Net earnings for Q4-07 decreased by $1.9 million from Q4-06 primarily due to a $2.6 million decrease in net interest and dividend income and $0.5 million increase in noninterest expenses, partially offset by a $1.3 million decrease in the provision for income taxes. Net interest and dividend income was lower due to a decrease in the Company's net interest margin. The margin (excluding loan prepayment income) decreased to 1.89% in Q4-07, from 2.48% in Q4-06, due to an increase in nonaccrual loans, a higher cost of deposits and repayments of higher yielding loans coupled with lower competitive pricing for new loans. Interest income that was not recorded on nonaccrual loans amounted to $1.9 million in Q4-07, compared to a $0.1 million net recovery of interest in Q4-06. Noninterest expenses increased primarily due to $0.5 million of expenses associated with nonaccrual loans/foreclosed real estate and a $0.3 million increase in FDIC insurance premiums (due to a higher rate structure imposed by the FDIC on all insured financial institutions), partially offset by $0.5 million of expense from the early retirement of debentures in Q4-06 which did not recur. The provision for loan losses decreased slightly to $0.7 million in Q4-07, from $0.8 million in Q4-06 as the impact of a decline in the rate of net loan growth was largely offset by additional provisions resulting from credit downgrades on nonaccrual loans. Noninterest income decreased to $1.7 million in Q4-07, from $1.9 million in Q4-06 due to a lower level of income from loan prepayments. The Company's effective income tax rate was 43% in Q4-07, compared to 42% in Q4-06. The Company had 72 employees at December 31, 2007 and 2006. The Company's efficiency ratio, which is a measure of its ability to control expenses as a percentage of its revenues, was 34% in Q4-07, compared to 23% in Q4-06. Return on average assets and equity decreased to 0.77% and 8.76% respectively, in Q4-07, from 1.18% and 14.56% respectively, in Q4-06. The efficiency ratio and returns on average assets and equity were negatively affected by nonaccrual loans and higher FDIC insurance premiums.

Net earnings for 2007 decreased by $4.1 million from 2006 due to an $8.0 million decrease in net interest and dividend income and a $1.1 million increase in the provision for loan losses, partially offset by a $2.0 million increase in noninterest income, a $2.9 million decrease in the provision for income taxes and a $0.1 million decrease in noninterest expenses. The net interest margin (excluding loan prepayment income) decreased to 2.11% in 2007, from 2.75% in 2006 due to the same reasons noted above for the quarterly period. Interest income that was not recorded on nonaccrual loans amounted to $4.5 million in 2007, compared to $0.2 million in 2006. The provision for loan losses increased due to credit downgrades on nonaccrual loans. Noninterest income increased due to a higher level of income from loan prepayments, which included $2.5 million of income from the early payoff of one loan. Noninterest expenses remained relatively unchanged as a one-time charge of $1.5 million recorded in 2006 in connection with death benefits payable to the Company's former Chairman was offset by $0.7 million of expenses associated with nonaccrual loans/foreclosed real estate and a $0.9 million increase in FDIC insurance premiums. The Company's effective income tax rate was 44% in 2007, compared to 43% in 2006.

Total assets at December 31, 2007 amounted to $2.0 billion, compared to $1.97 billion at December 31, 2006. The increase reflected the growth in the Company's loan portfolio, partially offset by a lower level of security investments and other short-term investments.

Total loans, net of unearned fees, at December 31, 2007 increased to $1.61 billion, from $1.49 billion at December 31, 2006. The increase was due to new originations secured by commercial and multifamily real estate exceeding principal repayments. New originations totaled $88 million for Q4-07 and $555 million for 2007, compared to $111 million for Q4-06 and $548 million for 2006. Principal repayments totaled $103 million for Q4-07 and $433 million for 2007, compared to $113 million for Q4-06 and $427 million for 2006.

Total nonaccrual loans increased to $90.8 million (18 loans) at December 31, 2007, from $3.3 million (2 loans) at December 31, 2006. Foreclosure proceedings are pending on all of the loans and are in various stages of resolution, including some proceedings that have been temporarily stayed by reason of bankruptcy filings. The Company believes that the estimated fair value of each of the underlying collateral properties continues to exceed its recorded investment in the related nonaccrual loan as of December 31, 2007. However, there can be no assurance that the Company will not incur loan chargeoffs or significant expenses with respect to the ultimate collection of these loans. At December 31, 2007, two loans totaling $11.9 million were 90 days past due and still accruing interest. The loans have matured and the borrowers continue to make monthly payments of principal and interest. One loan ($0.9 million) will be extended by the Company and the other loan ($11.0 million) may be extended or the Company will continue to collect monthly payments of principal and interest until it is repaid in full.

The total allowance for loan losses amounted to $21.6 million at December 31, 2007, compared to $17.8 million at December 31, 2006. The allowance represented 1.34% of total loans (net of deferred fees) outstanding at December 31, 2007 and 1.20% at December 31, 2006. The increase in the allowance was due to provisions totaling $3.8 million during the year, of which $2.2 million was attributable to credit downgrades on nonaccrual loans and $1.6 million from net loan growth of $122 million from December 31, 2006.

Total securities held to maturity at December 31, 2007 decreased to $344 million, from $404 million at December 31, 2006, due to maturities and calls exceeding new purchases. The investment portfolio, which is held by Intervest National Bank, had a weighted-average remaining contractual maturity of 4.0 years and a yield of 5.01% at December 31, 2007. The Bank has used the proceeds from the security repayments to partially fund new loans. The Bank invests in U.S. government agency debt obligations to emphasize safety and liquidity. The Company does not own or invest in collateralized debt obligations or collateralized mortgage obligations.

Total deposits at December 31, 2007 increased to $1.66 billion, from $1.59 billion at December 31, 2006, reflecting an increase in certificate of deposit accounts. The Bank's goal is to target its loan-to-deposit ratio at approximately 85%. This ratio was 88% at December 31, 2007.

Total borrowed funds and related interest payable at December 31, 2007 decreased to $136 million, from $173 million at December 31, 2006, due to a $25 million decrease in short-term FHLBNY advances outstanding and a $12 million decrease in outstanding debentures and related interest payable resulting from cash repayments and the conversion of certain debentures into the Holding Company's Class A common stock.

Total stockholders' equity at December 31, 2007 increased to $179.5 million, from $170.0 million at December 31, 2006. The increase was due to the following: $19.4 million from net earnings, $1.9 million from the conversion of debentures and $0.3 million from stock-based compensation, partially offset by the payment a $2.1 million cash dividend in June and the repurchase of $10 million of Class A common stock. In 2007, the Holding Company repurchased a total of 404,339 shares of its Class A common stock for $10 million under its share repurchase plan.

Intervest Bancshares Corporation is a financial 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.