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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







|x | Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the Quarterly Period Ended June 30, 2009

Or



| ̈ | Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

Commission file number 000-51920





INDEPENDENT BANCSHARES, INC.

(Exact name of small business issuer as specified in its charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Florida                                                        |  | 59-2869407                       
|(State or Other Jurisdiction of Incorporation or Organization) |  | (IRS Employer Identification No.)

60 SW 17thStreet

Ocala, Florida 34471

(Address of Principal Executive Offices)

352-622-2377

(Issuers
Telephone Number, Including Area Code)



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





Indicate by check mark whether the issuer
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days:    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definition of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | x

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

State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date:



|                                     |  |                  
|------------------------------------ |  | -----------------
|Common stock, par value $2 per share |  | 1,235,644 shares 
|(class)                              |  | At August 7, 2009

Transitional Small Business Format (check one):    YES   ̈    NO  x









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##### Table of Contents

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

INDEX



|                              |  |                                                                                                                 |  |      
|----------------------------- |  | --------------------------------------------------------------------------------------------------------------- |  | -----
|                              |  | Page                                                                                                           
|Part I. FINANCIAL INFORMATION |  |                                                                                                                
|                              |  |                                                                                                                
|Item 1.                       |  | Financial Statements                                                                                            |  |      
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Balance Sheets - at June 30, 2009 (Unaudited) and at December 31, 2008                   |  | 2    
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Statements of Operations (Unaudited) - Three and Six months ended June 30, 2009 and 2008 |  | 3    
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Statements of Stockholders Equity (Unaudited) - Six months ended June 30, 2009 and
2008 |  | 4    
|                              |  |                                                                                                                
|                              |  | Condensed Consolidated Statements of Cash Flows (Unaudited) - Six months ended June 30, 2009 and
2008           |  | 5    
|                              |  |                                                                                                                
|                              |  | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                |  | 6-9  
|                              |  |                                                                                                                
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                           |  | 10-16
|                              |  |                                                                                                                
|Item 3.                       |  | Quantitative and Qualitative Disclosures about Market Risk                                                      |  | 17   
|                              |  |                                                                                                                
|Item 4T.                      |  | Controls and Procedures                                                                                         |  | 17   
|                              | 
|Part II. OTHER INFORMATION    |  |                                                                                                                
|                              |  |                                                                                                                
|Item 1.                       |  | Legal Proceedings                                                                                               |  | 18   
|                              |  |                                                                                                                
|Item 1A.                      |  | Risk Factors                                                                                                    |  | 18   
|                              |  |                                                                                                                
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                     |  | 18   
|                              |  |                                                                                                                
|Item 3.                       |  | Defaults upon Senior Securities                                                                                 |  | 18   
|                              |  |                                                                                                                
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                             |  | 18-19
|                              |  |                                                                                                                
|Item 5.                       |  | Other Information                                                                                               |  | 19   
|                              |  |                                                                                                                
|Item 6.                       |  | Exhibits                                                                                                        |  | 19   
|                              | 
|SIGNATURES                    |  | 20                                                                                                             



1



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##### Table of Contents

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

($ in thousands, except share amounts)



|                                                                                                  |  |                |         |   |                    |         |  
|------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ------------------ | ------- | -
|                                                                                                  |  | AtJune 30,2009 |         |   | AtDecember 31,2008 |        
|                                                                                                  |  | (Unaudited)    |         |   |                    |        
|Assets                                                                                            |  |                |         |   |                    |         |  
|Cash and due from banks                                                                           |  | $              | 7,800   |   |                    | 6,569   |  
|Interest-earning deposits                                                                         |  |                | 74      |   |                    | 32      |  
|Federal funds sold                                                                                |  |                | 8,747   |   |                    | 3,152   |  
|                                                                                                  |  |                |         |   |                    |         |  
|                                                                                                  |  |               
|Cash and cash equivalents                                                                         |  |                | 16,621  |   |                    | 9,753   |  
|                                                                                                  |  |               
|Certificate of deposit                                                                            |  |                | 250     |   |                    | 750     |  
|Securities available for sale                                                                     |  |                | 34,428  |   |                    | 35,370  |  
|Loans, net of allowance for loan losses of $2,160 and $1,915                                      |  |                | 141,839 |   |                    | 148,493 |  
|Accrued interest receivable                                                                       |  |                | 800     |   |                    | 905     |  
|Federal Home Loan Bank stock                                                                      |  |                | 871     |   |                    | 925     |  
|Federal Reserve Bank stock                                                                        |  |                | 237     |   |                    | 237     |  
|Premises and equipment, net                                                                       |  |                | 8,615   |   |                    | 8,175   |  
|Foreclosed real estate                                                                            |  |                | 968     |   |                    | 2,021   |  
|Goodwill                                                                                          |  |                | 1,525   |   |                    | 1,525   |  
|Customer intangible, net                                                                          |  |                | 270     |   |                    | 305     |  
|Other assets                                                                                      |  |                | 3,554   |   |                    | 2,169   |  
|                                                                                                  |  |                |         |   |                    |         |  
|                                                                                                  |  |               
|Total assets                                                                                      |  | $              | 209,978 |   |                    | 210,628 |  
|                                                                                                  |  |                |         |   |                    |         |  
|                                                                                                  |  |               
|Liabilities and Stockholders Equity                                                              |  |                |         |   |                    |         |  
|                                                                                                  |  |               
|Liabilities:                                                                                      |  |                |         |   |                    |         |  
|Noninterest-bearing demand deposits                                                               |  |                | 16,881  |   |                    | 16,108  |  
|NOW, money-market and savings deposits                                                            |  |                | 85,235  |   |                    | 70,367  |  
|Time deposits                                                                                     |  |                | 79,338  |   |                    | 92,232  |  
|                                                                                                  |  |                |         |   |                    |         |  
|                                                                                                  |  |               
|Total deposits                                                                                    |  |                | 181,454 |   |                    | 178,707 |  
|                                                                                                  |  |               
|Federal Home Loan Bank advances                                                                   |  |                | 10,000  |   |                    | 10,000  |  
|Junior subordinated debenture                                                                     |  |                | 2,062   |   |                    | 2,062   |  
|Other borrowings                                                                                  |  |                | 263     |   |                    | 1,385   |  
|Accrued interest payable and other liabilities                                                    |  |                | 1,282   |   |                    | 2,041   |  
|                                                                                                  |  |                |         |   |                    |         |  
|                                                                                                  |  |               
|Total liabilities                                                                                 |  |                | 195,061 |   |                    | 194,195 |  
|                                                                                                  |  |                |         |   |                    |         |  
|                                                                                                  |  |               
|Stockholders equity:                                                                             |  |                |         |   |                    |         |  
|Common stock, $2 par value, 10,000,000 shares authorized, 1,235,644 shares issued and outstanding |  |                | 2,471   |   |                    | 2,471   |  
|Additional paid-in capital                                                                        |  |                | 8,831   |   |                    | 8,831   |  
|Retained earnings                                                                                 |  |                | 3,658   |   |                    | 5,218   |  
|Accumulated other comprehensive loss                                                              |  |                | (43     | ) |                    | (87     | )
|                                                                                                  |  |                |         |   |                    |         |  
|                                                                                                  |  |               
|Total stockholders equity                                                                        |  |                | 14,917  |   |                    | 16,433  |  
|                                                                                                  |  |                |         |   |                    |         |  
|                                                                                                  |  |               
|Total liabilities and stockholders equity                                                        |  | $              | 209,978 |   |                    | 210,628 |  
|                                                                                                  |  |                |         |   |                    |         |  

See accompanying Notes to Condensed Consolidated Financial Statements.



2



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##### Table of Contents

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share amounts)



|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|--------------------------------------------------- |  | -------------------------- | ----- | - | ------------------------ | ----- | - | ---- | ------ | - | ---- | ----- | -
|                                                    |  | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |      
|                                                    |  | 2009                       |       |   | 2008                     |       |   | 2009 |        |   | 2008 |      
|Interest income:                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|Loans                                               |  | $                          | 2,123 |   |                          | 2,513 |   |      | 4,325  |   |      | 5,155 |  
|Securities                                          |  |                            | 359   |   |                          | 487   |   |      | 734    |   |      | 953   |  
|Other                                               |  |                            | 4     |   |                          | 42    |   |      | 6      |   |      | 87    |  
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|Total interest income                               |  |                            | 2,486 |   |                          | 3,042 |   |      | 5,065  |   |      | 6,195 |  
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|                                                    |  |                            |       |  
|Interest expense:                                   |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|Deposits                                            |  |                            | 1,008 |   |                          | 1,323 |   |      | 2,141  |   |      | 2,812 |  
|Borrowings                                          |  |                            | 124   |   |                          | 143   |   |      | 239    |   |      | 293   |  
|Capitalized interest                                |  |                            |      |   |                          | (162  | ) |      |       |   |      | (164  | )
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|Total interest expense                              |  |                            | 1,132 |   |                          | 1,304 |   |      | 2,380  |   |      | 2,941 |  
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|                                                    |  |                            |       |  
|Net interest income                                 |  |                            | 1,354 |   |                          | 1,738 |   |      | 2,685  |   |      | 3,254 |  
|                                                    |  |                            |       |  
|Provision for loan losses                           |  |                            | 515   |   |                          | 238   |   |      | 1,880  |   |      | 560   |  
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|                                                    |  |                            |       |  
|Net interest income after provision for loan losses |  |                            | 839   |   |                          | 1,500 |   |      | 805    |   |      | 2,694 |  
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|                                                    |  |                            |       |  
|Noninterest income:                                 |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|Service charges on deposit accounts                 |  |                            | 110   |   |                          | 115   |   |      | 231    |   |      | 238   |  
|Brokerage fees                                      |  |                            | 107   |   |                          | 201   |   |      | 187    |   |      | 329   |  
|Gain on sale of loans                               |  |                            | 21    |   |                          | 19    |   |      | 97     |   |      | 45    |  
|Other                                               |  |                            | 95    |   |                          | 112   |   |      | 187    |   |      | 233   |  
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|Total noninterest income                            |  |                            | 333   |   |                          | 447   |   |      | 702    |   |      | 845   |  
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|                                                    |  |                            |       |  
|Noninterest expense:                                |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|Salaries and employee benefits                      |  |                            | 925   |   |                          | 1,017 |   |      | 1,886  |   |      | 2,090 |  
|Occupancy and equipment                             |  |                            | 254   |   |                          | 203   |   |      | 493    |   |      | 407   |  
|Data processing                                     |  |                            | 73    |   |                          | 144   |   |      | 137    |   |      | 312   |  
|Advertising and business development                |  |                            | 20    |   |                          | 56    |   |      | 51     |   |      | 117   |  
|Directors fees                                      |  |                            | 33    |   |                          | 40    |   |      | 66     |   |      | 80    |  
|Stationary and supplies                             |  |                            | 20    |   |                          | 26    |   |      | 40     |   |      | 53    |  
|Other                                               |  |                            | 791   |   |                          | 548   |   |      | 1,602  |   |      | 909   |  
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|Total noninterest expense                           |  |                            | 2,116 |   |                          | 2,034 |   |      | 4,275  |   |      | 3,968 |  
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|                                                    |  |                            |       |  
|Loss before income taxes                            |  |                            | (944  | ) |                          | (87   | ) |      | (2,768 | ) |      | (429  | )
|                                                    |  |                            |       |  
|Income tax benefit                                  |  |                            | (426  | ) |                          | (77   | ) |      | (1,208 | ) |      | (251  | )
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|                                                    |  |                            |       |  
|Net loss                                            |  | $                          | (518  | ) |                          | (10   | ) |      | (1,560 | ) |      | (178  | )
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|                                                    |  |                            |       |  
|Loss per share - basic                              |  | $                          | (0.42 | ) |                          | (.01  | ) |      | (1.26  | ) |      | (0.14 | )
|                                                    |  |                            |       |   |                          |       |   |      |        |   |      |       |  

See accompanying Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders Equity

Six Months Ended June 30, 2009 and 2008

($ in thousands)



|                                                                                           |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     |        |  
|------------------------------------------------------------------------------------------ |  | ------------ |  | ---------- | ----- | -------------- | ----- | ---------------- | ---------------- | - | ----------------- | ----- | - | ------------------- | ------ | -
|                                                                                           |  | Common Stock |  | Additional |       |                |       |                  | AccumulatedOther |   |                   | Total |  
|                                                                                           |  | Shares       |  | ParAmount  |       | Paid-InCapital |       | RetainedEarnings |                  |   | ComprehensiveLoss |       |   | StockholdersEquity |       
|Balance at December 31, 2007                                                               |  | 1,235,644    |  | $          | 2,471 |                | 8,831 |                  | 5,969            |   |                   | (63   | ) |                     | 17,208 |  
|                                                                                           |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     |        |  
|                                                                                           |  |              |  |            |       |               
|Comprehensive loss:                                                                        |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     |        |  
|Net loss (unaudited)                                                                       |  |             |  |            |      |                |      |                  | (178             | ) |                   |      |   |                     | (178   | )
|                                                                                           |  |              |  |            |       |               
|Change in unrealized loss on securities available for sale, net of tax benefit (unaudited) |  |             |  |            |      |                |      |                  |                 |   |                   | (162  | ) |                     | (162   | )
|                                                                                           |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     |        |  
|                                                                                           |  |              |  |            |       |               
|Comprehensive loss (unaudited)                                                             |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     | (340   | )
|                                                                                           |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     |        |  
|                                                                                           |  |              |  |            |       |               
|Balance at June 30, 2008 (unaudited)                                                       |  | 1,235,644    |  | $          | 2,471 |                | 8,831 |                  | 5,791            |   |                   | (225  | ) |                     | 16,868 |  
|                                                                                           |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     |        |  
|                                                                                           |  |              |  |            |       |               
|Balance at December 31, 2008                                                               |  | 1,235,644    |  | $          | 2,471 |                | 8,831 |                  | 5,218            |   |                   | (87   | ) |                     | 16,433 |  
|                                                                                           |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     |        |  
|                                                                                           |  |              |  |            |       |               
|Comprehensive loss:                                                                        |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     |        |  
|Net loss (unaudited)                                                                       |  |             |  |            |      |                |      |                  | (1,560           | ) |                   |      |   |                     | (1,560 | )
|                                                                                           |  |              |  |            |       |               
|Change in unrealized loss on securities available for sale, net of tax benefit (unaudited) |  |             |  |            |      |                |      |                  |                 |   |                   | 44    |   |                     | 44     |  
|                                                                                           |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     |        |  
|                                                                                           |  |              |  |            |       |               
|Comprehensive loss (unaudited)                                                             |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     | (1,516 | )
|                                                                                           |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     |        |  
|                                                                                           |  |              |  |            |       |               
|Balance at June 30, 2009 (unaudited)                                                       |  | 1,235,644    |  | $          | 2,471 |                | 8,831 |                  | 3,658            |   |                   | (43   | ) |                     | 14,917 |  
|                                                                                           |  |              |  |            |       |                |       |                  |                  |   |                   |       |   |                     |        |  

See accompanying Notes to Condensed Consolidated Financial Statements.



4



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##### Table of Contents

INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)



|                                                                                                                 |  |                          |        |   |      |        |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | ------ | -
|                                                                                                                 |  | Six Months EndedJune 30, |       
|                                                                                                                 |  | 2009                     |        |   | 2008 |       
|Cash flows from operating activities:                                                                            |  |                          |        |   |      |        |  
|Net loss                                                                                                         |  | $                        | (1,560 | ) |      | (178   | )
|Adjustments to reconcile net loss to net cash (used in) provided by operating activities:                        |  |                          |        |   |      |        |  
|Depreciation and amortization                                                                                    |  |                          | 224    |   |      | 182    |  
|Provision for loan losses                                                                                        |  |                          | 1,880  |   |      | 560    |  
|Net amortization of premiums and discounts on securities                                                         |  |                          | 36     |   |      | (79    | )
|Amortization of customer intangible                                                                              |  |                          | 35     |   |      | 35     |  
|Net decrease in accrued interest receivable                                                                      |  |                          | 105    |   |      | 112    |  
|Net increase in other assets                                                                                     |  |                          | (1,408 | ) |      | (169   | )
|Net (decrease) increase in accrued interest payable and other liabilities                                        |  |                          | (759   | ) |      | 581    |  
|Loss on sale of foreclosed real estate                                                                           |  |                          | 50     |   |      |       |  
|Writedown of foreclosed real estate                                                                              |  |                          | 516    |   |      |       |  
|                                                                                                                 |  |                          |        |   |      |        |  
|                                                                                                                 |  |                         
|Net cash (used in) provided by operating activities                                                              |  |                          | (881   | ) |      | 1,044  |  
|                                                                                                                 |  |                          |        |   |      |        |  
|                                                                                                                 |  |                         
|Cash flows from investing activities:                                                                            |  |                          |        |   |      |        |  
|Purchase of securities available for sale                                                                        |  |                          | (2,000 | ) |      | (7,642 | )
|Maturities, sales, and principal repayments of securities available for sale                                     |  |                          | 2,973  |   |      | 6,233  |  
|Net repayment (originations) of loans                                                                            |  |                          | 3,656  |   |      | (721   | )
|Purchase of premises and equipment                                                                               |  |                          | (664   | ) |      | (610   | )
|Redemption of Federal Home Loan Bank stock                                                                       |  |                          | 54     |   |      | 1      |  
|Maturities of certificates of deposit                                                                            |  |                          | 500    |   |      |       |  
|Proceeds from sale of foreclosed real estate                                                                     |  |                          | 1,605  |   |      |       |  
|                                                                                                                 |  |                          |        |   |      |        |  
|                                                                                                                 |  |                         
|Net cash provided by (used in) investing activities                                                              |  |                          | 6,124  |   |      | (2,739 | )
|                                                                                                                 |  |                          |        |   |      |        |  
|                                                                                                                 |  |                         
|Cash flows from financing activities:                                                                            |  |                          |        |   |      |        |  
|Net increase (decrease) in deposits                                                                              |  |                          | 2,747  |   |      | (10    | )
|Net (decrease) increase in other borrowings                                                                      |  |                          | (1,122 | ) |      | 312    |  
|                                                                                                                 |  |                          |        |   |      |        |  
|                                                                                                                 |  |                         
|Net cash provided by financing activities                                                                        |  |                          | 1,625  |   |      | 302    |  
|                                                                                                                 |  |                          |        |   |      |        |  
|                                                                                                                 |  |                         
|Net increase (decrease) in cash and cash equivalents                                                             |  |                          | 6,868  |   |      | (1,393 | )
|                                                                                                                 |  |                         
|Cash and cash equivalents at beginning of period                                                                 |  |                          | 9,753  |   |      | 8,729  |  
|                                                                                                                 |  |                          |        |   |      |        |  
|                                                                                                                 |  |                         
|Cash and cash equivalents at end of period                                                                       |  | $                        | 16,621 |   |      | 7,336  |  
|                                                                                                                 |  |                          |        |   |      |        |  
|                                                                                                                 |  |                         
|Supplemental disclosures of cash flow information:                                                               |  |                          |        |   |      |        |  
|Cash paid during the period for:                                                                                 |  |                          |        |   |      |        |  
|Interest                                                                                                         |  | $                        | 2,441  |   |      | 3,126  |  
|                                                                                                                 |  |                          |        |   |      |        |  
|Taxes                                                                                                            |  | $                        |       |   |      |       |  
|                                                                                                                 |  |                          |        |   |      |        |  
|                                                                                                                 |  |                         
|Noncash transactions:                                                                                            |  |                          |        |   |      |        |  
|Accumulated other comprehensive loss, net change in unrealized loss on securities available for sale, net of tax |  | $                        | 44     |   |      | (162   | )
|                                                                                                                 |  |                          |        |   |      |        |  
|                                                                                                                 |  |                         
|Transfer of loans to foreclosed real estate                                                                      |  | $                        | 1,118  |   |      | 1,776  |  
|                                                                                                                 |  |                          |        |   |      |        |  

See accompanying Notes to Condensed Consolidated Financial Statements.



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)



|1. | Basis of Presentation.In the opinion of the management of Independent BancShares, Inc. (the Holding Company), the accompanying condensed
consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position at June 30, 2009, the results of operations for the three- and six-month periods ended
June 30, 2009 and 2008 and the cash flows for the six-month periods ended June 30, 2009 and 2008. The results of operations for the three- and six-month periods ended June 30, 2009, are not necessarily indicative of results that may
be expected for the year ending December 31, 2009.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Holding Company owns 100% of the outstanding common stock of
Independent National Bank (the Bank) and HKH Financial Center, Inc. (HKH) doing business as 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.



|2. | Loans.The components of loans are summarized as follows (in thousands):
|-- | -----------------------------------------------------------------------



|                                        |  |                |         |   |                    |         |  
|--------------------------------------- |  | -------------- | ------- | - | ------------------ | ------- | -
|                                        |  | AtJune 30,2009 |         |   | AtDecember 31,2008 |        
|Commercial real estate                  |  | $              | 64,573  |   |                    | 68,036  |  
|Residential real estate and home equity |  |                | 56,910  |   |                    | 54,092  |  
|Construction and land development       |  |                | 13,276  |   |                    | 17,520  |  
|Commercial                              |  |                | 6,636   |   |                    | 8,004   |  
|Consumer                                |  |                | 2,640   |   |                    | 2,842   |  
|                                        |  |                |         |   |                    |         |  
|                                        |  |               
|Total loans                             |  |                | 144,035 |   |                    | 150,494 |  
|                                        |  |               
|Deduct:                                 |  |                |         |   |                    |         |  
|Allowance for loan losses               |  |                | (2,160  | ) |                    | (1,915  | )
|Deferred loan costs, net                |  |                | (36     | ) |                    | (86     | )
|                                        |  |                |         |   |                    |         |  
|                                        |  |               
|Loans, net                              |  | $              | 141,839 |   |                    | 148,493 |  
|                                        |  |                |         |   |                    |         |  

(continued)



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued





|3. | Loan Impairment and Loan Losses.An analysis of the change in the allowance for loan losses follows (in thousands):
|-- | ------------------------------------------------------------------------------------------------------------------



|                          |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|------------------------- |  | -------------------------- | ----- | - | ------------------------ | ----- | - | ---- | ------ | - | ---- | ----- | -
|                          |  | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |      
|                          |  | 2009                       |       |   | 2008                     |       |   | 2009 |        |   | 2008 |      
|Beginning balance         |  | $                          | 2,255 |   |                          | 1,755 |   |      | 1,915  |   |      | 1,887 |  
|Provision for loan losses |  |                            | 515   |   |                          | 238   |   |      | 1,880  |   |      | 560   |  
|Net, charge-offs          |  |                            | (610  | ) |                          | (55   | ) |      | (1,635 | ) |      | (509  | )
|                          |  |                            |       |   |                          |       |   |      |        |   |      |       |  
|                          |  |                            |       |  
|Ending balance            |  | $                          | 2,160 |   |                          | 1,938 |   |      | 2,160  |   |      | 1,938 |  
|                          |  |                            |       |   |                          |       |   |      |        |   |      |       |  

Nonaccrual and past due loans are as follows (in thousands):



|                                             |  |                 |       |                     |      
|-------------------------------------------- |  | --------------- | ----- | ------------------- | -----
|                                             |  | At June 30,2009 |       | At December 31,2008
|Nonaccrual loans                             |  | $               | 7,674 |                     | 3,213
|Past due ninety days or more, still accruing |  |                 |      |                     |     
|                                             |  |                 |       |                     |      
|                                             |  |                
|                                             |  | $               | 7,674 |                     | 3,213
|                                             |  |                 |       |                     |      

Collateral dependent impaired loans are as follows (in thousands):



|                                                                  |  |                 |       |                     |      
|----------------------------------------------------------------- |  | --------------- | ----- | ------------------- | -----
|                                                                  |  | At June 30,2009 |       | At December 31,2008
|Gross loans with a related allowance for loan loss recorded       |  | $               |      |                     |     
|Less: Allowance on these loans                                    |  |                 |      |                     |     
|Gross loans for which there is no related allowance for loan loss |  |                 | 7,163 |                     | 3,095
|                                                                  |  |                 |       |                     |      
|                                                                  |  |                
|Net investment in impaired loans                                  |  | $               | 7,163 |                     | 3,095
|                                                                  |  |                 |       |                     |      

There was no interest collected or recognized on impaired loans during the three- or six-months
ended June 30, 2009 or 2008.



|4. | Loss Per Share. Basic loss per share has been computed on the basis of the weighted-average number of shares of common stock outstanding during the periods,
which was 1,235,644 during the three-and six-month periods ended June 30, 2009 and 2008. There is no dilution to basic loss per share because the Company does not have any common stock equivalents.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. | Regulatory Capital.The Bank is required to maintain certain minimum regulatory capital requirements. At June 30, 2009 and December 31, 2008,
the Banks capital exceeded regulatory capital requirements.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(continued)



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued





|6. | Fair Value Measurements.Financial assets subject to fair value measurements on a recurring basis are as follows (in thousands):
|-- | -------------------------------------------------------------------------------------------------------------------------------



|                              |  |                                                 |        |                                                           |   |                                           |        |                                        |    
|----------------------------- |  | ----------------------------------------------- | ------ | --------------------------------------------------------- | - | ----------------------------------------- | ------ | -------------------------------------- | ---
|                              |  | Fair Value Measurements at Reporting Date Using
|                              |  | FairValue                                       |        | Quoted PricesIn ActiveMarkets forIdenticalAssets(Level 1) |   | SignificantOtherObservableInputs(Level 2) |        | SignificantUnobservableInputs(Level 3)
|As of June 30, 2009:          |  |                                                 |        |                                                           |   |                                           |        |                                        |    
|Available for sale securities |  | $                                               | 34,428 |                                                           |  |                                           | 33,912 |                                        | 516
|                              |  |                                                 |        |                                                           |   |                                           |        |                                        |    

The table below presents a reconciliation for all available-for-sale securities measured at fair
value on a recurring basis using significant unobservable inputs (Level 3) for the six-months ended June 30, 2009. These instruments were valued using pricing models and discounted cash flow methodologies incorporating assumptions that, in
managements judgment, reflect the assumptions a marketplace participant would use at June 30, 2009 (in thousands).



|                                             |  |   |     |  
|-------------------------------------------- |  | - | --- | -
|Balance, January 1, 2009                     |  | $ | 564 |  
|Total gains or losses (realized/unrealized): |  |   |     |  
|Included in operations                       |  |   |    |  
|Included in other comprehensive income       |  |   | (46 | )
|Purchases, net of repayments                 |  |   |    |  
|Transfers out of Level 3                     |  |   | (1  | )
|Non trading activity                         |  |   | (1  | )
|                                             |  |   |     |  
|                                             | 
|Balance, June 30, 2009                       |  | $ | 516 |  
|                                             |  |   |     |  

Financial assets subject to fair value measurements on a nonrecurring basis are as follows (in
thousands):



|                       |  |               |       |     |                                                |   |           |   |                                               |       |             |       |                    |      
|---------------------- |  | ------------- | ----- | --- | ---------------------------------------------- | - | --------- | - | --------------------------------------------- | ----- | ----------- | ----- | ------------------ | -----
|                       |  |               |       |     | Fair Value Measurementsat Reporting Date
Using |   |           |   | TotalLosses inOperationsDuring the Six Months
|                       |  | CarryingValue |       |     | (Level 1)                                      |   | (Level 2) |   | (Level 3)                                     |       | TotalLosses |       | EndedJune 30, 2009
|As of June 30, 2009:   |  |               |       |     |                                                |   |           |   |                                               |       |             |       |                    |      
|Impaired loans         |  | $             | 3,631 | (1) |                                                |  |           |  |                                               | 3,631 |             | 2,910 |                    | 1,627
|                       |  |               |       |     |                                                |   |           |   |                                               |       |             |       |                    |      
|                       |  |               |       |     |                                                |  
|Foreclosed real estate |  | $             | 968   |     |                                                |  |           |  |                                               | 968   |             | 1,050 |                    | 516  
|                       |  |               |       |     |                                                |   |           |   |                                               |       |             |       |                    |      
|                      

| | (1) | Loans with a carrying value of $3,532 at June 30, 2009 were measured for impairment using Level 3 inputs and had a fair value in excess of carrying value.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

(continued)



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued





|7. | Fair Value of Financial Instruments.The estimated fair values of the Companys financial instruments are as follows (in thousands):
|-- | -----------------------------------------------------------------------------------------------------------------------------------



|                                |  |                 |         |                     |         |                |         |           |        
|------------------------------- |  | --------------- | ------- | ------------------- | ------- | -------------- | ------- | --------- | -------
|                                |  | At June 30,2009 |         | At December 31,2008
|                                |  | CarryingAmount  |         | FairValue           |         | CarryingAmount |         | FairValue
|Financial assets:               |  |                 |         |                     |         |                |         |           |        
|Cash and cash equivalents       |  | $               | 16,621  |                     | 16,621  |                | 9,753   |           | 9,753  
|Certificates of deposit         |  |                 | 250     |                     | 250     |                | 750     |           | 750    
|Securities available for sale   |  |                 | 34,428  |                     | 34,428  |                | 35,370  |           | 35,370 
|Loans                           |  |                 | 141,839 |                     | 140,578 |                | 148,493 |           | 145,225
|Accrued interest receivable     |  |                 | 800     |                     | 800     |                | 905     |           | 905    
|Federal Home Loan Bank stock    |  |                 | 871     |                     | 871     |                | 925     |           | 925    
|Federal Reserve Bank stock      |  |                 | 237     |                     | 237     |                | 237     |           | 237    
|                                |  |                 |         |                    
|Financial liabilities:          |  |                 |         |                     |         |                |         |           |        
|Deposits                        |  |                 | 181,454 |                     | 181,972 |                | 178,707 |           | 178,887
|Federal Home Loan Bank advances |  |                 | 10,000  |                     | 10,634  |                | 10,000  |           | 10,370 
|Junior subordinated debentures  |  |                 | 2,062   |                     | 2,062   |                | 2,062   |           | 2,062  
|Other borrowings                |  |                 | 263     |                     | 263     |                | 1,385   |           | 1,385  
|                                |  |                 |         |                    
|Off-balance-sheet instruments   |  |                 |        |                     |        |                |        |           |       



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

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

Forward Looking Statements

Certain statements made
in this report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this report, the words may, will, should,
would, anticipate, estimate, expect, plan, believe, intend, and similar expressions identify forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by such forward-looking
statements. Factors that might cause such a difference include, but are not limited to: (1) the impact of current economic conditions, including disruptions in the housing and credit markets, either national or in the markets in which the
Company does business; (2) changes in the interest rate environment that reduce net interest margin; (3) charge-offs and loan loss provisions; (4) the ability of the Bank to maintain required capital levels and adequate sources of
funding and liquidity; (5) the impact of problems affecting issuers of investment securities the Bank holds (6) changes and trends in capital markets; (7) competitive pressures among depository institutions that increase
significantly; (8) effects of critical accounting policies and judgments; (9) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies; (10) legislative
or regulatory changes or actions, or significant litigation that adversely affect the Company or the business in which the Company is engaged; (11) ability to attract and retain key personnel; (12) ability to secure confidential
information through the use of computer systems and telecommunications network; and (13) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity, and other
factors described in our periodic reports filed with the SEC. We may update that discussion in this or another periodic report we file with the SEC thereafter. We undertake no obligation to release revisions to these forward-looking statements or to
reflect events or conditions occurring after the date of this report, except as required in our periodic reports.

General

The Holding Company owns 100% of the outstanding common stock of Independent National Bank (the Bank) and HKH Financial Center, Inc., doing
business as 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.



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES



Liquidity and Capital Resources

The Companys primary source of cash during the six-months ended June 30, 2009 was from maturities and principal repayments of securities available for sale of $3.0 million, a net increase in loan principal
repayments of $3.7 million, and an increase in deposits of $2.7 million. Cash was used primarily to purchase securities available for sale of $2 million. At June 30, 2009, the Bank exceeded its regulatory liquidity requirements.

Off-Balance Sheet Arrangements

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 include undisbursed lines of credit and construction loans, commitments to extend
credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amounts recognized in the condensed consolidated balance sheet. The contract or notional amounts of those
instruments reflect the extent of the Companys involvement in particular classes of 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 undisbursed lines of credit and
construction loans, 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.

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.



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

A summary of the amounts of the Companys financial instruments, with off-balance-sheet risk at June 30, 2009 follows (in thousands):



|                                                   |  |                |      
|-------------------------------------------------- |  | -------------- | -----
|                                                   |  | ContractAmount
|Undisbursed lines of credit and construction loans |  | $              | 3,465
|                                                   |  |                |      
|                                                   | 
|Commitments to extend credit                       |  | $              | 8,925
|                                                   |  |                |      
|                                                   | 
|Standby letters of credit                          |  | $              | 152  
|                                                   |  |                |      

Management believes that the Company has adequate resources to fund all its commitments, that a
majority of all of its existing commitments will be funded within twelve months and, if so desired, that the Company can adjust the rates and terms on time deposits and other deposit accounts to retain or obtain new deposits in a changing interest
rate environment.

Selected Ratios

The
following table shows selected ratios for the periods ended or at the dates indicated:



|                                                        |  |                             |    |  |                            |    |  |                             |   
|------------------------------------------------------- |  | --------------------------- | -- |  | -------------------------- | -- |  | --------------------------- | --
|                                                        |  | Six MonthsEndedJune 30,2009 |    |  | Year EndedDecember 31,2008 |    |  | Six MonthsEndedJune 30,2008 |   
|Average equity as a percentage of average assets        |  | 7.44                        | %  |  | 7.86                       | %  |  | 7.84                        | % 
|                                                        |  |                             |   
|Total equity to total assets at end of period           |  | 7.10                        | %  |  | 7.81                       | %  |  | 7.80                        | % 
|                                                        |  |                             |   
|Return on average assets (1)                            |  | (1.47                       | )% |  | (0.36                      | )% |  | (0.16                       | )%
|                                                        |  |                             |   
|Return on average equity (1)                            |  | (19.73                      | )% |  | (4.57                      | )% |  | (2.08                       | )%
|                                                        |  |                             |   
|Noninterest expense to average assets (1)               |  | 4.02                        | %  |  | 3.82                       | %  |  | 3.64                        | % 
|                                                        |  |                             |   
|Nonperforming loans to total loans at end of period (2) |  | 5.33                        | %  |  | 2.14                       | %  |  | 0.74                        | % 
|                                                        | 

| | (1) | Annualized for the six-months ended June 30, 2009 and 2008.
| | --- | -----------------------------------------------------------

| | (2) | Nonperforming loans consist of nonaccrual loans. There are no loans contractually past due ninety days or more that are still accruing interest.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

Results of Operations

The following table sets forth, for the
periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on
interest-bearing liabilities and the resultant average costs; (iii) net interest/dividend income; (iv) interest-rate spread; and (v) net interest margin. Yields and costs were derived by dividing annualized income or expense by the
average balance of assets or liabilities, respectively, for the periods shown. The yields and costs include certain fees which are considered to constitute adjustments to yields (dollars in thousands).



|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|---------------------------------------------------------------- |  | --------------------------- | ------- | -------------------- | ---- | ----------------- |  | ---- | -------------- |  | -------------------- | ------- |  | ----------------- | ----- | - |  | ---- | -
|                                                                 |  | Three Months Ended June 30, |        
|                                                                 |  | 2009                        |         |                      | 2008 |                  
|                                                                 |  | AverageBalance              |         | InterestandDividends |      | AverageYield/Rate |  |      | AverageBalance |  | InterestandDividends |         |  | AverageYield/Rate |      
|Interest-earning assets:                                         |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Loans                                                            |  | $                           | 143,284 |                      |      | 2,123             |  | 5.93 | %              |  | $                    | 149,482 |  |                   | 2,513 |   |  | 6.72 | %
|Securities                                                       |  |                             | 35,897  |                      |      | 359               |  | 4.01 |                |  |                      | 43,193  |  |                   | 487   |   |  | 4.50 |  
|Other interest-earning assets (1)                                |  |                             | 8,423   |                      |      | 4                 |  | 0.17 |                |  |                      | 7,001   |  |                   | 42    |   |  | 2.40 |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Total interest-earning assets                                    |  |                             | 187,604 |                      |      | 2,486             |  | 5.30 |                |  |                      | 199,676 |  |                   | 3,042 |   |  | 6.09 |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Noninterest-earning assets                                       |  |                             | 25,371  |                      |      |                   |  |      |                |  |                      | 19,489  |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Total assets                                                     |  | $                           | 212,975 |                      |      |                   |  |      |                |  | $                    | 219,165 |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Interest-bearing liabilities:                                    |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Savings, NOW and money-market deposits                           |  |                             | 77,537  |                      |      | 246               |  | 1.28 |                |  |                      | 75,456  |  |                   | 288   |   |  | 1.53 |  
|Time deposits                                                    |  |                             | 88,467  |                      |      | 762               |  | 3.49 |                |  |                      | 92,162  |  |                   | 1,035 |   |  | 4.49 |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Total interest-bearing deposits                                  |  |                             | 166,004 |                      |      | 1,008             |  | 2.46 |                |  |                      | 167,618 |  |                   | 1,323 |   |  | 3.16 |  
|                                                                 |  |                             |         |                      |      |                  
|Borrowed funds                                                   |  |                             | 12,580  |                      |      | 124               |  | 3.98 |                |  |                      | 14,698  |  |                   | 143   |   |  | 3.89 |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Capitalized interest                                             |  |                             |         |                      |      |                  |  |      |                |  |                      |         |  |                   | (162  | ) |  |      |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Total interest-bearing liabilities                               |  |                             | 178,584 |                      |      | 1,132             |  | 2.57 |                |  |                      | 182,316 |  |                   | 1,304 |   |  | 2.86 |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Noninterest-bearing demand deposits                              |  |                             | 17,803  |                      |      |                   |  |      |                |  |                      | 18,526  |  |                   |       |   |  |      |  
|Noninterest-bearing liabilities                                  |  |                             | 593     |                      |      |                   |  |      |                |  |                      | 1,335   |  |                   |       |   |  |      |  
|Stockholders equity                                             |  |                             | 15,995  |                      |      |                   |  |      |                |  |                      | 16,988  |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Total liabilities and stockholders equity                       |  | $                           | 212,975 |                      |      |                   |  |      |                |  | $                    | 219,165 |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Net interest income                                              |  |                             |         |                      | $    | 1,354             |  |      |                |  |                      |         |  | $                 | 1,738 |   |  |      |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Interest-rate spread                                             |  |                             |         |                      |      |                   |  | 2.73 | %              |  |                      |         |  |                   |       |   |  | 3.23 | %
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Net interest margin (2)                                          |  |                             |         |                      |      |                   |  | 2.90 | %              |  |                      |         |  |                   |       |   |  | 3.48 | %
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                  
|Ratio of interest-earning assets to interest-bearing liabilities |  |                             | 1.05    |                      |      |                   |  |      |                |  |                      | 1.10    |  |                   |       |   |  |      |  
|                                                                 |  |                             |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  



|(1) | Includes interest-earning deposits, federal funds sold and Federal Home Loan Bank and Federal Reserve Bank stock.
|--- | -----------------------------------------------------------------------------------------------------------------

|(2) | Net interest margin is annualized net interest income divided by average interest-earning assets.
|--- | -------------------------------------------------------------------------------------------------



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average costs; (iii) net interest/dividend income; (iv) interest-rate spread;
and (v) net interest margin. Yields and costs were derived by dividing annualized income or expense by the average balance of assets or liabilities, respectively, for the periods shown. The yields and costs include certain fees which are
considered to constitute adjustments to yields (dollars in thousands).



|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|---------------------------------------------------------------- |  | ------------------------- | ------- | -------------------- | ---- | ----------------- |  | ---- | -------------- |  | -------------------- | ------- |  | ----------------- | ----- | - |  | ---- | -
|                                                                 |  | Six Months Ended June 30, |        
|                                                                 |  | 2009                      |         |                      | 2008 |                  
|                                                                 |  | AverageBalance            |         | InterestandDividends |      | AverageYield/Rate |  |      | AverageBalance |  | InterestandDividends |         |  | AverageYield/Rate |      
|Interest-earning assets:                                         |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Loans                                                            |  | $                         | 141,943 |                      |      | 4,325             |  | 6.09 | %              |  | $                    | 150,235 |  |                   | 5,155 |   |  | 6.86 | %
|Securities                                                       |  |                           | 35,736  |                      |      | 734               |  | 4.11 |                |  |                      | 42,354  |  |                   | 953   |   |  | 4.50 |  
|Other interest-earning assets (1)                                |  |                           | 8,828   |                      |      | 6                 |  | 0.14 |                |  |                      | 6,281   |  |                   | 87    |   |  | 2.77 |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Total interest-earning assets                                    |  |                           | 186,507 |                      |      | 5,065             |  | 5.43 |                |  |                      | 198,870 |  |                   | 6,195 |   |  | 6.23 |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Noninterest-earning assets                                       |  |                           | 26,169  |                      |      |                   |  |      |                |  |                      | 19,299  |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Total assets                                                     |  | $                         | 212,676 |                      |      |                   |  |      |                |  | $                    | 218,169 |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Interest-bearing liabilities:                                    |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Savings, NOW and money-market deposits                           |  |                           | 79,454  |                      |      | 507               |  | 1.29 |                |  |                      | 76,901  |  |                   | 706   |   |  | 1.84 |  
|Time deposits                                                    |  |                           | 86,313  |                      |      | 1,634             |  | 3.84 |                |  |                      | 90,040  |  |                   | 2,106 |   |  | 4.68 |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Total interest-bearing deposits                                  |  |                           | 165,767 |                      |      | 2,141             |  | 2.62 |                |  |                      | 166,941 |  |                   | 2,812 |   |  | 3.37 |  
|                                                                 |  |                           |         |                      |      |                  
|Borrowed funds                                                   |  |                           | 12,588  |                      |      | 239               |  | 3.86 |                |  |                      | 14,421  |  |                   | 293   |   |  | 1.79 |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|Capitalized interest                                             |  |                           |         |                      |      |                  |  |      |                |  |                      |         |  |                   | (164  | ) |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Total interest-bearing liabilities                               |  |                           | 178,355 |                      |      | 2,380             |  | 2.71 |                |  |                      | 181,362 |  |                   | 2,941 |   |  | 3.24 |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Noninterest-bearing demand deposits                              |  |                           | 17,885  |                      |      |                   |  |      |                |  |                      | 18,560  |  |                   |       |   |  |      |  
|Noninterest-bearing liabilities                                  |  |                           | 623     |                      |      |                   |  |      |                |  |                      | 1,144   |  |                   |       |   |  |      |  
|Stockholders equity                                             |  |                           | 15,813  |                      |      |                   |  |      |                |  |                      | 17,103  |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Total liabilities and stockholders equity                       |  | $                         | 212,676 |                      |      |                   |  |      |                |  | $                    | 218,169 |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Net interest income                                              |  |                           |         |                      | $    | 2,685             |  |      |                |  |                      |         |  | $                 | 3,254 |   |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Interest-rate spread                                             |  |                           |         |                      |      |                   |  | 2.72 | %              |  |                      |         |  |                   |       |   |  | 2.99 | %
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Net interest margin (2)                                          |  |                           |         |                      |      |                   |  | 2.91 | %              |  |                      |         |  |                   |       |   |  | 3.27 | %
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                  
|Ratio of interest-earning assets to interest-bearing liabilities |  |                           | 1.05    |                      |      |                   |  |      |                |  |                      | 1.10    |  |                   |       |   |  |      |  
|                                                                 |  |                           |         |                      |      |                   |  |      |                |  |                      |         |  |                   |       |   |  |      |  



|(1) | Includes interest-earning deposits, federal funds sold and Federal Home Loan Bank and Federal Reserve Bank stock.
|--- | -----------------------------------------------------------------------------------------------------------------

|(2) | Net interest margin is annualized net interest income divided by average interest-earning assets.
|--- | -------------------------------------------------------------------------------------------------



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

Comparison of the Three-Month Periods Ended June 30, 2009 and 2008

General Operating Results.Net loss for the quarter ended June 30, 2009 was $518,000 or $0.42 per basic share compared to net loss of $10,000 or $0.01 per basic share for the quarter ended
June 30, 2008. The second quarter 2009 loss was caused by credit-related expenses of $135,000 for foreclosed real estate write downs, $65,000 for foreclosed real estate expenses and loss on sale of foreclosed real estate included in other
expenses, and a $515,000 provision for loan losses.

The Company does not have any sub-prime securities in its investment portfolio. The
sustained level of liquidity and conservative nature of investments helps offset the increased level of risk in the loan portfolio. The Company does not use brokered deposits and its loan to deposit ratio is 79.36%.

Interest Income.Interest income declined $556,000 to $2.5 million for the three-month period ended June 30, 2009, compared to $3.0 million for the
three-month period ended June 30, 2008. The decline was due to a decrease in the average yield of earning assets from 6.09% to 5.30%, a decrease in average loans outstanding of $6.2 million, and the reversal of interest on nonaccrual loans of
$33,000.

Interest Expense.Interest expense decreased $172,000 from $1.3 million for the three-month period ended June 30, 2008,
compared to $1.1 million for the three-month period ended June 30, 2009. The decrease was due to repricing of deposits, which lowered the average rate paid to 2.46% from 3.16%.

Provision for Loan Losses.The provision for loan loss is a current period expense charged to operations to bring total loan loss allowance to a level deemed appropriate by management. The provision is
based upon the volume and type of lending conducted by the Company, general economic conditions, particularly as they relate to the Companys market area, and other factors related to the collectability of the Companys loan portfolio. The
Company recorded provisions of $515,000 and $238,000, for the three-month periods ended June 30, 2009 and 2008, respectively. During the three-month period ending June 30, 2009, the Company posted net charge offs of $610,000 to the
allowance for loan losses, due primarily to loans that were written down to the market value of the collateral. At June 30, 2009, the allowance for loan losses was $2.2 million or 1.50% of gross loans. In response to market conditions, the
Companys allowance for loan losses has increased from 1.27% of loans at June 30, 2008, to 1.50% of loans at June 30, 2009. Management continues aggressively working on its collection efforts and continues to increase the level of
monitoring for the loan portfolio. The Company has never participated in any type of sub-prime lending. Management believes the allowance for loan losses of $2.2 million at June 30, 2009, is adequate. However, if market conditions continued to
deteriorate, additional provisions for loan losses may be necessary.

Noninterest Income.Noninterest income declined $ 114,000 to $333,000
for the three-month period ended June 30, 2009, compared to $447,000 for the three-month period ended June 30, 2008. The decline was due primarily to a $94,000 decrease in brokerage fee income.

Noninterest Expense.Noninterest expense increased $82,000, from $2.0 million for the three-month period ended June 30, 2008, to $2.1 million for the
three-month period ended June 30, 2009. The increase was attributable to expenses related to foreclosed real estate of $200,000, and the FDIC special assessment of $98,000. The balance of noninterest expense to operate the Company decreased
$216,000 for the three-month period ended June 30, 2009, as compared to the same period in 2008.

Income Taxes.The Company
benefited from an income tax credit of $426,000 for the three-month period ended June 30, 2009, compared to a benefit of $77,000 for the three-month period ended June 30, 2008.



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES

Comparison of the Six-Month Periods Ended June 30, 2009 and 2008

General Operating Results.Net losses for the six-month period ended June 30, 2009 was $1.6 million or $1.26 per basic share, compared to net losses of $178,000 or $0.14 per basic share for the
comparable period in 2008. The net loss was a result of a provision for loan loss of $1.9 million, and the expense to carry foreclosed real estate of $596,000.

The Company does not have any sub-prime securities in its investment portfolio. The sustained level of liquidity and conservative nature of investments helps offset the increased level of risk in the loan portfolio.
The Company does not use brokered deposits. The loan to deposit ratio at June 30, 2009 is 79.36%.

Interest Income.Interest income
decreased $1.1 million to $5.1 million for the six-month period ended June 30, 2009, compared to $6.2 million for the six-month period ended June 30, 2008. The decrease was due to a drop in the average yield of earning assets from 6.23% to
5.43%, a decrease in average loans outstanding of $8.3 million, and the reversal of interest on nonaccrual loans of $115,000.

Interest Expense.Interest expense decreased $561,000 to $2.4 million for the six-month period ended June 30, 2009, compared to $2.9 million for the six-month period ended June 30, 2008. The decrease was due to repricing of deposits, which lowered
the average rate paid to 2.62% from 3.37%.

Provision for Loan Losses.The provision for loan losses is charged to operations to bring the
total loan loss allowance to a level deemed appropriate by management. The provision is based upon the volume and type of lending conducted by the Company, industry standards, general economic conditions, particularly as they relate to the
Companys market area, and other factors related to the Companys loan portfolio. The Company recorded provisions for loan losses for the six-month periods ended June 30, 2009 and 2008 of $1.9 million and $560,000, respectively.
During the six-month period ending June 30, 2009, the Company posted net charge offs of $1.6 million to the allowance for loan losses, due primarily to charge-offs on loans transferred to foreclosed real estate. At June 30, 2009, the
allowance for loan losses was $2.2 million or 1.50% of gross loans. In response to market conditions the Companys allowance for loan losses has increased form 1.27% of loans at June 30, 2008 to 1.50% at June 30, 2009. Management is
aggressively working on its collection effort and continues to increase the level of monitoring of the loan portfolio. The Company has never participated in any type of sub-prime lending. Management believes that the allowance for loan losses of
$2.2 million at June 30, 2009 is adequate. However, if market conditions continue to deteriorate, additional provisions for loan losses may be necessary.

Noninterest Income.Noninterest income decreased $143,000 during the six-month period ended June 30, 2009. The decrease was due to a decline in brokerage fees of $142,000.

Noninterest Expense.Noninterest expense increased $306,000 to $4.3 million for the six-month period ended June 30, 2009, as compared to $4.0 million
for the same period in 2008. The increase in expenses can be attributed to foreclosed real estate expenses of $596,000, and FDIC special assessment of $98,000. Expenses of core operations decreased $290,000 for the period ended June 30, 2009
compared to the same period in 2008.

Income Taxes.The Company benefited from an income tax credit of $1.2 million for the six-month period
ended June 30, 2009, compared to an income tax credit of $251,000 for the six-month period ended June 30, 2008.



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES





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

None applicable



|Item 4T. | Controls and Procedures
|-------- | -----------------------

Evaluation of Disclosure Controls and
Procedures

The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports
that the Company files or submits under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon
managements evaluation of those controls and procedures performed within the 90 days preceding the filing of this Report, the Chief Executive Officer and Chief Financial Officer of the Company concluded that, subject to the limitations noted
below, the Companys disclosure controls and procedures (as defined in Rule 13a-14 under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or
submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.

Changes in Internal Controls Over Financial Reporting

There have been no changes in the Companys internal control over financial reporting during the first six months of 2009 that have materially affected or are reasonably likely to materially affect the Companys internal control
over financial reporting.

Limitations on the Effectiveness of Controls

Our management (including our Chief Executive Officer and Chief Financial Officer) does not expect that our financial reporting, disclosure controls and
other internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because
of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override or the control.

The design of the system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES



Part II - OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

There are no material pending
legal proceeding to which the Holding Company or any of its subsidiaries is a party or to which any of their property is subject.



|Item 1A. | Risk Factors
|-------- | ------------

None applicable



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

None applicable



|Item 3. | Defaults upon Senior Securities
|------- | -------------------------------

None applicable



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

The Annual
Meeting of Shareholders (the Annual Meeting) of the Holding Company was held on June 17, 2009, to elect eleven directors of the Company to serve in such capacity for the next year, and to ratify the appointment of Hacker,
Johnson & Smith PA, as the Companys independent auditors for the year ending December 31, 2009. At the Annual Meeting, 1,172,878 shares were present, in person or by proxy, out of a total of 1,235,644 issued and outstanding as of
the record date. Listed below are the results of the matters subject to a vote of security holders:

Proposal 1: Election of Directors



|                               |  |           |  |         |  |         
|------------------------------ |  | --------- |  | ------- |  | --------
|Name of Nominee                |  | For       |  | Against |  | Withhold
|Charles H. Deters              |  | 1,170,119 |  |        |  | 2,759   
|Jeremy J. Deters               |  | 1,170,119 |  |        |  | 2,759   
|David A. Dizney                |  | 1,170,119 |  |        |  | 2,759   
|Robert A. Ellinor              |  | 1,170,119 |  |        |  | 2,759   
|Billy G. Gadd                  |  | 1,170,119 |  |        |  | 2,759   
|Digvijay L. Gaekwad            |  | 1,170,119 |  |        |  | 2,759   
|Mark A. Imes                   |  | 1,170,119 |  |        |  | 2,759   
|Deborah A. Klugger             |  | 1,170,119 |  |        |  | 2,759   
|John L. Peterson, D.V.M.       |  | 1,170,119 |  |        |  | 2,759   
|Lanford T. Slaughter, D.D.S.   |  | 1,170,119 |  |        |  | 2,759   
|Frank E. Stafford, Jr., C.P.A. |  | 1,170,119 |  |        |  | 2,759   



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES



Proposal 2: Ratification of Hacker, Johnson & Smith PA



|        |  |               
|------- |  | --------------
|        |  | Voting Results
|For     |  | 1,170,569     
|Against |  | 652           
|Abstain |  | 1,657         



|Item 5. | Other Information
|------- | -----------------

None applicable



|Item 6. | Exhibits
|------- | --------



|            |  |                                                                                                                                             
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibit                                                                                                                      
|31.1        |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - President and Chief Executive Officer                             
|            | 
|31.2        |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer                                           
|            | 
|32.1        |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - President and Chief Executive Officer, and Chief Financial Officer



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INDEPENDENT BANCSHARES, INC. AND SUBSIDIARIES



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.

Date: August 7, 2009



INDEPENDENT BANCSHARES, INC.(Registrant)By:

/s/ Mark A. ImesName:

Mark A. Imes, President andChief Executive Officer(Principal Executive Officer)By:

/s/ Nicholas J. PanicaroName:

Nicholas J. Panicaro, Chief Financial Officer(Principal Financial and Accounting Officer)




20