UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

 (Mark One)

|X|                QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2006

|_|               TRANSITION REPORT UNDER 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                                 (IRS Employer
incorporation or organization)                               Identification No.)

         100 North Laura Street, Suite 1000, Jacksonville, Florida 32202
         ---------------------------------------------------------------
                    (Address of principal executive offices)

                                 (904) 421-3040
                                 --------------
                           (Issuer'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  |_|

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer or a  non-accelerated  filer (as defined in Rule 12b-2 of The
Exchange Act).

Large Accelerated Filer |_|  Accelerated Filer |_|  Non-accelerated Filer |X|

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

Yes  |_|  No  |X|

As of May 5, 2006, the latest practicable date, 1,721,652 of the issuer's common
shares, $.01 par value, were issued and outstanding.

<PAGE>

                           JACKSONVILLE BANCORP, INC.

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         Page
                                                                                         ----
<S>                                                                                      <C>
PART I -FINANCIAL INFORMATION

        Item 1.    Consolidated Financial Statements (Unaudited)

              Consolidated Balance Sheets ............................................    3

              Consolidated Statements of Income ......................................    4

              Consolidated Statements of Changes in Shareholders' Equity..............    5

              Consolidated Statements of Cash Flows ..................................    6

              Notes to Consolidated Financial Statements .............................    7

        Item 2.    Management's Discussion and Analysis of
                   Financial Condition and Results of Operation.......................   12

        Item 3.    Quantitative and Qualitative Disclosures about Market Risk.........   22

        Item 4.    Controls and Procedures............................................   23

PART II - OTHER INFORMATION

        Item 1.    Legal Proceedings..................................................   24

        Item 1A.   Risk Factors.......................................................   24

        Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds........   24

        Item 3.    Defaults Upon Senior Securities....................................   24

        Item 4.    Submission of Matters to a Vote of Security Holders................   24

        Item 5.    Other Information..................................................   24

        Item 6.    Exhibits...........................................................   24

SIGNATURES ...........................................................................   26

CERTIFICATIONS........................................................................   27
</TABLE>

--------------------------------------------------------------------------------


                                                                              2.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                           CONSOLIDATED BALANCE SHEETS
                (Dollars in thousands, except per share amounts)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               March 31,     December 31,
                                                                 2006            2005
                                                               ---------     ------------
                                                              (Unaudited)
<S>                                                            <C>            <C>
ASSETS
Cash and due from banks                                        $   5,854      $   4,399
Federal funds sold                                                13,326            368
                                                               ---------      ---------
     Total cash and cash equivalents                              19,180          4,767
Securities available for sale                                     27,230         24,211
Securities held to maturity                                           50             50
Loans, net of allowance for loan losses                          245,694        232,031
     of $2,354 at 2006 and $2,207 at 2005
Premises and equipment, net                                        4,068          3,821
Bank-owned life insurance (BOLI)                                   4,687          4,635
Federal Home Loan Bank (FHLB) stock                                  681          1,062
Accrued interest receivable                                        1,362          1,425
Other assets                                                       1,120          1,042
                                                               ---------      ---------

         Total assets                                          $ 304,072      $ 273,044
                                                               =========      =========

LIABILITIES
Deposits
     Noninterest bearing                                       $  36,598      $  40,582
     Money market, NOW and savings deposits                      171,788        127,425
     Time deposits                                                67,564         66,204
                                                               ---------      ---------
         Total deposits                                          275,950        234,211
FHLB advances                                                      3,000         13,650
Subordinated debt                                                  4,000          4,000
Accrued expenses and other liabilities                               722          1,337
                                                               ---------      ---------
     Total liabilities                                           283,672        253,198

SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 8,000,000 shares authorized,
  1,721,652 and 1,716,366 shares issued                               18             17
Additional paid-in capital                                        17,653         17,526
Retained earnings                                                  3,226          2,718
Treasury stock, 1,800 and 1650 shares                                (58)           (54)
Accumulated other comprehensive loss                                (439)          (361)
                                                               ---------      ---------
     Total shareholders' equity                                   20,400         19,846
                                                               ---------      ---------

         Total liabilities and shareholders' equity            $ 304,072      $ 273,044
                                                               =========      =========
</TABLE>

--------------------------------------------------------------------------------

                 See accompanying notes to financial statements.


                                                                              3.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

--------------------------------------------------------------------------------

                                                          Three Months Ended
                                                               March 31,
                                                       -------------------------
                                                          2006           2005
                                                       ----------     ----------
Interest and dividend income
     Loans, including fees                             $    4,492     $    3,100
     Securities                                               265            250
     Other                                                     98              6
                                                       ----------     ----------
         Total interest income                              4,855          3,356

Interest expense
     Deposits                                               2,213          1,187
     FHLB advances                                             75             64
     Subordinated debt                                         74             54
     Other                                                      1              7
                                                       ----------     ----------
         Total interest expense                             2,363          1,312
                                                       ----------     ----------

Net interest income                                         2,492          2,044
Provision for loan losses                                     152             64
                                                       ----------     ----------

Net interest income after provision for loan losses         2,340          1,980

Noninterest income
     Service charges on deposit accounts                      116            165
     Other income                                              98             58
                                                       ----------     ----------
         Total noninterest income                             214            223

Noninterest expense
     Salaries and employee benefits                           883            854
     Occupancy and equipment                                  352            185
     Other                                                    516            565
                                                       ----------     ----------
         Total noninterest expense                          1,751          1,604
                                                       ----------     ----------

Income before income taxes                                    803            599
Income tax expense                                            295            232
                                                       ----------     ----------

Net income                                             $      508     $      367
                                                       ==========     ==========

Weighted average:
     Common shares                                      1,718,435      1,708,109
     Dilutive stock options and warrants                   86,539         84,969
                                                       ----------     ----------
     Dilutive shares                                    1,804,974      1,793,078
                                                       ==========     ==========

Basic earnings per common share                        $      .30     $      .21
                                                       ==========     ==========
Diluted earnings per common share                      $      .28     $      .20
                                                       ==========     ==========

--------------------------------------------------------------------------------

                 See accompanying notes to financial statements.


                                                                              4.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (Unaudited)
                             (Dollars in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                            Common Stock                      Retained                   Accumulated
                                     -------------------------   Additional   Earnings      Treasury        Other
                                     Outstanding                   Paid-In  (Accumulated     Stock      Comprehensive
                                        Shares        Amount       Capital     Deficit)      Amount     Income (Loss)     Total
                                     -----------    ----------   ---------- ------------   ----------   -------------  ----------
<S>                                   <C>           <C>          <C>          <C>          <C>           <C>           <C>
Balance at January 1, 2005             1,708,366    $       17   $   17,381   $      546   $       --    $     (140)   $   17,804

Comprehensive income:
   Net income                                                                        367                                      367
   Change in unrealized gain (loss)
        on securities available for
        sale, net of tax effects                                                                               (201)         (201)
                                                                                                                       ----------
   Total comprehensive income                                                                                                 166

Purchase of treasury stock                (1,500)                                                 (40)                        (40)

Exercise of stock options,
   including tax benefits of $6              800                         14                                                    14

                                      ----------    ----------   ----------   ----------   ----------    ----------    ----------
Balance at March 31, 2005              1,707,666    $       17   $   17,395   $      913   $      (40)   $     (341)   $   17,944
                                      ==========    ==========   ==========   ==========   ==========    ==========    ==========


Balance at January 1, 2006             1,714,716    $       17   $   17,526   $    2,718   $      (54)   $     (361)   $   19,846

Comprehensive income:
   Net income                                                                        508                                      508
   Change in unrealized gain (loss)                                                                             (78)          (78)
        on securities available for
         sale, net of tax effects
                                                                                                                       ----------
   Total comprehensive income                                                                                                 430

Purchase of treasury stock                (1,800)                                                 (58)                        (58)

Issuance of treasury stock                 1,650                          2                        54                          56

Compensation expense and exercise
   of common stock options,
   including tax benefits of $41           5,286             1          125                                                   126

                                      ----------    ----------   ----------   ----------   ----------    ----------    ----------
Balance at March 31, 2006              1,719,852    $       18   $   17,653   $    3,226   $      (58)   $     (439)   $   20,400
                                      ==========    ==========   ==========   ==========   ==========    ==========    ==========
</TABLE>

--------------------------------------------------------------------------------

                 See accompanying notes to financial statements.


                                                                              5.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                             (Dollars in thousands)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                         Three Months Ended
                                                                               March 31,
                                                                        ----------------------
                                                                          2006          2005
                                                                        --------      --------
<S>                                                                     <C>           <C>
Cash flows from operating activities
     Net income                                                         $    508      $    367
     Adjustments to reconcile net income to net cash from operating
       activities:
         Depreciation and amortization                                       120            91
         Net amortization of deferred loan fees                              (44)           18
         Provision for loan losses                                           152            64
         Premium amortization, net of accretion                               12            94
         Increase in cash surrender value of BOLI                            (52)           --
         Stock-based compensation                                             87            38
         Net change in accrued interest receivable and other assets           11           (91)
         Net change in accrued expenses and other liabilities               (615)         (430)
                                                                        --------      --------
              Net cash from operating activities                             179           151

Cash flows from investing activities
     Purchases of securities available for sale                           (3,949)       (3,354)
     Proceeds from maturities of securities available for sale               794         1,871
     Loan (originations) payments, net                                   (13,771)       (4,848)
     Additions to premises and equipment, net                               (347)         (100)
     Proceeds from sale (purchases) of Federal Home Loan Bank stock          381          (139)
                                                                        --------      --------
         Net cash from investing activities                              (16,892)       (6,570)

Cash flows from financing activities
     Net change in deposits                                               41,739         7,005
     Net change in short-term FHLB advances                              (10,650)           --
     Proceeds from exercise of stock options                                  54             8
     Excess tax benefits from stock-based payment arrangements                41             6
     Purchase of treasury stock                                              (58)          (40)
                                                                        --------      --------
         Net cash from financing activities                               31,126         6,979
                                                                        --------      --------

Net change in cash and cash equivalents                                   14,413           560
Cash and cash equivalents at beginning of period                           4,767         6,735
                                                                        --------      --------

Cash and cash equivalents at end of period                              $ 19,180      $  7,295
                                                                        ========      ========

Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest                                                       $  2,374      $  1,301
         Income taxes                                                        655           286
</TABLE>

--------------------------------------------------------------------------------

                 See accompanying notes to financial statements.


                                                                              6.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                    NOTES TO CONSOLIDATED FINANCIAL STATMENTS
                                   (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 four operating branches in Jacksonville,
Florida,  with a fifth  branch  expected  to open in the  second  quarter of the
current year.

The  consolidated  financial  statements  include the  accounts of  Jacksonville
Bancorp,  Inc. and its wholly owned subsidiary,  The Jacksonville  Bank, and the
Bank's wholly owned subsidiary, Fountain Financial, Inc. The consolidated entity
is  referred  to as  the  "Company"  and  the  Bank  and  its  subsidiaries  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, 2005.

The accounting and reporting  policies of the Company reflect  banking  industry
practice and conform to generally accepted  accounting  principles in the United
States  of  America.  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 March 31, 2006 and 2005 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, 2005 consolidated
balance  sheet  was  derived  from  the  Company's  December  31,  2005  audited
consolidated financial statements.

NOTE 2 - STOCK-BASED COMPENSATION AND STOCK PLANS

Prior to January 1, 2006,  the  Company  followed  the  provisions  of SFAS 148,
Accounting for Stock-Based  Compensation--Transition  and Disclosure ("Statement
148"),  which  provides  transition  methods  to  and  enhances  the  disclosure
requirements of SFAS 123,  Accounting for Stock-Based  Compensation  ("Statement
123"). As permitted under Statement 123, the Company  followed the guidelines of
Accounting  Principles  Board  Opinion No. 25,  Accounting  for Stock  Issued to
Employees  ("Opinion  25") and  disclosed  pro  forma  compensation  expense  in
accordance  with  Statement 148. No  compensation  expense for stock options was
recorded in the financial statements prior to January 1, 2006.

On December 16, 2004, the Financial  Accounting  Standards Board ("FASB") issued
SFAS 123R (Revised 2004),  Share-Based Payment ("Statement 123(R)"),  which is a
revision of Statement 123.  Statement 123(R)  supersedes  Opinion 25. Generally,
the  approach  in  Statement  123(R) is similar  to the  approach  described  in
Statement 123.  However,  Statement 123(R) requires all share-based  payments to
employees,  including grants of employee stock options,  to be recognized in the
Statement  of Income  based on their fair  values.  Pro forma  disclosure  is no
longer an alternative method under Statement 123(R).

Statement  123(R) is effective for fiscal years  beginning  after June 15, 2005.
The Company adopted Statement 123(R) using the "modified  prospective" method in
which  compensation  cost is recognized  beginning  with the effective  date (a)
based on the  requirement  of  Statement  123(R)  for all  stock-based  payments
granted after the effective date and (b) based on the  requirements of Statement
123 for all awards granted to employees prior to the effective date of Statement
123(R) that remain unvested as of the effective date. Additionally, compensation
costs for the  portion  of  outstanding  awards for which  service  has not been
rendered  (such as  unvested  options)  that are  outstanding  as of the date of
adoption are  recognized  as the remaining  services are  rendered.  The Company
recognizes  the fair value of  stock-based  compensation  awards in salaries and
benefits in the condensed  consolidated  statement of income on a  straight-line
basis over the vesting period.

--------------------------------------------------------------------------------


                                                                              7.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                    NOTES TO CONSOLIDATED FINANCIAL STATMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

--------------------------------------------------------------------------------

The Company  recorded  stock-based  compensation  expense for the periods  ended
March  31,  2006 and 2005 as  follows,  the  components  of  which  are  further
discussed below:

                                                    For the Three Months Ended
                                                    --------------------------
                                                          2006      2005
                                                         -----     -----
            Stock Options                                $  31     $  --
            Stock Issued for Director Compensation          56        38
                                                         -----     -----
            Total                                        $  87     $  38
                                                         =====     =====

The recorded  amounts of stock-based  compensation  expense for stock options in
2006 represent  amortization  related to stock-based payments in accordance with
Statement  123(R).  The Company  recognized no tax benefits related to the above
stock option  expense,  as all stock options  expensed above are incentive stock
options.  However,  the Company  recognized  tax  benefits of $41 related to the
exercise of nonqualified stock options during the period.

SFAS 123R requires the recognition of stock-based compensation for the number of
awards that are  ultimately  expected  to vest.  As a result,  for most  awards,
recognized  stock  compensation was reduced for estimated  forfeitures  prior to
vesting  primarily based on historical  annual forfeiture rates of approximately
2.55%.  Estimated  forfeitures will be reassessed in subsequent  periods and may
change based on new facts and  circumstances.  Prior to January 1, 2006,  actual
forfeitures  were  accounted  for as they  occurred for purposes of required pro
forma stock compensation disclosures.

During 2005, the Company  accounted for stock-based  payments to employees using
Opinion 25's  intrinsic  value method and recognized no  compensation  costs for
employee stock options in prior years. Had the Company adopted  Statement 123(R)
in 2005,  the  impact of that  Standard  would have  approximated  the impact of
Statement  123 in the  disclosure of pro forma net income and earnings per share
described as follows:

                                                       For the Three Months
                                                       Ended March 31, 2005
                                                       --------------------

            Net income as reported                            $  367
            Deduct:  Stock-based compensation
                 expense determined under fair
                 value based method                               29
                                                              ------
            Pro forma net income                              $  338
                                                              ======

                 Basic--as reported                           $  .21
                 Basic--pro forma                             $  .20

                 Diluted--as reported                         $  .20
                 Diluted--pro forma                           $  .19

--------------------------------------------------------------------------------


                                                                              8.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                    NOTES TO CONSOLIDATED FINANCIAL STATMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

--------------------------------------------------------------------------------

Following  approval by the shareholders at the 2003 Annual Meeting,  the Company
established the Directors' Stock Purchase Plan for non-employee directors. Under
this Stock Purchase Plan, Directors may elect to receive shares of the Company's
common stock as an alternative to the equivalent  amounts of cash for director's
fees.  A total of  100,000  shares  of the  Company's  common  stock  were  made
available for issuance,  all of which  remained  available at March 31, 2006, as
all  transactions  executed to date were open market  purchases.  The  Company's
expense in connection with this Plan was $56 and $38, for the three months ended
March 31, 2006 and 2005,  respectively,  which is included in other  expenses in
the Consolidated Statements of Income.

On April 25, 2006, the Company's shareholders approved the Jacksonville Bancorp,
Inc.  2006 Stock  Incentive  Plan (the "2006  Plan").  Under the 2006 Plan,  the
Compensation  Committee  of the  Board of  Directors,  or other  such  committee
appointed  by  the  Board,   consisting  of  only   "non-employee,   independent
directors," has full authority to select the eligible individuals to whom awards
will be granted, the types of awards granted, the number of shares subject to an
award,  the exercise  price,  and other terms and conditions of the award. Up to
20,000 shares of the Company's common stock,  par value of $.01 per share,  will
be  available  for  issuance  for  awards  under the 2006  Plan,  in the form of
incentive stock options,  restricted stock, restricted stock units,  performance
grants,  and  stock  appreciation  rights.  Shares  subject  to an award  may be
authorized  and  unissued  shares,  treasury  shares,  or shares of common stock
purchased  on the open market.  Any award that  expires or is forfeited  for any
reason is returned to the 2006 Plan. On April 25, 2006, 904 shares of restricted
stock were granted under the 2006 Plan, with a vesting date of March 9, 2008.

The 2006 Plan is a new plan and does not supersede the Company's  original Stock
Option Plan,  adopted by the  Company's  shareholders  on April 26, 2000,  which
continues to govern  awards made under it. Under the  Company's  original  Stock
Option  Plan,  options  to buy stock are  granted  to  directors,  officers  and
employees.  Options  available to be issued under the original Stock Option Plan
are  equal to 15% of the  total  shares  outstanding.  At March  31,  2006,  the
original Stock Option Plan provided for the issuance of up to 257,978 shares, of
which 34,121 shares remain available for issuance.

Stock options are granted  under both stock option plans with an exercise  price
equal to or greater than the stock fair market  value at the date of grant.  All
stock options granted have ten-year lives, generally containing vesting terms of
three to five years. Certain grants have been made that vest immediately. Common
stock issued upon exercise of stock options are newly-issued shares.

The fair value of each option  award is estimated on the date of grant using the
Black Scholes-Merton  Closed-Form  ("Black-Scholes") option valuation model that
uses the assumptions  such as expected stock price  volatility,  expected option
life,  risk-free  interest rate, and dividend yield.  Expected  volatilities are
based on  historical  volatilities  of the  Company's  stock.  The Company  uses
historical data to estimate option  exercises and employee  terminations  within
the valuation  model.  The expected term of options granted is determined  using
historical data adjusted for known factors that would alter historical  exercise
behavior,  including announced  retirement dates. The risk-free rate for periods
within the  contractual  life of the option is based on the U.S.  Treasury yield
curve in effect at the time of grant.  The dividend yield is zero as the Company
has not  historically  paid any  dividends  and does not  anticipate  payment of
dividends in the future.

--------------------------------------------------------------------------------


                                                                              9.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                    NOTES TO CONSOLIDATED FINANCIAL STATMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

--------------------------------------------------------------------------------

The  Company  believes  that the use of the  Black-Scholes  model meets the fair
value  measurement  objectives of Statement  123(R) and reflects all substantive
characteristics  of the instruments being valued.  There were no options granted
during the three  months ended March 31, 2006 or 2005;  therefore,  no valuation
was performed for those periods.

The following  table  reports  stock option  activity for the three months ended
March 31, 2006:

<TABLE>
<CAPTION>
                                                             Weighted
                                                 Weighted     Average
                                                  Average    Remaining    Aggregate     Weighted
                                  Number of      Exercise   Contractual   Intrinsic     Average
                                   Options         Price        Term        Value      Fair Value
                                  ---------      --------   -----------   ---------    ----------
<S>                                 <C>          <C>              <C>      <C>          <C>
Outstanding at January 1, 2006      193,857      $  13.94                  $  3,501     $   5.41
Granted                                  --            --                        --           --
Exercised                            (5,286)        10.00                       111         3.50
Forfeited                                --            --                        --           --
                                  ---------------------------------------------------------------

Outstanding at March 31, 2006       188,571      $  14.05         5.92        3,385     $   5.46
     Fully vested and
         expected to vest           183,762         14.05         5.92        3,298         5.46
                                  ---------------------------------------------------------------

Exercisable at March 31, 2006       134,571      $  11.16         5.13     $  2,804     $   4.35
                                  ==============================================================
</TABLE>

As of March 31, 2006,  there was $321 of total  unrecognized  compensation  cost
related to unvested stock options granted. The cost is expected to be recognized
over a remaining weighted average period of 1.6 years.

--------------------------------------------------------------------------------


                                                                             10.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                    NOTES TO CONSOLIDATED FINANCIAL STATMENTS
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

--------------------------------------------------------------------------------

NOTE 3 - 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 March 31, 2006 and December 31, 2005:

<TABLE>
<CAPTION>
                                             Adequately
                                             Capitalized      March 31, 2006     December 31, 2005
                                             Requirement          Actual               Actual
                                             -----------      --------------     -----------------
<S>                                                <C>            <C>                  <C>
Tier 1 Capital (to Average Assets)
Consolidated                                      >4%              8.65%                9.06%
Bank                                              >4%              8.16%                8.34%

Tier 1 Capital (to Risk Weighted Assets)
Consolidated                                      >4%              9.66%               10.05%
Bank                                              >4%              9.13%                9.25%

Total Capital (to Risk Weighted Assets)
Consolidated                                      >8%             10.58%               10.97%
Bank                                              >8%             10.05%               10.17%
</TABLE>

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 March 31, 2006, that the
Company and the Bank met all capital requirements to which they are subject. The
Company has  included in Tier 1 Capital  and Total  Capital the trust  preferred
securities that were issued in June 2004.

NOTE 4 - FHLB ADVANCES

FHLB advances at March 31, 2006  consisted of a $3,000 fixed rate  advance.  The
interest rate on the fixed rate advance, which matures April 11, 2008, is 4.36%.
The advance is collateralized by a blanket lien on the Company's residential and
commercial  real  estate  loan  portfolio.  The  Company had $13,650 in advances
outstanding  at December  31,  2005,  which  consisted  of the $3,000 fixed rate
advance discussed above and $10,650 in overnight advances.

--------------------------------------------------------------------------------


                                                                             11.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     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"),
collectively (the "Company").  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.

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
mortgage-backed  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,  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,
increases  in cash  surrender  value of Bank Owned Life  Insurance  ("BOLI") and
mortgage  origination fees.  Included in noninterest  expense are costs incurred
for salaries and employee benefits,  occupancy and equipment 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.  We have  advanced  the
interest of the Bank by attracting  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. In the first quarter of 2006, we
acquired additional securities which we expect will increase interest income. In
the fourth  quarter of 2005,  the Bank launched a business  banking  initiative,
which will likely result in additional  noninterest fee income. In addition, the
Bank  opened  its  fourth  location  in  February  2006 and will  open its fifth
location in the second quarter of 2006 in key areas of Jacksonville,  which give
us additional  visibility  and access to  businesses  and  individuals  and will
likely result in additional loan and deposit growth.

--------------------------------------------------------------------------------


                                                                             12.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

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, impact interest-earnings 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 and real estate  market  remain strong and
have not shown signs of weakness or potential downturn. In addition, the Company
believes its  underwriting  procedures  are  relatively  conservative  and, as a
result,  the Company  should not be any more affected than the overall market in
the event of economic downturn.

As  stated  above,   fluctuations   in  interest   rates  impact  our  yield  on
interest-earning assets and our cost of funds, and thus our net interest margin.
Beginning in June 2004, the Federal Reserve implemented a tightening policy that
has resulted in 15 interest rate increases in the prime rate, which was 7.75% at
April 20,  2006.  These rate  increases  have  improved our yield on our earning
assets,  but also serve to  increase  our cost of funds by  increasing  interest
rates paid on deposits  tied to the prime rate, as well as rates charged on FHLB
advances and other borrowings.

Introduction

In the  following  pages,  management  presents  an  analysis  of the  financial
condition  of  Jacksonville  Bancorp,  Inc.  as of March 31,  2006  compared  to
December  31,  2005,  and the results of  operations  for the three months ended
March 31,  2006  compared  with the same  period  in 2005.  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.

--------------------------------------------------------------------------------


                                                                             13.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

Comparison of Financial Condition at March 31, 2006 and December 31, 2005

Total assets  increased  $31.1 million,  or 11%, from $273.0 million at December
31, 2005 to $304.1  million at March 31,  2006.  During the three  months  ended
March 31, 2006, the Company experienced net loan growth of $13.7 million, or 6%.
The  increase in net loans was driven by  increases  in  commercial  real estate
loans of $21.6  million,  or 16%,  and  residential  real  estate  loans of $7.3
million,  or 13%. The Company  funded the increase in earning  assets through an
increase in deposits of $41.8  million from $234.2  million at December 31, 2005
to $276.0 million at March 31, 2006.

Total deposits increased $41.7 million,  or 18%, from $234.2 million at December
31, 2005 to $276.0  million at March 31,  2006.  During the three  months  ended
March 31, 2006,  noninterest  bearing  deposits  decreased $4.0 million to $36.6
million,  and money market,  NOW and savings deposits increased $45.7 million to
$239.4 million.  Average core deposit growth of $61.1 million,  or 48%, over the
first three months of 2005 has lessened the Company's dependence on the national
CD market, which contributed favorably to our risk profile.

Investment securities available for sale increased $3.0 million to $27.2 million
at March 31, 2006.  During the three  months ended March 31, 2006,  we purchased
$3.9 million of securities and received $794,000 in proceeds from maturities and
principal repayments. Of the $3.9 million of securities purchased in the current
year, approximately $770,000 was invested in tax-exempt municipal securities.

FHLB advances at March 31, 2006  consisted of a $3.0 million fixed rate advance.
The interest  rate on the fixed rate  advance,  which matures April 11, 2008, is
4.36%.  The  advance  is  collateralized  by a  blanket  lien  on the  Company's
residential  and commercial  real estate loan  portfolio.  The Company had $13.7
million in advances  outstanding  at December 31, 2005,  which  consisted of the
$3.0 million fixed rate advance  discussed  above and $10.7 million in overnight
advances.

Total stockholders'  equity increased by $554,000,  or 3%, from $19.8 million at
December  31, 2005 to $20.4  million at March 31,  2006.  The increase is mainly
attributable  to net income of  $508,000.  At March 31,  2006,  the  Company had
8,000,000  authorized  shares of $.01 par value common stock, of which 1,721,652
shares were issued and  1,719,852  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 March 31, 2006.

Comparison  of  Operating  Results for the Three Months Ended March 31, 2006 and
2005

Net Income

Net income increased $141,000,  or 38%, from $367,000 for the three months ended
March 31, 2005 to $508,000 for the three  months  ended March 31, 2006.  Diluted
earnings per share increased $.08 from $.20 for the three months ended March 31,
2005 to $.28 for the three  months ended March 31,  2006.  This  increase in net
income and diluted  earnings  per share was due to an  increase in net  interest
income, offset by an increase in provision for loan losses, noninterest expenses
and income tax expense. Net interest income increased as a result of an increase
in interest-earning assets, as well as an increase in the average interest rates
earned on those  assets.  Occupancy  and  equipment  expenses  accounted for the
largest portion of the increase in noninterest  expenses.  Salaries and employee
benefits  increased due to the expense of stock options  resulting from adoption
of FAS 123(R) on  January  1, 2006.  The  increase  in income  tax  expense  was
directly related to the increase in net income.

--------------------------------------------------------------------------------


                                                                             14.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

Net Interest Income

Net interest income, the difference between interest earned on  interest-earning
assets and interest paid on interest-bearing liabilities, increased $448,000, or
22.0%  from $2.0  million  for the three  months  ended  March 31,  2005 to $2.5
million for the three months ended March 31, 2006.  This increase  resulted from
an  increase  in  interest  income of $1.5  million,  offset by an  increase  in
interest  expense of $1.1 million.  The average net interest margin  decreased 4
basis  points from 3.73% for the three  months ended March 31, 2005 to 3.69% for
the three months ended March 31, 2006.  Refer to the table and discussion on the
following pages for a detailed analysis of the increase in net interest income.

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.

<TABLE>
<CAPTION>
                                                                   Three Months Ended March 31,
                                               ---------------------------------------------------------------------
                                                             2006                                 2005
                                               --------------------------------     --------------------------------
                                               Average                  Average     Average                  Average
                                               Balance     Interest       Rate      Balance     Interest       Rate
                                               --------    --------     -------     --------    --------     -------
                                                                      (Dollars in thousands)
<S>                                            <C>         <C>             <C>      <C>         <C>             <C>
Interest-earning assets:
     Loans (1)                                 $239,565    $  4,492        7.60%    $195,635    $  3,100        6.43%
     Securities (2)                              25,063         265        4.29       24,794         242        3.96
     Other interest-earning assets (3)            9,399          98        4.23        1,872          14        3.03
                                               --------    --------                 --------    --------
         Total interest-earning assets          274,027       4,855        7.19      222,301       3,356        6.12
                                                           --------                             --------
     Noninterest-earning assets (4)              13,182                                7,761
                                               --------                             --------

         Total assets                          $287,209                             $230,062
                                               ========                             ========

Interest-bearing liabilities:
     Savings and NOW deposits                  $ 18,082    $     82        1.84     $ 23,872    $     62        1.05
     Money market deposits                      131,497       1,434        4.42       70,899         575        3.29
     Time deposits                               68,304         697        4.14       73,159         549        3.04
     FHLB advances                                6,778          75        4.49        9,317          64        2.79
     Subordinated debt                            4,000          74        7.50        4,000          54        5.48
     Other interest-bearing liabilities (5)          91           1        4.46        1,016           8        3.19
                                               --------    --------                 --------    --------
         Total interest-bearing liabilities     228,752       2,363        4.19      182,263       1,312        2.92
                                                           --------                             --------
     Noninterest-bearing liabilities             38,368                               29,892
     Shareholders' equity                        20,089                               17,907
                                               --------                             --------
         Total liabilities and
           shareholders' equity                $287,209                             $230,062
                                               ========                             ========

Net interest income                                        $  2,492                             $  2,044
                                                           ========                             ========

Interest rate spread (6)                                                   3.00%                                3.20%
                                                                       ========                             ========
Net interest margin (7)                                                    3.69%                                3.73%
                                                                       ========                             ========
</TABLE>

--------------------------------------------------------------------------------


                                                                             15.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

----------
(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.

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.

                                              Three Months Ended March 31,
                                                  2006 Versus 2005 (1)
                                                  --------------------
                                         Increase (decrease) due to changes in:
                                         --------------------------------------
                                                                       Net
                                            Volume         Rate       Change
                                            -------      -------     -------
                                                 (Dollars in thousands)
   Interest income:
       Loans                                $   766      $   626     $ 1,392
       Securities                                 3           20          23
       Other interest-earning assets             77            7          84
                                            -------      -------     -------
   Total interest income                        846          653       1,499
                                            -------      -------     -------

   Interest expense:
       Savings and NOW deposits                 (18)          38          20
       Money market deposits                    612          247         859
       Time deposits                            (38)         186         148
       FHLB advances                            (21)          32          11
       Subordinated debt                         --           20          20
       Other interest-bearing liabilities        (9)           2          (7)
                                            -------      -------     -------
   Total interest expense                       526          525       1,051
                                            -------      -------     -------

   Increase in net interest income          $   320      $   128     $   448
                                            =======      =======     =======

   ----------
   (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.

Net interest income increased by $448,000,  or 22.0%,  from $2.0 million for the
first three months of 2005 to $2.5 million for the current  three-month  period.
As can be seen from the above  rate/volume  analysis,  the increase is primarily
comprised of a positive volume variance of $320,000 and a positive rate variance
of $128,000.

Volume  Variance.  When  comparing  the first  three  months of 2006 to the same
period  last  year,  the  Company  experienced  substantial  growth  in its loan
portfolio,  with the most significant impact occurring in commercial real estate
and residential real estate loans.  The Company also experienced  growth in core
deposit  products,  with the largest increase  occurring in money market deposit
accounts.  In addition,  the Company utilized the increase in deposits to invest
in interest-earning  assets,  which contributed to the positive volume variance.
The  aggregate  positive  impact  of the loan and core  deposit  growth  largely
comprised the positive volume variance of $320,000.

--------------------------------------------------------------------------------


                                                                             16.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

Rate Variance.  The increases in the Federal Funds rate by the Federal  Reserve,
along with the growth in loan  balances,  is the primary reason for the positive
rate  variance  of  $128,000.   The  average  rate  earned  by  the  Company  on
interest-earning  assets  increased  by 107 basis  points to 7.19% for the three
months  ended March 31, 2006,  whereas,  the average rate paid by the Company on
interest-bearing  liabilities  increased  127 basis points to 4.19% for the same
period.  Therefore,  the  average  rate  earned on  interest-earning  assets was
greater  than  the  average  rate  paid on  interest-bearing  liabilities,  thus
contributing to the positive rate variance.

Net Interest  Margin.  Net interest  margin  decreased by four basis points from
3.73% to 3.69% when  comparing the first three months of 2006 to the same period
last year.  This  decrease  is mainly the result of an  increase  in net funding
costs from deposit growth, offset by an increase in interest-earning assets. The
increase  in net  funding  cost is the  result of the  recent  increases  in the
Federal Funds rate. The Company closely monitors its cost of funds and has taken
action to reduce such costs.  Furthermore,  variable  rates adjust to increasing
rates,  and proceeds from  maturity,  amortization  and  prepayment of loans and
securities continue to be invested at higher rates,  mitigating the rising costs
of core funding.

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 loss.

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  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.

Additional information with regard to the Company's methodology and reporting of
the  allowance  for loan losses is  included  in the 2005 Annual  Report on Form
10-K.

--------------------------------------------------------------------------------


                                                                             17.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

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 or realize the full carrying  value of the loan. The Company's
nonperforming assets at March 31, 2006 and December 31, 2005 are as follows:

<TABLE>
<CAPTION>
                                                                              March 31,    December 31,
                                                                                2006           2005
                                                                              ---------    ------------
                                                                               (Dollars in thousands)
<S>                                                                           <C>            <C>
   Nonaccruing loans                                                          $     235      $     319
   Loans past due over 90 days still on accrual (1)                                  --            447
                                                                              ---------      ---------
   Total nonperforming loans                                                        235            766
   Foreclosed assets, net                                                            --             --
                                                                              ---------      ---------
   Total nonperforming assets                                                 $     235      $     766
                                                                              =========      =========

   Allowance for loan losses                                                  $   2,354      $   2,207

   Nonperforming loans and foreclosed assets as a percent of total assets           .08%           .28%
   Nonperforming loans as a percent of gross loans                                  .09%           .33%
   Allowance for loan losses as a percent of nonperforming loans               1,001.70%        288.12%
</TABLE>

   ----------
   (1)   The  $447,000  loans past due over 90 days and still on accrual  was
         comprised of one  outstanding  loan which was brought current by the
         customer in January 2006.

Allowance and Provision for Loan Losses

The allowance for loan losses grew by $147,000  during the first three months of
2006, amounting to $2.4 million at March 31, 2006 as compared to $2.2 million at
December 31, 2005.  The  allowance  represented  approximately  .95% and .94% of
total loans at both dates, respectively.  During the first three months of 2006,
the Company had  charge-offs  of $4,700,  no recoveries  and recorded a $152,000
provision  for loan  losses  compared to no  charge-offs,  no  recoveries  and a
provision  for loan losses of $64,000 for the first  three  months of 2005.  The
larger provision for loan losses in 2006 resulted primarily from the increase in
loans outstanding.

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
and lease 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.

--------------------------------------------------------------------------------


                                                                             18.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

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  period,  loan  portfolio  concentrations  and  trends  in  the  loan
portfolio.

Based on the results of the analysis  performed by management at March 31, 2006,
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
"Application  of 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  90% of the Company's total loans  outstanding at March
31,  2006.  In  recent  years,  economic  conditions  in  Jacksonville  and  the
surrounding  communities  have been strong and real estate values have continued
to grow.  However,  such 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's
underwriting policies are relatively  conservative and, as a result, the Company
should not be any more affected than the overall market.

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.

--------------------------------------------------------------------------------


                                                                             19.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

Noninterest Income, Noninterest Expense, and Income Taxes

Noninterest  income was  $214,000  for the three  months  ended March 31,  2006,
compared to $223,000 for the 2005 period.  The decrease was  primarily  due to a
decrease in service  charges,  offset by an increase in other  income of $40,000
driven by the  increase in cash  surrender  value of the BOLI asset  recorded as
tax-free  noninterest  income.  The decrease in income from service  charges was
primarily the result of a reduction in return check charges and  maintenance and
activity charges.

Noninterest  expense  increased to $1.8 million for the three months ended March
31, 2006, from $1.6 million for the three months ended March 31, 2005. Occupancy
and equipment  accounted  for the majority of  noninterest  expense,  increasing
$167,000  over the  same  quarter  of 2005.  This  increase  is a result  of the
absorption of additional rent and equipment expense related to the Company's two
newest  locations.  The Company opened its fourth  location in February 2006 and
anticipates  opening its fifth  location  in the second  quarter.  Salaries  and
employee  benefits  also  increased due to $31,000 in  stock-based  compensation
expense resulting from the adoption of FAS 123(R) on January 1, 2006.

Income  taxes for the  three  months  ended  March 31,  2006 were  $295,000  (an
effective  rate of 36.74%)  compared to income  taxes of $232,000  for the three
months  ended  March 31,  2005 (an  effective  tax rate of  38.73%).  Income tax
expense  increased  due to the increase in net income,  while the  effective tax
rate decreased due to the tax-free  noninterest income earned on the BOLI in the
current period, which wasn't purchased until the second quarter of 2005, as well
as tax-free income earned on additional municipal securities.

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  Company's  total  risk-based
capital,  Tier 1  risk-based  capital  and Tier 1 leverage  capital  ratios were
10.61%, 9.69% and 8.67%, respectively, at March 31, 2006.

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 first fund loan
growth.  Any  remaining  cash is used  primarily  to  reduce  borrowings  and to
purchase  investment  securities.  During the first  three  months of 2006,  the
Company's cash and cash  equivalent  position  increased by $14.4  million.  The
increase  in cash  mainly  resulted  from an  increase  in deposit  accounts  of
approximately  $41.8 million from $234.2  million at December 31, 2005 to $276.0
million at March 31,  2006,  offset by an increase in net loan  originations  of
$13.8  million,  repayment of FHLB advances of $10.7  million,  and purchases of
securities of $3.9 million.

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 March 31, 2006, the Company had $40.6 million in federal funds sold and
available-for-sale securities not subject to pledge agreements.

--------------------------------------------------------------------------------


                                                                             20.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

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 core  deposits  from  businesses  and  consumers  in its local and national
market.  The Company can also borrow overnight federal funds and fixed-rate term
products under credit facilities established with the Federal Home Loan Bank and
other  commercial  banks.  These lines in the aggregate  amount of approximately
$81.1 million do not represent legal commitments to extend credit on the part of
the other banks.

Recent  Accounting  Pronouncements.  In December 2004, the FASB issued Statement
No. 153, Exchange of Nonmonetary Assets,  ("Statement 153"), an amendment of APB
Opinion No. 29, Accounting for Nonmonetary  Transactions.  This statement amends
the  principle of APB No. 29 and  generally  requires  that the  transaction  is
recorded at fair value with gain or loss  recognition  in income.  Statement 153
removed the APB 29 exception that exchanges of "similar, productive" nonmonetary
assets be accounted for at book value and more broadly provides  exceptions only
for transactions  that lack "commercial  substance."  Statement 153 is effective
for exchanges in fiscal years beginning after June 15, 2005. The Company adopted
Statement  153 on  January 1,  2006,  and  adoption  is not  expected  to have a
material impact on the financial  condition,  results of operations or liquidity
of the Company.

In May 2005, the FASB issued Statement No. 154, Accounting for Changes and Error
Corrections,  as amended,  ("Statement 154"), which replaces APB No. 20 and FASB
Statement 3.  Statement 154 modifies  prior  guidance on accounting  changes and
error  corrections  and  requires  retrospective   application  for  changes  in
accounting principles (unless that principle designates otherwise),  retroactive
restatement  for  error  corrections  and  prospective  method  for  changes  in
estimates.  Statement 154 is effective for accounting changes and corrections of
errors in fiscal years  beginning  after December 15, 2005. The Company  adopted
Statement  154 on  January 1,  2006,  and  adoption  is  expected  to change the
Company's  procedures  for  accounting  changes and error  corrections  (if any)
according to the methods required by Statement 154. The Company is not currently
aware of any  accounting  changes  or  errors to which  the  provisions  of this
Statement will apply.

In March 2004, the FASB Emerging  Issues Task Force (EITF)  released Issue 03-1,
The Meaning of  Other-Than-Temporary  Impairment and Its  Application to Certain
Investments,  which addressed  other-than-temporary  impairment for certain debt
and equity  investments.  The recognition and measurement  requirements of Issue
03-1, and other disclosure requirements not already implemented,  were effective
for periods  beginning  after June 15, 2004. In September  2004,  the FASB Staff
issued FASB Staff  Position (FSP)  EITF-03-1a,  which delayed the effective date
for certain  measurement and recognition  guidance  contained in Issue 03-1. The
FSP required  the  application  of  pre-existing  other-than-temporary  guidance
during the period of delay until a final consensus is reached. In November 2005,
the  FASB  staff   issued  FSP  FAS  115-1  and  FAS  124-1,   The   Meaning  of
Other-Than-Temporary  Impairment  and Its  Application  to Certain  Investments,
which  permanently   delayed  certain   measurement  and  recognition   guidance
(paragraphs  10-18) of Issue 03-1 and amended FAS 115 and FAS 124.  According to
FSP FAS 115-1 and FAS 124-1,  impaired securities should be written down to fair
value  as of the  Balance  Sheet  date and the  amount  is  recognized  based on
expected cash flows.  FSP FAS 115-1 and FAS 124-1 applies to all investments and
is effective for periods  beginning after December 15, 2005. The Company adopted
FSP FAS 115-1 and FAS 124-1 on January 1, 2006,  and adoption is not expected to
materially impact the financial condition, results of operations or liquidity of
the Company.

--------------------------------------------------------------------------------


                                                                             21.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

In February 2006, the FASB issued  Statement 155,  Accounting for Certain Hybrid
Financial   Instruments--an  Amendment  of  FASB  Statements  No.  133  and  140
("Statement 155"). This Statement amends FASB Statements No. 133, Accounting for
Derivative  Instruments and Hedging  Activities  ("Statement 133"), and No. 140,
Accounting for Transfers and Servicing of Financial  Assets and  Extinguishments
of Liabilities  ("Statement 140").  Statement 155 permits fair value measurement
for financial  instruments  containing  embedded  derivatives;  clarifies  which
instruments  are subject to Statement No. 133;  requires  evaluation of security
interests in financial assets for freestanding  derivatives and hybrid financial
instruments for embedded  derivatives;  clarifies that  concentrations of credit
risk in the form of subordination are not embedded  derivatives;  and eliminates
the prohibition  placed on Qualifying Special Purpose Entities by Statement 140.
Statement 155 is effective for all financial  instruments  acquired or issued in
fiscal years beginning  after September 15, 2006 (January 1, 2007).  Adoption is
not expected to have a material  impact on the financial  condition,  results of
operations or liquidity of the Company.

In March 2006,  the FASB issued  Statement No. 156,  Accounting for Servicing of
Financial Assets--an Amendment to Statement No. 140 ("Statement 156"). Statement
156 requires an entity to recognize a servicing asset or servicing  liability if
certain criteria exist in the contract;  requires initial fair value measurement
of all  separately  identifiable  servicing  assets and  servicing  liabilities;
permits use of either the amortization  method or fair value measurement  method
for  each  class  of  separately   recognized   servicing  assets  or  servicing
liabilities;   permits  a  one-time   reclassification   of   available-for-sale
securities to trading securities for servicing assets and servicing liabilities;
and requires separate presentation of servicing assets and servicing liabilities
subsequently measured at fair value.  Statement 156 is effective in fiscal years
beginning after  September 15, 2006 (January 1, 2007).  Adoption is not expected
to have a material impact on the financial condition,  results of operations, or
liquidity of the Company.

Contractual Obligations,  Commitments,  Contingent Liabilities,  and Off-Balance
Sheet Arrangements. The Corporation 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
Corporation's  overall level of these financial  obligations  since December 31,
2005 and that any changes in the  Corporation's  obligations which have occurred
are routine for the industry.  Further  discussion of the nature of each type of
obligation  is  included  in   Management's   Discussion  and  Analysis  in  the
Corporation's  Annual  Report  on  Form  10-K  and  is  incorporated  herein  by
reference.

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 and
narrower  guidelines  approved by ALCO. 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.

--------------------------------------------------------------------------------


                                                                             22.
<PAGE>

                           JACKSONVILLE BANCORP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

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
December 31, 2005  disclosures in Form 10-K. 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 is recorded,  processed,  summarized  and
      reported  within the time periods  specified in the rules and forms of the
      Securities and Exchange  Commission.  Based upon their evaluation of those
      controls and  procedures  performed as of the end of the period covered by
      this report,  the Chief Executive and principal  financial  officer of the
      Company  concluded that the Company's  disclosure  controls and procedures
      were adequate.

b.    Changes in internal controls.  The Company made no changes in its internal
      control over financial  reporting  during its most recent quarter that has
      materially   affected  the  Company's   internal  control  over  financial
      reporting.

--------------------------------------------------------------------------------


                                                                             23.
<PAGE>

                           PART II - OTHER INFORMATION
--------------------------------------------------------------------------------

Item 1.     Legal Proceedings

            There are no material  pending legal  proceedings  to which we are a
            party or to which any of our properties  are subject;  nor are there
            material  proceedings  known to be contemplated by any  governmental
            authority;  nor are  there  any  material  proceedings  known to us,
            pending or  contemplated,  in which any of our directors,  officers,
            affiliates or any principal  security  holders,  or any associate of
            any of the foregoing,  is a party or has an interest  adverse to us,
            except as set forth below. On April 11, 2006, The Jacksonville  Bank
            has been served with a Summons and a copy of the Complaint  filed by
            Wells Fargo Financial  Leasing,  Inc. in the Circuit Court of Fourth
            Judicial Circuit in and for Duval County,  Florida. The basis of the
            Complaint  stems from an erroneous  wire  transfer  that was made by
            Wells Fargo on February 16, 2005 to one of our customers, offsetting
            an overdraft in our customer's  account in the amount of $33,143.95.
            The Bank  retained the amount and Wells Fargo is pursuing the refund
            plus  interest  and  costs.  The Bank  does not  expect to incur any
            material loss with regard to this matter.

Item 1A.    Risk Factors

            There have been no material changes from the risk factors  disclosed
            in the Annual  Report on Form 10-K for the year ended  December  31,
            2005.

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

            None

Item 3.     Defaults on Senior Securities

            None

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

            None

Item 5.     Other Information

            None

Item 6.     Exhibits

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

                  Exhibit No. 3.2:   Amended and Restated Bylaws of the Company
                                     (2)

                  Exhibit No. 3.3:   Amendment to Amended and Restated Bylaws of
                                     the Company (3)

                  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 Exhibit No. 3.1 to
                        Form SB-2, Registration Statement and amendments
                        thereto, effective as of September 30, 1998,
                        Registration No. 333-64815.

--------------------------------------------------------------------------------


                                                                             24.
<PAGE>

                  (2)   Incorporated herein by reference to Exhibit No. 3.2 to
                        Form 10-QSB for the quarter ended June 30, 2002, filed
                        August 14, 2002.

                  (3)   Incorporated herein by reference to Exhibit No. 3.3 to
                        Form 10-QSB for the quarter ended June 30, 2005, filed
                        August 10, 2005.

--------------------------------------------------------------------------------


                                                                             25.
<PAGE>

                           JACKSONVILLE BANCORP, INC.

                                   SIGNATURES

--------------------------------------------------------------------------------

In accordance with the  requirement of the Securities  Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


Date:  May 5, 2006                      /s/ Gilbert J. Pomar, III
                                        ----------------------------------------
                                        Gilbert J. Pomar, III
                                        President and Chief Executive Officer


Date:  May 5, 2006                      /s/ Valerie A. Kendall
                                        ----------------------------------------
                                        Valerie A. Kendall
                                        Executive Vice President
                                        and Chief Financial Officer

--------------------------------------------------------------------------------


                                                                             26.