity. Issuance costs of $469,000
     associated with Capital Securities I and $444,000 for Capital Securities II
     have  been  capitalized by the Holding Company and are being amortized over
     the  life  of  the  securities.

     All  of  the  Capital Securities are subject to mandatory redemption (i) in
     whole,  but  not  in  part,  upon  repayment  of  the  Junior  Subordinated
     Debentures  at  stated  maturity  or, at the option of the Holding Company,
     their earlier redemption in whole upon the occurrence of certain changes in
     the  tax  treatment  or  capital  treatment of the Capital Securities, or a
     change  in  the  law  such that the Trust would be considered an investment
     company  and  (ii) in whole or in part at any time on or after December 18,
     2006 for Capital Securities I and September 17, 2008 for Capital Securities
     II contemporaneously with the optional redemption by the Holding Company of
     the  Junior  Subordinated  Debentures  in  whole  or  in  part.


                                       56
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------
9.   SUBORDINATED  DEBENTURES  -  CAPITAL  SECURITIES,  CONTINUED

     The  Junior Subordinated Debentures are redeemable prior to maturity at the
     option  of  the  Holding  Company (i) on or after December 18, 2006 for the
     9.875%  Junior  Subordinated  Debentures and on or after September 17, 2008
     for  the  6.75%  Junior Subordinated Debentures, in whole at any time or in
     part  from  time  to  time,  or (ii) in whole, but not in part, at any time
     within 90 days following the occurrence and continuation of certain changes
     in  the  tax treatment or capital treatment of the Capital Securities, or a
     change  in  law  such  that  the  Trust  would  be considered an investment
     company.  Any  redemption  would  need  prior  regulatory  approvals.

10.  STOCKHOLDERS'  EQUITY

     The  Holding  Company's  Board  of  Directors  is authorized to issue up to
     300,000  shares  of  preferred  stock  of  the  Holding  Company  without
     stockholder  approval.  The  powers,  preferences  and  rights,  and  the
     qualifications,  limitations,  and  restrictions  thereof  on any series of
     preferred stock issued is determined by the Board of Directors. At December
     31,  2003  and  2002,  there was no preferred stock issued and outstanding.

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

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, 2003 and 2002, balances
     maintained  as  reserves  were  approximately  $691,000  and  $470,000,
     respectively.

     As  a  member of the Federal Reserve Banking system, the Bank must maintain
     an investment in the capital stock of the Federal Reserve Bank. At December
     31,  2003  and  2002,  such  investment, which earns a dividend, aggregated
     $1,384,000  and  $1,108,000,  respectively. As a member of the Federal Home
     Loan  Banking  system,  the Bank must maintain an investment in the capital
     stock of the Federal Home Loan Bank. At December 31, 2003, such investment,
     which  currently earns a dividend, aggregated $1,691,000. The Bank became a
     member  of  the  Federal  Home  Loan  Bank  of  New  York  in  2003.

     At  December  31,  2003  and 2002, U.S. government agency securities with a
     carrying  value  of  $5,835,000  and $7,081,000, respectively, were pledged
     against  various  deposit  accounts  and  lines  of  credit.

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

12.  PROFIT  SHARING  PLANS

     The Company sponsors tax-qualified, profit sharing plans in accordance with
     the  provisions  of  Section  401(k)  of the Internal Revenue Code, whereby
     eligible  employees meeting certain length-of-service requirements may make
     tax-deferred  contributions  up  to  certain  limits.  The  Company  makes
     discretionary  matching  contributions  up  to 3% of employee compensation,
     which vest to the employees over a period of time. Total cash contributions
     to the plans included in the consolidated statements of earnings aggregated
     $55,000,  $47,000  and  $37,000  in  2003,  2002  and  2001,  respectively.


                                       57
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------
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 $35,000,000 at December 31, 2003 and
     $19,000,000  at  December  31, 2002. There are no loans to any directors or
     executive  officers  of  the  Holding  Company  or  its  subsidiaries.

     The  Company  paid fees of approximately $262,000 in 2003, $157,000 in 2002
     and $219,000 in 2001 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
     $531,000 in 2003, $515,000 in 2002 and $301,000 in 2001 to a broker/dealer,
     a  principal  of  which  is  a  director  of  the  Company.

14.  COMMON  STOCK  WARRANTS

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

     Data  concerning  common  stock  warrants  is  as  follows:

<TABLE>
<CAPTION>
                                                            Exercise Price Per Warrant
                                                          -------------------------------      Total           Wtd-Avg
CLASS A COMMON STOCK WARRANTS:                            $       6.67   $      10.01 (1)   Warrants    Exercise Price
----------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>            <C>               <C>         <C>
Outstanding at December 31, 2000 and 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                               501,465            42,510     543,975   $          6.93
-----------------------------------------------------------------------------------------------------
Remaining contractual life in years at December 31, 2003           3.1                 -         2.8
----------------------------------------------------------------------------------------------------------------------
<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. For
     purposes  of  this  schedule, they are shown as outstanding at December 31, 2003.
</TABLE>

<TABLE>
<CAPTION>
                                                             Exercise Price Per Warrant
                                                          -------------------------------         Total          Wtd-Avg
CLASS B COMMON STOCK WARRANTS:                            $         6.67  $     10.00 (1)      Warrants   Exercise Price
<S>                                                       <C>             <C>              <C>           <C>
------------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 2001, 2002 and 2003                  145,000          50,000        195,000  $          7.52
-------------------------------------------------------------------------------------------------------
Remaining contractual life in years at December 31, 2003             4.1             4.1            4.1
------------------------------------------------------------------------------------------------------------------------
<FN>
(1) At December 31, 2003, 42,600 of these warrants were immediately exercisable.
    An  additional 7,400 warrants vest and become exercisable on April 27th of 2004.
    These  warrants,  which  expire on January 31, 2008, become fully vested earlier
    upon  certain  conditions.
</TABLE>

                                       58
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------
14.  COMMON  STOCK  WARRANTS,  CONTINUED

     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.

     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 warrants is summarized as
     follows:

<TABLE>
<CAPTION>
                                                                  For the Year Ended December 31,
                                                              --------------------------------------
($ in thousands)                                                    2003         2002         2001
----------------------------------------------------------------------------------------------------
<S>                                                           <C>           <C>          <C>
Compensation expense recorded in connection with vesting
     of Class B warrants during the period                    $         26  $        26  $        25
Compensation expense recorded in connection with
    Class A common stock warrants whose terms were modified            418          109            -
----------------------------------------------------------------------------------------------------
                                                              $        444  $       135  $        25
----------------------------------------------------------------------------------------------------
</TABLE>

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, 2003 and 2002, the Company had a net deferred tax asset of
     $2,960,000  and  $1,997,000,  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 during 2003, 2002 or 2001.

     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, 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
------------------------------------------------------------
Year Ended December 31, 2001:
------------------------------
   Federal                      $  2,265  $    (284)  $1,981
   State and Local                   809        (80)     729
------------------------------------------------------------
                                $  3,074  $    (364)  $2,710
------------------------------------------------------------
</TABLE>


                                       59
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

15.  INCOME  TAXES,  CONTINUED

     The  components  of  the  deferred  tax  benefit  are  as  follows:

<TABLE>
<CAPTION>
                                      For the Year Ended December 31,
                                 -----------------------------------------
<S>                              <C>           <C>            <C>
($ in thousands)                     2003           2002          2001
--------------------------------------------------------------------------
Allowance for loan losses        $      (896)  $       (623)  $      (220)
Organization and startup costs            29             28            41
Stock-based compensation                  45            (62)          (12)
Depreciation                             (65)           (41)          (18)
Deferred income                          (75)            13          (157)
All other                                 (1)             4             2
--------------------------------------------------------------------------
                                 $      (963)  $       (681)  $      (364)
--------------------------------------------------------------------------
</TABLE>

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

<TABLE>
<CAPTION>
                                    At December 31,
                                 -------------------
<S>                              <C>       <C>
($ in thousands)                     2003       2002
----------------------------------------------------
Allowance for loan losses        $  2,468  $   1,572
Organization and startup costs         11         40
Stock-based compensation               73        118
Depreciation                          179        114
Deferred income                       219        144
All other                              10          9
----------------------------------------------------
Total deferred tax asset         $  2,960  $   1,997
----------------------------------------------------
</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,
                                                          ----------------------------------
<S>                                                       <C>           <C>          <C>
                                                             2003         2002         2001
--------------------------------------------------------------------------------------------
Tax provision at statutory rate                              35.0%        34.0%        34.0%
Increase in taxes resulting from:
   State and local income taxes, net of federal benefit       8.2          6.6          7.6
   Other                                                     (0.2)           -          0.2
--------------------------------------------------------------------------------------------
                                                             43.0%        40.6%        41.8%
--------------------------------------------------------------------------------------------
</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,
                                                                          --------------------------------------
<S>                                                                       <C>           <C>          <C>
($ in thousands, except share and per share amounts)                           2003         2002         2001
----------------------------------------------------------------------------------------------------------------
Basic earnings per share:
  Net earnings applicable to common stockholders                          $      9,120  $     6,906  $     3,778
  Average number of common shares outstanding                                4,938,995    4,043,619    3,899,629
----------------------------------------------------------------------------------------------------------------
Basic earnings per share amount                                           $       1.85  $      1.71  $      0.97
----------------------------------------------------------------------------------------------------------------
Diluted earnings per share:
  Net earnings applicable to common stockholders                          $      9,120  $     6,906  $     3,778
  Adjustment to net earnings from assumed conversion of debentures                 452          436            -
                                                                          --------------------------------------
  Adjusted net earnings for diluted earnings per share computation        $      9,572  $     7,342  $     3,778
                                                                          --------------------------------------
  Average number of common shares outstanding:
      Common shares outstanding                                              4,938,995    4,043,619    3,899,629
      Potential dilutive shares resulting from exercise of warrants            356,339      313,519            -
      Potential dilutive shares resulting from conversion of debentures        962,386      990,983            -
                                                                          --------------------------------------
  Total average number of common shares outstanding used for dilution        6,257,720    5,348,121    3,899,629
----------------------------------------------------------------------------------------------------------------
Diluted earnings per share amount                                         $       1.53  $      1.37  $      0.97
----------------------------------------------------------------------------------------------------------------
</TABLE>


                                       60
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

16.  EARNINGS  PER  SHARE,  CONTINUED

     In  2003 and 2002, all warrants and convertible debentures outstanding were
     considered in the computation of diluted EPS because they were dilutive. In
     2001,  2,650,218 warrants with exercise prices ranging from $6.67 to $16.00
     were not considered in the computations of diluted EPS for 2001 because the
     warrants'  exercise  price  per  share exceeded the average market price of
     Class  A  common stock during 2001 and as a result, they were not dilutive.
     Convertible  debentures  with  principal  and  accrued  interest  totaling
     $9,164,000  at  December  31, 2001 and convertible at $14.00 per share into
     Class  A  common  stock were not considered in the diluted EPS computations
     for  2001  because  they  were  not  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 Federal Reserve Bank (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, 2003 and 2002, that the Company and
     the  Bank  met all capital adequacy requirements to which they are subject.
     As  of  December 31, 2003, 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.


                                       61
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

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, 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
Consolidated as of December 31, 2002:
------------------------------------------
   Total capital to risk-weighted assets    $ 70,764    13.06%  $ 43,342        8.00%           NA        NA
   Tier 1 capital to risk-weighted assets   $ 66,153    12.21%  $ 21,671        4.00%           NA        NA
   Tier 1 capital to average assets         $ 66,153     9.88%  $ 26,788        4.00%           NA        NA
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%
Intervest National Bank at December 31,2002:
------------------------------------------
   Total capital to risk-weighted assets    $ 54,777    12.16%  $ 36,048        8.00%  $    45,060     10.00%
   Tier 1 capital to risk-weighted assets   $ 50,313    11.17%  $ 18,024        4.00%  $    27,036      6.00%
   Tier 1 capital to average assets         $ 50,313     8.84%  $ 22,768        4.00%  $    28,460      5.00%
-------------------------------------------------------------------------------------------------------------
</TABLE>

     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, 2003 and 2002, Intervest
     Securities  Corporation's  net  capital  was  $459,000  and  $208,000,
     respectively.

19.  OFF-BALANCE  SHEET  FINANCIAL  INSTRUMENTS

     The  Company  is party to financial instruments with off-balance sheet risk
     in  the  normal  course  of  business  to  meet  the financing needs of its
     customers.  These  instruments  are  in  the  form of commitments to extend
     credit,  unused  lines  of  credit  and  standby letters of credit, and may
     involve,  to  varying degrees, elements of credit and interest rate risk in
     excess  of  the  amounts recognized in the consolidated balance sheets. The
     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 by the Company upon extension of credit, is based on management's
     credit  evaluation  of  the  counterparty.

     Standby letters of credit are conditional commitments issued by the Company
     to  guarantee  the  performance  of a customer to a third party. The credit
     risk  involved in issuing letters of credit is essentially the same as that
     involved  in  extending  loans  to  customers.


                                       62
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

19.  OFF-BALANCE  SHEET  FINANCIAL  INSTRUMENTS,  CONTINUED

     The  notional  amounts  of  the  Company's  off-balance  sheet  financial
     instruments  is  as  follows:
<TABLE>
<CAPTION>
                                At December 31,
                            -------------------
<S>                         <C>       <C>
($ in thousands)                2003       2002
------------------------------------------------
Unfunded loan commitments   $123,791  $  68,244
Available lines of credit        825        533
Standby letters of credit        100      1,267
------------------------------------------------
                            $124,716  $  70,044
------------------------------------------------
</TABLE>
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, 2003       At December 31, 2002
                                             ------------------------  ------------------------
<S>                                          <C>          <C>          <C>          <C>
                                                Carrying         Fair     Carrying         Fair
($in thousands)                                    Value        Value        Value        Value
-----------------------------------------------------------------------------------------------
Financial Assets:
  Cash and cash equivalents                  $    64,128  $    64,128  $    30,849  $    30,849
  Time deposits with banks                             -            -        2,000        2,000
  Securities held to maturity, net               152,823      152,995      145,694      146,560
  FRB and FHLB stock                               3,075        3,075        1,108        1,108
  Loans receivable, net                          664,545      700,855      485,301      497,664
  Accrued interest receivable                      4,995        4,995        4,263        4,263
Financial Liabilities:
  Deposit liabilities                            675,513      687,135      505,958      515,018
  Debentures payable plus accrued interest       139,200      143,667      113,302      115,992
  Mortgage note payable                              255          272          266          278
  Accrued interest payable on deposits             1,080        1,080          895          895
Off -Balance Sheet Instruments:
   Commitments to lend                               868          868          415          415
-----------------------------------------------------------------------------------------------
</TABLE>
     Fair  value  estimates  are  made  at  a  specific  point  in time based on
     available  information  about  each  financial instrument. Where available,
     quoted  market  prices  are  used.  However,  a  significant portion of the
     Company's  financial  instruments,  such  as  commercial  real  estate  and
     multifamily  loans,  do not have an active marketplace in which they can be
     readily sold or purchased to determine fair value. Consequently, fair value
     estimates  for such instruments are based on assumptions made by management
     that  include  the  financial  instrument's credit risk characteristics and
     future  estimated  cash  flows  and prevailing interest rates. As a result,
     these  fair value estimates are subjective in nature, involve uncertainties
     and  matters  of  significant  judgment and therefore, cannot be determined
     with  precision.  Accordingly,  changes  in any of management's assumptions
     could  cause  the  fair  value  estimates  to  deviate  substantially.

     The  fair  value  estimates  also  do not reflect any additional premium or
     discount  that  could  result  from  offering  for  sale,  at one time, the
     Company's  entire  holdings  of  a  particular  financial  instrument,  nor
     estimated  transaction  costs.


                                       63
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

20.  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS,  CONTINUED

     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  each  class  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 Federal
     Reserve Bank and Federal Home Loan Bank stock approximates fair 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.

     DEBENTURES,  MORTGAGE  NOTE  PAYABLE  AND  ACCRUED  INTEREST  PAYABLE.  The
     estimated  fair value of debentures and related accrued interest payable as
     well  as  the  mortgage  note  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,  time  deposits  with banks, 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.  ACQUISITION  OF  INTERVEST  SECURITIES  CORPORATION

     On  June  2,  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.  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. Intervest Securities Corporation is a broker/dealer and a NASD and
     SIPC  member  firm  located at 10 Rockefeller Plaza in New York City and it
     participates  as  a  selected dealer from time to time in offerings of debt
     securities  of  the  Company,  primarily  those  of  Intervest  Mortgage
     Corporation.

     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
     Intervest  Securities  Corporation  were  diminimus.


                                       64
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

22.  HOLDING  COMPANY  FINANCIAL  INFORMATION

                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                              At December 31,
                                                           -------------------
($ in thousands)                                               2003      2002
-------------------------------------------------------------------------------
<S>                                                        <C>       <C>
ASSETS
Cash and due from banks                                    $    286  $     229
Short-term investments                                        2,682      7,258
                                                          --------------------
   Total cash and cash equivalents                            2,968      7,487
Loans receivable, net  (net of allowance for loan losses
     of  $78 and $47 at December 31, 2003 and 2002)          15,514      9,239
Investment in subsidiaries                                   93,467     63,813
Deferred debenture offering costs, net of amortization        1,172        942
Stock proceeds receivable from warrant conversions            2,535          -
All other assets                                                528        809
--------------------------------------------------------------------------------
TOTAL ASSETS                                               $116,184  $  82,290
--------------------------------------------------------------------------------

LIABILITIES
Debentures payable                                         $ 38,268  $  25,894
Accrued interest payable on debentures                        2,461      3,123
All other liabilities                                            70        147
--------------------------------------------------------------------------------
TOTAL LIABILITIES                                            40,799     29,164
--------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
Common equity                                                75,385     53,126
--------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                   75,385     53,126
--------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $116,184  $  82,290
--------------------------------------------------------------------------------
</TABLE>


                        CONDENSED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>

                                                               For the Year Ended December 31,
                                                        ------------------------------------------
($ in thousands)                                              2003          2002           2001
--------------------------------------------------------------------------------------------------
<S>                                                      <C>           <C>            <C>
Interest income                                          $     1,125   $        988   $       818
Interest expense                                               3,024          2,695         1,124
                                                        ------------------------------------------
Net interest expense                                          (1,899)        (1,707)         (306)
Provision (credit) for loan losses                                32             (2)           19
Noninterest income                                               346            205           176
Noninterest expenses                                             748            544           226
                                                        ------------------------------------------
Loss before income taxes                                      (2,333)        (2,044)         (375)
Credit for income taxes                                       (1,033)          (924)         (172)
                                                        ------------------------------------------
Net loss before earnings of subsidiaries                      (1,300)        (1,120)         (203)
Equity in earnings of Intervest National Bank                  8,667          6,459         3,404
Equity in earnings of Intervest Mortgage Corporation           1,759          1,567           577
Equity in net loss of Intervest Securities Corporation            (6)             -             -
--------------------------------------------------------------------------------------------------
NET EARNINGS                                             $     9,120   $      6,906   $     3,778
--------------------------------------------------------------------------------------------------

Cash dividends received from subsidiaries                $     1,695   $      1,500   $       125
</TABLE>


                                       65
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

22.  HOLDING  COMPANY  FINANCIAL  INFORMATION,  CONTINUED

                       CONDENSED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                             For the Year Ended December 31,
                                                                        -----------------------------------------
($ in thousands)                                                            2003           2002          2001
-----------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>            <C>            <C>
OPERATING ACTIVITIES
Net earnings                                                            $      9,120   $      6,906   $    3,778
Adjustments to reconcile net earnings to net cash
     provided by operating activities:
Equity in earnings of subsidiaries                                           (10,420)        (8,026)      (3,981)
Cash dividends received from subsidiaries                                      1,695          1,500          125
Provision (credit) for loan losses                                                32             (2)          19
Deferred income tax expense (benefit)                                             38            (55)         (16)
Compensation expense from awards/modifications of stock warrants                 444            135           26
Increase in accrued interest payable on debentures                               347            756          831
Change in all other assets and liabilities, net                                  175           (365)          81
-----------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                      1,431            849          863
-----------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Investment in subsidiaries, net                                              (20,715)          (338)     (15,500)
Cash acquired through acquisition of Intervest Securities Corporation            218              -            -
Purchase of equipment and leasehold improvements                                 (11)            (2)           -
Loan originations and principal repayments, net                               (6,316)           389       (3,738)
-----------------------------------------------------------------------------------------------------------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES                          (26,824)            49      (19,238)
-----------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Net decrease in mortgage escrow funds payable                                    (75)           (64)         (11)
Gross proceeds from issuance of debentures                                    15,464              -       18,500
Debenture offering costs                                                        (446)            (9)        (700)
Principal repayments of debentures                                            (1,000)             -            -
Proceeds from issuance of common stock upon the exercise
    of stock warrants                                                          6,931          5,801            -
-----------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                     20,874          5,728       17,789
-----------------------------------------------------------------------------------------------------------------

Net (decrease) increase in cash and cash equivalents                          (4,519)         6,626         (586)
Cash and cash equivalents at beginning of year                                 7,487            861        1,447
-----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                $      2,968   $      7,487   $      861
-----------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES
Cash paid (received) during the year for:
   Interest                                                             $      2,545   $      1,825   $      202
   Income taxes                                                               (1,136)          (617)        (139)
Noncash transactions:
  Conversion of debentures into Class A common stock:
      Principal converted                                                      2,090              -            -
      Accrued interest converted                                               1,009              -            -
      Unamortized debenture offering costs converted                             (84)             -            -
  Class B stock issued to acquire Intervest Securities Corporation               215              -            -
  Accumulated other comprehensive income, change in
      subsidiary's unrealized (loss) gain on securities available for
      sale, net of tax                                                             -           (111)         363
-----------------------------------------------------------------------------------------------------------------

</TABLE>


                                       66
<PAGE>
                INTERVEST BANCSHARES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

23.  SELECTED  QUARTERLY  FINANCIAL  DATA  (UNAUDITED)

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

<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                                                       $727,945   $749,777   $822,900   $910,595
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                  $120,138   $120,524   $144,363   $139,455
Total stockholders' equity                                         $ 55,000   $ 58,009   $ 63,745   $ 75,385
-------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                                     2002
                                                                                     -----
                                                                     First     Second      Third     Fourth
($ in thousands, except per share amounts)                          Quarter    Quarter    Quarter    Quarter
-------------------------------------------------------------------------------------------------------------
<S>                                                                <C>        <C>        <C>        <C>
Interest and dividend income                                       $  9,711   $ 11,008   $ 11,396   $ 11,364
Interest expense                                                      6,073      6,530      6,857      6,865
                                                                   ------------------------------------------
Net interest and dividend income                                      3,638      4,478      4,539      4,499
Provision for loan losses                                               346        426        192        310
                                                                   ------------------------------------------
Net interest and dividend income after provision for loan losses      3,292      4,052      4,347      4,189
Noninterest income                                                      274        378        736        830
Noninterest expenses                                                  1,462      1,680      1,594      1,743
                                                                   ------------------------------------------
Earnings before income taxes                                          2,104      2,750      3,489      3,276
Provision for income taxes                                              856      1,106      1,385      1,366
-------------------------------------------------------------------------------------------------------------
NET EARNINGS                                                       $  1,248   $  1,644   $  2,104   $  1,910
-------------------------------------------------------------------------------------------------------------

BASIC EARNINGS PER SHARE:                                          $    .32   $    .42   $    .52   $    .45
DILUTED EARNINGS PER SHARE:                                        $    .30   $    .33   $    .41   $    .37
-------------------------------------------------------------------------------------------------------------

Return on average assets                                               0.95%      1.10%      1.30%      1.14%
Return on average equity                                              12.23%     15.42%     18.57%     15.71%
Total assets                                                       $563,970   $628,157   $661,721   $685,979
Total cash and investment securities                               $144,193   $161,935   $190,799   $179,651
Total loans, net of unearned fees                                  $405,055   $449,771   $454,391   $489,912
Total deposits                                                     $404,019   $465,753   $486,623   $505,958
Total borrowed funds and related interest payable                  $106,929   $104,246   $113,082   $113,568
Total stockholders' equity                                         $ 41,699   $ 44,155   $ 47,118   $ 53,126
-------------------------------------------------------------------------------------------------------------
</TABLE>


                                       67
<PAGE>
ITEM  9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL  DISCLOSURE

None

ITEM  9A.  CONTROLS  AND  PROCEDURES

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

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

                                    PART III

ITEM  10.  DIRECTORS  AND  EXECUTIVE  OFFICERS

a.   DIRECTORS.  The  information  required  by this item is contained under the
     section  entitled  "Election of Directors" in the Company's Proxy Statement
     for  its  2004  Annual  Meeting (the "Proxy Statement") and is incorporated
     herein  by  reference.

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

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

ITEM  11.  EXECUTIVE  COMPENSATION

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

ITEM  12.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT

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

ITEM  13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

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

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.

                                     PART IV

ITEM  15.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  AND  REPORTS  ON FORM 8-K

(a)  DOCUMENTS  FILED  AS  PART  OF  THIS  REPORT

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

     (2)  FINANCIAL  STATEMENT  SCHEDULES:  See Item 8 "Financial Statements and
          Supplementary  Data"

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


                                       68
<PAGE>
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.

12   Computation  of  ratios  of  earnings  to  fixed  charges.

21   Subsidiaries


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

32   Certification  of the principal executive and financial officer pursuant to
     Section  906  of  The  Sarbanes-Oxley  Act  of  2002.

(b)          A  current  report  on Form 8-K dated January 20, 2004 was filed by
the registrant to provide, under Item 12, its quarterly earnings release for the
period  ended  December  31,  2003.


                                       69
<PAGE>
                                   SIGNATURES

Pursuant  to  the requirements of Section 13 or 15(d) of the Securities Exchange
Act  of 1934, the Company has duly caused this report to be signed on its behalf
by  the  undersigned,  thereunto  duly  authorized,  on  the  date  indicated.

INTERVEST  BANCSHARES  CORPORATION
(Registrant)

By:  /s/  Lowell  S.  Dansker                          Date: February  26,  2004
     -------------------------                              --------------------
          Lowell  S.  Dansker,  Vice  Chairman  and  President

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

CHAIRMAN  AND  EXECUTIVE  VICE  PRESIDENT:

By:  /s/  Jerome  Dansker                              Date: February  26,  2004
     -------------------------                              --------------------
          Jerome  Dansker

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

By:  /s/  Lowell  S.  Dansker                          Date: February  26,  2004
     -------------------------                              --------------------
          Lowell  S.  Dansker

VICE  PRESIDENT,  SECRETARY  AND  DIRECTOR:

By:  /s/  Lawrence  G.  Bergman                        Date: February  26,  2004
     --------------------------                             --------------------
          Lawrence  G.  Bergman

DIRECTORS:

By:  /s/  Michael  A. Callen                           Date: February  26,  2004

     -------------------------                              --------------------
          Michael  A.  Callen

By:  /s/  Paul  Derosa                                 Date: February  26,  2004
     -------------------------                              --------------------
          Paul  Derosa

By:  /s/  Stephen  A. Helman                           Date: February  26,  2004
     -------------------------                              --------------------
          Stephen  A.  Helman

By:  /s/  Wayne F. Holly                               Date: February  26,  2004
     -------------------------                              --------------------
          Wayne  F.  Holly

By:  /s/  Lawton  Swan,  III                           Date: February  26,  2004
     -------------------------                              --------------------
          Lawton  Swan,  III

By:  /s/  Thomas  E. Willett                           Date: February  26,  2004
     -------------------------                              --------------------
          Thomas  E.  Willett

By:  /s/  David  J. Willmott                           Date: February  26,  2004
     -------------------------                              --------------------
          David  J.  Willmott

By:  /s/  Wesley T. Wood                               Date: February  26,  2004
     -------------------------                              --------------------
          Wesley  T.  Wood


                                       70
<PAGE>