UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549
                       ______________________________
                                  FORM 10-K/A
  [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                 ACT OF 1934
                For the Fiscal Year Ended:  December 31, 1998

                                     or

  [ ]   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: 0-10196

                        INDEPENDENT BANKSHARES, INC.
           (Exact Name of Registrant as Specified in its Charter)

            Texas                                       75-1717279
(State or Other Jurisdiction of                      (I.R.S. Employer
Incorporation or Organization)                     Identification No.)

     547 Chestnut Street
        Abilene, Texas                                    79602
(Address of Principal Executive Offices)                (Zip Code)

     Registrant's Telephone Number, Including Area Code:  (915) 677-5550

         Securities Registered Pursuant to Section 12(b) of the Act:
                                                   Name of each exchange
       Title of each class                          on which registered
___________________________________________      ________________________
Common Stock, $0.25 Par Value                     American Stock Exchange
8.5% Cumuative Trust Preferred Securites          American Stock Exchange
  Guaranteed by Independent Bankshares, Inc.

      Securities Registered Pursuant to Section 12(g) of the Act: None
                       ______________________________

     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 [X]  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 amendment to this Form 10-K.          [X]

     The aggregate market value of the voting stock held by nonaffiliates
of the Registrant, based on the market value of such stock on March 18,
1999, was $18,130,000.  For purposes of this computation, all executive
officers, directors and 5% beneficial owners of the Registrant are deemed
to be affiliates.  Such determination should not be deemed an admission
that such executive officers, directors and beneficial owners are, in fact,
affiliates of the Registrant.  At March 18, 1999, 2,228,780 shares of the
Registrant's common stock, $0.25 par value per share, were outstanding.

                     DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference into the
indicated part or parts of this report:

(1)  Annual Report to Shareholders for the fiscal year ended December 31,
     1998, furnished to the Commission pursuant to Rule 14a-3(b) - Part II
     and Part IV.
(2)  Definitive proxy statement filed with the Commission pursuant to
     Regulation 14A in connection with the Annual Meeting of Shareholders
     held April 27, 1999 - Part III.
_____________________________________________________________________________

<PAGE>

Pursuant to Rule 15d-21 under the Securities Exchange Act of 1934, the
undersigned registrant ("Registrant") hereby amends its annual report on Form
10-K for the fiscal year ended December 31, 1998 to include the following
information, financial statements, and exhibits required by Form 10-K/A with
respect to the Independent Bankshares, Inc. Employee Stock Ownership/401(k) Plan
("Plan") for the year ended December 31, 1998.  Independent Bankshares, Inc. is
the issuer of the securities held pursuant to the Plan. The schedules called for
under Article 6A-05 in Regulation S-X have been omitted because they are
inapplicable or the required information has been given in the financial
statements or notes thereto:


   INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNERSHIP /
                         401(k) PLAN
           FINANCIAL STATEMENTS AND AUDITORS' REPORT

                          CONTENTS
                          --------

                 December 31, 1998 and 1997


                                                            Page
                                                            ----
FINANCIAL STATEMENTS:

   Independent Auditors' Report                                1

   Statements of Net Assets Available for Benefits
    with Fund Information                                      2

   Statements of Changes in Net Assets Available for
    Benefits with Fund Information                             4

   Notes to Financial Statements                               6

SUPPLEMENTARY INFORMATION:

   Independent Auditors' Report on Supplementary Information   12

   Schedule of Assets Held for Investment Purposes             13

   Schedule of Reportable Transactions                         14




<PAGE>


                       March 23, 1999




To the Employee Stock Ownership / 401(k) Plan Committee of
 Independent Bankshares, Inc.
Abilene, Texas




                Independent Auditors' Report
                ----------------------------

We have audited the accompanying statements of net assets
available for benefits with fund information of the
INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNERSHIP/401(K)
PLAN as of December 31, 1998 and 1997, and the related
statements of changes in net assets available for benefits
with fund information for the years then ended. These financial
statements are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally
accepted auditing standards. 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
present fairly, in all material respects, the net assets
available for benefits with fund information of the
Independent Bankshares, Inc. Employee Stock Ownership / 401(k)
Plan as of December 31, 1998 and 1997, and the changes in net
assets available for benefits with fund information for the years
then ended in conformity with generally accepted accounting principles.




                               /s/ CONDLEY AND COMPANY, L.L.P.

                               Certified Public Accountants


                             -1-



<PAGE>

  INDEPENDENT BANKSHARES, INC., EMPLOYEE STOCK OWNERSHIP 401(K) PLAN
                            Abilene, Texas

 STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION

<TABLE>
<CAPTION>

                                                                                  Participant Directed
                                        ---------------------------------------------------------------------------------------
                                                                                   Federated
                                         Federated     Federated      Federated     Managed       Trust for       Independent
                                          Managed    Managed Growth    Managed     Aggressive   U.S. Treasury  Bankshares, Inc.
                                        Income Fund  & Income Fund   Growth Fund  Growth Fund    Obligations     Common Stock
                                        -----------  --------------  -----------  -----------  --------------  ----------------
<S>                                     <C>          <C>             <C>          <C>          <C>             <C>
          ASSETS
          ------

Cash                                    $            $               $            $            $               $
Contributions receivable
Participant loans
Investments,at fair value
  Federated Managed Income Fund              10,031
  Federated Managed Growth &
   Income Fund                                               45,569
  Federated Managed Growth Fund                                           20,820
  Federated  Managed  Aggressive
   Growth Fund                                                                         41,038
  Trust for U.S. Treasury Obligations                                                                  34,966
  Independent Bankshares, Inc.
   Common Stock                                                                                                     166,992
Accrued income
                                        -----------  --------------  -----------  -----------  --------------  ----------------

TOTAL ASSETS                            $    10,031  $       45,569  $    20,820  $    41,038  $       34,966  $        166,992
                                        ===========  ==============  ===========  ===========  ==============  ================
         LIABILITIES
         -----------

Benefit claims payable                  $            $               $            $            $        2,357  $          1,110
Accrued liabilities
Notes payable
                                        -----------  --------------  -----------  -----------  --------------  ----------------


NET ASSETS (DEFICIT) AVAILABLE FOR
   PLAN BENEFITS                        $    10,031  $       45,569  $    20,820  $    41,038  $       32,609  $        165,882
                                        ===========  ==============  ===========  ===========  ==============  ================

</TABLE>


The accompanying notes are an integral part of the financial statement

                                       -2-


<PAGE>
<TABLE>
<CAPTION>

                                   Non-Participant Directed                             December 31,
---------------------------------------------------------------------              ------------------------
                                  Independent Bankshares, Inc., Common Stock
   Participant                   ------------------------------------------
      Loans             Other        Allocated             Unallocated             1998         1997
------------------  -----------  --------------           ----------------     -----------  -----------
   <S>                <C>         <C>                     <C>                  <C>          <C>

   $                  $  8,854     $     4,232             $                   $   13,086    $   41,508
                          (305)                                                      (305)        4,614
        63,390                                                                     63,390        56,252
                                                                                   10,031         9,011
                                                                                   45,569        36,533
                                                                                   20,820        21,564
                                                                                   41,038        25,447
                                                                                   34,966        23,863
                                     1,445,646                    193,541       1,806,179     3,035,793
                           300                                                        300           285
------------------  ----------   -------------            ---------------      ----------   -----------

   $    63,390        $  8,849     $ 1,449,878               $    193,541      $2,035,074   $ 3,254,870
==================  ==========   =============            ===============      ==========   ===========

   $                  $            $                         $                 $    3,467  $          0
                         5,341                                                      5,341         5,366
                                                                  234,166         234,166       193,832
------------------  ----------   -------------            ---------------      ----------  ------------
   $    63,390        $  3,508     $ 1,449,878               $    (40,625)     $1,792,100   $ 3,055,672
==================  ==========   =============            ===============      ==========  ============

</TABLE>

The accompanying notes are an integral part of the financial statement

                                       -3-




<PAGE>


        INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNERSHIP/401(K) PLAN
                                 Abilene, Texas

          STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
                             WITH FUND INFORMATION


<TABLE>
<CAPTION>
                                                                    Participant Directed
                                   ----------------------------------------------------------------------------------------------
                                    Federated      Federated      Federated       Federated         Trust for       Independent
                                     Managed     Managed Growth    Managed    Managed Aggressive  U.S. Treasury  Bankshares, Inc.
                                   Income Fund   & Income Fund   Growth Fund      Growth Fund      Obligations     Common Stock
                                   ------------  --------------  -----------  ------------------  -------------  ----------------
<S>                                <C>           <C>             <C>          <C>                 <C>            <C>
ADDITIONS TO NET ASSETS
 ATTRIBUTED TO:

Net unrealized appreciation
 (depreciation) in fair
  value of investments             $       117   $       1,770   $       872  $            2,349   $              $       (93,164)
Dividend income                                                                                                             5,473
Interest income                          1,065           5,232         3,388               4,164          3,725
Gain on sale of investments                 44             568           626                 263                           (5,190)
                                   -----------   -------------   -----------  ------------------  -------------  ----------------

  Total Investment Income                1,226           7,570         4,886               6,776          3,725           (92,881)

Plan transfers                          (2,357)         (3,869)       (7,016)               (175)        (9,295)           13,927


Employer contributions

Employee contributions                   2,543          10,111         6,020              12,627         19,454            32,621

Allocation of 4306.021 shares
  of ISBI Common Stock,
  at market
                                   -----------   -------------   -----------  ------------------  -------------  ----------------
  Total Additions                        1,412          13,812         3,890              19,228         13,884           (46,333)
                                   -----------   -------------   -----------  ------------------  -------------  ----------------



DEDUCTIONS FROM NET ASSETS
  ATTRIBUTED TO:

Distributions to participants              392           4,776         4,634               3,636          5,218             3,475

Allocation of 4306.021 shares
 of ISBI Common Stock, at market

Interest expense

Administrative expenses                                                                                     (80)
                                   -----------   ------------    -----------  ------------------  -------------  ----------------
  Total Deductions                         392          4,776          4,634               3,636          5,138             3,475

INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR      BENEFITS              1,020          9,036           (744)             15,592          8,746           (49,808)

Net Assets Available For Benefits:

Beginning of Year                        9,011         36,533         21,564              25,446         23,863           215,690
                                   -----------   ------------    -----------  ------------------  -------------  ----------------

End of Year                        $    10,031   $     45,569    $    20,820  $           41,038  $      32,609  $        165,882
                                   ===========   ============    ===========  ==================  =============  ================

</TABLE>

The accompanying notes are an integral part of the financial statements.

                                       -4-

<PAGE>
<TABLE>
<CAPTION>

                                     Non-Participant Directed                 December 31,
--------------------------------------------------------------------   -------------------------
                           Independent Bankshares, Inc. Common Stock
 Participant               -----------------------------------------
    Loans        Other         Allocated               Unallocated         1998          1997
 -----------   ---------   -----------------         ---------------   -----------   -----------
 <S>           <C>         <C>                       <C>               <C>           <C>

 $             $           $      (1,018,817)        $      (147,288)  $(1,254,162)  $ 1,093,948
                                      25,695                   4,376        35,544        29,601
                       15                                                   17,589         9,038
                                      (1,919)                 (2,644)       (8,251)        1,236
 -----------   ----------  -----------------         ---------------   -----------   -----------

           0           15           (995,041)               (145,556)   (1,209,280)    1,133,823
       7,138        1,647            (54,183)                 54,183             0             0

                   (1,511)           106,681                               105,170        99,690

                   (2,953)                                                  80,423        71,372


                                      54,187                                54,187
 -----------   ----------  -----------------         ----------------  -----------   -----------
       7,138       (2,802)          (888,356)                 (91,373)    (969,500)    1,304,885
 -----------   ----------  -----------------         ----------------  -----------   -----------





                                     166,395                               188,526       170,952


                                                               54,187       54,187

                                                               22,822       22,822        18,370

                      (26)            28,643                                28,537        27,223
  ----------   ----------  -----------------         ----------------  -----------   -----------

           0          (26)           195,038                   77,009      294,072       216,545


       7,138       (2,776)        (1,083,394)                (168,382)  (1,263,572)    1,088,340



      56,252        6,284          2,533,272                  127,757    3,055,672     1,967,332
  ----------    ----------    --------------         ----------------   ----------   -----------

  $   63,390    $    3,508    $    1,449,878         $        (40,625)  $ 1,792,100  $ 3,055,672
  ==========    ==========    ==============         ================   ===========  ===========

</TABLE>


                                 -5-




<PAGE>

       INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNERSHIP/401(K) PLAN

                       NOTES TO FINANCIAL STATEMENTS

                        December 31, 1998 and 1997

NOTE 1:   DESCRIPTION OF PLAN

            Independent Bankshares, Inc. (the "Company") established the
          Independent Bankshares, Inc. Employee Stock Ownership Plan
          (the "Plan") effective January 1, 1987. The Plan is an
          employee stock ownership plan, and is designed to
          comply with Section 4975 (e)(7) and the regulations
          thereunder of the Internal Revenue Code of 1986, as
          amended (the "Code"), and is subject to the applicable
          provisions of the Employee Retirement Income Security Act
          of 1974, as amended ("ERISA"). The Plan is administered by
          Independent Bankshares, Inc. Employers participating in
          the Plan during the year are Independent Bankshares, Inc.
          and its wholly owned subsidiary First State Bank, N.A.,
          Abilene, Texas.  First State Bank, N.A., Abilene is the
          Plan's trustee. The Company's wholly owned subsidiary, Azle
          State Bank, Azle, Texas, did not participate in the Plan
          during 1998.

            The Plan was amended in 1993 to add a 401(k) provision. This
          allows plan participants to make salary deferrals which are
          credited to each participant's account. The Plan name was
          changed to the Independent Bankshares, Inc. Employee Stock
          Ownership / 401(k) Plan.

            During 1997, the Plan purchased additional shares of Company Common
          Stock using the proceeds of a bank borrowing guaranteed by
          the Company, and holds the stock in a trust established
          under the Plan.  The borrowing is to be repaid by fully
          deductible Company contributions to the trust fund.  As
          the Plan makes each payment of principal, an appropriate
          percentage of stock will be allocated to eligible
          employees' accounts in accordance with applicable
          regulations under the Code.  Shares vest fully upon
          allocation.  The borrowing is collateralized by the
          unallocated shares of stock and is guaranteed by the
          Company.  The lender has no rights against shares once
          they are allocated under the Plan.  Accordingly, the
          financial statements of the Plan for the year 1998
          presents separately the assets and liabilities and changes
          therein pertaining to:

            (a)  the accounts of employees with vested rights in allocated stock
                  (Allocated) and
            (b)  stock not yet allocated to employees (Unallocated).

            The more significant aspects of the Plan are summarized below:

            Eligibility to Participate
            --------------------------

            An employee becomes a participant on the January 1 or July 1
          coincident with or immediately following the later of the
          date on which he or she completes one year of service
          (1,000 hours), and attains age 21.

          Employer's Contributions
          ------------------------

           The Company, at its discretion, annually will determine the amount
          of its contribution, if any, to the Plan. The Company may
          make its contribution to the Plan in cash or in the
          Company's Common Stock or such property that is acceptable
          to the trustee. For each plan year the Company and its
          subsidiaries contribute to the Plan, the allocation of the
          contribution will be based upon a participant's
          proportionate share of the total compensation paid during
          that plan year to all participants in the Plan. The
          Company may also, at its discretion, make a matching
          contribution of up to 5% of eligible participants' yearly
          compensation.

                                 -6-


<PAGE>

            Employee Contributions
            ----------------------

            The Plan permits (but does not require) employees to make voluntary
          contributions or salary deferrals up to the maximum amount
          allowable by law.

            Vesting
            -------

            An employee's interest in the contributions by the Company and its
          subsidiaries to the Plan for the employee's benefit
          becomes 100% vested (nonforfeitable) upon the employee
          attaining age 65, or if the employee terminates employment
          because of death or disability. If an employee terminates
          employment prior to normal retirement age for any reason
          other than death or disability, then the employee's
          interest in the contributions by the Company and its
          subsidiaries to the Plan for the employee's benefit
          becomes vested in accordance with the following schedule:


              Years of Service               Nonforfeitable
             With the Employer             Accrued Benefit
          -----------------------      -----------------------

                Less than 2                      None
                     2                            10%
                     3                            20%
                     4                            40%
                     5                            60%
                     6                            80%
                     7                           100%

            Forfeitures
            -----------

            The Plan provides two methods of vesting forfeitures. The primary
          method of vesting forfeitures is the "forfeiture break in
          service" rule. The secondary method of forfeiture is the
          "cash out" rule. Termination of employment alone will not
          result in a forfeiture under the Plan unless an employee
          does not return to employment with the Company before
          incurring a "forfeiture break in service" (a period of 5
          consecutive plan years). The cash out rule becomes
          operative if an employee terminates employment and
          receives a total distribution of the vested portion of his
          or her account balance.

            Distributions
            -------------

          Distributions after an employee attains age 65 will be paid as soon
          thereafter as is practical.

          If an employee dies prior to receiving all of his or her benefits
          under the Plan, the trustee will pay the balance of their
          account to their beneficiary.

          If an employee becomes disabled, the trustee will pay his or her
          account balance as if he or she had retired.

          If an employee terminates employment prior to attaining normal
          retirement age, the trustee will distribute the employee's
          vested interest in lump sum or in equal installments over
          a fixed period of time. The Employee Stock Ownership /
          401(k) Plan Committee will direct the trustee to
          distribute the employee's vested interest in the Plan at
          any time prior to the close of the plan year in which the
          employee separates from service, postpone distribution
          until after the plan year in which the employee separates
          from service, or postpone distribution until the employee
          attains age 65.

                                 -7-



<PAGE>


            Plan Termination
            ----------------

            The Company reserves the right to terminate the Plan at any time,
          subject to Plan provisions. Upon such termination of the
          Plan, the interest of each participant will be distributed
          to such participant or his or her beneficiary at the time
          prescribed by the Plan terms and the Code.

            Tax Status
            ----------

            The Internal Revenue Service has determined and informed the Company
          by a letter dated June 28, 1995, that the Plan is
          qualified and tax-exempt under the appropriate sections of
          the Code.

NOTE 2:   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Investment Valuation and Income Recognition
            -------------------------------------------

            The shares of Common Stock of the Company are valued at fair value
          on December 31 of each year. Fair values at December 31,
          1998 and 1997, were determined by using the closing sales
          prices for the last market transaction on or prior to
          those dates according to the American Stock Exchange.

            Mutual funds owned by the Company are valued at fair value on
          December 31 of each year. Fair value is determined by the
          fair value on December 31 as published in the Wall Street
          Journal.

            Dividend income is accrued on the ex-dividend date.

            Purchases and sales of securities are recorded on a trade-date
          basis. Realized gains and losses from security
          transactions are reported on the specific identification
          method.

            Contributions
            -------------

            Contributions are recognized in the year in which they are declared
          and not received.

NOTE 3:   ADMINISTRATION OF PLAN ASSETS

            The Plan's assets, which consist principally of the Company's Common
          Stock and mutual funds, are held by the trustee of the
          Plan.

            Contributions are held and managed by the trustee under the
          direction of the Employee Stock Ownership / 401(k) Plan
          Committee. The trustee invests contributions received,
          interest, and dividend income and makes distributions to
          participants.

            Certain administrative functions are performed by officers or
          employees of the Company or its subsidiaries. No such
          officer or employee receives compensation from the Plan.

NOTE 4:   INVESTMENTS

            The Plan's investments, at December 31, are presented in the
          following table:

                                                        1998
                                        -----------------------------------
                                          Number of
                                         Shares Held    Cost     Fair Value
                                        ------------  --------   ----------
          Participant Directed:
          Federated Managed Income
            Fund                            919.4625  $  9,677   $   10,031
          Federated Managed Growth
            & Income Fund                 3,848.7479    42,446       45,569
          Federated Managed Growth
            Fund                          1,616.425     19,190       20,820

                                     -8-



<PAGE>

          Federated Managed Aggressive
            Growth Fund                   2,941.820     37,067       41,038

          Trust for U.S. Treasury
            Obligations                  34,966.4       34,966       34,966

          Independent Bankshares, Inc.
            Common Stock                 14,521        163,720      166,992

          Non Participant Directed:
           Independent Bankshares, Inc.
           Common Stock:
          Allocated                     125,708        380,960    1,445,646
          Unallocated                    16,830         51,002      193,541
                                                      --------   ----------
             Total                                    $739,028   $1,958,603
                                                      ========   ==========

                                                        1997
                                        -----------------------------------
                                          Number of
                                         Shares Held    Cost     Fair Value
                                        ------------  --------   ----------
          Participant Directed:
          Federated Managed Income
           Fund                             839.7655  $  8,688   $    9,011
          Federated Managed Growth &
           Income Fund                    3,210.2689    34,890       36,533
          Federated Managed Growth
           Fund                           1,768.955     20,162       21,564
          Federated Managed Aggressive
           Growth Fund                    1,974.148     23,563       25,447
          Trust for U.S. Treasury
           Obligations                   23,863.22      23,863       23,863
          Independent Bankshares, Inc.
           Common Stock                  10,923        110,899      215,047

          Non-Participant Directed:
          Independent Bankshares, Inc.
            Common Stock:
          Allocated                     126,966        394,306    2,499,636
          Unallocated                    16,310         50,654      321,110
                                                      --------   ----------
               Total                                  $667,025   $3,152,211
                                                      ========   ==========


NOTE 5:   NOTES RECEIVABLE

          Notes receivable from participants as of December 31, consist of the
          following:

<TABLE>
<CAPTION>
                                                                                 1998           1997

                                                                             ----------    ----------
          <S>                                                                <C>           <C>
          Albert Jordan, originated December 16, 1998, at $20,000 with
            monthly payments of $405, including interest at 7.75%            $   20,000    $        0

          Luther Snell, originated November 15, 1997 at $13,000 with
            monthly payments of $270, including interest at 8.5%                 10,585        12,821

          Luther Snell, originated January 10, 1997, at $15,000 with
            monthly payments of $306, including interest at 8.25%                 9,883        12,668

                                       -9-
<PAGE>
                                                                                 1998          1997
                                                                              ----------   ----------

          Luther Snell, originated December 3, 1998, at $8,000 with
              monthly payments of $165, including interest at 7.75%           $   8,000    $        0

          Randal Crosswhite, originated January 17, 1997, at $10,439
               with monthly payments of $212, including interest at 8.25%         6,734         8,633

          Carolyn Marshall, originated November 5, 1996, at $3,850 with
               monthly payments of $100, including interest at 8.75%              1,885         2,872

          Karen Timmons, originated November 12, 1998, at $1,700 with
               monthly payments of $63, including interest at 8%                  1,650             0

          Joel Velasquez, originated August 18, 1997, at $2,322 with
               monthly payments of $65, including interest at 8.25%               1,503         2,126

          Mary Ann Martin, originating April 17, 1998, at $1,500 with
               monthly payments of $48, including interest at 8.5%                1,197             0

          Sandra Fowler, originated January 7, 1998, at $1,500 with
               monthly payments of $70, including interest at 8.5%                  826             0

          Karen Timmons, originated November 15, 1997, at $1,387 with
               monthly payments of $65, including interest at 8.5%                  698         1,332

          Albert Jordan, originated December 16, 1997, at $15,800 with
               monthly payments of $500, including interest at 8.5%                 429        15,800

                                                                               --------      --------
             Total                                                             $ 63,390      $ 56,252
                                                                               ========      ========

</TABLE>

NOTE 6:   NOTES PAYABLE

            During January 1997, the Plan established a note payable to
          the Company in the original amount of $213,750,
          the proceeds of which were used to purchase Common
          Stock of the Company in a public stock offering.
          Monthly payments are $3,480 including interest at
          the Company's floating prime interest rate plus 1%
          (8.75% at December 31, 1998).  The loan is
          scheduled to mature in January, 2004. The balance
          at December 31, 1998, was $169,162.

            The Plan also has a $65,000 revolving line of credit with
          the Company, of which the entire amount was used
          at December 31, 1998.  The balance is payable on
          June 30, 1999, with interest at the Company's
          floating prime interest rate plus 1%.

            The following is a five-year maturity schedule of the note
          payable:

                          1999              $     26,837
                          2000                    29,499
                          2001                    32,428
                          2002                    35,647
                          2003                    39,185
                          Subsequent               5,566
                                            ------------
                          Total             $    169,162
                                            ============


                            -10-


<PAGE>

NOTE 7:   RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

          The following is a reconciliation of net assets
          available for benefits according to the financial
          statements to Form 5500 at December 31, 1998:


          Net assets available for benefits
            per the financial statements      $  1,792,100
          Net accrued income and expenses
            per the financial statements      $      5,041
                                              ------------
          Net assets available for benefits
            per Form 5500                     $  1,797,141
                                              ============


          The following is a reconciliation of the decrease
          in net assets available for plan benefits per the
          financial statements to Form 5500 for the year
          December 31, 1998:


          Decrease in net assets available
            for benefits per the financial
            statements                        $ (1,263,572)
          Net accrued income and expenses
            for 1998                                 5,041
          Net accrued income and expenses
            for 1997                                  (616)
                                              ------------
          Decrease in net assets available
            for benefits per Form 5500        $ (1,259,147)
                                              ============



                            -11-



<PAGE>


                  SUPPLEMENTARY INFORMATION



<PAGE>
                       March 23, 1999



To the Employee Stock Ownership / 401(k) Plan Committee of
 Independent Bankshares, Inc.
Abilene, Texas


          Independent Auditors' Report on Supplementary Information
         ----------------------------------------------------------

Our audit was conducted for the purpose of forming an
opinion on the basic financial statements taken as a whole.
The supplemental schedules of assets held for investment and
reportable transactions are presented for the purpose of
additional analysis and are not a required part of the basic
financial statements but are supplementary information
required by the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. The supplemental schedules have
been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion,
are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.



                              /s/ CONDLEY AND COMPANY, L.L.P.
                              Certified Public Accountants


                            -12-


<PAGE>

INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNDERSHIP / 401(K) PLAN
                       EIN 75-1717279
                        Plan No. 003
                        ------------
              Plan Year Ended December 31, 1998

 Item 30a - Schedule of Assets Held for Investment Purposes

           a                       b                 c         d
           -                       -                 -         -
                             Description of
                               Investment
                           Including Maturity
                               Date, Rate
  Identity of Issuer,        of Investment,
 Borrower, Lessor, or      Collateral, Par or               Current
     Similar Party           Maturity Value        Cost      Value
 ---------------------   ----------------------  --------   --------
Federated Managed
 Income Fund                919.4625 fund units  $  9,677   $  10,031
Federated Managed
 Growth & Income Fund     3,848.7479 fund units    42,446      45,569
Federated Managed
 Growth Fund              1,616.425  fund units    19,190      20,820
Federated Managed
 Aggressive Growth Fund   2,941.820  fund units    37,067      41,038
Trust for U.S. Treasury
 Obligation              34,966.4    fund units    34,966      34,966
Independent Bankshares,
 Inc.                   157,059 shares of $0.25
                        par value Common Stock    595,681   1,806,179

                            -13-


<PAGE>

INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNDERSHIP / 401(K) PLAN
                       EIN 75-1717279
                        Plan No. 003
                        ------------
              Plan Year Ended December 31, 1998

       Item 30d - Schedule of Reportable Transactions

<TABLE>
<CAPTION>

   a              b               c          d        e           f            g           h            i
   -              -               -          -        -           -            -           -            -
            Description of                                                               Current
            Asset (Include                                     Expense                  Value of
Identity    Interest Rate                                      Incurred                 Asset on
of Party    and Maturity in    Purchase    Selling   Lease       With       Cost of    Transaction    Net Gain
Involved    case of a Loan)     Price       Price    Price    Transaction    Asset        Date        or (Loss)
--------    ---------------   ---------    -------   ------   -----------   -------    -----------   ---------
<S>         <C>               <C>          <C>       <C>      <C>           <C>        <C>           <C>
There were no reportable transactions in the current year.

</TABLE>
                                -14-


<PAGE>

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

          (a)  Documents Filed as Part of Report.

               3. Exhibits

                  The exhibits listed below are filed as part of or incorporated
          by reference in this report.  Where such filing is made by
          incorporation by reference to a previously filed document, such
          document is identified in parenthesis.  See the Index of Exhibits
          included with the exhibits filed as part of this report.

          No.     Description
          --      -----------
          3.1     Restated Articles of Incorporation of Independent
                  Bankshares, Inc. (Exhibit 3.1 to the Company's Annual Report
                  on Form 10-K for the year ended December 31, 1994).

          3.2     Restated Bylaws of Independent Bankshares, Inc. (Exhibit
                  3.2 to the Company's Annual Report on Form 10-K for the year
                  ended December 31, 1994).

          3.3     Amendment to Restated Bylaws of Independent Bankshares, Inc.
                  dated March 17, 1999 (previously filed)

          4.1     Specimen Stock Certificate for Common Stock of the
                  Company (Exhibit 4.1 to the Company's Registration Statement
                  on Form S-1, SEC File No. 333-16419).

          4.2     1999 Stock Option Plan of Indendent Bankshares, Inc.
                  (previously filed)

         10.1     Form of Incentive Stock Option Agreement (previously filed)

         10.2     Form of Nonqualified Stock Option Agreement (previously filed)

         10.3    Master Equipment Lease Agreement, dated December 24,
                 1992, between Independent Bankshares, Inc. and NCR Credit
                 Corporation, Amendment to Master Equipment Lease Agreement
                 dated concurrently therewith, and related form of Schedule and
                 Commencement Certificate (Exhibit 10.7 to the Company's Annual
                 Report on Form 10-K for the year ended December 31, 1993).

         10.4    Loan Agreement, dated September 21, 1998, by and between
                 Bank One, Texas, National Association and the Company and
                 Independent Financial Corp. and First State Bank, National
                 Association and related Promissory Note of the Company, Pledge
                 Agreement of the Company and Pledge Agreement of Independent
                 Financial Corp.  (Exhibit 10.1 to the Company's Current Report
                 on Form 8-K dated September 22, 1998).

         10.5    Agreement and Plan of Reorganization dated May 29, 1998,
                 by and between the Company and Azle Bancorp (previously filed
                 as Exhibit 1.1 to the Company's Current Report on Form 8-K
                 dated June 19, 1998).

         13.1    Annual Report to Shareholders for the year ended December
                 31, 1998 (previously filed).

         21.1    Subsidiaries of Independent Bankshares, Inc. (previously
                 filed).

         23.1    Consent of PricewaterhouseCoopers LLP (previously filed).

         23.2    Consent of Condley and Company, L.L.P. (filed herewith)

         27.1    Financial Data Schedule (previously filed).

    (b)  Current Reports on Form 8-K.

                 Current Report on Form 8-K dated September 22, 1998,
                 reporting the consummation of the acquisition of Azle Bancorp
                 and Azle State by the Company.



<PAGE>

                                   SIGNATURES

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

Date:   June 21, 1999
                                   INDEPENDENT BANKSHARES, INC.


                                    By:       /s/ BRYAN STEPHENSON
                                       ---------------------------------------
                                               Bryan W. Stephenson,
                                        President and Chief Executive Officer


                                   By:       /s/ RANDAL N. CROSSWHITE
                                      ----------------------------------------
                                               Randal N. Crosswhite
                                      Senior Vice President, Chief Financial
                                            Officer, Corporate Secretary

                                   INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK
                                   OWNERSHIP/401(K) PLAN

                                   By:  First State Bank, N.A., Abilene, Trustee

                                        By:  /s/ CAROLYN K. MARSHALL
                                           ---------------------------------
                                        Name:  Carolyn K. Marshall
                                             -------------------------------
                                        Title: VP/TO
                                             -------------------------------

<PAGE>



                                INDEX TO EXHIBITS

    Exhibit Number                              Description
   ---------------      -----------------------------------------------------
          3.1           Restated Articles of Incorporation of Independent
                        Bankshares, Inc. (Exhibit 3.1 to the Company's Annual
                        Report on Form 10-K for the year ended December 31,
                        1994).

          3.2           Restated Bylaws of Independent Bankshares, Inc. (Exhibit
                        3.2 to the Company's Annual Report on Form 10-K for the
                        year ended December 31, 1994).

          3.3           Amendment to Restated Bylaws of Independent Bankshares,
                        Inc., dated March 17, 1999 (previously filed)

          4.1           Specimen Stock Certificate for Common Stock of the
                        Company (Exhibit 4.1 to the Company's Registration
                        Statement on Form S-1, SEC File No. 333-16419).

          4.2           1999 Stock Option Plan of Independent Bankshares, Inc.
                        (previously filed)

         10.1           Form of Incentive Stock Option Agreement (previously
                        filed)

         10.2           Form of Nonqualified Stock Option Agreement (previously
                        filed)

         10.3           Master Equipment Lease Agreement, dated December 24,
                        1992, between Independent Bankshares, Inc. and NCR
                        Credit Corporation, Amendment to Master Equipment
                        Lease Agreement dated concurrently therewith, and
                        related form of Schedule and Commencement Certificate
                        (Exhibit 10.7 to the Company's Annual Report on
                        Form 10-K for the year ended December 31, 1993).

         10.4           Loan Agreement, dated September 21, 1998, by and between
                        Bank One, Texas, National Association and the Company
                        and Independent Financial Corp. and First State Bank,
                        National Association and related Promissory Note of the
                        Company, Pledge Agreement of the Company and Pledge
                        Agreement of Independent Financial Corp. (Exhibit 10.1
                        to the Company's Current Report on Form 8-K dated
                        September 22, 1998).


         10.5           Agreement and Plan of Reorganization dated May 29, 1998,
                        by and between the Company and Azle Bancorp (previously
                        filed as Exhibit 1.1 to the Company's Current Report on
                        Form 8-K dated June 19, 1998).


         13.1           Annual Report to Shareholders for the year
                        ended December 31, 1998 (previously filed).

         21.1           Subsidiaries of Independent Bankshares, Inc.
                        (previously filed)

         23.1           Consent of PricewaterhouseCoopers LLP
                        (previously filed)

         23.2           Consent of Condley and Company, L.L.P. (filed herewith)

         27.1           Financial Data Schedule (previously filed).



<PAGE>