**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-Q**




(Mark
      One)





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      quarterly period ended June
      30, 2008





o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE
                ACT





For
      the
      transition period from __________ to ____________.





Commission
      file number 000-30248





**JACKSONVILLE
      BANCORP, INC.**


(Exact
      name of registrant as specified in its charter)





Florida
            
            59-3472981(State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Identification
                No.)





100
      North Laura Street, Suite 1000, Jacksonville, Florida 32202


(Address
      of principal executive offices)





(904)
      421-3040


(Registrant’s
      telephone number)





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 o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.





Large
                accelerated filer
            o
            Accelerated
                filer
            oNon-accelerated
                filer
            o
            Smaller
                reporting company
            x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of The Exchange Act).





Yes o  No x





As
      of
      August 7, 2008, the latest practicable date, 1,748,799 **** of
      the
      Registrant’s common shares, $.01 par value, were issued and
      outstanding.








JACKSONVILLE
      BANCORP, INC.




TABLE
      OF
      CONTENTS





PagePART
                I – FINANCIAL INFORMATIONItem
                1.
            Financial
                StatementsConsolidated
                Balance Sheets
            3Consolidated
                Statements of Income
            4Consolidated
                Statements of Changes in Shareholders’ Equity
            5Consolidated
                Statements of Cash Flows
            6Notes
                to Consolidated Financial Statements
            7Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            13Item
                3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            23Item
                4.
            Controls
                and Procedures
            23Part
                II – Other InformationItem
                1.
            Legal
                Proceedings
            24Item
                1A.
            Risk
                Factors
            24Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            25Item
                3.
            Defaults
                Upon Senior Securities
            25Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            25Item
                5.
            Other
                Information
            25Item
                6.
            Exhibits
            25SIGNATURES
            27EXHIBIT
                INDEX
            28CERTIFICATIONSCertification
                of Gilbert J. Pomar, III
            30Certification
                of Valerie A. Kendall
            31Certification
                under Section 906 of the Sarbanes-Oxley Act of 2002
            32




2.




JACKSONVILLE
      BANCORP, INC. **PART
      I – FINANCIAL INFORMATION**





**Item
      1. Financial Statements**





CONSOLIDATED
      BALANCE SHEETS


(Dollars
      in thousands, except per share amounts)










June 30,
            
            December 31,2008
            
            2007(Unaudited)ASSETSCash
                and due from banks
            
            $
            5,782
            
            $
            5,584Federal
                funds sold
            
            
            242
            
            
            451Total
                cash and cash equivalents
            
            
            6,024
            
            
            6,035Securities
                available for sale
            
            
            28,246
            
            
            29,727Securities
                held to maturity
            
            
            50
            
            
            50Loans,
                net of allowance for loan losses of $4,213 at 2008 and $3,116 at
                2007
            
            
            370,094
            
            
            339,265Premises
                and equipment, net
            
            
            4,137
            
            
            4,342Bank-owned
                life insurance (BOLI)
            
            
            8,612
            
            
            5,010Federal
                Home Loan Bank (FHLB) stock
            
            
            2,681
            
            
            3,638Accrued
                interest receivable
            
            
            2,069
            
            
            2,275Other
                assets
            
            
            2,324
            
            
            1,620Total
                assets
            
            $
            424,237
            
            $
            391,962LIABILITIESDepositsNoninterest
                bearing
            
            $
            39,427
            
            $
            35,382Money
                market, NOW and savings deposits
            
            
            108,091
            
            
            116,181Time
                deposits
            
            
            185,330
            
            
            137,330Total
                deposits
            
            
            332,848
            
            
            288,893FHLB
                advances
            
            
            43,900
            
            
            67,830Federal
                funds purchased
            
            
            6,000
            
            
            —Subordinated
                debt
            
            
            14,550
            
            
            7,000Accrued
                expenses and other liabilities
            
            
            697
            
            
            1,610Total
                liabilities
            
            
            397,995
            
            
            365,333SHAREHOLDERS’
                EQUITYCommon
                stock, $.01 par value, 8,000,000 shares authorized, 1,748,799 and
                1,747,981 shares issued
            
            
            17
            
            
            17Additional
                paid-in capital
            
            
            18,537
            
            
            18,459Retained
                earnings
            
            
            7,855
            
            
            8,186Treasury
                stock, 874 and 1,650 shares
            
            
            (17
            )
            
            (40
            )Accumulated
                other comprehensive income
            
            
            (150
            )
            
            7Total
                shareholders’ equity
            
            
            26,242
            
            
            26,629Total
                liabilities and shareholders’ equity
            
            $
            424,237
            
            $
            391,962




See
      accompanying notes to unaudited consolidated financial statements.




3.


JACKSONVILLE
      BANCORP, INC.


CONSOLIDATED
      STATEMENTS OF INCOME


(Unaudited)


(Dollars
      in thousands, except per share amounts)









Three Months Ended
            
            Six Months EndedJune 30,
            
            June 30,2008
            
            2007
            
            2008
            
            2007Interest
                and dividend incomeLoans,
                including fees
            
            $
            5,846
            
            $
            6,259
            
            $
            12,235
            
            $
            11,986Securities
            
            
            356
            
            
            340
            
            
            734
            
            
            640Other
            
            
            7
            
            
            13
            
            
            33
            
            
            29Total
                interest income
            
            
            6,209
            
            
            6,612
            
            
            13,002
            
            
            12,655Interest
                expenseDeposits
            
            $
            2,780
            
            $
            3,120
            
            $
            5,782
            
            $
            5,824FHLB
                advances
            
            
            394
            
            
            360
            
            
            832
            
            
            628Subordinated
                debt
            
            
            106
            
            
            139
            
            
            233
            
            
            274Other
            
            
            2
            
            
            4
            
            
            3
            
            
            8Total
                interest expense
            
            
            3,282
            
            
            3,623
            
            
            6,850
            
            
            6,734Net
                interest income
            
            
            2,927
            
            
            2,989
            
            
            6,152
            
            
            5,921Provision
                for loan losses
            
            
            1,755
            
            
            201
            
            
            2,118
            
            
            448Net
                interest income after provision for loan losses
            
            
            1,172
            
            
            2,788
            
            
            4,034
            
            
            5,473Noninterest
                incomeService
                charges on deposit accounts
            
            
            158
            
            
            150
            
            
            326
            
            
            301Other
                income
            
            
            102
            
            
            135
            
            
            186
            
            
            276Total
                noninterest income
            
            
            260
            
            
            285
            
            
            512
            
            
            577Noninterest
                expenseSalaries
                and employee benefits
            
            
            1,125
            
            
            1,038
            
            
            2,287
            
            
            2,075Merger
                costs
            
            
            430
            
            
            —
            
            
            430
            
            
            —Occupancy
                and equipment
            
            
            442
            
            
            460
            
            
            889
            
            
            906Other
            
            
            825
            
            
            452
            
            
            1,532
            
            
            1,075Total
                noninterest expense
            
            
            2,822
            
            
            1,950
            
            
            5,138
            
            
            4,056Income
                (loss) before income taxes
            
            
            (1,390
            )
            
            1,123
            
            
            (592
            )
            
            1,994Income
                tax expense (benefit)
            
            
            (550
            )
            
            429
            
            
            (289
            )
            
            757Net
                income (loss)
            
            $
            (840
            )
            $
            694
            
            $
            (303
            )
            $
            1,237Weighted
                average:Common
                shares
            
            
            1,748,350
            
            
            1,742,673
            
            
            1,747,989
            
            
            1,742,793Dilutive
                stock options and warrants
            
            
            —
            
            
            77,146
            
            
            —
            
            
            78,362Dilutive
                shares
            
            
            1,748,350
            
            
            1,819,819
            
            
            1,747,989
            
            
            1,821,155Basic
                earnings (loss) per common share
            
            $
            (.48
            )
            $
            .40
            
            $
            (.17
            )
            $
            .71Diluted
                earnings (loss) per common share
            
            $
            (.48
            )
            $
            .38
            
            $
            (.17
            )
            $
            .68




See
      accompanying notes to unaudited consolidated financial statements.




4.


JACKSONVILLE
      BANCORP, INC.


CONSOLIDATED
      STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


(Unaudited)


(Dollars
      in thousands)







Common Stock
            
            Additional
            
            
            
            
            
            Accumulated OtherOutstanding
            
            Paid-In
            
            Retained
            
            Treasury Stock
            
            ComprehensiveShares
            
            Amount
            
            Capital
            
            Earnings
            
            Amount
            
            Income (Loss)
            
            TotalBalance
                at January 1, 2007
            
            
            1,741,688
            
            $
            17
            
            $
            18,230
            
            $
            5,241
            
            $
            (57
            )
            $
            (293
            )
            $
            23,138Comprehensive
                income:Net
                income (loss)
            
            
            
            
            
            
            
            
            
            
            
            1,237
            
            
            
            
            
            
            
            
            1,237Change
                in unrealized gain (loss) on securities available for sale, net of
                tax
                effects
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (194
            )
            
            (194
            )Total
                comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,043Purchase
                of treasury stock
            
            
            (3,320
            )
            
            
            
            
            
            
            
            
            
            
            (108
            )
            
            
            
            
            (108
            )Issuance
                of treasury stock
            
            
            3,300
            
            
            
            
            
            —
            
            
            (2
            )
            
            114
            
            
            
            
            
            112Share-based
                compensation expense
            
            
            
            
            
            
            
            
            90
            
            
            
            
            
            
            
            
            
            
            
            90Balance
                at June 30, 2007
            
            
            1,741,668
            
            $
            17
            
            $
            18,320
            
            $
            6,476
            
            $
            (51
            )
            $
            (487
            )
            $
            24,275Balance
                at January 1, 2008
            
            
            1,746,331
            
            $
            17
            
            $
            18,459
            
            $
            8,186
            
            $
            (40
            )
            $
            7
            
            $
            26,629Comprehensive
                income:Net
                income (loss)
            
            
            
            
            
            
            
            
            
            
            
            (303
            )
            
            
            
            
            
            
            
            (303
            )Change
                in unrealized gain (loss) on securities available for sale, net of
                tax
                effects
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (157
            )
            
            (157
            )Total
                comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (460
            )Purchase
                of treasury stock
            
            
            (2,224
            )
            
            
            
            
            
            
            
            
            
            
            (49
            )
            
            
            
            
            (49
            )Issuance
                of treasury stock
            
            
            3,000
            
            
            
            
            
            22
            
            
            (28
            )
            
            72
            
            
            
            
            
            66Share-based
                compensation expense
            
            
            
            
            
            
            
            
            53
            
            
            
            
            
            
            
            
            
            
            
            53Common
                stock issued
            
            
            618
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            —Exercise
                of common stock options
            
            
            200
            
            
            
            
            
            3
            
            
            
            
            
            
            
            
            
            
            
            3Balance
                at June 30, 2008
            
            
            1,747,925
            
            $
            17
            
            $
            18,537
            
            $
            7,855
            
            $
            (17
            )
            $
            (150
            )
            $
            26,242




See
      accompanying notes to unaudited consolidated financial statements.




5.


JACKSONVILLE
      BANCORP, INC.


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


(Unaudited)


(Dollars
      in thousands)







Six Months EndedJune
                30,2008
            
            2007Cash
                flows from operating activitiesNet
                income (loss)
            
            $
            (303
            )
            $
            1,237Adjustments
                to reconcile net income to net cash from
                operating activities:Depreciation
                and amortization
            
            
            263
            
            
            278Net
                amortization of deferred loan fees
            
            
            32
            
            
            74Provision
                for loan losses
            
            
            2,118
            
            
            448Premium
                amortization, net of accretion
            
            
            (7
            )
            
            11Earnings
                on Bank Owned Life Insurance
            
            
            (102
            )
            
            (87
            )Share-based
                compensation
            
            
            122
            
            
            202Loss
                on disposal of assets
            
            
            38
            
            
            —Net
                change in accrued interest receivable and other assets
            
            
            (430
            )
            
            21Net
                change in accrued expenses and other liabilities
            
            
            (913
            )
            
            (7
            )Net
                cash from operating activities
            
            
            818
            
            
            2,177Cash
                flows from investing activitiesPurchases
                of securities available for sale
            
            
            (3,000
            )
            
            (2,620
            )Proceeds
                from maturities, calls and paydown of securities available for
                sale
            
            
            4,236
            
            
            1,770Loan
                (originations) payments, net
            
            
            (32,979
            )
            
            (39,041
            )Investment
                in Bank Owned Life Insurance
            
            
            (3,500
            )
            
            —Additions
                to premises and equipment, net
            
            
            (69
            )
            
            (81
            )Net
                change in Federal Home Loan Bank stock
            
            
            957
            
            
            (1,155
            )Net
                cash from investing activities
            
            
            (34,355
            )
            
            (41,127
            )Cash
                flows from financing activitiesNet
                change in deposits
            
            
            43,955
            
            
            18,591Net
                change in overnight FHLB advances
            
            
            (9,930
            )
            
            7,000Net
                change in Fed funds purchased
            
            
            6,000
            
            
            (182
            )Proceeds
                from issuance of subordinated debt
            
            
            7,550
            
            
            —Proceeds
                from fixed rate FHLB advances
            
            
            —
            
            
            16,000Repayment
                of fixed rate FHLB advance
            
            
            (14,000
            )
            
            —Purchase
                of treasury stock
            
            
            (49
            )
            
            (108
            )Net
                cash from financing activities
            
            
            33,526
            
            
            41,301Net
                change in cash and cash equivalents
            
            
            (11
            )
            
            2,351Cash
                and cash equivalents at beginning of period
            
            
            6,035
            
            
            4,478Cash
                and cash equivalents at end of period
            
            $
            6,024
            
            $
            6,829Supplemental
                disclosures of cash flow informationCash
                paid during the period forInterest
            
            $
            7,000
            
            $
            6,545Income
                taxes
            
            
            795
            
            
            645





See
      accompanying notes to unaudited consolidated financial
      statements.


6.


JACKSONVILLE
      BANCORP, INC.


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(Dollars
      in thousands, except per share amounts)







**NOTE
      1 - BASIS OF PRESENTATION**


Jacksonville
      Bancorp, Inc. is a bank holding company headquartered in Jacksonville, Florida.
      Jacksonville Bancorp, Inc. owns and operates The Jacksonville Bank, which has
      a
      total of five operating branches in Jacksonville, Florida.




The
      consolidated financial statements include the accounts of Jacksonville Bancorp,
      Inc. and its wholly owned subsidiary, The Jacksonville Bank, and The
      Jacksonville Bank’s wholly owned subsidiary, Fountain Financial, Inc. The
      consolidated entity is referred to as the “Company” and The Jacksonville Bank
      and its subsidiary are collectively referred to as the “Bank.” The Company’s
      financial condition and operating results principally reflect those of the
      Bank.
      All intercompany balances and amounts have been eliminated. For further
      information refer to the consolidated financial statements and notes thereto
      included in the Company's Annual Report on Form 10-K for the year ended December
      31, 2007, as filed with the U.S. Securities and Exchange Commission (the “SEC”)
      on March 27, 2008.





The
      accounting and reporting policies of the Company reflect banking industry
      practice and conform to U.S. generally accepted accounting principles. In
      preparing the consolidated financial statements, management is required to
      make
      estimates and assumptions that affect the reported asset and liability balances
      and revenue and expense amounts and the disclosure of contingent assets and
      liabilities. Actual results could differ significantly from those estimates.





The
      consolidated financial information included herein as of and for the periods
      ended June 30, 2008 and 2007 is unaudited; however, such information reflects
      all adjustments which are, in the opinion of management, necessary for a fair
      statement of results for the interim periods. The December 31, 2007 consolidated
      balance sheet was derived from the Company's December 31, 2007 audited
      consolidated financial statements.





**Adoption
      of New Accounting Standards**





In
      September 2006, the FASB issued Statement No. 157, *Fair
      Value Measurements* . 
      This Statement defines fair value, establishes a framework for measuring fair
      value and expands disclosures about fair value measurements.  This
      Statement establishes a fair value hierarchy about the assumptions used to
      measure fair value and clarifies assumptions about risk and the effect of a
      restriction on the sale or use of an asset.  The standard is effective for
      fiscal years beginning after November 15, 2007.  In February 2008, the FASB
      issued Staff Position (FSP) 157-2, *Effective
      Date of FASB Statement No. 157* . 
      This FSP delays the effective date of FAS 157 for all nonfinancial assets and
      nonfinancial liabilities, except those that are recognized or disclosed at
      fair
      value on a recurring basis (at least annually) to fiscal years beginning after
      November 15, 2008, and interim periods within those fiscal years.  The
      impact of adoption was not material.





In
      February 2007, the FASB issued Statement No. 159, *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* . 
      The standard provides companies with an option to report selected financial
      assets and liabilities at fair value and establishes presentation and disclosure
      requirements designed to facilitate comparisons between companies that choose
      different measurement attributes for similar types of assets and
      liabilities.  The Company did not elect the fair value option for any
      financial assets or financial liabilities as of January 1, 2008, the
      effective date of the standard.




7.





JACKSONVILLE
      BANCORP, INC.


NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 (Dollars
        in thousands, except per share amounts)




In  September
      2006, the FASB Emerging Issues Task Force finalized Issue No.  06-4,
      Accounting for D eferred
      Compensation and Postretirement Benefit  Aspects
      of Endorsement Split-Dollar Life Insurance Arrangements. This  issue
      requires that a liability be recorded during the service period when  a
      split-dollar life insurance agreement continues  after
      participants’  employment  or
      retirement. The required accrued liability will be based on  either
      the post-employment benefit cost for the continuing life insurance  or
      based
      on the future death benefit depending on the contractual terms of  the
      underlying  agreement.
      This issue is effective for fiscal years  beginning
      after December 15, 2007. T he
      adoption of EITF 06-4 had
      no material
      impact on the financial statements.




**NOTE
      2 - LOAN PORTFOLIO COMPOSITION**


The
      composition of the Bank’s loan portfolio at June 30, 2008 and December 31, 2007
      is indicated below along with the growth from the prior year end.


% Increase (Decrease)Total Loans
            
            Total Loans
            
            from December 31, 2007June 30, 2008
            
            December 31, 2007
            
            to June 30, 2008Real
                estate mortgage loans:Commercial
            
            $
            221,960
            
            $
            210,614
            
            
            5.4
            %Residential
            
            
            84,721
            
            
            75,141
            
            
            12.7
            %Construction(1)
            
            
            32,830
            
            
            29,737
            
            
            10.4
            %Farmland
            
            
            2,582
            
            
            2,325
            
            
            11.1
            %Commercial
                loans
            
            
            28,190
            
            
            20,291
            
            
            38.9
            %Consumer
                loans
            
            
            4,415
            
            
            4,631
            
            
            (4.7
            )%Subtotal
            
            
            374,698
            
            
            342,739
            
            
            9.3
            %Less:
                Net deferred loan fees
            
            
            (391
            )
            
            (358
            )
            
            9.2
            %Total
            
            $
            374,307
            
            $
            342,381
            
            
            9.3
            %





(1)
            Includes
                construction, land development and other land
                loans.


8.


JACKSONVILLE
      BANCORP, INC.


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(Dollars
      in thousands, except per share amounts)







**NOTE
      3 - ALLOWANCE FOR LOAN LOSSES**


Activity
      in the allowance for loan losses for the six months ended June 30, 2008 and
      2007
      follows:





Six Months Ended June 30,2008
            
            2007Balance,
                January 1
            
            $
            3,116
            
            $
            2,621Provisions
                for loan losses charged to expense
            
            
            2,118
            
            
            448Loans
                charged off
            
            
            (1,026
            )
            
            (24
            )Recoveries
                of loans previously charged off
            
            
            5
            
            
            3Balance,
                June 30
            
            $
            4,213
            
            $
            3,048





Impaired
      loans were as follows:





June
                30,
            
            December
                31,2008
            
            2007Loans
                with no allocated allowance for loan losses
            
            $
            478
            
            $
            590Loans
                with allocated allowance for loan losses
            
            
            9,016
            
            
            100Total
            
            $
            9,494
            
            $
            690Amount
                of the allowance for loan losses allocated
            
            $
            803
            
            $
            50




9.


JACKSONVILLE
      BANCORP, INC.


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(Dollars
      in thousands, except per share amounts)









**NOTE
      4 - CAPITAL ADEQUACY**


Federal
      banking regulators have established certain capital adequacy standards required
      to be maintained by banks and bank holding companies. The minimum requirements
      established in the regulations are set forth in the table below, along with
      the
      actual ratios at June 30, 2008 and December 31, 2007:





**Actual**
            
            **For Capital**
              **Adequacy**
              **Purposes**
            
            **To Be Well**
              **Capitalized Under**
              **Prompt Corrective**
              **Action Provisions**Amount
            
            Ratio
            
            Amount
            
            Ratio
            
            Amount
            
            RatioJune
                30, 2008Total
                Capital to risk weighted assetsConsolidated
            
            $
            45,156
            
            
            11.91
            %
            $
            30,338
            
            
            8.00
            %
            
            N/A
            
            
            N/ABank
            
            
            39,874
            
            
            10.50
            %
            
            30,389
            
            
            8.00
            %
            $
            37,986
            
            
            10.00
            %Tier
                1 (Core) Capital to Risk weighted assetsConsolidated
            
            
            35,101
            
            
            9.26
            %
            
            15,169
            
            
            4.00
            %
            
            N/A
            
            
            N/ABank
            
            
            35,660
            
            
            9.39
            %
            
            15,195
            
            
            4.00
            %
            
            22,792
            
            
            6.00
            %Tier
                1 (Core) Capital to average assetsConsolidated
            
            
            35,101
            
            
            8.40
            %
            
            16,716
            
            
            4.00
            %
            
            N/A
            
            
            N/ABank
            
            
            35,660
            
            
            8.54
            %
            
            16,706
            
            
            4.00
            %
            
            20,882
            
            
            5.00
            %December
                31, 2007Total
                Capital to risk weighted assetsConsolidated
            
            $
            36,739
            
            
            10.60
            %
            $
            27,715
            
            
            8.00
            %
            
            N/A
            
            
            N/ABank
            
            
            35,313
            
            
            10.16
            %
            
            27,819
            
            
            8.00
            %
            $
            34,774
            
            
            10.00
            %Tier
                1 (Core) Capital to Risk weighted assetsConsolidated
            
            
            33,623
            
            
            9.70
            %
            
            13,858
            
            
            4.00
            %
            
            N/A
            
            
            N/ABank
            
            
            32,197
            
            
            9.26
            %
            
            13,910
            
            
            4.00
            %
            
            20,864
            
            
            6.00
            %Tier
                1 (Core) Capital to average assetsConsolidated
            
            
            33,623
            
            
            8.68
            %
            
            15,487
            
            
            4.00
            %
            
            N/A
            
            
            N/ABank
            
            
            32,197
            
            
            8.31
            %
            
            15,496
            
            
            4.00
            %
            
            19,370
            
            
            5.00
            %





In
      addition, under such standards, a well-capitalized bank is one that has a total
      risk-based capital ratio equal to or greater than 10%, a Tier 1 risk-based
      capital ratio equal to or greater than 6%, and a Tier 1 leverage capital ratio
      equal to or greater than 5%. Management believes, as of June 30, 2008, that
      the
      Bank is well capitalized for prompt corrective action purposes. The Company
      has
      included in Tier 1 Capital and Total Capital the trust preferred securities
      that
      were issued in June 2004, December 2006 and June 2008.


10.


JACKSONVILLE
      BANCORP, INC.


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(Dollars
      in thousands, except per share amounts)







**NOTE
      5 - FEDERAL HOME LOAN BANK ADVANCES**


At
      June
      30, 2008 and December 31, 2007, advances from the Federal Home Loan Bank (FHLB)
      were as follows:





2008
            
            2007Overnight
                advance maturing daily at a daily variable rate of 2.57% and 4.40%
                at June
                30, 2008 and December 31, 2007, respectively
            
            $
            18,900
            
            $
            28,830Advances
                maturing January 11, 2008 at a fixed rate of 5.26%
            
            
            —
            
            
            6,000Advances
                maturing January 26, 2008 at a fixed rate of 4.65%
            
            
            —
            
            
            5,000Advances
                maturing April 11, 2008 at a fixed rate of 4.36%
            
            
            —
            
            
            3,000Advances
                maturing July 28, 2008 at a fixed rate of 4.59%
            
            
            5,000
            
            
            5,000Convertible
                advances maturing June 8, 2010 with a quarterly call option beginning
                June
                9, 2008 at a fixed rate of 4.99%
            
            
            5,000
            
            
            5,000Convertible
                advances maturing June 8, 2012 with a quarterly call option beginning
                September 10, 2007 at a fixed rate of 4.68%
            
            
            5,000
            
            
            5,000Convertible
                advances maturing August 13, 2010 with a quarterly call option beginning
                August 13, 2008 at a fixed rate of 4.51%
            
            
            5,000
            
            
            5,000Convertible
                advances maturing October 4, 2010 with a quarterly call option beginning
                October 6, 2008 at a fixed rate of 4.15%
            
            
            5,000
            
            
            5,000$
            43,900
            
            $
            67,830





Each
      advance is payable at its maturity date, with a prepayment penalty for the
      fixed
      rate advances. The advances are collateralized by a blanket lien arrangement
      of
      the Company’s first mortgage loans, second mortgage loans and commercial real
      estate loans.


11.


JACKSONVILLE
      BANCORP, INC.


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(Dollars
      in thousands, except per share amounts)







**NOTE
      6 - FAIR VALUE**


Statement
      157 establishes a fair value hierarchy which requires an entity to maximize
      the
      use of observable inputs and minimize the use of unobservable inputs when
      measuring fair value. The standard describes three levels of inputs that may
      be
      used to measure fair value:





Level
      1:
      Quoted prices (unadjusted) or identical assets or liabilities in active markets
      that the entity has the ability to access as of the measurement
      date.





Level
      2:
      Significant other observable inputs other than Level 1 prices such as quoted
      prices for similar assets or liabilities; quoted prices in markets that are
      not
      active; or other inputs that are observable or can be corroborated by observable
      market data.





Level
      3:
      Significant unobservable inputs that reflect a reporting entity’s own
      assumptions about the assumptions that market participants would use in pricing
      an asset or liability.





Assets
      measured at fair value on a recurring basis as summarized below:





**Fair Value Measurements at June 30, 2008 Using**June 30,
              2008
            
            Quoted Prices in
              Active Markets for
              Identical Assets
            
            Significant Other
              Observable
              Inputs
            
            Significant
              Unobservable
              InputsAssets:Securities
                available for sale
            
            $
            28,246
            
            
            —
            
            $
            28,246
            
            
            —





Security
      fair values are based on market prices or dealer quotes on securities with
      similar characteristics.




Assets
      measured at fair value on a non-recurring basis are summarized
      below:





**Fair Value Measurements at June 30, 2008 Using**June 30,
              2008
            
            Quoted Prices in
              Active Markets for
              Identical Assets
            
            Significant Other
              Observable
              Inputs
            
            Significant
              Unobservable
              InputsAssets:Impaired
                Loans
            
            $
            8,213
            
            
            —
            
            $
            8,213
            
            
            —





The
      following represent impairment charges recognized during the period:


Impaired
      loans, which are measured for impairment using discounted cash flows or the
      fair
      value of the collateral for collateral dependent loans, had a carrying amount
      of
      $9,016, with a valuation allowance of $803, resulting in an additional provision
      for loan losses of $736 for the period. Additional impaired loans, not measured
      using levels of inputs to measure fair value, had a carrying amount of $478.
      Collateral dependent impaired loans, valued under Level 2, were measured using
      current appraised values along with information on recent market transactions;
      loans valued under Level 3 were valued based on the present value of expected
      future cash flows.


12.





JACKSONVILLE
      BANCORP, INC.





MANAGEMENT’S
      DISCUSSION AND ANALYSIS


OF
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS







**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**




**General**





Jacksonville
      Bancorp, Inc. (“Bancorp”) was incorporated on October 24, 1997 and was organized
      to conduct the operations of The Jacksonville Bank (the “Bank”). The Bank is a
      Florida state-chartered commercial bank that opened for business on May 28,
      1999, and its deposits are insured by the Federal Deposit Insurance Corporation.
      The Bank provides a variety of community banking services to businesses and
      individuals in the greater Jacksonville area of Northeast Florida. During 2000,
      the Bank formed Fountain Financial, Inc., a wholly owned subsidiary. The primary
      business activities of Fountain Financial, Inc. consist of referral of our
      customers to third parties for the sale of insurance products. Bancorp, the
      Bank
      and Fountain Financial, Inc. are collectively referred to herein as the
“Company.”





**Forward
      Looking Statements**





“Management's
      Discussion and Analysis of Financial Condition and Results of Operations” and
“Quantitative and Qualitative Disclosures About Market Risk” contain various
      forward-looking statements with respect to financial performance and business
      matters. Such statements are generally contained in sentences including the
      words or phrases “will likely result,” “are expected to,” “is anticipated,” or
“estimate,” “project” or “believe.” The Company cautions that these
      forward-looking statements are subject to numerous assumptions, risks and
      uncertainties, including changes in local economic conditions, changes in
      regulatory requirements, fluctuations in interest rates, demand for products,
      and competition, and, therefore, actual results could differ materially from
      those contemplated by the forward-looking statements. In addition, the Company
      assumes no duty to update forward-looking statements to reflect events or
      circumstances after the date of such statements.





**Business
      Strategy**





Our
      primary business segment is community banking and consists of attracting
      deposits from the general public and using such deposits and other sources
      of
      funds to originate commercial business loans, commercial real estate loans,
      residential mortgage loans and a variety of consumer loans. We also invest
      in
      securities backed by the United States Government, and agencies thereof, as
      well
      as municipal tax-exempt bonds. Our profitability depends primarily on our net
      interest income, which is the difference between the income we receive from
      our
      loan and securities investment portfolios and our costs incurred on our
      deposits, the Federal Home Loan Bank (“FHLB”) advances, and other sources of
      funding. Net interest income is also affected by the relative amounts of
      interest-earning assets and interest-bearing liabilities. Net interest income
      is
      generated as the relative amounts of interest-earning assets grow in relation
      to
      the relative amounts of interest-bearing liabilities. In addition, the level
      of
      noninterest income earned and noninterest expenses incurred also affects
      profitability. Included in noninterest income are service charges earned on
      deposit accounts and increases in cash surrender value of Bank Owned Life
      Insurance (“BOLI”). Included in noninterest expense are costs incurred for
      salaries and employee benefits, occupancy and equipment expenses, data
      processing expenses, marketing and advertising expenses, federal deposit
      insurance premiums and legal and professional fees.





Our
      goal
      is to sustain profitable, controlled growth by focusing on increasing our loan
      and deposit market share in the Northeast Florida market by developing new
      financial products, services and delivery channels; closely managing yields
      on
      interest-earning assets and rates on interest-bearing liabilities; focusing
      on
      noninterest income opportunities; controlling the growth of noninterest
      expenses; and maintaining strong asset quality. We have initiated programs
      to
      expand our scope of services and achieve these goals. The Bank has adopted
      a
      philosophy of seeking out and retaining the best available personnel for
      positions of responsibility which we believe will provide us with a competitive
      edge in the local banking industry. The Bank opened its fourth and fifth
      locations in 2006 in key areas of Jacksonville, which provide additional
      visibility and access to businesses and individuals, that will likely result
      in
      additional loan and deposit opportunities.


13.




Our
      operations are influenced by the local economic conditions and by policies
      of
      financial institution regulatory authorities. Fluctuations in interest rates,
      due to factors such as competing financial institutions as well as the Federal
      Reserve’s decisions on changes in interest rates, impact interest-earning assets
      and our cost of funds and, thus, our net interest margin. In addition, the
      local
      economy and real estate market of Northeast Florida and the demand for our
      products and loans impacts our margin. The local economy and viability of local
      businesses can also impact the ability of our customers to make payments on
      loans, thus impacting our loan portfolio. The Company evaluates these factors
      when valuing its allowance for loan losses and believes that the local economy
      is stable. However, the Company believes that the local real estate market
      has
      softened somewhat in the residential real estate area. The Company also believes
      its underwriting procedures are relatively conservative and, as a result, the
      Company is not being any more affected than the overall market in the current
      economic downturn.





In
      the
      six months of 2008, the Federal Reserve reduced the federal funds rate four
      times. At December 31, 2007, the federal funds rate was 4.25%. The Federal
      Reserve reduced the federal funds rate to 3.50% on January 22, 2008, to 3.0%
      on
      January 30, 2008, to 2.25% on March 18, 2008 and to 2.0% on April 30, 2008.
      In
      anticipation, the Company positioned itself to be in a slightly liability
      sensitive position, which means the pricing on our earning assets will reset
      to
      the lower short-term rates at a slower pace than our interest bearing
      liabilities. This position would typically have a positive impact on the net
      interest margin. However, other variables, such as liquidity needs, competition
      and the need to pursue alternative funding sources, have offset the benefits
      of
      the pricing resets.





On
      January 28, 2008, Bancorp entered into an Agreement and Plan of Merger (the
      “Merger Agreement”) with Heritage Bancshares, Inc. (“Heritage”) pursuant to
      which, subject to the satisfaction or waiver of the conditions contained
      therein, Heritage would merge with and into Bancorp (the “Merger”), with Bancorp
      remaining as the surviving entity.





On
      June
      24, 2008, Bancorp announced that, through mutual agreement, the Merger Agreement
      with Heritage had been terminated. Both companies attributed the amicable
      termination of the deal to the current economic climate in the banking industry
      which changed the benefits of the merger for their respective
      stockholders.





**Introduction**





In
      the
      following pages, management presents an analysis of the financial condition
      of
      the Company as of June 30, 2008 compared to December 31, 2007, and the results
      of operations for the six months ended June 30, 2008 compared with the same
      period in 2007. This discussion is designed to provide a more comprehensive
      review of the operating results and financial position than could be obtained
      from an examination of the financial statements alone. This analysis should
      be
      read in conjunction with the interim financial statements and related footnotes
      included herein.




14.





**Comparison
      of Financial Condition at June 30, 2008 and December 31,
      2007**





Total
      assets increased $32.2 million, or 8.2%, from $392 million at December 31,
      2007
      to $424.2 million at June 30, 2008. During the six months ended June 30, 2008,
      the Company experienced net loan growth of $30.8 million, or 9.1%. The increase
      in net loans was driven by increases in commercial real estate loans of $11.3
      million, or 5.4%, residential real estate loans of $9.6 million, or 12.7%,
      construction real estate loans of $3.1 million, or 10.4%, and commercial loans
      of $7.9 million, or 38.9%. The Company funded the increase in earning assets
      through an increase in deposits of $43.9 million, an increase in federal funds
      purchased of $6.0 million and an increase of subordinated debt of $7.5 million
      offset by a decrease in FHLB advances by $23.9 million.





Total
      deposits increased $43.9 million, or 15.2%, from $288.9 million at December 31,
      2007 to $332.8 million at June 30, 2008. During the six months ended June
      30, 2008, noninterest-bearing deposits increased $4.0 million to $39.4
      million. Money market, NOW and savings deposits decreased $8.1 million to
      $108.1 million. Time deposits increased $48.0 million to $185.0
      million.





Investment
      securities available for sale decreased $1.5 million to $28.2 million at June
      30, 2008. During the six months ended June 30, 2008, we purchased $3.0 million
      of securities and received $4.2 million in proceeds from maturities, calls
      and
      principal repayments. Of the $3.0 million purchased in the current year,
      approximately $1.3 million was invested in mortgage-backed securities and $1.7
      million was invested in U.S. government agency securities.





Bank-owned
      life insurance increased $3.6 million primarily due to the purchase of an
      additional $3.5 million BOLI contract entered into by the Bank during the
      second quarter.





Subordinated
      debt increased by $7.6 million as a result of a private placement offering
      of
      trust preferred securities. The securities were issued at a rate 3.75% over
      90-day LIBOR rates. The Company has treated the trust preferred securities
      as
      Tier 1 capital up to the maximum amount allowed and the remainder as Tier 2
      capital for federal regulatory purposes.





Total
      shareholders' equity decreased by $387,000, or 1.5%, from $26.6 million at
      December 31, 2007 to $26.2 million at June 30, 2008. The decrease is mainly
      attributable to a net loss of $303,000. At June 30, 2008, the Company had
      8,000,000 authorized shares of $.01 par value common stock, of which 1,748,799
      shares were issued and 1,747,925 shares were outstanding. In addition, the
      Company had 2,000,000 authorized shares of $.01 par value preferred stock,
      none
      of which were issued or outstanding at June 30, 2008.




**Comparison
      of Operating Results for the Six Months Ended June 30, 2008 and
      2007**





**Net
      Income**





There
      was
      a net loss for the first six months of 2008 of $303,000, compared to a $1.2
      million net income in the first six months of 2007. On a diluted per share
      basis, the net loss was $.17 for the six months ended June 30, 2008
      compared to net income of $.68 for the six months ended June 30, 2007. The
      net
      loss was driven primarily by additional provisions for loan losses, lower net
      interest margin, and expenses related to the termination of the
      merger.


15.





**Net
      Interest Income**





Net
      interest income, the difference between interest earned on interest-earning
      assets and interest paid on interest-bearing liabilities, increased $231,000,
      or
      3.9% from $5.9 million for the six months ended June 30, 2007 to $6.2 million
      for the six months ended June 30, 2008. This increase resulted from an increase
      in interest income of $347,000, offset by an increase in interest expense of
      $116,000, driven primarily by an increase in time deposits, our highest cost
      deposit category. Additional funding from short-term borrowings and FHLB
      advances also increased interest expense by $204,000. The primary driver in
      the
      increase in net interest income will continue to be the growth in our earning
      assets.





When
      comparing the first six months of 2008 to the same period last year, the Company
      experienced growth in its loan portfolio of 9.3%, compared to 13.7% for the
      same
      period in the previous year, with the most significant impact occurring in
      commercial loans. The Company also experienced growth in deposit products,
      with
      the largest increase occurring in time deposit accounts.





Many
      of
      the Bank’s loans are indexed to the prime rate. The lower level of the prime
      rate in the first six months of 2008 compared to the comparative period in
      2007
      is reflected in the lower average yield of the loan portfolio due to lower
      rates
      earned on variable rate loans and new loan production. The average yield on
      interest-earning assets for the first six months of 2008 was 6.63%, which was
      a
      decrease of 113 basis points, compared to the 7.76% yield earned during the
      first six months of 2007.





The
      average cost of interest-bearing liabilities decreased 76 basis points from
      4.79% in the first six months of 2007 to 4.03% in the comparable period in
      2008.
      The average cost of interest-bearing deposits and all interest-bearing
      liabilities reflect, in part, the change in the funding mix for the first six
      months of 2008 as compared to the same period in 2007.





The
      net
      interest margin decreased by 49 basis points from 3.63% to 3.14% when comparing
      the first six months of 2008 to the same period last year. This decrease is
      mainly the result of the rapid reduction in short-term rates by the Federal
      Reserve which immediately affected our variable priced loans offset by a lagging
      in deposit repricing due to maturities of time deposits and the competitive
      nature of the funding markets. Additionally, $7.8 million in loans were placed
      on non-accrual status during the second quarter. Furthermore, proceeds from
      maturity, amortization and prepayment of loans and securities continue to be
      invested at current market rates. The Company closely monitors its cost of
      funds
      and has taken action to reduce such costs through deposit gathering initiatives
      focused on generating lower cost demand, money market and savings accounts.
      In
      the current interest rate environment, the margin may contract further; however,
      as stated above, management has implemented various strategies to reduce the
      rising cost of funding.




16.


***Average
      Balance Sheet; Interest Rates and Interest
      Differential.*** **** The
      following table sets forth the average daily balances for each major category
      of
      assets, liabilities and shareholders’ equity as well as the amounts and average
      rates earned or paid on each major category of interest-earning assets and
      interest-bearing liabilities.




Six
                  Months Ended June 30,2008
              
              2007Average
              
              
              
              Average
              
              Average
              
              
              
              AverageBalance
              
              Interest
              
              Rate
              
              Balance
              
              Interest
              
              Rate(Dollars
                  in thousands)Interest-earning
                  assets:Loans
                  (1)
              
              $
              360,561
              
              $
              12,235
              
              
              6.82
              %
              $
              299,608
              
              $
              11,986
              
              
              8.07
              %Securities
                  (2)
              
              
              31,813
              
              
              734
              
              
              4.64
              
              
              28,343
              
              
              640
              
              
              4.55Other
                  interest-earning assets (3)
              
              
              2,191
              
              
              33
              
              
              3.03
              
              
              777
              
              
              29
              
              
              7.53Total
                  interest-earning assets
              
              
              394,565
              
              
              13,002
              
              
              6.63
              
              
              328,728
              
              
              12,655
              
              
              7.76Noninterest-earning
                  assets (4)
              
              
              15,990
              
              
              
              
              
              
              
              
              14,058Total
                  assets
              
              $
              410,555
              
              
              
              
              
              
              
              $
              342,786Interest-bearing
                  liabilities:Savings
                  deposits
              
              $
              14,816
              
              $
              234
              
              
              3.18
              
              $
              10,054
              
              $
              158
              
              
              3.17NOW
                  deposits
              
              
              7,350
              
              
              7
              
              
              .19
              
              
              7,360
              
              
              6
              
              
              .16Money
                  market deposits
              
              
              90,749
              
              
              1,194
              
              
              2.65
              
              
              126,679
              
              
              2,846
              
              
              4.53Time
                  deposits
              
              
              180,645
              
              
              4,347
              
              
              4.84
              
              
              108,232
              
              
              2,814
              
              
              5.24FHLB
                  advances
              
              
              40,508
              
              
              832
              
              
              4.14
              
              
              23,811
              
              
              628
              
              
              5.32Subordinated
                  debt
              
              
              7,456
              
              
              233
              
              
              6.28
              
              
              7,000
              
              
              274
              
              
              7.89Other
                  interest-bearing liabilities (5)
              
              
              286
              
              
              3
              
              
              2.11
              
              
              246
              
              
              8
              
              
              6.56Total
                  interest-bearing liabilities
              
              
              341,810
              
              
              6,850
              
              
              4.03
              
              
              283,382
              
              
              6,734
              
              
              4.79Noninterest-bearing
                  liabilities
              
              
              41,515
              
              
              
              
              
              
              
              
              35,728Shareholders'
                  equity
              
              
              27,230
              
              
              
              
              
              
              
              
              23,676Total
                  liabilities and shareholders' equity
              
              $
              410,555
              
              
              
              
              
              
              
              $
              342,786Net
                  interest income
              
              
              
              
              $
              6,152
              
              
              
              
              
              
              
              $
              5,921Interest
                  rate spread (6)
              
              
              
              
              
              
              
              
              2.60
              %
              
              
              
              
              
              
              
              2.97
              %Net
                  interest margin (7)
              
              
              
              
              
              
              
              
              3.14
              %
              
              
              
              
              
              
              
              3.63
              %







(1)
            Includes
                nonaccrual loans.


(2)
            Due
                to immateriality, the interest income and yields related to certain
                tax
                exempt assets have not been adjusted to reflect a fully taxable equivalent
                yield.


(3)
            Includes
                federal funds sold.


(4)
            For
                presentation purposes, the BOLI acquired by the Bank has been included
                in
                noninterest-earning assets.


(5)
            Includes
                federal funds purchased.


(6)
            Interest
                rate spread represents the difference between the average yield on
                interest-earning assets and the average cost of interest-bearing
                liabilities.


(7)
            Net
                interest margin is net interest income divided by average interest-earning
                assets.


17.


***Rate/Volume
      Analysis.*** **** The
      following table sets forth the effect of changes in volumes, changes in rates,
      and changes in rate/volume on tax-equivalent interest income, interest expense
      and net interest income.




Six Months Ended June 30,2008 Versus 2007 (1)Increase (decrease) due to changes in:NetVolume
              
              Rate
              
              Change(Dollars
                  in thousands)Interest
                  income:Loans
              
              $
              2,226
              
              $
              (1,977
              )
              $
              249Securities
              
              
              80
              
              
              14
              
              
              94Other
                  interest-earning assets
              
              
              29
              
              
              (25
              )
              
              4Total
                  interest income
              
              
              2,335
              
              
              (1,988
              )
              
              347Interest
                  expense:Savings
                  deposits
              
              
              75
              
              
              1
              
              
              76NOW
                  deposits
              
              
              —
              
              
              1
              
              
              1Money
                  market deposits
              
              
              (671
              )
              
              (981
              )
              
              (1,652
              )Time
                  deposits
              
              
              1,757
              
              
              (224
              )
              
              1,533FHLB
                  advances
              
              
              366
              
              
              (162
              )
              
              204Subordinated
                  debt
              
              
              17
              
              
              (58
              )
              
              (41
              )Other
                  interest-bearing liabilities
              
              
              1
              
              
              (6
              )
              
              (5
              )Total
                  interest expense
              
              
              1,545
              
              
              (1,429
              )
              
              116Increase
                  in net interest income
              
              $
              790
              
              $
              (559
              )
              $
              231








(1)
            The
                change in interest due to both rate and volume has been allocated
                to the
                volume and rate components in proportion to the relationship of the
                dollar
                amounts of the absolute change in
                each.




**Critical
      Accounting Policies**





A
      critical accounting policy is one that is both very important to the portrayal
      of the Company’s financial condition and requires management’s most difficult,
      subjective or complex judgments. The circumstances that make these judgments
      difficult, subjective or complex have to do with the need to make estimates
      about the effect of matters that are inherently uncertain. Based on this
      definition, the Company’s primary critical accounting policy is the
      establishment and maintenance of an allowance for loan losses.





The
      allowance for loan loss is established through a provision for loan loss charged
      to expense. Loans are charged against the allowance for loan loss when
      management believes that the collectibility of the principal is unlikely. The
      allowance is an amount that management believes will be adequate to absorb
      inherent probable and estimable incurred losses on existing loans that may
      become uncollectible based on evaluations of the collectibility of the loans.
      The evaluations take into consideration such objective factors as changes in
      the
      nature and volume of the loan portfolio and historical loss experience. The
      evaluation also considers certain subjective factors such as overall portfolio
      quality, review of specific problem loans and current economic conditions that
      may affect the borrowers’ ability to pay. The level of allowance for loan loss
      is also impacted by increases and decreases in loans outstanding because either
      more or less allowance is required as the amount of the Company’s credit
      exposure changes. To the extent actual loan losses differ materially from
      management’s estimate of these subjective factors, loan growth/run-off
      accelerates, or the mix of loan types changes, the level of provision for loan
      loss, and related allowance can, and will, fluctuate.


18.




Additional
      information with regard to the Company’s methodology and reporting of the
      allowance for loan losses is included in the Company’s Annual Report on Form
      10-K for the year ended December 31, 2007, as filed with the SEC on March 27,
      2008.





**Asset
      Quality**





The
      Company has identified certain assets as nonperforming. These assets include
      nonaccruing loans, loans that are contractually past due 90 days or more as
      to
      principal or interest payments and still accruing, and foreclosed real estate.
      Loans are placed on nonaccrual status when management has concerns regarding
      its
      ability to collect the outstanding loan principal and interest amounts and
      typically when such loans are more than 90 days past due. These loans present
      more than the normal risk that the Company will be unable to eventually collect
      or realize their full carrying value. Loans are impaired when it is considered
      probable that management will not collect the outstanding loan principal and
      interest amounts according to the loan’s contractual terms or realize the full
      carrying value of the loan. During the first six months in 2008, the Company
      experienced an increase in impaired loans from $690,000 to $8.8 million driven
      by an increase in nonperforming loans of $8.1 million and one additional loan
      in
      the amount of $700,000 that was identified as a result of the expanded efforts
      of management as discussed under the Allowance and Provision for Loan Losses
      section below. The Company’s nonperforming assets at June 30, 2008 and December
      31, 2007 are as follows:





June
                30,
            
            December
                31,2008
            
            2007(Dollars
                in thousands)Nonaccruing
                loans
            
            $
            8,794
            
            $
            690Loans
                past due over 90 days still on accrual
            
            
            —
            
            
            —Total
                nonperforming loans
            
            
            8,794
            
            
            690Foreclosed
                assets, net
            
            
            —
            
            
            —Total
                nonperforming assets
            
            $
            8,794
            
            $
            690Allowance
                for loan losses
            
            $
            4,213
            
            $
            3,116Nonperforming
                loans and foreclosed assets as a percent of total assets
            
            
            2.07
            %
            
            .18
            %Nonperforming
                loans as a percent of gross loans
            
            
            2.35
            %
            
            .20
            %Allowance
                for loan losses as a percent of nonperforming loans
            
            
            47.91
            %
            
            451.59
            %





The
      Company critically evaluates all requests for additional funding on classified
      loans to determine whether the borrower has the capacity and willingness to
      repay. Any requests of this nature require concurrence by the Loan Committee
      of
      the Board of Directors.





**Allowance
      and Provision for Loan Losses**





The
      allowance for loan losses grew by $1.1 million during the first six months
      of
      2008, amounting to $4.2 million at June 30, 2008, as compared to $3.1
      million at December 31, 2007. The allowance represented approximately 1.12%
      of
      total loans at June 30, 2008 and .91% at December 31, 2007. During the first
      six
      months of 2008, the Company had charge-offs of $1.0 million, recoveries of
      $5,000 and recorded a $2.1 million provision for loan losses compared to
      charge-offs of $24,000, recoveries of $3,000 and a provision for loan losses
      of
      $448,000 for the first six months of 2007. The larger provision for loan losses
      in 2008 was driven primarily from continued loan growth and the Bank’s expanded
      efforts to identify potential losses inherent in the portfolio. The Bank’s
      increased identification efforts of potential losses in the portfolio are based
      on a variety of specific factors, including the Company’s and peer banks’
experiences as well as industry and economic trends. As a result of the expanded
      efforts, management does not believe that the same level of charge-offs
      experienced during the six-month period of 2008 will be experienced in future
      periods. Impaired loans increased to $9.5 million as of June 30, 2008; of this
      amount, $803,000 was specifically allocated to the allowance for loan losses
      which is deemed sufficient to absorb any future potential
      losses.


19.





The
      allowance for loan losses is a valuation allowance for credit losses in the
      loan
      portfolio. Management has adopted a methodology to properly analyze and
      determine an adequate loan loss allowance. The analysis is based on sound,
      reliable and well documented information and is designed to support an allowance
      that is adequate to absorb all estimated incurred losses in the Company’s loan
      portfolio. Due to their similarities, the Company has grouped the loan portfolio
      into three components. The components are residential real estate, consumer
      loans and commercial loans. The Company has created a loan classification system
      to properly calculate the allowance for loan losses. Commercial and commercial
      real estate loans are individually evaluated for impairment. If a loan is
      impaired, a portion of the allowance is allocated so that the loan is reported,
      net, at the present value of estimated future cash flows using the loan’s
      existing rate or at the fair value of collateral if repayment is expected solely
      from the sale of the collateral. Large groups of smaller balance homogeneous
      loans, such as consumer and residential real estate loans, are collectively
      evaluated for impairment and, accordingly, they are not separately identified
      for impairment disclosures.





In
      estimating the overall exposure to loss on impaired loans, the Company has
      considered a number of factors, including the borrower’s character, overall
      financial condition, resources and payment record, the prospects for support
      from any financially responsible guarantors, and the realizable value of any
      collateral. The Company also considers other internal and external factors
      when
      determining the allowance for loan losses. These factors include, but are not
      limited to, changes in national and local economic conditions, commercial
      lending staff limitations, impact from lengthy commercial loan workout and
      charge-off periods, loan portfolio concentrations and trends in the loan
      portfolio.





Bank
      regulators recently issued “Joint Guidance on Concentrations in Commercial Real
      Estate Lending.” This document outlines regulators’ concerns regarding the high
      level of growth in commercial real estate loans on banks’ balance sheets. Many
      banks, especially those in Florida, have seen a substantial increase in exposure
      to commercial real estate loans. The Company has and will continue to pursue
      fundamentally sound commercial real estate lending opportunities that fit within
      its lending parameters. The ongoing growth and concentration in this category
      is
      considered when analyzing the adequacy of the loan loss allowance based on
      sound, reliable and well documented information.





Based
      on
      the results of the analysis performed by management at June 30, 2008, the
      allowance for loan loss is considered to be adequate to absorb estimated loan
      losses in the portfolio as of that date. As more fully discussed in the
“Critical Accounting Policies” section of this discussion and analysis of
      financial condition and results of operations, the process for estimating credit
      losses and determining the allowance for loan losses as of any balance sheet
      date is subjective in nature and requires material estimates. Actual results
      could differ significantly from these estimates.





The
      amount of future charge-offs and provisions for loan losses could be affected
      by, among other things, economic conditions in Jacksonville, Florida, and the
      surrounding communities. Such conditions could affect the financial strength
      of
      the Company’s borrowers and do affect the value of real estate collateral
      securing the Company’s mortgage loans. Loans secured by real estate represent
      approximately 91% of the Company’s total loans outstanding at June 30, 2008. In
      recent years, economic conditions in Jacksonville and the surrounding
      communities have been strong and real estate values have appreciated in a
      healthy manner. Presently, economic conditions remain relatively stable in
      this
      market and real estate values have experienced some softening. Residential
      real
      estate values have experienced greater volatility and have declined in most
      areas. Conditions and values could deteriorate in the future, and such
      deterioration could be substantial. If this were to occur, some of the Company’s
      borrowers may be unable to make the required contractual payments on their
      loans, and the Company may be unable to realize the full carrying value of
      such
      loans through foreclosure. However, management believes that the Company should
      not be any more affected than the overall market.


20.




Future
      provisions and charge-offs could also be affected by environmental impairment
      of
      properties securing the Company’s mortgage loans. Under the Company’s current
      policy, an environmental audit is required on practically all commercial-type
      properties that are considered for a mortgage loan. At the present time, the
      Company is not aware of any existing loans in the portfolio where there is
      environmental pollution existing on the mortgaged properties that would
      materially affect the value of the portfolio.





**Noninterest
      Income, Noninterest Expense and Income Taxes**





Noninterest
      income was $512,000 for the six months ended June 30, 2008, compared to $577,000
      for the comparable 2007 period. The decrease in total noninterest income was
      primarily the result of a reduction in mortgage origination referral income
      due
      to the slowing real estate market, partially offset by income earned on an
      additional $3.5 million BOLI contract entered into by the bank during the second
      quarter.





Noninterest
      expense increased to $5.1 million for the six months ended June 30, 2008, from
      $4.0 million for the six months ended June 30, 2007. Compensation expenses,
      professional fees, data processing fees, FDIC assessments, a one-time charge
      of
      $38,000 for the disposal of fixed assets no longer in use and a one-time charge
      of $430,000 for expenses related to the termination of the merger accounted
      for
      the majority of noninterest expense increasing $1.1 million over the same period
      in 2007.





Income
      taxes for the six months ended June 30, 2008 was a tax benefit of $289,000
      (an
      effective rate of 48.82%) compared to income taxes of $757,000 for the six
      months ended June 30, 2007 (an effective tax rate of 37.96%). The increase
      in
      the effective tax rate compared to one year earlier is the result of the
      benefits derived from tax-free municipal bonds and tax-free income earned on
      the
      bank-owned life insurance policies resulting in a lower percentage of income,
      or
      greater percentage of loss, being taxed at the statutory rates.





**Comparison
      of Operating Results for the Three Months Ended June 30, 2008 and
      2007**





Net
      income for the second quarter of 2008 was a loss of $840,000, or a net loss
      of
      $.48 per diluted share, as compared to a net income of $694,000, or $.38 per
      diluted share, earned for the same quarter last year. The largest components
      of
      the decrease in net income are an increase in provision for loan loss of
      $1.5 million, $430,000 for expenses related to the termination of the
      merger and a $166,000 increase in professional fees.





Net
      interest income for the second quarter of 2008 was flat at $2.9 million,
      compared to the second quarter of 2007. Interest income for the quarter declined
      $403,000 when compared to the prior year as a result of the ongoing reduction
      in
      short-term rates by the Federal Reserve as well as the $7.8 million in loans
      that were placed on non-accrual during the quarter; this was offset by average
      earning asset growth of $59.9 million. Interest expense declined by $341,000
      as
      a result of the reduction in short-term rates offset by a transition from core
      deposits into more expensive time deposits and wholesale funding required to
      support the Company’s strong earning asset growth. The net interest margin was
      2.93% for the quarter, compared to 3.51% for the comparable period in
      2007.


21.





**Capital**





The
      Company’s capital management policy is designed to build and maintain capital
      levels that meet regulatory standards. Under current regulatory capital
      standards, banks are classified as well-capitalized, adequately-capitalized
      or
      undercapitalized. Under such standards, a well-capitalized bank is one that
      has
      a total risk-based capital ratio equal to or greater than 10%, a Tier 1
      risk-based capital ratio equal to or greater than 6%, and a Tier 1 leverage
      capital ratio equal to or greater than 5%. The Bank’s total risk-based capital,
      Tier 1 risk-based capital and Tier 1 leverage capital ratios were 10.50%, 9.39%
      and 8.54%, respectively, at June 30, 2008. The Company also maintains capital
      levels that meet the same regulatory standards. If the capital ratios of the
      Company and Bank were to fall below levels required under regulatory standards,
      it is the Company’s and Bank’s policy to increase capital in an amount
      sufficient to meet regulatory requirements within 30 days.





During
      the second quarter, the Company issued $7.6 million in a private placement
      offering of trust preferred securities. The trust preferred securities are
      treated as Tier 1 capital up to the maximum amount allowed and the remainder
      as
      Tier 2 capital for federal regulatory purposes.





**Cash
      Flows and Liquidity**





***Cash
      Flows*** *.*  The
      Company’s primary sources of cash are deposit growth, maturities and
      amortization of investment securities, FHLB advances and federal funds
      purchased. The Company uses cash from these and other sources to fund loan
      growth. Any remaining cash is used primarily to reduce borrowings and to
      purchase investment securities. During the first six months of 2008, the
      Company’s cash and cash equivalent position decreased by $11,000. The decrease
      in cash mainly resulted from an increase in deposit accounts of approximately
      $43.9 million from $288.9 million at December 31, 2007 to $332.8 million at
      June 30, 2008, offset by net loan originations of $33.0 million as well as
      a decrease in FHLB advances of $23.9 million from $67.8 million at December
      31,
      2007 to $43.9 million at June 30, 2008.





***Liquidity.*** The
      Company has both internal and external sources of near-term liquidity that
      can
      be used to fund loan growth and accommodate deposit outflows. The primary
      internal sources of liquidity are principal and interest payments on loans;
      proceeds from maturities and monthly payments on the balance of the investment
      securities portfolio; and its overnight position with federal funds sold. At
      June 30, 2008, the Company had $28.5 million in federal funds sold and
      available-for-sale securities not subject to pledge agreements.





The
      Company’s primary external sources of liquidity are customer deposits and
      borrowings from other commercial banks. The Company’s deposit base consists of
      both deposits from businesses and consumers in its local market as well as
      national market and brokered certificates of deposit. The Company can also
      borrow overnight federal funds and fixed-rate term products under credit
      facilities established with the FHLB and other commercial banks. These lines,
      in
      the aggregate amount of approximately $159.9 million, do not represent legal
      commitments to extend credit on the part of the other banks.





***Contractual
      Obligations, Commitments and Contingent Liabilities*** **.** The
      Company has various financial obligations, including contractual obligations
      and
      commitments that may require future cash payments. Management believes that
      there have been no material changes in the Company’s overall level of these
      financial obligations since December 31, 2007 and that any changes in the
      Company’s obligations which have occurred are routine for the industry. Further
      discussion of the nature of each type of obligation is included in the section
      entitled “Management’s Discussion and Analysis of Financial Condition and
      Results of Operations” in the Company’s Annual Report on Form 10-K for the year
      ended December 31, 2007, as filed with the SEC on March 27, 2008, and is
      incorporated herein by reference.


22.




***Off-Balance
      Sheet Arrangements*** *.* There
      have been no material changes in the risks related to off-balance sheet
      arrangements since the Company’s disclosure in its Annual Report on Form 10-K
      for the year ended December 31, 2007.





**Item
      3. Quantitative and Qualitative Disclosures about Market
      Risk**





Market
      risk is the risk that a financial institution will be adversely impacted by
      unfavorable changes in market prices. These unfavorable changes could result
      in
      a reduction in net interest income, which is the difference between interest
      earned on interest-earning assets and interest paid on interest-bearing
      liabilities.





Interest
      rate risk is the sensitivity of income to variations in interest rates over
      both
      short-term and long-term horizons. The primary goal of interest rate risk
      management is to control this risk within limits approved by the Board of
      Directors and narrower guidelines approved by the Asset Liability Committee.
      These limits and guidelines reflect the Bank’s tolerance for interest rate risk.
      The Bank attempts to control interest rate risk by identifying and quantifying
      exposures. The Bank quantifies its interest rate risk exposures using
      sophisticated simulation and valuation models as well as simpler gap analyses
      performed by a third-party vendor specializing in this activity. There have
      been
      no significant changes in the Bank’s primary market risk exposure or how those
      risks are managed since our disclosures in our Annual Report on Form 10-K for
      the year ended December 31, 2007.





The
      Bank’s internal policy on interest rate risk specifies that if interest rates
      were to shift immediately up or down 200 basis points, estimated net interest
      income for the next 12 months should change by less than 15%. The most current
      simulation projects the Bank’s net interest income to be within the parameters
      of its internal policy and has not changed significantly from our disclosures
      in
      our Annual Report on Form 10-K for the year ended December 31, 2007. Such
      simulation involves numerous assumptions and estimates, which are inherently
      subjective and are subject to substantial business and economic uncertainties.
      Accordingly, the actual effects of an interest rate shift under actual future
      conditions may be expected to vary significantly from those derived from the
      simulation to the extent that the assumptions used in the simulation differ
      from
      actual conditions.




**Item
      4. Controls and Procedures**




***(a)***  ***Evaluation of Disclosure Controls and Procedures***




The
      Company maintains controls and procedures designed to ensure that information
      required to be disclosed in the reports that the Company files or submits under
      the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is
      recorded, processed, summarized and reported within the time periods specified
      in the rules and forms of the Securities and Exchange Commission. Based upon
      management’s evaluation of those controls and procedures as of the end of the
      fiscal quarter covered by this quarterly report on Form 10-Q, the Chief
      Executive Officer and Chief Financial Officer of the Company concluded that,
      subject to the limitations noted below, the Company’s disclosure controls and
      procedures (as defined in Rules 13a-15(e) under the Exchange Act) are effective
      to ensure that the information required to be disclosed by the Company in the
      reports that it files or submits under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in the SEC’s rules and
      forms.




23.




***(b)***  ***Changes
      in Internal Controls***




In
      the
      ordinary course of business, the Company may routinely modify, upgrade and
      enhance its internal controls and procedures for financial reporting. In an
      effort to improve internal control over financial reporting, the Company
      continues to emphasize the importance of identifying areas for improvement
      and
      to create and implement new policies and procedures where deficiencies exist.
      The Company has improved controls relating to credit policies, loan grading
      and
      the allowance for loan loss. However, there have not been any changes in the
      Company’s internal controls over financial reporting as defined in Exchange Act
      Rules 13a-15(f) and 15d-15(f) during the fiscal quarter to which this report
      relates that have materially affected, or are reasonably likely to materially
      affect, the Company’s internal control over financial reporting.




***(c)***  ***Limitations
      on the Effectiveness of Controls***




Our
      management, including our Chief Executive Officer and Chief Financial Officer,
      does not expect that our disclosure controls and internal controls will prevent
      all error and all fraud. A control system, no matter how well conceived and
      operated, can provide only reasonable, not absolute, assurance that the
      objectives of the control system are met. Further, the design of a control
      system must reflect the fact that there are resource constraints, and the
      benefits of controls must be considered relative to their costs. Because of
      the
      inherent limitations in all control systems, no evaluation of controls can
      provide absolute assurance that all control issues and instances of fraud,
      if
      any, within the Company have been detected. These inherent limitations include
      the realities that judgments in decision-making can be faulty and that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management’s override of the control.




The
      design of any system of controls also is based in part upon certain assumptions
      about the likelihood of future events, and there can be no assurance that any
      design will succeed in achieving its stated goals under all potential future
      conditions; over time, controls may become inadequate because of changes in
      conditions, or the degree of compliance with the policies or procedures may
      deteriorate. Because of the inherent limitations in a cost-effective control
      system, misstatements due to error or fraud may occur and not be
      detected.




**PART
      II - OTHER INFORMATION**





**Item 1.**
            **Legal
                Proceedings**




From
      time
      to time, as a normal incident of the nature and kind of business in which we
      are
      engaged, various claims or charges are asserted against us and/or our directors,
      officers or affiliates. In the ordinary course of business, the Company and
      its
      subsidiary are also subject to regulatory examinations, information gathering
      requests, inquiries and investigations. Other than ordinary routine litigation
      incidental to our business, management believes after consultation with legal
      counsel that there are no pending legal proceedings against the Company or
      the
      Bank that will, individually or in the aggregate, have a material adverse effect
      on the consolidated results of operations or financial condition of the
      Company.





**Item
                1A.**
            **Risk
                Factors**


There
                have been no material changes from the risk factors disclosed in
                the
                Company’s Annual Report on Form 10-K for the year ended December 31, 2007,
                as filed with the SEC on March 27,
                2008.


24.




**Item
                2.**
            **Unregistered
                Sales of Equity Securities and Use of
                Proceeds**


None





**Item
                3.**
            **Defaults
                Upon Senior Securities**


None





**Item
                4.**
            **Submission
                of Matters to a Vote of Security
                Holders**


On
                April 29, 2008, the Company held an annual meeting of the shareholders
                of
                its common stock to vote on (i) the election of four persons to the
                Company’s Board of Directors, and (ii) the approval of the 2008 Amendment
                and Restatement of the Jacksonville Bancorp, Inc. 2006 Stock Incentive
                Plan.





All
                of the directors up for election at the annual meeting were elected
                to
                serve a term of office of three years, expiring at the annual meeting
                in
                the year 2011. The following table sets forth the votes for and votes
                withheld with respect to the election of the
                directors:





Director
                Nominee
            
            Votes
                For
            
            Votes
                WithheldR.C.
                Mills
            
            
            1,518,186
            
            
            22,570Gilbert
                J. Pomar, III
            
            
            1,518,186
            
            
            22,570Donald
                E. Roller
            
            
            1,515,311
            
            
            25,445Charles
                F. Spencer
            
            
            1,517,536
            
            
            23,220





The
                2008 Amendment and Restatement of the Jacksonville Bancorp, Inc.
                2006
                Stock Incentive Plan (the “Plan”) was also approved by the shareholders.
                The Plan, among other things, authorized up to 70,000 shares of the
                Company’s common stock for issuances of awards under the Plan. The
                purposes of the Plan are to encourage outstanding individuals to
                accept or
                continue employment with the Company or its subsidiaries and to furnish
                maximum incentive to those persons to improve operations and increase
                profits and to strengthen the mutuality of interest between those
                persons
                and the Company’s shareholders by providing them incentives. The following
                table sets forth the votes for, votes against and votes withheld
                with
                respect to the approval of the
                Plan:





Votes
                For
            
            Votes
                Against
            
            Votes
                Abstained
            
            Non-votes856,692
            
            
            38,026
            
            
            10,930
            
            
            635,108





**Item
                5.**
            **Other
                Information**


None





**Item 6.**
            **Exhibits**


Exhibit
      No. 3.1:  Articles
      of Incorporation of the Company (1)





Exhibit
      No. 3.2:  Amended
      and Restated Bylaws of the Company, as amended to date (2)





Exhibit
      No. 4.1:  Form
      of
      Capital Security Certificate of Jacksonville Bancorp, Inc. Statutory Trust
      III (3)





Exhibit
      No. 4.2:  Form
      of
      Common Security Certificate of Jacksonville Bancorp, Inc. Statutory Trust III (4)





Exhibit
      No. 4.3:  Form
      of
      Junior Subordinated Debt Security of Jacksonville Bancorp, Inc. (5)




25.





Exhibit
      No. 10.1:  Mutual
      Termination Agreement dated June 24, 2008 between Jacksonville Bancorp, Inc.
      and
      Heritage Bancshares, Inc. (6)




Exhibit
      No. 10.2:  Indenture
      dated June 20, 2008 between Jacksonville Bancorp, Inc. and Wells Fargo Bank,
      National Association, as trustee. (7)




Exhibit
      No. 10.3:  Amended
      and Restated Declaration of Trust of Jacksonville Bancorp, Inc. Statutory Trust
      III dated June 20, 2008, by and among Jacksonville Bancorp, Inc., as sponsor,
      Wells Fargo Delaware Trust Company, as Delaware trustee, Wells Fargo Bank,
      National Association, as institutional trustee, and the administrators named
      therein. (8)





Exhibit
      No. 10.4:  Guarantee
      Agreement dated June 20, 2008, by and between Jacksonville Bancorp, Inc. and
      Wells Fargo Bank, National Association, as trustee. (9)





Exhibit
      No. 31.1:  Certification
      of principal executive officer required by Rule 13a-14(a)/15d-14(a) of the
      Exchange Act.





Exhibit
      No. 31.2:  Certification
      of principal financial officer required by Rule 13a-14(a)/15d-14(a) of the
      Exchange Act.




Exhibit
      No. 32:  Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.









(1)
            Incorporated
                herein by reference to Appendix A to Form SB-2, filed September 30,
                1998,
                Registration No. 333-64815.


(2)
            Incorporated
                herein by reference to Exhibit No. 3.2 to Form 10-K for year ended
                December 31, 2007, filed March 27, 2008, File No.
                000-30248.


(3)
            Incorporated
                herein by reference to Exhibit No. 4.1 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


(4)
            Incorporated
                herein by reference to Exhibit No. 4.2 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


(5)
            Incorporated
                herein by reference to Exhibit No. 4.3 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


(6)
            Incorporated
                herein by reference to Exhibit No. 10.1 to Form 8-K/A filed June
                26, 2008,
                File No. 000-30248.


(7)
            Incorporated
                herein by reference to Exhibit No. 10.1 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


(8)
            Incorporated
                herein by reference to Exhibit No. 10.2 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


(9)
            Incorporated
                herein by reference to Exhibit No. 10.3 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


26.


JACKSONVILLE
      BANCORP, INC.





SIGNATURES









Pursuant
      to the requirements 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:
                August 8, 2008
            /s/
                Gilbert J. Pomar, IIIGilbert
                J. Pomar, IIIPresident
                and Chief Executive OfficerDate:
                August 8, 2008
            /s/
                Valerie A. KendallValerie
                A. KendallExecutive
                Vice Presidentand
                Chief Financial Officer




27.


JACKSONVILLE
      BANCORP, INC.





EXHIBIT
      INDEX




Exhibit
      No. 3.1:  Articles
      of Incorporation of the Company (1)





Exhibit
      No. 3.2:  Amended
      and Restated Bylaws of the Company, as amended to date (2)





Exhibit
      No. 4.1:  Form
      of
      Capital Security Certificate of Jacksonville Bancorp, Inc. Statutory Trust
      III (3)





Exhibit
      No. 4.2:  Form
      of
      Common Security Certificate of Jacksonville Bancorp, Inc. Statutory Trust III (4)





Exhibit
      No. 4.3:  Form
      of
      Junior Subordinated Debt Security of Jacksonville Bancorp, Inc. (5)





Exhibit
      No. 10.1:  Mutual
      Termination Agreement dated June 24, 2008 between Jacksonville Bancorp, Inc.
      and
      Heritage Bancshares, Inc. (6)




Exhibit
      No. 10.2:  Indenture
      dated June 20, 2008 between Jacksonville Bancorp, Inc. and Wells Fargo Bank,
      National Association, as trustee. (7)




Exhibit
      No. 10.3:  Amended
      and Restated Declaration of Trust of Jacksonville Bancorp, Inc. Statutory Trust
      III dated June 20, 2008, by and among Jacksonville Bancorp, Inc., as sponsor,
      Wells Fargo Delaware Trust Company, as Delaware trustee, Wells Fargo Bank,
      National Association, as institutional trustee, and the administrators named
      therein. (8)





Exhibit
      No. 10.4:  Guarantee
      Agreement dated June 20, 2008, by and between Jacksonville Bancorp, Inc. and
      Wells Fargo Bank, National Association, as trustee. (9)





Exhibit
      No. 31.1:  Certification
      of principal executive officer required by Rule 13a-14(a)/15d-14(a) of the
      Exchange Act.





Exhibit
      No. 31.2:  Certification
      of principal financial officer required by Rule 13a-14(a)/15d-14(a) of the
      Exchange Act.




Exhibit
      No. 32:  Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.







(1)
            Incorporated
                herein by reference to Appendix A to Form SB-2, filed September 30,
                1998,
                Registration No. 333-64815.


(2)
            Incorporated
                herein by reference to Exhibit No. 3.2 to Form 10-K for year ended
                December 31, 2007, filed March 27, 2008, File No.
                000-30248.


(3)
            Incorporated
                herein by reference to Exhibit No. 4.1 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


(4)
            Incorporated
                herein by reference to Exhibit No. 4.2 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


(5)
            Incorporated
                herein by reference to Exhibit No. 4.3 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


(6)
            Incorporated
                herein by reference to Exhibit No. 10.1 to Form 8-K/A filed June
                26, 2008,
                File No. 000-30248.


(7)
            Incorporated
                herein by reference to Exhibit No. 10.1 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


(8)
            Incorporated
                herein by reference to Exhibit No. 10.2 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


(9)
            Incorporated
                herein by reference to Exhibit No. 10.3 to Form 8-K filed July 31,
                2008,
                File No. 000-30248.


28.