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

                                   FORM 10-QSB

 (Mark One)

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

For the quarterly period ended September 30, 2005
                               ------------------

|_|   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 small business issuer 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 an accelerated filer (as
defined in Rule 12b-2 of The Exchange Act).

Yes |_| No |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 November 10, 2005, the latest practicable date, 1,713,166 of the issuer's
common shares, $.01 par value, were issued and outstanding.

Transitional Small Business Disclosure Format (Check one):

Yes |X| No |_|


<PAGE>

                           JACKSONVILLE BANCORP, INC.

                                      INDEX

                                                                            Page
                                                                            ----

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.................... 9

    Item 3.   Controls and Procedures.........................................20

PART II - OTHER INFORMATION

    Item 1.   Legal Proceedings...............................................21

    Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.....21

    Item 3.   Defaults Upon Senior Securities.................................21

    Item 4.   Submission of Matters to a Vote of Security Holders.............21

    Item 5.   Other Information...............................................21

    Item 6.   Exhibits........................................................21

SIGNATURES ...................................................................22

CERTIFICATIONS................................................................23


                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                               September 30,   December 31,
                                                                   2005           2004
                                                                ---------       ---------
                                                                (Unaudited)
<S>                                                             <C>             <C>
ASSETS
Cash and due from banks                                         $   4,672       $   4,715
Federal funds sold                                                     75           2,020
                                                                ---------       ---------
     Total cash and cash equivalents                                4,747           6,735
Securities available for sale                                      23,605          23,125
Securities held to maturity                                            50              50
Loans, net of allowance for loan losses                           221,924         188,137
Premises and equipment, net                                         3,946           3,985
Bank-owned life insurance (BOLI)                                    4,582              --
Federal Home Loan Bank (FHLB) stock                                   717             353
Accrued interest receivable                                         1,257             973
Other assets                                                          818             386
                                                                ---------       ---------

         Total assets                                           $ 261,646       $ 223,744
                                                                =========       =========

LIABILITIES
Deposits
     Noninterest bearing                                        $  43,523       $  27,779
     Money market, NOW and savings deposits                       123,055          94,324
     Time deposits                                                 65,722          79,085
                                                                ---------       ---------
         Total deposits                                           232,300         201,188
Federal funds purchased                                               267              --
FHLB advances                                                       5,000              --
Subordinated debt                                                   4,000           4,000
Accrued expenses and other liabilities                                844             752
                                                                ---------       ---------
     Total liabilities                                            242,411         205,940

SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 8,000,000 shares authorized,
  1,713,166 and 1,708,366 shares issued                                17              17
Additional paid-in capital                                         17,451          17,381
Retained earnings                                                   2,032             546
Treasury stock, 1,500 shares                                          (45)             --
Accumulated other comprehensive loss                                 (220)           (140)
                                                                ---------       ---------
     Total shareholders' equity                                    19,235          17,804
                                                                ---------       ---------

         Total liabilities and shareholders' equity             $ 261,646       $ 223,744
                                                                =========       =========
</TABLE>

                 See accompanying notes to financial statements.


                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                              Three Months Ended              Nine Months Ended
                                                                September 30,                   September 30,
                                                            2005            2004            2005            2004
                                                         ----------      ----------      ----------      ----------
<S>                                                      <C>             <C>             <C>             <C>
Interest and dividend income
     Loans, including fees                               $    3,926      $    2,553      $   10,405      $    7,073
     Securities                                                 233             256             730             660
     Other                                                       16              31              36              67
                                                         ----------      ----------      ----------      ----------
         Total interest income                                4,175           2,840          11,171           7,800

Interest expense
     Deposits                                                 1,590           1,000           4,173           2,738
     FHLB advances                                               77              --             196              --
     Subordinated debt                                           64              44             177              50
     Other                                                        2              --              12               3
                                                         ----------      ----------      ----------      ----------
         Total interest expense                               1,733           1,044           4,558           2,791
                                                         ----------      ----------      ----------      ----------

Net interest income                                           2,442           1,796           6,613           5,009
Provision for loan losses                                       141              98             369             282
                                                         ----------      ----------      ----------      ----------

Net interest income after provision for loan losses           2,301           1,698           6,244           4,727

Noninterest income
     Service charges on deposit accounts                        169             166             494             491
     Gain on sale of foreclosed assets                           --              --              --              20
     Other income                                               106              37             245             118
                                                         ----------      ----------      ----------      ----------
         Total noninterest income                               275             203             739             629

Noninterest expense
     Salaries and employee benefits                             740             662           2,354           1,826
     Occupancy and equipment                                    278             200             861             537
     Other                                                      493             530           1,423           1,333
                                                         ----------      ----------      ----------      ----------
         Total noninterest expense                            1,511           1,392           4,638           3,696
                                                         ----------      ----------      ----------      ----------

Income before income taxes                                    1,065             509           2,345           1,660
Income tax expense                                              389             192             859             625
                                                         ----------      ----------      ----------      ----------

Net income                                               $      676      $      317      $    1,486      $    1,035
                                                         ==========      ==========      ==========      ==========

Weighted average:
     Common shares                                        1,712,236       1,551,690       1,710,306       1,503,078
     Dilutive stock options and warrants                     86,951         156,199          86,800         157,535
                                                         ----------      ----------      ----------      ----------
                                                          1,799,187       1,707,889       1,797,106       1,660,613
                                                         ==========      ==========      ==========      ==========

Basic earnings per common share                          $      .39      $      .20      $      .87      $      .69
                                                         ==========      ==========      ==========      ==========
Diluted earnings per common share                        $      .38      $      .19      $      .83      $      .62
                                                         ==========      ==========      ==========      ==========
</TABLE>

                 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                           Other
                             Outstanding                 Paid-In        (Accumulated    Treasury Stock   Comprehensive
                                Shares        Amount     Capital           Deficit)         Amount        Income (Loss)     Total
                             ------------    -------   ----------        -----------    --------------   --------------   ---------
<S>                             <C>          <C>         <C>              <C>               <C>           <C>             <C>
Balance at January 1, 2004      1,467,166    $    15     $ 14,230         $    (789)        $     --      $    (49)       $ 13,407

Comprehensive income:
   Net income                                                                 1,035                                          1,035
   Change in unrealized gain
        on securities available for
        sale, net of tax effects                                                                                11              11
                                                                                                                            -------
   Total comprehensive income                                                                                                1,046
Exercise of stock options,
  including tax benefits           15,800                     222                                                              222
Exercise of common stock warrants 224,900          2        2,921                                                            2,923
                                ---------    -------     --------         ---------         --------      --------        ---------
Balance at September 30, 2004   1,707,866    $    17     $ 17,373         $     246         $     --      $    (38)       $ 17,598

Balance at January 1, 2005      1,708,366    $    17     $ 17,381         $     546         $     --      $   (140)       $ 17,804

Comprehensive income:
   Net income                                                                 1,486                                          1,486
   Change in unrealized gain (loss)
        on securities available for
        sale, net of tax effects                                                                               (80)            (80)
                                                                                                                          ---------
   Total comprehensive income                                                                                                1,406

Purchase of treasury stock         (4,500)                                                      (128)                         (128)

Issuance of treasury stock          3,000                       1                                 83                            84

Exercise of stock options,
   including tax benefits           4,800                      69                                                               69
                                ---------    -------     --------         ---------         --------      --------        ---------
Balance at September 30, 2005   1,711,666    $    17     $ 17,451         $   2,032         $    (45)     $   (220)       $ 19,235

Balance at July 1, 2004         1,510,116    $    15     $ 14,800         $     (71)        $     --      $   (377)       $ 14,367

Comprehensive income:
   Net income                                                                   317                                            317
   Change in unrealized gain
     on securities available for
     sale, net of tax effects                                                                                  339             339
                                                                                                                         ---------
   Total comprehensive income                                                                                                  656
Exercise of stock options,
  including tax benefits           10,600                     142                                                              142
Exercise of common stock warrants 187,150          2        2,431                                                            2,433
                                ---------    -------     --------         ---------         --------      --------        ---------
Balance at September 30, 2004   1,707,866    $    17     $ 17,373             $ 246         $     --      $    (38)       $ 17,598

Balance at July 1, 2005         1,711,666    $    17     $ 17,450         $   1,356         $   (43)      $   (114)       $ 18,666

Comprehensive income:
   Net income                                                                   676                                            676
   Change in unrealized gain (loss)
     on securities available for
     sale, net of tax effects                                                                                 (106)           (106)
                                                                                                                          ---------
   Total comprehensive income                                                                                                  570

Purchase of treasury stock         (1,500)                                                       (45)                          (45)

Issuance of treasury stock          1,500                       1                                 43                            44
                                ---------    -------     --------         ---------         --------      --------        --------
Balance at September 30, 2005   1,711,666    $    17     $ 17,451         $   2,032         $    (45)     $   (220)       $ 19,235
                                =========    =======     ========         =========         ========      ========        ========
</TABLE>

                 See accompanying notes to financial statements.


                                       5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                            Nine Months Ended
                                                                              September 30,
                                                                           2005           2004
                                                                         --------       --------
<S>                                                                      <C>            <C>
Cash flows from operating activities
     Net income                                                          $  1,486       $  1,035
     Adjustments to reconcile net income to net cash from operating
       activities:
         Depreciation and amortization                                        314            179
         Net amortization of deferred loan fees                              (113)           (63)
         Provision for loan losses                                            369            282
         Premium amortization, net of accretion                                31              8
         Increase in cash surrender value of BOLI                             (82)            --
         Gain on sale of foreclosed assets                                     --            (20)
         Issuance of treasury stock as compensation                            84             --
         Net change in accrued interest receivable and other assets          (668)           440
         Net change in accrued expenses and other liabilities                 113            688
                                                                         --------       --------
              Net cash from operating activities                            1,534          2,549

Cash flows from investing activities
     Purchases of securities available for sale                            (5,422)       (13,020)
     Proceeds from maturities of securities available for sale              4,783          6,203
     Net change in loans                                                  (34,043)       (23,992)
     Purchase of BOLI                                                      (4,500)            --
     Premises and equipment expenditures, net                                (275)          (887)
     Proceeds from sale of foreclosed assets                                   --            415
     Purchases of Federal Home Loan Bank stock                               (364)          (109)
                                                                         --------       --------
         Net cash from investing activities                               (39,821)       (31,390)

Cash flows from financing activities
     Net change in deposits                                                31,112         30,834
     Net change in short-term FHLB advances                                 2,000             --
     Net change in federal funds purchased                                    267         (4,296)
     Proceeds from long-term FHLB advances                                  3,000             --
     Proceeds from issuance of subordinated debt                               --          4,000
     Proceeds from exercise of stock options                                   48            160
     Proceeds from exercise of common stock warrants                           --          2,923
     Purchase of treasury stock                                              (128)            --
                                                                         --------       --------
         Net cash from financing activities                                36,299         33,621
                                                                         --------       --------

Net change in cash and cash equivalents                                    (1,988)         4,780
Cash and cash equivalents at beginning of period                            6,735          3,894
                                                                         --------       --------

Cash and cash equivalents at end of period                               $  4,747       $  8,674
                                                                         ========       ========

Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest                                                        $  4,545       $  2,820
         Income taxes                                                       1,069             28
</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

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-KSB for the year ended December 31, 2004.

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 September 30, 2005 and 2004 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, 2004
consolidated balance sheet was derived from the Company's December 31, 2004
audited consolidated financial statements.

NOTE 2 - STOCK-BASED COMPENSATION

On September 13, 2005, the Company granted 5,000 incentive stock options at an
exercise price of $29.00 under its Stock Option Plan. The options have a term of
ten years beginning on the date of grant and vest in equal increments over five
years. There were no options exercised or expired/forfeited during the period.
As of September 30, 2005, 197,857 options were outstanding.

Employee compensation expense under stock options is reported using the
intrinsic value method. No stock-based compensation cost is reflected in net
income, as all options granted had an exercise price equal to or greater than
the market price of the underlying common stock at date of grant. The following
table illustrates the effect on net income and earnings per share if expense was
measured using the fair value recognition provisions of FASB Statement No. 123,
Accounting for Stock-Based Compensation.

<TABLE>
<CAPTION>
                                                  Three Months Ended          Nine Months Ended
                                                     September 30,               September 30,
                                                  2005        2004           2005           2004
                                                -------      -------      ---------      ---------
<S>                                             <C>          <C>          <C>            <C>
Net income as reported                          $   676      $   317      $   1,486      $   1,035
Deduct:  Stock-based compensation expense
  determined under fair value based method           30           36             89             95
                                                -------      -------      ---------      ---------

Pro forma net income                            $   646      $   281      $    1,397     $     940
                                                =======      =======      =========      =========

Basic earnings per share as reported            $   .39      $   .20      $     .87      $     .69
Pro forma basic earnings per share                  .38          .18            .82            .63

Diluted earnings per share as reported          $   .38      $   .19      $     .83      $     .62
Pro forma diluted earnings per share                .36          .16            .78            .57
</TABLE>


                                       7
<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 September 30, 2005 and December 31, 2004:

<TABLE>
<CAPTION>
                               Adequately
                               Capitalized      September  30, 2005     December 31, 2004
                               Requirement           Actual                    Actual
                               -----------           ------                    ------
<S>                                   <C>             <C>                      <C>
Tier 1 Capital (to
Average Assets)
Consolidated                         >4%              9.16%                    10.09%
Bank                                 >4%              8.35%                     8.24%
Tier 1 Capital (to Risk
Weighted Assets)
Consolidated                         >4%             10.17%                    11.21%
Bank                                 >4%              9.23%                     9.17%
Total Capital (to Risk
Weighted Assets)
Consolidated                         >8%             11.08%                    12.15%
Bank                                 >8%             10.14%                    10.11%
</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 September 30, 2005, 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 - TREASURY STOCK

Treasury stock is carried at cost. Gains and losses on issuances are based on
the market price of the underlying common stock at the date of sale and
determined using the first-in, first-out (FIFO) method. Gains on issuances are
credited to additional paid-in capital while losses are charged to additional
paid-in capital to the extent that previous net gains from issuances are
included therein, otherwise to retained earnings. Gains or losses on the
issuance of treasury stock are not credited or charged to income.

NOTE 5 - FHLB ADVANCES

FHLB advances at September 30, 2005 consisted of $3,000,000 fixed rate and
$2,000,000 variable rate advances. The interest rate on the fixed portion of the
advance, which matures April 11, 2008, is 4.36%. The interest rate on the
variable portion of the advance, which adjusts daily, was 4.16% at September 30,
2005. The advances are collateralized by a blanket lien on the Company's
residential and commercial real estate loan portfolio. The Company had no FHLB
advances outstanding at December 31, 2004.


                                       8
<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"), which
is further discussed below, 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 strategically
transformed our deposit portfolio from national time deposits to local core
deposits, thus reducing our cost of funds and increasing our net interest
margin. 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
third quarter, we acquired additional municipal securities which we expect will
increase tax-free interest income. In the fourth quarter, the Bank will launch a
business banking initiative, including an overdraft privilege program, for its
customers which will likely result in additional noninterest fee income. In
addition, the Bank announced the opening of its fourth and fifth locations in
key areas of Jacksonville, which will give us additional visibility and access
to businesses and individuals and will likely result in additional loan and
deposit growth. The additional locations are expected to open in the first
quarter of 2006.


                                       9
<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 impact 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 of 2004, the Federal Reserve implemented a tightening policy
that has resulted in eleven interest rate increases in the prime rate, which was
6.75% at October 1, 2005. These rate increases have improved our interest margin
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. The Company's balance sheet
is currently asset sensitive; therefore, rate sensitive assets exceed rate
sensitive liabilities. As interest rates continue to rise, we expect an increase
in interest margin.

Introduction

In the following pages, management presents an analysis of the financial
condition of Jacksonville Bancorp, Inc. as of September 30, 2005 compared to
December 31, 2004, and the results of operations for the three and nine months
ended September 30, 2005 compared with the same periods in 2004. 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.


                                       10
<PAGE>

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

Comparison of Financial Condition at September 30, 2005 and December 31, 2004

Total assets increased $37.9 million, or 17%, from $223.7 million at December
31, 2004 to $261.6 million at September 30, 2005. During the nine months ended
September 30, 2005, the Company experienced net loan growth of $33.8 million, or
18%. The increase in net loans was driven by increases in commercial real estate
loans of $28.2 million, or 24%, and residential real estate loans of $7.7
million, or 15.4%. In addition, the Company acquired $4.5 million of Bank-Owned
Life Insurance (BOLI) on May 10, 2005. The Company funded the increase in
earning assets through an increase in deposits of $31.1 million, as well as an
increase in FHLB advances of $5 million.

As previously discussed, the Company entered into a $4.5 million BOLI contract
on May 10, 2005. The investment was originally recorded at the premium amount,
and increases in cash surrender value are recognized as tax-free noninterest
income. During the current quarter, the Company has recognized approximately
$52,000 in income, and the investment is valued at $4,582,000.

Total deposits increased $31.1 million, or 15.5%, from $201.2 million at
December 31, 2004 to $232.3 million at September 30, 2005. During the nine
months ended September 30, 2005, noninterest bearing deposits increased $15.7
million to $43.5 million, and money market, NOW and savings deposits increased
$28.7 million to $123.1 million. Average core deposit growth of $62.4 million,
or 81.5%, over the first nine months of 2004 has lessened the Company's
dependence on the national CD market, which contributed favorably to our risk
profile. As part of the Company's strategic decision to reduce its costs of
funds and risk profile, it has shifted its focus from national certificates of
deposit to obtaining lower cost core deposits from local customers. As a result,
time deposits decreased $13.4 million to $65.7 million at September 30, 2005,
and the certificate of deposit portfolio as a percent of total deposits declined
to 28.3% at September 30, 2005 from 39.3% at December 31, 2004. Almost all
certificates of deposit held by the Company mature in less than five years with
the majority maturing in the next year.

Investment securities available for sale increased $480,000 to $23.6 million at
September 30, 2005. During the nine months ended September 30, 2005, we
purchased $5.4 million of securities and received $4.8 million in proceeds from
maturities and principal repayments. Of the $5.4 million of securities purchased
in the current year, approximately $3.2 million were invested in tax-exempt
municipal securities.

FHLB advances at September 30, 2005 consisted of $3,000,000 fixed rate and
$2,000,000 variable rate advances. The interest rate on the fixed portion of the
advance, which matures April 11, 2008, is 4.36%. The interest rate on the
variable portion of the advance, which adjusts daily, was 4.16% at September 30,
2005. The advances are collateralized by a blanket lien on the Company's
residential and commercial real estate loan portfolio. The Company had no FHLB
advances outstanding at December 31, 2004.

Total stockholders' equity increased by $1,431,000, or 8.04%, from $17,804,000
at December 31, 2004 to $19,235,000 at September 30, 2005. The increase is
attributable to net income of $1,486,000. At September 30, 2005, the Company had
8,000,000 authorized shares of $.01 par value common stock, of which 1,713,166
shares were issued and 1,711,666 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 September 30, 2005.


                                       11
<PAGE>

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

Comparison of Operating Results for the Nine Months Ended September 30, 2005 and
2004

Net Income

Net income increased $451,000, or 43.6%, from $1,035,000 for the nine months
ended September 30, 2004 to $1,486,000 for the nine months ended September 30,
2005. Diluted earnings per share increased $.21 from $.62 for the nine months
ended September 30, 2004 to $.83 for the nine months ended September 30, 2005.
This increase in net income and diluted earnings per share was due to an
increase in net interest income and noninterest 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.
Interest income earned on loans increased $3.3 million to $10.4 million for the
nine months ended September 30, 2005. Salaries and employee benefits accounted
for the largest portion of the increase in noninterest expenses. The increase in
income tax expense was directly related to the increase in net income.

Net Interest Income

Net interest income, the difference between interest earned on interest-earning
assets and interest paid on interest-bearing liabilities, increased $1,604,000,
or 32.0% from $5,009,000 for the nine months ended September 30, 2004 to
$6,613,000 for the nine months ended September 30, 2005. This increase resulted
from an increase in interest income of $3,371,000, offset by an increase in
interest expense of $1,767,000. The average net interest rate spread increased
10 basis points from 3.15% for the nine months ended September 30, 2004 to 3.25%
for the nine months ended September 30, 2005. Refer to the table on the
following page for a detailed analysis of the increase in net interest income.


                                       12
<PAGE>

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

Net Interest Income (continued from previous page)

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 stockholders' 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>
                                                                   Nine Months Ended September 30,
                                                -------------------------------------------------------------------
                                                             2005                                2004
                                                ------------------------------      -------------------------------
                                                  Average              Average         Average             Average
                                                  Balance    Interest   Rate           Balance   Interest   Rate
                                                  -------    --------   ----           -------   --------   ----
                                                                       (Dollars in thousands)
Interest-earning assets:
<S>                                             <C>          <C>         <C>        <C>          <C>          <C>
     Loans (1)                                  $   205,966  $ 10,405    6.75%      $   164,782  $  7,073     5.73%
     Securities                                      23,869       730    4.09            17,754       660     4.97
     Other interest-earning assets (2)                1,938        36    2.48             8,284        67     1.08
                                                -----------  --------               -----------  --------
         Total interest-earning assets (3)          231,773    11,171    6.44           190,820     7,800     5.46
                                                             --------                            --------
     Noninterest-earning assets (4)                  10,034                               7,117
                                                -----------                         -----------

         Total assets                           $   241,807                         $   197,937
                                                ===========                         ===========

Interest-bearing liabilities:
     Savings and NOW deposits                   $    22,200  $    201    1.21        $   21,339  $    129      .81
     Money market deposits                           84,921     2,268    3.57            34,439       535     2.08
     Time deposits                                   71,672     1,704    3.18           104,116     2,074     2.66
     FHLB advances                                    7,473       196    3.51                --        --       --
     Subordinated debt                                4,000       177    5.92             1,547        50     4.32
     Other interest-bearing liabilities (5)             523        12    3.07               245         3     1.64
                                                -----------  --------               -----------  --------
         Total interest-bearing liabilities         190,789     4,558    3.19           161,686     2,791     2.31
                                                             --------                            --------
     Noninterest-bearing liabilities                 32,698                              21,851
     Stockholders' equity                            18,320                              14,400
                                                -----------                         ------------
         Total liabilities and
           stockholders' equity                 $   241,807                         $   197,937
                                                ===========                         ===========

Net interest income                                          $  6,613                            $  5,009
                                                             ========                            ========

Interest rate spread (6)                                                 3.25%                                3.15%
                                                                         ====                                 ====
Net interest margin (7)                                                  3.81%                                3.51%
                                                                         ====                                 ====
</TABLE>

1)    Includes nonaccrual loans.
2)    Includes federal funds sold.
3)    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.
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.


                                       13
<PAGE>

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

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.

<TABLE>
<CAPTION>
                                                        Nine Months Ended September 30,
                                                             2005 Versus 2004 (1)
                                                    Increase (decrease) due to changes in:
                                                    --------------------------------------
                                                                                     Net
                                                    Volume           Rate          Change
                                                 -------------  ------------    -------------
                                                            (Dollars in thousands)
<S>                                              <C>            <C>             <C>
     Interest income:
         Loans                                   $      1,951   $      1,381    $      3,332
         Securities                                       201           (131)             70
         Other interest-earning assets                    (76)            45             (31)
                                                 -------------  ------------    -------------
     Total interest income                              2,076          1,295           3,371
                                                 ------------   ------------    ------------

     Interest expense:
         Savings and NOW deposits                           5             67              72
         Money market deposits                          1,163            570           1,733
         Time deposits                                   (723)           353            (370)
         FHLB advances                                    196             --             196
         Subordinated debt                                103             24             127
         Other interest-bearing liabilities                 5              4               9
                                                 ------------   ------------    ------------
     Total interest expense                               749          1,018           1,767
                                                 ------------   ------------    ------------

     Increase in net interest income             $      1,327   $        277    $      1,604
                                                 ============   ============    ============
</TABLE>

_______________
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 $1,604,000, or 32.0%, from $5,009,000 for the
first nine months of 2004 to $6,613,000 for the current nine-month period. As
can be seen from the above rate/volume analysis, the increase is primarily
comprised of a positive volume variance of $1,327,000 and a positive rate
variance of $277,000.

Volume Variance. When comparing the first nine months of 2005 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 non-interest bearing
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 $1,327,000 and is
further enhanced by the positive impact on net interest margin discussed in the
"Rate Variance" section that follows.

Rate Variance. The increases in the Federal Funds rate by the Federal Reserve,
along with the growth in low cost core deposits, and the resulting positive
impact on net interest margin is the primary reason for the positive rate
variance of $277,000. The average rate earned by the Company on interest-earning
assets increased by 98 basis points to 6.44% for the nine months ended September
30, 2005, whereas, the average rate paid by the Company on interest-bearing
liabilities increased 88 basis points to 3.19% 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.


                                       14
<PAGE>

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

Net Interest Margin. Net interest margin increased by 30 basis points from 3.51%
to 3.81% when comparing the first nine months of 2005 to the same period last
year. When applied to average total interest-earning assets of approximately
$231.8 million for the first nine months of 2005, the improvement in net
interest margin results in an increase in net interest income of approximately
$1,604,000. The increase in net interest margin occurred primarily due to an
increase in the yield on earning assets offset somewhat by an increase in net
funding costs from deposit growth as well as the increase in FHLB advances. The
Company experienced a negative rate variance of $131,000 in its securities
portfolio during the quarter. This resulted from a strategic decision made
during the fourth quarter of 2004 to restructure the investment portfolio to
mitigate duration risk which resulted in transitioning to lower yielding short-
term investments. An increase in both the average rate earned and funding costs
primarily was the result of nine increases, or a total of 250 basis points, in
the Federal Funds rate from September 30, 2004 to September 30, 2005. Variable
rates adjusted to increasing rates, and proceeds from maturity, amortization and
prepayment of loans and securities continued to be invested at higher rates,
mitigating the rising costs of core funding.

Management believes that available yields will continue to rise in 2005 and that
the increase will have a positive impact on the net interest margin.

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.


                                       15
<PAGE>

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

Additional information with regard to the Company's methodology and reporting of
the allowance for loan losses is included in the 2004 Annual Report and 10-KSB.

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 September 30, 2005 and December 31, 2004 are as follows:

<TABLE>
<CAPTION>
                                                                       September 30,      December 31,
                                                                           2005               2004
                                                                           ----               ----
                                                                            (Dollars in thousands)
<S>                                                                   <C>               <C>
     Nonaccruing loans                                                $          310    $           654
     Loans past due over 90 days still on accrual (1)                            190                 --
                                                                      --------------    ---------------
     Total nonperforming loans                                                   500                654
     Foreclosed assets, net                                                       --                 --
                                                                      --------------    ---------------
     Total nonperforming assets                                       $          500    $           654
                                                                      ==============    ===============

     Allowance for loan losses                                        $        2,103    $         1,843

     Nonperforming assets as a percent of total assets                          .20%               .29%
     Nonperforming loans as a percent of gross loans                            .23%               .34%
     Allowance for loan losses as a percent of nonperforming loans           420.60%            281.80%
</TABLE>

_____________________
1)    The $190,000 loans past due over ninety days and still on accrual was
      comprised of one outstanding loan which was collected in full on October
      19, 2005.

Allowance and Provision for Loan Losses

The allowance for loan losses grew by $260,000 during the first nine months of
2005, amounting to $2,103,000 at September 30, 2005 as compared to $1,843,000 at
December 31, 2004. The allowance represented approximately .94% and .97% of
total loans at both dates, respectively. During the first nine months of 2005,
the Company had loan charge-offs of $109,000, no recoveries and recorded a
$369,000 provision for loan losses compared to charge-offs of $30,000,
recoveries of $12,000 and a provision for loan losses of $282,000 for the first
nine months of 2004. The larger provision for loan losses in 2005 resulted
primarily from the increase in loans outstanding.


                                       16
<PAGE>

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

The allowance for loan losses is the amount that management currently believes
will be adequate to absorb estimated probable losses in the Company's loan
portfolio. Our process for assessing the adequacy of the allowance for loan
losses and the resultant need, if any, for periodic provisions to the allowance
charged to income, includes both individual loan analyses and loan pool
analyses. Individual loan analyses are periodically performed on loan
relationships of a significant size or when otherwise deemed necessary.
Individual loans identified through this analysis are then divided into the
following risk categories: Special Mention, Substandard, and Doubtful. When
appropriate, a specific reserve will be established for individual loans.
Otherwise, we allocate an allowance for each risk category based on factors such
as historical loss rate, concentrations of credit risk, and recent trends in
loan loss history. The remaining unallocated reserve is then analyzed for
sufficiency based on factors such as changes in national and local economic
conditions, perceived strength of our lending staff, loan portfolio
concentrations and growth rate. At September 30, 2005, the Company had allocated
approximately $469,000 to loans categorized as either Special Mention or
Substandard. In addition, the Company had placed a specific reserve of
approximately $121,000 on two loans as a result of the individual loan analysis.

Based on the results of the analysis performed by management at September 30,
2005, 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 will be affected
by, among other things, economic conditions in Jacksonville, Florida, and the
surrounding communities. Such conditions could affect the financial strength of
the Company's borrowers and do affect the value of real estate collateral
securing the Company's mortgage loans. Loans secured by real estate represent
approximately 91% of the Company's total loans outstanding at September 30,
2005. 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.


                                       17
<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 $739,000 for the nine months ended September 30, 2005,
compared to $629,000 for the 2004 period. The increase was primarily due to an
increase in other income of $127,000 driven by the $82,000 increase in cash
surrender value of the BOLI asset recorded as tax-free noninterest income.
Service charges on deposit accounts remained relatively flat at approximately
$490,000 in 2005 and 2004.

Noninterest expense increased to $4,638,000 for the nine months ended September
30, 2005, from $3,696,000 for the nine months ended June 30, 2004. Salaries and
employee benefits was the largest noninterest expense increasing $528,000 to
$2,354,000 for the 2005 period. Between September 30, 2004 and September 30,
2005, the Company made significant investments to position itself for the future
by increasing the experience and talent of its personnel. Total full-time
employees increased during the period, including the addition of a risk manager,
human resources manager, residential mortgage solicitor, cash management
officer, and senior commercial banker, enhancing the overall talent and
experience level of the Bank's management. In addition, the Company built out
and relocated its main office and headquarters to a new location in the heart of
downtown Jacksonville, which accounted for a portion of the $324,000 increase in
occupancy and equipment expenses. Professional fees increased $45,000 due to
additional audit and legal expenses, as well as costs incurred to ensure
compliance with the Sarbanes-Oxley Act of 2002, in particular with Section 404
of the Act.

Income taxes for the nine months ended September 30, 2005 were $859,000 (an
effective rate of 36.72%) compared to income taxes of $625,000 for the nine
months ended September 30, 2004 (an effective tax rate of 37.62%). This increase
was mainly due to the increase in net income.

Comparison of Operating Results for the Three Months Ended September 30, 2005
and 2004

Net income for the third quarter of 2005 was $676,000, or $.38 per share, as
compared to $317,000, or $.19 per share, earned for the same quarter last year.
The increase in net income is attributable to an increase in net interest income
of $646,000 and an increase in noninterest income of $72,000, partially offset
by an increase in noninterest expense.

Net interest income increased by $646,000, or 36%, from $1,796,000 for the third
quarter of 2004 to $2,442,000 for the current quarter. The increase is primarily
comprised of a positive volume variance of $486,000 and a positive rate variance
of $160,000. The reasons for the positive volume variance and positive rate
variance are the same as those discussed above with respect to the nine-month
periods.

The increase in noninterest income is attributable to an increase in other
income while the increase in noninterest expense is attributable to increases in
salaries, occupancy and equipment expense, and other operating expenses. The
reasons for the increases in other income, salaries and occupancy and equipment
expense are the same as those discussed above with respect to the nine-month
periods.

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
11.08%, 10.17% and 9.16%, respectively, at September 30, 2005.


                                       18
<PAGE>

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

The Company has included the $4.0 million of trust preferred securities that
were issued in June 2004 in its Tier 1 Capital and Total Capital. Inclusion of
the trust preferred securities has increased the Company's total risk-based
capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios by 173,
174 and 155 basis points, respectively, at September 30, 2005.

Cash Flows and Liquidity

Cash Flows. The Company's primary sources of cash are deposit growth, maturities
and amortization of investment securities, operations, 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 nine months of 2005, the
Company's cash and cash equivalent position decreased by $1.99 million. Net cash
provided by operating activities was $1.5 million and $2.5 million for the nine
months ended September 30, 2005 and 2004, respectively. The decrease in cash
from the nine months ended September 30, 2004 to the current period mainly
resulted from an increase in cash disbursed for loans of approximately $10.0
million, cash paid for BOLI of $4.5 million, net of an increase in cash deposits
of $0.3 million and FHLB advances of $5.0 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 September 30, 2005, the Company had $23,680,000 in federal funds sold
and available-for-sale securities not subject to pledge agreements.

The Company's primary external sources of liquidity are customer deposits and
borrowings from other commercial banks. The Company's deposit base consists of
both core deposits from businesses and consumers in its local market area and
brokered deposits. 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 $66.7 million do not represent legal commitments to extend
credit on the part of the other banks.


                                       19
<PAGE>

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

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.

The Company has determined that interest rate risk is its predominant market
risk. The Company is currently in an asset-sensitive position; therefore, a
significant decline in interest rates may adversely impact net interest income.

The Company monitors its market risk and does not believe that there have been
any material changes in its market risk exposure since December 31, 2004.

Item 3. 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.


                                       20
<PAGE>

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

Item 1.    Legal Proceedings

           None

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 Bylaws of the Company (2)

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

            Exhibit No. 10:   Absolute Net Lease between Hwy 17 Investors, Inc.
                              and The Jacksonville Bank dated September 1, 2005

            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 from the Exhibits to Form SB-2,
            Registration Statement and amendments thereto, as effective on
            September 30, 1998, Registration No. 333-64815.

      (2)   Incorporated herein by reference from the Exhibits to Form 10-QSB
            for the quarter ended June 30, 2002, filed August 14, 2002.


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<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:  November 10, 2005                 /s/ Gilbert J. Pomar, III
                                         ---------------------------------------
                                         Gilbert J. Pomar, III
                                         President and Chief Executive Officer


Date:  November 10, 2005                 /s/ Valerie A. Kendall
                                         ---------------------------------------
                                         Valerie A. Kendall
                                         Executive Vice President
                                         and Chief Financial Officer


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