Exhibit
      13.1





**PRO
      FINANCIAL HOLDINGS, INC.**





**Holding
      Company for**





**PROBANK**





Audited
      Consolidated Financial Statements





December
      31, 2007





(Together
      with Independent Auditors' Report)








Financial
      Statements of Pro Financial





INDEX
      TO
      FINANCIAL STATEMENTS





Report
                of Independent Registered Public Accounting Firm
            3Consolidated
                Balance Sheets
            4Consolidated
                Statements of Earnings
            5Consolidated
                Statements of Stockholders' Equity
            6Consolidated
                Statements of Cash Flows
            7Notes
                to Consolidated Financial Statements
            8 –
                24


2


**Independent
      Auditors' Report**





Pro
      Financial Holdings, Inc.


Tallahassee,
      Florida:





We
      have
      audited the accompanying consolidated balance sheet of Pro Financial Holdings,
      Inc. and Subsidiary (the "Company") at December 31, 2007, and the related
      consolidated statements of income/(loss), stockholders' equity, and cash flows
      for the years ended December 31, 2007 and 2006. These consolidated financial
      statements are the responsibility of the Company's management. Our
      responsibility is to express an opinion on these consolidated financial
      statements based on our audit.





We
      conducted our audit in accordance with auditing standards generally accepted
      in
      the United States of America. Those standards require that we plan and perform
      the audit to obtain reasonable assurance about whether the consolidated
      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. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall consolidated financial statement presentation. We believe
      that our audit provides 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 the results of its operations and its cash flows for the years ended
      December 31, 2007 and 2006, in conformity with accounting principles generally
      accepted in the United States of America.





*/s/
      James D.A. Holley & Co. P.A.*





Tallahassee,
      Florida


March
      27,
      2008


3




**PRO
      FINANCIAL HOLDINGS, INC.**





**Consolidated
      Balance Sheet**


**At**  **December
      31, 2007**


**($
      in thousands, except share amounts)**





**Assets**Cash
                and due from banks
            
            $
            878Federal
                funds sold
            
            
            10,631Total
                cash and cash equivalents
            
            
            11,509Securities
                available for sale- net of unrealized gain/(loss)
            
            
            6,364Loans,
                net of allowance for loan losses of $72 and deferred fees of
                $14
            
            
            3,810Federal
                Home Loan Bank stock
            
            
            16Premises
                and equipment, net
            
            
            1,417Accrued
                interest receivable
            
            
            50Other
                assets
            
            
            1,004Total
                assets
            
            $
            24,170**Liabilities
                and Stockholders' Equity**Liabilities:Noninterest-bearing
                demand deposits
            
            $
            3,402Interest
                bearing deposits
            
            
            8,218Total
                deposits
            
            
            11,620Securities
                sold under agreements to repurchase
            
            
            101Accrued
                Interest Payable
            
            
            11Other
                liabilities
            
            
            39Total
                liabilities
            
            
            11,771Commitments
                (Note 15)Stockholders'
                equity:Common
                stock, $.01 par value; 9,000,000 shares authorized, 1,334,840 shares
                issued and outstanding
            
            
            13Preferred
                Stock, authorized 1,000,000 shares, issued and outstanding- 0
                Shares
            
            
            -Additional
                paid-in capital
            
            
            13,286Accumulated
                deficit
            
            
            (908
            )Accumulated
                other comprehensive gain
            
            
            8Total
                stockholders' equity
            
            
            12,399Total
                liabilities and stockholders' equity
            
            $
            24,170




See
      Accompanying Notes to Consolidated Financial Statements.


4




**PRO
      FINANCIAL HOLDINGS, INC.**




**Consolidated
      Statement of Income (Loss)**


**For
      the Years Ended December 31, 2007 and 2006.**


**(In
      thousands)**





2007
            
            2006Interest
                income:Interest
                and fees on loans
            
            $
            54
            
            $
            -Interest
                and fees on investment securities
            
            
            51
            
            
            -Interest
                and fees on federal funds sold
            
            
            285
            
            
            -Total
                interest income
            
            
            390
            
            
            -Interest
                expense on deposits
            
            
            74
            
            
            -Interest
                expense on borrowings
            
            
            20
            
            
            7Total
                interest expense
            
            
            94
            
            
            7Net
                Interest Income before provision for loan loss
            
            
            296
            
            
            (7
            )Provision
                for loan losses
            
            
            (72
            )
            
            -Net
                interest income after provision for loan losses
            
            
            224
            
            
            (7
            )Noninterest
                income:Service
                charges on deposit account
            
            
            6
            
            
            -Other
                Income
            
            
            15
            
            
            -Total
                Noninterest Income
            
            
            21
            
            
            -Noninterest
                expenses:Salaries
                and employee benefits
            
            
            829
            
            
            71Occupancy
                and equipment
            
            
            202
            
            
            13Other
            
            
            419
            
            
            146Total
                noninterest expenses
            
            
            1,450
            
            
            230Income
                (Loss) Before Income Tax
            
            
            (1,205
            )
            
            (237
            )Income
                Tax Benefit
            
            
            534
            
            
            0Net
                loss
            
            $
            (671
            )
            $
            (237
            )Basic
                net loss per share
            
            $
            (1.21
            )Basic
                average common shares outstanding
            
            
            556,183Diluted
                net loss per share
            
            $
            (1.21
            )Diluted
                average common shares outstanding
            
            
            556,183





See
      Accompanying Notes to Consolidated Financial Statements.


5




**PRO
      FINANCIAL HOLDINGS, INC.**




**Consolidated
      Statement of Stockholders' Equity**




**For
      the Year Ended December 31, 2007**


**($
      in thousands)**





**Additional**
            
            
            
            **Accumulated**
            
            **Total****Common Stock**
            
            **Preferred Stock**
            
            **Paid-In**
            
            **Accumulated**
            
            **Other Compre-**
            
            **Stockholders’****Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **hensive Income**
            
            **Equity**Issuance of
                preferred stock
            
            
            -
            
            $
            -
            
            
            1
            
            $
            100
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            100Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (237
            )
            
            -
            
            
            (237
            )Balance
                at December 31, 2006
            
            
            -
            
            
            -
            
            
            1
            
            
            100
            
            
            -
            
            
            (237
            )
            
            -
            
            
            (137
            )Issuance
                of preferred stock
            
            
            -
            
            
            -
            
            
            3.5
            
            
            350
            
            
            -
            
            
            -
            
            
            -
            
            
            350Retirement
                of preferred stock
            
            
            -
            
            
            -
            
            
            (4.5
            )
            
            (450
            )
            
            -
            
            
            -
            
            
            -
            
            
            (450
            )Transfer
                from common stock subscriptions to outstanding common
                stock
            
            
            1,334.8
            
            
            13
            
            
            -
            
            
            -
            
            
            13,286
            
            
            -
            
            
            -
            
            
            13,299Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (671
            )
            
            -Unrealized
                gain on securities available for sale
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            8Comprehensive
                Loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (663
            )Balance
                at December 31, 2007
            
            
            1,334.8
            
            $
            13
            
            
            -
            
            
            -
            
            $
            13,286
            
            $
            (908
            )
            $
            8
            
            $
            12,399




See
      Accompanying Notes to Consolidated Financial Statements.


6




**PRO
      FINANCIAL HOLDINGS, INC.**




**Consolidated
      Statement of Cash Flows**





**For
      the Years Ended December 31, 2007 and 2006**


**(In
      thousands)**





2007
            
            2006Cash
                flows from operating activities:Net
                loss
            
            $
            (671
            )
            $
            (237
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
            
            
            74
            
            
            -Increase
                in other assets
            
            
            (140
            )
            
            (9
            )Increase
                in deferred tax
            
            
            (534
            )
            
            -Increase
                in accrued interest receivable
            
            
            (50
            )
            
            -Increase
                in accrued expense & accounts payable
            
            
            39
            
            
            12Net
                cash used in operating activities
            
            
            (1,282
            )
            
            (234
            )Cash
                flows from investing activities:Purchase
                of furniture and equipment
            
            
            (1,473
            )
            
            (6
            )Purchase
                of securities available for sale
            
            
            (6,369
            )
            
            -Increase
                in loans to customers
            
            
            (3,810
            )
            
            -Purchase
                of other investments
            
            
            -
            
            
            (325
            )Net
                cash used in investing activities
            
            
            (11,652
            )
            
            (331
            )Cash
                flows from financing activities:Principal
                reduction in notes payable
            
            
            (508
            )
            
            496Increase
                in Fed Funds purchased & Repos
            
            
            101
            
            
            -Increase
                in deposits
            
            
            11,620
            
            
            -Issuance
                of preferred stock
            
            
            -
            
            
            100Retirement
                of issuance preferred stock
            
            
            (100
            )
            
            -Issuance
                of common stock
            
            
            13,299
            
            
            -Net
                cash provided by financing activities
            
            
            24,412
            
            
            596Net
                increase in cash and cash equivalents
            
            
            11,478
            
            
            31Cash
                and cash equivalents at beginning of year
            
            
            31
            
            
            -Cash
                and cash equivalents at end of year
            
            $
            11,509
            
            $
            31





Supplemental
      disclosure of cash flow information:





Cash
      paid
      during the years interest in for 2007 and 2006 was $83,000 and $7,000,
      respectively.





See
      Accompanying Notes to Consolidated Financial Statements.


7




**PRO
      FINANCIAL HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements**





**1.
      Summary of Significant Accounting Policies**





***Organization.*** Pro
      Financial Holdings, Inc. (the "Holding Company") was organized on March 29,
      2006
      and owns 100% of the outstanding common stock of Pro Bank (the "Bank"). The
      Holding Company’s primary activity is the operation of the Bank. The Bank is a
      state (Florida)-chartered commercial bank and commenced banking operations
      on
      September 5, 2007. The Bank offers a variety of banking and financial services
      to individual and corporate customers through its banking offices located in
      Tallahassee, Florida. The deposit accounts of the Bank are insured up to the
      applicable limits by the Federal Deposit Insurance Corporation.





***Basis
      of Presentation.*** The
      accompanying consolidated financial statements include the accounts of the
      Holding Company and the Bank (collectively, the "Company"). 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 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. A material estimate that is particularly
      susceptible to significant change in the near term relates to the determination
      of the allowance for loan losses.




***Cash
      and Cash Equivalents.*** For
      purposes of the consolidated statement of cash flows, cash and cash equivalents
      include cash, balances due from banks and federal funds sold, all of which
      mature within ninety days.




***Securities.***  Securities
      may be classified as either trading, held-to-maturity or available-for-sale.
      Trading securities are held principally for resale and recorded at their fair
      values. Unrealized gains and losses on trading securities are included
      immediately in operations. Held-to-maturity securities are those which the
      Company has the positive intent and ability to hold to maturity and are reported
      at amortized cost. Available-for-sale securities consist of securities not
      classified as trading securities or as held-to-maturity securities. Unrealized
      holding gains and losses on available-for-sale securities are excluded from
      operations and reported in 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. Premiums and discounts
      on
      securities available for sale are recognized in interest income using the
      interest method over the period to maturity.




***Federal
      Home Loan Bank*** ***.*** The
      Corporation’s investment in Federal Home Loan bank stock, which can be sold only
      to Federal Home Loan Bank at its par value of $100, is a restricted investment
      and is carried at cost. The Federal Home Loan Bank determines the amount of
      investment in stock based on the Bank’s liability for Federal Home Loan Bank
      advances.




(continued)


8




**PRO****FINANCIAL HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**1.**  **Summary
      of Significant Accounting Policies, Continued**





***Loans.*** Loans
      that management has the intent and ability to hold for the foreseeable future
      or
      until maturity or pay-off are reported at their outstanding principal adjusted
      for any charge-offs, the allowance for loan losses, and any deferred fees or
      costs.





Loan
      origination fees are capitalized and certain direct origination costs are
      deferred. 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 operations. 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.





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 considered impaired. For such loans, an allowance
      is
      established when the discounted cash flows or collateral value or observable
      market price 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 industry
      loss experience adjusted for qualitative factors.




(continued)


9




**PRO****FINANCIAL HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**1.
      Summary of Significant Accounting Policies, Continued**





***Allowance
      for Loan Losses, Continued.*** 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 and commercial real estate
      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 and lines of credit loans for impairment
                disclosures.





***Premises
      and Equipment.*** Leasehold improvements, furniture and fixtures, and computer equipment and
      software are stated at cost less accumulated depreciation. Interest costs are
      capitalized in connection with the construction of new banking offices.
      Depreciation expense is computed using the straight-line method over the
      estimated useful life of each type of asset.





***Advertising.*** The
      Company expenses all media advertising as incurred.





***Preopening
      and Organizational Costs.*** Preopening and organizational costs were approximately $903,000. Prior to the
      commencement of banking operations, all costs had been charged to expense as
      incurred.





***Income
      Taxes.*** The
      Bank
      reports income under the Statement of Financial Accounting Standards No. 109,
      “Accounting for Income Tax,” which requires recognition of deferred tax
      liabilities and assets for the expected future tax consequences of events that
      have been included in the financial statements or tax returns. Under this
      method, deferred tax liabilities and assets are determined based on the
      difference between the financial statement bases of assets and liabilities
      using
      enacted tax rates in effect for the year in which the differences are expected
      to reverse.





Recognition
                of deferred tax balance sheet amounts is based on management’s belief that
                it is more likely than not that the tax benefit associated with certain
                temporary differences, tax operating loss carry forwards, and tax
                credits
                will be realized. A valuation allowance is recorded for those deferred
                tax
                items for which it is more likely than not that realization will
                not
                occur.





(continued)


10




**PRO****FINANCIAL HOLDINGS, INC.**





**Notes
      to Consolidated Financial Statements, Continued**





**1.
      Summary of Significant Accounting Policies, Continued**




***Off-Balance
      Sheet Instruments.*** In the
      ordinary course of business the Company has entered into off-balance sheet
      financial instruments consisting of commitments to extend credit and unused
      lines of credit. Such financial instruments are recorded in the consolidated
      financial statements when they are funded.





***Comprehensive
      Income or Loss.*** Accounting
      principles generally require that recognized revenue, expenses, gains and losses
      be included in net loss. Although certain changes in assets and liabilities,
      such as unrealized gains and losses on available-for-sale securities, are
      reported as a separate component of the equity section of the consolidated
      balance sheet, such items, along with net loss, are components of comprehensive
      loss. The component of other comprehensive gain was unrealized holding gains
      on
      available-for-sale securities.





***Recent
          Pronouncements.*** 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 defines fair value, establishes a framework for measuring
          fair
          value in accordance with generally accepted accounting principals, and
          expands
          disclosures about fair value measurements. This statement is effective
          for the
          Company as of January 1, 2008. Management is in the process of evaluating
          the
          impact of SFAS 157 and does not anticipate it will have any effect on the
          Company's consolidated financial condition or results of operations.





In
                February 2007, the FASB issued SFAS No. 159,*The
                Fair Value Option for Financial Assets and Financial
                Liabilities*("SFAS 159"). SFAS 159 provides the Company with an option to report
                selected financial assets and liabilities at fair value. This statement
                is
                effective for the Company as of January 1, 2008. Management is in
                the
                process of evaluating the impact of SFAS 159 and does not anticipate
                it
                will have any effect on the Company's consolidated financial condition
                or
                results of operations.





In
                December 2007, the FASB issued SFAS No. 141(R),*Business
                Combinations*("SFAS 141(R)"). SFAS 141(R) is effective for fiscal years beginning
                after
                December 15, 2008 and early implementation is not permitted. SFAS
                141(R)
                requires the acquiring entity in a business combination to recognize
                all
                (and only) the assets acquired and liabilities assumed in the transaction;
                establishes the acquisition date fair value as the measurement objective
                for all assets acquired and liabilities assumed; and requires the
                acquirer
                to disclose to investors and other users all of the information they
                need
                to evaluate and understand the nature and financial effect of the
                business
                combination. Acquisition related costs including finder's fees, advisory,
                legal, accounting, valuation and other professional and consulting
                fees
                are required to be expensed as incurred. Management is in the process
                of
                evaluating the impact of SFAS 141(R) and does not anticipate it will
                have
                any effect on the Company's current consolidated financial condition
                or
                results of operations.





(continued)


11




**PRO** **FINANCIAL
      HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**2.
      Securities Available for Sale**





Debt
      and
      equity securities have been classified in the balance sheet according to
      management’s intent. The following table reflects the amortized cost and
      estimated market values of investments in debt securities held at December
      31,
      2007. In addition, gross unrealized gains and gross unrealized losses are
      disclosed as of December 31, 2007 in accordance with Statement of Position
      90-11
      of the American Institute of Certified Public Accountants, which is effective
      for financial statements covering fiscal years ending after December 15,
      1990.





The
      carrying amount of securities and their fair values are as follows (in
      thousands):





**Gross**
            
            **Gross****Amortized**
            
            **Unrealized**
            
            **Unrealized**
            
            **Fair****Cost**
            
            **Gains**
            
            **Losses**
            
            **Value*****At
                December 31, 2007-***US
                Government Agencies
            
            $
            1,000
            
            $
            17
            
            $
            0
            
            $
            1,017Mortgage-backed
                Securities
            
            
            5,356
            
            
            0
            
            
            (9
            )
            
            5,347Total
                Securities
            
            $
            6,356
            
            $
            17
            
            $
            (9
            )
            $
            6,364





The
      book
      and market values of pledged securities were $3.50 million and $3.52 million
      at
      December 31, 2007.





The
      market value is established by an independent pricing service as of the
      approximate dates indicated. The differences between the book value and market
      value reflect current interest rates and represent the potential loss (or gain)
      had the portfolio been liquidated on that date. Security losses (or gains)
      are
      realized only in the even of dispositions prior to maturity.





At
      December 31, 2007 the Bank did not hold investment securities of any single
      issuer, other than obligations of the U.S Treasury and other U.S Government
      agencies, whose aggregate book value exceed ten percent of shareholders’
equity.





The
      amortized cost and estimated market value of debt securities available for
      sale
      at December 31,
      2007
      by contractual maturity, are shown below. Expected maturities will differ from
      contractual maturities because borrowers may have the right to call or repay
      obligations with or without call or repayment penalties.  (in
      thousands)





Amortized
                Cost
            
            Estimated
                Mkt ValueDecember
                31, 2007Non-mortgage
                backed securities:
            
            $
            -
            
            $
            -Due
                in one year or less
            
            
            -
            
            
            -Due
                in one through five years
            
            
            -
            
            
            -Due
                after five years through ten years
            
            
            1,000
            
            
            1,017Due
                after ten years
            
            
            -
            
            
            -Total
                non-mortgage back securities
            
            
            1,000
            
            
            1,017Mortgage
                backed securities
            
            
            5,356
            
            
            5,347Total
            
            $
            6,356
            
            $
            6,364




(continued)




12




**PRO** **FINANCIAL
      HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





There
      were no sales of securities during 2007.





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.





At
      December 31, 2007, the Company had seven mortgage-backed securities with an
      unrealized loss with aggregate depreciation of .37% from the Bank’s amortized
      cost basis. In analyzing an issuer’s financial condition, management considers
      whether the securities are issued by the federal government or its agencies,
      whether downgrades by bond rating agencies have occurred, and industry analyst’s
      reports. As management has the ability to hold debt securities until maturity,
      or for the foreseeable future if classified as available for sale, no declines
      are deemed to be other than temporary.





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:(in thousands)





More
                than 12MGross
            
            FairUnrealized
            
            MarketLosses
            
            ValueUS
                Government agencies
            
            $
            -
            
            $
            -Mortgage
                backed
            
            
            14
            
            
            3,769Total
            
            $
            14
            
            $
            3,769





The
      Corporation owns a 20.3% equity investment in Moon Building Investors, LLC
      with
      a balance of $325,000 which is included in other assets. The equity method
      of
      accounting is used for this investment since the Corporation does not own a
      controlling interest. Moon Building Investors, LLC owns a building that is
      leased to the Corporation under a lease that is effective January 1, 2007,
      as
      described in Note 15.





(continued)




13




**PRO** **FINANCIAL
      HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**3.
      Loans**


The
      following is a summary of the loan portfolio by principal categories at December
      31, 2007   (in
      thousands):





**At
                December 31,****2007**Mortgage
                loans on real estateCommercial
                real estate
            
            $
            2,699Home
                Equity
            
            
            71Residential
            
            
            73Total
            
            
            2,843Commercial
                loans
            
            
            669Consumer
            
            
            384Total
                loans
            
            
            3,896Less:Deferred
                loan fees, net
            
            
            (14
            )Allowance
                for loan losses
            
            
            (72
            )Loans,
                net
            
            $
            3,810




Overdrafts
      included in loans were $2,733 at December 31, 2007




**4.
      Allowance for Loan Losses**





A
      summary
      of changes in allowance for loan losses of the Bank for the year ended December
      31,   2007
      is
      as follows (in thousands):




**Year
                Ended****December
                31,****2007**Beginning
                balance
            
            $
            -Add:Provision
                for loan losses
            
            
            72Subtotal
            
            
            72Less:Loans
                charged off
            
            
            -Recoveries
                on loans previously charged off
            
            
            -Net
                loans charged off
            
            
            0Balance,
                end of year
            
            $
            72





(continued)




14




**PRO** **FINANCIAL
      HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**4.
      Allowance for Loan Losses, continued**





Loans
      on
      which the accrual of interest had been discontinued or reduced amounted to
      $60,000 at December 31, 2007. If interest on these loans had been accrued,
      such
      income would have been approximately $1,000.





The
      Company grants the majority of its loans to borrowers throughout Leon and the
      surrounding Counties in Florida. Although the Company has a diversified loan
      portfolio, a significant portion of its borrowers' ability to honor their
      contracts is dependent upon the economy of this area.





**5.
      Premises and Equipment**


The
      following is a summary of assets classification and depreciable lives for the
      Bank as of December 31, 2007 (in thousands):





**At
                December 31,**
            
            **Useful****2007**
            
            **Lives
                (Yrs)**Leasehold
                and improvements
            
            $
            643
            
            
            10Furniture
                and fixtures
            
            
            470
            
            
            5Data
                processing equipment and software
            
            
            378
            
            
            5Total,
                at cost
            
            
            1,491Less
                accumulated depreciation
            
            
            (74
            )Premises
                and equipment, net
            
            $
            1,417





Depreciation
      included in operating expenses amounted to $74,071 in 2007.





**6.
      Deposits**


The
      aggregate amount of time deposits with a minimum denomination of $100,000 was
      $1.36 million at December 31, 2007.





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





**Year
                Ending****December
                31,**
            
            **Amount**2008
            
            $
            2,0282009
            
            
            1$
            2,029





(continued)




15




**PRO
      FINANCIAL HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**7.
      Dividend Restrictions**


The
      Holding Company is limited in the amount of cash dividends it may declare and
      pay by the amount of dividends it can receive from the Bank. The Bank is limited
      in the amount of cash dividends that may be paid. 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, as
      defined by state banking regulations. However, for any dividend declaration,
      the
      Company 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
      dividends which the Company 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.





**8.
      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 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 and standby
      letters of 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 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.
      Collateral held varies but may include accounts receivable, inventory, property,
      plant and equipment, and income-producing commercial properties.





Commitments
      to extend credit typically result in loans with a market interest rate when
      funded. A summary of the amounts of the Company's financial instruments with
      off-balance sheet risk at December 31, 2007 follows (in thousands):





Commitments
                to extend credit
            
            $
            916Stand
                By letters of credit
            
            
            -Total
            
            $
            916





(continued)




16




**PRO** **FINANCIAL
      HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**8.
      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. Those guarantees are primarily
      issued to support public and private borrowings arrangements, including
      commercial paper, bond financing and similar transactions. All letters of credit
      are due within one year of the original commitment date. The credit risk
      involved in issuing letters of credit is essentially the same as that involved
      in extending the loan facilities to customer.




**9.
      Related Party Transactions**


In
      the
      ordinary course of business, the Company has direct and indirect loans
      outstanding to or for the benefit of certain executive officers and directors.
      These loans were made on substantially the same terms as those prevailing,
      at
      the time made, for comparable loans to other persons and did not involve more
      than the normal risk of collectability or present other unfavorable features.





The
      following is a summary of activity during 2007 with respect to such loans to
      these individuals (in thousands):




**Amount**Loans:Originated
                during the year
            
            $
            1,242Principal
                repayments
            
            
            -Balance
                at December 31, 2007
            
            $
            1,242Deposits
                at December 31, 2007
            
            $
            5,383





**10.
      Credit Risk Concentration**





The
      Company grants commercial and residential loans to customers in Leon County,
      Gadsden County, Wakulla County and Jefferson County and other surrounding
      counties. Although the Company has a diversified loan portfolio, a substantial
      portion of its debtors’ ability to honor their contracts is dependent on the
      area’s economic stability.




The
      distribution of commitments to extend credit approximates the distribution
      of
      loans outstanding. Commercial and standby letters of credit were granted
      primarily to commercial borrowers. The Company, as a matter of policy, does
      not
      extend credit in excess of the legal lending limit to any single borrower or
      group of related borrowers.




The
      Company maintains its cash balances in several financial institutions. Accounts
      at the financial institutions are secured by the Federal Deposit Insurance
      Corporation up to  $100,000.Uninsured
      balances aggregate to $85,484 at December 31, 2007.





(continued)




17




**PRO****FINANCIAL HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**




**11.
      Operating Expense**





Components
      of other operating expenses greater that 1% of total interest income and
      other income
      for the periods ended December 31, 2007 are: (in thousands)





2007Charge
                offs
            
            $
            4Dues
                & Subscriptions
            
            
            8Insurance
            
            
            10Computer
                and Data processing expenses
            
            
            17Advertising
            
            
            44Audits
                and exams
            
            
            27Check
                Printing
            
            
            6Supplies
            
            
            51Telephone
                expense
            
            
            11Training
                expense
            
            
            5Travel
                & Entertainment expense
            
            
            9Legal
                expense
            
            
            4$
            196




**12.
      Regulatory Matters**


The
      Bank
      is subject to various regulatory capital requirements administered by the
      federal 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 financial statements. Under capital adequacy guidelines and the
      regulatory framework for prompt corrective action, the Bank must meet specific
      capital guidelines that involve quantitative measures of the Bank's assets,
      liabilities, and certain off-balance sheet items as calculated under regulatory
      accounting practices. The Bank's capital amounts and classification are also
      subject to qualitative judgments by the regulators about components, risk
      weightings, and other factors.





Quantitative
      measures established by regulation to ensure capital adequacy require the Bank
      to maintain minimum amounts and ratios (set forth in the table below) 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 average assets (as defined).
      Management believes, as of December 31, 2007, that the Bank meets all capital
      adequacy requirements to which it is subject.





As
      of
      December 31, 2007, the most recent notification from the regulatory authorities
      categorized the Bank as well capitalized under the regulatory framework for
      prompt corrective action. To be categorized as adequately capitalized the Bank
      must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage
      percents as set forth in the table. There are no conditions or events since
      that
      notification that management believes have changed the Bank's category. The
      Bank's actual capital amounts and percents are also presented in the table
      ( in
      thousands):





(continued)




18




**PRO** **FINANCIAL
      HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**For
                Well****For
                Capital**
            
            **Capitalized****Actual**
            
            **Adequacy
                Purposes**
            
            **Purposes****Amount**
            
            **Percent**
            
            **Amount**
            
            **Percent**
            
            **Amount**
            
            **Percent*****As
                of December 31,******2007:***Total
                Capital(to
                Risk-Weighted Assets)
            
            
            Bank
                $ 9,092
            
            
            110.83
            %
            $
            656
            
            
            8.00
            %
            $
            820
            
            
            10.00
            %PFHI
                  $12,471
            
            
            128.36
            %
            $
            777
            
            
            8.00
            %
            $
            972
            
            
            10.00
            %Tier
                I Capital(to
                Risk-Weighted Assets)
            
            
            Bank
                $ 9,020
            
            
            109.95
            %
            $
            328
            
            
            4.00
            %
            $
            492
            
            
            6.00
            %PFHI
                  $12,399
            
            
            127.62
            %
            $
            499
            
            
            4.00
            %
            $
            748
            
            
            6.00
            %Total
                Capital(to
                Total Assets) *
            
            
            Bank
                $ 9,020
            
            
            44.08
            %
            $
            795
            
            
            4.00
            %
            $
            994
            
            
            5.00
            %PFHI
                $12,471
            
            
            51.44
            %
            $
            967
            
            
            4.00
            %
            $
            1,209
            
            
            5.00
            %





*
      The
      Bank is required to maintain 8.00% throughout the first three years of
      operations.




**13.
      Line of Credit**


The
      Company had a line of credit with a financial institution to fund the
      organizational phase. The loan was for $1.00 million and paid interest at a
      rate
      of Wall Street Journal prime less one percent. The loan was repaid on August
      6,
      2007.





The
      Company has an unused line of credit with a financial institution for unsecured
      federal funds borrowings of $3.25 million effective until July 1,
      2008.





**14.
      Income Taxes**


Income
      taxes reflected in the statements of income are as follows:  (in
      thousands)





2007
            
            2006Currently
                payableFederal
            
            $
            -
            
            $
            -State
            
            
            **-**
            
            
            **-**DeferredFederal
            
            
            (455
            )
            
            (75
            )State
            
            
            (
                79
            )
            
            (13
            )(534
            )
            
            (88
            )Valuation
                allowance
            
            
            -
            
            
            88$
            (534
            )
            $
            -





The
      difference between federal income tax computed at the statutory rates and the
      actual tax provision is shown below:




2007
            
            2006Computed
                tax expense/(benefit)
            
            $
            (410
            )
            $
            (81
            )Increases/(decreases)
                resulting from:State
                tax benefit net of federal benefit
            
            
            (36
            )
            
            (7
            )Change
                in deferred tax valuation allowance
            
            
            (88
            )
            
            88$
            (534
            )
            $
            -




(continued)





19




**PRO** **FINANCIAL
      HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**14.
      Income Taxes, continued**





The
      deferred tax asset and liability and the temporary differences comprising those
      balances at December 31, 2006 and 2007, are detailed below: (in
      thousands)





2007
            
            2006Deferred
                tax assets:Net
                operating loss carryover
            
            $
            182
            
            $
            -Organization
                and start up costs
            
            
            325
            
            
            88Provision
                for loan losses
            
            
            27
            
            
            -534
            
            
            88Asset
                valuation allowance
            
            
            -
            
            
            (88
            )Net
                deferred tax asset
            
            $
            534
            
            $
            -





A
      valuation allowance as of December 31, 2006 was provided because the Corporation
      believed that it was more likely than not, at that time, that the tax benefit
      of
      future deduction for organization and start up costs would not be realized
      since
      realization was contingent upon the successful organization of a proposed
      subsidiary bank. The proposed subsidiary bank was charted and commenced
      operations on September 5, 2007. The Corporation believes that it’s more likely
      than not that 100% of the deferred tax asset as or December 31, 2007 will be
      realized.





At
      December 31, 2007, the Corporation had a net operating loss carry forward of
      $182,000 for federal and state income tax purposes. This loss carry forward
      can
      be used in each succeeding year through 2027 to offset income generated in
      those
      years and can be carried forward indefinitely for Florida income tax purposes.
      Organization and startup costs are deductible over fifteen years.





**15.
      Commitments**


The
      Corporation entered into two leases for office space for the conduct of bank
      operations and has classified these leases as operating leases under the
      provisions of SFAS 13. One of the leases has an initial lease term of five
      years
      and commences on January 1, 2007. This lease contains a renewal option of an
      additional five year term with a 3% annual escalation provision. This lease
      also
      has a purchase option under which the property can be purchased for $2.9 million
      during the 25 th through
      the 36 th month of
      the lease; $3.2 million during the 37 th through
      the 48 th month;
      and $3.5 million during the 49 th through
      the 60 th month of
      the lease. If the leasee does not exercise the option to purchase within lease
      months 25 to 60, the purchase option expires.





The
      other
      lease has an initial lease term of ten years and commences on February 1, 2007.
      This lease contains a renewal option for two additional five year periods with
      a
      3% escalation provision.





Both
      leases require the lessee to pay taxes, insurance, and common area expenses
      related to the property.





(continued)




20




**PRO** **FINANCIAL
      HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**15.
      Commitments, continued**





Future
      minimum lease payments with respect to these leases commencing on January 1,
      2007 are as follows: (in thousands)





Year
            
            Amount2008
            
            $
            1282009
            
            
            1512010
            
            
            1742011
            
            
            213Thereafter
            
            
            283$
            949





**16.
      Capital Stock**





***Common
      Stock.*** The
      Corporation’s charter authorizes the issuance of 9.0 million shares of one class
      of common stock, par value, $.01 per share. Each share of common stock shall
      have the same relative rights and be identical in all respects with every other
      share of common stock. The holders of common stock are entitled to elect the
      member of the Board of Directors of the Corporation and such holders are
      entitled to vote as a class on all matters required or permitted to be submitted
      to the shareholders of the Corporation. Each holder of  common
      stock is entitled to one vote per share. No holder of any class of stock has  preemptive
      rights with respect to the issuance of shares of that or any other class of
      stocks, and the holders of common stock are not entitled to cumulative voting
      rights with respect to the election of directors. As of December 31, 2006,
      there
      were no shares of common stock  issued
      or
      outstanding.





The
      Company completed the sale of 1,334,840 shares of common  stock
      at
      $10 per share  prior
      to
      the commencement of banking operations and incurred  $49,691
      in common stock offering costs. The initial proceeds were allocated as
      follows  (in
      thousands):





Common
                stock
            
            $
            13Additional
                paid-in capital
            
            
            13,286$
            13,299





In
      connection with the sale of common stock, the Company issued one warrant to
      purchase one share of the Company's common stock at $10 per share for each
      share
      purchased in the initial offering. The warrants have a three year term which
      expire in October 2010 and are callable **** by
      the
      Company at any time after April 2008. The warrant term may be
      extended.





***Preferred
      Stock.*** The
      Board of Directions is authorized, subject to any limitations prescribed by
      law,
      to provide for the issuance of 1.0 million shares of stock in series, and by
      filing a preferred stock designation certificate pursuant to the applicable
      laws
      of the State of Florida, to establish from time to time the number of shares
      to
      be included in each such series and to fix the stated value, designation,
      powers, preferences, and right of the share of each such series and any
      qualifications, limitations or restriction thereof. The number of authorized
      shares of preferred stock may be increased of decreased (but not below the
      number of shares  then
      outstanding) by the affirmative vote of the holders of a majority of the common
      stock, without
      a
      vote of the holders of the preferred stock, or of any series thereof, unless
      a
      vote ofany
      such
      holders is required pursuant to the terms of any preferred stock designation
      certificate.




(continued)




21




**PRO** **FINANCIAL
      HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**16.
      Capital Stock, continued**




The
          board
          of directors established 5,000 shares of Series A Preferred Stock, $0.01
          par
          value (hereafter referred to as “Series A Preferred Stock”) which ranks superior
          to the common stock of the Corporation with respect to the payment of dividends
          and the distribution of assets. On December 31, 2006, the Corporation had
          issued
          1,000 shares of Series A Preferred Stock in exchange for
          cash.





The
      outstanding preferred stock has the following characteristics:





***Dividend
      Rights.*** The
      holders of shares of Series A Preferred Stock are entitled to receive dividends
      or other distributions when and as declared by the Board of Directors, out
      of
      funds legally available therefore.





***Liquidation
      Preference.*** In the
      event of any liquidation, dissolution or winding up of the affairs of the
      Corporation, whether voluntary or involuntary, the holders of Series A Preferred
      Stock are entitled to receive out of the assets of the Corporation available
      for
      distribution to shareholders, an amount equal to $100 per share of any
      distribution to holders of Common Stock of the Corporation.





***Redemption.*** **** The
      Corporation may redeem shares of Series A Preferred Stock at any time after
      issuance, at a redemption price of $100 per share. Notice of any redemption
      shall be given in person or by first class mail, postage prepaid, mailed not
      less than five days nor more than 30 days prior to the date fixed for redemption
      to the holders of record of the shares to be redeemed. After the date of
      redemption and notwithstanding the fact that any shares called for redemption
      shall not have been surrendered for cancellation, on and after such date the
      shares represented thereby called for redemption shall be deemed no longer
      outstanding, and all rights of the holders of such shares shall cease except
      for
      the right to receive the redemption value of the shares.





***No
      Voting Rights.*** Except
      as otherwise required by law, the holders of Series A Preferred Stock shall
      not
      be entitled to vote.





***Reacquired
      Shares.*** Shares
      of Series A Preferred Stock, converted, redeemed, or otherwise acquired by
      the
      Corporation shall be restored to the status of authorized and unissued shares
      of
      preferred stock without designation as to series.





***No
      Sinking Fund.*** Shares
      of Series A Preferred Stock are not subject to the operations of a sinking
      fund.





During
      2007, the preferred stock was retired and there were no outstanding preferred
      stock as of December 31, 2007.





(continued)




22




**PRO** **FINANCIAL
      HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**17.
      Fair Values of Financial Instruments**





SFAS
      No.
      107, Disclosures
      about Fair Value of Financial Instruments requires
      disclosures of fair value information about financial instruments whether or
      not
      recognized on the face of the balancesheets, for which it is practicable to
      estimate that value. The assumptions used in the estimation of the fair value
      of
      Company’s financials instruments are detailed below. Where quoted prices are not
      available, fair values are based on estimates using discounted cash flows and
      other valuation techniques. The use of discounted cash flows can be
      significantly affected by the assumptions used, including the discount rate
      and
      estimates of future cash flows. The following disclosures should not be
      considered as representative of the liquidation value of the Company, but rather
      a good faith estimate of the increase or decrease in value of financial
      instruments held by the Company since purchase, origination, or issuance.





*Cash
      and Short Term Investments* –
      For cash, due
      from banks, federal funds sold, and interest bearing deposits with other banks,
      the carrying amount is a reasonable estimate of fair value.





*Investment
      Securities Held to Maturity and Securities Available for
      Sale* –
fair
      values for investment securities are based on quoted market prices.





*Loans* –
The
      fair value of fixed rate loans is estimated by discounting the future cash
      flows
      using the current rates at which similar loans would be made to borrowers with
      similar credit ratings. For variable rate loans, the carrying amount is a
      reasonable estimate of fair value.





*Deposit
      Liabilities* –
The
      fair value of demand deposits, savings accounts and certain money market
      deposits is the amount payable on demand at the reporting date. The fair value
      of fixed maturity certificates of deposit is estimated by discounting the future
      cash flows using the rates currently offered for deposits of similar remaining
      maturities.





*Commitments
      to Extend Credit, Standby Letters of Credit and Financial Guarantees
      Written* –
Because
      commitments to extend credit and standby letters of credit are made using
      variable rates, the contract value is a reasonable estimate of fair value.





*Limitations* –
Fair
      Value estimates are made at a specific point in time, based on relevant market
      information and information about the financial instrument. These estimates
      do
      not reflect any premium or discount that could result from offering for sale
      at
      one time the Company’s entire holdings of a particular financial instrument.
      Because no market exists for a significant portion of the Company’s financial
      instruments, fair value estimates are based on many judgments. These estimates
      are subjective in nature and involve uncertainties and matters of significant
      judgment and therefore cannot be determined with precision. Changes in
      assumptions could significantly affect the estimates.





(continued)




23




**PRO** **FINANCIAL
      HOLDINGS, INC.**




**Notes
      to Consolidated Financial Statements, Continued**





**17.
      Fair Values of Financial Instruments**





Fair
      Values estimates are based on existing on and off balance sheet financial
      instruments without attempting to estimate the value of anticipated future
      business and the value of assets and liabilities that are not considered
      financial instruments. Significant assets and liabilities that are not
      considered financial instruments include the mortgage banking operations,
      brokerage network, deferred income taxes, premises and equipment and goodwill.
      In addition, the tax ramifications related to the realized gains and losses
      can
      have a significant effect on fair value estimates and have not been considered
      in the estimates.





The
      carrying amount and estimated fair values of the Company’s financial instruments
      at December 31,  2007
      are
      as follows: (in thousands)





2007Carrying
            
            EstimatedAmount
            
            Fair
                Value**Assets:**Cash
                and short term investments
            
            $
            11,509
            
            $
            11,509Securities
                available for sale
            
            
            6,379
            
            
            6,379Loans
            
            
            3,810
            
            
            3,810**Liabilities:**Deposits
            
            $
            11,619
            
            $
            11,619Repo
            
            
            101
            
            
            101**Unrecognized
                financial instruments:**Commitments
                to extend credit
            
            $
            916
            
            $
            916Standby
                letters of credit
            
            
            0
            
            
            0





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