Exhibit 99.1

Report of Independent Registered Public Accounting Firm

Independent BancShares, Inc.

Ocala, Florida

We have audited the accompanying
consolidated balance sheets of Independent BancShares, Inc. and Subsidiary (the Company) at December 31, 2007 and 2006, and the related consolidated statements of earnings, stockholders equity and cash flows for the years then
ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company at December 31, 2007 and 2006, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

HACKER, JOHNSON & SMITH PA

Tampa, Florida

March 28, 2008



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Consolidated Balance Sheets

($ in thousands, except per share amounts)



|                                                                                                              |  |              |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                                                                                              |  | December 31, |        
|                                                                                                              |  | 2007         |         |   | 2006 |  
|Assets                                                                                                        |  |              |         |   |      |   |         |  
|Cash and due from banks                                                                                       |  | $            | 5,287   |   |      | $ | 6,057   |  
|Interest-earning deposits                                                                                     |  |              | 6       |   |      |   | 86      |  
|Federal funds sold                                                                                            |  |              | 3,436   |   |      |   | 6,134   |  
|                                                                                                              |  |              |         |   |      |   |         |  
|Cash and cash equivalents                                                                                     |  |              | 8,729   |   |      |   | 12,277  |  
|Securities available for sale                                                                                 |  |              | 41,486  |   |      |   | 40,996  |  
|Loans, net of allowance for loan losses of $1,887 and $1,899                                                  |  |              | 152,092 |   |      |   | 149,985 |  
|Accrued interest receivable                                                                                   |  |              | 1,057   |   |      |   | 925     |  
|Premises and equipment, net                                                                                   |  |              | 7,841   |   |      |   | 7,933   |  
|Federal Home Loan Bank stock                                                                                  |  |              | 926     |   |      |   | 935     |  
|Federal Reserve Bank stock                                                                                    |  |              | 237     |   |      |   | 237     |  
|Deferred tax asset                                                                                            |  |              | 680     |   |      |   | 851     |  
|Goodwill                                                                                                      |  |              | 1,525   |   |      |   |        |  
|Customer intangible, net                                                                                      |  |              | 375     |   |      |   |        |  
|Other assets                                                                                                  |  |              | 767     |   |      |   | 478     |  
|                                                                                                              |  |              |         |   |      |   |         |  
|Total assets                                                                                                  |  | $            | 215,715 |   |      | $ | 214,617 |  
|                                                                                                              |  |              |         |   |      |   |         |  
|Liabilities and Stockholders Equity                                                                          |  |              |         |   |      |   |         |  
|Liabilities:                                                                                                  |  |              |         |   |      |   |         |  
|Noninterest-bearing demand deposits                                                                           |  | $            | 18,055  |   |      | $ | 19,053  |  
|NOW, money-market and savings deposits                                                                        |  |              | 81,375  |   |      |   | 81,005  |  
|Time deposits                                                                                                 |  |              | 83,737  |   |      |   | 79,428  |  
|                                                                                                              |  |              |         |   |      |   |         |  
|Total deposits                                                                                                |  |              | 183,167 |   |      |   | 179,486 |  
|Federal Home Loan Bank advances                                                                               |  |              | 10,000  |   |      |   | 10,000  |  
|Junior subordinated debenture                                                                                 |  |              | 2,062   |   |      |   | 2,062   |  
|Other borrowings                                                                                              |  |              | 2,341   |   |      |   | 3,528   |  
|Accrued interest payable and other liabilities                                                                |  |              | 937     |   |      |   | 3,380   |  
|                                                                                                              |  |              |         |   |      |   |         |  
|Total liabilities                                                                                             |  |              | 198,507 |   |      |   | 198,456 |  
|                                                                                                              |  |              |         |   |      |   |         |  
|Commitments (Notes 4 and 10)                                                                                  |  |              |         |   |      |   |         |  
|Stockholders equity:                                                                                         |  |              |         |   |      |   |         |  
|Common stock, $2 par value, 2,000,000 shares authorized,1,235,646 and 1,176,975 shares issued and outstanding |  |              | 2,471   |   |      |   | 2,354   |  
|Additional paid in capital                                                                                    |  |              | 8,831   |   |      |   | 7,517   |  
|Retained earnings                                                                                             |  |              | 5,969   |   |      |   | 6,649   |  
|Accumulated other comprehensive loss                                                                          |  |              | (63     | ) |      |   | (359    | )
|                                                                                                              |  |              |         |   |      |   |         |  
|Total stockholders equity                                                                                    |  |              | 17,208  |   |      |   | 16,161  |  
|                                                                                                              |  |              |         |   |      |   |         |  
|Total liabilities and stockholders equity                                                                    |  | $            | 215,715 |   |      | $ | 214,617 |  
|                                                                                                              |  |              |         |   |      |   |         |  

See accompanying Notes to Consolidated Financial Statements.



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Earnings

(In thousands)



|                                                    |  |                          |        |      |   |       
|--------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ------
|                                                    |  | Years Ended December 31,
|                                                    |  | 2007                     |        | 2006
|Interest income:                                    |  |                          |        |      |   |       
|Loans                                               |  | $                        | 11,730 |      | $ | 11,175
|Securities                                          |  |                          | 1,849  |      |   | 1,421 
|Other                                               |  |                          | 200    |      |   | 401   
|                                                    |  |                          |        |      |   |       
|Total interest income                               |  |                          | 13,779 |      |   | 12,997
|                                                    |  |                          |        |      |   |       
|Interest expense:                                   |  |                          |        |      |   |       
|Deposits                                            |  |                          | 6,370  |      |   | 4,831 
|Borrowings                                          |  |                          | 736    |      |   | 780   
|                                                    |  |                          |        |      |   |       
|Total interest expense                              |  |                          | 7,106  |      |   | 5,611 
|                                                    |  |                          |        |      |   |       
|Net interest income                                 |  |                          | 6,673  |      |   | 7,386 
|Provision for loan losses                           |  |                          | 187    |      |   | 58    
|                                                    |  |                          |        |      |   |       
|Net interest income after provision for loan losses |  |                          | 6,486  |      |   | 7,328 
|                                                    |  |                          |        |      |   |       
|Noninterest income:                                 |  |                          |        |      |   |       
|Service charges on deposit accounts                 |  |                          | 470    |      |   | 467   
|Brokerage fees                                      |  |                          | 618    |      |   |      
|Gain on sale of securities                          |  |                          | 2      |      |   |      
|Other                                               |  |                          | 636    |      |   | 513   
|                                                    |  |                          |        |      |   |       
|Total noninterest income                            |  |                          | 1,726  |      |   | 980   
|                                                    |  |                          |        |      |   |       
|Noninterest expense:                                |  |                          |        |      |   |       
|Salaries and employee benefits                      |  |                          | 4,108  |      |   | 3,427 
|Occupancy and equipment                             |  |                          | 795    |      |   | 639   
|Data processing                                     |  |                          | 496    |      |   | 339   
|Advertising and business development                |  |                          | 189    |      |   | 209   
|Directors fees                                     |  |                          | 164    |      |   | 152   
|Stationery and supplies                             |  |                          | 122    |      |   | 155   
|Other                                               |  |                          | 1,491  |      |   | 1,105 
|                                                    |  |                          |        |      |   |       
|Total noninterest expense                           |  |                          | 7,365  |      |   | 6,026 
|                                                    |  |                          |        |      |   |       
|Earnings before income taxes                        |  |                          | 847    |      |   | 2,282 
|Income taxes                                        |  |                          | 91     |      |   | 733   
|                                                    |  |                          |        |      |   |       
|Net earnings                                        |  | $                        | 756    |      | $ | 1,549 
|                                                    |  |                          |        |      |   |       
|Earnings per share  basic and diluted              |  | $                        | 0.61   |      | $ | 1.25  
|                                                    |  |                          |        |      |   |       

See accompanying Notes to Consolidated Financial Statements.



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Stockholders Equity

Years Ended
December 31, 2007 and 2006

($ in thousands)



|                                                                                  |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  
|--------------------------------------------------------------------------------- |  | ------------ |  | ------------------------ | ----- | ---------------- | - | ----- | --------------------------------- | - | ------ | ------------------------ |  | - | ---- | - |  | - | ------ | -
|                                                                                  |  | Common Stock |  | AdditionalPaid inCapital |       | RetainedEarnings |   |       | AccumulatedOtherComprehensiveLoss |   |        | TotalStockholdersEquity | 
|                                                                                  |  | Shares       |  | ParAmount                |       |                  |   |      
|Balance at December 31, 2005                                                      |  | 1,119,791    |  | $                        | 2,240 |                  | $ | 5,936 |                                   | $ | 6,782  |                          |  | $ | (476 | ) |  | $ | 14,482 |  
|                                                                                  |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  
|Comprehensive income:                                                             |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  
|Net earnings                                                                      |  |             |  |                          |      |                  |   |      |                                   |   | 1,549  |                          |  |   |     |   |  |   | 1,549  |  
|Net change in unrealized loss onsecurities available for sale,net of income taxes |  |             |  |                          |      |                  |   |      |                                   |   |       |                          |  |   | 117  |   |  |   | 117    |  
|                                                                                  |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  
|Comprehensive income                                                              |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   | 1,666  |  
|                                                                                  |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  
|Proceeds from shares issued to theEmployee Stock Purchase Plan                    |  | 1,373        |  |                          | 2     |                  |   | 18    |                                   |   |       |                          |  |   |     |   |  |   | 20     |  
|5% stock dividends                                                                |  | 55,811       |  |                          | 112   |                  |   | 1,563 |                                   |   | (1,675 | )                        |  |   |     |   |  |   |       |  
|Cash in lieu of shares                                                            |  |             |  |                          |      |                  |   |      |                                   |   | (7     | )                        |  |   |     |   |  |   | (7     | )
|                                                                                  |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  
|Balance at December 31, 2006                                                      |  | 1,176,975    |  |                          | 2,354 |                  |   | 7,517 |                                   |   | 6,649  |                          |  |   | (359 | ) |  |   | 16,161 |  
|                                                                                  |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  
|Comprehensive income:                                                             |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  
|Net earnings                                                                      |  |             |  |                          |      |                  |   |      |                                   |   | 756    |                          |  |   |     |   |  |   | 756    |  
|Net change in unrealized loss onsecurities available for sale,net of income taxes |  |             |  |                          |      |                  |   |      |                                   |   |       |                          |  |   | 296  |   |  |   | 296    |  
|                                                                                  |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  
|Comprehensive income                                                              |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   | 1,052  |  
|                                                                                  |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  
|5% stock dividends                                                                |  | 58,671       |  |                          | 117   |                  |   | 1,314 |                                   |   | (1,431 | )                        |  |   |     |   |  |   |       |  
|Cash in lieu of shares                                                            |  |             |  |                          |      |                  |   |      |                                   |   | (5     | )                        |  |   |     |   |  |   | (5     | )
|                                                                                  |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  
|Balance at December 31, 2007                                                      |  | 1,235,646    |  | $                        | 2,471 |                  | $ | 8,831 |                                   | $ | 5,969  |                          |  | $ | (63  | ) |  | $ | 17,208 |  
|                                                                                  |  |              |  |                          |       |                  |   |       |                                   |   |        |                          |  |   |      |   |  |   |        |  

See accompanying Notes to Consolidated Financial Statements.



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(In thousands)



|                                                                                                                                   |  |                          |         |   |      |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                                                                   |  | Years Ended December 31, |        
|                                                                                                                                   |  | 2007                     |         |   | 2006 |  
|Cash flows from operating activities:                                                                                              |  |                          |         |   |      |   |         |  
|Net earnings                                                                                                                       |  | $                        | 756     |   |      | $ | 1,549   |  
|Adjustments to reconcile net earnings to net cash(used in) provided by operating activities:                                       |  |                          |         |   |      |   |         |  
|Depreciation, amortization and accretion, net                                                                                      |  |                          | 345     |   |      |   | 270     |  
|Provision for loan losses                                                                                                          |  |                          | 187     |   |      |   | 58      |  
|Provision for deferred income taxes                                                                                                |  |                          | (6      | ) |      |   | 35      |  
|Amortization of customer intangible                                                                                                |  |                          | 115     |   |      |   |        |  
|Net amortization of premiums and discounts on securities                                                                           |  |                          | 220     |   |      |   | 225     |  
|Net increase in accrued interest receivable                                                                                        |  |                          | (132    | ) |      |   | (89     | )
|Net increase in other asset                                                                                                        |  |                          | (289    | ) |      |   | (201    | )
|Net (decrease) increase in accrued interest payable and other liabilities                                                          |  |                          | (2,443  | ) |      |   | 1,749   |  
|                                                                                                                                   |  |                          |         |   |      |   |         |  
|Net cash (used in) provided by operating activities                                                                                |  |                          | (1,247  | ) |      |   | 3,596   |  
|                                                                                                                                   |  |                          |         |   |      |   |         |  
|Cash flows from investing activities:                                                                                              |  |                          |         |   |      |   |         |  
|Purchase of securities available for sale                                                                                          |  |                          | (10,592 | ) |      |   | (17,028 | )
|Maturities, sales, and principal repayments of securities available for sale                                                       |  |                          | 10,355  |   |      |   | 10,605  |  
|Loans originated, net of principal repayments                                                                                      |  |                          | (2,294  | ) |      |   | (5,511  | )
|Purchase of premises and equipment                                                                                                 |  |                          | (249    | ) |      |   | (1,058  | )
|Redemption (purchase) of Federal Home Loan Bank stock                                                                              |  |                          | 9       |   |      |   | (46     | )
|Purchase of HKH Financial Center, Inc.                                                                                             |  |                          | (2,019  | ) |      |   | (3      | )
|                                                                                                                                   |  |                          |         |   |      |   |         |  
|Net cash used in investing activities                                                                                              |  |                          | (4,790  | ) |      |   | (13,041 | )
|                                                                                                                                   |  |                          |         |   |      |   |         |  
|Cash flows from financing activities:                                                                                              |  |                          |         |   |      |   |         |  
|Net increase in deposits                                                                                                           |  |                          | 3,681   |   |      |   | 14,859  |  
|Net decrease in Federal Home Loan Bank advances                                                                                    |  |                          |        |   |      |   | (2,000  | )
|Principal repayments on notes payable                                                                                              |  |                          |        |   |      |   | (1,783  | )
|Net (decrease) increase in other borrowings                                                                                        |  |                          | (1,187  | ) |      |   | 303     |  
|Proceeds from shares issued to the employee stock purchase plan                                                                    |  |                          |        |   |      |   | 20      |  
|Proceeds from issuance of junior subordinated debentures                                                                           |  |                          |        |   |      |   | 2,062   |  
|Cash paid in lieu of fractional shares                                                                                             |  |                          | (5      | ) |      |   | (7      | )
|                                                                                                                                   |  |                          |         |   |      |   |         |  
|Net cash provided by financing activities                                                                                          |  |                          | 2,489   |   |      |   | 13,454  |  
|                                                                                                                                   |  |                          |         |   |      |   |         |  
|Net (decrease) increase in cash and cash equivalents                                                                               |  |                          | (3,548  | ) |      |   | 4,009   |  
|Cash and cash equivalents at beginning of year                                                                                     |  |                          | 12,277  |   |      |   | 8,268   |  
|                                                                                                                                   |  |                          |         |   |      |   |         |  
|Cash and cash equivalents at end of year                                                                                           |  | $                        | 8,729   |   |      | $ | 12,277  |  
|                                                                                                                                   |  |                          |         |   |      |   |         |  
|Supplemental disclosures of cash flow information:                                                                                 |  |                          |         |   |      |   |         |  
|Cash paid during the period for:                                                                                                   |  |                          |         |   |      |   |         |  
|Interest                                                                                                                           |  | $                        | 7,139   |   |      | $ | 5,558   |  
|                                                                                                                                   |  |                          |         |   |      |   |         |  
|Taxes                                                                                                                              |  | $                        | 36      |   |      | $ | 1,113   |  
|                                                                                                                                   |  |                          |         |   |      |   |         |  
|Noncash transactions:                                                                                                              |  |                          |         |   |      |   |         |  
|Accumulated other comprehensive loss, net change in unrealizedloss on securities available for sale, net of income taxes
(benefit) |  | $                        | 296     |   |      | $ | 117     |  
|                                                                                                                                   |  |                          |         |   |      |   |         |  
|Common stock dividend                                                                                                              |  | $                        | 1,431   |   |      | $ | 1,675   |  
|                                                                                                                                   |  |                          |         |   |      |   |         |  

See accompanying Notes to Consolidated Financial Statements.



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2007 and 2006
and for the Years then Ended



|(1) | General and Summary of Significant Accounting Policies
|--- | ------------------------------------------------------

Organization. Independent BancShares, Inc. (the Holding Company) owns 100% of the outstanding common stock of Independent National Bank (the Bank) and HKH Financial Center, Inc., d/b/a Independent
Financial Partners (IFP), (collectively, the Company). The Holding Companys primary business activity is the operation of the Bank and IFP. The Bank is a nationally-chartered commercial bank and its deposits are insured
up to the applicable limits by the Federal Deposit Insurance Corporation (FDIC). The Bank offers a variety of financial services to individual and corporate customers through its five banking offices located in Marion and Sumter
Counties, Florida. IFP is a financial services company registered with the National Association of Securities Dealers (NASD). IFP has an established product and brokering agreement with Raymond James Financial Services, Inc.

Basis of Presentation. The accompanying consolidated financial statements include the accounts of the Holding Company, the Bank and IFP.
All significant intercompany accounts and transactions have been eliminated in consolidation. The accounting and reporting practices of the Company conform to accounting principles generally accepted in the United States of America and to general
practices within the banking industry. The following summarizes the more significant of these polices and practices:

Use of
Estimates. In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts
of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly
susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the valuation of deferred tax assets.

Cash and Cash Equivalents. For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash and balances due from banks, interest-earning deposits and federal funds sold,
all of which mature within ninety days.

The Bank is required under Federal Reserve Board regulations to maintain reserves, generally
consisting of cash or noninterest-earning accounts, against its transaction deposit accounts. At December 31, 2007 and 2006, these required reserves were $0.9 million and $1.2 million, respectively.



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(1) | General and Summary of Significant Accounting Policies (Continued)
|--- | ------------------------------------------------------------------



Securities. Securities can be classified as either trading, available for sale or held to maturity. Securities that are held principally for
resale in the near term are considered trading securities and recorded at fair value with changes in fair value recorded in earnings. Debt securities that the Company has the positive intent and ability to hold to maturity are classified as
held to maturity and are reported at amortized cost. Available for sale securities consist of securities not classified as trading securities nor as held to maturity securities. Unrealized holding gains and losses, net of tax, on
available for sale securities are excluded from earnings and reported in accumulated other comprehensive loss. Gains and losses on the sale of available for sale securities are recorded on the trade date and are determined using the
specific-identification method. Purchase premiums and discounts are recognized in interest-income using the interest method over the terms of the securities.

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the
length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a
period of time sufficient to allow for any anticipated recovery in fair value.

Loans. Management has the intent, and the
Company has the ability to hold for the foreseeable future or until maturity or pay-offs, to report loans at their outstanding principal adjusted for any charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans.

Loan commitment and origination fees are deferred and certain direct origination costs are capitalized. Both are recognized as an
adjustment of the yield of the related loan.

The accrual of interest on loans is discontinued at the time the loan is ninety days
delinquent unless the loan is well collateralized and in process of collection. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged-off is reversed against interest income. The interest on these
loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are
reasonably assured.

Allowance for Loan Losses. The allowance for loan losses is established as losses are estimated to have
occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the
allowance.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(1) | General and Summary of Significant Accounting Policies (Continued)
|--- | ------------------------------------------------------------------



Allowance for Loan Losses(Continued).The allowance for loan losses is evaluated on a regular basis by management and
is based upon managements periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrowers ability to repay, estimated
value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of specific and general components. The specific component relates to loans that are impaired. For such loans, an allowance is
established when the discounted cash flows or the collateral value of the impaired loan is lower than the carrying value of that loan. The general component covers all other loans and is based on historical loss experience adjusted for qualitative
factors.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to
collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of
collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment
shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrowers prior payment record, and the amount of
the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial, commercial real estate and construction and land development loans by either the present value of expected future cash flows
discounted at the loans effective interest rate, the loans obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller-balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer or residential real estate and home equity loans
for impairment disclosures.

Premises and Equipment.Land is carried at cost. Buildings, furniture and equipment are carried
at cost, less accumulated depreciation computed principally using the straight-line method over the estimated useful life of each type of asset.



|                        |  |      
|----------------------- |  | -----
|                        |  | Years
|Buildings               |  | 39   
|Furniture and equipment |  | 3-7  



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(1) | General and Summary of Significant Accounting Policies (Continued)
|--- | ------------------------------------------------------------------



Transfer of Financial Assets. Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered.
Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge
or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Income Taxes. Deferred income tax assets and liabilities are recorded to reflect the tax consequences on future years of temporary
differences between revenues and expenses reported for financial statement and those reported for income tax purposes. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be realized or settled. Valuation allowances are provided against deferred income tax assets which are not likely to be realized.

The Holding Company, the Bank and IFP file consolidated income tax returns. Income taxes are allocated between the Holding Company, the Bank and IFP as
though separate income tax returns were filed.

Advertising. The Company expenses all media advertising as incurred.

Goodwill.Goodwill represents the excess of the acquisition cost over the fair value of the net assets acquired.
Generally accepted in the United States of America accounting principles require goodwill to be tested for impairment on an annual basis and between annual tests in certain circumstances, and written down when impaired. Based on the impairment tests
performed, there was no impairment of goodwill during the year ended December 31, 2007. There can be no assurance that future goodwill impairment tests will not result in a charge to earnings.

OffBalance-Sheet Financial Instruments. The Company is a party to financial instruments with off-balance-sheet risk in the normal
course of business to meet the financing needs of its customers. These off-balance-sheet commitments are not reflected in the consolidated financial statements until they are funded. These financial instruments are undisbursed lines of credit and
construction loans, commitments to extend credit and standby letters of credit and may involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the consolidated balance sheets. The contract amounts
of these instruments reflect the extent of involvement the Company has in these financial instruments.

Comprehensive Income.
Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net earnings. Although certain changes in assets and liabilities, such as net unrealized gains and losses on available for sale securities,
are reported as a separate component of the equity section of the consolidated balance sheets, such items along with net earnings, are components of comprehensive income.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(1) | General and Summary of Significant Accounting Policies (Continued)
|--- | ------------------------------------------------------------------



Comprehensive Income(Continued).The components of other comprehensive income are as follows (in thousands):



|                                                              |  |                          |      |   |      |   |     |  
|------------------------------------------------------------- |  | ------------------------ | ---- | - | ---- | - | --- | -
|                                                              |  | Years Ended December 31, |     
|                                                              |  | 2007                     |      |   | 2006 |  
|Unrealized holding gains on available for sale securities     |  | $                        | 475  |   |      | $ | 146 |  
|Reclassification adjustment for net gain realized in earnings |  |                          | (2   | ) |      |   |    |  
|                                                              |  |                          |      |   |      |   |     |  
|Net change in unrealized gains                                |  |                          | 473  |   |      |   | 146 |  
|Income taxes                                                  |  |                          | (177 | ) |      |   | (29 | )
|                                                              |  |                          |      |   |      |   |     |  
|Net change in unrealized gains, net of tax                    |  | $                        | 296  |   |      | $ | 117 |  
|                                                              |  |                          |      |   |      |   |     |  

Fair Values of Financial Instruments. The fair value of a financial instrument is
the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the
Companys various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument or may not necessarily represent the underlying fair value of the Company.
The following methods and assumptions were used by the Company in estimating fair values of financial instruments:

Cash and Cash
Equivalents. The carrying amounts of cash and cash equivalents approximate their fair value.

Securities Available for
Sale. Fair values for securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans. For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying
values. Fair values for certain fixed-rate mortgage (e.g. one-to-four family residential), commercial real estate and commercial loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality.

Federal Home Loan Bank Stock and Federal Reserve Bank Stock. Fair value
of the Companys investment in Federal Home Loan Bank stock and Federal Reserve Bank stock is based on its redemption value.

Accrued Interest Receivable. The carrying amounts of accrued interest approximate their fair values.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(1) | General and Summary of Significant Accounting Policies (Continued)
|--- | ------------------------------------------------------------------



Fair Values of Financial Instruments(Continued).

Deposits. The fair values disclosed for noninterest-bearing demand, NOW, money-market and savings deposits are, by definition, equal to the
amount payable on demand at the reporting date (that is, their carrying amounts). Fair values for fixed-rate time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on time deposits to
a schedule of aggregated expected monthly maturities on time deposits.

Federal Home Loan Bank Advances. Fair values are
estimated using discounted cash flow analysis based on the Companys current incremental borrowing rates for similar types of borrowing arrangements.

Junior Subordinated Debentures. Fair values are estimated using discounted cash flows analysis based on the Companys current incremental borrowing rates for similar types of debentures.

Other Borrowings.The carrying amounts of borrowings under retail customer repurchase agreements and federal funds purchased approximate
fair value.

Off-Balance-Sheet Financial Instruments. Fair values for off-balance-sheet lending commitments are based on fees
currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties credit standing.

Earnings Per Share. Basic earnings per share is computed on the basis of the weighted-average number of common shares outstanding, which was 1,235,687 and 1,235,574 shares during the years ended
December 31, 2007 and 2006, respectively. All per share amounts reflect the 5% stock dividends paid in March 2006 and 2007. There is no dilution to basic earnings per share because the Company does not have any common stock equivalents.

Recent Accounting Standards.In September 2006, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements(SFAS 157).SFAS 157 provides guidance for using fair value to measure assets and liabilities. It defines fair value, establishes a
framework for measuring fair value under generally accepted accounting principles and expands disclosures about fair value measurement. Under SFAS 157, fair value refers to the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants in the market in which the reporting entity transacts. It clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset
or liability. In support of this principle, SFAS 157 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under SFAS 157, fair value measurements would be separately disclosed by level within the
fair value hierarchy. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and is not expected to have a material impact on the Companys consolidated financial condition or results of
operations.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(1) | General and Summary of Significant Accounting Policies (Continued)
|--- | ------------------------------------------------------------------



Recent Accounting Standards.(Continued) In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities  Including an Amendment of FASB Statement No. 115(SFAS 159). SFAS 159 permits an entity to choose to measure many financial instruments and certain other items at fair value at
specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The fair value option may be applied instrument by
instrument (with a few exceptions), is irrevocable (unless a new election date occurs) and is applied only to entire instruments and not to portions of instruments. SFAS 159 is effective as of the beginning of an entitys first fiscal year that
begins after November 15, 2007 and is not expected to have a material impact on the Companys consolidated financial condition or results of operations.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations(SFAS 141(R)). SFAS 141(R) will significantly change the accounting for business combinations, as an
acquiring entity will be required to recognize all the assets and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS 141(R) changes the accounting treatment for several specific items, such as
acquisition costs, noncontrolling interests (formerly referred to as minority interests), contingent liabilities, restructuring costs and changes in deferred tax asset valuation allowances. SFAS 141(R) also includes a substantial number of new
disclosure requirements. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early adoption is
prohibited. The Company is currently evaluating the impact the adoption of this statement will have on the accounting for future acquisitions and business combinations.

In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements  An Amendment of ARB No. 51(SFAS 160). SFAS 160 establishes
new accounting and reporting standards for the noncontrolling interest (formerly referred to as minority interests) in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2008 and early adoption is prohibited. The Company currently does not have any noncontrolling interests and is evaluating the impact the adoption of this statement will have on the accounting for
future business combinations.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(2) | Securities Available for Sale
|--- | -----------------------------



Management has classified all securities as available for sale. The carrying amount of these securities and their approximate fair values are as follows
(in thousands):



|                                   |  |               |        |                      |   |                       |  |   |                      |   |  |   |       
|---------------------------------- |  | ------------- | ------ | -------------------- | - | --------------------- |  | - | -------------------- | - |  | - | ------
|                                   |  | AmortizedCost |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | ApproximateFairValue
|At December 31, 2007:              |  |               |        |                      |   |                       |  |   |                      |   |  |   |       
|Mortgage-backed securities         |  | $             | 23,324 |                      | $ | 148                   |  | $ | (171                 | ) |  | $ | 23,301
|Municipal bonds                    |  |               | 15,164 |                      |   | 50                    |  |   | (128                 | ) |  |   | 15,086
|U. S. Government agency securities |  |               | 1,000  |                      |   |                      |  |   | (2                   | ) |  |   | 998   
|Commercial paper and time deposits |  |               | 2,100  |                      |   | 1                     |  |   |                     |   |  |   | 2,101 
|                                   |  |               |        |                      |   |                       |  |   |                      |   |  |   |       
|                                   |  | $             | 41,588 |                      | $ | 199                   |  | $ | (301                 | ) |  | $ | 41,486
|                                   |  |               |        |                      |   |                       |  |   |                      |   |  |   |       
|At December 31, 2006:              |  |               |        |                      |   |                       |  |   |                      |   |  |   |       
|Mortgage-backed securities         |  | $             | 25,953 |                      | $ | 6                     |  | $ | (403                 | ) |  | $ | 25,556
|Municipal bonds                    |  |               | 14,618 |                      |   | 34                    |  |   | (177                 | ) |  |   | 14,475
|U. S. Government agency securities |  |               | 1,000  |                      |   |                      |  |   | (35                  | ) |  |   | 965   
|                                   |  |               |        |                      |   |                       |  |   |                      |   |  |   |       
|                                   |  | $             | 41,571 |                      | $ | 40                    |  | $ | (615                 | ) |  | $ | 40,996
|                                   |  |               |        |                      |   |                       |  |   |                      |   |  |   |       

The contractual maturity of these securities as of December 31, 2007 follows (in thousands):



|                                       |  |               |        |                       |   |       
|-------------------------------------- |  | ------------- | ------ | --------------------- | - | ------
|                                       |  | AmortizedCost |        | ApproximateFair Value
|Due in one year or less                |  | $             | 2,100  |                       | $ | 2,101 
|Due after one year through five years  |  |               | 2,077  |                       |   | 2,051 
|Due after five years through ten years |  |               | 1,221  |                       |   | 1,204 
|Due after ten years                    |  |               | 12,866 |                       |   | 12,829
|Mortgage-backed securities             |  |               | 23,324 |                       |   | 23,301
|                                       |  |               |        |                       |   |       
|                                       |  | $             | 41,588 |                       | $ | 41,486
|                                       |  |               |        |                       |   |       



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(2) | Securities Available for Sale (Continued)
|--- | -----------------------------------------



The following summarizes sales of securities available for sale (in thousands):



|                                                    |  |                          |       |   |      |   |  
|--------------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | -
|                                                    |  | Years Ended December 31,
|                                                    |  | 2007                     |       |   | 2006
|Proceeds from sale of securities available for sale |  | $                        | 2,332 |   |      | $ | 
|                                                    |  |                          |       |   |      |   |  
|Gross gains                                         |  | $                        | 16    |   |      | $ | 
|Gross losses                                        |  |                          | (14   | ) |      |   | 
|                                                    |  |                          |       |   |      |   |  
|Net gain on sale of securities available for sale   |  | $                        | 2     |   |      | $ | 
|                                                    |  |                          |       |   |      |   |  

Securities with carrying values of approximately $8.0 million and $8.5 million at December 31,
2007 and 2006, respectively, were pledged to secure other borrowings and for public deposits.

Information pertaining to securities with
gross unrealized losses at December 31, 2007, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:



|                           |  |                     |     |                      |   |       
|-------------------------- |  | ------------------- | --- | -------------------- | - | ------
|                           |  | Over Twelve Months 
|                           |  | GrossUnrealizedLoss |     | ApproximateFairValue
|Debt securities:           |  |                     |     |                      |   |       
|Mortgage-backed securities |  | $                   | 171 |                      | $ | 12,783
|Municipal bonds            |  |                     | 128 |                      |   | 7,443 
|U. S. Government agencies  |  |                     | 2   |                      |   | 998   
|                           |  |                     |     |                      |   |       
|Total debt securities      |  | $                   | 301 |                      | $ | 21,224
|                           |  |                     |     |                      |   |       

The unrealized losses on sixty-eight investment securities available for sale were caused by
interest rate changes. It is expected that the securities would not be settled at a price less than the par value of the investments. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because
the Company has the ability and intent to hold these investments until a market price recovery or maturity, these investments are not considered other-than-temporarily impaired.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(3) | Loans
|--- | -----



The components of loans are as follows (in thousands):



|                                        |  |                 |         |   |      |   |         |  
|--------------------------------------- |  | --------------- | ------- | - | ---- | - | ------- | -
|                                        |  | At December 31, |        
|                                        |  | 2007            |         |   | 2006 |  
|Commercial real estate                  |  | $               | 65,251  |   |      | $ | 64,466  |  
|Residential real estate and home equity |  |                 | 49,154  |   |      |   | 45,838  |  
|Construction and land development       |  |                 | 27,379  |   |      |   | 30,475  |  
|Commercial                              |  |                 | 9,456   |   |      |   | 7,976   |  
|Consumer                                |  |                 | 2,866   |   |      |   | 3,275   |  
|                                        |  |                 |         |   |      |   |         |  
|Total loans                             |  |                 | 154,106 |   |      |   | 152,030 |  
|Deduct:                                 |  |                 |         |   |      |   |         |  
|Allowance for loan losses               |  |                 | (1,887  | ) |      |   | (1,899  | )
|Net deferred loan fees                  |  |                 | (127    | ) |      |   | (146    | )
|                                        |  |                 |         |   |      |   |         |  
|Loans, net                              |  | $               | 152,092 |   |      | $ | 149,985 |  
|                                        |  |                 |         |   |      |   |         |  

The following is a summary of the activity in the allowance for loan losses (in thousands):



|                                |  |                 |       |   |      |   |       |  
|------------------------------- |  | --------------- | ----- | - | ---- | - | ----- | -
|                                |  | At December 31, |      
|                                |  | 2007            |       |   | 2006 |  
|Allowance, at beginning of year |  | $               | 1,899 |   |      | $ | 1,877 |  
|Provision for loan losses       |  |                 | 187   |   |      |   | 58    |  
|Loan charge-offs                |  |                 | (291  | ) |      |   | (106  | )
|Loan recoveries                 |  |                 | 92    |   |      |   | 70    |  
|                                |  |                 |       |   |      |   |       |  
|Allowance, at end of year       |  | $               | 1,887 |   |      | $ | 1,899 |  
|                                |  |                 |       |   |      |   |       |  



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(3) | Loans (Continued)
|--- | -----------------



Nonaccrual loans were approximately $751,000 and $137,000 at December 31, 2007 and 2006, respectively. There were no accruing loans past due ninety
days or more at December 31, 2007 or 2006.

Impaired loans are as follows (in thousands):



|                                                            |  |                 |       |   |      |   |     |  
|----------------------------------------------------------- |  | --------------- | ----- | - | ---- | - | --- | -
|                                                            |  | At December 31, |      
|                                                            |  | 2007            |       |   | 2006 |  
|Gross loans with a related allowance for loan loss recorded |  | $               | 2,328 |   |      | $ | 70  |  
|Less: Allowance on these loans                              |  |                 | (164  | ) |      |   | (13 | )
|                                                            |  |                 |       |   |      |   |     |  
|Net investment in impaired loans                            |  | $               | 2,164 |   |      | $ | 57  |  
|                                                            |  |                 |       |   |      |   |     |  

The Company grants real estate, commercial and consumer loans to customers primarily in the State
of Florida with the majority of such loans in the Marion County area. Therefore, the Companys exposure to credit risk is significantly affected by changes in the economy of the Marion County area. The Company does not have any significant
concentrations to any one industry or customer.

The Company does have construction and land development loans, generally with original
terms of 10 years or less, aggregating $20.1 million at December 31, 2007, the primary source of repayment is the sale of the related collateral or the conversion of the existing debt into debt at another financial institution. The majority of
these loans are located in Marion County, Florida.

With the uncertain real estate market in Marion County, Florida, in the short-term,
obtaining refinancing or sale of the collateral may be difficult or impossible under terms acceptable to the borrower. Management is closely monitoring these loans and believes the loan loss allowance at December 31, 2007 is adequate.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(4) | Premises and Equipment
|--- | ----------------------



Premises and equipment are as follows (in thousands):



|                                               |  |                 |        |   |      |   |        |  
|---------------------------------------------- |  | --------------- | ------ | - | ---- | - | ------ | -
|                                               |  | At December 31, |       
|                                               |  | 2007            |        |   | 2006 |  
|Cost:                                          |  |                 |        |   |      |   |        |  
|Land                                           |  | $               | 3,696  |   |      | $ | 3,755  |  
|Buildings                                      |  |                 | 3,827  |   |      |   | 3,970  |  
|Furniture and equipment                        |  |                 | 2,815  |   |      |   | 2,428  |  
|Construction in process                        |  |                 | 202    |   |      |   | 98     |  
|                                               |  |                 |        |   |      |   |        |  
|Total cost                                     |  |                 | 10,540 |   |      |   | 10,251 |  
|Less accumulated depreciation and amortization |  |                 | (2,699 | ) |      |   | (2,318 | )
|                                               |  |                 |        |   |      |   |        |  
|Premises and equipment, net                    |  | $               | 7,841  |   |      | $ | 7,933  |  
|                                               |  |                 |        |   |      |   |        |  

The Company leases an operations facility under an operating lease that expires in 2009. The lease
requires monthly lease payments and common area maintenance charges and has renewal options. Rent expense under the operating lease was $87,000 for the year ended December 31, 2007. There were no leases during the year ended December 31,
2006. Future minimum rental commitments are $73,000 in 2008 and $8,000 in 2009.

In addition, the Company has entered into contracts with
the architects and engineers to design its future main bank office. The Company expects the facility to cost approximately $5.7 million. However, the Company has not put the project out to bid, nor does it have an estimated completion date.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(5) | Deposits
|--- | --------



The aggregate amount of time deposits, each with a minimum denomination of $100,000, was approximately $42.5 million and $35.0 million at
December 31, 2007 and 2006, respectively.

At December 31, 2007, the scheduled maturities of time deposits are as follows (in
thousands):



|                         |  |   |       
|------------------------ |  | - | ------
|Year Ending December 31, |  |   |       
|2008                     |  | $ | 66,310
|2009                     |  |   | 4,815 
|2010                     |  |   | 5,028 
|2011                     |  |   | 4,407 
|2012                     |  |   | 3,177 
|                         |  |   |       
|                         |  | $ | 83,737
|                         |  |   |       



|(6) | Federal Home Loan Bank Advances
|--- | -------------------------------

Federal Home Loan
Bank (FHLB) advances are as follows (in thousands):



|                                     |  |                              |      |  |                 |      |  |      |        |      |   |       
|------------------------------------ |  | ---------------------------- | ---- |  | --------------- | ---- |  | ---- | ------ | ---- | - | ------
|                                     |  | Interest Rate atDecember 31, |      |  | At December 31,
|                                     |  | 2007                         |      |  | 2006            |      |  | 2007 |        | 2006
|Maturing in Year Ending December 31, |  |                              |      |  |                 |      |  |      |        |      |   |       
|2011                                 |  | 5.02                         | %(a) |  | 5.02            | %(a) |  | $    | 5,000  |      | $ | 5,000 
|2016                                 |  | 3.57                         | %(b) |  | 3.57            | %(b) |  |      | 5,000  |      |   | 5,000 
|                                     |  |                              |      |  |                 |      |  |      |        |      |   |       
|                                     |  |                              |      |  |                 |      |  | $    | 10,000 |      | $ | 10,000
|                                     |  |                              |      |  |                 |      |  |      |        |      |   |       



|(a) | FHLB has the option to convert beginning in 2006 to a floating rate at which time the Company may prepay the advance
without penalty.
|--- | -------------------------------------------------------------------------------------------------------------------------------------



|(b) | FHLB has the option to convert beginning in 2008 to a floating rate at which time the Company may prepay the advance
without penalty.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

The advances are collateralized by the Companys FHLB stock and qualifying residential mortgages
pledged as collateral under a blanket floating lien agreement. As of December 31, 2007, the Company had a remaining available line with the FHLB of approximately $22.8 million.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(7) | Junior Subordinated Debenture
|--- | -----------------------------



Independent Bancshares Capital Trust I (the Trust) was formed for the sole purpose of issuing $2,000,000 of Trust Preferred Securities. In
accordance with Financial Accounting Standards Interpretation No. 46 Consolidation of Variable Interest Entities (as revised December 2003), the Company accounts for the Trust under the equity method of accounting.

On December 18, 2006, the Trust sold adjustable-rate Trust Preferred Securities due March 15, 2036 in the aggregate principal
amount of $2,000,000 (the Capital Securities) in a pooled trust preferred securities offering. The interest rate on the Capital Securities adjusts quarterly, to a rate equal to the then current three-month London Interchange Bank
Offering Rate (LIBOR), plus 185 basis points. In addition, the Holding Company contributed capital of $62,000 to the Trust for the purchase of the common securities of the Trust. The proceeds from these sales were paid to the Holding
Company in exchange for $2,062,000 of its adjustable-rate Junior Subordinated Debentures (the Debentures) due March 15, 2036. The Debentures have the same terms as the Capital Securities. The sole asset of the Trust, the obligor on
the Capital Securities, is the Debentures.

The Holding Company has guaranteed the Trusts payment of distributions on, payments on any
redemptions of, and any liquidation distribution with respect to, the Capital Securities. Cash distributions on both the Capital Securities and the Debentures are payable quarterly in arrears on
March 15, June 15, September 15 and December 15 of each year. Issuance costs of approximately $10,000 associated with the Capital Securities have been capitalized by the Holding Company and are being amortized over the
expected life of the securities.

The Capital Securities are subject to mandatory redemption (i) in whole, but not in part, upon
repayment of the Debentures at stated maturity or, at the option of the Holding Company, their earlier redemption in whole upon the occurrence of certain changes in the tax treatment or capital treatment of the Capital Securities, or a change in the
law such that the Trust would be considered an Investment Company and (ii) in whole or in part at any time on or after March 15, 2012 contemporaneously with the optional redemption by the Holding Company of the Debentures in whole or in
part. The Debentures are redeemable prior to maturity at the option of the Holding Company (i) on or after March 15, 2012, in whole at any time or in part from time to time, or (ii) in whole, but not in part, at any time within 90
days following the occurrence and continuation of certain changes in the tax treatment or capital treatment of the Capital Securities, or a change in law such that the Trust would be considered an Investment Company, required to be registered under
the Investment Company Act of 1940.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(8) | Other Borrowings
|--- | ----------------



The Company enters into repurchase agreements with customers that sweep funds from deposit accounts into investment accounts. These investment accounts
are not federally insured and are treated as borrowings. These agreements require the Company to pledge securities as collateral for these borrowings. At December 31, 2007 and 2006, the outstanding balance of such borrowings totaled $2.3
million and $3.5 million and the Company pledged securities with a carrying value of approximately $4.3 million and $5.0 million as collateral for these agreements.

The Company has unsecured federal funds purchased lines of credit totaling $6.0 million with three correspondent banks. The Company did not have any borrowings outstanding under these lines at December 31, 2007
and 2006.



|(9) | Income Taxes
|--- | ------------

Income taxes consist of the following
(in thousands):



|               |  |                          |    |   |      |   |    
|-------------- |  | ------------------------ | -- | - | ---- | - | ---
|               |  | Years Ended December 31,
|               |  | 2007                     |    |   | 2006
|Current:       |  |                          |    |   |      |   |    
|Federal        |  | $                        | 97 |   |      | $ | 580
|State          |  |                          |   |   |      |   | 118
|               |  |                          |    |   |      |   |    
|Total current  |  |                          | 97 |   |      |   | 698
|               |  |                          |    |   |      |   |    
|Deferred:      |  |                          |    |   |      |   |    
|Federal        |  |                          | (5 | ) |      |   | 30 
|State          |  |                          | (1 | ) |      |   | 5  
|               |  |                          |    |   |      |   |    
|Total deferred |  |                          | (6 | ) |      |   | 35 
|               |  |                          |    |   |      |   |    
|Total          |  | $                        | 91 |   |      | $ | 733
|               |  |                          |    |   |      |   |    

The reasons for the differences between the statutory Federal income tax rate and the effective tax
rate are summarized as follows ($ in thousands):



|                                                    |  |                          |      |   |      |       |   |        |   |      |   |  |      |  
|--------------------------------------------------- |  | ------------------------ | ---- | - | ---- | ----- | - | ------ | - | ---- | - |  | ---- | -
|                                                    |  | Years Ended December 31, |     
|                                                    |  | 2007                     |      |   | 2006 |      
|                                                    |  | Amount                   |      |   | %    |       |   | Amount |   |      | % | 
|Income taxes at statutory rate                      |  | $                        | 288  |   |      | 34.0  | % |        | $ | 776  |   |  | 34.0 | %
|Increase (decrease) in income taxes resulting from: |  |                          |      |   |      |       |   |        |   |      |   |  |      |  
|State income taxes, net of federal tax benefit      |  |                          |     |   |      |      |   |        |   | 81   |   |  | 3.5  |  
|Tax-exempt income, net                              |  |                          | (172 | ) |      | (20.3 | ) |        |   | (120 | ) |  | (5.2 | )
|Other, net                                          |  |                          | (25  | ) |      | (3.0  | ) |        |   | (4   | ) |  | (.2  | )
|                                                    |  |                          |      |   |      |       |   |        |   |      |   |  |      |  
|Income taxes                                        |  | $                        | 91   |   |      | 10.7  | % |        | $ | 733  |   |  | 32.1 | %
|                                                    |  |                          |      |   |      |       |   |        |   |      |   |  |      |  



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(9) | Income Taxes (Continued)
|--- | ------------------------



The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in
thousands):



|                                                 |  |                          |     |   |      |   |     |  
|------------------------------------------------ |  | ------------------------ | --- | - | ---- | - | --- | -
|                                                 |  | Years Ended December 31, |    
|                                                 |  | 2007                     |     |   | 2006 |  
|Deferred tax assets:                             |  |                          |     |   |      |   |     |  
|Allowance for loan losses                        |  | $                        | 661 |   |      | $ | 642 |  
|Unrealized loss on securities available for sale |  |                          | 39  |   |      |   | 216 |  
|Deferred loan fees                               |  |                          | 47  |   |      |   | 55  |  
|Impaired loan interest                           |  |                          | 22  |   |      |   |    |  
|                                                 |  |                          |     |   |      |   |     |  
|Gross deferred tax assets                        |  |                          | 769 |   |      |   | 913 |  
|                                                 |  |                          |     |   |      |   |     |  
|Deferred tax liabilities:                        |  |                          |     |   |      |   |     |  
|Premises and equipment                           |  |                          | (76 | ) |      |   | (59 | )
|Other                                            |  |                          | (13 | ) |      |   | (3  | )
|                                                 |  |                          |     |   |      |   |     |  
|Gross deferred tax liabilities                   |  |                          | (89 | ) |      |   | (62 | )
|                                                 |  |                          |     |   |      |   |     |  
|Net deferred tax asset                           |  | $                        | 680 |   |      | $ | 851 |  
|                                                 |  |                          |     |   |      |   |     |  



|(10) | Off-Balance-Sheet Financial Instruments
|---- | ---------------------------------------

The
Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are undisbursed lines of credit and construction loans, commitments to
extend credit, and standby letters of credit and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheet. The contract amounts of these instruments reflect the extent of
involvement the Company has in these financial instruments.

The Companys exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.

Commitments to extend credit, including lines of credit, are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customers credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company, upon extension of
credit is based on managements credit evaluation of the counterparty.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(10) | Off-Balance-Sheet Financial Instruments (Continued)
|---- | ---------------------------------------------------



Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These letters of
credit are primarily issued to support third-party borrowing arrangements and generally have expiration dates within one year of issuance. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending
loans to customers. The Company generally holds collateral supporting these commitments.

A summary of the amounts of the Companys
financial instruments, with off-balance-sheet risk at December 31, 2007 follows (in thousands):



|                                                   |  |                |       
|-------------------------------------------------- |  | -------------- | ------
|                                                   |  | ContractAmount
|Undisbursed lines of credit and construction loans |  | $              | 11,211
|                                                   |  |                |       
|Commitments to extend credit                       |  | $              | 9,257 
|                                                   |  |                |       
|Standby letters of credit                          |  | $              | 812   
|                                                   |  |                |       



|(11) | Related Party Transactions and Economic Dependence
|---- | --------------------------------------------------

In the ordinary course of business, the Company has granted loans and entered into other transactions with principal officers and directors and their affiliates. These transactions have been at market rates prevailing at the time. A summary
of related party transactions follows (in thousands):



|                                             |  |                 |       |      |   |      
|-------------------------------------------- |  | --------------- | ----- | ---- | - | -----
|                                             |  | At December 31,
|                                             |  | 2007            |       | 2006
|Loans outstanding at year end                |  | $               | 3,530 |      | $ | 3,228
|                                             |  |                 |       |      |   |      
|New loans originated or advances during year |  | $               | 724   |      | $ | 729  
|                                             |  |                 |       |      |   |      
|Principal repayments on loans during year    |  | $               | 593   |      | $ | 163  
|                                             |  |                 |       |      |   |      
|Deposits at year end                         |  | $               | 1,397 |      | $ | 1,769
|                                             |  |                 |       |      |   |      



|(12) | Regulatory Matters
|---- | ------------------

The Bank is subject to various
regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Companys and the Banks financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective actions, the Bank must meet specific capital guidelines that
involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(12) | Regulatory Matters (Continued)
|---- | ------------------------------



Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the
following table) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital (as defined) to adjusted total assets (as defined).

As of December 31, 2007, the most recent notification from the regulatory authorities categorized the Bank as well capitalized. An institution must
maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the following tables. There are no conditions or events since the notification that management believes have changed the Banks category. The
Banks actual capital amounts and percentages are also presented in the table ($ in thousands).



|                                        |  |        |        |   |                            |   |        |                                                                       |        |  |     |        |  |   |        |  |      |  
|--------------------------------------- |  | ------ | ------ | - | -------------------------- | - | ------ | --------------------------------------------------------------------- | ------ |  | --- | ------ |  | - | ------ |  | ---- | -
|                                        |  | Actual |        |   | Minimum CapitalRequirement |   |        | Minimum To Be WellCapitalized UnderPrompt CorrectiveAction
Provisions |       
|                                        |  | Amount |        | % |                            |   | Amount |                                                                       | %      |  |     | Amount |  | % |       
|As of December 31, 2007:                |  |        |        |   |                            |   |        |                                                                       |        |  |     |        |  |   |        |  |      |  
|Total Capital to Risk-Weighted Assets   |  | $      | 19,116 |   | 12.1                       | % |        | $                                                                     | 12,600 |  | 8.0 | %      |  | $ | 15,750 |  | 10.0 | %
|Tier I Capital to Risk-Weighted Assets  |  | $      | 17,229 |   | 10.9                       | % |        | $                                                                     | 6,300  |  | 4.0 | %      |  | $ | 9,450  |  | 6.0  | %
|Tier I Capital to Adjusted Total Assets |  | $      | 17,229 |   | 8.0                        | % |        | $                                                                     | 8,643  |  | 4.0 | %      |  | $ | 10,803 |  | 5.0  | %
|As of December 31, 2006:                |  |        |        |   |                            |   |        |                                                                       |        |  |     |        |  |   |        |  |      |  
|Total Capital to Risk-Weighted Assets   |  | $      | 18,180 |   | 11.7                       | % |        | $                                                                     | 12,442 |  | 8.0 | %      |  | $ | 15,557 |  | 10.0 | %
|Tier I Capital to Risk-Weighted Assets  |  | $      | 16,281 |   | 10.5                       | % |        | $                                                                     | 6,223  |  | 4.0 | %      |  | $ | 9,334  |  | 6.0  | %
|Tier I Capital to Adjusted Total Assets |  | $      | 16,281 |   | 7.7                        | % |        | $                                                                     | 8,504  |  | 4.0 | %      |  | $ | 10,630 |  | 5.0  | %



|(13) | Dividend Restrictions
|---- | ---------------------

The Company is limited in
the amount of cash dividends that may be paid by the amount the Bank may pay to the Holding Company. The amount of cash dividends that may be paid is based on the Banks net earnings of the current year combined with the Banks retained
earnings of the preceding two years. However, for any dividend declaration, the Bank must consider additional factors such as the amount of current period net earnings, liquidity, asset quality, capital adequacy and economic conditions. It is likely
that these factors would further limit the amount of dividend which the Bank could declare. In addition, bank regulators have the authority to prohibit banks from paying dividends if they deem such payment to be an unsafe or unsound practice.



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(14) | Employee Benefit Plans
|---- | ----------------------



The Company has established a 401(k) profit sharing plan covering employees age 18 and over who have completed one year of service. The Company may
contribute to the Plan at the discretion of the Board of Directors. For the years ended December 31, 2007 and 2006, the Company recognized approximately $94,000 and $168,000 in expenses in connection with the 401(k) plan.

The Company also has an Employee Stock Purchase Plan that expired in February 2006 under which certain employees could elect to purchase a limited amount
of Companys common stock at a fixed price upon initiation of the plan. There were -0- and 1,373 shares issued in connection with this Plan during the years ended December 31, 2007 and 2006, respectively.



|(15) | Fair Value of Financial Instruments
|---- | -----------------------------------

The estimated
fair values of the Companys financial instruments are as follows (in thousands):



|                                |  |                        |         |            |   |                |  |           |         |  |   |        
|------------------------------- |  | ---------------------- | ------- | ---------- | - | -------------- |  | --------- | ------- |  | - | -------
|                                |  | At December 31,       
|                                |  | 2007                   |         | 2006      
|                                |  | CarryingAmount         |         | Fair Value |   | CarryingAmount |  | FairValue
|                                |  | (Dollars in Thousands)
|Financial assets:               |  |                        |         |            |   |                |  |           |         |  |   |        
|Cash and cash equivalents       |  | $                      | 8,729   |            | $ | 8,729          |  | $         | 12,277  |  | $ | 12,277 
|Securities available for sale   |  |                        | 41,486  |            |   | 41,486         |  |           | 40,996  |  |   | 40,996 
|Loans                           |  |                        | 152,092 |            |   | 152,323        |  |           | 149,985 |  |   | 149,001
|Accrued interest receivable     |  |                        | 1,057   |            |   | 1,057          |  |           | 925     |  |   | 925    
|Federal Home Loan Bank stock    |  |                        | 926     |            |   | 926            |  |           | 935     |  |   | 935    
|Federal Reserve Bank stock      |  |                        | 237     |            |   | 237            |  |           | 237     |  |   | 237    
|                                |  |                        |         |           
|Financial liabilities:          |  |                        |         |            |   |                |  |           |         |  |   |        
|Deposits                        |  |                        | 183,167 |            |   | 175,671        |  |           | 179,486 |  |   | 180,064
|Federal Home Loan Bank advances |  |                        | 10,000  |            |   | 9,750          |  |           | 10,000  |  |   | 10,046 
|Junior subordinated debentures  |  |                        | 2,062   |            |   | 2,063          |  |           | 2,062   |  |   | 2,062  
|Other borrowings                |  |                        | 2,341   |            |   | 2,341          |  |           | 3,528   |  |   | 3,528  
|Off-balance-sheet instruments   |  |                        |        |            |   |               |  |           |        |  |   |       



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(16) | Business Combination
|---- | --------------------



On January 2, 2007, the Holding Company purchased the assets of IFP, a financial services company, for $2,019,000. IFP is registered with NASD, and
has an established product and brokering agreement with Raymond James Financial Services, Inc. Since January 2, 2007, IFP has operated as a wholly-owned subsidiary of the Holding Company. The acquisition of IFP provides the Company with the
ability to provide additional services to its customers.

Assets acquired included intangible assets of approximately $2,015,000, consisting
of goodwill of $1,525,000, customer intangibles of $490,000 and premises and equipment of $4,000. The principal factors considered in valuing the customer intangible included (1) existing customer revenues, (2) estimated customer attrition
and (3) pricing increases based on an inflationary rate for services to be rendered. The customer intangible was being amortized on the straight-line method over a seven year period or $70,000 per year. Goodwill and the customer intangible are
evaluated periodically for impairment. As a result, the Company charged off approximately $45,000 in customer intangibles during the year ended December 31, 2007.

The following table presents unaudited pro forma results incorporating IFP for the year ended December 31, 2006. Since no consideration is given to operational efficiencies and expanded products and services, the
pro forma summary information does not necessarily reflect the results of operations as they would have been, if the acquisition had occurred on January 1, 2006. The following amounts (except the per share amount) are in thousands.



|                         |  |                                   |       
|------------------------ |  | --------------------------------- | ------
|                         |  | For the YearEndedDecember 31,2006
|Total revenue            |  | $                                 | 14,605
|                         |  |                                   |       
|Net earnings             |  | $                                 | 1,587 
|                         |  |                                   |       
|Earnings per basic share |  | $                                 | 1.25  
|                         |  |                                   |       



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(17) | Holding Company Only Financial Information
|---- | ------------------------------------------



The Holding Companys unconsolidated financial information is as follows (in thousands):

Condensed Balance Sheets



|                                           |  |                 |        |      |   |       
|------------------------------------------ |  | --------------- | ------ | ---- | - | ------
|                                           |  | At December 31,
|                                           |  | 2007            |        | 2006
|Assets                                     |  |                 |        |      |   |       
|Cash                                       |  | $               | 19     |      | $ | 2,065 
|Investment in subsidiaries                 |  |                 | 19,203 |      |   | 15,923
|Other assets                               |  |                 | 82     |      |   | 241   
|                                           |  |                 |        |      |   |       
|Total assets                               |  | $               | 19,304 |      | $ | 18,229
|                                           |  |                 |        |      |   |       
|Liabilities and Stockholders Equity       |  |                 |        |      |   |       
|Accounts payable                           |  | $               | 34     |      | $ | 6     
|Junior subordinated debenture              |  |                 | 2,062  |      |   | 2,062 
|Stockholders equity                       |  |                 | 17,208 |      |   | 16,161
|                                           |  |                 |        |      |   |       
|Total liabilities and stockholders equity |  | $               | 19,304 |      | $ | 18,229
|                                           |  |                 |        |      |   |       

Condensed Statements of Earnings



|                                     |  |                         |      |   |      |   |       |  
|------------------------------------ |  | ----------------------- | ---- | - | ---- | - | ----- | -
|                                     |  | Years EndedDecember 31, |     
|                                     |  | 2007                    |      |   | 2006 |  
|Interest income                      |  | $                       | 8    |   |      | $ | 2     |  
|Interest expense                     |  |                         | (152 | ) |      |   | (92   | )
|Noninterest expense                  |  |                         | (191 | ) |      |   | (128  | )
|Income taxes                         |  |                         | 126  |   |      |   | 83    |  
|                                     |  |                         |      |   |      |   |       |  
|Loss before earnings of subsidiaries |  |                         | (209 | ) |      |   | (135  | )
|                                     |  |                         |      |   |      |   |       |  
|Earnings of subsidiary               |  |                         | 965  |   |      |   | 1,684 |  
|                                     |  |                         |      |   |      |   |       |  
|Net earnings                         |  | $                       | 756  |   |      | $ | 1,549 |  
|                                     |  |                         |      |   |      |   |       |  



---

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements



|(17) | Holding Company Only Financial Information (Continued)
|---- | ------------------------------------------------------



Condensed Statements of Cash Flows



|                                                                                                                                                                    |  |                          |        |   |      |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | -
|                                                                                                                                                                    |  | Years Ended December 31, |       
|                                                                                                                                                                    |  | 2007                     |        |   | 2006 |  
|Cash flows from operating activities:                                                                                                                               |  |                          |        |   |      |   |        |  
|Net earnings                                                                                                                                                        |  | $                        | 756    |   |      | $ | 1,549  |  
|Adjustment to reconcile net earnings to net cash used in operating activities:                                                                                      |  |                          |        |   |      |   |        |  
|Equity in earnings of subsidiary                                                                                                                                    |  |                          | (965   | ) |      |   | (1,684 | )
|Net decrease (increase) in other assets                                                                                                                             |  |                          | 159    |   |      |   | (210   | )
|Increase in accounts payable                                                                                                                                        |  |                          | 28     |   |      |   | 6      |  
|                                                                                                                                                                    |  |                          |        |   |      |   |        |  
|Net cash used in operating activities                                                                                                                               |  |                          | (22    | ) |      |   | (339   | )
|                                                                                                                                                                    |  |                          |        |   |      |   |        |  
|Cash flows from investing activities:                                                                                                                               |  |                          |        |   |      |   |        |  
|Investment in subsidiaries                                                                                                                                          |  |                          | (2,019 | ) |      |   |       |  
|Dividends from subsidiary                                                                                                                                           |  |                          |       |   |      |   | 1,808  |  
|                                                                                                                                                                    |  |                          |        |   |      |   |        |  
|Net cash (used in) provided by investing activities                                                                                                                 |  |                          | (2,019 | ) |      |   | 1,808  |  
|                                                                                                                                                                    |  |                          |        |   |      |   |        |  
|Cash flows from financing activities:                                                                                                                               |  |                          |        |   |      |   |        |  
|Principal repayments on note payable                                                                                                                                |  |                          |       |   |      |   | (1,750 | )
|Proceeds from share issued to the employee stock purchase plan                                                                                                      |  |                          |       |   |      |   | 20     |  
|Proceeds from trust preferred securities                                                                                                                            |  |                          |       |   |      |   | 2,062  |  
|Cash paid in lieu of fractional shares                                                                                                                              |  |                          | (5     | ) |      |   | (7     | )
|                                                                                                                                                                    |  |                          |        |   |      |   |        |  
|Net cash (used in) provided by financing activities                                                                                                                 |  |                          | (5     | ) |      |   | 325    |  
|                                                                                                                                                                    |  |                          |        |   |      |   |        |  
|Net (decrease) increase in cash and cash equivalents                                                                                                                |  |                          | (2,046 | ) |      |   | 1,794  |  
|Cash at beginning of the year                                                                                                                                       |  |                          | 2,065  |   |      |   | 271    |  
|                                                                                                                                                                    |  |                          |        |   |      |   |        |  
|Cash at end of year                                                                                                                                                 |  | $                        | 19     |   |      | $ | 2,065  |  
|                                                                                                                                                                    |  |                          |        |   |      |   |        |  
|Noncash transactions:                                                                                                                                               |  |                          |        |   |      |   |        |  
|Net change in investment in subsidiary due to change in accumulated other comprehensive loss, unrealized loss on securities available for
sale, net of income taxes |  | $                        | 296    |   |      | $ | 117    |  
|                                                                                                                                                                    |  |                          |        |   |      |   |        |  
|Common stock dividend                                                                                                                                               |  | $                        | 1,431  |   |      | $ | 1,675  |  
|                                                                                                                                                                    |  |                          |        |   |      |   |        |