Intervest Bancshares Corporation Reports 2009 Second Quarter Earnings of $0.4 Million

NEW YORK--(Business Wire)--
Intervest Bancshares Corporation (NASDAQ-GS: IBCA) (the "Company") today
reported net earnings for the second quarter of 2009 ("Q2-09") of $0.4 million,
or $0.04 per diluted common share, compared to $1.9 million, or $0.22 per share,
for the second quarter of 2008 ("Q2-08"). The decrease in net earnings was due a
$2.3 million increase in noninterest expenses, a $1.1 million decrease in
noninterest income and $0.4 million of dividend requirements related to
outstanding preferred stock held by the U.S. Treasury under the TARP program.
The aggregate of these items was partially offset by a $1.2 million decrease in
the provision for income tax expense and a $1.1 million increase in net interest
and dividend income.

Net interest and dividend income increased to $10.2 million in Q2-09 from $9.1
million in Q2-08, primarily reflecting $173 million of growth in interest
earning assets. The Company's net interest margin improved to 1.75% in Q2-09,
from 1.69% in Q2-08 due to lower deposit and borrowing costs, which decreased
the cost of funds to 3.95% in Q2-09 from 4.70% in Q2-08. This decrease was
largely offset by $360 million of calls in the first half of 2009 of higher
yielding U.S. government agency security investments (coupled with the
reinvestment of those proceeds into the same types of securities with lower
market rates of approximately 100 basis points) and lower yields earned on
overnight investments. The yield on interest-earning assets decreased to 5.30%
in Q2-09 from 5.92% in Q2-08. The provision for loan losses amounted to $2.7
million in Q2-09, compared to $2.8 million in Q2-08. The Company continues to be
negatively impacted by the downturn in the economy and lower commercial real
estate values. Noninterest expenses increased to $6.5 million in Q2-09 from $4.2
million in Q2-08 primarily due to a 444% increase, or $1.8 million, in FDIC
insurance expense due to higher premium rates and a special assessment in June,
both of which have been imposed on all FDIC insured banks, and a $0.4 million
increase in expenses associated with nonperforming assets. Noninterest income
decreased to $0.1 million in Q2-09 from $1.1 million in Q2-08 primarily due to a
$0.5 million decrease in income from early repayment of loans and a $0.3 million
impairment charge on certain trust preferred security investments. The Company's
effective income tax rate was 23% in Q2-09, compared to 43% in Q2-08. The lower
rate was due to a $0.2 million income tax refund of prior year taxes. The
Company had 73 employees at June 30, 2009, compared to 71 employees at June 30,
2008.

Net earnings for the six-months ended June 30, 2009 decreased by $3.3 million
from the same period of 2008 due to a $4.8 million increase in noninterest
expenses, a $1.9 million decrease in noninterest income and $0.8 million of
preferred stock dividend requirements, partially offset by a $2.2 million
decrease in the provision for income taxes, a $1.5 million increase in net
interest and dividend income and a $0.5 million decrease in the provision for
loan losses.

Total assets at June 30, 2009 were $2.38 billion, compared to $2.27 billion at
December 31, 2008, reflecting growth in loans and security investments,
partially offset by a lower level of overnight investments.

Total securities held to maturity amounted to $567 million at June 30, 2009, a
$91 million increase from $476 million at December 31, 2008. At June 30, 2009,
the portfolio had a weighted-average remaining contractual maturity and a yield
of 4.7 years and 2.94%, respectively. The Company does not own or invest in any
CDOs, CMOs or any preferred or common stock of FNMA or FHLMC.

Total loans, net of unearned fees, amounted to $1.75 billion at June 30, 2009, a
$40 million increase from $1.71 billion at December 31, 2008. The increase was
due to $129 million of new originations secured primarily by commercial real
estate exceeding the aggregate of $77 million of principal repayments, $9.4
million of loans transferred to foreclosed real estate and $2.3 million of loan
chargeoffs. The new loans are nearly all fixed-rate with a weighted-average
yield and term of 6.57% and 5.3 years, respectively. New loan originations for
the first half of 2008 amounted to $226 million.

Total nonperforming assets at June 30, 2009 amounted to $148.0 million, or 6.22%
of total assets, compared to $117.7 million, or 5.18%, at December 31, 2008. At
June 30, 2009, nonperforming assets were comprised of $129.8 million of
nonaccrual loans, or 39 loans, and $18.2 million (net of a $0.8 million
valuation allowance) of real estate acquired through foreclosure, or 6
properties. At June 30, 2009, the Company also had $76 million of accruing
restructured loans on which the Company has granted certain concessions to
provide payment relief generally consisting of the deferral of principal and or
a partial reduction in interest payments for a period of time.

The Company is taking various steps to resolve its nonaccrual loans, including
proceeding with foreclosures on many of the collateral properties as well as
working with certain borrowers to provide payment relief. The Company believes
that concentrating its effort towards the individual collection of nonaccrual
loans either through the restructure of certain loans or through the acquisition
and eventual sale of the collateral properties in most cases will maximize the
recovery of the Company's investment. The Company's ability to complete
foreclosure or other proceedings to acquire and sell certain collateral
properties however continues to be delayed by various factors including
bankruptcy proceedings and an overloaded court system. As a result of these
delays, the timing and amount of the resolution/disposition of nonaccrual loans
as well as foreclosed real estate cannot be predicted with certainty. In
addition, if the current downturn in commercial real estate values and local
economic conditions in both New York and Florida as well as other factors noted
above continue for an additional extended period, it could have an adverse
impact on the Company's future asset quality and level of nonperforming assets,
charge offs and profitability. There can be no assurance that the Company will
not incur significant additional loan loss provisions or expenses in connection
with the ultimate collection of nonaccrual loans or in carrying and disposing of
foreclosed real estate. The Company does not own or originate
construction/development loans or condominium conversion loans.

The total allowance for loan losses increased to $32.0 million at June 30, 2009,
from $28.5 million at December 31, 2008. The increase was due to $4.5 million of
loan loss provisions and a $1.3 million partial recovery of a previous
chargeoff, partially offset by $2.3 million of new chargeoffs. The allowance
represented 1.84% of total loans (net of deferred fees) at June 30, 2009,
compare to 1.67% at December 31, 2008. At June 30, 2009 and December 31, 2008, a
SFAS No. 114 specific valuation allowance (included as part of the overall
allowance for loan losses) in the aggregate amount of $13.5 million and $8.2
million, respectively, was maintained on nonaccrual and restructured loans, all
of which are considered impaired loans.

Total deposits at June 30, 2009 increased to $1.99 billion, from $1.86 billion
at December 31, 2008, reflecting an increase of $98 million in money market
accounts and a $31 million increase in certificate of deposit accounts. Total
borrowed funds and related interest payable at June 30, 2009 decreased to $118
million, from $149 million at December 31, 2008, reflecting the early repayment
of $30 million of higher rate subordinated debentures.

Total stockholders' equity at June 30, 2009 increased to $213.1 million, from
$212.0 million at December 31, 2008 primarily due to net earnings of $0.9
million for the period. In April 2009, the Company's wholly owned subsidiary,
Intervest National Bank (the "Bank") agreed with the OCC, its primary regulator,
to maintain minimum capital ratios at specified levels higher than those
otherwise required by applicable regulations as follows: Tier 1 capital to total
average assets (leverage ratio) - 9%; Tier 1 capital to risk-weighted assets -
10%; and total capital to risk-weighted assets - 12%. At June 30, 2009, the
Bank's actual capital ratios were in excess of these levels and were 13.33%,
12.08% and 9.94%, respectively.

Intervest Bancshares Corporation is a holding company. Its operating
subsidiaries are: Intervest National Bank, a nationally chartered commercial
bank that has its headquarters and full-service banking office at One
Rockefeller Plaza, in New York City, and a total of six full-service banking
offices in Clearwater and Gulfport, Florida; and Intervest Mortgage Corporation,
a mortgage investment company. Intervest National Bank maintains capital ratios
in excess of the regulatory requirements to be designated as a well-capitalized
institution. Intervest Bancshares Corporation's Class A Common Stock is listed
on the NASDAQ Global Select Market: Trading Symbol IBCA.

This press release may contain forward-looking information. Except for
historical information, the matters discussed herein are subject to certain
risks and uncertainties that may affect the Company's actual results of
operations. The following important factors, among others, could cause actual
results to differ materially from those set forth in forward looking statements:
changes in general economic conditions and real estate values in the Company's
market areas; changes in policies by regulatory agencies; fluctuations in
interest rates; demand for loans and deposits; and competition. Reference is
made to the Company's filings with the SEC for further discussion of risks and
uncertainties regarding the Company's business. Historical results are not
necessarily indicative of the future prospects of the Company.

Selected Consolidated Financial Information Follows.

INTERVEST BANCSHARES CORPORATION
Selected Consolidated Financial Information
(Dollars in thousands, except per share amounts) Quarter Ended Six-Months Ended
June 30, June 30,
Selected Operating Data: 2009 2008 2009 2008
Interest and dividend income $ 30,804 $ 31,776 $ 61,483 $ 63,564
Interest expense 20,607 22,712 41,996 45,645
Net interest and dividend income 10,197 9,064 19,487 17,919
Provision for loan losses 2,686 2,753 4,543 5,016
Net interest and dividend income after provision for loan losses 7,511 6,311 14,944 12,903
Noninterest income 57 1,139 130 2,082
Noninterest expenses 6,554 4,197 12,493 7,715
Earnings before income taxes 1,014 3,253 2,581 7,270
Provision for income taxes 236 1,392 908 3,128
Net earnings before preferred dividend requirements 778 1,861 1,673 4,142
Preferred dividend requirements (1) 409 - 814 -
Net earnings available to common stockholders $ 369 $ 1,861 $ 859 $ 4,142
Basic earnings per common share $ 0.04 $ 0.22 $ 0.10 $ 0.50
Diluted earnings per common share $ 0.04 $ 0.22 $ 0.10 $ 0.50
Cash dividends paid per common share $ - $ 0.25 $ - $ 0.25
Average common shares used to calculate:
Basic earnings per common share 8,270,812 8,270,812 8,270,812 8,247,241
Diluted earnings per common share (2) 8,270,812 8,270,812 8,270,812 8,251,589
Common shares outstanding at end of period 8,270,812 8,270,812 8,270,812 8,270,812
Common stock options/warrants outstanding at end of period 955,712 132,140 955,712 132,140
Yield on interest-earning assets 5.30% 5.92% 5.40% 6.04%
Cost of funds 3.95% 4.70% 4.12% 4.82%
Net interest margin (3) 1.75% 1.69% 1.71% 1.70%
Return on average assets (annualized) 0.13% 0.34% 0.14% 0.39%
Return on average common equity (annualized) 1.64% 4.04% 1.77% 4.52%
Effective income tax rate 23.27% 42.79% 35.18% 43.03%
Efficiency ratio (4) 53% 34% 53% 34%
Total average loans outstanding $ 1,739,859 $ 1,701,949 $ 1,726,844 $ 1,674,302
Total average securities outstanding 575,281 428,601 550,628 414,872
Total average short-term investments outstanding 16,320 28,201 16,764 28,704
Total average interest-earning assets outstanding 2,331,460 2,158,751 2,294,236 2,117,878
Total average assets outstanding 2,359,924 2,179,331 2,320,792 2,137,491
Total average interest-bearing deposits outstanding $ 1,972,245 $ 1,802,455 $ 1,930,739 $ 1,762,543
Total average borrowings outstanding 120,982 141,383 126,192 142,925
Total average interest-bearing liabilities outstanding 2,093,227 1,943,838 2,056,931 1,905,468
Total average stockholders' equity 212,733 184,185 212,448 183,088

At Jun 30, At Mar 31, At Dec 31, At Sep 30, At Jun 30,
Selected Financial Condition Information: 2009 2009 2008 2008 2008
Total assets $ 2,380,044 $ 2,317,613 $ 2,271,833 $ 2,180,746 $ 2,207,170
Total cash and short-term investments 23,441 30,203 54,903 21,969 16,726
Total securities held to maturity 566,722 544,702 475,581 410,844 430,934
Total FRB and FHLB stock 9,929 9,657 8,901 10,912 8,428
Total loans, net of unearned fees 1,746,087 1,708,752 1,705,711 1,691,851 1,723,213
Total deposits 1,995,165 1,938,123 1,864,135 1,734,820 1,809,683
Total borrowed funds and accrued interest payable 118,035 122,194 149,566 210,551 168,063
Total preferred equity 23,273 23,177 23,080 - -
Total common equity 189,864 189,440 188,894 186,230 183,549
Book value per common share 22.96 22.90 22.84 22.52 22.19
Total allowance for loan losses $ 32,054 $ 30,371 $ 28,524 $ 25,828 $ 26,609
Total loan recoveries for the quarter 1,329 - - - -
Total loan chargeoffs for the quarter 2,332 10 - 4,227 -
Total accruing troubled debt restructurings (5) 76,210 30,586 - - -
Total loans ninety days past due and still accruing. 6,367 1,958 1,964 - 3,051
Total nonaccrual loans 129,784 119,305 108,610 82,759 119,078
Total foreclosed real estate 18,214 9,742 9,081 25,099 7,272
Allowance for loan losses/net loans 1.84% 1.78% 1.67% 1.53% 1.54%

(1) Represents accrued dividends on $25 million of 5% cumulative preferred stock held by the U.S. Treasury and amortization of related preferred stock discount.
(2) Diluted EPS includes shares that would be outstanding if dilutive common stock options/warrants were assumed to be exercised during the period. Outstanding options/warrants are dilutive when their exercise price is above the average market price of the Class A common stock during the reporting periods.
(3) Net interest margin is reported exclusive of income from loan prepayments, which is included as a component of noninterest income.
(4) Represents noninterest expenses (excluding provision for loan losses & real estate expenses) as a percentage of net interest and dividend income plus noninterest income.
(5) Represent loans whose terms have been modified mostly through the deferral of principal and or a partial reduction in interest payments.

INTERVEST BANCSHARES CORPORATION
Consolidated Financial Highlights
At or For The Period Ended
($ in thousands, except per share amounts) Six-Months Year Year Year Year
Ended Ended Ended Ended Ended

June 30,
Dec 31,
Dec 31,
Dec 31,
Dec 31,

2009
2008
2007
2006
2005
Balance Sheet Highlights:
Total assets $2,380,044 $2,271,833 $2,021,392 $1,971,753 $1,706,423
Asset growth rate 5% 12% 3% 16% 30%
Total loans, net of unearned fees $1,746,087 $1,705,711 $1,614,032 $1,490,653 $1,367,986
Loan growth rate 2% 6% 8% 9% 35%
Total deposits $1,995,165 $1,864,135 $1,659,174 $1,588,534 $1,375,330
Deposit growth rate 7% 12% 4% 16% 38%
Loans/deposits (Intervest National Bank) 82% 85% 88% 84% 88%
Total borrowed funds and accrued interest payable. $ 118,035 $ 149,566 $ 136,434 $ 172,909 $ 155,725
Preferred equity $ 23,273 $ 23,080 $ - $ - $ -
Common equity $ 189,864 $ 188,894 $ 179,561 $ 170,046 $ 136,178
Common shares outstanding 8,270,812 8,270,812 8,075,812 8,371,595 7,823,058
Common book value per share $ 22.96 $ 22.84 $ 22.23 $ 20.31 $ 17.41
Market price per common share $ 3.50 $ 3.99 $ 17.22 $ 34.41 $ 24.04
Asset Quality Highlights
Nonaccrual loans $129,784 $108,610 $90,756 $ 3,274 $ 750
Foreclosed real estate 18,214 9,081 - - -
Accruing troubled debt restructurings (1) 76,210 - - - -
Loans ninety days past due and still accruing 6,367 1,964 11,853 - 2,649
Allowance for loan losses 32,054 28,524 21,593 17,833 15,181
Loan recoveries 1,329 - - - -
Loan chargeoffs 2,342 4,227 - - -
Allowance for loan losses/net loans 1.84% 1.67% 1.34% 1.20% 1.11%
Statement of Operations Highlights:
Interest and dividend income $61,483 $128,497 $131,916 $128,605 $97,881
Interest expense 41,996 90,335 89,653 78,297 57,447
Net interest and dividend income 19,487 38,162 42,263 50,308 40,434
Provision for loan losses 4,543 11,158 3,760 2,652 4,075
Noninterest income 130 5,026 8,825 6,855 6,594
Noninterest expenses 12,493 18,873 12,876 13,027 10,703
Earnings before income taxes 2,581 13,157 34,452 41,484 32,250
Provision for income taxes 908 5,891 15,012 17,953 14,066
Net earnings before preferred dividend requirements 1,673 7,266 19,440 23,531 18,184
Preferred dividend requirements (2) 814 41 - - -
Net earnings available to common stockholders $ 859 $ 7,225 $ 19,440 $ 23,531 $18,184
Basic earnings per common share $ 0.10 $ 0.87 $ 2.35 $ 2.98 $ 2.65
Diluted earnings per common share $ 0.10 $ 0.87 $ 2.31 $ 2.82 $ 2.47
Adjusted net earnings used to calculate $ 859 $ 7,225 $19,484 $ 23,679 $18,399
diluted earnings per common share
Average common shares used to calculate:
Basic earnings per common share 8,270,812 8,259,091 8,275,539 7,893,489 6,861,887
Diluted earnings per common share 8,270,812 8,267,781 8,422,017 8,401,379 7,449,658
Net interest margin (3) 1.71% 1.79% 2.11% 2.75% 2.70%
Return on average assets 0.14% 0.34% 0.96% 1.28% 1.20%
Return on average common equity 1.77% 3.94% 11.05% 15.82% 16.91%
Effective income tax rate 35.18% 44.77% 43.57% 43.28% 43.62%
Efficiency ratio (4) 53% 33% 24% 23% 23%
Full-service banking offices 7 7 7 7 6

(1) Represent loans whose terms have been modified mostly through the deferral of principal and or a partial reduction in interest payments.
(2) Represents accrued dividends on $25 million of 5% cumulative preferred stock held by the U.S. Treasury and amortization of related preferred stock discount.
(3) Net interest margin is reported exclusive of income from loan prepayments, which is included as a component of noninterest income. Inclusive of such income, the margin would compute to 1.72% for the six-months ended June 30, 2009, 1.77% for 2008, 2.60% for 2007, 3.24% for 2006 and 2.85% for 2005.
(4) Represents noninterest expenses (excluding provision for loan losses and real estate expenses) as a percentage of net interest and dividend income plus noninterest income. Noninterest expenses for 2006 included a one-time charge of $1.5 million.

Intervest Bancshares Corporation
Lowell S. Dansker, Chairman, 212-218-2800
Fax 212-218-2808

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