##### Table of Contents





U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







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

For the quarterly period ended March 31, 2008



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number: 0-49789





Henry County Bancshares, Inc.

(Exact name of registrant as specified in its
charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Georgia                                                        |  | 58-1485511                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)

4806 N. Henry Blvd., Stockbridge, Georgia 30281

(Address of principal executive offices)

(770) 474-7293

(Issuers telephone number)

N/A

(Former name, former address and former fiscal year, if changed since
last report)





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, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting
company in Rule 12b-2 of the Exchange Act.

Large Accelerated filer   ̈    Accelerated filer  x    Non-accelerated filer   ̈    Smaller
Reporting Company   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).    Yes   ̈    No  x

State the number of shares outstanding of each of the issuers classes of common equity, as of May 12, 2008: 14,245,690; $2.50 par value.









---

##### Table of Contents

HENRY COUNTY BANCSHARES, INC AND SUBSIDIARIES

INDEX



|         |  |                                                                                                         |  |     
|-------- |  | ------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                         |  | Page
|PART I.  |  | FINANCIAL INFORMATION                                                                                   |  |     
|         |  |                                                                                                        
|         |  | Item 1. Financial Statements                                                                            |  |     
|         |  |                                                                                                        
|         |  | Consolidated Balance Sheets- March 31, 2008 and December 31, 2007                                       |  | 3   
|         |  |                                                                                                        
|         |  | Consolidated Statements of Income and Comprehensive Income - Three Months Ended March 31, 2008 and 2007 |  | 4   
|         |  |                                                                                                        
|         |  | Consolidated Statements of Cash Flows - Three Months Ended March 31, 2008 and 2007                      |  | 5   
|         |  |                                                                                                        
|         |  | Notes to Consolidated Financial Statements                                                              |  | 6-8 
|         |  |                                                                                                        
|         |  | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations           |  | 9-16
|         |  |                                                                                                        
|         |  | Item 3. Quantitative and Qualitative Disclosures About Market Risk                                      |  | 17  
|         |  |                                                                                                        
|         |  | Item 4. Controls and Procedures                                                                         |  | 18  
|         |  |                                                                                                        
|PART II. |  | OTHER INFORMATION                                                                                       |  |     
|         |  |                                                                                                        
|         |  | Item 4 - Submission of Matters to a Vote of Security Holders                                            |  | 19  
|         |  |                                                                                                        
|         |  | Item 6 - Exhibits and Reports on Form 8-K                                                               |  | 19  
|         |  |                                                                                                        
|         |  | Signatures                                                                                              |  | 20  



---

##### Table of Contents

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2008 AND DECEMBER 31, 2007

(Unaudited)



|                                                                                         |  |               |             |   |                  |   |             |  
|---------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                         |  | March 31,2008 |             |   | December 31,2007 |  
|Assets                                                                                   |  |               |             |   |                  |   |             |  
|Cash and due from banks                                                                  |  | $             | 16,494,745  |   |                  | $ | 16,826,236  |  
|Interest- bearing deposits in banks                                                      |  |               | 1,341,041   |   |                  |   | 2,731,987   |  
|Federal funds sold                                                                       |  |               | 14,800,000  |   |                  |   | 9,500,000   |  
|Securities available for sale, at fair value                                             |  |               | 79,890,240  |   |                  |   | 87,717,716  |  
|Securities held to maturity, at cost, (fair value 2008 $4,194,983; 2007 $4,143,401)      |  |               | 4,163,642   |   |                  |   | 4,164,690   |  
|Restricted equity securities, at cost                                                    |  |               | 1,702,651   |   |                  |   | 1,897,751   |  
|Loans held for sale                                                                      |  |               | 533,600     |   |                  |   | 950,405     |  
|                                                                                         |  |              
|Loans                                                                                    |  |               | 562,807,073 |   |                  |   | 569,387,551 |  
|Less allowance for loan losses                                                           |  |               | 8,718,348   |   |                  |   | 7,657,387   |  
|                                                                                         |  |               |             |   |                  |   |             |  
|Loans, net                                                                               |  |               | 554,088,725 |   |                  |   | 561,730,164 |  
|                                                                                         |  |              
|Premises and equipment                                                                   |  |               | 10,164,894  |   |                  |   | 10,341,368  |  
|Other assets                                                                             |  |               | 22,202,708  |   |                  |   | 23,135,732  |  
|                                                                                         |  |               |             |   |                  |   |             |  
|Total assets                                                                             |  | $             | 705,382,246 |   |                  | $ | 718,996,049 |  
|                                                                                         |  |               |             |   |                  |   |             |  
|                                                                                         |  |              
|Liabilities and Stockholders' Equity                                                     |  |               |             |   |                  |   |             |  
|                                                                                         |  |              
|Deposits                                                                                 |  |               |             |   |                  |   |             |  
|Noninterest-bearing                                                                      |  | $             | 70,183,039  |   |                  | $ | 71,388,083  |  
|Interest-bearing                                                                         |  |               | 551,755,955 |   |                  |   | 554,463,038 |  
|                                                                                         |  |               |             |   |                  |   |             |  
|Total deposits                                                                           |  |               | 621,938,994 |   |                  |   | 625,851,121 |  
|Other borrowings                                                                         |  |               | 3,128,658   |   |                  |   | 13,424,498  |  
|Other liabilities                                                                        |  |               | 4,218,538   |   |                  |   | 4,186,288   |  
|                                                                                         |  |               |             |   |                  |   |             |  
|Total liabilities                                                                        |  |               | 629,286,190 |   |                  |   | 643,461,907 |  
|                                                                                         |  |               |             |   |                  |   |             |  
|                                                                                         |  |              
|Stockholders' equity                                                                     |  |               |             |   |                  |   |             |  
|Common stock, par value $2.50; 30,000,000 shares authorized; 14,388,749.60 shares issued |  |               | 35,971,874  |   |                  |   | 35,971,874  |  
|Surplus                                                                                  |  |               | 739,560     |   |                  |   | 739,560     |  
|Retained earnings                                                                        |  |               | 40,880,752  |   |                  |   | 40,644,829  |  
|Accumulated other comprehensive income                                                   |  |               | 822,474     |   |                  |   | 435,733     |  
|Treasury stock, 143,060 and 138,560 shares, respectively                                 |  |               | (2,318,604  | ) |                  |   | (2,257,854  | )
|                                                                                         |  |               |             |   |                  |   |             |  
|Total stockholders' equity                                                               |  |               | 76,096,056  |   |                  |   | 75,534,142  |  
|                                                                                         |  |               |             |   |                  |   |             |  
|Total liabilities and stockholders' equity                                               |  | $             | 705,382,246 |   |                  | $ | 718,996,049 |  
|                                                                                         |  |               |             |   |                  |   |             |  

See Notes to Consolidated Financial Statements.



3



---

##### Table of Contents

HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

THREE MONTHS ENDED MARCH 31, 2008 AND 2007

(Unaudited)



|                                                                                                  |  |                             |            |      |   |           
|------------------------------------------------------------------------------------------------- |  | --------------------------- | ---------- | ---- | - | ----------
|                                                                                                  |  | Three Months EndedMarch 31,
|                                                                                                  |  | 2008                        |            | 2007
|Interest income                                                                                   |  |                             |            |      |   |           
|Loans                                                                                             |  | $                           | 9,778,904  |      | $ | 11,625,268
|Taxable securities                                                                                |  |                             | 1,150,634  |      |   | 1,050,097 
|Nontaxable securities                                                                             |  |                             | 79,445     |      |   | 89,109    
|Deposits in banks                                                                                 |  |                             | 31,159     |      |   | 5,237     
|Federal funds sold                                                                                |  |                             | 104,802    |      |   | 210,020   
|                                                                                                  |  |                             |            |      |   |           
|Total interest income                                                                             |  |                             | 11,144,944 |      |   | 12,979,731
|                                                                                                  |  |                             |            |      |   |           
|Interest expense                                                                                  |  |                             |            |      |   |           
|Deposits                                                                                          |  |                             | 5,808,918  |      |   | 5,773,410 
|Other borrowings                                                                                  |  |                             | 118,079    |      |   | 307,895   
|                                                                                                  |  |                             |            |      |   |           
|Total interest expense                                                                            |  |                             | 5,926,997  |      |   | 6,081,305 
|                                                                                                  |  |                             |            |      |   |           
|Net interest income                                                                               |  |                             | 5,217,947  |      |   | 6,898,426 
|Provision for loan losses                                                                         |  |                             | 1,110,000  |      |   | 12,500    
|                                                                                                  |  |                             |            |      |   |           
|Net interest income after provision for loan losses                                               |  |                             | 4,107,947  |      |   | 6,885,926 
|                                                                                                  |  |                             |            |      |   |           
|Other operating income                                                                            |  |                             |            |      |   |           
|Service charges on deposit accounts                                                               |  |                             | 337,062    |      |   | 337,090   
|Other service charges and fees                                                                    |  |                             | 254,528    |      |   | 289,178   
|Mortgage banking income                                                                           |  |                             | 120,605    |      |   | 158,292   
|                                                                                                  |  |                             |            |      |   |           
|Total other income                                                                                |  |                             | 712,195    |      |   | 784,560   
|                                                                                                  |  |                             |            |      |   |           
|Other expenses                                                                                    |  |                             |            |      |   |           
|Salaries and employee benefits                                                                    |  |                             | 1,865,737  |      |   | 1,763,893 
|Occupancy and equipment expenses                                                                  |  |                             | 481,874    |      |   | 438,071   
|Other operating expenses                                                                          |  |                             | 741,167    |      |   | 557,697   
|                                                                                                  |  |                             |            |      |   |           
|Total other expenses                                                                              |  |                             | 3,088,778  |      |   | 2,759,661 
|                                                                                                  |  |                             |            |      |   |           
|Income before income taxes                                                                        |  |                             | 1,731,364  |      |   | 4,910,825 
|                                                                                                  |  |                            
|Income tax expense                                                                                |  |                             | 640,700    |      |   | 1,867,501 
|                                                                                                  |  |                             |            |      |   |           
|Net income                                                                                        |  |                             | 1,090,664  |      |   | 3,043,324 
|                                                                                                  |  |                             |            |      |   |           
|Other comprehensive gain:                                                                         |  |                             |            |      |   |           
|Unrealized gains on securities available for sale, net of tax                                     |  |                             | 386,741    |      |   | 80,425    
|                                                                                                  |  |                             |            |      |   |           
|Comprehensive income                                                                              |  | $                           | 1,477,405  |      | $ | 3,123,749 
|                                                                                                  |  |                             |            |      |   |           
|Earnings per share (weighted average shares outstanding- 14,284,744 and 14,321,468, respectively) |  | $                           | 0.08       |      | $ | 0.21      
|                                                                                                  |  |                             |            |      |   |           
|Cash dividends per share                                                                          |  | $                           | 0.06       |      | $ | 0.06      
|                                                                                                  |  |                             |            |      |   |           

See Notes to Consolidated Financial Statements.



4



---

##### Table of Contents

HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2008 AND 2007

(Unaudited)



|                                                                                  |  |      |             |   |      |   |             |  
|--------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                  |  | 2008 |             |   | 2007 |  
|OPERATING ACTIVITIES                                                              |  |      |             |   |      |   |             |  
|Net income                                                                        |  | $    | 1,090,664   |   |      | $ | 3,043,324   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |             |   |      |   |             |  
|Depreciation                                                                      |  |      | 176,474     |   |      |   | 149,133     |  
|Net decrease in loans held for sale                                               |  |      | 416,805     |   |      |   | 321,385     |  
|Provision for loan losses                                                         |  |      | 1,110,000   |   |      |   | 12,500      |  
|Writedowns of other real estate owned                                             |  |      | 109,064     |   |      |   |            |  
|(Increase) decrease in interest receivable                                        |  |      | 964,790     |   |      |   | (377,824    | )
|Decrease in interest payable                                                      |  |      | (419,002    | ) |      |   | (213,481    | )
|Net other operating activities                                                    |  |      | 918,818     |   |      |   | 1,920,538   |  
|                                                                                  |  |      |             |   |      |   |             |  
|Net cash provided by operating activities                                         |  |      | 4,367,613   |   |      |   | 4,855,575   |  
|                                                                                  |  |      |             |   |      |   |             |  
|                                                                                  |  |     
|INVESTING ACTIVITIES                                                              |  |      |             |   |      |   |             |  
|Purchases of securities available for sale                                        |  |      | (23,037,629 | ) |      |   | (22,999,520 | )
|Proceeds from maturities of securities available for sale                         |  |      | 31,451,075  |   |      |   | 13,030,792  |  
|Proceeds from maturities of securities held to maturity                           |  |      | 1,048       |   |      |   | 101,449     |  
|Retirement of restricted equity securities                                        |  |      | 195,100     |   |      |   | 12,300      |  
|Net increase in federal funds sold                                                |  |      | (5,300,000  | ) |      |   | (30,200,000 | )
|Net decrease in interest-bearing deposits in banks                                |  |      | 1,390,946   |   |      |   | 67,502      |  
|Net decrease in loans                                                             |  |      | 5,723,814   |   |      |   | 14,781,501  |  
|Purchase of premises and equipment                                                |  |      |            |   |      |   | (424,533    | )
|                                                                                  |  |      |             |   |      |   |             |  
|Net cash provided by (used in) investing activities                               |  |      | 10,424,354  |   |      |   | (25,630,509 | )
|                                                                                  |  |      |             |   |      |   |             |  
|                                                                                  |  |     
|FINANCING ACTIVITIES                                                              |  |      |             |   |      |   |             |  
|Net increase (decrease) in deposits                                               |  |      | (3,912,127  | ) |      |   | 23,116,363  |  
|Net repayments of other borrowings                                                |  |      | (10,295,840 | ) |      |   | (33,324     | )
|Dividends paid                                                                    |  |      | (854,741    | ) |      |   | (859,287    | )
|Purchase of treasury stock                                                        |  |      | (60,750     | ) |      |   |            |  
|                                                                                  |  |      |             |   |      |   |             |  
|Net cash provided by (used in) financing activities                               |  |      | (15,123,458 | ) |      |   | 22,223,752  |  
|                                                                                  |  |      |             |   |      |   |             |  
|Net increase (decrease) in cash and due from banks                                |  |      | (331,491    | ) |      |   | 1,448,818   |  
|                                                                                  |  |     
|Cash and due from banks, beginning of period                                      |  |      | 16,826,236  |   |      |   | 18,584,790  |  
|                                                                                  |  |      |             |   |      |   |             |  
|Cash and due from banks, end of period                                            |  | $    | 16,494,745  |   |      | $ | 20,033,608  |  
|                                                                                  |  |      |             |   |      |   |             |  
|                                                                                  |  |     
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                 |  |      |             |   |      |   |             |  
|Cash paid for:                                                                    |  |      |             |   |      |   |             |  
|Interest                                                                          |  | $    | 6,345,999   |   |      | $ | 6,294,786   |  
|                                                                                  |  |     
|Income taxes                                                                      |  | $    |            |   |      | $ | 203,547     |  
|                                                                                  |  |     
|Noncash transactions                                                              |  |      |             |   |      |   |             |  
|Other real estate acquired in settlement of loans                                 |  | $    | 807,625     |   |      | $ | 678,221     |  
|                                                                                  |  |     
|Financed sales of other real estate owned                                         |  | $    |            |   |      | $ |            |  

See Notes to Consolidated Financial Statements.



5



---

##### Table of Contents

HENRY COUNTY BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. BASIS OF PRESENTATION

The consolidated financial information for Henry County Bancshares, Inc. (the Company) included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim period.

The results of operations for the three month period ended March 31, 2008 are not necessarily indicative of the results to be expected for the full
year.

Adoption of New Accounting Standards

Fair Value Option and Fair Value Measurements

In September 2006, the FASB issued Statement
No. 157, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The statement establishes a fair value hierarchy
prioritizing the assumptions used to measure fair value and clarifies assumptions about risk and the effect of a restriction on the sale or use of an asset. The standard is effective for fiscal years beginning after November 15, 2007. In
February 2008, the FASB issued FASB Staff Position (FSP) No. FAS 157-2, Effective Date of FASB Statement No. 157.This FSP delays the effective date of FAS 157 for all nonfinancial assets and nonfinancial liabilities, except
those that are recognized or disclosed at fair value on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. As permitted under FASB Staff Position No. FAS
157-2, the Company has elected to defer the application of FAS 157 to nonfinancial assets and liabilities until January 1, 2009. The Company does not believe the impact will be material to the financial condition of the Company.

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



6



---

##### Table of Contents

Fair Value Measurement

Statement 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Statement 157 also establishes a fair value hierarchy which requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

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

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

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

The Company used the following methods and significant assumptions to estimate fair value.

Securities: The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities
exchanges or matrix pricing, which is a mathematical technique, used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities relationship
to other benchmark quoted securities.

Assets and Liabilities Measured on a Recurring Basis

Fair Value Measurements at March 31, 2008, using:



|                              |  |                                                              |   |                                             |   |                                       |  |   |  
|----------------------------- |  | ------------------------------------------------------------ | - | ------------------------------------------- | - | ------------------------------------- |  | - | -
|                              |  | Quoted Prices in ActiveMarkets for Identical Assets(Level 1) |   | Significant Other ObservableInputs(Level 2) |   | Significant ObservableInputs(Level
3)
|Assets:                       |  |                                                              |   |                                             |   |                                       |  |   |  
|Available for sale securities |  | $                                                            |  |                                             | $ | 79,890,240                            |  | $ | 



7



---

##### Table of Contents

NOTE 2. SUPPLEMENTAL SEGMENT INFORMATION

The Company has two reportable segments: commercial banking and mortgage loan origination. The commercial banking segment provides traditional banking
services offered through the Bank. The mortgage loan origination segment provides mortgage loan origination services offered through First Metro.

The accounting policies of the segments are the same as those described in the footnotes to the December 31, 2007 consolidated financial statements as filed in our annual report on Form 10-K. The Company evaluates performance based on
profit and loss from operations before income taxes not including nonrecurring gains and losses.

The Company accounts for intersegment
revenues and expenses as if the revenue/expense transactions were to third parties, that is, at current market prices.

The Companys
reportable segments are strategic business units that offer different products and services. They are managed separately because each segment has different types and levels of credit and interest rate risk.



|                                           |  |                   |             |          |   |           |          |  |   |              |   |  |       |            |   |  |   |            
|------------------------------------------ |  | ----------------- | ----------- | -------- | - | --------- | -------- |  | - | ------------ | - |  | ----- | ---------- | - |  | - | -----------
|                                           |  | INDUSTRY SEGMENTS
|For the Three Months Ended March 31, 2008  |  | CommercialBanking |             | Mortgage |   |           | AllOther |  |   | Eliminations |   |  | Total
|Interest income                            |  | $                 | 11,158,372  |          | $ | 2,952     |          |  | $ |             |   |  | $     | (16,380    | ) |  | $ | 11,144,944 
|Interest expense                           |  |                   | 5,929,949   |          |   | 13,428    |          |  |   |             |   |  |       | (16,380    | ) |  |   | 5,926,997  
|Net interest income (expense)              |  |                   | 5,228,423   |          |   | (10,476   | )        |  |   |             |   |  |       |           |   |  |   | 5,217,947  
|Intersegment net interest income (expense) |  |                   | 10,476      |          |   | (10,476   | )        |  |   |             |   |  |       |           |   |  |   |           
|Other revenue from external sources        |  |                   | 588,440     |          |   | 120,605   |          |  |   | 3,150        |   |  |       |           |   |  |   | 712,195    
|Intersegment other revenues                |  |                   | 6,210       |          |   | (6,210    | )        |  |   |             |   |  |       |           |   |  |   |           
|Depreciation                               |  |                   | 174,784     |          |   | 129       |          |  |   | 1,561        |   |  |       |           |   |  |   | 176,474    
|Provision for loan losses                  |  |                   | 1,110,000   |          |   |          |          |  |   |             |   |  |       |           |   |  |   | 1,110,000  
|Segment profit (loss)                      |  |                   | 1,796,045   |          |   | (56,838   | )        |  |   | (7,843       | ) |  |       |           |   |  |   | 1,731,364  
|Segment assets                             |  |                   | 705,972,888 |          |   | 1,278,068 |          |  |   | 296,076      |   |  |       | (2,164,786 | ) |  |   | 705,382,246
|Expenditures for premises and equipment    |  |                   |            |          |   |          |          |  |   |             |   |  |       |           |   |  |   |           

NOTE 2. SUPPLEMENTAL SEGMENT INFORMATION (Continued)



|                                           |  |                   |             |          |   |           |          |  |   |              |   |  |       |            |   |  |   |            
|------------------------------------------ |  | ----------------- | ----------- | -------- | - | --------- | -------- |  | - | ------------ | - |  | ----- | ---------- | - |  | - | -----------
|                                           |  | INDUSTRY SEGMENTS
|For the Three Months Ended March 31, 2007  |  | CommercialBanking |             | Mortgage |   |           | AllOther |  |   | Eliminations |   |  | Total
|Interest income                            |  | $                 | 12,994,233  |          | $ | 4,389     |          |  | $ |             |   |  | $     | (18,891    | ) |  | $ | 12,979,731 
|Interest expense                           |  |                   | 6,085,694   |          |   | 14,502    |          |  |   |             |   |  |       | (18,891    | ) |  |   | 6,081,305  
|Net interest income (expense)              |  |                   | 6,908,539   |          |   | (10,113   | )        |  |   |             |   |  |       |           |   |  |   | 6,898,426  
|Intersegment net interest income (expense) |  |                   | 10,113      |          |   | (10,113   | )        |  |   |             |   |  |       |           |   |  |   |           
|Other revenue from external sources        |  |                   | 623,118     |          |   | 158,292   |          |  |   | 3,150        |   |  |       |           |   |  |   | 784,560    
|Intersegment other revenues                |  |                   | 6,210       |          |   | (6,210    | )        |  |   |             |   |  |       |           |   |  |   |           
|Depreciation                               |  |                   | 147,412     |          |   | 160       |          |  |   | 1,561        |   |  |       |           |   |  |   | 149,133    
|Provision for loan losses                  |  |                   | 12,500      |          |   |          |          |  |   |             |   |  |       |           |   |  |   | 12,500     
|Segment profit (loss)                      |  |                   | 4,961,767   |          |   | (33,041   | )        |  |   | (17,901      | ) |  |       |           |   |  |   | 4,910,825  
|Segment assets                             |  |                   | 722,131,062 |          |   | 1,252,744 |          |  |   | 1,125,912    |   |  |       | (3,099,025 | ) |  |   | 721,410,693
|Expenditures for premises and equipment    |  |                   | 424,533     |          |   |          |          |  |   |             |   |  |       |           |   |  |   | 424,533    



8



---

##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following is managements discussion and analysis of certain significant factors which have affected the financial position and operating results of Henry County Bancshares, Inc. and its subsidiaries, The
First State Bank and First Metro Mortgage Co., during the periods included in the accompanying consolidated financial statements.

Special Cautionary
Notice Regarding Forward Looking Statements

Certain of the statements made herein under the caption Managements Discussion and Analysis of
Financial Condition and Results of Operations (MD&A) are forward-looking statements and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or
achievements of Henry County Bancshares, Inc. to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward looking statements include statements using the words
such as may, will, anticipate, should, would, believe, contemplate, expect, estimate, continue, may,
intend, or other similar words and expressions of the future. Our actual results may differ significantly from the results we discuss in these forward-looking statements.

These forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors, including, without limitation: the effects of future economic conditions; governmental monetary and
fiscal policies, as well as legislative and regulatory changes; the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities, and other interest-sensitive assets and
liabilities; interest rate risks; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual
funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally, and internationally, together with such competitors offering banking products and services by mail,
telephone, computer, and the Internet.

Critical Accounting Policies

We have adopted various accounting policies which govern the application of accounting principles generally accepted in the United States in the preparation of our financial statements. Our significant accounting
policies are described in the footnotes to the consolidated financial statements at December 31, 2007 as filed in our annual report on Form 10-K.

Certain accounting policies involve significant judgments and assumptions by us which have a material impact on the carrying value of certain assets and liabilities. We consider these accounting policies to be critical accounting policies.
The judgments and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances. Because of the nature of the judgments and assumptions we make, actual results could differ from
these judgments and estimates which could have a material impact on our carrying values of assets and liabilities and our results of operations.

We
believe the allowance for loan losses is a critical accounting policy that requires the most significant judgments and estimates used in preparation of our consolidated financial statements. Please see the portion of this discussion that addresses
our allowance for loan losses for a description of our processes and methodology for determining our allowance for loan losses.



9



---

##### Table of Contents

Liquidity and Capital Resources

Our liquidity and capital resources are monitored on a periodic basis by management, State and Federal regulatory authorities. As determined under guidelines established by regulatory authorities and internal policy,
our liquidity ratio of 14.59% at March 31, 2008 was considered satisfactory.

At March 31, 2008, our capital ratios were in excess of the
regulatory minimum capital requirements to be classified as well-capitalized. The regulatory minimum capital requirements to be classified as well-capitalized and our actual capital ratios on a consolidated and bank-only basis are as follows:



|                           |  |              |   |  |       |   |  |                              |  
|-------------------------- |  | ------------ | - |  | ----- | - |  | ---------------------------- | -
|                           |  | Actual       |   |  |       |  
|                           |  | Consolidated |   |  | Bank  |   |  | MinimumRegulatoryRequirement |  
|Leverage capital ratios    |  | 10.47        | % |  | 10.44 | % |  | 5.00                         | %
|Risk-based capital ratios: |  |              |   |  |       |   |  |                              |  
|Tier 1 capital             |  | 12.45        |   |  | 12.41 |   |  | 6.00                         |  
|Total capital              |  | 13.70        |   |  | 13.66 |   |  | 10.00                        |  

Off-Balance Sheet Risk

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of
credit. Such commitments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the balance sheets.

Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. We use
the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. A summary of our commitments is as follows:



|                             |  |               |           
|---------------------------- |  | ------------- | ----------
|                             |  | March 31,2008
|Commitments to extend credit |  | $             | 72,561,000
|Letters of credit            |  |               | 6,143,000 
|                             |  |               |           
|                             |  | $             | 78,704,000
|                             |  |               |           

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed
necessary by us upon extension of credit, is based on our credit evaluation of the customer.



10



---

##### Table of Contents

Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third
party. Those letters of credit are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral is
required in instances which we deem necessary.

Financial Condition

Following is a summary of our balance sheets for the periods indicated:



|                                   |  |                        |         |                  |   |        
|---------------------------------- |  | ---------------------- | ------- | ---------------- | - | -------
|                                   |  | March 31,2008          |         | December 31,2007
|                                   |  | (Dollars in Thousands)
|Cash and due from banks            |  | $                      | 16,495  |                  | $ | 16,826 
|Interest-bearing deposits in banks |  |                        | 1,341   |                  |   | 2,732  
|Federal funds sold                 |  |                        | 14,800  |                  |   | 9,500  
|Securities                         |  |                        | 85,756  |                  |   | 93,781 
|Loans, net                         |  |                        | 554,089 |                  |   | 561,730
|Loans held for sale                |  |                        | 534     |                  |   | 950    
|Premises and equipment             |  |                        | 10,165  |                  |   | 10,341 
|Other assets                       |  |                        | 22,202  |                  |   | 23,136 
|                                   |  |                        |         |                  |   |        
|                                   |  | $                      | 705,382 |                  | $ | 718,996
|                                   |  |                        |         |                  |   |        
|Total deposits                     |  | $                      | 621,939 |                  | $ | 625,851
|Other borrowings                   |  |                        | 3,129   |                  |   | 13,424 
|Other liabilities                  |  |                        | 4,218   |                  |   | 4,187  
|Stockholders equity               |  |                        | 76,096  |                  |   | 75,534 
|                                   |  |                        |         |                  |   |        
|                                   |  | $                      | 705,382 |                  | $ | 718,996
|                                   |  |                        |         |                  |   |        

Our assets decreased by 1.89% in the first quarter of 2008. Decreases in net loans of $7.6 million, coupled with
decreases in investment securities of $8.0 million were primarily used to fund increases in federal funds sold of $5.3 million as well as to reduce other borrowings by $10.3 million. Total deposits decreased $3.9 million in the first quarter of
2008. The decrease in deposit accounts were primarily a result of decreases in certificates of deposit of $10.9 million, offset by increases in interest bearing checking, savings and demand deposit accounts of $6.9 million. Our total equity has
increased by $562,000 year-to-date as net income of $1.091 million coupled with increases in unrealized gains on securities available for sale, net of tax, of $387,000 was offset by dividends paid of $855,000 and purchases of treasury stock of
$61,000.



11



---

##### Table of Contents

Results of Operations For The Three Months Ended March 31, 2008 and 2007

Following is a summary of our operations for the periods indicated.



|                          |  |                             |        |      |   |       
|------------------------- |  | --------------------------- | ------ | ---- | - | ------
|                          |  | Three Months EndedMarch 31,
|                          |  | 2008                        |        | 2007
|                          |  | (Dollars in Thousands)     
|Interest income           |  | $                           | 11,145 |      | $ | 12,979
|Interest expense          |  |                             | 5,927  |      |   | 6,081 
|                          |  |                             |        |      |   |       
|Net interest income       |  |                             | 5,218  |      |   | 6,898 
|Provision for loan losses |  |                             | 1,110  |      |   | 12    
|Other income              |  |                             | 712    |      |   | 784   
|Other expense             |  |                             | 3,089  |      |   | 2,760 
|                          |  |                             |        |      |   |       
|Pretax income             |  |                             | 1,731  |      |   | 4,910 
|Income taxes              |  |                             | 640    |      |   | 1,867 
|                          |  |                             |        |      |   |       
|Net income                |  | $                           | 1,091  |      | $ | 3,043 
|                          |  |                             |        |      |   |       

Our net interest income has decreased by $1,680,000 in the first quarter of 2008 as compared to the same period in
2007. Our net yield on average interest-earning assets has decreased to 3.10% in the first quarter of 2008 as compared to 4.17% for the first quarter of 2007. The decrease in net yield on average interest-earning assets is primarily due to a 147
basis point drop in our yield on loans, coupled with a decrease in average outstanding loans in the first quarter of 2008 as compared to 2007. Our net yield on average interest-earning assets was 3.64% for the entire year of 2007. The yields earned
on loans have decreased primarily as a result of continued decreases in the Prime lending rate as well as an increased level of nonaccrual loans. We reversed approximately $700,000 in interest income on loans placed on nonaccrual during the first
quarter of 2008, effectively lowering our net yield on average earning assets by approximately 42 basis points. Our net cost on average interest-bearing liabilities decreased slightly to 4.23% in the first quarter of 2008 compared to 4.48% for the
first quarter of 2007. The decrease in interest expense is largely the result of a lower cost of funds during the first quarter of 2008 compared to 2007 as our interest-bearing deposits are re-pricing downward as market deposit rates have lowered.

The provision for loan losses for the first quarter of 2008 was $1,110,000, an increase of $1,097,500 from the same quarter in 2007. The amounts provided
are due primarily to our assessment of the inherent risk in the portfolio at March 31, 2008. The allowance for loan losses as a percentage of total net outstanding loans was 1.55% at March 31, 2008 and 1.34% at December 31, 2007. The
allowance for loan losses is maintained at a level that is deemed appropriate by management to adequately cover all known and inherent risks in the loan portfolio. Our evaluation of the loan portfolio includes a continuing review of loan loss
experience, current economic conditions which may affect the borrowers ability to repay and the underlying collateral value. Please see the information on page 15 for a further discussion of our allowance for loan losses methodology.



12



---

##### Table of Contents

The following table shows our nonperforming assets for the periods ended March 31, 2008, December 31,
2007, and March 31, 2007:



|                                                                                                         |  |                        |        |                  |   |               |  |   |      
|-------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | ---------------- | - | ------------- |  | - | -----
|                                                                                                         |  | March 31,2008          |        | December 31,2007 |   | March 31,2007
|                                                                                                         |  | (Dollars in Thousands)
|Nonaccrual loans                                                                                         |  | $                      | 36,938 |                  | $ | 32,744        |  | $ | 74   
|Loans contractually past due ninety days or more as to interest or principal payments and still accruing |  |                        | 3,012  |                  |   | 4,714         |  |   | 4,591
|Restructured loans                                                                                       |  |                        | 0      |                  |   | 0             |  |   | 0    
|                                                                                                         |  |                        |        |                  |   |               |  |   |      
|Total nonperforming loans                                                                                |  | $                      | 39,950 |                  | $ | 37,458        |  | $ | 4,665
|Other real estate                                                                                        |  |                        | 11,093 |                  |   | 10,394        |  |   | 2,089
|                                                                                                         |  |                        |        |                  |   |               |  |   |      
|Total nonperforming assets                                                                               |  | $                      | 51,043 |                  | $ | 47,852        |  | $ | 6,754
|                                                                                                         |  |                        |        |                  |   |               |  |   |      

Nonperforming assets consist of nonaccrual loans, loans restructured due to the debtors financial
difficulties, loans past due 90 days or more as to interest or principal and still accruing, and other real estate owned, which is real estate acquired through foreclosure. Nonaccrual loans are those loans on which recognition of interest income has
been discontinued. Restructured loans generally allow for an extension of the original repayment period or a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower. When management believes
there is sufficient doubt to the collecibility of principal or interest on any loan, or generally when loans are 90 days or more past due, the accrual of interest is discontinued and the loan is designated as nonaccrual, unless the loan is well
secured and in the process of collection. Interest payments received on nonaccrual loans are either applied against principal or reported as income according to managements judgment as to the collectibility of principal. Loans are returned to
an accrual status when those factors that indicated doubtful collectibility on a timely basis no longer exist. Other real estate owned is initially recorded at the lower of cost or estimated market value at the date of acquisition. A provision for
estimated losses is recorded when a subsequent decline in value occurs.

Nonperforming assets at March 31, 2008 amounted to approximately $51.0
million, or 8.89% of total loans and other real estate. This compares to approximately $47.8 million or 8.25% of total loans and other real estate at December 31, 2007, and $6.7 million or 1.23% at March 31, 2007.

The increase in nonperforming assets is primarily attributed to increases in nonaccrual loans as well as an increase in other real estate owned. The increase in
nonaccrual loans are primarily attributed to two separate loan relationships involving residential developments. These relationships are both located in our trade area and are comprised of a $4.5 million development loan covering 127 acres located
in Newton County, Georgia, and a $1.8 million development loan secured by 95 acres in Butts County, Georgia. The Company also placed a loan in the amount of $2.2 million on nonaccrual during the first quarter of 2008 secured by a developed
commercial retail center located in Henry County, Georgia. Several smaller relationships secured by construction loans on homes in various stages of completion, as well as residential lots totaling approximately $2.4 million were also placed on
nonaccrual during the first quarter of 2008. The Company collected interest and renewed approximately $4.9 million in loans previously placed on nonaccrual during the quarter ended March 31, 2008. The Company also collected principal and
interest on nonaccrual loans in the amount of $844,000 during the first quarter of 2008 as a result of the sale of



13



---

##### Table of Contents

collateral. The increase in other real estate owned during the first quarter of 2008 is primarily attributed to the foreclosure of a construction loan in the
amount of $807,000 secured by fifteen town homes which are valued well in excess of the carrying value and that the Company is actively marketing for resale.

Our policy is to discontinue the accrual of interest income when, in the opinion of management, collection of such interest becomes doubtful. Generally nonaccrual status is determined when (1) there is a significant deterioration in
the financial condition of the borrower and full repayment of principal and interest is not expected and (2) the principal or interest is more than ninety days past due, unless the loan is both well-secured and in the process of collection.
Accrual of interest on such loans is resumed when, in managements judgment, the collection of interest and principal becomes probable.

Loans
classified for regulatory purposes as loss, doubtful, substandard, or special mention that have not been included in the table above do not represent or result from trends or uncertainties which management reasonably expects will materially impact
future operating results, liquidity or capital resources. These classified loans do not represent material credits about which management is aware of any information which causes management to have serious doubts as to the ability of such borrowers
to comply with the loan repayment terms.



14



---

##### Table of Contents

Information regarding certain loans and allowance for loan loss data through March 31, 2008 and 2007 is as follows:



|                                                                              |  |                             |         |   |      |   |         |  
|----------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                              |  | Three Months EndedMarch 31, |        
|                                                                              |  | 2008                        |         |   | 2007 |  
|                                                                              |  | (Dollars in Thousands)      |        
|Average amount of loans outstanding                                           |  | $                           | 568,571 |   |      | $ | 556,546 |  
|                                                                              |  |                             |         |   |      |   |         |  
|Balance of allowance for loan losses at beginning of period                   |  | $                           | 7,657   |   |      | $ | 5,230   |  
|                                                                              |  |                             |         |   |      |   |         |  
|Loans charged off                                                             |  |                             |         |   |      |   |         |  
|Real estate                                                                   |  |                             | 50      |   |      |   | 13      |  
|Commercial                                                                    |  |                             |        |   |      |   |        |  
|Consumer installment                                                          |  |                             |        |   |      |   |        |  
|                                                                              |  |                             |         |   |      |   |         |  
|                                                                              |  |                             | 50      |   |      |   | 13      |  
|                                                                              |  |                             |         |   |      |   |         |  
|Loans recovered                                                               |  |                             |         |   |      |   |         |  
|Real estate                                                                   |  |                             |        |   |      |   |        |  
|Commercial                                                                    |  |                             |        |   |      |   | 1       |  
|Consumer installment                                                          |  |                             | 1       |   |      |   | 3       |  
|                                                                              |  |                             |         |   |      |   |         |  
|                                                                              |  |                             | 1       |   |      |   | 4       |  
|                                                                              |  |                             |         |   |      |   |         |  
|Net (charge-offs)/ recoveries                                                 |  |                             | (49     | ) |      |   | (9      | )
|                                                                              |  |                             |         |   |      |   |         |  
|Additions to allowance charged to operating expense during period             |  |                             | 1,110   |   |      |   | 12      |  
|                                                                              |  |                             |         |   |      |   |         |  
|Balance of allowance for loan losses at end of period                         |  | $                           | 8,718   |   |      | $ | 5,233   |  
|                                                                              |  |                             |         |   |      |   |         |  
|Ratio of net loans charged off during the period to average loans outstanding |  |                             | .01     | % |      |   |        | %
|                                                                              |  |                             |         |   |      |   |         |  

The allowance for loan losses is maintained at a level that is deemed appropriate by us to adequately cover all
known and inherent risks in the loan portfolio. Our judgment as to the adequacy of the allowance for loan losses is based on a number of assumptions about future events, which we believe to be reasonable, but which may or may not prove to be
accurate. In assessing the adequacy, management relies predominately on its ongoing review of the loan portfolio. This review takes into consideration the judgments of the responsible lending officers and senior management, and also those of
regulatory agencies that review the loan portfolio as part of the regular bank examination process, as well as reviews conducted by our outside loan review firm. In evaluating the allowance, management also considers our loan loss experience,
deterioration in asset values, general and local economic conditions, concentrations of credit, slowing housing sales and other appropriate information. Certain nonperforming loans are individually assessed for impairment under Statement of
Financial Accounting Standards (SFAS) No. 114 and assigned specific allocations. Other identified high-risk loans or credit relationships are also individually assessed and assigned specific allocations.



15



---

##### Table of Contents

Other operating income decreased in the first quarter of 2008 as compared to the same period in 2007 by $72,000 due
primarily to decreases in other service charges and fees of $34,000 as well as decreased mortgage banking income of $38,000 as a result of a lower volume in mortgage originations.

Other expenses increased in the first quarter of 2008 as compared to the same period in 2007 by $329,000. These increases were the result of increased salaries and employee benefits, net of capitalized loan fees, of
$102,000, increased occupancy and equipment expense of $44,000 and increases in other operating expenses of $183,000 as of March 31, 2008. The increase in salaries and employee benefits are primarily attributed to increases in salaries of
approximately $77,000, coupled with decreases in capitalized loan fees of $89,000, offset by decreases in incentives paid of $62,000. The increase in occupancy and equipment expense is primarily attributed to increased building and fixture
depreciation expenses in the amount of $27,000. The increase in other operating expenses are attributed to increases in FDIC insurance premiums of $73,000, increased expenses attributed to other real estate owned of $24,000 and write downs of other
real estate owned of $109,000, offset by decreases in advertising expenses of $26,000.

We have provided for income taxes at an effective tax rate of 37%
for the first quarter of 2008 compared to 38% for the first quarter of 2007. The decrease in our effective tax rate for the first quarter of 2008 is primarily the result of a decrease in pretax income.

We are not aware of any known trends, events or uncertainties, other than the effect of events as described above that will have or are reasonably likely to have a
material effect on our liquidity, capital resources, or operations. We are also not aware of any current recommendations by the regulatory authorities which, if they were implemented, would have such an effect.



16



---

##### Table of Contents

|ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

We are
exposed only to U.S. dollar interest rate changes and accordingly, we manage exposure by considering the possible changes in the net interest margin. We do not have any trading instruments nor do we classify any portion of the investment portfolio
as held for trading. We do not engage in any hedging activities or enter into any derivative instruments with a higher degree of risk than mortgage-backed securities that are commonly pass through securities. Finally, we have no exposure to foreign
currency exchange rate risk, commodity price risk, and other market risks. Interest rates play a major part in the net interest income of a financial institution. The sensitivity to rate changes is known as interest rate risk. The
repricing of interest earning assets and interest-bearing liabilities can influence the changes in net interest income. As part of our asset/liability management program, the timing of repriced assets and liabilities is referred to as Gap
management. It is our policy to maintain a Gap ratio in the one-year time horizon of .80 to 1.20.

GAP management alone is not enough to properly manage
interest rate sensitivity, because interest rates do not respond at the same speed or at the same level to market rate changes. For example, savings and money market rates are more stable than loans tied to a Prime rate and thus respond
with less volatility to a market rate change.

We use a third party simulation model to monitor changes in net interest income due to changes in market
rates. The model of rising, falling and stable interest rate scenarios allow management to monitor and adjust interest rate sensitivity to minimize the impact of market rate swings. The analysis of impact on net interest margins as well as economic
value of equity over a twelve-month period is subjected to a 200 basis point increase and decrease in rate. The first quarter model reflects an increase of 29% in net interest income and a 7% increase in economic value of equity for a 200 basis
point increase in rates. The same model shows a 5% decrease in net interest income and an 18% decrease in economic value of equity for a 200 basis point decrease in rates. Our asset/liability committee monitors changes on a quarterly basis, measures
the changing values based on the models performance and determines an appropriate interest rate policy for management to follow in order to minimize the impact on earnings and market value equity in the projected rate environment.



17



---

##### Table of Contents

|ITEM 4. | Controls and Procedures
|------- | -----------------------

As of the end of the period covered by
this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and the Principal Financial and Accounting Officer, of the design and operation of our disclosure controls and procedures.
Based on this evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer concluded that our disclosure controls and procedures are effective. In connection with the new rules, we are in the process of further reviewing
and documenting our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes designed to enhance their effectiveness and to ensure that our systems evolve with
our business.

There have been no changes in our internal controls or in other factors that could affect internal controls subsequent to the date of this
evaluation, and there have been no corrective actions with respect to significant deficiencies or material weaknesses.



18



---

##### Table of Contents

II - OTHER INFORMATION



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
|------- | ----------------------------------------------------



| | (a) | The annual meeting of the stockholders of the Company was held on April 15, 2008.
| | --- | ---------------------------------------------------------------------------------



| | (b) | The following directors were elected at the meeting to serve for a one-year term.
| | --- | ---------------------------------------------------------------------------------

Paul J. Cates, Jr.

Phillip H. Cook

H.K. Elliott, Jr.

G.R. Foster, III

David H. Gill

Mary Lynn Lambert

Edwin C. Kelley, Jr.

Robert O. Linch

William C. Strom, Jr.

Ronald M. Turpin

James C. Waggoner

The shares represented at the meeting (10,064,283 or 70.65%) voted as follows: 10,064,283 voted unanimously for
the election of the directors.



|ITEM 6. | EXHIBITS.
|------- | ---------



| | (a) | Exhibits.
| | --- | ---------



|     |  |                                                                                                                                                                                    
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                         
|     | 
|31.2 |  | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                         
|     | 
|32   |  | Certification of the Chief Executive Officer and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



19



---

##### Table of Contents

SIGNATURES

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



|                   |  |                               |  |                                              
|------------------ |  | ----------------------------- |  | ---------------------------------------------
|                   |  | HENRY COUNTY BANCSHARES, INC.
|                   |  |                               |  | (Registrant)                                 
|                   |  |                              
|DATE: May 12, 2008 |  | BY:                           |  | /s/ David H. Gill                            
|                   |  |                               |  | David H. Gill, President and CEO             
|                   |  |                               |  | (Principal Executive Officer)                
|                   |  |                              
|DATE: May 12, 2008 |  | BY:                           |  | /s/ Thomas L. Redding                        
|                   |  |                               |  | Thomas L. Redding, Sr. Vice President and CFO
|                   |  |                               |  | (Principal Financial and Accounting Officer) 



20