----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

**QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**For      the quarterly period ended June 30, 2008**

**T      BANCSHARES, INC.**

| **Texas**                                                                                     |   | **71-0919962**                                                      |
|-----------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|
| (State                or other jurisdiction ofincorporation                  or organization) |   | (I.R.S.                EmployerIdentification                  No.) |

| Larger                Accelerated Filer  | Yes                 ̈ | No                x      |
|------------------------------------------|---------------------------|--------------------------|
| Accelerated                Filer         | Yes                 ̈ | No                x      |
| Nonaccelerated                Filer      | Yes                 ̈ | No                x      |
| Smaller                Reporting Company | Yes                x      | No                 ̈ |

----

**T      BANCSHARES, INC.**

|               |                                                            |   | PAGE |
|-------------------------|--------------------------------------------------------------------------------|--------|------|
| PART                I.  | FINANCIAL                INFORMATION                                           |   | 3    |
| ITEM                1.  | Financial                Statements                                            |   | 3    |
| ITEM                2.  | Management’s                Discussion and Analysis or Plan of Operation |   | 18   |
| ITEM                3.  | Quantitative                and Qualitative Disclosures about Market Risk      |   | 29   |
| ITEM                4.  | Controls                and Procedures                                         |   | 31   |
| PART                II. | OTHER                INFORMATION                                               |   | 31   |
| ITEM                1.  | Legal                Proceedings                                               |   | 31   |
| ITEM                2.  | Unregistered                Sales of Equity Securities and Use of Proceeds     |   | 31   |
| ITEM                3.  | Defaults                Upon Senior Securities                                 |   | 31   |
| ITEM                4.  | Submission                of Matters to a Vote of Security Holders             |   | 31   |
| ITEM                5.  | Other                Information                                               |   | 31   |
| ITEM                6.  | Exhibits                and Reports on Form 8-K                                |   | 32   |

----

**PART      I.**
**FINANCIAL      INFORMATION**

**ITEM      1.** **Financial      Statements**

**T      BANCSHARES, INC.**

**CONSOLIDATED      STATEMENTS OF FINANCIAL CONDITION**

| **(000's)**                                                                                                                                             |   | **June 30, 2008** |    | **December 31,****2007** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|-------------------------------|--------|
|                                                                                                                                                    |   | **(unaudited)**             |    |                          |   |
|                                                                                                                                                    |   |                             |    |                     |   |
| **ASSETS**                                                                                                                                              |   |                             |    |                               |   |
|                                                                                                                                                    |   |                        |    |                          |   |
| Cash                  and due from banks                                                                                                                |   | $                           | 1,989   |                          | $      | 3,235 |   |
| Federal                  funds sold                                                                                                                     |   |                        | 16,595  |                          |   | 20,325 |   |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| Total                  cash and cash equivalents                                                                                                        |   |                        | 18,584  |                          |   | 23,560 |   |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| Investments                  restricted, at cost                                                                                                        |   |                        | 547     |                          |   | 499 |   |
| Held                  to maturity, restricted                                                                                                           |   |                        | 996     |                          |   | 992 |   |
| Loans,                  net of allowance for loan losses of $1,554 and $1,600,                  respectively                                            |   |                        | 134,682 |                          |   | 119,924 |   |
| Bank                  premises and equipment, net                                                                                                       |   |                        | 1,360   |                          |   | 1,601 |   |
| Other                  assets                                                                                                                           |   |                        | 1,688   |                          |   | 939 |   |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| Total                  assets                                                                                                                           |   | $                           | 157,857 |                          | $      | 147,515 |   |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| **LIABILITIES**                                                                                                                                         |   |                        |         |                          |   |  |   |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| Demand                  Deposits:                                                                                                                       |   |                        |         |                          |   |  |   |
| Noninterest-bearing                                                                                                                                     |   | $                           | 11,294  |                          | $      | 13,878 |   |
| Interest-bearing                                                                                                                                        |   |                        | 51,889  |                          |   | 52,313 |   |
| Time                  deposits $100,000 and over                                                                                                        |   |                        | 49,365  |                          |   | 41,687 |   |
| Other                  time deposits                                                                                                                    |   |                        | 29,770  |                          |   | 25,032 |   |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| Total                  deposits                                                                                                                         |   |                        | 142,318 |                          |   | 132,910 |   |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| Other                  liabilities                                                                                                                      |   |                        | 1,418   |                          |   | 479 |   |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| Total                  liabilities                                                                                                                      |   |                        | 143,736 |                          |   | 133,389 |   |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| **Shareholders'                  Equity**                                                                                                               |   |                        |         |                          |   |  |   |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| Common                  Stock, $ .01 par value; 10,000,000 shares authorized; 1,703,801                  shares                  issued and outstanding |   |                        | 17      |                          |   | 17 |   |
| Additional                  paid-in capital                                                                                                             |   |                        | 16,865  |                          |   | 16,819 |   |
| Retained                  deficit                                                                                                                       |   |                        | (2,761  | )                             |   | (2,710 | ) |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| Total                  shareholders' equity                                                                                                             |   |                        | 14,121  |                          |   | 14,126 |   |
|                                                                                                                                                    |   |                        |         |                          |   |  |   |
| Total                  liabilities and shareholders' equity                                                                                             |   | $                           | 157,857 |                          | $      | 147,515 |   |

----

**T      BANCSHARES, INC.**

**CONSOLIDATED      STATEMENTS OF INCOME**

**(Unaudited)**

|                                                                            |   | **Three Months Ended June 30,** |      | **Six Months Ended June 30,** |   |
|-------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|-----------|---------------------------------------------------|--------|
| **(000's)**                                                                               |   | **2008**                                            |      | **2007**                                          |   | **2008** |   | **2007** |   |
|                                                                                      |   |                                                |      |                                              |   |   |   |   |   |
| **Interest                Income**                                                        |   |                                                |      |                                              |   |   |   |   |   |
|                                                                                      |   |                                                |      |                                              |   |   |   |   |   |
| Loan,                including fees                                                       |   | $                                                   | 2,470     |                                              | $      | 2,258 |   | $ | 4,971 |   | $ | 4,269 |   |
| Securities,                restricted                                                     |   |                                                | 9         |                                              |   | 20 |   |   | 25 |   |   | 39 |   |
| Federal                funds sold                                                         |   |                                                | 74        |                                              |   | 340 |   |   | 193 |   |   | 720 |   |
| Total                interest income                                                      |   |                                                | 2,553     |                                              |   | 2,618 |   |   | 5,189 |   |   | 5,028 |   |
| **Interest                Expense**                                                       |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
|                                                                                      |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
| Deposits                                                                                  |   |                                                | 1,284     |                                              |   | 1,286 |   |   | 2,611 |   |   | 2,447 |   |
|                                                                                      |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
| Net                interest income                                                        |   |                                                | 1,269     |                                              |   | 1,332 |   |   | 2,578 |   |   | 2,581 |   |
| Provision                for loan losses                                                  |   |                                                | 150       |                                              |   | 150 |   |   | 300 |   |   | 300 |   |
|                                                                                      |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
| Net                    interest income after provision for loan                    losses |   |                                                | 1,119     |                                              |   | 1,182 |   |   | 2,278 |   |   | 2,281 |   |
|                                                                                      |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
| **Noninterest                Income**                                                     |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
|                                                                                      |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
| Trust                income                                                               |   |                                                | 3,208     |                                              |   | 2,337 |   |   | 5,672 |   |   | 4,415 |   |
| Service                fees                                                               |   |                                                | 29        |                                              |   | 660 |   |   | 54 |   |   | 1,174 |   |
| Total                noninterest income                                                   |   |                                                | 3,237     |                                              |   | 2,997 |   |   | 5,726 |   |   | 5,589 |   |
|                                                                                      |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
| **Noninterest                Expense**                                                    |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
|                                                                                      |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
| Salaries                and employee benefits                                             |   |                                                | 770       |                                              |   | 697 |   |   | 1,518 |   |   | 1,344 |   |
| Occupancy                and equipment                                                    |   |                                                | 342       |                                              |   | 248 |   |   | 698 |   |   | 504 |   |
| Trust                consulting services                                                  |   |                                                | 2,815     |                                              |   | 2,078 |   |   | 4,952 |   |   | 4,007 |   |
| Professional                fees                                                          |   |                                                | 202       |                                              |   | 229 |   |   | 345 |   |   | 559 |   |
| Other                                                                                     |   |                                                | 252       |                                              |   | 483 |   |   | 542 |   |   | 881 |   |
| Total                noninterest expense                                                  |   |                                                | 4,381     |                                              |   | 3,735 |   |   | 8,055 |   |   | 7,295 |   |
|                                                                                      |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
| **Net                Income (Loss)**                                                      |   | $                                                   | (25       | )                                                 | $      | 444 |   | $ | (51 | ) | $ | 575 |   |
|                                                                                      |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
| **Earning                (loss) per common share:**                                       |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
| Basic                                                                                     |   |                                                | (0.02     | )                                                 |   | 0.26 |   |   | (0.03 | ) |   | 0.34 |   |
| Diluted                                                                                   |   |                                                | (0.02     | )                                                 |   | 0.25 |   |   | (0.03 | ) |   | 0.33 |   |
|                                                                                      |   |                                                |           |                                              |   |  |   |   |  |   |   |  |   |
| Weighted                average common shares outstanding                                 |   |                                                | 1,703,801 |                                              |   | 1,691,470 |   |   | 1,703,801 |   |   | 1,690,813 |   |
| Weighted                average diluted shares outstanding                                |   |                                                | 1,703,801 |                                              |   | 1,764,197 |   |   | 1,703,801 |   |   | 1,726,385 |   |

----

**T      BANCSHARES, INC.**

**CONSOLIDATED      STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY**

**(Unaudited)**

| **(000's)**                                      |   | **Common Stock** |         | **Additional****Paid-in****Capital** |   | **Retained Deficit** |   | **Total** |               |
|--------------------------------------------------|--------|-----------------------|--------------|--------------------------------------|--------|---------------------------|--------|-----------|--------------------|
|                                             |   |                  |         |                                 |   |                      |   |      |               |
| **BALANCE,                December 31, 2006**    |   | $                     | 17           |                                 | $      | 16,572                    |   | $         | (3,511             | ) | $ | 13,078 |   |
|                                             |   |                  |              |                                 |   |                           |   |      |                    |   |   |  |   |
| Comprehensive                income:             |   |                  |              |                                 |   |                           |   |      |                    |   |   |  |   |
| Net                income — YTD       |   |                  |              |                                 |   |                           |   |      | 575                |   |   | 575 |   |
| Total                comprehensive income        |   |                  |         |                                 |   |                      |   |      |               |   |   | 575 |   |
|                                             |   |                  |              |                                 |   |                           |   |      |                    |   |   |  |   |
| Exercise                of warrants              |   |                  |              |                                 |   | 28                        |   |      |                    |   |   | 28 |   |
| Exercise                of stock options         |   |                  |         |                                 |   | 10                        |   |      |               |   |   | 10 |   |
| Stock                based compensation          |   |                  |         |                                 |   | 34                        |   |      |               |   |   | 34 |   |
|                                             |   |                  |              |                                 |   |                           |   |      |                    |   |   |  |   |
| **BALANCE,                June 30, 2007**        |   | $                     | 17           |                                 | $      | 16,644                    |   | $         | (2,936             | ) | $ | 13,725 |   |
|                                             |   |                  |              |                                 |   |                           |   |      |                    |   |   |  |   |
| **BALANCE,                December 31, 2007**    |   | $                     | 17           |                                 | $      | 16,819                    |   | $         | (2,710             | ) | $ | 14,126 |   |
|                                             |   |                  |              |                                 |   |                           |   |      |                    |   |   |  |   |
| Comprehensive                income:             |   |                  |              |                                 |   |                           |   |      |                    |   |   |  |   |
| Net                loss — YTD              |   |                  |              |                                 |   |                           |   |      | (51                | ) |   | (51 | ) |
| Total                comprehensive income (loss) |   |                  |              |                                 |   |                           |   |      |                    |   |   | (51 | ) |
|                                             |   |                  |              |                                 |   |                           |   |      |                    |   |   |  |   |
| Stock                based compensation          |   |                  |    |                                 |   | 46                        |   |      |     |   |   | 46 |   |
|                                             |   |                  |              |                                 |   |                           |   |      |                    |   |   |  |   |
| **BALANCE,                June 30, 2008**        |   | $                     | 17           |                                 | $      | 16,865                    |   | $         | (2,761             | ) | $ | 14,121 |   |

----

**T      BANCSHARES, INC.**

**CONSOLIDATED      STATEMENT OF CASH FLOWS**

**(Unaudited)**

|                                                                                                                          |   | **Six                Months Ended June 30,** |    |
|-------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|
| **(000's)**                                                                                                                   |   | **2008**                                     |    | **2007** |   |
|                                                                                                                          |   |                                         |    |   |   |
| **Cash                Flows from Operating Activities**                                                                       |   |                                    |    |   |   |
| Net                Income (loss)                                                                                              |   | $                                            | (51     | ) | $ | 575 |   |
| Adjustments                to reconcile net income (loss) to net cash provided (used) by operating                activities: |   |                                         |         |   |   |  |   |
|                                                                                                                          |   |                                         |         |   |   |  |   |
| Provision                for loan losses                                                                                      |   |                                         | 300     |   |   | 300 |   |
| Depreciation                and amortization                                                                                  |   |                                         | 260     |   |   | 260 |   |
| Accretion                of discount                                                                                          |   |                                         | (8      | ) |   | (12 | ) |
| Stock                based compensation                                                                                       |   |                                         | 46      |   |   | 34 |   |
| Net                change in other assets                                                                                     |   |                                         | (749    | ) |   | 592 |   |
| Net                change in other liabilities                                                                                |   |                                         | 939     |   |   | 324 |   |
|                                                                                                                          |   |                                         |         |   |   |  |   |
| Net                cash provided (used) by operating activities                                                               |   |                                         | 737     |   |   | 2,073 |   |
|                                                                                                                          |   |                                         |         |   |   |  |   |
| **Cash                Flows from Investing Activities**                                                                       |   |                                         |         |   |   |  |   |
| Purchase                of securities held to maturity                                                                        |   |                                         | (996    | ) |   | (1,000 | ) |
| Proceeds                from maturity of securities                                                                           |   |                                         | 1,000   |   |   | 1,000 |   |
| Purchase                of Federal Home Loan Bank stock                                                                       |   |                                         | (48     | ) |   | (30 | ) |
| Net                change in loans                                                                                            |   |                                         | (15,058 | ) |   | (21,264 | ) |
| Purchases                of premises and equipment                                                                            |   |                                         | (19     | ) |   | (407 | ) |
|                                                                                                                          |   |                                         |         |   |   |  |   |
| Net                cash used in investing activities                                                                          |   |                                         | (15,121 | ) |   | (21,701 | ) |
|                                                                                                                          |   |                                         |         |   |   |  |   |
| **Cash                Flows from Financing Activities**                                                                       |   |                                         |         |   |   |  |   |
| Net                change in demand deposits                                                                                  |   |                                         | (3,008  | ) |   | (12,657 | ) |
| Net                change in time deposits                                                                                    |   |                                         | 12,416  |   |   | 21,878 |   |
| Exercise                of stock options                                                                                      |   |                                         | -       |   |   | 10 |   |
| Exercise                of warrants                                                                                           |   |                                         | -       |   |   | 28 |   |
|                                                                                                                          |   |                                         |         |   |   |  |   |
| Net                cash provided by financing activities                                                                      |   |                                         | 9,408   |   |   | 9,259 |   |
|                                                                                                                          |   |                                         |         |   |   |  |   |
| Net                change in cash and cash equivalents                                                                        |   |                                         | (4,976  | ) |   | (10,369 | ) |
| Cash                and cash equivalents at beginning of period                                                               |   |                                         | 23,560  |   |   | 37,766 |   |
|                                                                                                                          |   |                                         |         |   |   |  |   |
| Cash                and cash equivalents at end of period                                                                     |   | $                                            | 18,584  |   | $ | 27,397 |   |
|                                                                                                                          |   |                                         |         |   |   |  |   |
| Supplemental                disclosures of cash flow information                                                              |   |                                         |         |   |   |  |   |
| Cash                paid during the period for                                                                                |   |                                         |         |   |   |  |   |
| Interest                                                                                                                      |   | $                                            | 2,579   |   | $ | 2,423 |   |
| Income                taxes                                                                                                   |   | $                                            | 20      |   | $ | - |   |

----

**T      BANCSHARES, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      1.**
**BASIS      OF PRESENTATION**

**Organization      and Nature of Operations**

**NOTE      2. ADOPTION OF NEW ACCOUNTING POLICIES**

*Accounting      for Uncertainty in Income Taxes - An interpretation of FASB Statement      109*
*Accounting      for Income Taxes*

----

**Note      3.**
**      LOANS**

| **(000's)**                                          |   | **June 30,****2008** |    | **December 31,****2007** |   |
|------------------------------------------------------|--------|---------------------------|---------|-------------------------------|--------|
|                                                 |   |                      |    |                          |   |
| Commercial                and industrial             |   | $                         | 90,397  |                          | $      | 81,811 |   |
| Consumer                installment                  |   |                      | 3,776   |                          |   | 3,183 |   |
| Real                estate — mortgage     |   |                      | 15,868  |                          |   | 23,542 |   |
| Real                estate — construction |   |                      | 26,354  |                          |   | 13,177 |   |
| Other                                                |   |                      | 14      |                          |   | 13 |   |
|                                                 |   |                      |    |                          |   |   |   |
|                                                 |   |                      | 136,409 |                          |   | 121,726 |   |
|                                                 |   |                      |    |                          |   |   |   |
| Less                allowance for loan losses        |   |                      | 1,554   |                          |   | 1,600 |   |
| Less                deferred loan fees               |   |                      | 173     |                          |   | 202 |   |
|                                                 |   |                      |    |                          |   |   |   |
| Net                loans                             |   | $                         | 134,682 |                          | $      | 119,924 |   |

| **(000's)**                                               |   | **June 30,****2008** |   | **December 31,****2007** |   |
|-----------------------------------------------------------|--------|---------------------------|--------|-------------------------------|--------|
|                                                      |   |                      |   |                          |   |
| Balance                at beginning of period             |   | $                         | 1,600  |                          | $      | 1,000 |   |
| Provision                charged to operations            |   |                      | 300    |                          |   | 600 |   |
| Loans                charged off                          |   |                      | (352   | )                             |   | - |   |
| Recoveries                of loans previously charged off |   |                      | 6      |                          |   | - |   |
|                                                      |   |                      |   |                          |   |   |   |
| Balance                at end of period                   |   | $                         | 1,554  |                          | $      | 1,600 |   |

----

**Note      4.**
**SECURITIES**

|                       |   | **June 30, 2008** |   |
|--------------------------------------|--------|-----------------------------|--------|
| **(000's)**                          |   | **Amortized****Cost**       |   | **Unrealized****Gains** |   | **Unrealized****Losses** |   | **Estimated****Fair Value** |   |
|                                 |   |                        |   |   |   |   |   |   |   |
| U.S.                  Treasury Notes |   | $                           | 996    |   | $ | - |   | $ | - |   | $ | 996 |   |

|                       |   | **December 31, 2007** |   |
|--------------------------------------|--------|---------------------------------|--------|
| **(000's)**                          |   | **Amortized****Cost**           |   | **Unrealized****Gains** |   | **Unrealized****Losses** |   | **Estimated****Fair Value** |   |
|                                 |   |                            |   |   |   |   |   |   |   |
| U.S.                  Treasury Notes |   | $                               | 992    |   | $ | - |   | $ | - |   | $ | 992 |   |

**NOTE      5.**
**RELATED      PARTIES**

**NOTE      6.**
**BANK      PREMISES AND EQUIPMENT**

| **(000's)**                                   |   | **June 30,****2008** |   | **December 31,****2007** |   |
|-----------------------------------------------|--------|---------------------------|--------|-------------------------------|--------|
| Leasehold                improvements         |   | $                         | 931    |                          | $      | 931 |   |
| Furniture                and equipment        |   |                      | 1,777  |                          |   | 1,758 |   |
|                                          |   |                      | 2,708  |                          |   | 2,689 |   |
| Less:                accumulated depreciation |   |                      | 1,348  |                          |   | 1,088 |   |
| Balance                at end of period       |   | $                         | 1,360  |                          | $      | 1,601 |   |

----

**NOTE      7. OTHER ASSETS**

| **(000's)**                                |   | **June 30,****2008** |                         | **December 31,****2007** |   |
|--------------------------------------------|--------|---------------------------|------------------------------|-------------------------------|--------|
|                                       |   |                      |                         |                          |   |
| Accrued                interest receivable |   | $                         | 496                          |                          | $      | 561 |   |
| Prepaid                assets              |   |                      | 261                          |                          |   | 239 |   |
| Accounts                receivable         |   |                      | 905                          |                          |   | 132 |   |
| Other                                      |   |                      | 26                           |                          |   | 7 |   |
|              |   |                      |                    |                          |   |     |   |
|                                       |   | $                         | 1,688                        |                          | $      | 939 |   |

**NOTE      8.**
**DEPOSITS**

| **(000's)**                                                  |   | **As of June 30, 2008** |    | **As of December 31, 2007** |   |
|--------------------------------------------------------------|--------|---------------------------------------------|---------|-------------------------------------------------|--------|
|                                                         |   |                                        |    |                                            |   |   |   |   |   |
| Noninterest                bearing demand                    |   | $                                           | 11,294  |                                            |   | 8 | %   | $ | 13,878 |   |   | 10 | % |
| Interest                bearing demand (NOW)                 |   |                                        | 1,719   |                                            |   | 1 | % |   | 1,781 |   |   | 2 | % |
| Money                market accounts                         |   |                                        | 50,012  |                                            |   | 35 | % |   | 50,353 |   |   | 38 | % |
| Savings                accounts                              |   |                                        | 158     |                                            |   | 0 | % |   | 179 |   |   | 0 | % |
| Certificates                of deposit, less than $100,000   |   |                                        | 29,770  |                                            |   | 21 | % |   | 25,032 |   |   | 19 | % |
| Certificates                of deposit, $100,000 and greater |   |                                        | 49,365  |                                            |   | 35 | % |   | 41,687 |   |   | 31 | % |
|                                                         |   | $                                           | 142,318 |                                            |   | 100 | % | $ | 132,910 |   |   | 100.0 | % |

| **(000’s)** |   |   |                                           |
|-------------------|--------|--------|------------------------------------------------|
| 2008              |   | $      | 41,502                                         |   |
| 2009              |   |   | 11,320                                         |   |
| 2010              |   |   | 4,476                                          |   |
| 2011              |   |   | 14,145                                         |   |
| 2012              |   |   | 6,578                                          |   |
| 2013              |   |   | 1,114                                          |   |
|              |   |   |                       |   |
| Total             |   | $      | 79,135                                         |   |

----

**Note      9.**
**Other      liabilities**

| **(000's)**                                   |   | **June 30,****2008** |   | **December 31,****2007** |   |
|-----------------------------------------------|--------|---------------------------|--------|-------------------------------|--------|
|                                          |   |                      |   |                          |   |
| Trust                Advisor Fees Payable     |   | $                         | 797    |                          | $      | - |   |
| Interest                Payable               |   |                      | 186    |                          |   | 155 |   |
| Audit                Fees                     |   |                      | 135    |                          |   | 136 |   |
| Incentive                Compensation         |   |                      | 50     |                          |   | - |   |
| Legal                                         |   |                      | 173    |                          |   | 113 |   |
| Franchise                & Property Taxes |   |                      | 16     |                          |   | 21 |   |
| Other                Accruals                 |   |                      | 61     |                          |   | 54 |   |
|                                          |   | $                         | 1,418  |                          | $      | 479 |   |

**NOTE      10.**
**INCOME      TAXES**

**NOTE      11.**
**STOCK      OPTIONS**

----

|                                           |   | **Number                of****Shares****Underlying****Options** |    | **Weighted****Average****Exercise****Prices** |   |
|-----------------------------------------------------|--------|-----------------------------------------------------------------|---------|-----------------------------------------------|--------|
|                                                |   |                                                            |    |                                          |   |
| Outstanding                at beginning of the year |   |                                                            | 196,000 |                                          | $      | 10.44 |   |
| Granted                                             |   |                                                            | -       |                                          |   | - |   |
| Exercised                                           |   |                                                            | -       |                                          |   | - |   |
| Expired                / forfeited                  |   |                                                            | 5,500   |                                          |   | 10.23 |   |
|                                                |   |                                                            |         |                                          |   |  |   |
| Outstanding                at end of period         |   |                                                            | 190,500 |                                          | $      | 10.44 |   |
| Exercisable                at end of period         |   |                                                            | 97,600  |                                          | $      | 10.04 |   |
| Available                for grant at end of period |   |                                                            | 58,500  |                                          |   |    |   |

|                                   |   | **Shares** |    | **Weighted****Average****Grant Date****Fair Value** |   |
|---------------------------------------------|--------|------------|---------|---------------------------------------------------------------|--------|
|                                        |   |       |    |                                                          |   |
| Nonvested                at January 1, 2008 |   |       | 101,900 |                                                          | $      | 2.15 |   |
| Granted                                     |   |       | -       |                                                          |   | - |   |
| Vested                                      |   |       | 3,500   |                                                          |   | 2.39 |   |
| Forfeited                                   |   |       | 5,500   |                                                          |   | 2.75 |   |
|                                        |   |       |         |                                                          |   |  |   |
| Nonvested                at June 30, 2008   |   |       | 92,900  |                                                          | $      | 2.96 |   |

**NOTE      12.**
**STOCK      WARRANTS**

----

**NOTE      13.**
**COMMITMENTS      AND CONTINGENCIES**

**Employment      Agreements**

**NOTE      14.**
**REGULATORY      MATTERS**

----

|                                                   |   | **Actual** |   | **For Capital Adequacy Purposes** |   | **To Be Well Capitalized Under****Prompt Corrective Action****Provisions** |          |
|-------------------------------------------------------------|--------|------------|--------|--------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|---------------|
| **(000's)**                                                 |   | **Amount** |   | **Ratio**                                        |   | **Amount**                                                                                               |          | **Ratio** |   | **Amount** |   | **Ratio** |   |
|                                                        |   |       |   |                                             |   |                                                                                                     |          |   |   |   |   |   |   |
| **As                    of June 30, 2008**                  |   |       |   |                                             |   |                                                                                                     |          |   |   |   |   |   |   |
| Total                    Capital (to Risk Weighted Assets)  |   | $          | 14,750 |                                             |   | 11.75                                                                                                    | %   | $ | 10,040 | ≥   |   | 8.00 | %   | $ | 12,550 | ≥   |   | 10.00 | % |
|                                                        |   |       |   |                                             |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                    1 Capital (to Risk Weighted Assets) |   |       | 13,196 |                                             |   | 10.51                                                                                                    | %             |   | 5,020 | ≥ |   | 4.00 | % |   | 7,530 | ≥ |   | 6.00 | % |
|                                                        |   |       |   |                                             |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                    1 Capital (to Average Assets)       |   |       | 13,196 |                                             |   | 8.38                                                                                                     | %             |   | 6,299 | ≥ |   | 4.00 | % |   | 7,874 | ≥ |   | 5.00 | % |
|                                                        |   |       |   |                                             |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| **As                    of December 31, 2007**              |   |       |   |                                             |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    Capital (to Risk Weighted Assets)  |   | $          | 14,499 |                                             |   | 13.00                                                                                                    | %             | $ | 8,921 | ≥ |   | 8.00 | % | $ | 11,151 | ≥ |   | 10.00 | % |
|                                                        |   |       |   |                                             |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                    1 Capital (to Risk Weighted Assets) |   |       | 13,093 |                                             |   | 11.74                                                                                                    | %             |   | 4,460 | ≥ |   | 4.00 | % |   | 6,691 | ≥ |   | 6.00 | % |
|                                                        |   |       |   |                                             |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                    1 Capital (to Average Assets)       |   |       | 13,093 |                                             |   | 9.45                                                                                                     | %             |   | 5,540 | ≥ |   | 4.00 | % |   | 6,925 | ≥ |   | 5.00 | % |

**NOTE      15.**
**PARENT      COMPANY CONDENSED FINANCIAL STATEMENTS**

**T      BANCSHARES, INC.**

**CONDENSED      BALANCE SHEET**

**(Unaudited)**

| **(000's)**                                  |   | **June 30,****2008**    |   | **December 31,****2007** |   |
|----------------------------------------------|--------|------------------------------|--------|-------------------------------|--------|
|                                         |   |                         |   |                          |   |
| **ASSETS**                                   |   |                    |   |                     |   |
|                                         |   |                    |   |                     |   |
| Cash                and due from banks       |   | $                            | 689    |                          | $      | 743 |   |
| Due                from subsidiary           |   |                         | 290    |                          |   | 290 |   |
| Investment                in subsidiary      |   |                         | 13,196 |                          |   | 13,093 |   |
|                                         |   |                         |        |                          |   |  |   |
| Total                Assets                  |   | $                            | 14,175 |                          | $      | 14,126 |   |
|                                         |   |                         |        |                          |   |  |   |
| **LIABILITIES                AND CAPITAL**   |   |                         |        |                          |   |  |   |
|                                         |   |                         |        |                          |   |  |   |
| Accounts                Payable              |   |                         | 54     |                          |   | - |   |
| Capital                                      |   |                         | 14,121 |                          |   | 14,126 |   |
|                                         |   |                         |        |                          |   |  |   |
| Total                Liabilities and Capital |   | $                            | 14,175 |                          | $      | 14,126 |   |

----

**T      BANCSHARES, INC.**

**CONDENSED      STATEMENT OF INCOME**

**(Unaudited)**

|                                         |   | **Three Months Ended June 30,** |   | **Six Months Ended June 30,** |   |
|--------------------------------------------------------|--------|-----------------------------------------------------|--------|---------------------------------------------------|--------|
| **(000's)**                                            |   | **2008**                                            |   | **2007**                                          |   | **2008** |   | **2007** |   |
|                                                   |   |                                                |   |                                              |   |   |   |   |   |   |   |   |   |
| Equity                in income (loss) from subsidiary |   | $                                                   | 74     |                                              | $      | 523 |   | $ | 103 |   | $ | 675 |   |
|                                                   |   |                                                |        |                                              |   |  |   |   |  |   |   |  |   |
| Noninterest                expense:                    |   |                                                |        |                                              |   |  |   |   |  |   |   |  |   |
| Professional                and administrative         |   |                                                | 78     |                                              |   | 61 |   |   | 108 |   |   | 66 |   |
| Stock                options                           |   |                                                | 21     |                                              |   | 18 |   |   | 46 |   |   | 34 |   |
| Total                noninterest expenses              |   |                                                | 99     |                                              |   | 79 |   |   | 154 |   |   | 100 |   |
|                                                   |   |                                                |        |                                              |   |  |   |   |  |   |   |  |   |
| Net                income (loss)                       |   | $                                                   | (25    | )                                                 | $      | 444 |   | $ | (51 | ) | $ | 575 |   |

----

**T      BANCSHARES, INC.**

**CONDENSED      STATEMENT OF CASH FLOWS**

**(Unaudited)**

|                                                                                                                     |   | **Six Months Ended June 30,** |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|
| **(000's)**                                                                                                                   |   | **2008**                                          |   | **2007** |   |
|                                                                                                                          |   |                                              |   |   |   |
| **Cash                Flows from Operating Activities**                                                                       |   |                                              |   |   |   |
|                                                                                                                          |   |                                              |   |   |   |
| Net                Income (Loss)                                                                                              |   | $                                                 | (51    | ) | $ | 575 |   |
| Adjustments                to reconcile net income (loss) to net cash provided (used) by operating                activities: |   |                                              |        |   |   |  |   |
|                                                                                                                          |   |                                              |        |   |   |  |   |
| Equity                in (earnings) loss of Bank                                                                              |   |                                              | (103   | ) |   | (675 | ) |
| Stock                based compensation                                                                                       |   |                                              | 46     |   |   | 34 |   |
| Net                change in other assets                                                                                     |   |                                              | -      |   |   | - |   |
| Net                change in other liabilities                                                                                |   |                                              | 54     |   |   | - |   |
|                                                                                                                          |   |                                              |        |   |   |  |   |
| Net                cash provided (used) by operating activities                                                               |   |                                              | (54    | ) |   | (66 | ) |
|                                                                                                                          |   |                                              |        |   |   |  |   |
| **Cash                Flows from Investing Activities**                                                                       |   |                                              |        |   |   |  |   |
|                                                                                                                          |   |                                              |        |   |   |  |   |
| Proceeds                from sale of premises and equipment                                                                   |   |                                              | -      |   |   | - |   |
|                                                                                                                          |   |                                              |        |   |   |  |   |
| Net                cash used in investing activities                                                                          |   |                                              | -      |   |   | - |   |
|                                                                                                                          |   |                                              |        |   |   |  |   |
| **Cash                Flows from Financing Activities**                                                                       |   |                                              |        |   |   |  |   |
|                                                                                                                          |   |                                              |        |   |   |  |   |
| Exercise                of warrants                                                                                           |   |                                              | -      |   |   | 38 |   |
|                                                                                                                          |   |                                              |        |   |   |  |   |
| Net                cash provided by financing activities                                                                      |   |                                              | -      |   |   | 38 |   |
|                                                                                                                          |   |                                              |        |   |   |  |   |
| Net                change in cash and cash equivalents                                                                        |   |                                              | (54    | ) |   | (28 | ) |
| Cash                and cash equivalents at beginning of period                                                               |   |                                              | 743    |   |   | 727 |   |
|                                                                                                                          |   |                                              |        |   |   |  |   |
| Cash                and cash equivalents at end of period                                                                     |   | $                                                 | 689    |   | $ | 699 |   |
|                                                                                                                          |   |                                              |        |   |   |  |   |
| Supplemental                disclosures of cash flow information                                                              |   |                                              |        |   |   |  |   |
| Cash                paid during the period for                                                                                |   |                                              |        |   |   |  |   |
| Interest                                                                                                                      |   | $                                                 | -      |   | $ | - |   |
| Income                taxes                                                                                                   |   | $                                                 | -      |   | $ | - |   |

----

**NOTE      16. SUBSEQUENT EVENTS**

----

**ITEM      2.**
**Management’s      Discussion and Analysis or Plan of Operation**

|   | · | we                have limited operating history upon which to base an estimate of                our                future financial performance; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | if                we are unable to implement our business plan and strategies, we will                be                hampered in our ability to develop business and serve our customers,                which, in turn, could have an adverse effect on our financial                performance; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we                are subject to significant government regulation and legislation                that                increases the cost of doing business and inhibits our ability to                compete; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | if                we fail to retain our key employees, growth and profitability could                be                adversely affected; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we                face substantial competition in our primary market                area; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | if                we fail to sustain attractive investment returns to our Trust customers,                our growth and profitability in our Trust services could be adversely                affected; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we                have a significant dental industry loan concentration in which economic                or                regulatory changes could adversely affect the ability of those customers                to fulfill their loan obligations; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | if                we fail to adequately address informal administrative actions with                the                Office of the Comptroller of the Currency, this may have an adverse                impact                on the Company’s operating results or financial                condition; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we                compete in an industry that continually experiences technological                change,                and we may not be able to compete effectively with other banking                institutions with greater                resources; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                Bank’s current legally mandated lending limits are lower than those of                our                competitors, which may impair our ability to attract                borrowers; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                economic downturn, especially one affecting our primary service area,                may                have an adverse effect on our financial                performance; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | changes                in governmental economic and monetary policies, the Internal Revenue                Code                and banking and credit regulations, as well as other factors, will                affect                the demand for loans and the ability of the Bank to attract                deposits; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                in the general level of interest rates and other economic factors                can                affect the Bank’s interest income by affecting the spread between                interest-earning assets and interest-bearing                liabilities; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we                have no current intentions of paying cash                dividends; |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | we                may not be able to raise additional capital on terms favorable to                us;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | our                directors and executive officers beneficially own a significant portion                of                our outstanding common stock. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

**Executive      Overview**

***Introduction***

**Recent      Developments**

***Consent      Order***

***Rights      Offering***

----

**Results      of Operations**

***Net      Interest Income and Net Interest Margin***

***Key      Performance Indicators at June 30, 2008***

|   | · | total                assets grew to $158 million at the end of the second quarter of 2008,                representing an increase of $10 million or 7.0%, from $148 million                at the                end of 2007; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | total                loans, net of allowance for loan losses, grew to $135 million at                the end                of the second quarter of 2008, representing an increase of $15 million                or                12.3%, from $120 million at the end of                2007; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | total                deposits grew to $142 million at the end of the second quarter of                2008,                representing and increase of $9 million or 7.1% from $133 million                at the                end of 2007; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | total                revenue was $10.9 million for the six months ended June 30, 2008                compared                to $10.6 million for the same period in the prior year, representing                an                increase of 2.8%; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | net                loss was $51,000 for the six months ended June 30, 2008, compared                to net                income of $575,000 for the same period in the prior year. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**FINANCIAL      SUMMARY**

**Consolidated      Daily Average Balances, Average Yields and Rates**

|                                                                |   | **Six Months Ended June 30,** |    |
|---------------------------------------------------------------------|--------|---------------------------------------------------|---------|
|                                                                |   | **2008**                                          |    | **2007** |   |
| **(000'S)**                                          |   | **AverageBalance**                                |    | **Interest** |   | **AverageYield** |   | **AverageBalance** |   | **Interest** |   | **AverageYield** |   |
|                                                                |   |                                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest-earning                  assets**                        |   |                                              |         |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
|                                                           |   |                                              |         |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Loans,                  net of reserve                         |   | $                                                 | 131,274 |   | $ | 4,972 |   |   | 7.3 | % | $ | 97,008 |   | $ | 4,269 |   |   | 8.8 | % |
| Federal                  funds sold                            |   |                                              | 15,056  |   |   | 193 |   |   | 1.8 | % |   | 27,814 |   |   | 720 |   |   | 5.2 | % |
| Securities                                                     |   |                                              | 1,502   |   |   | 24 |   |   | 3.8 | % |   | 1,467 |   |   | 39 |   |   | 5.3 | % |
| Total                  earning assets                          |   |                                              | 147,832 |   |   | 5,189 |   |   | 7.0 | % |   | 126,289 |   |   | 5,028 |   |   | 8.0 | % |
| Cash                  and other assets                         |   |                                              | 4,650   |   |   |  |   |   |  |   |   | 6,196 |   |   |  |   |   |  |   |
| Total                  assets                                  |   | $                                                 | 152,482 |   |   |  |   |   |  |   | $ | 132,485 |   |   |  |   |   |  |   |
|                                                           |   |                                              |         |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| **Interest-bearing                  liabilities**              |   |                                              |         |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| NOW                  accounts                                  |   | $                                                 | 1,823   |   | $ | 10 |   |   | 1.1 | % | $ | 1,692 |   | $ | 10 |   |   | 1.2 | % |
| Money                  market accounts                         |   |                                              | 46,900  |   |   | 671 |   |   | 2.9 | % |   | 63,934 |   |   | 1,441 |   |   | 4.5 | % |
| Savings                  accounts                              |   |                                              | 156     |   |   | 1 |   |   | 1.4 | % |   | 349 |   |   | 2 |   |   | 1.4 | % |
| Certificates                  of deposit less than $100,000    |   |                                              | 28,390  |   |   | 721 |   |   | 5.1 | % |   | 14,360 |   |   | 380 |   |   | 5.3 | % |
| Certificates                  of deposit $100,000 or greater   |   |                                              | 47,139  |   |   | 1,208 |   |   | 5.1 | % |   | 23,036 |   |   | 614 |   |   | 5.3 | % |
| Total                  interest bearing deposits               |   |                                              | 124,408 |   |   | 2,611 |   |   | 4.2 | % |   | 103,371 |   |   | 2,447 |   |   | 4.7 | % |
| Noninterest                  bearing deposits                  |   |                                              | 13,927  |   |   |  |   |   |  |   |   | 16,049 |   |   |  |   |   |  |   |
| Other                  liabilities                             |   |                                              | 932     |   |   |  |   |   |  |   |   | 587 |   |   |  |   |   |  |   |
| Stockholders                  equity                           |   |                                              | 13,215  |   |   |  |   |   |  |   |   | 12,478 |   |   |  |   |   |  |   |
| Total                  liabilities and stockholders' equity    |   | $                                                 | 152,482 |   |   |  |   |   |  |   | $ | 132,485 |   |   |  |   |   |  |   |
|                                                           |   |                                              |         |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Net                  interest income                           |   |                                              |         |   |   | 2,578 |   |   |  |   |   |  |   |   | 2,581 |   |   |  |   |
| Net                  interest spread                           |   |                                              |         |   |   |  |   |   | 2.8 | % |   |  |   |   |  |   |   | 3.2 | % |
| Net                  interest margin                           |   |                                              |         |   |   |  |   |   | 3.5 | % |   |  |   |   |  |   |   | 4.1 | % |
|                                                           |   |                                              |         |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Provision                  for loan loss                       |   |                                              |         |   |   | 300 |   |   |  |   |   |  |   |   | 300 |   |   |  |   |
| Non-interest                  income                           |   |                                              |         |   |   | 5,726 |   |   |  |   |   |  |   |   | 5,589 |   |   |  |   |
| Non-interest                  expense                          |   |                                              |         |   |   | 8,055 |   |   |  |   |   |  |   |   | 7,295 |   |   |  |   |
| Income                  (loss) before income taxes             |   |                                              |         |   |   | (51 | ) |   |  |   |   |  |   |   | 575 |   |   |  |   |
| Income                  taxes expense (benefit)                |   |                                              |         |   |   | - |   |   |  |   |   |  |   |   | - |   |   |  |   |
| Net                  income (loss)                             |   |                                              |         |   | $ | (51 | ) |   |  |   |   |  |   | $ | 575 |   |   |  |   |
|                                                           |   |                                              |         |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Earnings                  (loss) per share                     |   |                                              |         |   |   | (0.03 | ) |   |  |   |   |  |   |   | 0.34 |   |   |  |   |
| Return                  on average equity                      |   |                                              |         |   |   | (0.77 | )% |   |  |   |   |  |   |   | 9.2 | % |   |  |   |
| Return                  on average assets                      |   |                                              |         |   |   | (0.07 | )% |   |  |   |   |  |   |   | 0.9 | % |   |  |   |
| Equity                  to assets ratio                        |   |                                              |         |   |   | 8.67 | % |   |  |   |   |  |   |   | 9.4 | % |   |  |   |

----

***Provision      for Loan Losses***

***Non-interest      Income***

***Noninterest      Expense***

***Income      Taxes***

**Financial      Condition**

***Short-Term      Investments and Interest-bearing Deposits in Other Financial      Institutions***

----

***Investment      Securities***

***Loan      Portfolio***

|                                                 |   | **As of**              |    | **As of**                  |   |
|------------------------------------------------------|--------|-----------------------------|---------|---------------------------------|--------|
| **(000's)**                                          |   | **June 30, 2008** |    | **December 31, 2007** |   |
|                                                 |   |                        |         |                            |   |  |   |
| Commercial                and industrial             |   | $                           | 90,397  |                            | $      | 81,811 |   |
| Consumer                installment                  |   |                        | 3,776   |                            |   | 3,183 |   |
| Real                estate — mortgage     |   |                        | 15,868  |                            |   | 23,542 |   |
| Real                estate — construction |   |                        | 26,354  |                            |   | 13,177 |   |
| Other                                                |   |                        | 14      |                            |   | 13 |   |
|                                                 |   |                        | 136,409 |                            |   | 121,726 |   |
|                                                 |   |                        |         |                            |   |  |   |
| Less                allowance for loan losses        |   |                        | 1,554   |                            |   | 1,600 |   |
| Less                deferred loan fees               |   |                        | 173     |                            |   | 202 |   |
|                                                 |   | $                           | 134,682 |                            | $      | 119,924 |   |

----

|                                                           |   | **As of June 30, 2008** |   |
|----------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                           |   |                                        |   | **Over 1 Year through5 Years** |   | **Over 5 Years** |   |   |   |
| **(000's)**                                     |   | **One YearorLess**                     |   | **Fixed Rate** |   | **Floating or                  AdjustableRate** |   | **Fixed Rate** |   | **Floating or                  AdjustableRate** |   | **Total** |   |
|                                                           |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                  and industrial                |   | $                                           | 29,489 |   | $ | 25,723 |   | $ | 13,429 |   | $ | 21,332 |   | $ | 424 |   | $ | 90,397 |   |
| Consumer                  installment                     |   |                                        | 1,339  |   |   | 890 |   |   | - |   |   | 1,547 |   |   | - |   |   | 3,776 |   |
| Real                  estate — mortgage*       |   |                                        | 4,888  |   |   | 6,946 |   |   | 351 |   |   | 2,678 |   |   | 1,005 |   |   | 15,868 |   |
| Real                  estate — construction*   |   |                                        | 23,996 |   |   | 753 |   |   | - |   |   | 1,605 |   |   | - |   |   | 26,354 |   |
| Other                                                     |   |                                        | 14     |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 14 |   |
| Total                                                     |   | $                                           | 59,726 |   | $ | 34,312 |   | $ | 13,780 |   | $ | 27,162 |   | $ | 1,429 |   | $ | 136,409 |   |

***Nonperforming      Loans and Assets***

----

***Allowance      for Loan Losses***

| **(000's)**                                          |   | **As of****June 30, 2008** |   | **As of****December 31, 2007**    |   |
|------------------------------------------------------|--------|-------------------------------------------|--------|--------------------------------------------------|--------|
| **Allocated:**                                       |   | **Amount**                                |   | **Loan****Category to****Gross Loans** |   | **Amount** |   | **Loan****Category to****Gross Loans** |   |
|                                                 |   |                                      |        |                                             |   |  |   |   |  |   |   |  |   |
| Commercial                and industrial             |   | $                                         | 1,030  |                                             |   | 66.28 | % | $ | 1,076 |   |   | 67.22 | % |
| Consumer                installment                  |   |                                      | 43     |                                             |   | 2.77 | % |   | 42 |   |   | 2.61 | % |
| Real                estate — mortgage     |   |                                      | 181    |                                             |   | 11.63 | % |   | 309 |   |   | 19.34 | % |
| Real                estate — construction |   |                                      | 300    |                                             |   | 19.32 | % |   | 173 |   |   | 10.83 | % |
| Total                allowance for loan losses       |   | $                                         | 1,554  |                                             |   | 100.00 | % | $ | 1,600 |   |   | 100.00 | % |

***Nonearning      Assets***

----

***Deposits***

|                                                          |   | **For the six months ended** |    |
|---------------------------------------------------------------|--------|--------------------------------------------------|---------|
| **(000's)**                                                   |   | **June 30, 2008**                      |    | **June 30, 2007** |   |
|                                                          |   | **Average****Balance**                           |    | **Percent of                  Deposits** |   | **Average****Rate** |   | **Average****Balance** |   | **Percent of                  Deposits** |   | **Average****Rate** |   |
|                                                          |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest                  bearing deposits                 |   | $                                                | 13,927  |   |   | 10.07 | % |   | 0.00 | % | $ | 16,049 |   |   | 13.44 | % |   | 0.0 | % |
| NOW                  accounts                                 |   |                                             | 1,823   |   |   | 1.32 | % |   | 1.12 | % |   | 1,692 |   |   | 1.42 | % |   | 1.19 | % |
| Money                  market accounts                        |   |                                             | 46,900  |   |   | 33.90 | % |   | 2.87 | % |   | 63,934 |   |   | 53.54 | % |   | 4.51 | % |
| Savings                  accounts                             |   |                                             | 156     |   |   | 0.11 | % |   | 1.42 | % |   | 349 |   |   | 0.29 | % |   | 1.41 | % |
| Certificates                  of deposit, less than $100,000  |   |                                             | 28,390  |   |   | 20.52 | % |   | 5.08 | % |   | 14,360 |   |   | 12.02 | % |   | 5.29 | % |
| Certificates                  of deposit, $100,000 or greater |   |                                             | 47,139  |   |   | 34.08 | % |   | 5.13 | % |   | 23,036 |   |   | 19.29 | % |   | 5.33 | % |
|                                                          |   |                                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  deposits                               |   | $                                                | 138,335 |   |   | 100.00 | % |   | 4.21 | % | $ | 119,420 |   |   | 100.00 | % |   | 4.73 | % |

| **(000's)**                                        |   | **June 30,****2008** |   | **December 31,****2007** |   |
|----------------------------------------------------|--------|---------------------------|--------|-------------------------------|--------|
|                                               |   |                      |        |                          |   |  |   |
| Three                months or less                |   | $                         | 6,588  |                          | $      | 2,034 |   |
| Over                three months through 12 months |   |                      | 24,067 |                          |   | 25,049 |   |
| Over                one year through three years   |   |                      | 5,124  |                          |   | 11,650 |   |
| Over                three years                    |   |                      | 13,586 |                          |   | 2,954 |   |
|                                               |   |                      |        |                          |   |  |   |
| Total                                              |   | $                         | 49,365 |                          | $      | 41,687 |   |

***Off-Balance      Sheet Arrangements***

***Borrowings***

----

|                                   |   | **As of June 30, 2008** |   |
|----------------------------------------|--------|---------------------------------------------|--------|
| **(000's)**                            |   | **Less than One****Year**         |   | **One to Three****Years** |   | **Over Three to****Five Years** |   | **Over Five****Years** |   |
|                                   |   |                                        |        |   |   |  |   |   |  |   |   |  |   |
| Operating                leases        |   | $                                           | 280    |   | $ | 583 |   | $ | 553 |   | $ | 365 |   |
|                                   |   |                                        |        |   |   |  |   |   |  |   |   |  |   |
| Certificates                of deposit |   | $                                           | 49,665 |   | $ | 8,876 |   | $ | 20,594 |   | $ | - |   |

***Capital      Resources and Capital Adequacy Requirements***

----

|                                                      |   | **Actual** |   | **For Capital Adequacy****Purposes** |   | **To Be Well Capitalized****Under Prompt Corrective****Action Provisions** |          |
|-----------------------------------------------------------|--------|------------|--------|------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|---------------|
| **(000's)**                                               |   | **Amount** |   | **Ratio**                                      |   | **Amount**                                                                                               |          | **Ratio** |   | **Amount** |   | **Ratio** |   |
|                                                      |   |       |   |                                           |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| **As                  of June 30, 2008**                  |   |       |   |                                           |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  Capital (to Risk Weighted Assets)  |   | $          | 14,750 |                                           |   | 11.75                                                                                                    | %   | $ | 10,040 | ≥  |   | 8.00 | %   | $ | 12,550 | ≥    |   | 10.00 |   |
|                                                      |   |       |   |                                           |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 Capital (to Risk Weighted Assets) |   |       | 13,196 |                                           |   | 10.51                                                                                                    | %             |   | 5,020 | ≥  |   | 4.00 | % |   | 7,530 | ≥  |   | 6.00 | % |
|                                                      |   |       |   |                                           |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 Capital (to Average Assets)       |   |       | 13,196 |                                           |   | 8.38                                                                                                     | %             |   | 6,299 | ≥ |   | 4.00 | % |   | 7,874 | ≥ |   | 5.00 | % |
|                                                      |   |       |   |                                           |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| **As                  of December 31, 2007**              |   |       |   |                                           |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  Capital (to Risk Weighted Assets)  |   | $          | 14,499 |                                           |   | 13.00                                                                                                    | %             | $ | 8,921 | ≥ |   | 8.00 | % | $ | 11,151 | ≥ |   | 10.00 | % |
|                                                      |   |       |   |                                           |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 Capital (to Risk Weighted Assets) |   |       | 13,093 |                                           |   | 11.74                                                                                                    | %             |   | 4,460 | ≥ |   | 4.00 | % |   | 6,691 | ≥ |   | 6.00 | % |
|                                                      |   |       |   |                                           |   |                                                                                                     |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 Capital (to Average Assets)       |   |       | 13,093 |                                           |   | 9.45                                                                                                     | %             |   | 5,540 | ≥ |   | 4.00 | % |   | 6,925 | ≥  |   | 5.00 | % |

**Liquidity      Management**

----

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

|                                           |   | **Change in Future Net Interest Income****as of June                30, 2008** |     |
|------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------|----------|
|                                           |   | **Dollar Change**                                                                                            |     | **Percentage****Change** |   |
|                                           |   |                                                                                                              |          |   |   |  |   |
| +200                basis points over one year |   | $                                                                                                                 | 347,000  |   |   | 7.19 | % |
| +100                basis points over one year |   |                                                                                                              | 173,000  |   |   | 3.59 | % |
| -100                basis points over one year |   |                                                                                                              | (206,000 | ) |   | -4.27 | % |
| -200                basis points over one year |   |                                                                                                              | (469,000 | ) |   | -9.72 | % |

----

|                                                                                                                       |   | **As of June 30, 2008**                 |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|--------|
|                                                                                                                       |   | **Volumes Subject to Repricing Within** |   |
|                                                                                                                       |   | **0 - 1Days**                                     |   | **2 - 90Days** |   | **91 - 364                  Days** |   | **1 - 3Years** |   | **Over 3                  Years** |   | **Non-interest****    Sensitive    ** |   | **Total** |   |
| **Assets**                                                                                                            |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                  |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term                  investments and federal funds sold                                                        |   | $                                                           | 16,595 |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | 1,989 |   | $ | 18,584 |   |
| Investment                  securities                                                                                |   |                                                        | -      |   |   | 996 |   |   | - |   |   | - |   |   | 547 |   |   | - |   |   | 1,543 |   |
| Loans                                                                                                                 |   |                                                        | 47,686 |   |   | 7,916 |   |   | 21,398 |   |   | 20,160 |   |   | 39,249 |   |   | - |   |   | 136,409 |   |
| Fixed                  and other assets                                                                               |   |                                                        | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 1,321 |   |   | 1,321 |   |
|                                                                                                                  |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  assets                                                                                         |   | $                                                           | 64,281 |   | $ | 8,912 |   | $ | 21,398 |   | $ | 20,160 |   | $ | 39,796 |   | $ | 3,310 |   | $ | 157,857 |   |
|                                                                                                                  |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                  and Shareholders' Equity**                                                             |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                  |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing,                  interest-bearing checking, savings and money market accounts                    |   | $                                                           | 51,889 |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | 11,294 |   | $ | 63,183 |   |
| Certificates                  of deposit                                                                              |   |                                                        | -      |   |   | 7,945 |   |   | 41,720 |   |   | 8,876 |   |   | 20,594 |   |   | - |   |   | 79,135 |   |
| Borrowed                  funds                                                                                       |   |                                                        | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Other                  liabilities                                                                                    |   |                                                        | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 1,418 |   |   | 1,418 |   |
| Shareholders'                  equity                                                                                 |   |                                                        | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 14,121 |   |   | 14,121 |   |
|                                                                                                                  |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  liabilities and shareholders' equity                                                           |   | $                                                           | 51,889 |   | $ | 7,945 |   | $ | 41,720 |   | $ | 8,876 |   | $ | 20,594 |   | $ | 26,833 |   | $ | 157,857 |   |
|                                                                                                                  |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Period                  gap                                                                                           |   |                                                        | 12,392 |   |   | 967 |   |   | (20,322 | ) |   | 11,284 |   |   | 19,202 |   |   |   |   |   |   |   |
| Cumulative                  gap                                                                                       |   |                                                        | 12,392 |   |   | 13,359 |   |   | (6,963 | ) |   | 4,321 |   |   | 23,523 |   |   |   |   |   |   |   |
|                                                                                                                  |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Period                  gap to total assets                                                                           |   |                                                        | 7.85   | % |   | 0.61 | % |   | -12.87 | % |   | 7.15 | % |   | 12.16 | % |   |   |   |   |   |   |
|                                                                                                                  |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative                  gap to total assets                                                                       |   |                                                        | 7.85   | % |   | 8.46 | % |   | -4.41 | % |   | 2.74 | % |   | 14.90 | % |   |   |   |   |   |   |

----

**ITEM      4.**
**Controls      and Procedures**

**PART      II.**
**OTHER      INFORMATION**

**ITEM      1.**
**Legal      Proceedings**

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

**ITEM      3.**
**Defaults      Upon Senior Securities**

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

***Proposal      #1 – Election of Board of Directors***

***Proposal      #2 – Ratification of the Appointment of Weaver and Tidwell, LLP as the      Independent Registered Public Accounting Firm for the Fiscal Year Ending      December 31, 2008***

**ITEM      5.**
**Other      Information**

----

**ITEM      6.**
**Exhibits**

| **Exhibit Number** |   | **Description of Exhibit**                                                                                                                                 |
|-------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                    |   | Rule                13a-14(a) Certification of Chief Executive Officer.                                                                                              |
|                    |   |                                                                                                                                                                 |
| 31.2                    |   | Rule                13a-14(a) Certification of Chief Financial Officer.                                                                                              |
|                    |   |                                                                                                                                                                 |
| 32.1                    |   | Certification                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002. |

----

**SIGNATURES**

|                                 | T                BANCSHARES, INC. |
|--------------------------------------|-----------------------------------|
|                            |                         |                    |
| Date:                August 14, 2008 | By:                     | /s/                Patrick G. Adams |
|                            |                                   |    |
|                                 |                              | Patrick                G. AdamsPresident                  and Chief Executive Officer |

----