##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2005
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from _______to _______
 Commission File Number: 333-95335
 Integrity Bancshares, Inc.
 
  Georgia
    
    58-2508612(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification No.)
 11140 State Bridge Road, Alpharetta, Georgia 30022
 
  (770) 777-0324
 
   
  þ o
 o þ
  o þ




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INTEGRITY BANCSHARES, INC.
AND SUBSIDIARY
 INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheet  September 30, 2005
    
    
    3Consolidated Statements of Income and Comprehensive Income
Three Months Ended September 30, 2005 and 2004
And Nine Months Ended September 30, 2005 and 2004
    
    
    4Consolidated
Statements of Cash Flows 
Nine Months Ended September 30, 2005 and 2004
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    10Item 3. Controls and Procedures
    
    
    16PART II. OTHER INFORMATIONItem 1  Legal Proceedings
    
    
    17Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17Item 3  Defaults Upon Senior Securities
    
    
    17Item 4
 Submission of Matters to a Vote of Security Holders
    
    
    17Item 5  Other Information
    
    
    17Item 6
 Exhibits
    
    
    17Signatures
    
    
    18EX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32 SECTION 906 CERTIFICATION OF THE CEO AND CFO




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM I. FINANCIAL STATEMENTS
 INTEGRITY BANCSHARES, INC. AND SUBSIDIARY
 
 CONSOLIDATED BALANCE SHEET
(Unaudited)
 September 30,2005AssetsCash and due from banks
    
    $
    4,916,464Interest-bearing deposits in banks
    
    
    213,490Federal funds sold
    
    
    3,095,000Securities available-for-sale, at fair value
    
    
    62,259,898Restricted equity securities, at cost
    
    
    889,300Loans
    
    
    578,453,069Less allowance for loan losses
    
    
    5,279,194Loans, net
    
    
    573,173,875Premises and equipment
    
    
    10,741,285Other assets
    
    
    6,589,871Total assets
    
    $
    661,879,183Liabilities and Stockholders EquityDepositsNoninterest-bearing
    
    $
    12,073,583Interest-bearing
    
    
    574,843,847Total deposits
    
    
    586,917,430Other borrowings
    
    
    6,186,000Other liabilities
    
    
    4,387,860Total liabilities
    
    
    597,491,290Commitments and contingenciesStockholders equityCommon stock, no par value; 50,000,000 shares authorized;
14,361,542 shares issued and outstanding
    
    
    56,228,255Retained earnings
    
    
    8,528,812Accumulated other comprehensive loss
    
    
    (369,174
    )Total stockholders equity
    
    
    64,387,893Total liabilities and stockholders equity
    
    $
    661,879,183
 See Notes to Consolidated Financial Statements.
 3




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##### Table of Contents



INTEGRITY BANCSHARES, INC. AND SUBSIDIARY
 
 CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Interest incomeLoans
    
    $
    10,677,869
    
    
    $
    5,554,414
    
    
    $
    27,666,305
    
    
    $
    14,472,970Taxable securities
    
    
    664,789
    
    
    
    434,111
    
    
    
    1,942,073
    
    
    
    1,109,737Deposits in banks
    
    
    1,536
    
    
    
    1,473
    
    
    
    4,129
    
    
    
    2,294Federal funds sold
    
    
    24,738
    
    
    
    6,236
    
    
    
    37,663
    
    
    
    20,353Total interest income
    
    
    11,368,932
    
    
    
    5,996,234
    
    
    
    29,650,170
    
    
    
    15,605,354Interest expenseDeposits
    
    
    4,645,509
    
    
    
    1,810,620
    
    
    
    11,322,175
    
    
    
    4,592,139Federal funds purchased, securities sold under
repurchase agreements and other borrowings
    
    
    279,937
    
    
    
    162,663
    
    
    
    928,145
    
    
    
    415,178Total interest expense
    
    
    4,925,446
    
    
    
    1,973,283
    
    
    
    12,250,320
    
    
    
    5,007,317Net interest income
    
    
    6,443,486
    
    
    
    4,022,951
    
    
    
    17,399,850
    
    
    
    10,598,037Provision for loan losses
    
    
    765,282
    
    
    
    1,608,801
    
    
    
    2,000,634
    
    
    
    2,321,249Net interest income after
provision for loan losses
    
    
    5,678,204
    
    
    
    2,414,150
    
    
    
    15,399,216
    
    
    
    8,276,788Other incomeService charges on deposit accounts
    
    
    17,773
    
    
    
    14,746
    
    
    
    43,547
    
    
    
    43,587Other operating income
    
    
    172,177
    
    
    
    259,446
    
    
    
    532,998
    
    
    
    370,331Total other income
    
    
    189,950
    
    
    
    274,192
    
    
    
    576,545
    
    
    
    413,918Other expensesSalaries and employee benefits
    
    
    1,482,097
    
    
    
    1,270,995
    
    
    
    4,719,712
    
    
    
    3,032,938Occupancy and equipment expenses
    
    
    443,521
    
    
    
    315,870
    
    
    
    1,277,775
    
    
    
    696,396Other operating expenses
    
    
    940,845
    
    
    
    693,459
    
    
    
    2,509,186
    
    
    
    1,775,115Total other expenses
    
    
    2,866,463
    
    
    
    2,280,324
    
    
    
    8,506,673
    
    
    
    5,504,449Net income before income taxes
    
    
    3,001,691
    
    
    
    408,018
    
    
    
    7,469,088
    
    
    
    3,186,257Income tax expense
    
    
    1,103,300
    
    
    
    151,686
    
    
    
    2,761,680
    
    
    
    1,179,086Net income
    
    
    1,898,391
    
    
    
    256,332
    
    
    
    4,707,408
    
    
    
    2,007,171Other comprehensive income (loss):Unrealized gains (losses) on securities available-for-sale arising during period, net of tax
    
    
    (130,047
    )
    
    
    535,524
    
    
    
    (170,426
    )
    
    
    (119,489
    )Comprehensive income
    
    $
    1,768,344
    
    
    $
    791,856
    
    
    $
    4,536,982
    
    
    $
    1,887,682Basic earnings per share
    
    $
    0.13
    
    
    $
    0.02
    
    
    $
    0.35
    
    
    $
    0.20Diluted earnings per share
    
    $
    0.12
    
    
    $
    0.02
    
    
    $
    0.33
    
    
    $
    0.19Cash dividends per share
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 See Notes to Consolidated Financial Statements.
 4




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INTEGRITY BANCSHARES, INC. AND SUBSIDIARY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(Unaudited)
 2005
    
    
    2004OPERATING ACTIVITIESNet income
    
    $
    4,707,408
    
    
    $
    2,007,171Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation
    
    
    404,558
    
    
    
    310,201Provision for loan losses
    
    
    2,000,634
    
    
    
    2,321,249Stock compensation
    
    
    399,600
    
    
    
    227,389Increase in interest receivable
    
    
    (1,317,398
    )
    
    
    (330,102
    )Increase in interest payable
    
    
    436,469
    
    
    
    489,203Gain on sale of other real estate
    
    
    
    
    
    
    (177,495
    )Gain on sale of premises and equipment
    
    
    (309,375
    )
    
    
    (40,490
    )Net other operating activities
    
    
    (295,636
    )
    
    
    (2,027,577
    )Net cash provided by operating activities
    
    
    6,026,260
    
    
    
    2,779,549INVESTING ACTIVITIESNet (increase) decrease in interest-bearing deposits in banks
    
    
    74,472
    
    
    
    (97,630
    )Purchases of securities available-for-sale
    
    
    (25,337,743
    )
    
    
    (24,258,482
    )Proceeds from maturities of securities available-for-sale
    
    
    10,734,953
    
    
    
    10,497,180Purchase (redemption) of restricted equity securities
    
    
    343,300
    
    
    
    (1,100,000
    )Net (increase) decrease in federal funds sold
    
    
    (3,095,000
    )
    
    
    2,439,000Net increase in loans
    
    
    (192,701,857
    )
    
    
    (114,169,959
    )Proceeds from sale of other real estate
    
    
    
    
    
    
    2,693,669Proceeds from sale of premises and equipment
    
    
    
    
    
    
    5,000,000Purchase of premises and equipment
    
    
    (2,513,808
    )
    
    
    (2,213,776
    )Net cash used in investing activities
    
    
    (212,495,683
    )
    
    
    (121,209,998
    )FINANCING ACTIVITIESNet increase in deposits
    
    
    213,645,179
    
    
    
    84,942,295Net decrease in federal funds purchased
    
    
    (4,279,000
    )
    
    
    (9,815,000
    )Net proceeds (repayments) of other borrowings
    
    
    (15,000,000
    )
    
    
    25,186,000Proceeds from exercised stock options
    
    
    750,645
    
    
    
    Net proceeds from sale of common stock
    
    
    14,994,352
    
    
    
    20,309,609Net cash provided by financing activities
    
    
    210,111,176
    
    
    
    120,622,904Net increase in cash and due from banks
    
    
    3,641,753
    
    
    
    2,192,455Cash and due from banks, beginning of period
    
    
    1,274,711
    
    
    
    1,693,155Cash and due from banks, end of period
    
    $
    4,916,464
    
    
    $
    3,885,610SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid during period for:Interest
    
    $
    11,813,851
    
    
    $
    4,518,114Income taxes
    
    $
    2,906,419
    
    
    $
    3,320,488
 See Notes to Consolidated Financial Statements.
 5




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##### Table of Contents



INTEGRITY BANCSHARES, INC.
AND SUBSIDIARY
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 1.
    
    BASIS OF PRESENTATIONThe consolidated financial information for Integrity Bancshares, Inc. (the
Company) included herein is unaudited; however, such information reflects all
adjustments (consisting solely of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair statement of results for the interim
period.All earnings per share figures and number of shares outstanding have been
adjusted to reflect a three-for-two stock split declared on December 17, 2004 and a
two-for-one stock split declared on November 2, 2005.The results of operations for the three and nine month periods ended September
30, 2005 are not necessarily indicative of the results to be expected for the full
year.NOTE 2.
    
    STOCK COMPENSATION PLANSAt September 30, 2005, the Company has two stock-based employee compensation
plans. The Company accounts for those plans under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. For fixed stock options, no stock-based employee
compensation cost is reflected in net income, as all fixed options granted under
those plans had an exercise price equal to the market value of the underlying stock
on the date of grant. For variable stock options, stock-based compensation amounted
to $399,600 and $227,389 for the nine months ended September 30, 2005 and 2004,
respectively.
The following table illustrates the effect on net income and earnings per share
if the Company had applied the fair value recognition provisions of SFAS Statement
No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation.
 Three Months EndedSeptember 30,2005
    
    
    2004Net income, as reported
    
    $
    1,898,391
    
    
    $
    256,332Difference between stock-based employee
compensation expense determined under fair value
based method and APB No. 25 for all awards,
net of tax
    
    
    (150,940
    )
    
    
    41,421Pro forma net income
    
    $
    1,747,451
    
    
    $
    297,753Earnings per share:Basic  as reported
    
    $
    .13
    
    
    $
    .02Basic  pro forma
    
    $
    .12
    
    
    $
    .03Diluted  as reported
    
    $
    .12
    
    
    $
    .02Diluted  pro forma
    
    $
    .11
    
    
    $
    .03




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Nine Months EndedSeptember 30,2005
    
    
    2004Net income, as reported
    
    $
    4,707,408
    
    
    $
    2,007,171Difference between stock-based employee
compensation expense determined under fair value
based method and APB No. 25 for all awards,
net of tax
    
    
    (369,505
    )
    
    
    7,415Pro forma net income
    
    $
    4,337,903
    
    
    $
    2,014,586Earnings per share:Basic  as reported
    
    $
    .35
    
    
    $
    .20Basic  pro forma
    
    $
    .32
    
    
    $
    .20Diluted  as reported
    
    $
    .33
    
    
    $
    .19Diluted  pro forma
    
    $
    .30
    
    
    $
    .19
 NOTE 3.
    
    EARNINGS PER SHAREPresented below is a summary of the components used to
calculate basic and diluted earnings per common share.
 Three Months EndedSeptember 30,2005
    
    
    2004Basic Earnings Per Share:Weighted average common shares outstanding
    
    
    14,361,542
    
    
    
    12,241,628Net income
    
    $
    1,898,391
    
    
    $
    256,332Basic earnings per share
    
    $
    0.13
    
    
    $
    0.02Diluted Earnings Per Share:Weighted average common shares outstanding
    
    
    14,361,542
    
    
    
    12,241,628Net effect of the assumed exercise of stock
options based on the treasury stock method
using average market prices for the period
    
    
    895,014
    
    
    
    637,950Total weighted average common shares and
common stock equivalents outstanding
    
    
    15,256,556
    
    
    
    12,879,578Net income
    
    $
    1,898,391
    
    
    $
    256,332Diluted earnings per share
    
    $
    0.12
    
    
    $
    0.02




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Nine Months EndedSeptember 30,2005
    
    
    2004Basic Earnings Per Share:Weighted average common shares outstanding
    
    
    13,530,746
    
    
    
    10,151,385Net income
    
    $
    4,707,408
    
    
    $
    2,007,171Basic earnings per share
    
    $
    0.35
    
    
    $
    0.20Diluted Earnings Per Share:Weighted average common shares outstanding
    
    
    13,530,746
    
    
    
    10,151,385Net effect of the assumed exercise of stock
options based on the treasury stock method
using average market prices for the period
    
    
    890,736
    
    
    
    646,359Total weighted average common shares and
common stock equivalents outstanding
    
    
    14,421,482
    
    
    
    10,797,744Net income
    
    $
    4,707,408
    
    
    $
    2,007,171Diluted earnings per share
    
    $
    0.33
    
    
    $
    0.19
 NOTE 4.
    
    CURRENT ACCOUNTING DEVELOPMENTSIn January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51, and on December 24,
2003, the FASB issued FASB Interpretation No. 46 (Revised December 2003),
Consolidation of Variable Interest Entities which replaced FIN 46. The
interpretation addresses consolidation by business enterprises of variable interest
entities. A variable interest entity is defined as an entity subject to
consolidation according to the provisions of the interpretation. The revised
interpretation provides for special effective dates for entities that had fully or
partially applied the original interpretation as of December 24, 2003. Otherwise,
application of the interpretation was required in financial statements of public
entities that have interests in special-purpose entities, or SPEs, for periods
ending after December 15, 2003. Application by public entities, other than small
business issuers, for all other types of variable interest entities (i.e., non-SPEs)
is required in financial statements for periods ending after March 15, 2004.
Application by small business issuers to variable interest entities other than SPEs
is required at various dates in 2004 and 2005. The Company has determined that the
revised provisions required deconsolidation of subsidiary trusts which issued trust
preferred securities. The Company adopted these revised provisions in the first
quarter of 2004. The interpretations did not have a material effect on the
Companys financial condition or results of operations.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 4.
    
    CURRENT ACCOUNTING DEVELOPMENTS (Continued)In December 2004, the FASB published Statement No. 123 (revised 2004),
Share-Based Payment (FAS 123(R) or the Statement). FAS 123(R) requires that
the compensation cost relating to share-based payment transactions, including grants
of employee stock options, be recognized in financial statements. That cost will be
measured based on the fair value of the equity or liability instruments issued. FAS
123(R) covers a wide range of share-based compensation arrangements including stock
options, restricted share plans, performance-based awards, share appreciation
rights, and employee share purchase plans. FAS 123(R) is a replacement of FASB
Statement No. 123, Accounting for Stock-Based Compensation, and supersedes APB
Opinion No. 25, Accounting for Stock Issued to Employees, and its related
interpretive guidance (APB 25).The effect of the Statement will be to require entities to measure the cost of
employee services received in exchange for stock options based on the grant-date
fair value of the award, and to recognize the cost over the period the employee is
required to provide services for the award. FAS 123(R) permits entities to use any
option-pricing model that meets the fair value objective in the Statement.The Company will be required to apply FAS 123(R) as of the beginning of its
first interim period that begins after December 15, 2005, which will be the year
ending December 31, 2006.FAS
123(R) allows two methods for determining the effects of the transition: the modified prospective transition method and the modified retrospective method of
transition. Under the modified prospective transition method, an entity would use
the fair value based accounting method for all employee awards granted, modified, or
settled after the effective date. As of the effective date, compensation cost
related to the nonvested portion of awards outstanding as of that date would be
based on the grant-date fair value of those awards as calculated under the original
provisions of Statement No. 123; that is, an entity would not remeasure the
grant-date fair value estimate of the unvested portion of awards granted prior to
the effective date. An entity will have the further option to either apply the
Statement to only the quarters in the period of adoption and subsequent periods, or
apply the Statement to all quarters in the fiscal year of adoption. Under the
modified retrospective method of transition, an entity would revise its previously
issued financial statements to recognize employee compensation cost for prior
periods presented in accordance with the original provisions of Statement No. 123.The Company has not yet completed its study of the transition methods or made
any decisions about how it will adopt FAS 123(R). The impact of this Statement on
the Company in fiscal 2006 and beyond will depend upon various factors, among them
being our future compensation strategy. The pro forma compensation costs presented
in the table above and in prior filings for the Company have been calculated using a
Black-Scholes option pricing model and may not be indicative of amounts which should
be expected in future years. No decisions have been made as to which option-pricing
model is most appropriate for the Company for future awards.NOTE 5.
    
    SUBSEQUENT EVENTOn November 2, 2005 the Board of Directors declared a two-for-one stock split,
payable on December 12, 2005 to shareholders of record as of November 28, 2005. All
earnings per share figures and number of shares outstanding have been adjusted to
reflect the stock split.




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS
  Forward Looking Statements
   Critical Accounting Policies
   Allowance for loan losses




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##### Table of Contents



Liquidity and Capital Resources
   ActualMinimumRegulatoryConsolidated
    
    Bank
    
    Requirement*Leverage capital ratios
    
    
    11.32
    %
    
    
    11.05
    %
    
    
    5.00
    %Risk-based capital ratios:Tier 1 capital
    
    
    10.85
    
    
    
    10.58
    
    
    
    6.00Total capital
    
    
    11.65
    
    
    
    11.39
    
    
    
    10.00
 
 
  Off-Balance Sheet Risk
   September 30, 2005(Dollars in Thousands)Commitments to extend credit
    
    $
    205,422Letters of credit
    
    
    1,396$
    206,818




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##### Table of Contents



Financial Condition
  September 30,
    
    
    December 31,2005
    
    
    2004(Dollars in Thousands)Cash and due from banks
    
    $
    4,916
    
    
    $
    1,275Interest-bearing deposits in banks
    
    
    214
    
    
    
    288Federal funds sold
    
    
    3,095
    
    
    
    Securities
    
    
    62,260
    
    
    
    47,928Restricted equity securities
    
    
    889
    
    
    
    1,233Loans, net
    
    
    573,174
    
    
    
    382,473Premises and equipment
    
    
    10,741
    
    
    
    8,608Other assets
    
    
    6,590
    
    
    
    4,370$
    661,879
    
    
    $
    446,175Deposits
    
    $
    586,917
    
    
    $
    373,272Federal funds purchased
    
    
    
    
    
    
    4,279Other borrowings
    
    
    6,186
    
    
    
    21,186Other liabilities
    
    
    4,388
    
    
    
    3,883Stockholders equity
    
    
    64,388
    
    
    
    43,555$
    661,879
    
    
    $
    446,175




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##### Table of Contents



Results of Operations for the Three and Nine Months Ended September 30, 2005 and 2004
  Three Months EndedSeptember 30,2005
    
    
    2004(Dollars in Thousands)Interest income
    
    $
    11,369
    
    
    $
    5,996Interest expense
    
    
    4,926
    
    
    
    1,973Net interest income
    
    
    6,443
    
    
    
    4,023Provision for loan losses
    
    
    765
    
    
    
    1,609Other income
    
    
    190
    
    
    
    274Other expense
    
    
    2,866
    
    
    
    2,280Pretax income
    
    
    3,002
    
    
    
    408Income taxes
    
    
    1,104
    
    
    
    152Net income
    
    $
    1,898
    
    
    $
    256
 Nine Months EndedSeptember 30,2005
    
    
    2004(Dollars in Thousands)Interest income
    
    $
    29,650
    
    
    $
    15,605Interest expense
    
    
    12,250
    
    
    
    5,007Net interest income
    
    
    17,400
    
    
    
    10,598Provision for loan losses
    
    
    2,001
    
    
    
    2,321Other income
    
    
    577
    
    
    
    414Other expense
    
    
    8,507
    
    
    
    5,505Pretax income
    
    
    7,469
    
    
    
    3,186Income taxes
    
    
    2,762
    
    
    
    1,179Net income
    
    $
    4,707
    
    
    $
    2,007




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##### Table of Contents



September 30,2005
    
    2004(Dollars in Thousands)Nonaccrual loans
    
    $
    2,885
    
    
    $
    2,292Loans contractually past due ninety days or more as to interest
or principal payments and still accruing
    
    
    0
    
    
    
    0Restructured loans
    
    
    0
    
    
    
    0Potential problem loans
    
    
    819
    
    
    
    1,882Interest income that would have been recorded on nonaccrual
and restructured loans under original terms
    
    
    105
    
    
    
    135Interest income that was recorded on nonaccrual and
restructured loans
    
    
    0
    
    
    
    0




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##### Table of Contents



Nine Months EndedSeptember 30,2005
    
    
    2004(Dollars in Thousands)Average amount of loans outstanding
    
    $
    487,403
    
    
    $
    276,557Balance of allowance for loan losses at beginning of period
    
    $
    3,433
    
    
    $
    3,573Loans charged offCommercial and financial
    
    
    (210
    )
    
    
    0Real estate mortgage
    
    
    0
    
    
    
    (550
    )Installment
    
    
    0
    
    
    
    0(210
    )
    
    
    (550
    )Loans recoveredCommercial and financial
    
    
    0
    
    
    
    0Real estate mortgage
    
    
    55
    
    
    
    12Installment
    
    
    0
    
    
    
    055
    
    
    
    12Net (charge-offs)/recoveries
    
    
    (155
    )
    
    
    (538
    )Additions to allowance charged to operating expense during period
    
    
    2,001
    
    
    
    2,321Balance of allowance for loan losses at end of period
    
    $
    5,279
    
    
    $
    5,356Ratio of net loans charged off during the period to
average loans outstanding
    
    
    0.03
    %
    
    
    0.19
    %




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##### Table of Contents



ITEM 3. CONTROLS AND PROCEDURES




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 ITEM 5. OTHER INFORMATION.
  
 ITEM 6. EXHIBITS
 31.1
    
    Certification of the Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certificate of Principal Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification of the Chief Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




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##### Table of Contents



SIGNATURES
  INTEGRITY BANCSHARES, INC.(Registrant)DATE: November 7, 2005
    
    BY:
    
    /s/ Steven M. SkowSteven M. Skow, President and C.E.O.
(Principal Executive Officer)DATE: November 7, 2005
    
    BY:
    
    /s/ Jeff L. SandersJeff L. Sanders, Senior VP & C.F.O.(Principal Financial and Accounting Officer)