----

**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 March 31, 2008**

**T      BANCSHARES, INC.**

| **Texas**                                      |   | **71-0919962**                     |
|------------------------------------------------|--------|------------------------------------|
| (State                or other jurisdiction of |   | (I.R.S.                Employer    |
| incorporation                or organization)  |   | Identification                No.) |

----

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**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 | 16   |
| ITEM                4.  | Controls                and Procedures                                         | 29   |
| PART                II. | OTHER                INFORMATION                                               | 30   |
| ITEM                1.  | Legal                Proceedings                                               | 30   |
| ITEM                2.  | Unregistered                Sales of Equity Securities and Use of Proceeds     | 30   |
| ITEM                3.  | Defaults                Upon Senior Securities                                 | 30   |
| ITEM                4.  | Submission                of Matters to a Vote of Security Holders             | 30   |
| ITEM                5.  | Other                Information                                               | 30   |
| ITEM                6.  | Exhibits                                                                       | 30   |

----

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

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

**T      BANCSHARES, INC.**

**CONSOLIDATED      STATEMENTS OF FINANCIAL CONDITION**

| **(000's)**                                                                                                                                                                                   |   | **March 31, 2008** |    | **December 31,****2007** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|-------------------------------|--------|
|                                                                                                                                                                                          |   | **(unaudited)**              |    |                          |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |
| **ASSETS**                                                                                                                                                                                    |   |                         |    |                          |   |   |   |
|                                                                                                                                                                                          |   |                         |         |                          |   |  |   |
| Cash                  and due from banks                                                                                                                                                      |   | $                            | 2,671   |                          | $      | 3,235 |   |
| Federal                  funds sold                                                                                                                                                           |   |                         | 15,565  |                          |   | 20,325 |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| Total                  cash and cash equivalents                                                                                                                                              |   |                         | 18,236  |                          |   | 23,560 |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| Investments                  restricted, at cost                                                                                                                                              |   |                         | 499     |                          |   | 499 |   |
| Held                  to maturity, restricted                                                                                                                                                 |   |                         | 997     |                          |   | 992 |   |
| Loans,                  net of allowance for loan losses of $1,575 and $1,600,                  respectively                                                                                  |   |                         | 129,769 |                          |   | 119,924 |   |
| Bank                  premises and equipment, net                                                                                                                                             |   |                         | 1,471   |                          |   | 1,600 |   |
| Other                  assets                                                                                                                                                                 |   |                         | 938     |                          |   | 940 |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| Total                  assets                                                                                                                                                                 |   | $                            | 151,910 |                          | $      | 147,515 |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| **LIABILITIES**                                                                                                                                                                               |   |                         |    |                          |   |   |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| Demand                  Deposits:                                                                                                                                                             |   |                         |    |                          |   |   |   |
| Noninterest-bearing                                                                                                                                                                           |   | $                            | 11,969  |                          | $      | 13,878 |   |
| Interest-bearing                                                                                                                                                                              |   |                         | 47,028  |                          |   | 52,313 |   |
| Time                  deposits $100,000 and over                                                                                                                                              |   |                         | 48,701  |                          |   | 41,687 |   |
| Other                  time deposits                                                                                                                                                          |   |                         | 29,525  |                          |   | 25,031 |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| Total                  deposits                                                                                                                                                               |   |                         | 137,223 |                          |   | 132,909 |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| Other                  liabilities                                                                                                                                                            |   |                         | 562     |                          |   | 480 |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| Total                  liabilities                                                                                                                                                            |   |                         | 137,785 |                          |   | 133,389 |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| **Shareholders'                  Equity**                                                                                                                                                     |   |                         |    |                          |   |   |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| Common                  Stock, $ .01 par value; 10,000,000 shares authorized; 1,703,801                  and 1,703,801 shares issued and outstanding,                  respectively |   |                         | 17      |                          |   | 17 |   |
| Additional                  paid-in capital                                                                                                                                                   |   |                         | 16,844  |                          |   | 16,819 |   |
| Retained                  deficit                                                                                                                                                             |   |                         | (2,736  | )                             |   | (2,710 | ) |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| Total                  shareholders' equity                                                                                                                                                   |   |                         | 14,125  |                          |   | 14,126 |   |
|                                                                                                                                                                                          |   |                         |    |                          |   |   |   |
| Total                  liabilities and shareholders' equity                                                                                                                                   |   | $                            | 151,910 |                          | $      | 147,515 |   |

----

**T      BANCSHARES, INC.**

**CONSOLIDATED      STATEMENTS OF INCOME**

**(Unaudited)**

|                                                               |   | **Three Months Ended March 31,** |      |
|--------------------------------------------------------------------|--------|------------------------------------------------------|-----------|
| **(000's,                except share information)**               |   | **2008**                                             |      | **2007** |   |
|                                                               |   |                                                 |      |   |   |
| **Interest                Income**                                 |   |                                                 |           |   |   |  |   |
|                                                               |   |                                                 |           |   |   |  |   |
| Loan,                including fees                                |   | $                                                    | 2,501     |   | $ | 2,010 |   |
| Securities,                restricted                              |   |                                                 | 15        |   |   | 20 |   |
| Federal                funds sold                                  |   |                                                 | 120       |   |   | 380 |   |
|                                                               |   |                                                 |           |   |   |  |   |
| Total                interest income                               |   |                                                 | 2,636     |   |   | 2,410 |   |
|                                                               |   |                                                 |      |   |   |  |   |
| **Interest                Expense**                                |   |                                                 |           |   |   |  |   |
|                                                               |   |                                                 |           |   |   |  |   |
| Deposits                                                           |   |                                                 | 1,327     |   |   | 1,160 |   |
|                                                               |   |                                                 |           |   |   |  |   |
| Net                interest income                                 |   |                                                 | 1,309     |   |   | 1,250 |   |
|                                                               |   |                                                 |           |   |   |  |   |
| Provision                for loan losses                           |   |                                                 | 150       |   |   | 150 |   |
|                                                               |   |                                                 |           |   |   |  |   |
| Net                interest income after provision for loan losses |   |                                                 | 1,159     |   |   | 1,100 |   |
|                                                               |   |                                                 |           |   |   |  |   |
| **Noninterest                Income**                              |   |                                                 |           |   |   |  |   |
|                                                               |   |                                                 |           |   |   |  |   |
| Trust                income                                        |   |                                                 | 2,463     |   |   | 2,078 |   |
| Service                fees                                        |   |                                                 | 25        |   |   | 515 |   |
|                                                               |   |                                                 |           |   |   |  |   |
| Total                noninterest income                            |   |                                                 | 2,488     |   |   | 2,593 |   |
|                                                               |   |                                                 |           |   |   |  |   |
| **Noninterest                Expense**                             |   |                                                 |           |   |   |  |   |
|                                                               |   |                                                 |           |   |   |  |   |
| Salaries                and employee benefits                      |   |                                                 | 756       |   |   | 647 |   |
| Occupancy                and equipment                             |   |                                                 | 377       |   |   | 307 |   |
| Trust                expenses                                      |   |                                                 | 2,136     |   |   | 2,141 |   |
| Professional                fees                                   |   |                                                 | 143       |   |   | 117 |   |
| Other                                                              |   |                                                 | 261       |   |   | 350 |   |
|                                                                    |   |                                                 |      |   |   |  |   |
| Total                noninterest expense                           |   |                                                 | 3,673     |   |   | 3,562 |   |
|                                                                    |   |                                                 |           |   |   |  |   |
| **Net                Income (Loss)**                               |   | $                                                    | (26       | ) | $ | 131 |   |
|                                                                    |   |                                                 |           |   |   |  |   |
| **Earning                (loss) per common share:**                |   |                                                 |           |   |   |  |   |
|                                                                    |   |                                                 |           |   |   |  |   |
| Basic                                                              |   |                                                 | (0.02     | ) |   | 0.08 |   |
| Diluted                                                            |   |                                                 | (0.02     | ) |   | 0.05 |   |
|                                                                    |   |                                                 |           |   |   |  |   |
| Weighted                average common shares outstanding          |   |                                                 | 1,703,801 |   |   | 1,690,150 |   |
| Weighted                average diluted shares outstanding         |   |                                                 | 1,703,801 |   |   | 1,712,743 |   |

----

**T      BANCSHARES, INC.**

**STATEMENT      OF CHANGES IN STOCKHOLDERS’ EQUITY**

**(Unaudited)**

| **(000's)**                                      |   | **Common Stock** |                                | **Additional****Paid-in****Capital** |   | **Retained Deficit**           |   | **Total** |                         |
|--------------------------------------------------|--------|-----------------------|-------------------------------------|--------------------------------------|--------|-------------------------------------|--------|-----------|------------------------------|
|                                             |   |                  |                                |                                 |   |                                |   |      |                         |
| **BALANCE,                January 1, 2007**      |   |                  |                                |                                 | $      | 17                                  |   | $         | 16,572                       |   |   |   |   | $ | (3,511 | ) | $ | 13,078 |   |
|                                             |   |                  |                                     |                                 |   |                                     |   |      |                              |   |   |  |   |   |  |   |   |  |   |
| Comprehensive                income:             |   |                  |                           |                                 |   |                           |   |      |                    |   |   |    |   |   |                     |   |   |  |   |
| Net                income — YTD       |   |                  |                                     |                                 |   |                                     |   |      |                              |   |   |  |   |   | 131 |   |   | 131 |   |
| Total                comprehensive income (loss) |   |                  |                                |                                 |   |                                |   |      |                         |   |   |   |   |   |   |   |   | 131 |   |
|                                             |   |                  |                                     |                                 |   |                                     |   |      |                              |   |   |  |   |   |  |   |   |  |   |
| Stock                based compensation          |   |                  |                      |                                 |   |                      |   |      | 16                           |   |   |                      |   |   |                      |   |   | 16 |   |
|                                             |   |                  |                                     |                                 |   |                                     |   |      |                              |   |   |  |   |   |  |   |   |  |   |
| **BALANCE,                March 31, 2007**       |   |                  |                                |                                 | $      | 17                                  |   | $         | 16,588                       |   |   |   |   | $ | (3,380 | ) | $ | 13,225 |   |
|                                             |   |                  |                                     |                                 |   |                                     |   |      |                              |   |   |  |   |   |  |   |   |  |   |
| **BALANCE,                January 1, 2008**      |   |                  |                                |                                 | $      | 17                                  |   | $         | 16,819                       |   |   |   |   | $ |  (2,710 | ) | $ | 14,126 |   |
|                                             |   |                  |                                     |                                 |   |                                     |   |      |                              |   |   |  |   |   |  |   |   |  |   |
| Comprehensive                income:             |   |                  |                           |                                 |   |                           |   |      |                         |   |   |  |   |   |                    |   |   |                    |   |
| Net                loss — YTD              |   |                  |                                     |                                 |   |                           |   |      |                              |   |   |  |   |   | (26 | ) |   | (26 | ) |
| Total                comprehensive income        |   |                  |                                |                                 |   |                           |   |      |                         |   |   |   |   |   |   |   |   | (26 | ) |
|                                             |   |                  |                                     |                                 |   |                                     |   |      |                              |   |   |  |   |   |  |   |   |  |   |
| Stock                based compensation          |   |                  |                           |                                 |   |                           |   |      | 25                           |   |   |                    |   |   |                    |   |   | 25 |   |
|                                             |   |                  |                                     |                                 |   |                                     |   |      |                              |   |   |  |   |   |  |   |   |   |   |
| **BALANCE,                March 31, 2008**       |   |                  |                                |                                 | $      | 17                                  |   | $         | 16,844                       |   |   |   |   | $ | (2,736 | ) | $ | 14,125 |   |

----

**T      BANCSHARES, INC.**

**CONSOLIDATED      STATEMENT OF CASH FLOWS**

**(Unaudited)**

|                                                                                                                          |   | **Three Months Ended March 31,** |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|
| **(000's)**                                                                                                                   |   | **2008**                                             |   | **2007** |   |
|                                                                                                                          |   |                                                 |   |   |   |
| **Cash                Flows from Operating Activities**                                                                       |   |                                                 |        |   |   |  |   |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| Net                income (loss)                                                                                              |   | $                                                    | (26    | ) | $ | 131 |   |
| Adjustments                to reconcile net income (loss) to net cash provided (used) by operating                activities: |   |                                                 |        |   |   |  |   |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| Provision                for loan losses                                                                                      |   |                                                 | 150    |   |   | 150 |   |
| Depreciation                and amortization                                                                                  |   |                                                 | 135    |   |   | 124 |   |
| Accretion                of discount                                                                                          |   |                                                 | (8     | ) |   | (12 | ) |
| Stock                based compensation                                                                                       |   |                                                 | 25     |   |   | 16 |   |
| Net                change in other assets                                                                                     |   |                                                 | 2      |   |   | 467 |   |
| Net                change in other liabilities                                                                                |   |                                                 | 82     |   |   | 258 |   |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| Net                cash provided  by operating activities                                                                |   |                                                 | 360    |   |   | 1,134 |   |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| **Cash                Flows from Investing Activities**                                                                       |   |                                                 |        |   |   |  |   |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| Purchase                of securities held to maturity                                                                        |   |                                                 | (997   | ) |   | (988 | ) |
| Proceeds                from maturity of securities held to maturity                                                          |   |                                                 | 1,000  |   |   | 1,000 |   |
| Net                change in loans                                                                                            |   |                                                 | (9,995 | ) |   | (9,226 | ) |
| Purchases                of premises and equipment                                                                            |   |                                                 | (6     | ) |   | (338 | ) |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| Net                cash used in investing activities                                                                          |   |                                                 | (9,998 | ) |   | (9,552 | ) |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| **Cash                Flows from Financing Activities**                                                                       |   |                                                 |        |   |   |  |   |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| Net                change in demand deposits                                                                                  |   |                                                 | (1,909 | ) |   | 1,444 |   |
| Net                change in time deposits                                                                                    |   |                                                 | 6,223  |   |   | 1,673 |   |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| Net                cash provided by financing activities                                                                      |   |                                                 | 4,314  |   |   | 3,117 |   |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| Net                change in cash and cash equivalents                                                                        |   |                                                 | (5,324 | ) |   | (5,301 | ) |
| Cash                and cash equivalents at beginning of period                                                               |   |                                                 | 23,560 |   |   | 37,766 |   |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| Cash                and cash equivalents at end of period                                                                     |   | $                                                    | 18,236 |   | $ | 32,465 |   |
|                                                                                                                          |   |                                                 |        |   |   |  |   |
| Supplemental                disclosures of cash flow information                                                              |   |                                                 |        |   |   |  |   |
| Cash                paid during the period for                                                                                |   |                                                 |        |   |   |  |   |
| Interest                                                                                                                      |   | $                                                    | 1,221  |   | $ | 1,152 |   |
| Income                taxes                                                                                                   |   | $                                                    | -      |   | $ | - |   |

----

**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)**                                            |   | **March 31,****2008** |    | **December 31,****2007** |   |
|--------------------------------------------------------|--------|----------------------------|---------|-------------------------------|--------|
|                                                   |   |                       |    |                          |   |
| Commercial                  and industrial             |   | $                          | 88,625  |                          | $      | 81,811 |   |
| Consumer                  installment                  |   |                       | 3,463   |                          |   | 3,183 |   |
| Real                  estate — mortgage     |   |                       | 15,001  |                          |   | 23,542 |   |
| Real                  estate — construction |   |                       | 24,430  |                          |   | 13,177 |   |
| Other                                                  |   |                       | 14      |                          |   | 13 |   |
|                                                   |   |                       |         |                          |   |  |   |
|                                                   |   |                       | 131,533 |                          |   | 121,726 |   |
|                                                   |   |                       |         |                          |   |  |   |
| Less                  allowance for loan losses        |   |                       | 1,575   |                          |   | 1,600 |   |
| Less                  deferred loan fees               |   |                       | 189     |                          |   | 202 |   |
|                                                   |   |                       |         |                          |   |  |   |
| Net                  loans                             |   | $                          | 129,769 |                          | $      | 119,924 |   |

| **(000's)**                                                 |   | **March 31,****2008** |   | **December 31,****2007** |   |
|-------------------------------------------------------------|--------|----------------------------|--------|-------------------------------|--------|
|                                                        |   |                       |   |                          |   |
| Balance                  at beginning of period             |   | $                          | 1,600  |                          | $      | 1,000 |   |
| Provision                  charged to operations            |   |                       | 150    |                          |   | 600 |   |
| Loans                  charged off                          |   |                       | 175    |                          |   | - |   |
| Recoveries                  of loans previously charged off |   |                       | -      |                          |   | - |   |
|                                                        |   |                       |        |                          |   |  |   |
| Balance                  at end of period                   |   | $                          | 1,575  |                          | $      | 1,600 |   |

----

**NOTE      4.**
**SECURITIES**

|                                 |   | **March                  31, 2008** |   |
|--------------------------------------|--------|-------------------------------------|--------|
| **(000's)**                          |   | **Amortized****Cost**               |   | **Unrealized****Gains** |   | **Unrealized****Losses** |   | **Estimated****Fair Value** |   |
|                                 |   |                                |   |   |   |   |   |   |   |
| U.S.                  Treasury Notes |   | $                                   | 997    |   | $ | - |   | $ | - |   | $ | 997 |   |

|                                   |   | **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)**                                     |   | **March 31,****2008** |   | **December 31,****2007** |   |
|-------------------------------------------------|--------|----------------------------|--------|-------------------------------|--------|
| Leasehold                  improvements         |   | $                          | 931    |                          | $      | 931 |   |
| Furniture                  and equipment        |   |                       | 1,763  |                          |   | 1,758 |   |
|                                            |   |                       | 2,694  |                          |   | 2,689 |   |
| Less:                  accumulated depreciation |   |                       | 1,223  |                          |   | 1,089 |   |
| Balance                  at end of period       |   | $                          | 1,471  |                          | $      | 1,600 |   |

----

**NOTE      7. OTHER ASSETS**

| **(000's)**                                     |   | **March 31,****2008** |   | **December 31,****2007** |   |
|-------------------------------------------------|--------|----------------------------|--------|-------------------------------|--------|
|                                            |   |                       |   |                          |   |
| Accrued                  interest receivable    |   | $                          | 526    |                          | $      | 561 |   |
| Identifiable                  intangible assets |   |                       | 326    |                          |   | 239 |   |
| Accounts                  receivable            |   |                       | 83     |                          |   | 132 |   |
| Other                                           |   |                       | 3      |                          |   | 8 |   |
|                                            |   |                       |        |                          |   |  |   |
|                                            |   | $                          | 938    |                          | $      | 940 |   |

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

| **(000's)**                                                  |   | **As                of March 31, 2008** |    | **As                of December 31, 2007** |   |
|--------------------------------------------------------------|--------|-----------------------------------------|---------|--------------------------------------------|--------|
|                                                         |   |                                    |    |                                       |   |   |   |   |   |
| Noninterest                bearing demand                    |   | $                                       | 11,969  |                                       |   | 9 | % | $ | 13,878 |   |   | 10 | % |
| Interest                bearing demand (NOW)                 |   |                                    | 2,499   |                                       |   | 2 | % |   | 1,781 |   |   | 2 | % |
| Money                market accounts                         |   |                                    | 44,393  |                                       |   | 32 | % |   | 50,353 |   |   | 38 | % |
| Savings                accounts                              |   |                                    | 136     |                                       |   | 0 | % |   | 178 |   |   | 0 | % |
| Certificates                of deposit, less than $100,000   |   |                                    | 29,525  |                                       |   | 22 | % |   | 25,032 |   |   | 19 | % |
| Certificates                of deposit, $100,000 and greater |   |                                    | 48,701  |                                       |   | 35 | % |   | 41,687 |   |   | 31 | % |
|                                                         |   | $                                       | 137,223 |                                       |   | 100 | % | $ | 132,909 |   |   | 100.0 | % |

| **(000’s)**  |   |   |   |   |
|-------------------------|--------|--------|--------|--------|
| 2008                    |   | $      | 43,917 |   |
| 2009                    |   |   | 9,103  |   |
| 2010                    |   |   | 4,366  |   |
| 2011                    |   |   | 13,575 |   |
| 2012                    |   |   | 6,203  |   |
| 2013                    |   |   | 1,062  |   |
|                    |   |   |        |   |
| Total                   |   | $      | 78,226 |   |

----

**NOTE      9.**
**Other      liabilities**

| **(000's)**                                     |   | **March                  31,****2008** |   | **December                  31,****2007** |   |
|-------------------------------------------------|--------|----------------------------------------|--------|-------------------------------------------|--------|
|                                            |   |                                   |   |                                      |   |
| Interest                  Payable               |   | $                                      | 260    |                                      | $      | 155 |   |
| Audit                  Fees                     |   |                                   | 128    |                                      |   | 136 |   |
| Incentive                  Compensation         |   |                                   | 35     |                                      |   | - |   |
| Legal                                           |   |                                   | 121    |                                      |   | 113 |   |
| Franchise                  & Property Taxes |   |                                   | 17     |                                      |   | 21 |   |
| Other                  Accruals                 |   |                                   | 1      |                                      |   | 55 |   |
|                                            |   | $                                      | 562    |                                      | $      | 480 |   |

**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                  |   |                                                            | -       |                                          |   | - |   |
|                                                |   |                                                            |         |                                          |   |  |   |
| Outstanding                at end of period         |   |                                                            | 196,000 |                                          | $      | 10.44 |   |
| Exercisable                at end of period         |   |                                                            | 97,600  |                                          | $      | 10.03 |   |
| Available                for grant at end of period |   |                                                            | 53,000  |                                          |   |  |   |

|                                        |   | **Shares** |    | **Weighted****Average****Grant                Date****Fair                Value** |   |
|---------------------------------------------|--------|------------|---------|-----------------------------------------------------------------------------------|--------|
|                                        |   |       |    |                                                                              |   |
| Nonvested                at January 1, 2008 |   |       | 101,900 |                                                                              | $      | 2.15 |   |
| Granted                                     |   |       | -       |                                                                              |   | - |   |
| Vested                                      |   |       | 3,500   |                                                                              |   | 2.39 |   |
| Forfeited                                   |   |       | -       |                                                                              |   | - |   |
|                                        |   |       |         |                                                                              |   |  |   |
| Nonvested                at March 31, 2008  |   |       | 98,400  |                                                                              | $      | 2.74 |   |

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

----

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

**Employment      Agreements**

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

----

| **(000's)**                                          |   | **Actual** |   | **For Capital Adequacy Purposes** |   | **To Be Well Capitalized Under**** Prompt Corrective Action ****Provisions** |   |
|-----------------------------------------------------------|--------|------------|--------|--------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|
|                                                      |   | **Amount** |   | **Ratio**                                        |   | **Amount**                                                                                                           |   |                        |   | **Ratio** |   | **Amount** |   |                        |   | **Ratio** |   |
|                                                      |   |       |   |                                             |   |                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |
| **As                  of March 31, 2008**                 |   |       |   |                                             |   |                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  Capital (to Risk Weighted Assets)  |   | $          | 14,602 |                                             |   | 12.34                                                                                                                | %      | $ | 9,463 |   |   | ≥ |   |   | 8.00 | % | $ | 11,829 |   |   | ≥ |   |   | 10.00 | % |
|                                                      |   |       |   |                                             |   |                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 Capital (to Risk Weighted Assets) |   |       | 13,122 |                                             |   | 11.09                                                                                                                | %      |   | 4,731 |   |   | ≥ |   |   | 4.00 | % |   | 7,097 |   |   | ≥ |   |   | 6.00 | % |
|                                                      |   |       |   |                                             |   |                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 Capital (to Average Assets)       |   |       | 13,122 |                                             |   | 8.90                                                                                                                 | %      |   | 5,899 |   |   | ≥ |   |   | 4.00 | % |   | 7,374 |   |   | ≥ |   |   | 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)**                                    |   | **March                  31,****2008** |   | **December                  31,****2007** |   |
|------------------------------------------------|--------|----------------------------------------|--------|-------------------------------------------|--------|
|                                           |   |                                   |   |                                      |   |
| **ASSETS**                                     |   |                                   |        |                                      |   |  |   |
|                                           |   |                                   |        |                                      |   |  |   |
| Cash                  and due from banks       |   | $                                      | 713    |                                      | $      | 743 |   |
| Investment                  in subsidiary      |   |                                   | 13,412 |                                      |   | 13,383 |   |
|                                           |   |                                   |        |                                      |   |  |   |
| Total                  Assets                  |   | $                                      | 14,125 |                                      | $      | 14,126 |   |
|                                           |   |                                   |        |                                      |   |  |   |
| **LIABILITIES                  AND CAPITAL**   |   |                                   |        |                                      |   |  |   |
|                                           |   |                                   |        |                                      |   |  |   |
| Capital                                        |   |                                   | 14,125 |                                      |   | 14,126 |   |
|                                           |   |                                   |        |                                      |   |  |   |
| Total                  Liabilities and Capital |   | $                                      | 14,125 |                                      | $      | 14,126 |   |

----

**T      BANCSHARES, INC.**

**CONDENSED      STATEMENT OF INCOME**

**(Unaudited)**

|                                                   |   | **Three Months Ended March 31,** |   |
|--------------------------------------------------------|--------|------------------------------------------------------|--------|
| **(000's)**                                            |   | **2008**                                             |   | **2007** |   |
|                                                   |   |                                                 |   |   |   |
| Equity                in income (loss) from subsidiary |   | $                                                    | 29     |   | $ | 152 |   |
|                                                   |   |                                                 |        |   |   |  |   |
| Noninterest                expense:                    |   |                                                 |        |   |   |  |   |
| Professional                and administrative         |   |                                                 | 30     |   |   | 5 |   |
| Stock                options                           |   |                                                 | 25     |   |   | 16 |   |
| Total                noninterest expenses              |   |                                                 | 55     |   |   | 21 |   |
|                                                   |   |                                                 |        |   |   |  |   |
| Net                income (loss)                       |   | $                                                    | (26    | ) | $ | 131 |   |

----

**T      BANCSHARES, INC.**

**CONDENSED      STATEMENT OF CASH FLOWS**

**(Unaudited)**

|                                                                                                                              |   | **Three Months Ended March 31,** |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|
| **(000's)**                                                                                                                       |   | **2008**                                             |   | **2007** |   |
|                                                                                                                              |   |                                                 |   |   |   |
| **Cash                  Flows from Operating Activities**                                                                         |   |                                                 |        |   |   |  |   |
|                                                                                                                              |   |                                                 |        |   |   |  |   |
| Net                  Income (Loss)                                                                                                |   | $                                                    | (26    | ) | $ | 131 |   |
| Adjustments                  to reconcile net income (loss) to net cash provided (used) by operating                  activities: |   |                                                 |        |   |   |  |   |
|                                                                                                                              |   |                                                 |        |   |   |  |   |
| Equity                  in (earnings) loss of Bank                                                                                |   |                                                 | (29    | ) |   | (152 | ) |
| Stock                  based compensation                                                                                         |   |                                                 | 25     |   |   | 16 |   |
| Net                  change in other assets                                                                                       |   |                                                 | -      |   |   | - |   |
| Net                  change in other liabilities                                                                                  |   |                                                 | -      |   |   | - |   |
|                                                                                                                              |   |                                                 |        |   |   |  |   |
| Net                  cash provided (used) by operating activities                                                                 |   |                                                 | (30    | ) |   | (5 | ) |
|                                                                                                                              |   |                                                 |        |   |   |  |   |
| **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                                                                                             |   |                                                 | -      |   |   | - |   |
|                                                                                                                              |   |                                                 |        |   |   |  |   |
| Net                  cash provided by financing activities                                                                        |   |                                                 | -      |   |   | - |   |
|                                                                                                                              |   |                                                 |        |   |   |  |   |
| Net                  change in cash and cash equivalents                                                                          |   |                                                 | (30    | ) |   | (5 | ) |
| Cash                  and cash equivalents at beginning of period                                                                 |   |                                                 | 743    |   |   | 727 |   |
|                                                                                                                              |   |                                                 |        |   |   |  |   |
| Cash                  and cash equivalents at end of period                                                                       |   | $                                                    | 713    |   | $ | 722 |   |
|                                                                                                                              |   |                                                 |        |   |   |  |   |
| Supplemental                  disclosures of cash flow information                                                                |   |                                                 |        |   |   |  |   |
| Cash                  paid during the period for                                                                                  |   |                                                 |        |   |   |  |   |
| Interest                                                                                                                          |   | $                                                    | -      |   | $ | - |   |
| Income                  taxes                                                                                                     |   | $                                                    | -      |   | $ | - |   |

**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***

**Results      of Operations**

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

----

***Key      Performance Indicators at March 31, 2008***

|   | · | total                assets grew to $152 million at the end of the first quarter of 2008,                representing an increase of $4 million or 2.7%, from $148 million                at the                end of 2007; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | total                loans, net of allowance for loan losses, grew to $130 million at                the end                of the first quarter of 2008, representing an increase of $10 million                or                8.3%, from $120 million at the end of                2007; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | total                deposits grew to $137 million at the end of the first quarter of                2008,                representing and increase of $4 million or 3.0% from $133 million                at the                end of 2007; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | total                revenue was $5.1 million for the three months ended March 31, 2008                compared to $5 million for the three months ended March 31, 2007,                representing an increase of 2%; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | net                loss was $26,000 for the three months ended March 31, 2008, compared                to                net income of $131,000 for the three months ended March 31,                2007. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**FINANCIAL      SUMMARY**

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

|                                                         |   | **Three                  Months Ended March 31,** |         |
|--------------------------------------------------------------|--------|---------------------------------------------------|--------------|
|                                                         |   | **2008**                                          |         | **2007** |   |
| **(000's)**                                                  |   | **Average****Balance**                            |         | **Interest** |   | **Average****Yield** |   | **Average****Balance** |   | **Interest** |   | **Average****Yield** |   |
|                                                         |   |                                              |         |   |   |   |   |   |   |   |   |   |   |
| **Interest-earning                  assets**                 |   |                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,                  net of reserve                       |   | $                                                 | 126,145      |   | $ | 2,501 |   |   | 7.9 | % | $ | 91,220 |   | $ | 2,010 |   |   | 9.0 | % |
| Federal                  funds sold                          |   |                                              | 15,081       |   |   | 120 |   |   | 3.2 | % |   | 29,497 |   |   | 380 |   |   | 4.7 | % |
| Securities                                                   |   |                                              | 1,495        |   |   | 15 |   |   | 4.0 | % |   | 1,449 |   |   | 20 |   |   | 6.0 | % |
| Total                  earning assets                        |   |                                              | 142,721      |   |   | 2,636 |   |   | 7.4 | % |   | 122,166 |   |   | 2,410 |   |   | 7.8 | % |
| Cash                  and other assets                       |   |                                              | 4,752        |   |   |   |   |   |   |   |   | 6,045 |   |   |   |   |   |   |   |
| Total                  assets                                |   | $                                                 | 147,473      |   |   |   |   |   |   |   | $ | 128,211 |   |   |   |   |   |   |   |
|                                                         |   |                                              |         |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |
| **Interest-bearing                  liabilities**            |   |                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                  accounts                                |   | $                                                 | 1,721        |   | $ | 5 |   |   | 1.2 | % | $ | 2,070 |   | $ | 5 |   |   | 1.1 | % |
| Money                  market accounts                       |   |                                              | 45,925       |   |   | 384 |   |   | 3.3 | % |   | 60,461 |   |   | 677 |   |   | 3.4 | % |
| Savings                  accounts                            |   |                                              | 158          |   |   | 1 |   |   | 2.5 | % |   | 362 |   |   | 1 |   |   | 1.5 | % |
| Certificates                  of deposit less than $100,000  |   |                                              | 27,130       |   |   | 349 |   |   | 5.1 | % |   | 14,549 |   |   | 192 |   |   | 4.5 | % |
| Certificates                  of deposit $100,000 or greater |   |                                              | 44,921       |   |   | 588 |   |   | 5.2 | % |   | 21,468 |   |   | 285 |   |   | 4.4 | % |
| Total                  interest bearing deposits             |   |                                              | 119,855      |   |   | 1,327 |   |   | 4.4 | % |   | 98,910 |   |   | 1,160 |   |   | 3.7 | % |
| Noninterest                  bearing deposits                |   |                                              | 13,533       |   |   |   |   |   |   |   |   | 16,795 |   |   |   |   |   |   |   |
| Other                  liabilities                           |   |                                              | 1,032        |   |   |   |   |   |   |   |   | 155 |   |   |   |   |   |   |   |
| Stockholders                  equity                         |   |                                              | 13,053       |   |   |   |   |   |   |   |   | 12,351 |   |   |   |   |   |   |   |
| Total                  liabilities and stockholders' equity  |   | $                                                 | 147,473      |   |   |   |   |   |   |   | $ | 128,211 |   |   |   |   |   |   |   |
|                                                         |   |                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest income                         |   |                                              |         |   |   | 1,309 |   |   |   |   |   |   |   |   | 1,250 |   |   |   |   |
| Net                  interest spread                         |   |                                              |         |   |   |   |   |   | 3.0 | % |   |   |   |   |   |   |   | 4.1 | % |
| Net                  interest margin                         |   |                                              |         |   |   |   |   |   | 3.7 | % |   |   |   |   |   |   |   | 5.4 | % |
|                                                         |   |                                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision                  for loan loss                     |   |                                              |    |   |   | 150 |   |   |   |   |   |   |   |   | 150 |   |   |   |   |
| Non-interest                  income                         |   |                                              |         |   |   | 2,488 |   |   |   |   |   |   |   |   | 2,593 |   |   |   |   |
| Non-interest                  expense                        |   |                                              |         |   |   | 3,673 |   |   |   |   |   |   |   |   | 3,562 |   |   |   |   |
| Income                  (loss) before income taxes           |   |                                              |         |   |   | (26 | ) |   |   |   |   |   |   |   | 131 |   |   |   |   |
| Income                  taxes expense (benefit)              |   |                                              |         |   |   | - |   |   |   |   |   |   |   |   | - |   |   |   |   |
| Net                  income (loss)                           |   |                                              |         |   | $ | (26 | ) |   |   |   |   |   |   | $ | 131 |   |   |   |   |
|                                                         |   |                                              |    |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Earnings                  (loss) per share                   |   |                                              |         |   |   | (0.02 | ) |   |   |   |   |   |   |   | 0.08 |   |   |   |   |
| Return                  on average equity                    |   |                                              |         |   |   | (0.8 | )% |   |   |   |   |   |   |   | 4.24 | % |   |   |   |
| Return                  on average assets                    |   |                                              |         |   |   | (0.07 | )% |   |   |   |   |   |   |   | 0.41 | % |   |   |   |
| Equity                  to assets ratio                      |   |                                              |         |   |   | 8.85 | % |   |   |   |   |   |   |   | 9.63 | % |   |   |   |

***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)**                                            |   | **March 31, 2008** |    | **December 31, 2007** |   |
|                                                   |   |                         |    |                            |   |
| Commercial                  and industrial             |   | $                            | 88,625  |                            | $      | 81,811 |   |
| Consumer                  installment                  |   |                         | 3,463   |                            |   | 3,183 |   |
| Real                  estate — mortgage     |   |                         | 15,001  |                            |   | 23,542 |   |
| Real                  estate — construction |   |                         | 24,430  |                            |   | 13,177 |   |
| Other                                                  |   |                         | 14      |                            |   | 13 |   |
|                                                   |   |                         | 131,533 |                            |   | 121,726 |   |
|                                                   |   |                         |         |                            |   |  |   |
| Less                  allowance for loan losses        |   |                         | 1,575   |                            |   | 1,600 |   |
| Less                  deferred loan fees               |   |                         | 189     |                            |   | 202 |   |
|                                                   |   | $                            | 129,769 |                            | $      | 119,924 |   |

----

|                                                    |   | **As                  of March 31, 2008**           |   |
|---------------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                    |   |                                                |   | **Over 1 Year through****5                  Years** |   | **Over 5 Years** |   |   |   |
| **(000's)**                                             |   | **One Year                   or****Less** |   | **Fixed Rate** |   | **Floating or                  Adjustable****Rate** |   | **Fixed                  Rate** |   | **Floating or                  Adjustable****Rate** |   | **Total** |   |
|                                                    |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                  and industrial              |   | $                                                   | 23,489 |   | $ | 9,435 |   | $ | 787 |   | $ | 38,722 |   | $ | 19,192 |   | $ | 88,625 |   |
| Consumer                  installment                   |   |                                                | 1,424  |   |   | 804 |   |   | 5 |   |   | 938 |   |   | 292 |   |   | 3,463 |   |
| Real                  estate — mortgage*     |   |                                                | 11,578 |   |   | 5,265 |   |   | 2,157 |   |   | 4,079 |   |   | 2,695 |   |   | 25,774 |   |
| Real                  estate — construction* |   |                                                | 9,390  |   |   | 1,975 |   |   | 196 |   |   | - |   |   | 2,097 |   |   | 13,658 |   |
| Other                                                   |   |                                                | 13     |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 13 |   |
| Total                                                   |   | $                                                   | 45,894 |   | $ | 17,479 |   | $ | 3,145 |   | $ | 43,738 |   | $ | 21,276 |   | $ | 131,533 |   |

***Nonperforming      Loans and Assets***

----

***Allowance      for Loan Losses***

| **(000's)**                                          |   | **As                of****March                31, 2008** |   | **As                of****December                31, 2007**         |   |
|------------------------------------------------------|--------|-----------------------------------------------------------|--------|----------------------------------------------------------------------|--------|
| **Allocated:**                                       |   | **Amount**                                                |   | **Loan****Category                to****Gross                Loans** |   | **Amount** |   | **Loan****Category                to****Gross                Loans** |   |
|                                                 |   |                                                      |   |                                                                 |   |   |   |   |   |
| Commercial                and industrial             |   | $                                                         | 1,061  |                                                                 |   | 67.40 | % | $ | 1,076 |   |   | 67.22 | % |
| Consumer                installment                  |   |                                                      | 41     |                                                                 |   | 2.63 | % |   | 42 |   |   | 2.61 | % |
| Real                estate — mortgage     |   |                                                      | 309    |                                                                 |   | 19.59 | % |   | 309 |   |   | 19.34 | % |
| Real                estate — construction |   |                                                      | 164    |                                                                 |   | 10.38 | % |   | 173 |   |   | 10.83 | % |
| Total                allowance for loan losses       |   | $                                                         | 1,575  |                                                                 |   | 100.00 | % | $ | 1,600 |   |   | 100.00 | % |

***Nonearning      Assets***

***Deposits***

----

|                                                              |   | **For                      the three months ended** |    |
|-------------------------------------------------------------------|--------|-----------------------------------------------------|---------|
| **(000's)**                                                       |   | **March                      31, 2008**             |    | **March                      31, 2007** |   |
|                                                              |   | **Average****Balance**                              |    | **Percent                      of****Deposits** |   | **Average****Rate** |   | **Average****Balance** |   | **Percent                      of****Deposits** |   | **Average****Rate** |   |
|                                                              |   |                                           |    |                          |   |                          |   |                          |   |                          |   |                          |   |
| Noninterest                      bearing deposits                 |   | $                                                   | 13,533  |   |   | 10.14 | % |   | 0.00 | %  | $ | 16,795 |   |   | 14.5 | % |   | 0.0 | % |
| NOW                      accounts                                 |   |                                                | 1,721   |   |   | 1.29 | % |   | 1.13 | % |   | 2,070 |   |   | 1.8 | % |   | 1.0 | % |
| Money                      market accounts                        |   |                                                | 45,925  |   |   | 34.43 | % |   | 3.34 | % |   | 60,461 |   |   | 52.2 | % |   | 4.5 | % |
| Savings                      accounts                             |   |                                                | 158     |   |   | 0.12 | % |   | 1.46 | % |   | 362 |   |   | 0.3 | % |   | 1.5 | % |
| Certificates                      of deposit, less than $100,000  |   |                                                | 27,130  |   |   | 20.34 | % |   | 5.18 | % |   | 14,549 |   |   | 12.6 | % |   | 5.3 | % |
| Certificates                      of deposit, $100,000 or greater |   |                                                | 44,921  |   |   | 33.68 | % |   | 5.22 | % |   | 21,468 |   |   | 18.6 | % |   | 5.3 | % |
|                                                              |   |                                                |         |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Total                      deposits                               |   | $                                                   | 133,388 |   |   | 100.00 | % |   | 4.43 | % | $ | 115,705 |   |   | 100.00 | % |   | 4.7 | % |

| **(000's)**                                            |   | **March 31,****2008**     |   | **December 31,****2007**  |   |
|-------------------------------------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
|                                                   |   |                      |   |                      |   |
| Three                  months or less                  |   | $                              | 7,126  |                           | $      | 2,034 |   |
| Over                  three months through 12 months   |   |                           | 24,104 |                           |   | 25,049 |   |
| Over                  one year through three years     |   |                           | 4,983  |                           |   | 11,650 |   |
| Over                  three years                      |   |                           | 12,488 |                           |   | 2,954 |   |
|                                                   |   |                           |        |                           |   |  |   |
| Total                                                  |   | $                              | 48,701 |                           | $      | 41,687 |   |

***Off-Balance      Sheet Arrangements***

***Borrowings***

----

|                                       |   | **As                  of March 31, 2008** |   |
|-------------------------------------------------|--------|-------------------------------------------|--------|
| **(000's)**                                     |   | **Less than****One****Year**         |   | **One to Three****Years** |   | **Over Three to****Five                  Years** |   | **Over Five****Years** |   |
|                                       |   |                                 |   |   |   |                        |   |                      |   |
| Operating                  leases          |   | $                                         | 279    |   | $ | 874 |   | $ | 482 |   | $ | 215 |   |
|                                       |   |                                      |        |   |   |  |   |   |  |   |   |  |   |
| Certificates                  of deposit   |   | $                                         | 49,612 |   | $ | 8,692 |   | $ | 19755 |   | $ | - |   |

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

----

|  **(000's)**                                         |   | **Actual**         |                                 | **For Capital Adequacy****Purposes** |   | **To Be Well Capitalized****Under Prompt Corrective****Action Provisions** |   |
|-----------------------------------------------------------|--------|--------------------|--------------------------------------|------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|--------|
|                                                      |   | **Amount**         |                                 | **Ratio**                                      |   | **Amount**                                                                                               |   |   |   | **Ratio** |   | **Amount** |   |   |   | **Ratio** |   |
|                                                      |   |     |                                 |                                 |   |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| **As                  of March 31, 2008 **           |   |               |                            |                                           |   |                                                                                                |   |   |                      |   |   |                      |   |   |                      |   |   |                      |   |   |                      |   |   |                      |   |
| Total                  Capital (to Risk Weighted Assets)  |   | $                  | 14,602                               |                                           |   | 12.34                                                                                                    | %      | $ | 9,463 |   |   | ≥ |   |   | 8.00 | % | $ | 11,829 |   |   |  ≥ |   |   | 10.00 | % |
|                                                 |   |               |                       |                                           |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 Capital (to Risk Weighted Assets) |   |               | 13,122                               |                                           |   | 11.09                                                                                                    | %      |   | 4,,731 |   |   | ≥ |   |   | 4.00 | % |   | 7,097 |   |   | ≥ |   |   | 6.00 | % |
|                                                      |   |               |                                 |                                           |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 Capital (to Average Assets)       |   |               | 13,122                               |                                           |   | 8.90                                                                                                     | %      |   | 5,899 |   |   | ≥ |   |   | 4.00 | % |   | 7,374 |   |   | ≥ |   |   | 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**

----

***Quantitative      and Qualitative Disclosure About Market Risks***

|                                             |   | **Change in Future Net Interest Income****as of March                  31, 2008** |   |
|--------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|
|                                             |   | **Dollar Change**                                                                                               |   | **Percentage****Change** |   |
|                                             |   |                                                                                                                 |   |   |   |
| +200                  basis points over one year |   | $                                                                                                                    | (7,000 | ) |   | -0.13 | % |
| +100                  basis points over one year |   |                                                                                                                 | (1,000 | ) |   | -0.02 | % |
| -100                  basis points over one year |   |                                                                                                                 | 20,000 |   |   | 0.36 | % |
| -200                  basis points over one year |   |                                                                                                                 | 25,000 |   |   | 0.45 | % |

----

|                                                                                                                |   | **As                  of March 31, 2008**                |                           |
|---------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|--------------------------------|
|                                                                                                                |   | **Volumes                  Subject to Repricing Within** |                           |
|                                                                                                                |   |                                                     |                           |
|                                                                                                                |   | **0 - 1****Days**                              |                           | **2 - 90****Days** |   | **91 - 364****Days** |   | **1 - 3****Years** |   | **Over 3****Years** |   | **Non-interest                  Sensitive** |   | **Total** |   |
| **Assets**                                                                                                          |   |                                                     |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                |   |                                                     |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term                  investments and federal funds sold                                                      |   | $                                                        | 15,565                         |   | $ | - |   | $ | 57 |   | $ | - |   | $ | - |   | $ | 2,614 |   | $ | 18,236 |   |
| Investment                  securities                                                                              |   |                                                     | -                              |   |   | 997 |   |   | - |   |   | - |   |   | 499 |   |   | - |   |   | 1,496 |   |
| Loans                                                                                                               |   |                                                     | 51,744                         |   |   | 1,748 |   |   | 6,321 |   |   | 17,353 |   |   | 54,367 |   |   | - |   |   | 131,533 |   |
| Fixed                  and other assets                                                                             |   |                                                     | -                              |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 645 |   |   | 644 |   |
|                                                                                                                |   |                                                     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  assets                                                                                       |   | $                                                        | 67,309                         |   | $ | 2,745 |   | $ | 6,378 |   | $ | 17,353 |   | $ | 54,866 |   | $ | 3,259 |   | $ | 151,910 |   |
|                                                                                                                |   |                                                     |                      |   |   |                      |   |   |                      |   |   |                      |   |   |                      |   |   |                      |   |   |                      |   |
| **Liabilities                  and Shareholders' Equity**                                                           |   |                                                     |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                |   |                                                     |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing,                  interest-bearing checking, savings and money market                  accounts |   | $                                                        | 47,028                         |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | 11,969 |   | $ | 58,997 |   |
| Certificates                  of deposit                                                                            |   |                                                     | -                              |   |   | 2,042 |   |   | 47,639 |   |   | 8,789 |   |   | 19,756 |   |   | - |   |   | 78,226 |   |
| Borrowed                  funds                                                                                     |   |                                                     | -                              |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Other                  liabilities                                                                                  |   |                                                     | -                              |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 562 |   |   | 562 |   |
| Shareholders'                  equity                                                                               |   |                                                     | -                              |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 14,125 |   |   | 14,125 |   |
|                                                                                                                |   |                                                     |                           |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |
| Total                  liabilities and shareholders' equity                                                         |   | $                                                        | 47,028                         |   | $ | 2,042 |   | $ | 47,639 |   | $ | 8,789 |   | $ | 19,756 |   | $ | 26,656 |   | $ | 151,910 |   |
|                                                                                                                |   |                                                     |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |
| Period                  gap                                                                                         |   |                                                     | 22,281                         |   |   | 703 |   |   | (41,261 | ) |   | 8,564 |   |   | 35,111 |   |   |   |   |   |   |   |
| Cumulative                  gap                                                                                     |   |                                                     | 22,281                         |   |   | 22,984 |   |   | (18,277 | ) |   | (9,713 | ) |   | 25,398 |   |   |   |   |   |   |   |
|                                                                                                                |   |                                                     |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Period                  gap to total assets                                                                         |   |                                                     | 14.67                          | % |   | 0.46 | % |   | -27.16 | % |   | 5.64 | % |   | 23.11 | % |   |    |   |   |                       |   |
|                                                                                                                |   |                                                     |                                |   |   |  |   |   |  |   |   |  |   |   |  |   |   |   |   |   |   |   |
| Cumulative                  gap to total assets                                                                     |   |                                                     | 14.67                          | % |   | 15.13 | % |   | -12.03 | % |   | 6.39 | % |   | 16.72 | % |   |                      |   |   |                      |   |

**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**

**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:                May 15, 2008 | By:                     | /s/                Patrick G. Adams |
|                              |                              |   |
|                              |                              | Patrick                G. Adams |
|                              |                              | President                and Chief Executive Officer |

----