<PAGE>

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                      2001
                                   FORM 10-K
(MARK ONE)
     [X]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001       COMMISSION FILE NUMBER 0-18179

                                       OR
     [ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934

                             HARRIS BANKCORP, INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                            <C>
                  DELAWARE                                      36-2722782
(State or other jurisdiction of incorporation      (I.R.S. Employer Identification No.)
              or organization)
  111 WEST MONROE STREET, CHICAGO, ILLINOIS                        60603
  (Address of principal executive offices)                      (Zip Code)
</Table>

                                  312/461-2121
              (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

          Securities registered pursuant to Section 12(g) of the Act:
                      COMMON STOCK, $8 PAR VALUE PER SHARE

Indicate by check mark whether the registrant (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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

All voting stock (6,667,490 shares of Common Stock, $8 par value) is owned by
Bankmont Financial Corp., a wholly-owned Delaware subsidiary of Bank of
Montreal.

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION (I) (1) (a)
AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM 10-K WITH A REDUCED
DISCLOSURE FORMAT.

                      Documents incorporated by reference:
                                      NONE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                        FORM 10-K CROSS REFERENCE INDEX

<Table>
<Caption>
                                                                             PAGE
                                                                             ----
<S>           <C>                                                            <C>
                                     PART I
Item 1        Business....................................................     2
Item 2        Properties..................................................     6
Item 3        Legal Proceedings...........................................     6
Item 4        Submission of Matters to a Vote of Security Holders
              (during the fourth quarter of 2001).........................     6

                                     PART II
Item 5        Market for Registrant's Common Equity and Related
              Stockholder Matters.........................................     6
Item 6        Selected Financial Data.....................................     8
Item 7        Management's Discussion and Analysis of Financial Condition
              and Results of Operations...................................    10
Item 7A       Quantitative and Qualitative Disclosures About Market
              Risk........................................................    10
Item 8        Financial Statements and Supplementary Data:
              Quarterly Financial Data....................................    50
              Consolidated Statements of Income...........................    51
              Consolidated Statements of Comprehensive Income.............    52
              Consolidated Statements of Condition........................    53
              Statements of Changes in Stockholder's Equity...............    54
              Consolidated Statements of Cash Flows.......................    55
              Notes to the Financial Statements...........................    56
              Joint Independent Auditors..................................    95
              Independent Auditors' Report................................    95
Item 9        Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure....................................    96

                                    PART III
Item 10       Directors and Executive Officers of the Registrant..........    96
Item 12       Security Ownership of Certain Beneficial Owners and
              Management..................................................    97

                                     PART IV
Item 14       Exhibits, Financial Statement Schedules and Reports on Form
              8-K.........................................................    97
Signatures................................................................    98
</Table>

                                        1
<PAGE>

                                     PART I

ITEM 1 -- BUSINESS

BUSINESS OVERVIEW

     Harris Bankcorp, Inc. ("Bankcorp" or the "Corporation") is a Delaware
multibank holding company headquartered in Chicago. Bankcorp is a wholly-owned
subsidiary of Bankmont Financial Corp. ("Bankmont"), a wholly-owned U.S.
subsidiary of Bank of Montreal ("BMO"). Bankcorp is registered as a financial
holding company pursuant to the Gramm-Leach-Bliley Financial Modernization Act
of 1999.

     On July 1, 2000, Bankmont contributed 100 percent of the common stock of
its wholly-owned subsidiary, Harris Bankmont, Inc. to the Corporation.
Immediately thereafter, Harris Bankmont, Inc. was liquidated and dissolved into
the Corporation under the corporation law of Delaware. Harris Bankcorp, Inc. was
the surviving corporation. The assets of Harris Bankmont, Inc. consisted
primarily of the stock of thirteen community banks located in the Chicago area.
This combination was accounted for at historical cost, similar to a pooling of
interests. All historical information is presented on a combined basis.

     Bankcorp provides banking, trust and other financial services domestically
and internationally through 28 bank and 10 active nonbank subsidiaries and an
Edge Act subsidiary. The bank subsidiaries include Harris Trust and Savings
Bank; Harris Bank Barrington, N.A.; Harris Bank Frankfort; Harris Bank Glencoe-
Northbrook, N.A.; Harris Bank Hinsdale, N.A.; Harris Bank Joliet, N.A.; Harris
Bank Libertyville; Harris Bank Naperville; Harris Bank Roselle; Harris Bank
Argo; Harris Bank Wilmette, N.A.; Harris Bank Winnetka, N.A.; Harris Bank St.
Charles; Harris Bank Batavia, N.A.; Harris Bank Palatine, N.A.; Harris Bank
Oakbrook Terrace; Harris Bank Arlington Meadows; Harris Bank Bartlett; Harris
Bank Hoffman-Schaumburg; Harris Bank Aurora, N.A.; Harris Bank Woodstock;
Suburban Bank of Barrington; Harris Bank Elk Grove, N.A.; Harris Bank Marengo;
Harris Bank Cary-Grove; Harris Bank Westchester; Harris Bank Huntley; and Harris
Trust Bank of Arizona. In addition, Harris Bankcorp and its parent Bankmont
together own HarrisTrust/Bank of Montreal, a full service bank located in West
Palm Beach, Florida. Nonbank subsidiaries consist of trust companies and other
specialized financial services companies, including Harris Investment
Management, Inc., a registered investment adviser, and Harris Preferred Capital
Corporation ("HPCC"), a real estate investment trust ("REIT"). For further
information on publicly traded preferred stock issued by HPCC, see Item
5 -- Market for Registrant's Common Equity and Related Stockholder Matters
section on page 6. Throughout this Form 10-K ("Report"), the term "Corporation"
refers to Harris Bankcorp, Inc. and subsidiaries.

     Bankcorp's lead bank subsidiary is Harris Trust and Savings Bank ("HTSB"),
an Illinois state-chartered bank with its principal office, 52 domestic branch
offices and 101 automated teller machines ("ATMs") located in the Chicago area.
Additionally, HTSB has offices in Atlanta, Detroit, Los Angeles and San
Francisco; a foreign branch office in Nassau; and an Edge Act subsidiary, Harris
Bank International Corporation ("HBIC"), in New York.

     HTSB provides a variety of banking and financial services to commercial and
industrial companies, financial institutions, governmental units, not-for-profit
organizations and individuals throughout the U.S. and abroad. Services rendered
and products sold to customers include numerous types of demand, savings and
time deposit accounts; certificates of deposit; various types of loans including
term, real estate and those under lines of credit and revolving credit
facilities; sales and purchases of foreign currencies; interest rate management
products including swaps, forward rate agreements and interest rate guarantees;
cash management services including lockbox and controlled disbursement
processing; underwriting of municipal bonds; and financial consulting.
Additionally, HTSB trades foreign currencies and a variety of debt securities
for its own account and utilizes interest rate swaps, financial futures and
options, principally to manage its risk exposure.

     In March 2000, the Corporation sold its corporate trust business. In
separate and unrelated transactions, the indenture trust business was sold to a
subsidiary of The Bank of New York Company, Inc., and the shareholder services
business to Computershare Limited. The combined sales resulted in a pretax gain
to the Corporation of $47.0 million.

                                        2
<PAGE>

     In December 2000, the Corporation sold its merchant card business to the
credit card processing joint venture (Moneris) formed between Bank of Montreal
and Royal Bank of Canada. The sale resulted in a pretax gain to Harris Bankcorp
of $60.2 million, which was eliminated in the consolidation of the Corporation's
results with Bank of Montreal.

     In July 2001, Bankmont acquired First National Bancorp, Inc. and its wholly
owned subsidiary, First National Bank of Joliet ("Joliet"). First National
Bancorp, Inc. was merged with and into Bankmont, followed by a capital
contribution of Joliet stock to the Corporation which resulted in approximately
$220 million of incremental capital. On the date of acquisition, Joliet had
total assets amounting to $1.1 billion, $860 million in total deposits and $1.0
billion in total liabilities. The purchase price was $220 million.

     HTSB's overseas activities are conducted through its foreign branch and
HBIC. Services include various types of loans and deposits, letters of credit,
personal trust services, export and import financing and foreign exchange
products. See the International Banking section on page 47.

     HTSB's Trust Department furnishes a variety of trust services to
individuals, businesses, municipalities and charitable organizations. HTSB acts
as trustee of personal, corporate, pension and other employee benefit trusts;
serves as executor and administrator of estates; and, until the sale of these
businesses in the spring of 2000, acted as stock and bond registrar and transfer
agent, dividend reinvestment agent and paying agent.

     The Corporation's segments are identified by the customers served, the
products and services they offer and the channels by which the products and
services are delivered. The Corporation's reportable segments are Personal and
Commercial Client Group, Investment Banking Group, Private Client Group, and
Emfisys and Corporate Support. Personal and Commercial Client Group comprises
both community banking, which serves individuals through a Chicagoland retail
bank network and small business/lower middle-market banking. The Investment
Banking Group is comprised of the Corporation's corporate banking distribution
to middle-market companies across the Midwest and nationally in selected
specialties, and the Corporation's Treasury group which serves as the
Corporation's funding unit. The Private Client Group serves the needs of
affluent individuals both within Chicagoland and nationally through the
integrated delivery of a comprehensive offering of wealth management services,
including investment management, personal trust, customized lending and
financial planning. Businesses within this group include private banking, mutual
fund management, retirement plan services and Harris Investment Management (the
Corporation's institutional investment manager). Emfisys is the technology and
e-business group that provides information technology planning, strategy and
development services, together with transaction-processing capabilities, North
American cash management solutions and real estate operations. Corporate Support
includes the corporate units that provide expertise and governance support for
the Bank in areas such as law, finance, internal audit, risk management,
corporate communications, human resources, and learning. Corporate Support also
reflects income from bank-owned insurance and inter-group eliminations and
residual revenues and expenses, representing the difference between actual
amounts incurred and the amounts allocated to operating segments. The gains on
the sales of the corporate trust and merchant card businesses and the results of
the corporate trust and the merchant card businesses, prior to their sale in
2000, are also reflected in this segment. For further information on operating
results by segment, see the Operating Segment Review section on page 13.

FORWARD-LOOKING INFORMATION

     This Report contains certain forward-looking statements and information
based on the beliefs of, and information currently available to, the
Corporation's management, as well as estimates and assumptions made by the
Corporation's management. Forward-looking statements, which describe future
plans, strategies and expectations of the Corporation, are generally
identifiable by use of words such as "anticipate," "believe," "will,"
"estimate," "expect," "future," "intend," "plan," "project," "target" and
similar expressions. The Corporation's ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could have a material adverse effect on the operations and future prospects of
the Corporation include, but are not limited to, changes in: interest rates,
general economic conditions, legislative or regulatory environment, monetary and
fiscal policies of the U.S. Government, including policies of the U.S. Treasury
and

                                        3
<PAGE>

the Federal Reserve Board, the quality or composition of the loan or securities
portfolios, demand for loan products, deposit flows, competition, demand for
financial services in the Corporation's market areas, unforeseen business risks
and accounting principles, policies and guidelines. These risks and
uncertainties should be considered in evaluating forward-looking statements. The
Corporation assumes no obligation to update any such forward-looking statements.

HARRIS BANKCORP GROWTH STRATEGY

     The Corporation is the centerpiece of Bank of Montreal's U.S. growth
strategy. This strategy has three components as the Corporation expands in
concentric circles from its Chicago base. The first goal is to make the
Corporation the dominant full-service bank in Chicagoland. A second goal is to
leverage the Harris franchise to become the premier mid-market
corporate/investment bank centered in the U.S. Midwest and build on BMO Nesbitt
Burns' North American strengths in high-growth sectors such as energy, media and
telecommunications. By combining the long-standing strengths and expertise of
Harris private banking and BMO Nesbitt Burns full-service brokerage, the third
broad goal is to expand the private client franchise in the sunbelt and other
fast-growing affluent urban centers across the United States.

     The Corporation's 2002 objectives incorporate the first goal through a plan
to sustain strong retail and small business lending growth, targeting to
increase loans outstanding by more than $1 billion per year for the next several
years and continue to assess strategic merger and acquisition opportunities.
These objectives will be pursued by the community banking group reflected in the
Personal and Commercial Client Group.

     Building on the successful integration of the mid-market corporate and
investment banking units in 2001, which are part of the Investment Banking Group
operating segment, 2002 objectives include the acceleration of the development
of top-tier, multi-product, lead client relationships with continued
double-digit growth in investment banking revenues. The integration of the
mid-market corporate and investment banking units allows the Corporation to
offer corporate and institutional customers complete financial services,
including raising capital, lending, mergers and acquisitions, financial
advisory, investment, operating and wealth management services. The recognized
Harris brand and reputation as a trusted advisor will assist as the Group
continues to focus on building new client relationships while deepening
relationships with existing clients.

     The Private Client Group operating segment objectives call for a
continuation of the expansion of the wealth management business through both
acquisition and organic growth by leveraging the Corporation's long-standing
reputation in major markets while expanding into selective new markets across
the country. The focus remains on growing the advisory salesforce to better
serve clients' evolving needs. The Group is working to establish a national
platform to accelerate the expansion of its wealth management franchise and
increase the U.S. client base. In the fourth quarter, the first integrated
Private Client Group office began to provide customers one-stop access to all
the Group's products and services, with a second integrated office planned for
the first quarter of 2002.

     Since 1994, Bankcorp has turned in consistent growth in earnings and
profitability. 2001 net income has more than doubled to $251.8 million excluding
the special provision for loan losses and special charge for the impairment in
the value of certain equity investments. Excluding the aforementioned special
charges, the Corporation's compound annual growth rate from 1994 to 2001 was
13%. Since 1994, in Chicagoland, Bankcorp has substantially built a retail bank,
tripling its customer base from 300,000 to more than 1,000,000; increased market
penetration from 1 household in 14 in 1994 to 1 household in 5 today; and
tripled distribution from 40 to 147 branches, including state-of-the-art
"multi-channel" delivery, call center, internet, and data mining capability.
Retail deposit share has more than tripled during the period and Bankcorp is now
the number two home equity lender based upon loan originations.

     Bankcorp has carved out a unique "locally rooted/centrally leveraged"
market position by keeping local bank charters; stripping out and centralizing
overhead and operations and creating a network of local marketing, sales and
service units. At the same time Bankcorp is achieving a reduction in branch
headcount, with levels of customer satisfaction which surveys show to be above
Bankcorp's large bank competitors. Bankcorp has set a goal to become the
dominant full-service bank in Chicagoland, through building small business,
private, commercial and corporate mid-market segments across Chicagoland, on top
of a retail
                                        4
<PAGE>

distribution system already in place. Specifically, Bankcorp has imported BMO's
capability and business model in retail/small business lending to grow our
retail lending and small business loans by $1 billion per year; and leveraging
our strong multi-channel distribution and customer base.

     While Bankcorp has an internal growth strategy for various U.S. lines of
business, it will continue to assess selective merger, acquisition and joint
venture opportunities either directly or indirectly in conjunction with
Bankmont, to strategically enhance organic growth. 2001 included the acquisition
by Bankmont of First National Bancorp, Inc. and its wholly owned subsidiary,
First National Bank of Joliet ("Joliet"). First National Bancorp, Inc. was
merged with and into Bankmont, followed by a capital contribution of Joliet
stock to the Corporation. This added approximately $565 million in loans and
$860 million in deposits. The acquisition of CSFBdirect Inc., closed in February
2002 as a subsidiary of Bankmont, is another significant step forward in
selective expansion in the U.S. CSFBdirect Inc. provides a significant national
franchise to the Corporation's integrated U.S. wealth management business and is
aligned with its strategy. Bankcorp will continue to grow and expand in
Chicagoland, the Midwest and beyond. The combined target for the Corporation
remains sustained double-digit growth in earnings, with cash ROE targeted to
reach the 20% level by 2003.

EFFECT OF GOVERNMENT POLICIES

     The operations of the Corporation are affected by general economic
conditions and the policies of various governmental regulatory authorities. In
particular, the Federal Reserve System regulates money and credit conditions and
interest rates in order to influence general economic conditions, primarily
through open market operations in U.S. Government securities, varying the
discount rate on bank borrowings, setting reserve requirements against financial
institution deposits and prescribing minimum capital requirements for member
banks. These policies have a significant influence on overall growth and
distribution of bank loans, investments and deposits, and affect interest rates
charged on loans and earned on investments or paid for time, savings and other
deposits. Federal Reserve Board monetary policies have had a significant effect
on the operating results of commercial banks in the past and this is expected to
continue. The effect of such policies upon the future business and earnings of
the Corporation cannot accurately be predicted.

REGULATION AND SUPERVISION

     Bankcorp is a legal entity, separate and distinct from its subsidiaries.
There are various legal limitations on the ability of its banking subsidiaries
to finance or otherwise supply funds to Bankcorp or various of its other
affiliates. Notes 15 and 16 to the Financial Statements on pages 86 through 88
of this Report provide details with respect to regulatory capital and dividend
restrictions.

     In addition, the banking subsidiaries are subject to certain restrictions
on any extensions of credit to Bankcorp and (with certain exceptions) other
affiliates, on investments in stock or other securities thereof and on the
taking of such securities as collateral for loans. As a bank holding company,
Bankcorp is subject to the Bank Holding Company Act of 1956, as amended, which
generally limits the activities of the holding company and its subsidiaries to
those so closely related to banking or managing or controlling banks as to be a
proper incident thereto. The Gramm-Leach-Bliley Financial Modernization Act of
1999 generally broadens the ability of eligible bank holding companies,
including Bankcorp, to affiliate with other industries, particularly insurance
and investment banking and to engage in activities which are financial in
nature. Regulatory authorities have issued regulations implementing the Act's
provisions. The Corporation's ongoing strategic analysis will include the impact
of the regulations on its business.

     Bankcorp and its banking subsidiaries are subject to regulation by various
state and Federal authorities. Applicable laws and regulations relate to
reserves, deposit insurance, investments, loans, mergers and consolidations,
issuance of securities, payment of dividends, capital adequacy and other aspects
of their operations. Bankcorp and its nonbank subsidiaries are affiliates of the
banking subsidiaries within the meaning of the Federal Reserve Act and the
Illinois Banking Act. Certain nonbank subsidiaries including the trust
companies, Harris Investment Management, Inc., HPCC and others are subject to a
variety of state and Federal regulations.

                                        5
<PAGE>

COMPETITION

     Active competition exists in all principal geographic and product line
areas in which the Corporation is presently engaged. Competitors include other
commercial banks, investment banks, savings and loan associations, finance
companies, credit unions, insurance companies, mutual funds, mortgage banks,
investment managers and advisors, leasing companies, other domestic and foreign
financial institutions and various nonfinancial intermediaries.

EMPLOYEES

     The Corporation and HTSB had full-time equivalent employees of 6,015 and
4,339, respectively, at December 31, 2001.

ITEM 2 -- PROPERTIES

     The Corporation's headquarters and HTSB's main banking premises are located
at 111 West Monroe Street, Chicago, Illinois. This bank and office building
complex is comprised of three connected buildings containing a total of
approximately 1,590,000 gross square feet. Approximately 52 percent of the
rentable space is committed to use by HTSB. Virtually all of the remaining space
in the entire building complex has been rented to tenants, including BMO. A
subsidiary of HTSB holds title to this property, which is used by all of the
Corporation's segments.

     On December 17, 2001 HTSB sold to a third party its fifteen-story
operations center containing approximately 415,000 gross square feet located at
311 West Monroe Street, Chicago, Illinois, and leased back approximately 259,000
rentable square feet The lease ends on December 31, 2011. HTSB has rights of
first offering to lease additional space and options to extend to December 31,
2026. The remainder of the building will be occupied by third-party tenants. The
sale resulted in a realized gain of $1 million and a deferred gain of $17
million as of December 31, 2001.

     In addition, HTSB owns or leases premises at other locations to conduct
branch banking activities which are part of the Chicagoland Banking group.

     Certain banking subsidiaries, other than HTSB, individually own premises
used to conduct banking business. Nonbank subsidiaries, certain branches and
divisions of HTSB and certain other subsidiaries conduct activities from leased
premises.

ITEM 3 -- LEGAL PROCEEDINGS

     For information on the Corporation's legal proceedings, see Note 17 to
Financial Statements on page 88 of this Report.

ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of the stockholder during the fourth
quarter of 2001.

                                    PART II

ITEM 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Bankmont presently owns all 6,667,490 shares of the voting stock of
Bankcorp, which are not listed or traded on any securities exchange. In 2001,
Bankcorp declared and paid to Bankmont approximately $264 million in cash
dividends on common stock and $18 million in cash dividends on preferred stock.
In 2000, Bankcorp declared and paid to Bankmont approximately $152 million in
cash dividends on common stock and $18 million in cash dividends on preferred
stock. There was also a noncash distribution of $2 million to Bankmont in 2000.
In 1999, Bankcorp declared and paid to Bankmont approximately $74 million in
cash dividends on common stock and $18 million in cash dividends on preferred
stock. At December 31, 2001, 2000 and 1999, the Corporation's equity capital
included $245 million of preferred stock, respectively.

     In 1998, HPCC issued $250 million of 7 3/8% noncumulative, exchangeable
Series A preferred stock. The preferred stock, which is listed and traded on the
New York Stock Exchange, is nonvoting except in certain

                                        6
<PAGE>

circumstances as outlined in HPCC's Form S-11 Registration Statement ("S-11").
Dividends on the preferred stock are noncumulative and are payable at the rate
of 7 3/8% per annum of the $25 per share liquidation preference. The preferred
shares can be redeemed in whole or in part at HPCC's option on or after March
30, 2003 or upon the occurrence of a tax event as defined in the S-11. Upon the
occurrence of specific events described in the S-11, including HTSB becoming
less than "adequately capitalized," HTSB being placed into conservatorship or
receivership or the Board of Governors of the Federal Reserve Bank directing
such an exchange, each preferred share would be exchanged automatically for one
newly issued HTSB preferred share. HPCC paid $18 million of dividends on
preferred stock in both 2000 and 1999.

                                        7
<PAGE>

ITEM 6 -- SELECTED FINANCIAL DATA
                     HARRIS BANKCORP, INC. AND SUBSIDIARIES
                 COMPARATIVE CONSOLIDATED STATEMENTS OF INCOME

<Table>
<Caption>
                                                                              FOR THE YEARS ENDED DECEMBER 31
                                                          -----------------------------------------------------------------------
                                                             2001           2000           1999           1998           1997
                                                             ----           ----           ----           ----           ----
                                                                          (FULLY TAXABLE EQUIVALENT (FTE) BASIS)
                                                           (IN THOUSANDS EXCEPT PER SHARE DATA, RATIOS AND NUMBER OF EMPLOYEES)
<S>                                                       <C>            <C>            <C>            <C>            <C>
INTEREST INCOME
Loans, including fees.................................    $1,123,202     $1,275,391     $1,029,314     $1,007,719     $1,027,951
Money market assets:
 Deposits at banks....................................         3,553          5,589          1,486         10,833         31,466
 Federal funds sold and securities purchased under
   agreement to resell................................        13,150         16,817         12,403         12,298         16,022
Trading account.......................................         4,782          4,600          5,609          4,965          4,638
Securities available-for-sale.........................       518,122        608,080        508,344        433,316        358,138
                                                          ----------     ----------     ----------     ----------     ----------
       Total interest income..........................     1,662,809      1,910,477      1,557,156      1,469,131      1,438,215
                                                          ----------     ----------     ----------     ----------     ----------
INTEREST EXPENSE
Domestic deposits.....................................       482,252        584,836        481,436        516,174        443,880
Foreign deposits......................................        84,758        146,907         79,420         66,555         96,832
Short-term borrowings.................................       218,085        371,831        217,642        178,490        159,087
Senior notes..........................................        33,997         52,309         69,027         47,690         39,883
Minority interest -- dividends on preferred stock of
 subsidiary...........................................        18,438         18,437         18,437         16,389             --
Long-term notes.......................................        31,906         37,058         32,486         30,748         27,798
                                                          ----------     ----------     ----------     ----------     ----------
       Total interest expense.........................       869,436      1,211,378        898,448        856,046        767,480
                                                          ----------     ----------     ----------     ----------     ----------
Net Interest Income...................................       793,373        699,099        658,708        613,085        670,735
Provision for loan losses.............................       220,135         34,052         27,880         30,818         59,527
                                                          ----------     ----------     ----------     ----------     ----------
Net Interest Income after Provision for Loan Losses...       573,238        665,047        630,828        582,267        611,208
                                                          ----------     ----------     ----------     ----------     ----------
NONINTEREST INCOME
Trust and investment management fees..................       118,982        128,579        156,577        144,334        134,198
Money market and bond trading.........................        16,818          8,974          8,893         10,512          7,269
Foreign exchange......................................         8,833          7,225          8,314          6,772          5,364
Merchant and charge card fees.........................           151         21,199         30,440         27,040         50,390
Service fees and charges..............................       123,654        117,196        124,706        117,696        105,107
Securities gains......................................        43,057         15,015         14,553         27,150         13,585
Gain on sale of credit card portfolio.................            --             --             --         12,000             --
Gain on sale of corporate trust business..............            --         46,993             --             --             --
Gain on sale of merchant card business................            --         60,162             --             --             --
Bank-owned insurance..................................        47,226         45,076         41,414         32,339         12,917
Other.................................................        92,993         85,955         94,767         89,196         63,541
                                                          ----------     ----------     ----------     ----------     ----------
       Total noninterest income.......................       451,714        536,374        479,664        467,039        392,371
                                                          ----------     ----------     ----------     ----------     ----------
NONINTEREST EXPENSES
Employment............................................       442,426        418,262        443,727        409,604        394,527
Net occupancy.........................................        51,350         55,616         52,617         55,292         60,458
Equipment.............................................        59,364         56,153         63,695         54,883         50,329
Marketing.............................................        38,326         31,697         31,395         26,763         26,740
Other.................................................       155,776        136,346        152,921        159,907        150,161
                                                          ----------     ----------     ----------     ----------     ----------
                                                             747,242        698,074        744,355        706,449        682,215
Goodwill and other valuation intangibles..............        28,295         25,409         25,828         24,917         28,659
                                                          ----------     ----------     ----------     ----------     ----------
       Total noninterest expenses.....................       775,537        723,483        770,183        731,366        710,874
                                                          ----------     ----------     ----------     ----------     ----------
FTE pretax income.....................................       249,415        477,938        340,309        317,940        292,705
Applicable income taxes...............................        47,434        130,171         74,932         79,586         80,418
FTE adjustment........................................        36,009         42,940         38,833         35,674         31,733
                                                          ----------     ----------     ----------     ----------     ----------
       Net Income.....................................       165,972        304,827        226,544        202,680        180,554
Dividends on preferred stock..........................        18,044         18,044         18,044         18,044         18,044
                                                          ----------     ----------     ----------     ----------     ----------
Net income applicable to common stock.................    $  147,928     $  286,783     $  208,500     $  184,636     $  162,510
                                                          ==========     ==========     ==========     ==========     ==========
PER COMMON SHARE STATISTICS
Net income applicable to common stock.................    $    22.19     $    43.01     $    31.27     $    27.69     $    24.38
Common stock dividends................................         39.60          22.80          11.13          28.27           7.84
Average common shares outstanding (in thousands)......         6,667          6,667          6,667          6,667          6,667
PROFITABILITY RATIOS
Net income:
 % Average total assets...............................          0.58           1.08           0.88           0.87           0.85
 % Average common stockholder's equity................          7.88          18.50          13.85          12.19          11.31
 % Average total assets (cash basis*).................          0.65           1.15           0.95           0.95           0.96
 % Average common stockholder's equity (cash
   basis*)............................................         10.46          23.09          18.14          16.30          16.10
Net income excluding non-recurring items:
 % Average total assets...............................          0.90(1)        0.84(2)        0.88           0.87           0.85
 % Average common stockholder's equity................         12.71(1)       14.11(2)       13.85          12.19          11.31
 % Average total assets (cash basis*).................          0.97(1)        0.91(2)        0.95           0.95           0.96
 % Average common stockholder's equity (cash
   basis*)............................................         16.17(1)       17.91(2)       18.14          16.30          16.10
NUMBER OF EMPLOYEES AT YEAR-END (full-time equivalent
 basis)...............................................         6,015          5,565          6,543          6,672          7,000
</Table>

-------------------------
(1) Excludes for 2001 $125 million pretax third quarter special provision for
    loan losses, $9 million pretax impairment in the value of certain equity
    securities and contribution of businesses sold in 2000 and related tax
    effects.

(2) Excludes for 2000 $60.2 million pretax gain on sale of merchant card and
    contribution, and $47 million pretax gain on sale of corporate trust
    business and contribution and related tax effects.

 * See the Return on Assets and Common Stockholder's Equity section of this
   Report on page 24 for further information.

                                        8
<PAGE>

                     HARRIS BANKCORP, INC. AND SUBSIDIARIES

                COMPARATIVE CONSOLIDATED STATEMENTS OF CONDITION

<Table>
<Caption>
                                                                        YEARS ENDED DECEMBER 31
                                                -----------------------------------------------------------------------
                                                   2001           2000           1999           1998           1997
                                                   ----           ----           ----           ----           ----
                                                    (DAILY AVERAGES, IN THOUSANDS EXCEPT RATIOS AND PER SHARE DATA)
<S>                                             <C>            <C>            <C>            <C>            <C>

ASSETS

Cash and demand balances due from banks.......  $ 1,066,414    $ 1,295,123    $ 1,382,951    $ 1,333,883    $ 1,290,231
Money market assets:
  Interest-bearing deposits at banks..........      197,773        205,120        167,211        297,709        601,705
  Federal funds sold and securities purchased
    under agreement to resell.................      362,066        257,297        240,997        224,643        291,964
Securities available-for-sale.................    9,039,156      9,129,803      8,252,218      6,852,886      5,463,296
Trading account assets........................       71,476         60,377         82,691         78,805         68,336
Domestic loans, net of unearned income........   15,608,611     15,069,847     13,707,631     12,840,181     12,089,835
Foreign office loans, net of unearned
  income......................................      178,193        155,645        139,798        123,705         90,584
                                                -----------    -----------    -----------    -----------    -----------
        Total loans...........................   15,786,804     15,225,492     13,847,429     12,963,886     12,180,419
Allowance for possible loan losses............     (202,122)      (167,041)      (158,830)      (147,182)      (149,602)
                                                -----------    -----------    -----------    -----------    -----------
    Net loans.................................   15,584,682     15,058,451     13,688,599     12,816,704     12,030,817
Premises and equipment........................      405,019        393,980        416,447        362,635        322,364
Customers' liability on acceptances...........       27,528         38,240         41,893         42,864         62,547
Bank-owned insurance..........................      928,682        862,231        744,573        592,460        236,704
Goodwill and other valuation intangibles......      288,565        237,438        263,273        281,894        304,409
Other assets..................................      654,948        670,175        576,310        544,139        504,420
                                                -----------    -----------    -----------    -----------    -----------
        Total assets..........................  $28,626,309    $28,208,235    $25,857,163    $23,428,622    $21,176,793
                                                ===========    ===========    ===========    ===========    ===========

LIABILITIES

Demand deposits...............................  $ 2,866,518    $ 3,146,273    $ 3,183,193    $ 3,602,985    $ 3,314,442
Interest checking deposits....................      427,527        348,608        301,408        488,439      1,034,069
Money market accounts.........................    5,897,170      5,260,012      4,997,657      3,574,106      2,501,080
Savings deposits and certificates.............    6,036,077      5,549,719      5,419,662      5,657,129      5,458,826
Other time deposits...........................    1,559,212      1,833,713      1,700,593      1,733,510        914,836
Deposits in foreign offices...................    2,071,563      2,340,022      1,627,569      1,279,126      1,795,952
                                                -----------    -----------    -----------    -----------    -----------
        Total deposits........................   18,858,067     18,478,347     17,230,082     16,335,295     15,019,205
Short-term borrowings.........................    5,532,651      6,036,980      4,494,119      3,474,556      3,056,380
Short-term notes -- senior....................      808,014        822,283      1,322,518        855,366        695,329
Acceptances outstanding.......................       27,535         38,216         41,906         42,866         62,561
Other liabilities.............................      442,359        286,471        293,734        304,904        262,144
Minority interest -- preferred stock of
  subsidiary..................................      250,000        250,000        250,000        221,918             --
Long-term notes...............................      585,380        500,523        474,512        433,869        399,192
                                                -----------    -----------    -----------    -----------    -----------
        Total liabilities.....................   26,504,006     26,412,820     24,106,871     21,668,774     19,494,811
Preferred stock...............................      245,000        245,000        245,000        245,000        245,000
Common stockholder's equity...................    1,877,303      1,550,415      1,505,292      1,514,848      1,436,982
                                                -----------    -----------    -----------    -----------    -----------
        Total liabilities and stockholder's
          equity..............................  $28,626,309    $28,208,235    $25,857,163    $23,428,622    $21,176,793
                                                ===========    ===========    ===========    ===========    ===========
RATIOS (PERCENTAGE OF TOTAL AVERAGE ASSETS)
Money market assets...........................         1.96%          1.64%          1.58%          2.23%          4.22%
Securities available-for-sale and trading
  account assets..............................        31.83          32.58          32.23          29.59          26.12
Loans, net of unearned income.................        55.15          53.98          53.55          54.81          57.52
Deposits......................................        65.88          65.51          66.64          69.72          70.92
Short-term borrowings (including senior
  notes)......................................        22.15          24.32          22.50          18.48          17.72
Common stockholder's equity...................         6.56           5.50           5.82           6.47           6.79

SELECTED YEAR-END DATA
Loans, net of unearned income.................  $15,953,439    $15,549,468    $14,447,674    $13,511,091    $12,192,237
Allowance for possible loan losses............      292,278        170,417        162,134        153,484        143,586
        Total assets..........................   29,046,107     28,966,476     27,180,496     25,111,805     22,223,637
Deposits......................................   19,226,349     19,114,976     17,380,475     17,389,073     16,298,498
Long-term notes...............................      671,972        534,899        474,673        474,387        399,278
Preferred stock -- Series A...................      200,000        200,000        200,000        200,000        200,000
Preferred stock -- Series B...................       45,000         45,000         45,000         45,000         45,000
Common stockholder's equity...................    1,952,114      1,785,308      1,489,000      1,554,999      1,524,975
YEAR-END COMMON STOCKHOLDER'S EQUITY PER
  COMMON SHARE................................  $    292.78    $    267.76    $    223.34    $    233.24    $    228.73
</Table>

                                        9
<PAGE>

ITEM 7  -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The areas requiring significant management
judgement include the provision and allowance for possible loan losses, income
tax valuation allowances, the valuation of intangible assets, and temporary vs.
other than temporary impairment in investment securities. Management has
established guidelines and policies for these areas which are summarized below.

     The provision for loan losses is based upon management's estimate of
potential loan losses and its evaluation of the adequacy of the allowance for
possible loan losses. Factors which influence management's judgement in
estimating loan losses and the adequacy of the allowance include the impact of
anticipated general economic conditions, the nature and volume of the current
loan portfolio, historical loss experience, and the balance of the allowance in
relation to total loans outstanding and the evaluation of risks associated with
nonperforming loans. A critical component of establishing and maintaining
adequate reserve protection is the Corporation's capability to recognize and
report changes in its risk profile (specifically, identifying potential problem
loan situations) in an accurate and timely manner. For further information on
the provision, see the discussion of the Provision and Allowance for Possible
Loan Losses section on page 43.

     Income tax valuation allowances are recorded against deferred tax assets
when management believes that it is more likely than not that the deferred tax
asset will not be realized. In determining the realizability of deferred tax
assets and whether a valuation allowance is needed, management assesses existing
carryback ability, expectations as to future taxable income, and the timing for
reversal of deferred tax liabilities.

     In valuing intangible assets and goodwill, management follows a process to
allocate the cost of an acquired entity to the assets acquired and liabilities
assumed based on their estimated fair values at acquisition date. Among sources
of relevant information, independent appraisals and valuations, present value
calculations and current replacement costs are used in determining estimated
fair values. Assets acquired and liabilities assumed are analyzed by major
categories. The excess of the cost over the net of the amounts assigned to the
assets acquired and liabilities assumed is recognized as goodwill. An intangible
asset is recognized as an asset apart from goodwill if it arises from
contractual or other legal rights or if it is separable, that is, it is capable
of being separated or divided from the acquired entity. For example, the
depositor relationship associated with deposit liabilities is considered
separable because it can be sold or exchanged in combination with the related
deposit liabilities in an observable transaction. Therefore, the depositor
relationship is considered an intangible asset (i.e. deposit premium) and is
recognized apart from goodwill. Management utilizes the previously mentioned
methods to value the deposit premium.

     In making a determination of temporary vs. other than temporary impairment
of an investment, a major consideration of management is whether the Corporation
will be able to collect all amounts due according to the contractual terms of
the investment. Such a determination involves estimation of the outcome of
future events as well as knowledge and experience about past and current events.
Factors considered include the following: whether the fair value is
significantly below cost and the decline is attributable to specific adverse
conditions in an industry or geographic area; the period of time the decline in
fair value has existed; if an outside rating agency has downgraded the
investment; if dividends have been reduced or eliminated; if

                                        10
<PAGE>

scheduled interest or principal payments have not been made and finally, whether
the financial condition of the issuer has deteriorated.

SUMMARY

2001 COMPARED TO 2000

     The Corporation had 2001 earnings of $166.0 million, a 46 percent decrease
from $304.8 million in 2000. Earnings comparability for 2001 and 2000 was
affected by the sale of the Corporation's corporate trust business in first
quarter 2000 and the sale of its merchant card business in December 2000.
Excluding the effect of the $47.0 million pretax gain on sale of the corporate
trust business and related operating results, and the $60.2 million pretax gain
from the sale of the merchant card business and related operating results, year
2000 earnings were $236.8 million. In addition, the Corporation announced two
special charges for the current year, a third quarter special provision for loan
losses of $125 million and a special pretax charge of $9.0 million in the fourth
quarter relating to impairments in the value of certain equity investments.
Excluding the effect of these special charges and the impact of divested
businesses, earnings were $256.6 million, representing an increase of 8 percent
over last year. This increase was attributable to continued strong business
growth in consumer, mortgage and small business loans and retail deposits, and a
more favorable interest rate environment that contributed to greater earnings
from treasury and trading activities. These were largely offset by an increased
loan loss provision associated with the impact of a weakened economy primarily
on the Bank's corporate loan portfolio, and by expenses related to business
growth and expansion.

     Cash return on average common stockholder's equity ("cash ROE") represents
net income applicable to common stock plus after-tax amortization expense of
goodwill and other valuation intangibles, divided by average common
stockholder's equity less average intangible assets. Excluding the special
charges described above and gains and related operating results from businesses
sold in 2000, cash ROE was 16.17 percent for 2001 compared to cash ROE of 17.91
percent for 2000. Cash return on average assets ("cash ROA") represents net
income plus after-tax amortization expense of goodwill and other valuation
intangibles, divided by average assets less average intangible assets. Excluding
the special charges described above and gains and related operating results of
businesses sold in 2000, cash ROA was 0.97 percent in 2001 compared to 0.91
percent in the prior year.

     Net interest income on a fully taxable equivalent basis was $793.4 million,
up $94.3 million or 13 percent from $699.1 million in 2000, primarily resulting
from an increase in net interest margin to 3.12 percent from 2.78 percent in
2000. This increase reflects the impact of a declining interest rate environment
during the past year and a higher mix of retail funding. Average earning assets
rose from $25.11 billion to $25.44 billion in the current year, primarily
attributable to an increase of 4 percent or $561 million in average loans,
partially offset by a decrease of $379 million in the investment securities
portfolio. Consumer, mortgage and small business loans grew by $1.35 billion or
21 percent, of which 4 percent was attributable to Joliet.

     Noninterest income was $451.7 million. Excluding the special $9.0 million
writedown of equity securities in 2001 and the effect of gains and operating
revenue from the businesses sold in 2000, noninterest income increased 15
percent from 2000. Net gains from portfolio securities increased $28.0 million,
bond trading profits increased $7.8 million and service fees and charges
increased $6.5 million. Other income, which includes syndication fees, mortgage
loan sales and other gains and fee income, increased $9.2 million from 2000.
Trust and investment management fees decreased $9.6 million and merchant and
charge card fees declined $21.0 million, both declines resulting from the
divestiture of businesses in the prior year.

     Year 2001 noninterest expenses of $775.5 million increased $52.1 million or
7 percent from last year. Excluding post-acquisition operating expenses for
Joliet and expenses associated with businesses sold in 2000, noninterest
expenses increased 8 percent, reflecting expansion initiatives in our retail,
private client and corporate and investment banking businesses. Income taxes
declined by $82.7 million during the current year, reflecting lower pretax
income in 2001.

     The provision for loan losses was $220.1 million in 2001, including the
$125 million special provision for loan losses in the third quarter 2001,
compared to $34.1 million in 2000. Net loan charge-offs during the

                                        11
<PAGE>

current year were $104.5 million compared to $26.3 million in the same period
last year, reflecting higher write-offs primarily in the corporate loan
portfolio.

     Nonperforming assets at December 31, 2001 totaled $216 million or 1.35
percent of total loans, compared to $107 million or 0.69 percent a year earlier.
Most of the increase from December 31, 2000 is comprised of loans to corporate
borrowers in different industry sectors experiencing the effects of a weakened
economy. At December 31, 2001, the allowance for possible loan losses was $292
million, equal to 1.83 percent of loans outstanding compared to $170 million at
the end of 2000, equal to 1.10 percent of loans outstanding. The ratio of the
allowance for possible loan losses to nonperforming assets was 135 percent at
December 31, 2001 compared to 159 percent at December 31, 2000.

     At December 31, 2001, consolidated equity capital of the Corporation
amounted to $2.20 billion, up from $2.03 billion at December 31, 2000. Bankcorp
paid $264 million in dividends on common stock and $18 million of preferred
dividends in 2001. Unrealized securities gains, net of tax, were $37 million at
December 31, 2001 compared to unrealized securities losses, net of tax, of $11
million at December 31, 2000. At December 31, 2001 and 2000, the Corporation's
equity capital included $245 million of preferred stock.

     The Corporation's regulatory capital leverage ratio was 7.32 percent in
2001 compared to 7.15 percent in 2000. Regulators require most banking
institutions to maintain capital leverage ratios of not less than 4.0 percent.
At December 31, 2001, the Corporation's Tier 1 and total risk-based capital
ratios were 9.30 percent and 12.31 percent, respectively, compared to respective
ratios of 9.14 percent and 11.79 percent at December 31, 2000. The 2001 year-end
risk-based capital ratios substantially exceeded minimum required regulatory
ratios of 4.0 percent and 8.0 percent, respectively.

2000 COMPARED TO 1999

     On July 1, 2000, Bankmont contributed 100 percent of the common stock of
its wholly-owned subsidiary, Harris Bankmont, Inc. to the Corporation.
Immediately thereafter, Harris Bankmont, Inc. was liquidated and dissolved into
the Corporation under the corporation law of Delaware. Harris Bankcorp, Inc. was
the surviving corporation. The assets of Harris Bankmont, Inc. consisted
primarily of the stock of thirteen community banks located in the Chicago area.
This combination was accounted for at historical cost, similar to a pooling of
interests. All historical information is presented on a combined basis.

     The Corporation had 2000 earnings of $304.8 million, a 35 percent increase
from $226.5 million in 1999. Earnings comparability for 2000 was affected by
both the sale of the Corporation's corporate trust business in first quarter
2000 and the sale of its merchant card business in December 2000. Excluding the
effect of the $47.0 million pretax gain on sale of the corporate trust business
and related charges, and the $60.2 million pretax gain from the sale of the
merchant card business and related operating results, year 2000 earnings were
$236.8 million, representing an increase of 5 percent over 1999. The merchant
card business was sold to the credit card processing joint venture (Moneris)
formed between Bank of Montreal and Royal Bank of Canada, and the resulting gain
was eliminated in the consolidation of the Corporation's results with Bank of
Montreal. 2000 earnings reflected strong earnings growth in the Corporation's
core businesses, partially offset by the impact of higher interest rates during
the year on securities portfolio earnings and the increased provision for loan
losses associated with a slowing economy.

     For 2000, cash ROE, excluding gains and operating results from the sale of
the corporate trust business and the merchant card business sold in 2000, was
17.91 percent compared to cash ROE of 18.14 percent for 1999. Cash ROA,
excluding gains and related results of businesses sold in 2000, was 0.91 percent
in 2000 compared to 0.95 percent in 1999.

     Net interest income on a fully taxable equivalent basis was $699.1 million,
up $40.4 million or 6 percent from $658.7 million in 1999, resulting from 11
percent growth in earning assets, partially offset by a reduction in net
interest margin. Net interest margin declined from 2.90 percent to 2.78 percent
currently, reflecting the impact of a rising rate environment during 2000.
Average earning assets rose from $22.69 billion to $25.11 billion in 2000,
attributable to an increase of 10 percent or $1.38 billion in commercial and
consumer loans and residential mortgages, and an increase of $1.01 billion in
the investment securities portfolio.

                                        12
<PAGE>

     Noninterest income of $536.4 million was up $56.7 million or 12 percent
year-to-year. Excluding the effect of gains from the corporate trust and
merchant card businesses sold in 2000, noninterest income decreased 11 percent
from 1999. The decline was primarily caused by year-to-year reductions in
operating revenues from the corporate trust business sold in first quarter 2000.
Trust and investment management fees declined $28.0 million or 18 percent from
the prior year while service fees and charges declined $7.5 million or 6
percent. Merchant and charge card fees declined $9.2 million. Income from
bank-owned insurance investments increased $3.7 million or 9 percent from 1999
due to increased investment balances. Other income, which includes syndication
fees, mortgage loan sales and other gains and fee income, decreased $8.8 million
from 1999. Gains from sales of securities were slightly higher compared to 1999,
$15.0 million compared to $14.6 million in 1999. Trading profits remained
relatively flat compared to 1999.

     Year 2000 noninterest expenses of $723.5 million decreased $46.7 million or
6 percent from 1999, primarily reflecting a decline from 1999 operating expense
for the corporate trust business sold in first quarter 2000, and one-time
systems expenditures related to Y2K made in 1999. Income taxes rose by $55.2
million during 2000, reflecting substantially higher pretax income.

     The 2000 provision for loan losses of $34.1 million was up $6.2 million or
22 percent from 1999. Net loan charge-offs during the current year were $26.3
million compared to $19.2 million in the same period of 1999, reflecting higher
write-offs in the commercial loan portfolio.

     Nonperforming assets at December 31, 2000 totaled $107 million, or 0.69
percent of total loans, compared to $30 million or 0.21 percent a year earlier.
Most of the increase from December 31, 1999 was comprised of five loans in the
shared national credit portfolio ranging in size from $8 million to $17 million,
to borrowers in five different industry sectors. At December 31, 2000, the
allowance for possible loan losses was $170 million, equal to 1.10 percent of
loans outstanding compared to $162 million at the end of 1999, equal to 1.12
percent of loans outstanding. The ratio of the allowance for possible loan
losses to nonperforming assets was 159 percent at December 31, 2000 compared to
546 percent at December 31, 1999.

     At December 31, 2000, consolidated equity capital of the Corporation
amounted to $2.03 billion, up from $1.73 billion at December 31, 1999. Bankcorp
paid $152 million in dividends on common stock and $18 million of preferred
dividends. Unrealized securities losses, net of tax, were $11 million at
December 31, 2000 compared to unrealized securities losses, net of tax, of $161
million at December 31, 1999. At December 31, 2000 and 1999, the Corporation's
equity capital included $245 million of preferred stock.

     The Corporation's regulatory capital leverage ratio was 7.15 percent in
2000 compared to 7.03 percent in 1999. Regulators require most banking
institutions to maintain capital leverage ratios of not less than 4.0 percent.
At December 31, 2000, the Corporation's Tier 1 and total risk-based capital
ratios were 9.14 percent and 11.79 percent, respectively, compared to respective
ratios of 9.03 percent and 11.68 percent at December 31, 1999. The 2000 year-end
risk-based capital ratios substantially exceeded minimum required regulatory
ratios of 4.0 percent and 8.0 percent, respectively.

OPERATING SEGMENT REVIEW

     The Corporation's segments are identified by the customers served, the
products and services they offer and the channels by which the products and
services are delivered. The Corporation's reportable segments are Personal and
Commercial Client Group, Investment Banking Group, Private Client Group, and
Emfisys and Corporate Support. Personal and Commercial Client Group comprises
community banking, which serves individuals through a Chicagoland retail bank
network, and small business/lower middle-market banking. The Investment Banking
Group is comprised of the Corporation's corporate banking distribution to
middle-market companies across the Midwest and nationally in selected
specialties, and the Corporation's Treasury group which serves as the
Corporation's funding unit. The Private Client Group serves the needs of
affluent individuals both within Chicagoland and nationally through the
integrated delivery of a comprehensive offering of wealth management services,
including investment management, personal trust, customized lending and
financial planning. Businesses within this group include private banking, mutual
fund management, retirement plan services and Harris Investment Management (the
Corporation's institutional investment manager). Emfisys is the technology and
e-business group that provides information technology

                                        13
<PAGE>

planning, strategy and development services, together with
transaction-processing capabilities, North American cash management solutions
and real estate operations. Corporate Support includes the corporate units that
provide expertise and governance support for the Bank in areas such as law,
finance, internal audit, risk management, corporate communications, human
resources, and learning. Corporate Support also reflects income from bank-owned
insurance and inter-group eliminations and residual revenues and expenses,
representing the difference between actual amounts incurred and the amounts
allocated to operating segments. The gains on the sales of the corporate trust
business and merchant card businesses and the results of the corporate trust and
the merchant card businesses, prior to their sale in 2000, are also reflected in
this segment.

     Segment results are presented on a fully taxable equivalent ("FTE") basis
and income tax expense is allocated to the segments by an application of the
Corporation's statutory tax rate to the pretax FTE basis profit or loss of each
segment. Segment data includes intersegment revenues, as well as corporate
overhead costs allocated to each segment based upon estimated usage of centrally
provided services. The Corporation evaluates the performance of its segments and
allocates resources to them based on FTE income before income taxes.

                                        14
<PAGE>

     Selected segment information is included in the following table:

<Table>
<Caption>
                                     PERSONAL AND
                                      COMMERCIAL     INVESTMENT       PRIVATE         EMFISYS AND      CONSOLIDATED
                                     CLIENT GROUP   BANKING GROUP   CLIENT GROUP   CORPORATE SUPPORT      TOTAL
                                     ------------   -------------   ------------   -----------------   ------------
                                                                     (IN MILLIONS)
<S>                                  <C>            <C>             <C>            <C>                 <C>
2001
Net interest income (FTE basis)....    $ 433.8         $ 285.6         $ 73.0           $  1.0           $ 793.4
Noninterest income.................      117.1           101.6          135.1             97.9             451.7
Provision for loan losses..........       30.0           189.8            0.3             (0.0)            220.1
Noninterest expense................      391.0            99.2          161.8            123.5             775.5
                                       -------         -------         ------           ------           -------
Income before income taxes.........      129.9            98.2           46.0            (24.6)            249.5
Income taxes.......................       50.7            39.0           18.9            (25.1)             83.5
                                       -------         -------         ------           ------           -------
Net income.........................    $  79.2         $  59.2         $ 27.1           $  0.5           $ 166.0
                                       =======         =======         ======           ======           =======
Average Assets.....................    $10,122         $13,546         $1,575           $3,383           $28,626
                                       =======         =======         ======           ======           =======
Average Loans......................    $ 6,924         $ 7,183         $1,414           $  266           $15,787
                                       =======         =======         ======           ======           =======
Average Deposits...................    $11,399         $ 3,775         $1,272           $2,412           $18,858
                                       =======         =======         ======           ======           =======
2000
Net interest income (FTE basis)....    $ 368.4         $ 257.6         $ 57.7           $ 15.4           $ 699.1
Noninterest income.................       91.4            74.1          132.7            238.2(1)          536.4
Provision for loan losses..........        9.4            23.6            0.2              0.9              34.1
Noninterest expense................      342.9           105.9          152.7            122.0             723.5
                                       -------         -------         ------           ------           -------
Income before income taxes.........      107.5           202.2           37.5            130.7             477.9
Income taxes.......................       43.4            80.4           15.5             33.8             173.1
                                       -------         -------         ------           ------           -------
Net income.........................    $  64.1         $ 121.8         $ 22.0           $ 96.9           $ 304.8
                                       =======         =======         ======           ======           =======
Average Assets.....................    $ 8,502         $14,958         $1,351           $3,397           $28,208
                                       =======         =======         ======           ======           =======
Average Loans......................    $ 5,748         $ 8,136         $1,228           $  113           $15,225
                                       =======         =======         ======           ======           =======
Average Deposits...................    $10,353         $ 4,115         $1,195           $2,815           $18,478
                                       =======         =======         ======           ======           =======
1999
Net interest income (FTE basis)....    $ 366.1         $ 247.6         $ 55.3           $(10.3)          $ 658.7
Noninterest income.................       88.0            75.0          132.0            184.7             479.7
Provision for loan losses..........        9.4            18.2            0.2              0.1              27.9
Noninterest expense................      343.4           104.9          149.4            172.5             770.2
                                       -------         -------         ------           ------           -------
Income before income taxes.........      101.3           199.5           37.7              1.8             340.3
Income taxes.......................       41.5            79.3           16.1            (23.1)            113.8
                                       -------         -------         ------           ------           -------
Net income.........................    $  59.8         $ 120.2         $ 21.6           $ 24.9           $ 226.5
                                       =======         =======         ======           ======           =======
Average Assets.....................    $ 7,981         $13,087         $1,194           $3,595           $25,857
                                       =======         =======         ======           ======           =======
Average Loans......................    $ 5,237         $ 7,325         $1,055           $  230           $13,847
                                       =======         =======         ======           ======           =======
Average Deposits...................    $10,049         $ 3,496         $1,219           $2,466           $17,230
                                       =======         =======         ======           ======           =======
</Table>

------------------------
(1) Includes pretax gains on sale of the corporate trust and merchant card
    businesses of $47.0 million and $60.2 million, respectively.

                                        15
<PAGE>

PERSONAL AND COMMERCIAL CLIENT GROUP

     Net income for Personal and Commercial Client Group for 2001 was $79.2
million, up $15.1 million from the year-ago period. Current year earnings were
impacted by a special provision for loan losses of $10.0 million pre-tax in
third quarter 2001. Total revenue was $550.9 million, an increase of $91.1
million or 20 percent from $459.8 million in 2000. The increase in revenue was
primarily due to improved interest margins and loan volume growth in community
banking, higher deposit levels and the acquisition of First National Bank of
Joliet. Noninterest expense of $391.0 million increased $48.1 million from 2000,
as a result of higher personnel expenses, business related initiatives and the
acquisition of First National Bank of Joliet. Income taxes increased by $7.3
million in the current year, reflecting higher pretax income.

     Net income for Personal and Commercial Client Group for 2000 was $64.1
million, up $4.3 million from 1999. Total revenue was $459.8 million, an
increase of $5.7 million from $454.1 million in 1999. The increase in total
revenue was primarily due to business volume growth in Chicagoland Banking.
Noninterest expenses were comparable to 1999. Income taxes increased $1.9
million in 2000 primarily due to higher pretax income.

INVESTMENT BANKING GROUP

     Net income for Investment Banking Group was $59.2 million in 2001,
reflecting a decrease of $62.6 million or 51 percent from $121.8 million a year
ago. Current year earnings were impacted by a special provision for loan losses
of $115.0 million in third quarter 2001, part of a $166.2 million total increase
from 2000. Total revenue of $387.2 million increased by $55.5 million or 17
percent from 2000, primarily the result of larger net gains from securities
sales and an increase in bond trading profits. Noninterest expenses decreased
$6.7 million from 2000. Income taxes decreased by $41.4 million during the year,
reflecting lower pretax income.

     Net income for Investment Banking Group was $121.8 million in 2000,
reflecting an increase of $1.6 million from $120.2 million in 1999. Total
revenue of $331.7 million increased by $9.1 million or 3 percent from 1999,
primarily as a result of increased loan volume and better spreads, offset by
increased funding costs on the investment portfolio due to increasing interest
rates in 2000. Noninterest expenses were comparable to 1999. Income taxes
increased by $1.1 million during the year, reflecting higher pretax income.

PRIVATE CLIENT GROUP

     Net income for Private Client Group was $27.1 million in 2001, reflecting
an increase of $5.1 million or 23 percent from $22.0 million a year ago. Total
revenue of $208.1 million increased by $17.7 million or 9 percent from $190.4
million in 2000. Revenue growth was primarily due to $187 million growth in loan
volume, increased margins and slightly higher trust and investment management
revenues. Noninterest expense increased $9.1 million or 6 percent to $161.8
million in the current year, primarily due to costs of expansion strategies and
initiatives. Income taxes increased by $3.4 million during the year, reflecting
higher pretax income.

     Net income for Private Client Group was $22.0 million in 2000, reflecting
an increase of $0.4 million or 2 percent from $21.6 million in 1999. Total
revenue of $190.4 million increased by $3.1 million or 2 percent from $187.3
million in 1999. Revenue growth was primarily attributable to a $172 million
increase in loan volume and higher trust and investment management revenues.
Noninterest expense increased $3.3 million or 2 percent to $152.7 million in
2000.

EMFISYS AND CORPORATE SUPPORT

     Net income for Emfisys and Corporate Support was $0.5 million in 2001
compared to $96.9 million in 2000. Excluding the operating results and the $47.0
million pretax gain on the sale of the corporate trust business in first quarter
2000, and the operating results and the $60.2 million pretax gain on the sale of
the merchant card business in fourth quarter 2000, net income was $5.4 million,
a decrease of $23.4 million from a year ago. Total revenue was $98.9 million, a
decrease of $154.7 million from 2000. Excluding the operating revenues and prior
year gains on sale of divested businesses, total revenue decreased $8.2 million.
Noninterest

                                        16
<PAGE>

expenses increased $1.5 million to $123.5 million in 2001. Excluding the
operating expenses of divested businesses, noninterest expense increased $26.4
million or 30 percent primarily due to increased employment costs associated
with business initiatives. Income taxes decreased $58.9 million during the year,
reflecting lower pretax income.

     Net income for Emfisys and Corporate Support was $96.9 million in 2000
compared to $24.9 million in 1999. Excluding the operating results and the $47.0
million pretax gain on the sale of the corporate trust business in first quarter
2000, and the operating results and the $60.2 million pretax gain on the sale of
the merchant card business in fourth quarter 2000, net income was $28.8 million,
an increase of $10.5 million from 1999. Total revenue was $253.6 million, an
increase of $79.2 million from 1999. Excluding the operating revenues and gains
on sale of divested businesses, total revenue increased $22.6 million or 27
percent from 1999. Noninterest expenses decreased $50.5 million to $122.0
million in 2000. Excluding the operating expenses of divested businesses,
noninterest expense decreased $5.0 million or 5 percent. Income taxes increased
$56.9 million during the year, reflecting higher pretax income.

                                        17
<PAGE>

                     HARRIS BANKCORP, INC. AND SUBSIDIARIES

                              NET INTEREST INCOME

<Table>
<Caption>
                                                                                  2001
                                                         ------------------------------------------------------
                                                                                        INTEREST 2001 VS. 2000
                                                                                        -----------------------
                                                                                                    INCREASE
                                                                                                   (DECREASE)
                                                                                                     DUE TO
                                                                                                   CHANGE IN
                                                         AVERAGE              AVERAGE    NET     --------------
                                                         BALANCE   INTEREST    RATE     CHANGE   VOLUME   RATE
                                                         -------   --------   -------   ------   ------   -----
                                                             (FULLY TAXABLE EQUIVALENT BASIS, IN MILLIONS)
<S>                                                      <C>       <C>        <C>       <C>      <C>      <C>
EARNING ASSETS/INTEREST INCOME
DOMESTIC OFFICES:
Loans, including fees..................................  $15,609    $1,114     7.14%    $(150)    $ 44    $(194)
Securities:
  U.S. Treasury and Federal agency.....................    8,249       468     5.68       (84)     (20)     (64)
  State and municipal..................................      519        35     6.74        (1)      --       (1)
  Other................................................      207        14     6.95        --       (1)       1
                                                         -------    ------              -----
         Total securities..............................    8,975       517     5.77       (85)     (21)     (64)
Trading account assets.................................       71         5     6.70        --        1       (1)
Interest-bearing deposits at banks.....................      198         4     2.21        (1)      --       (1)
Federal funds sold and securities purchased under
  agreement to resell..................................      279        11     3.85        (3)       4       (7)
Loans held for sale....................................       38        --       --        --       --       --
                                                         -------    ------              -----
         Total domestic earning assets/interest
           income......................................   25,170     1,651     6.56      (239)      26     (265)
                                                         -------    ------              -----
FOREIGN OFFICES:
Loans, including fees..................................      178         9     5.01        (2)       1       (3)
Securities:
  U.S. Treasury and Federal agency.....................        9         1     6.56        (5)      (5)      --
Interest-bearing deposits at banks.....................       --        (1)     N/R        (1)      --       (1)
Federal funds sold and securities purchased under
  agreement to resell..................................       83         3     2.91        (1)       1       (2)
                                                         -------    ------              -----
         Total foreign earning assets/interest
           income......................................      270        12     4.11        (9)      (1)      (8)
                                                         -------    ------              -----
TOTAL DOMESTIC AND FOREIGN EARNING ASSETS/INTEREST
  INCOME...............................................  $25,440     1,663     6.54      (248)      25     (273)
                                                         =======    ======              =====
SUPPORTING LIABILITIES/INTEREST EXPENSE
DOMESTIC OFFICES:
Interest checking deposits.............................  $   428         9     2.00        --        2       (2)
Money market accounts..................................    5,151       140     2.72       (42)      20      (62)
Savings deposits and certificates......................    6,036       269     4.45       (10)      23      (33)
Other interest-bearing time deposits...................    1,527        65     4.25       (51)     (20)     (31)
                                                         -------    ------              -----
         Total interest-bearing deposits...............   13,142       483     3.67      (103)      37     (140)
Short-term borrowings..................................    5,372       214     3.99      (152)     (31)    (121)
Senior notes...........................................      808        34     4.21       (18)      (1)     (17)
Minority interest -- dividends on preferred stock of
  subsidiary...........................................      250        18     7.38        --       --       --
Long-term notes........................................      585        32     5.45        (5)       6      (11)
                                                         -------    ------              -----
         Total domestic interest-bearing
           liabilities/interest expense................   20,157       781     3.87      (278)      19     (297)
                                                         -------    ------              -----
FOREIGN OFFICES:
Time deposits..........................................    2,034        85     4.17       (62)     (16)     (46)
Short-term borrowings..................................      161         4     2.46        (2)       1       (3)
                                                         -------    ------              -----
         Total foreign interest-bearing
           liabilities/interest expense................    2,195        89     4.04       (64)     (14)     (50)
                                                         -------    ------              -----
Total domestic and foreign interest-bearing
  liabilities/interest expense.........................   22,352       870     3.89      (342)       7     (349)
Other noninterest-bearing supporting liabilities.......    3,088        --       --        --       --       --
                                                         -------    ------              -----
TOTAL DOMESTIC AND FOREIGN SUPPORTING
  LIABILITIES/INTEREST EXPENSE.........................  $25,440       870     3.42      (342)      16     (358)
                                                         =======    ======              =====
TOTAL NET INTEREST INCOME FROM DOMESTIC AND FOREIGN
  OFFICES..............................................             $  793     3.12%    $  94     $  9    $  85
                                                                    ======      ===     =====     ====    =====
</Table>

-------------------------
Columns may not foot due to rounding.

N/R -- Computation not relevant.

                                        18
<PAGE>

                     HARRIS BANKCORP, INC. AND SUBSIDIARIES

                              NET INTEREST INCOME

<Table>
<Caption>
                                                                                      2000
                                                              -----------------------------------------------------
                                                                                             INTEREST 2000 VS. 1999
                                                                                             ----------------------
                                                                                                        INCREASE
                                                                                                       (DECREASE)
                                                                                                         DUE TO
                                                                                                        CHANGE IN
                                                              AVERAGE              AVERAGE    NET     -------------
                                                              BALANCE   INTEREST    RATE     CHANGE   VOLUME   RATE
                                                              -------   --------   -------   ------   ------   ----
                                                                  (FULLY TAXABLE EQUIVALENT BASIS, IN MILLIONS)
<S>                                                           <C>       <C>        <C>       <C>      <C>      <C>
EARNING ASSETS/INTEREST INCOME
DOMESTIC OFFICES:
Loans, including fees.......................................  $15,070    $1,264     8.39%     $242     $107    $135
Securities:
  U.S. Treasury and Federal agency..........................    8,543       552     6.46        97       59      38
  State and municipal.......................................      518        36     7.03        (1)      --      (1)
  Other.....................................................      221        15     6.66         3        4      (1)
                                                              -------    ------               ----
         Total securities...................................    9,282       603     6.50        99       64      35
Trading account assets......................................       60         4     7.62        (1)      (2)      1
Interest-bearing deposits at banks..........................      205         5     2.48         3        1       2
Federal funds sold and securities purchased under agreement
  to resell.................................................      204        14     6.80         3       --       3
Loans held for sale.........................................       --        --       --        --       --      --
                                                              -------    ------               ----
         Total domestic earning assets/interest income......   24,821     1,890     7.62       346      174     172
                                                              -------    ------               ----
FOREIGN OFFICES:
Loans, including fees.......................................      156        11     7.27         4        1       3
Securities:
  U.S. Treasury and Federal agency..........................       81         5     6.35         1       --       1
Interest-bearing deposits at banks..........................        1         1      N/R         1       --       1
Federal funds sold and securities purchased under agreement
  to resell.................................................       53         3     5.53         1        1      --
                                                              -------    ------               ----
         Total foreign earning assets/interest income.......      291        20     6.85         7        1       6
                                                              -------    ------               ----
TOTAL DOMESTIC AND FOREIGN EARNING ASSETS/INTEREST INCOME...  $25,112     1,910     7.60       353      174     179
                                                              =======    ======               ====
Supporting Liabilities/Interest Expense
DOMESTIC OFFICES:
Interest checking deposits..................................  $   349         8     2.37         2        1       1
Money market accounts.......................................    4,602       182     3.95        32        6      26
Savings deposits and certificates...........................    5,550       279     5.02        40        6      34
Other interest-bearing time deposits........................    1,808       116     6.42        29        7      22
                                                              -------    ------               ----
         Total interest-bearing deposits....................   12,309       585     4.75       103       20      83
Short-term borrowings.......................................    5,908       366     6.19       152       86      66
Senior notes................................................      822        52     6.36       (17)     (30)     13
Minority interest -- dividends on preferred stock of
  subsidiary................................................      250        18     7.38        --       --      --
Long-term notes.............................................      501        37     7.40         5        2       3
                                                              -------    ------               ----
         Total domestic interest-bearing
           liabilities/interest expense.....................   19,790     1,058     5.35       243       73     170
                                                              -------    ------               ----
FOREIGN OFFICES:
Time deposits...............................................    2,308       147     6.36        68       42      26
Short-term borrowings.......................................      129         6     4.80         2       --       2
                                                              -------    ------               ----
         Total foreign interest-bearing liabilities/interest
           expense..........................................    2,437       153     6.28        70       42      28
                                                              -------    ------               ----
         Total domestic and foreign interest-bearing
           liabilities/interest expense.....................   22,227     1,211     5.45       313      102     211
Other noninterest-bearing supporting liabilities............    2,885        --       --        --       --      --
                                                              -------    ------               ----
TOTAL DOMESTIC AND FOREIGN SUPPORTING LIABILITIES/INTEREST
  EXPENSE...................................................  $25,112     1,211     4.82       313      102     211
                                                              =======    ======               ====
TOTAL NET INTEREST INCOME FROM DOMESTIC AND FOREIGN
  OFFICES...................................................             $  699     2.78%     $ 40     $ 68    $(28)
                                                                         ======      ===      ====     ====    ====
</Table>

-------------------------
Columns may not foot due to rounding.

N/R -- Computation not relevant.

                                        19
<PAGE>

                      NOTES TO NET INTEREST INCOME TABLES

     1. Fully taxable equivalent adjustment

          Tax-exempt interest income (for Federal purposes) has been restated to
     a comparable taxable level. The Federal statutory tax rate used for this
     purpose was 35 percent in 2001, 2000, and 1999. This adjustment also
     includes a state tax component.

     2. Interest income

          The impact of restructured and nonaccrual loans is reflected in all
     average balance, net interest income and related yield calculations.
     Average balances include restructured and nonaccrual loans. Interest income
     and yields on these assets reflect income recorded on a cash basis.

     3. Volume and rate variances

          The change in interest income/expense attributable to volume is
     calculated by multiplying the annual change in volume by the prior year's
     rate. The rate variance is calculated by multiplying the annual change in
     rate by the prior year's volume. Any variance attributable jointly to
     volume and rate changes is prorated on a weighted basis between volume and
     rate.

     4. Average rate on securities

          Yields on securities classified as available-for-sale are based on
     amortized cost.

                                        20
<PAGE>

NET INTEREST INCOME

     Net interest income, the difference between interest and fees recognized on
earning assets and total interest expense, is the major component of operating
income for the Corporation. Since income on certain earning assets may be exempt
from Federal and/or state income taxes, the Management's Discussion and Analysis
section of this Report is prepared on a fully taxable equivalent (FTE) basis,
which, in effect, restates tax-advantaged income to a comparable level with
nontax-advantaged income. In 2001, the Corporation's FTE net interest income was
$793.4 million, up 13 percent from $699.1 million in 2000.

     The year-to-year change in net interest income is typically explained by
analyzing its two principal components, net interest margin and average earning
assets. Net interest margin is the difference between the overall FTE yield on
earning assets and the average cost of supporting liabilities, including
noninterest-bearing funds. Average earning assets represent the average volume
of assets employed by the Corporation during the year, which generate interest
income.

     For the year 2001, the Corporation's net interest margin increased 34 basis
points to 3.12 percent from 2.78 percent in 2000. This increase reflects the
impact of a declining interest rate environment during the past year and a
higher mix of retail funding.

     Average earning assets in 2001 totaled $25.44 billion, up $328 million, or
1% from $25.11 billion in 2000. This growth is primarily the result of an
increase in average loans of $561 million, or 4 percent, to $15.79 billion.
Consumer, mortgage and small business loans grew by $1.4 million or 21%. Average
securities decreased $380 million, or 4 percent, to $8.98 billion, the result of
decreased holdings of U.S. Treasury and Federal agency securities. Loans and
investment securities, as a percent of earning assets, were 62 percent and 35
percent in 2001 and 61 percent and 37 percent in 2000. Average Federal funds
sold and securities purchased under agreement to resell increased 41 percent or
$105 million compared to 2000.

     Changes in the mix of total supporting funds are a function of loan demand,
consumer preferences for maintaining funds in core deposits and wholesale market
spreads. The Corporation manages its wholesale funding activity at the margin
primarily by using the least expensive products given requirements for matched
funding, maturity, ability and expected cost to refund, reserve requirements and
deposit insurance costs. Secured borrowings, such as repurchase agreements, may
also be utilized depending on availability of collateral. In 2001, domestic
interest-bearing deposits increased $833 million, or 7 percent from 2000.
Average foreign office time deposits totaled $2.03 billion, down 12 percent or
$275 million, compared to $2.31 billion in 2000. Federal funds purchased and
securities sold under agreement to repurchase decreased $494 million or 9
percent, which resulted in a decrease in short-term borrowings of $504 million
or 8 percent from 2000 levels. Noninterest-bearing funds supporting earning
assets increased $203 million, and remained unchanged from 12 percent
year-to-year as a percentage of average supporting liabilities.

                                        21
<PAGE>

NONINTEREST INCOME

<Table>
<Caption>
                                                                  INCREASE          INCREASE
                                                                 (DECREASE)        (DECREASE)
                                 YEARS ENDED DECEMBER 31        2001 VS. 2000    2000 VS. 1999
                              ------------------------------   ---------------   --------------
                                2001       2000       1999      AMOUNT     %      AMOUNT     %
                                ----       ----       ----      ------     -      ------     -
                                                       (IN THOUSANDS)
<S>                           <C>        <C>        <C>        <C>        <C>    <C>        <C>
Trust and investment
  management fees...........  $118,982   $128,579   $156,577   $ (9,597)    (7)  $(27,998)  (18)
Money market and bond
  trading...................    16,818      8,974      8,893      7,844     87         81     1
Foreign exchange............     8,833      7,225      8,314      1,608     22     (1,089)  (13)
Merchant and charge card
  fees......................       151     21,199     30,440    (21,048)   (99)    (9,241)  (30)
Service fees and charges....   123,654    117,196    124,706      6,458      6     (7,510)   (6)
Securities gains............    43,057     15,015     14,553     28,042    187        462     3
Gain on sale of corporate
  trust business............        --     46,993         --    (46,993)  (100)    46,993   100
Gain on sale of merchant
  card business.............        --     60,162         --    (60,162)  (100)    60,162   100
Bank-owned insurance........    47,226     45,076     41,414      2,150      5      3,662     9
Foreign fees................    21,540     21,174     18,865        366      2      2,309    12
Other.......................    71,453     64,781     75,902      6,672     10    (11,121)  (15)
                              --------   --------   --------   --------   ----   --------   ---
          Total noninterest
            income..........  $451,714   $536,374   $479,664   $(84,660)   (16)  $ 56,710    12
                              ========   ========   ========   ========   ====   ========   ===
</Table>

     Noninterest income for the year was $451.7 million in 2001, down $84.7
million or 16 percent from 2000. During 2000 the Corporation sold its corporate
trust and merchant card businesses and realized gains of $47.0 million and $60.2
million, respectively. Excluding the special $9.0 million writedown of equity
securities and the gains on the sale and the operating revenue of the corporate
trust and merchant card businesses, noninterest income increased 15 percent from
2000.

     Trust and investment management fees were $119.0 million, down $9.6 million
or 7 percent from the prior year. Service fees and charges were $123.7 million
in 2001, up $6.5 million or 6 percent from 2000. Income from bank-owned
insurance increased $2.2 million or 5 percent from 2000 due to increased
investment balances. Other income, which includes syndication fees, mortgage
loan sales and other gains and fee income, increased $6.7 million or 10 percent.
Net gains from portfolio securities were $43.1 million, up $28.0 million from
2000.

     Trading account gains, primarily from municipal bond trading, totaled $16.8
million, up $7.8 million compared to 2000. Financial results from trading
activities will typically exhibit greater fluctuations over time than other
business activities. Foreign exchange revenues (FX) were $8.8 million, up $1.6
million or 22 percent from 2000. HTSB and BMO combine their U.S. FX trading.
Under this arrangement, FX net profit is shared by HTSB and BMO in accordance
with a specific formula set forth in the agreement. This agreement expires in
April 2002 but may be extended at that time. Either party may terminate the
arrangement at its option.

                                        22
<PAGE>

NONINTEREST EXPENSE

<Table>
<Caption>
                                                                   INCREASE         INCREASE
                                                                  (DECREASE)       (DECREASE)
                                   YEARS ENDED DECEMBER 31       2001 VS. 2000   2000 VS. 1999
                                ------------------------------   -------------   --------------
                                  2001       2000       1999     AMOUNT     %     AMOUNT     %
                                  ----       ----       ----     ------     -     ------     -
                                                        (IN THOUSANDS)
<S>                             <C>        <C>        <C>        <C>       <C>   <C>        <C>
Salaries and other
  compensation................  $375,736   $351,879   $368,818   $23,857     7   $(16,939)   (5)
Pension, profit sharing and
  other employee benefits.....    66,690     66,383     74,909       307    --     (8,526)  (11)
Net occupancy.................    51,350     55,616     52,617    (4,266)   (8)     2,999     6
Equipment.....................    59,364     56,153     63,695     3,211     6     (7,542)  (12)
Marketing.....................    38,326     31,697     31,395     6,629    21        302     1
Communication and delivery....    22,796     23,847     25,808    (1,051)   (4)    (1,961)   (8)
Expert services...............    28,048     23,044     28,601     5,004    22     (5,557)  (19)
Contract programming..........    31,479     17,589     12,195    13,890    79      5,394    44
Other.........................    73,453     71,866     86,317     1,587     2    (14,451)  (17)
                                --------   --------   --------   -------   ---   --------   ---
                                 747,242    698,074    744,355    49,168     7    (46,281)   (6)
Goodwill and other valuation
  intangibles.................    28,295     25,409     25,828     2,886    11       (419)   (2)
                                --------   --------   --------   -------   ---   --------   ---
          Total noninterest
            expenses..........  $775,537   $723,483   $770,183   $52,054     7   $(46,700)   (6)
                                ========   ========   ========   =======   ===   ========   ===
</Table>

     Noninterest expenses totaled $775.5 million, up $52.1 million or 7 percent
from 2000. Excluding post-acquisition operating expenses for Joliet and expenses
associated with businesses sold in 2000, noninterest expenses increased 8%.
Employment-related expenses totaled $442.4 million, an increase of $24.2 million
or 6 percent. Contract programming expenses increased $13.9 million due to the
outsourcing of the Solutions and Applications function. Net occupancy expenses
totaled $51.4 million, down $4.3 million from 2000. Equipment expenses totaled
$59.4 million, up $3.2 million or 6 percent from 2000. Expert services increased
$5.0 million compared to 2000. Amortization of goodwill and other valuation
intangibles increased $2.9 million or 11 percent from 2000.

INCOME TAXES

     The Corporation recorded income tax expense of $47.4 million in 2001,
compared to $130.2 million in 2000. The Corporation's effective tax rate
decreased to 22.2 percent in 2001 from 29.9 percent in 2000 primarily as a
result of a special third-quarter provision for loan losses, decreasing the
ratio of taxable to tax-exempt income.

     At December 31, 2001, the Corporation's Federal and state net deferred tax
assets were $79 million and $9 million, respectively. Management believes that
the realization of the recognized net deferred tax asset is more likely than not
based on existing carryback ability and expectations as to future taxable
income.

     The deferred taxes reported on the Corporation's Statement of Condition at
December 31, 2001 also include a $25 million liability for the tax effect of
unrealized gains associated with marking to market certain securities designated
as available-for-sale, in accordance with SFAS No. 115.

IMPACT OF NEW ACCOUNTING STANDARDS

     The Corporation adopted Statement of Financial Accounting Standards (SFAS)
No. 141, "Business Combinations," on July 1, 2001. The Statement addresses
financial accounting and reporting for business combinations and supersedes
Accounting Principles Board (APB) Opinion No. 16, "Business Combinations." It
requires all business combinations within the scope of the Statement to be
accounted for using the purchase method. It establishes criteria for the initial
recognition of intangible assets acquired in a business combination. The
provisions of the Statement apply to all business combinations initiated after
June 30, 2001

                                        23
<PAGE>

and to all business combinations accounted for using the purchase method for
which the date of acquisition is July 1, 2001 or later.

     In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 142, "Goodwill and Other Intangible Assets." The Statement addresses
financial accounting and reporting for acquired goodwill and other intangible
assets and supersedes APB Opinion No. 17, "Intangible Assets." Under this
standard, goodwill and other intangible assets that have indefinite useful lives
will not be subject to amortization while intangible assets with finite lives
will be amortized. The Statement is effective for fiscal years beginning after
December 15, 2001. However, goodwill and intangible assets acquired after June
30, 2001 will be subject immediately to the nonamortization and amortization
provisions of the Statement. The Corporation adopted SFAS No. 142 on January 1,
2002. Upon adoption of the Statement, the Corporation discontinued the
amortization of goodwill with a net carrying value of $11 million at December
31, 2001 and annual amortization of approximately $3 million that resulted from
business combinations prior to the adoption of SFAS No. 141. Goodwill will be
assessed periodically for impairment. The Corporation has an unidentifiable
intangible asset that is accounted for in accordance with SFAS No. 72,
"Accounting for Certain Acquisitions of Banking or Thrift Institutions." The
asset is excluded from the scope of SFAS No. 142 and will continue to be
amortized.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." The Statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made. The associated asset retirement costs should be capitalized as part of
the carrying amount of the long-lived asset. The Statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002. The
Corporation does not expect the implementation of this Statement to have a
material effect on its financial position or results of operations.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." The Statement addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
establishes a single accounting model for long-lived assets to be disposed of by
sale. It supersedes SFAS No. 121 and the accounting and reporting provisions of
APB Opinion No. 30 for the disposal of a segment of a business. The Statement is
effective for financial statements issued for fiscal years beginning after
December 15, 2001 and interim periods within those fiscal years. The Corporation
does not expect the implementation of this Statement to have a material effect
on its financial position or results of operations.

RETURN ON ASSETS AND COMMON STOCKHOLDER'S EQUITY

     Return on average assets ("ROA") measured by net income as a percentage of
average total assets, ROA was 0.90 percent in 2001, compared to 0.84 percent for
2000. the current year's ROA was slightly better than the average ROA of 0.87
percent for the five-year period ended December 31, 2001. Average common
stockholder's equity to average total assets provides a measure of leverage for
the Corporation. The ratio of average common stockholder's equity to average
total assets was 6.56 percent in 2001 compared to 5.50 percent in 2000. The
return on average common stockholder's equity ("ROE") was 12.71 percent, down
from the 14.11 percent achieved in 2000 and the 12.83 percent five-year average
return for the period ended December 31, 2001. The 2001 and 2000 ROA and ROE
exclude the special charges, gains and related operating results from businesses
sold in 2000.

     Cash return on average assets ("Cash ROA") of 0.97 percent in 2001 was
better than the 0.91 percent achieved in 2000. Cash return on average common
stockholder's equity ("Cash ROE") was 16.17 percent in 2001 compared to 17.91
percent in 2000. The 2001 and 2000 Cash ROA and Cash ROE exclude the special
charges, gains and related operating results from businesses sold in 2000.

                                        24
<PAGE>

<Table>
<Caption>
                                                               YEARS ENDED DECEMBER 31
                                                              -------------------------
                                                               2001      2000     1999
                                                               ----      ----     ----
                                                              (BASED ON NET INCOME AND
                                                                   DAILY AVERAGES)
<S>                                                           <C>       <C>      <C>
Return on average assets(1).................................    0.58%    1.08%    0.88%
Cash return on average assets(2)............................    0.65     1.15     0.95
Return on average common stockholder's equity(1)............    7.88    18.50    13.85
Cash return on average common stockholder's equity(3).......   10.46    23.09    18.14
RETURNS EXCLUDING NON-RECURRING ITEMS, GAINS AND RELATED
  OPERATING RESULTS OF BUSINESSES SOLD IN 2000:
Return on average assets(1).................................    0.90%    0.84%    0.88%
Cash return on average assets(2)............................    0.97     0.91     0.95
Return on average common stockholder's equity(1)............   12.71    14.11    13.85
Cash return on average common stockholder's equity(3).......   16.17    17.91    18.14
Average common stockholder's equity as a percentage of
  average total assets(1)...................................    6.56     5.50     5.82
Dividend payout ratio(4)....................................  169.93    55.78    40.72
Earnings retained as a percentage of average common
  stockholder's equity(5)...................................   (6.18)    8.69     8.92
Percentage growth in total average assets...................    1.48     9.09    10.37
</Table>

-------------------------
(1) Total average assets and average common equity used in these calculations
    include average gross and net unrealized gains or losses on
    available-for-sale securities, respectively.

(2) Cash return on average assets is calculated as net income plus after-tax
    amortization expense of goodwill and other valuation intangibles, divided by
    average assets less average intangible assets.

(3) Cash return on average common stockholder's equity is calculated as net
    income applicable to common stock plus after-tax amortization expense of
    goodwill and other valuation intangibles, divided by average common
    stockholder's equity less average intangible assets.

(4) Dividends on common and preferred stock as a percent of net income. 2000
    ratio includes $20 million of special dividends paid related to the gain on
    the sale of the corporate trust business and $60 million were paid as part
    of a capital restructuring. In 2001, special dividends of $30 million were
    paid related to the gain on the sale of the merchant card business and a
    $150 million dividend was paid to Bankmont as part of a capital
    restructuring as discussed in the "Capital Position" section below, the
    Corporation received a $220 million capital contribution from Bankmont in
    2001. Excluding the payment of these special dividends, the dividend payout
    ratio would have been 37% and 61% in 2000 and 2001, respectively.

(5) Earnings retained is defined as net income minus dividends. 2000 and 2001
    include the impact of special dividends of $80 million and $180 million,
    respectively. Excluding the payment of the special dividends, earnings
    retained as a percentage of common stockholder's equity would have been 14%
    and 3% in 2000 and 2001, respectively.

CAPITAL POSITION

     The Corporation's equity capital of $2.20 billion at December 31, 2001 has
more than doubled in the last seven years. During 2001 and 2000, Bankcorp
declared and paid common dividends of $264 million and $152 million,
respectively, and preferred dividends of $18 million in both years. In July
2001, Bankmont acquired First National Bancorp, Inc. and its wholly owned
subsidiary, First National Bank of Joliet. First National Bancorp, Inc. was
merged with and into Bankmont, followed by a capital contribution of First
National Bank of Joliet stock to the Corporation which resulted in approximately
$220 million of incremental capital. During 2001 and 2000, the Corporation's
equity capital increased by $48 million and $150 million, respectively,
representing after-tax unrealized holding gains related to the Corporation's
securities available-for-sale. Average consolidated equity capital was $2.12
billion in 2001 compared to $1.80 billion in 2000.

     Bankcorp's double leverage ratio, which is the Bankcorp parent company only
net equity investment in bank and nonbank subsidiaries as a percentage of its
equity capital, was 114 percent at December 31, 2001, up from 109 percent at
December 31, 2000. This ratio generally measures the extent to which holding
company equity investments are supported, in part, by parent-issued debt
instruments. Accordingly, a double leverage

                                        25
<PAGE>

ratio greater than 100 percent indicates that parent company equity investments
are supported by parent-issued debt. In the case of Bankcorp, outstanding
long-term debt is sufficient to fund equity investments not otherwise covered by
equity capital.

RISK-BASED CAPITAL

     U.S. banking regulators have issued risk-based capital guidelines, based on
the international "Basle Committee" agreement, which are applicable to all U.S.
banks and bank holding companies. These guidelines serve to: 1) establish a
uniform capital framework which is more sensitive to risk factors, including
off-balance-sheet exposures; 2) promote the strengthening of capital positions;
and 3) diminish a source of competitive inequality arising from differences in
supervisory requirements among countries. Bankcorp, as a U.S. bank holding
company, and HTSB, as a state-member bank, must each adhere to the guidelines of
the Federal Reserve Board (the "Board"), which are not significantly different
than those published by other U.S. banking regulators. The guidelines specify
minimum ratios for Tier 1 capital to risk-weighted assets of 4 percent and total
regulatory capital to risk-weighted assets of 8 percent.

     Risk-based capital guidelines define total capital to consist primarily of
Tier 1 (core) and Tier 2 (supplementary) capital. In general, Tier 1 capital is
comprised of stockholder's equity, including certain types of preferred stock,
less goodwill and certain other intangibles. Core capital must comprise at least
50 percent of total capital. Tier 2 capital basically includes subordinated debt
(less a discount factor during the five years prior to maturity), other types of
preferred stock and the allowance for possible loan losses. The portion of the
allowance for possible loan losses includable in Tier 2 capital is limited to
1.25 percent of risk-weighted assets. The Corporation's Tier 1 and total
risk-based capital ratios were 9.30 percent and 12.31 percent, respectively, at
December 31, 2001.

     The Board also requires an additional measure of capital adequacy, the Tier
1 leverage ratio, which is evaluated in conjunction with risk-based capital
ratios. The Tier 1 leverage ratio is computed by dividing period-end Tier 1
capital by adjusted quarterly average assets. The Board established a minimum
ratio of 3 percent applicable only to the strongest banking organizations
having, among other things, excellent asset quality, high liquidity, good
earnings and no undue interest rate risk exposure. Other institutions are
expected to maintain a minimum ratio of 4 percent. The Corporation's Tier 1
leverage ratio was 7.32 percent for fourth quarter 2001.

     In July 2001, Bankmont acquired First National Bancorp, Inc. and its wholly
owned subsidiary, First National Bank of Joliet. First National Bancorp, Inc.
was merged with and into Bankmont followed by a capital contribution of First
National Bank of Joliet stock to the Corporation which resulted in approximately
$220 million of incremental capital.

     In February 1998, Harris Preferred Capital Corporation, a subsidiary of
HTSB, issued $250 million of noncumulative preferred stock in a public offering.
The preferred stock qualifies as Tier 1 capital at both HTSB and the Corporation
for U.S. banking regulatory purposes.

     The Federal Deposit Insurance Corporation Improvement Act of 1991 contains
several provisions that established five capital categories for all Federal
Deposit Insurance Corporation ("FDIC")-insured institutions ranging from "well
capitalized" to "critically undercapitalized." See Note 15 to the Financial
Statements on page 86. Based on those regulations effective at December 31, 2001
all of the Corporation's subsidiary banks were designated as "well capitalized"
at year-end 2001, the highest capital category.

     Capital adequacy guidelines generally restrict the inclusion of intangible
assets in Tier 1 capital. However, mortgage servicing rights and the premium on
purchased credit card relationships may be included with (i.e., not deducted
from) Tier 1 capital provided that certain percentage limitations are not
violated. Identifiable intangibles acquired before February 19, 1992 continue to
be included with Tier 1 capital. All other intangibles (including core deposit
premiums and goodwill), along with amounts in excess of the above limits, are
deducted from Tier 1 capital for purposes of risk-based and leverage capital
ratio calculations. At December 31, 2001 the Corporation's intangible assets
totaled $358 million, including approximately $321 million of intangibles
excluded from Tier 1 capital under capital guidelines. The Corporation's
tangible

                                        26
<PAGE>

Tier 1 leverage ratio (which excludes all intangibles from capital) was 7.27
percent for the fourth quarter of 2001.

     Risk-based capital guidelines exclude from Tier 1 capital net unrealized
holding gains (losses) associated with marking to market debt securities
designated as available-for-sale. Net unrealized losses on marketable equity
securities are deducted from Tier 1 capital. Up to 45 percent of the pretax net
unrealized holding gains on available-for-sale equity securities may be included
in Tier 2 capital. Net unrealized holding gains (losses) excluded from Tier 1
capital for risk-based capital purposes amounted to $44 million and ($11)
million at December 31, 2001 and 2000, respectively.

     The following table summarizes the Corporation's risk-based capital ratios
and Tier 1 leverage ratio for the past three years:

<Table>
<Caption>
                                                               YEARS ENDED DECEMBER 31
                                                      -----------------------------------------
                                                         2001           2000           1999
                                                      -----------    -----------    -----------
                                                                   (IN THOUSANDS)
<S>                                                   <C>            <C>            <C>
Total assets (end of period)........................  $29,046,107    $28,966,476    $27,180,496
                                                      ===========    ===========    ===========
Average assets (fourth quarter).....................  $28,746,327    $28,946,538    $26,937,024
                                                      ===========    ===========    ===========
Risk-based on-balance-sheet assets..................  $17,861,350    $17,782,000    $16,488,277
                                                      ===========    ===========    ===========
Risk-based off-balance-sheet assets.................  $ 4,713,522    $ 4,928,876    $ 4,742,337
                                                      ===========    ===========    ===========
  Total risk-based assets, net of deductions (based
     on regulatory accounting principles)...........  $22,228,871    $22,487,192    $20,989,641
                                                      ===========    ===========    ===========
Tier 1 capital......................................  $ 2,067,205    $ 2,056,341    $ 1,895,050
                                                      ===========    ===========    ===========
Supplementary capital...............................  $   670,011    $   595,417    $   557,069
                                                      ===========    ===========    ===========
  Total capital, net of deductions (based on
     regulatory accounting principles)..............  $ 2,736,424    $ 2,651,036    $ 2,451,488
                                                      ===========    ===========    ===========
Tier 1 leverage ratio...............................         7.32%          7.15%          7.03%
Risk-based capital ratios:
  Tier 1............................................         9.30%          9.14%          9.03%
  Total.............................................        12.31%         11.79%         11.68%
</Table>

LIQUIDITY AND SOURCES OF FUNDS

Contractual Obligations and Commercial Commitments

     The Corporation has the following contractual obligations as of December
31, 2001:

<Table>
<Caption>
                                                                 DECEMBER 31, 2001
                                               -----------------------------------------------------
                                                              PAYMENTS DUE BY PERIOD
                                               -----------------------------------------------------
                                               LESS THAN                            AFTER
CONTRACTUAL OBLIGATIONS                         1 YEAR     1-3 YEARS   4-5 YEARS   5 YEARS    TOTAL
-----------------------                        ---------   ---------   ---------   -------    -----
                                                                  (IN THOUSANDS)
<S>                                            <C>         <C>         <C>         <C>       <C>
Long-Term Debt...............................       --      100,000     250,000    321,972   671,972
Operating Leases.............................   14,248       22,754      19,556     39,845    96,403
</Table>

     The Corporation had $672 million in long-term notes as of December 31,
2001. All of the Bankcorp notes are unsecured obligations, ranking on a parity
with all unsecured and subordinated indebtedness of the Corporation and are not
subject to redemption prior to maturity at the election of the debtholders. The
interest rate on the floating rate subordinated notes reprices semiannually and
floats at 50 basis points above 180 day LIBOR. The interest rate on the floating
rate senior notes reprices semiannually and floats at 38 basis points above 180
day LIBOR. At year-end 2001, 180 day LIBOR was 1.98 percent. See Note 7 to the
Financial Statements on page 65.

                                        27
<PAGE>

     Minimum rental commitments for all noncancelable operating leases totalled
$96 million as of December 31, 2001. The lease commitments are primarily for
office space. See Note 13 to the Financial Statements on page 83.

     The Corporation does not have capital lease obligations, unconditional
purchase obligations, or any other long-term obligation as of December 31, 2001.

     The Corporation has the following commercial commitments as of December 31,
2001:

<Table>
<Caption>
                                                           DECEMBER 31, 2001
                                  --------------------------------------------------------------------
                                               AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
                                  --------------------------------------------------------------------
                                   LESS THAN                                  OVER       TOTAL AMOUNTS
OTHER COMMERCIAL COMMITMENTS         1 YEAR       1-3 YEARS    4-5 YEARS     5 YEARS       COMMITTED
----------------------------       ---------      ---------    ---------     -------     -------------
                                                             (IN THOUSANDS)
<S>                               <C>             <C>          <C>          <C>          <C>
Lines of Credit................    4,627,981      2,627,269      953,602     293,658       8,502,510
Standby Letters of Credit......    1,427,889        732,262      202,150      15,580       2,377,881
Other Commercial Commitments...      576,514        139,505       48,833      26,326         791,178
Total Commercial Commitments...    6,632,384      3,499,036    1,204,585     335,564      11,671,569
</Table>

     The Corporation utilizes credit facilities with off-balance sheet risk
which include commitments to extend credit, standby letters of credit and
commercial letters of credit. There were no guarantees or standby repurchase
obligations as of December 31, 2001. Commercial commitments totalled $11.7
billion as of December 31, 2001. See Note 9 to the Financial Statements on page
68.

Summary

     Effective liquidity management allows a banking institution to accommodate
the changing net funds flow requirements of customers who may deposit or
withdraw funds, or modify their credit requirements. One of the principal
obligations of the banking system, and individual banks, is to provide for the
legitimate credit demands of customers. The liquidity of the banking system as a
whole may be viewed as the ability of the system to satisfy aggregate credit
demand; however, individual banks experience changes in liquidity resulting from
interbank transfers of deposits which do not affect the liquidity of the banking
system. Therefore, liquidity management within individual banks must deal with
the potential for greater volatility of net deposit flows which have little or
no impact on the banking system itself.

     The Corporation manages its liquidity position through continuous
monitoring of profitability trends, asset quality, interest rate sensitivity,
maturity schedules of earning assets and supporting liabilities, the composition
of managed and other (primarily demand) liabilities, and prospective customer
credit demand based upon knowledge of major customers and overall economic
conditions. Appropriate responses to changes in these conditions preserve
customer confidence in the ability of the Corporation to continually serve their
credit and deposit withdrawal requirements. The Corporation maintains a
liquidity risk policy within its comprehensive risk management framework and
manages and monitors liquidity risk within the parameters of this policy.

     Some level of liquidity is provided by maintaining assets which mature
within a short time-frame or could be sold quickly without significant loss. The
Corporation's liquid assets include cash and demand balances due from banks,
money market assets, securities available-for-sale and trading account assets.
Liquid assets represented approximately 38 percent of the Corporation's total
assets and amounted to $10.90 billion at December 31, 2001 compared to liquid
assets of $11.16 billion or approximately 39 percent of total assets one year
earlier. However, the most important source of liquidity is the ability to raise
funds, as required, in a variety of markets using multiple instruments. This
fund-raising activity involves the identification of broadly distributed sources
of funds, typically referred to as managed liabilities, which are varied by
type, maturity and geographical location of customers. The Corporation monitors
and controls the sources of these funds to avoid unwarranted market activity or
customer concentrations.

     The principal sources of external funds available to the Corporation are
retail and wholesale liabilities. Retail liabilities are comprised of demand
deposits, money market accounts, NOW accounts, passbook savings

                                        28
<PAGE>

and nonnegotiable certificates of deposit, typically of small denomination.
Wholesale funding sources include Eurodollar deposits in foreign offices,
Federal funds borrowed, securities sold under agreement to repurchase,
negotiable large denomination certificates of deposit and commercial paper. HTSB
offers to institutional investors from time to time, unsecured short-term and
medium-term bank notes in an aggregate principal amount of up to $1.50 billion
outstanding at any time. The term of each note could range from fourteen days to
fifteen years. The notes are subordinated to deposits and rank pari passu with
all other senior unsecured indebtedness of HTSB. As of December 31, 2001, $860
million of senior notes were outstanding with original maturities ranging from
365 to 396 days (remaining maturities ranging from 99 to 207 days) and stated
interest rates ranging from 1.78 percent to 4.41 percent. As of December 31,
2000, $390 million of senior notes were outstanding with original maturities
ranging from 28 to 365 days (remaining maturities ranging from 23 to 163 days)
and stated interest rates ranging from 6.52 percent to 6.66 percent.

     The Corporation's average volume of core deposits, consisting of domestic
and foreign demand deposits, interest checking deposits, savings deposits and
certificates, money market accounts and noninterest bearing time deposits,
increased from $14.36 billion or 57 percent of total non-equity funding at
December 31, 2000 to $15.30 billion or 61 percent of total non-equity funding at
December 31, 2001. The Corporation's average volume of wholesale deposits and
short-term borrowings decreased from $10.98 billion or 43 percent of total
non-equity funding at December 31, 2000 to $9.90 billion or 39 percent of total
non-equity funding at December 31, 2001.

     Average money market liabilities decreased 8 percent to $5.53 billion from
$6.04 billion for 2000, primarily as a result of decreases in Federal funds
borrowed and securities sold under repurchase agreements. Average money market
assets increased $97 million or 21 percent from 2000. These assets represented 2
percent of average earning assets in 2001, remaining relatively unchanged from
2000.

     The Corporation, in connection with the issuance of commercial paper and
for other corporate purposes, had a $150 million revolving credit agreement with
five nonaffiliated banks and BMO that terminated on December 8, 2001. At that
time, the Corporation renewed the revolving credit agreement, which will expire
on December 7, 2002. There were no borrowings under either credit facility in
2001 or 2000.

     The maintenance of an appropriate balance of maturity and interest rate
sensitivity risks between assets and liabilities is an integral component of
overall liquidity management. Mismatches of actual asset and liability
maturities, or interest rate sensitivity of assets and liabilities, will
increase the potential for profit or loss relative to changes in the general
level of interest rates. Asset and liability mismatches result in the normal
course of servicing customer credit and deposit requirements. The Corporation
uses interest rate swaps and financial futures, as appropriate, to reduce the
level of financial risk inherent in asset and liability mismatches. Gross cash
flows from the Corporation's derivative positions as an end-user were not
material to gross cash flows from financing and investing activities. The
Corporation's Asset/Liability Management Committee monitors and adjusts its
strategies in response to changing liquidity demands.

                                        29
<PAGE>

INTEREST SENSITIVITY

     Interest rate sensitivity information, in the form of interest sensitivity
gap schedules and simulations reflecting exposure of earnings to future changes
in interest rates, is used in conjunction with other data by the Corporation's
banking subsidiaries to monitor and manage their individual interest rate
exposures. The Corporation uses various derivative products, including interest
rate swaps, forward rate agreements, futures, options, and forward commitments
to manage interest rate sensitivities corresponding to various balance sheet
items, thereby modifying its exposure to changing interest rates.

<Table>
<Caption>
                                                                   DECEMBER 31, 2001
                            ------------------------------------------------------------------------------------------------
                                                       REPRICING PERIOD
                            -----------------------------------------------------------------------   NONREPRICING
                            1 - 31 DAYS   32 - 90 DAYS   91 - 365 DAYS   1 - 5 YEARS   OVER 5 YEARS      ITEMS        TOTAL
                            -----------   ------------   -------------   -----------   ------------   ------------    -----
                                                                     (IN MILLIONS)
<S>                         <C>           <C>            <C>             <C>           <C>            <C>            <C>
ASSETS
Loans.....................    $ 6,941       $ 1,376         $ 1,790        $4,387         $1,246        $   213      $15,953
Available-for-sale and
  trading account
  securities..............        660           539           2,135         4,064          1,417             80        8,895
Interest-bearing deposits
  at banks................        196            --              --            --             --             --          196
Federal funds sold and
  securities purchased
  under agreement to
  resell..................        535            --              --            --             --             --          535
Assets held for sale......        122            --              --            --             --             --          122
Other assets..............         --            --              --            --             --          3,345        3,345
                              -------       -------         -------        ------         ------        -------      -------
         Total assets.....    $ 8,454       $ 1,915         $ 3,925        $8,451         $2,663        $ 3,638      $29,046
                              =======       =======         =======        ======         ======        =======      =======
LIABILITIES AND
  STOCKHOLDER'S EQUITY
Time deposits.............      2,454         1,309           2,546           650              5             --        6,964
Savings and interest
  checking deposits.......      8,679            --              --            --             --             --        8,679
Noninterest-bearing
  deposits................         --            --              --            --             --          3,583        3,583
                              -------       -------         -------        ------         ------        -------      -------
         Total deposits...     11,133         1,309           2,546           650              5          3,583       19,226
Federal funds purchased
  and securities sold
  under agreement to
  repurchase..............      3,752           245             134            --             --             --        4,131
Minority
  interest-preferred stock
  of subsidiary...........         --            --              --            --             --            250          250
Other interest-bearing
  liabilities.............      1,069            32             860           350            322             --        2,633
Other noninterest-bearing
  liabilities.............         --            --              --            --             --            609          609
Stockholder's equity......         --            --              --            --             --          2,197        2,197
                              -------       -------         -------        ------         ------        -------      -------
         Total liabilities
           and
           stockholder's
           equity.........    $15,954       $ 1,586         $ 3,540        $1,000         $  327        $ 6,639      $29,046
                              =======       =======         =======        ======         ======        =======      =======
Interest sensitivity gap
  before net interest rate
  swaps, derivative
  products and forward
  commitments.............     (7,500)          329             385         7,451          2,336         (3,001)
         Net interest rate
           swaps..........        171            34             (20)         (142)           (43)            --
                              -------       -------         -------        ------         ------        -------
Interest sensitivity
  gap.....................    $(7,329)      $   363         $   365        $7,309         $2,293        $(3,001)
                              =======       =======         =======        ======         ======        =======
Cumulative gap............                  $(6,966)        $(6,601)       $  708         $3,001
                                            =======         =======        ======         ======
</Table>

                                        30
<PAGE>

     The schedule above presents the Corporation's consolidated interest
sensitivity gap at December 31, 2001. This point-in-time analysis depicts
repricing dates for earning assets, supporting funds and related off-
balance-sheet activities. Generally, dates for repricing are included on a
contractual basis. Certificates of deposit are reported based upon scheduled
maturity without reference to early redemption or renewal options. Fixed term
assets such as residential mortgages and consumer loans are reported based upon
scheduled repayments adjusted for estimated prepayments based on historical
behavior. A negative gap in a given time span indicates an excess of
interest-bearing liabilities over interest earning assets which reprice in that
period. After including interest rate swaps, derivative products and forward
commitments, at December 31, 2001, the Corporation had a cumulative negative
one-year interest rate gap of $6.6 billion. This measure, called the
"contractual gap" position, is calculated without regard to the existence of
nonrepricing items, the behavior of which must be considered in the evaluation
of the Corporation's overall interest rate sensitivity.

     In addition to gap measurements, the Corporation uses simulation modeling
to measure earnings risk and valuation risk, defined as risk to net equity
valuation, as a result of various interest rate scenarios and balance sheet
structures. These risk measurements include the impact of changes in interest
rates on all of the Corporation's assets, liabilities and off-balance-sheet
positions. They do not contemplate actions the Corporation could take to reduce
risk or actions customers might take in response to changing rates. Earnings
risk represents the 12-month impact on net income, and valuation risk represents
the change in value of the Corporation's assets and liabilities from adverse
changes in interest rates over the period that would be required to eliminate
open positions. The model of earnings risk and valuation risk is based on a
statistical analysis of historical data to calculate with 99% confidence the
potential loss in earnings/change in value the Corporation might experience if
an adverse change in market rates were to occur. Shifts in the yield curve and
changes in the shape of the yield curve are among the variables considered.
Limits are established for valuation risk at individual bank and consolidated
levels, and actual exposure is monitored to ensure that these limits are not
exceeded.

     Given a static balance sheet at December 31, 2001, for an immediate 100
basis point upward movement in interest rates, net interest income would
decrease by approximately $24.6 million over the next year compared to what it
would otherwise have been, and the net equity value of all interest-sensitive
positions would decrease by $125.3 million. Conversely, for a decline in
interest rates, net interest income would increase by approximately $6.9 million
and the net equity value of all interest sensitive positions would increase by
$88.0 million. At December 31, 2000, the same analysis using similar assumptions
indicated that for an upward movement in interest rates, net interest income
would have decreased by approximately $20.2 million and the net equity value of
all interest-sensitive positions would have decreased by $119.7 million. A
downward movement in interest rates would have increased net interest income by
$38.4 million and would have increased net equity value by $67.8 million.

     Management believes that the Corporation is well-positioned with its mix of
assets and liabilities to respond to interest rate movements in either
direction.

CASH FLOWS

     Cash flow analysis is an essential element for evaluating a company's
ability to satisfy its obligations to short- and long-term creditors,
bondholders and investors. The Corporation's Consolidated Statements of Cash
Flows can be found on page 55 of this Report. This financial statement is based
on period-end balances and does not reflect average investment or financing
levels.

     As a bank holding company, the Corporation regularly receives and disburses
large volumes of cash and cash equivalents. Since these gross numbers provide
little additional information to financial statement users, the FASB permits
bank holding companies to net certain cash receipts and payments in their cash
flow statements. The Corporation has adopted this net presentation for loans and
deposits.

     The Corporation's Consolidated Statements of Cash Flows divide its
activities into three main categories: operating, investing and financing.
Operating activities consist of those activities not categorized as investing or
financing and generally include cash revenues and expenses associated with
providing services to customers. Investing cash flows are defined as those
arising from the acquisition or disposal of loans, securities, money
                                        31
<PAGE>

market assets, subsidiaries and fixed assets. Financing cash flows include
deposits, both infusions from and dividend payments to the stockholder, along
with borrowings and principal repayments to bondholders or other creditors.

     Cash flows from operations are a significant source of operating capital.
Since applicable accounting statements require that cash transactions involving
assets held for sale and trading assets be included with operating cash flows,
normal year-end fluctuations in these holdings may not appropriately portray the
company's cash flows generated from operations. Core operating cash flows,
consisting of net income before provision for loan losses and depreciation and
amortization, increased by $50 million. Assets held for sale decreased $121
million, while year-end trading account assets increased $27 million.

     In 2001, the Corporation's investing activities utilized a total of $143
million in net cash. Loans, the primary use of new funds, increased $509
million. Bankmont's acquisition of First National Bancorp, Inc. and subsequent
contribution of First National Bank of Joliet stock to the Corporation utilized
funds of $220 million. These and other increases were offset by decreases in
securities of $860 million.

     In 2001, the Corporation's financing activities included accepting customer
deposits, issuing short-term senior notes and utilizing other short-term
borrowings. Financing activities utilized a total of $568 million in net cash.
Short-term borrowings decreased $784 million, while net issuances of short-term
senior notes were $471 million. Gross cash received and paid resulting from the
Corporation's derivative positions as an end-user were not material relative to
gross cash flows from financing or investing transactions.

     In the past three years, the Corporation has had one significant noncash
transaction. On July 1, 2000, Bankmont contributed 100 percent of the common
stock of its wholly-owned subsidiary, Harris Bankmont, Inc. to the Corporation.
Immediately thereafter, Harris Bankmont, Inc. was liquidated and dissolved into
the Corporation under the corporation law of Delaware. Harris Bankcorp, Inc. was
the surviving corporation. The assets of Harris Bankmont, Inc. consisted
primarily of the stock of thirteen community banks located in the Chicago area.
This combination was accounted for at historical cost, similar to a
pooling-of-interests.

SELECTED LOAN MATURITY SPREAD

     Variable rate loans, excluding consumer loans, accounted for 38 percent of
total loans in 2001, a decrease from 47 percent in 2000. Excluding consumer
loans, term loans (those with a remaining contractual maturity in excess of one
year) totaled $1.30 billion. Of these loans, $1.09 billion or 83 percent are due
within five years. Overall, the average FTE yield on total loans decreased to
7.11 percent in 2001 from 8.38 percent in 2000. The Corporation's average prime
rate in 2001 was 6.91 percent compared to 9.23 percent in 2000.

                                        32
<PAGE>

Type of Loan, by Maturity*

<Table>
<Caption>
                                                               DECEMBER 31, 2001
                                                -----------------------------------------------
                                                  WITHIN     1 THROUGH      OVER
                                                  1 YEAR      5 YEARS     5 YEARS      TOTAL
                                                  ------     ---------    -------      -----
                                                                (IN THOUSANDS)
<S>                                             <C>          <C>          <C>        <C>
Commercial, financial and agricultural........  $6,160,570   $1,026,341   $203,196   $7,390,107
Real estate construction......................     418,243       60,709      9,859      488,811
Foreign.......................................      20,548          459      3,805       24,812
                                                ----------   ----------   --------   ----------
                                                $6,599,361   $1,087,509   $216,860   $7,903,730
                                                ==========   ==========   ========   ==========
Loans with:
  Predetermined interest rates................  $1,386,895   $  323,157   $ 60,120   $1,770,172
  Floating interest rates.....................   5,212,466      764,352    156,740    6,133,558
                                                ----------   ----------   --------   ----------
                                                $6,599,361   $1,087,509   $216,860   $7,903,730
                                                ==========   ==========   ========   ==========
</Table>

------------------------
* Excludes installment loans to individuals, real estate mortgages and lease
  financing.

SECURITIES

     Debt and marketable equity securities are classified into two categories.
Trading account securities include those securities purchased for sale in the
near term. The remaining securities are classified as "available-for-sale."
These securities are classified as available-for-sale, even if the company has
no current intent to dispose of them. Available-for-sale securities are carried
at fair value, with net unrealized gains and losses (after-tax) reported as a
separate component of equity. Trading account assets are reported at fair value
with unrealized gains and losses included in trading account income, which also
includes realized gains and losses from closing such positions.

     At December 31, 2001, the fair value of available-for-sale securities was
$67 million above amortized cost. As a result, stockholder's equity included $37
million of unrealized (after tax effect) holding gains. At December 31, 2000,
the fair value of available-for-sale securities was $18 million below amortized
cost, and stockholder's equity included $11 million of unrealized (after tax
effect) holding losses.

     Securities averaged $9.04 billion in 2001, $9.13 billion in 2000, and $8.25
billion in 1999. On an FTE basis, interest income from securities decreased
$90.0 million to $518.1 million in 2001. The overall FTE yield on the
Corporation's securities averaged 5.77 percent during 2001, 6.49 percent during
2000, and 6.08 percent in 1999. Yields on average available-for-sale securities
are based on amortized cost.

     The Corporation periodically repositions its investment portfolio in
response to statutory changes, in order to meet regulatory capital requirements
or, as part of ongoing asset/liability management, to enhance future net
interest income levels while maintaining an appropriate risk/reward
relationship. Decisions to sell securities prior to maturity are a function of
several variables, including current and projected interest rates, variations in
the yield curve, liquidity requirements and the Corporation's current and
expected tax position. During 2001, the Corporation purchased $13.08 billion of
available-for-sale securities, sold $2.55 billion of available-for-sale
securities and had $11.38 billion of available-for-sale securities mature.
During 2000, the Corporation purchased $10.22 billion of available-for-sale
securities, sold $828 million of available-for-sale securities and had $9.13
billion of available-for-sale securities mature. The aforementioned sales of
securities generated a pretax net gain of $43.1 million during 2001 compared to
a net gain of $15.0 million during 2000 and a net gain of $14.6 million in 1999.
On an after-tax basis, the Corporation recorded a net gain from securities sales
of $26.3 million in 2001 compared to $9.2 million in 2000 and $8.9 million in
1999. In some cases, security gains are taken in order to realize otherwise
unrealized profits in anticipation of near-term increases in interest rates.

     Unrealized holding gains for available-for-sale securities, as of December
31, 2001, amounted to $37 million after tax compared to unrealized holding
losses of $18 million after tax as of December 31, 2000.

                                        33
<PAGE>

The change in unrealized gains of $55 million was primarily due to gains in
market value primarily resulting from declines in interest rates.

Carrying Value

<Table>
<Caption>
                                                                      DECEMBER 31
                                                        ---------------------------------------
                                                               2001                 2000
                                                        ------------------   ------------------
                                                          AMOUNT       %       AMOUNT       %
                                                          ------       -       ------       -
                                                                    (IN THOUSANDS)
<S>                                                     <C>          <C>     <C>          <C>
Securities available-for-sale
  U.S. Treasury.......................................  $1,553,322    17.7   $1,557,353    17.1
  Federal agency......................................   4,180,751    47.5    3,912,225    42.9
  Mortgage-backed.....................................   2,359,737    26.8    2,949,973    32.3
  State and municipal.................................     573,560     6.5      495,382     5.4
  Other...............................................     131,375     1.5      210,721     2.3
                                                        ----------   -----   ----------   -----
          Total securities available-for-sale.........  $8,798,745   100.0   $9,125,654   100.0
                                                        ==========   =====   ==========   =====
</Table>

     At year-end 2001, the weighted average maturity of the Corporation's
available-for-sale securities was 6 years and 8 months, a decrease of 2 years
and 6 months from the average maturity at the end of 2000. The maturity
distribution of the investment portfolio at December 31, 2001, together with the
approximate taxable equivalent yield of the portfolio, is presented in the
following table. The weighted average yields shown are computed by dividing an
annualized interest income amount, including the accretion of discounts and the
amortization of premiums, by the amortized cost of the securities outstanding at
December 31, 2001. Yields on tax-exempt securities have been calculated on an
FTE basis.
<Table>
<Caption>
                                                           DECEMBER 31
                              ---------------------------------------------------------------------

                                  U.S. TREASURY          FEDERAL AGENCY          MORTGAGE-BACKED
                              ---------------------   ---------------------   ---------------------
                                           WEIGHTED                WEIGHTED                WEIGHTED
                                           AVERAGE                 AVERAGE                 AVERAGE
                                AMOUNT      YIELD       AMOUNT      YIELD       AMOUNT      YIELD
                                ------     --------     ------     --------     ------     --------
                                 (FULLY TAXABLE EQUIVALENT YIELDS, AS AT BALANCES IN THOUSANDS)
<S>                           <C>          <C>        <C>          <C>        <C>          <C>
Securities
 available-for-sale
 Within 1 year..............  $  303,843     2.71%    $1,919,501     3.76%    $   12,391     6.65
 1 to 5 years...............     915,857     5.04      2,046,588     5.41        530,181     5.23
 5 to 10 years..............     300,390     5.00        185,391     5.72        321,526     6.13
 Over 10 years..............          --       --             --       --      1,490,464     6.55
 No stated maturity.........          --       --             --       --            186     7.30
                              ----------              ----------              ----------
       2001 Total...........  $1,520,090     4.57%    $4,151,480     4.66%    $2,354,748     6.20%
                              ==========     ====     ==========     ====     ==========     ====
       2000 Total...........  $1,551,705     5.46%    $3,904,815     6.58%    $2,971,333     6.75%
                              ==========     ====     ==========     ====     ==========     ====
2001 Average maturity.......       3 years 0 months         1 year 3 months      19 years 10 months
2000 Average maturity.......       3 years 4 months         1 year 9 months       24 years 4 months

<Caption>
                                              DECEMBER 31
                              -------------------------------------------
                               STATE, MUNICIPAL
                                   AND OTHER                TOTAL
                              -------------------   ---------------------
                                         WEIGHTED                WEIGHTED
                                         AVERAGE                 AVERAGE
                               AMOUNT     YIELD       AMOUNT      YIELD
                              --------   --------     ------     --------
                              (FULLY TAXABLE EQUIVALENT YIELDS, AS AT BALANCES IN THOUSANDS)
<S>                           <C>        <C>        <C>          <C>
Securities
 available-for-sale
 Within 1 year..............  $111,814     5.76%    $2,347,549     3.70%
 1 to 5 years...............   256,698     6.55      3,749,324     4.63
 5 to 10 years..............   147,812     7.11        955,119     5.85
 Over 10 years..............    48,001     7.60      1,538,465     6.58
 No stated maturity.........   141,276     6.29        141,462     6.28
                              --------              ----------
       2001 Total...........  $705,601     6.56%    $8,731,919     4.48%
                              ========     ====     ==========     ====
       2000 Total...........  $716,290     6.99%    $9,144,143     6.48%
                              ========     ====     ==========     ====
2001 Average maturity.......     3 years 2 months        6 years 8 months
2000 Average maturity.......      2 years 1 month        9 years 2 months
</Table>

     Other than securities of the U.S. Government and its agencies and
corporations, at December 31, 2001, there were no securities of any one issuer
aggregating more than 10 percent of stockholder's equity of the Corporation. In
the opinion of management, there were no material investments in securities
which would have constituted an unusual risk or uncertainty for the Corporation
at December 31, 2001.

DEPOSITS

     Total deposits in 2001 averaged $18.86 billion, an increase of $380 million
or 2 percent from 2000. The Corporation's average core deposits, consisting of
domestic and foreign demand deposits, interest checking deposits, money market
accounts, passbook and statement savings accounts, savings certificates and
noninterest-bearing time deposits grew $935 million or 7 percent to $15.30
billion. Money market accounts totaling $5.90 billion experienced the largest
growth, up $637 million or 12 percent over 2000 levels. Savings certificates and
passbook and statement savings accounts increased by $316 million or 8 percent
and by $170 million or 9 percent over 2000 levels, respectively. Interest
checking deposits also experienced an increase of $79 million to $428 million.
Other time deposits and deposits in foreign offices totaling $1.56 billion and
$2.07 billion decreased by $275 million and $268 million over 2000 levels,
respectively.

                                        34
<PAGE>

Demand deposits also decreased $280 million or 9 percent to $2.87 billion. Daily
averages and year-to-year comparisons are summarized below.

<Table>
<Caption>
                                                                                                         INCREASE
                                                                               INCREASE (DECREASE)      (DECREASE)
                                                   DECEMBER 31                    2001 VS. 2000       2000 VS. 1999
                                     ---------------------------------------   -------------------   ----------------
                                        2001          2000          1999         AMOUNT        %       AMOUNT      %
                                        ----          ----          ----         ------        -       ------      -
                                                              (DAILY AVERAGES, IN THOUSANDS)
<S>                                  <C>           <C>           <C>           <C>           <C>     <C>          <C>
Demand deposits....................  $ 2,866,518   $ 3,146,273   $ 3,183,193    $(279,755)     (9)   $  (36,920)  (1)
Interest checking deposits.........      427,527       348,608       301,408       78,919      23        47,200   16
Money market accounts..............    5,897,170     5,260,012     4,997,657      637,158      12       262,355    5
Passbook and statement savings
  accounts.........................    1,966,625     1,796,150     1,933,199      170,475       9      (137,049)  (7)
Savings certificates...............    4,069,452     3,753,569     3,486,463      315,883       8       267,106    8
Other time deposits................    1,559,212     1,833,713     1,700,593     (274,501)    (15)      133,120    8
Deposits in foreign offices........    2,071,563     2,340,022     1,627,569     (268,459)    (11)      712,453   44
                                     -----------   -----------   -----------    ---------            ----------
         Total deposits............  $18,858,067   $18,478,347   $17,230,082    $ 379,720       2    $1,248,265    7
                                     ===========   ===========   ===========    =========            ==========
</Table>

     Interest expense on deposits decreased by $164.7 million or 23 percent in
2001 primarily due to lower interest rates. Interest expense on domestic
deposits decreased 18 percent from 2000, while interest on foreign office
deposits decreased by 42 percent compared to the prior year. Effective interest
rates on both domestic and foreign office interest-bearing deposits are
summarized below:

Average Interest Rates Paid

<Table>
<Caption>
                                                               YEARS ENDED DECEMBER 31
                                                              -------------------------
                                                              2001      2000      1999
                                                              ----      ----      ----
<S>                                                           <C>       <C>       <C>
Interest checking deposits..................................  2.00%     2.37%     2.02%
Money market accounts.......................................  2.37      3.46      2.99
Passbook and statement savings accounts.....................  2.52      3.52      3.14
Savings certificates........................................  5.39      5.74      5.11
Other interest-bearing time deposits........................  4.25      6.42      5.19
Time deposits in foreign offices............................  4.17      6.36      4.98
                                                              ----      ----      ----
          Total interest-bearing deposits...................  3.56%     4.79%     4.01%
                                                              ====      ====      ====
</Table>

     Certificates of deposit in denominations of $100,000 or more issued by
domestic offices totaled $2.67 billion at December 31, 2001. Total interest
expense on domestic office certificates of deposit of $100,000 or more amounted
to approximately $143 million compared to $188 million in 2000 and $147 million
in 1999. Virtually all time deposits in foreign offices were in denominations of
$100,000 or more.

     The remaining maturity of domestic office certificates of deposit of
$100,000 or more is as follows:

Domestic Office Certificates of Deposit

<Table>
<Caption>
                                                                   DECEMBER 31
                                                             ------------------------
                                                              2001     2000     1999
                                                              ----     ----     ----
                                                                  (IN MILLIONS)
<S>                                                          <C>      <C>      <C>
Maturities:
  3 months or less.........................................  $1,091   $1,985   $1,772
  3 to 6 months............................................     390      318      305
  6 to 12 months...........................................   1,001      433      324
  Over 12 months...........................................     188      242      146
                                                             ------   ------   ------
          Total............................................  $2,670   $2,978   $2,547
                                                             ======   ======   ======
</Table>

                                        35
<PAGE>

MONEY MARKET ASSETS AND LIABILITIES

     The Corporation conducts most of its money market activities through HTSB.
Average money market assets, consisting primarily of interest-bearing deposits
at banks, Federal funds sold and securities purchased under agreement to resell,
increased 21 percent to $560 million in 2001 from $462 million in 2000. The
average yield on money market assets decreased from 4.85 percent in 2000 to 2.98
percent in 2001. Interest income earned on these assets decreased 25 percent to
$16.7 million in 2001. At December 31, 2001, interest-bearing deposits at banks,
Federal funds sold and reverse repurchase agreements totaled $196 million, $535
million and zero, respectively, compared to $141 million, $466 million and zero
at year-end 2000.

     Money market liabilities, consisting of Federal funds purchased, securities
sold under agreement to repurchase, commercial paper, senior notes and other
short-term borrowings, represent a managed source of funds for the Corporation.
During 2001, money market liabilities averaged $6.34 billion, an decrease of 7
percent from 2000, when money market liabilities averaged $6.86 billion. The
average rate paid on these borrowings decreased from 6.18 percent in 2000 to
3.98 percent in 2001, reflecting generally lower short-term interest rates
experienced by the market during 2001. At December 31, 2001, repurchase
agreements totaled $3.42 billion compared to $3.46 billion at year-end 2000.
Federal funds purchased and securities sold under agreement to repurchase
consist of overnight Federal funds borrowed and securities sold to banks,
brokers and corporations under agreement to repurchase. The repurchase
agreements are generally outstanding for periods ranging from one day to six
months. The following amounts and rates applied during 2001, 2000, and 1999:

Federal Funds Purchased and Securities Sold Under Agreement to Repurchase

<Table>
<Caption>
                                                                2001          2000          1999
                                                                ----          ----          ----
                                                                         (IN THOUSANDS)
<S>                                                          <C>           <C>           <C>
Amount outstanding at end of year........................    $4,130,968    $4,407,585    $4,580,887
Average interest rate of outstanding borrowings at end of
  year...................................................          1.67%         6.10%         4.65%
Highest amount outstanding as of any month-end during the
  year...................................................    $5,025,528    $5,610,183    $4,580,887
Daily average amount outstanding during the year.........    $4,643,411    $4,762,058    $3,695,446
Daily average annualized rate of interest................          3.86%         6.12%         4.80%
</Table>

     Short-term borrowings consist primarily of term borrowings in excess of
three days, term Federal funds purchased and short sales of securities. The
following amounts and rates applied during 2001, 2000 and 1999:

Short-Term Borrowings

<Table>
<Caption>
                                                                2001          2000          1999
                                                                ----          ----          ----
                                                                         (IN THOUSANDS)
<S>                                                          <C>           <C>           <C>
Amount outstanding at end of year........................    $  709,012    $1,492,614    $  684,127
Average interest rate of outstanding borrowings at end of
  year...................................................          1.94%         6.72%         6.44%
Highest amount outstanding as of any month-end during the
  year...................................................    $1,317,536    $1,540,611    $1,044,098
Daily average amount outstanding during the year.........    $  646,569    $  989,766    $  512,311
Daily average annualized rate of interest................          4.57%         6.36%         5.16%
</Table>

                                        36
<PAGE>

     Commercial paper has been sold directly by Bankcorp to a number of
investors, including individuals, partnerships, corporations, banks and other
financial institutions in various amounts with initial terms not exceeding 270
days. The following amounts and rates applied during 2001, 2000 and 1999:

Commercial Paper

<Table>
<Caption>
                                                                  2001        2000        1999
                                                                  ----        ----        ----
                                                                         (IN THOUSANDS)
<S>                                                             <C>         <C>         <C>
Amount outstanding at end of year...........................    $391,752    $366,614    $245,050
Average interest rate of outstanding commercial paper at end
  of year...................................................        1.64%       6.28%       4.67%
Highest amount outstanding as of any month-end during the
  year......................................................    $391,752    $366,614    $332,479
Daily average amount outstanding during the year............    $242,672    $285,156    $286,362
Daily average annualized rate of interest...................        3.86%       6.07%       4.85%
</Table>

     Senior notes are short- and medium-term notes issued to institutional
investors from time-to-time. During 2001, 2000 and 1999 only short-term notes
were outstanding. The following amounts and rates applied during 2001, 2000 and
1999:

Senior Notes

<Table>
<Caption>
                                                                 2001         2000          1999
                                                                 ----         ----          ----
                                                                          (IN THOUSANDS)
<S>                                                            <C>         <C>           <C>
Amount outstanding at end of year..........................    $860,000    $  389,500    $1,500,000
Average interest rate of outstanding senior notes at end of
  year.....................................................        2.81%         6.59%         5.40%
Highest amount outstanding as of any month-end during the
  year.....................................................    $985,000    $1,228,000    $1,500,000
Daily average amount outstanding during the year...........    $808,014    $  822,283    $1,322,518
Daily average annualized rate of interest..................        4.21%         6.36%         5.22%
</Table>

                                        37
<PAGE>

DISTRIBUTION OF LOANS BY TYPE OF BORROWER

SUMMARY

     In 2001, significant year-to-year loan growth occurred among the following
loan categories: construction, mortgages secured by residential and commercial
property and other installment

<Table>
<Caption>
                                                              YEARS ENDED DECEMBER 31
                                             ---------------------------------------------------------
                                               2001        2000        1999        1998        1997
                                               ----        ----        ----        ----        ----
                                                                   (IN MILLIONS)
<S>                                          <C>         <C>         <C>         <C>         <C>
Domestic Loans:
  Manufacturing and processing.............  $ 2,533.4   $ 2,545.2   $ 2,691.2   $ 2,510.7   $ 2,376.6
  Public and private service industries....    2,200.0     2,903.2     2,687.7     2,553.4     2,412.0
  Mining (including oil and gas)...........       22.6        34.2        29.3        12.5        14.7
  Farmers..................................      243.8       186.7       173.1       141.6       166.2
  Individuals (single payment).............      538.2       550.4       486.0       564.4       549.1
  Loans to purchase and carry securities...        9.9        20.1        20.9        23.9        25.6
  State and political subdivisions,
    including industrial revenue bonds.....        6.3         4.2         9.1        12.4        14.0
  Other commercial.........................    1,020.5     1,011.7       939.9       810.7       534.7
                                             ---------   ---------   ---------   ---------   ---------
         Total Commercial..................    6,574.7     7,255.7     7,037.2     6,629.6     6,092.9
                                             ---------   ---------   ---------   ---------   ---------
  Finance companies........................      133.2       153.6       192.8       197.6       219.5
  Commercial banks.........................       48.6        64.9         4.6          --         1.5
  Investment companies.....................       51.1        94.8        94.2       142.8        96.0
  Mortgage companies.......................       17.6        51.8        60.5        90.4        68.4
  Other financial institutions.............      401.6       590.5       769.6       726.4       631.4
                                             ---------   ---------   ---------   ---------   ---------
         Total Financial Institutions......      652.1       955.6     1,121.7     1,157.2     1,016.8
                                             ---------   ---------   ---------   ---------   ---------
         Total Brokers and Dealers.........      163.3       191.9       524.7       522.3       437.3
                                             ---------   ---------   ---------   ---------   ---------
  Construction.............................      488.8       248.9       145.6       184.9       197.4
  Mortgages secured by residential
    property...............................    4,572.8     3,975.0     3,474.9     3,267.0     2,861.7
  Mortgages secured by commercial
    property...............................    1,643.9     1,594.0     1,028.2       820.0       677.8
                                             ---------   ---------   ---------   ---------   ---------
         Total Real Estate.................    6,705.5     5,817.9     4,648.7     4,271.9     3,736.9
                                             ---------   ---------   ---------   ---------   ---------
  Charge card..............................        4.1          --          --          --          --
  Other installment........................    1,802.2     1,277.1     1,055.2       823.8       789.3
                                             ---------   ---------   ---------   ---------   ---------
         Total Installment (to
           individuals)....................    1,806.3     1,277.1     1,055.2       823.8       789.3
                                             ---------   ---------   ---------   ---------   ---------
         Total Lease Financing.............       27.0        27.5        22.9        26.3        34.4
                                             ---------   ---------   ---------   ---------   ---------
         Total Domestic Loans..............   15,928.9    15,525.7    14,410.4    13,431.1    12,107.6
                                             ---------   ---------   ---------   ---------   ---------
Foreign Loans:
  Governments and official institutions....         --          --         0.5         0.8         0.9
  Banks and other financial institutions...       10.0        12.9        10.8        52.9        51.0
  Other, primarily commercial and
    industrial.............................       14.8        11.3        26.9        28.2        37.1
                                             ---------   ---------   ---------   ---------   ---------
         Total Foreign Loans...............       24.8        24.2        38.2        81.9        89.0
                                             ---------   ---------   ---------   ---------   ---------
Less unearned income.......................        0.3         0.4         0.9         1.9         4.4
                                             ---------   ---------   ---------   ---------   ---------
  Loans, net of unearned income............  $15,953.4   $15,549.5   $14,447.7   $13,511.1   $12,192.2
                                             =========   =========   =========   =========   =========
</Table>

                                        38
<PAGE>

     Average loans increased by 4 percent during 2001 compared to 2000 daily
average loans over the last five years were as follows:

<Table>
<Caption>
                                                          DECEMBER 31
                              -------------------------------------------------------------------
                                 2001          2000          1999          1998          1997
                                 ----          ----          ----          ----          ----
                                                 (DAILY AVERAGES IN THOUSANDS)
<S>                           <C>           <C>           <C>           <C>           <C>
Commercial, financial and
  agricultural..............  $ 7,940,958   $ 8,904,376   $ 8,621,860   $ 7,955,876   $ 7,099,644
Real estate construction....      345,230       201,970       162,290       170,997       232,687
Real estate mortgages.......    5,903,295     4,937,322     4,026,187     3,831,882     3,010,950
Installment.................    1,523,083     1,128,638       981,576       902,486       909,105
Charge card.................        1,854            --            --            --       806,085
Foreign.....................       47,384        29,983        33,627        77,010        92,390
Lease financing.............       25,347        23,807        23,183        28,616        35,225
                              -----------   -----------   -----------   -----------   -----------
          Total loans.......   15,787,151    15,226,096    13,848,723    12,966,867    12,186,086
Less unearned income........          347           604         1,294         2,981         5,667
                              -----------   -----------   -----------   -----------   -----------
          Loans, net of
            unearned
            income..........  $15,786,804   $15,225,492   $13,847,429   $12,963,886   $12,180,419
                              ===========   ===========   ===========   ===========   ===========
</Table>

     Lending is diversified into several categories at the Corporation.
Concentrations to individual and related customers are monitored and risks
within specific industries are tracked in order to reduce overall exposure. When
lending to specialized industries, such as Agribusiness or Futures and
Securities, the risks are mitigated by following specifically developed policies
and procedures in the underwriting process as well as obtaining security for
most of these transactions. Secured and unsecured loans totaled $13.77 billion
and $2.19 billion, respectively, of total loans at 2001 year-end.

RISK MANAGEMENT

SUMMARY

     In a commercial banking environment, corporate personnel must identify,
quantify, monitor, evaluate and manage the risks inherent in its businesses,
product lines and other activities. Through its risk management framework the
Corporation:

          (1) Maintains a clear philosophy, approach and accountability towards
     risk-taking activities in well-documented policies, directives and
     procedures.

          (2) Fosters an environment where risks incurred are commensurate with
     qualifications, skills and expertise, possessed by personnel responsible
     for the related transactions or decisions.

          (3) Implements risk measures and limits to contain, diversify, or
     otherwise mitigate certain risks the Corporation faces.

          (4) Continuously enhances information flows and reporting to monitor
     exposures and ensure timely responses to any change in risk profiles.

     The risk management framework helps to ensure that the Corporation employs
its capital efficiently and achieves returns commensurate with the risk
undertaken. The Corporation's risk management process includes continuous
monitoring and review of the following classes of risk:

          (1) Credit risk, which is risk of loss of principal, interest or
     revenues due to the obligor's inability or failure to repay a financial
     obligation. This includes loan loss risk, replacement risk and settlement
     risk.

          (2) Market risk (also often referred to as position risk), is the risk
     of a potential negative impact on the Corporation's balance sheet and
     income statement resulting from adverse changes in the price or value of
     open or unhedged market positions.

                                        39
<PAGE>

          (3) Operational risk is defined as the risk of loss resulting from an
     internal control breakdown, for example in communications, information or
     transactional processing, legal/compliance issues, technology/systems or
     procedural failures, human errors, disasters or criminal activity.

          (4) Fiduciary risk, which arises when the Corporation, or its
     employees acting purportedly on its behalf, take actions which violate the
     trust and confidence properly placed in the Corporation by the client.

          (5) Liquidity and funding risk is the risk that the organization will
     be unable to meet its financial commitments without having to raise funds
     at unreasonable prices or sell assets on a forced basis.

     The Corporation applies a comprehensive risk assessment framework to
monitor these risks by line of business, customer and product line. The roles
and relationships of the Corporation's management committees and the Board of
Directors' oversight committees are well-defined and ensure comprehensive risk
management and oversight. The Risk Management and Fiduciary Risk Management
Committees are manned by senior managers from various business units of the
Corporation who bring specialized expertise to bear on risk management issues.
Through this risk management structure, the Corporation evaluates risks,
establishes formal policies, sets risk/return parameters and reviews performance
versus objectives. Management believes that effective policies, procedures,
monitoring and review systems are in place to determine that risk is thoroughly
and effectively analyzed, risk is well-diversified, any exceptions are dealt
with in a timely manner and compensation for risk is appropriately established
and meets return objectives.

     Although the majority of the Corporation's customers are located in the
Midwestern region of the United States, this concentration risk is mitigated by
a number of factors (see Note 10 to Financial Statements on page 77 for a
detailed discussion). Further, the Corporation maintains a watch on the economic
health of the region, primarily to address risk in its consumer lending
business.

     The level of credit risk inherent in the Corporation's earning assets is
evidenced, in part, by nonperforming assets consisting of loans placed on
nonaccrual status when collection of interest is doubtful, restructured loans on
which interest is being accrued but which have terms that have been renegotiated
to provide for a reduction of interest or principal, and real estate or other
assets which have been acquired in full or partial settlement of defaulted
loans. These assets, as a group, are not earning at rates comparable to other
earning assets. Assets received in satisfaction of debt are recorded by the
Corporation at lower of cost or fair value less estimated sales costs. Losses of
principal on nonperforming assets are charged off when, in management's opinion,
the amounts are uncollectible. Interest on nonaccrual loans is recognized as
income only at the time cash is received, although such interest may be applied
to reduce a loan's carrying value if the collectibility of principal is in
doubt. Information is reported monthly to the Board of Directors regarding
nonperforming loans and other nonperforming assets owned, primarily real estate.

     Management places an individual commercial or real estate credit on
nonaccrual status when the collection of interest is doubtful or when principal
or interest is 90 days past due unless the past due amounts are in process of
collection and the loan is adequately collateralized. Non-real estate secured
open-end consumer loans are charged off when they become 180 days past due,
while non-real estate secured closed-end consumer loans are charged off when
they become 120 days past due. For consumer loans secured by residential real
estate, a current assessment of value is made no later than 180 days past due.
Any outstanding loan balance in excess of the value of the property, less cost
to sell, is classified "Loss" and charged off.

     The Corporation extends credit to both commercial and retail customers.
Lending activities are centered in those industries in which it has demonstrated
expertise and specialized knowledge. All recognized risks are mitigated, to the
fullest extent possible, through loan structure and the perfection of a security
interest in collateral. The Corporation prescribes, within policy guidelines,
specific advance rates to be used in lending against readily marketable
collateral. These rates take into consideration the collateral type and the
term. Other collateral advances are set to reflect the marketability and
liquidation value of the collateral and normal advance rates are set by
corporate policy with deviations necessitating specific documentation and
approval.

     In addition to risks on earning assets, the Corporation has various
commitments and contingent liabilities outstanding that are not reflected on its
Consolidated Statements of Condition. Examples of these "off-
                                        40
<PAGE>

balance-sheet" items include assets held in trust, loan commitments and letters
of credit. Virtually all off-balance-sheet items must conform to the same risk
review process as loans and are subject to the Corporation's preset limits on
customer and product risk. Various hedging strategies are employed to reduce
certain types of exposure. Management reviews the magnitude and quality of
outstanding commitments and contingent liabilities.

     The Corporation's exposure to interest rate risk is primarily managed
within the Corporation's Treasury Group. The Corporation follows Treasury Group
Directives to define the maximum potential exposures that are permissible for
activities involving interest rate risk. The Standard is defined in terms of
both earnings risk and valuation risk for the Corporation's banking
subsidiaries. For further information on interest rate risk, see the Interest
Sensitivity section on page 30 of this Report.

NONACCRUAL, RESTRUCTURED AND PAST DUE LOANS

     As of December 31, 2001 non-performing loans represented 1.35% of total
loans, as compared to .67% at year-end 2000. Since the total of other assets
received in satisfaction of debt are very modest, non-performing assets also
measured 1.35% of total loans, versus .69% one year earlier. While the absolute
dollars associated with non-performing loans have increased when comparing the
years ended December 31, 2000 and December 31, 2001, a contraction in total
loans at HTSB magnified the impact of the dollar increase in non-performing
loans as a percentage of total loans.

     Non-performing loan and asset levels have been negatively impacted by
recessionary economic conditions in the United States, which significantly
affected commercial loan quality. These conditions were exacerbated by the
events of September 11th, which negatively impacted consumer confidence and
deferred recovery from weakened business conditions.

     There are now signs that this economic recovery has commenced and that
growth in the U.S. economy will gradually gather strength over the course of
2002. Based on this economic outlook and the predictable lag in its positive
effect, we expect a relatively stable level of non-performing loans during the
first two quarters of 2002 and to decline somewhat in the second half of the
year.

     The Corporation's non-performing loans are all made to domestic borrowers
and are not significantly concentrated in any industry category; however, in a
general sense, many of the non-performing loans reflect the weakness in the
manufacturing sector of the economy.

                                        41
<PAGE>

     Interest shortfall is the difference between the gross amount of interest
that would have been recorded if all year-end nonperforming loans had been
accruing at their original terms and the cash-basis interest income actually
recognized. Interest shortfall was $14.8 million in 2001 compared to $6.1
million in 2000.

<Table>
<Caption>
                                                        YEARS ENDED DECEMBER 31
                                         -----------------------------------------------------
                                           2001        2000       1999       1998       1997
                                           ----        ----       ----       ----       ----
                                                            (IN THOUSANDS)
<S>                                      <C>         <C>         <C>        <C>        <C>
Nonaccrual loans.......................  $212,301    $100,916    $25,205    $24,152    $22,729
Restructured loans.....................     2,495       2,949      2,975      1,523        598
                                         --------    --------    -------    -------    -------
          Total nonperforming loans....   214,796     103,865     28,180     25,675     23,327
Other assets received in satisfaction
  of debt..............................     1,020       3,457      1,496        923      1,741
                                         --------    --------    -------    -------    -------
          Total nonperforming assets...  $215,816    $107,322    $29,676    $26,598    $25,068
                                         ========    ========    =======    =======    =======
90-day past due loans, still accruing
  interest (all domestic)..............  $ 27,145    $ 30,652    $39,245    $24,227    $29,178
                                         ========    ========    =======    =======    =======
Gross amount of interest that would
  have been recorded if all year-end
  nonperforming loans had been accruing
  interest at their original terms.....  $ 14,847    $  6,106    $ 1,452    $ 2,072    $ 1,422
Interest income actually recognized....        --          --         --         --         --
                                         --------    --------    -------    -------    -------
          Interest shortfall...........  $ 14,847    $  6,106    $ 1,452    $ 2,072    $ 1,422
                                         ========    ========    =======    =======    =======
Nonperforming loans to total loans at
  year-end.............................      1.35%       0.67%      0.20%      0.19%      0.21%
Nonperforming assets to total loans at
  year-end.............................      1.35        0.69       0.21       0.20       0.23
</Table>

LOAN CONCENTRATIONS

     Management monitors industry loan concentrations in an effort to maintain a
well-diversified loan portfolio. Excluding total mortgage loans, at December 31,
2001 the Corporation's loan portfolio did not include any single industry
concentration in excess of 10 percent of total consolidated loans.

     The largest category of the Corporation's loans was domestic commercial,
which totaled $6.57 billion, or 41 percent of total outstandings at year-end
2001. Most of these credits were extended to manufacturing and service-related
companies. Outstandings to agribusiness and food-related industries represented
26 percent of all manufacturing loans and 4 percent of total consolidated loans.
The largest concentration within service-related industries was business and
personal, which accounted for 36 percent of all service-related credits and 5
percent of total loans.

     Foreign loans totaled $25 million at year-end 2001, accounting for 0.2
percent of the Corporation's total outstandings.

     Real estate loans, including residential mortgages, totaled $6.71 billion
at December 31, 2001, or 42 percent of total outstandings. First and second
mortgage loans collateralized by residential property totaled $4.57 billion, or
29 percent of loans. Commercial real estate mortgages and construction loans
totaled $2.13 billion at the end of 2001, representing 13 percent of loans.
Further details on the Corporation's commercial real estate outstandings can be
found below.

COMMERCIAL REAL ESTATE

     The commercial real estate market in certain areas of the country has
historically experienced depressed conditions from time to time. In the past,
many banks with loans to borrowers in this industry have reported large
increases in nonperforming assets and corresponding increases in their
allowances for loan losses resulting from commercial real estate transactions.
This phenomenon tends to be cyclical and varies by location.

                                        42
<PAGE>

     As of December 31, 2001, the Corporation, primarily through its banking
subsidiaries, had outstanding commercial real estate loans of approximately $2.3
billion, which included both construction loans and commercial credits
collateralized by commercial real estate. The vast majority of these loans are
collateralized by real estate located in the Chicago metropolitan area. Of the
outstanding commercial real estate loans, approximately $81 million were
classified as nonperforming assets representing less than 1 percent of total
consolidated loans. There were no material charge-offs related to commercial
real estate loans during 2001 or 2000. Management does not currently anticipate
the need to increase its allowance for possible loan losses to reflect potential
charge-offs in its commercial real estate loan portfolio.

PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES

     The loan loss reserve represents an aggregation of the subsidiary banks'
reserves. Accounting and Regulatory guidance requires that each institution's
loan loss reserve (or, allowance for loan and lease losses) be maintained at a
level that is adequate to absorb all estimated inherent losses in the Bank's
loan and lease portfolio. Therefore, the Corporation's reserve incorporates all
existing, significant issues affecting repayment capacity. Importantly, as the
loan loss reserve is a general reserve for unconfirmed losses, it is the
Corporation's policy to charge-off any confirmed losses in the portfolio upon
identification.

     The Corporation's approach to evaluating reserve adequacy is wholly
consistent with the fundamental tenets of regulatory and accounting guidance. As
part of the process of determining the level of expected losses within each
entity's loan and lease portfolio, and, thus, the appropriate level for the loan
loss reserve, management undertakes a conservative analysis to ensure that the
reserve appropriately reflects a margin for the imprecision inherent in most
estimates of expected credit losses. This analysis incorporates two principal
elements: quantitative and qualitative analysis. In its quantitative analysis,
each entity is required to segment its loans into discrete loan pools of similar
risk content. (Segmentation is typically determined by risk rating for
commercial and commercial real estate loans, and on a pooled basis for all
consumer loans, generally on the basis of product type. Segmentation may be
altered based upon changes in strategy or risk characteristics within a given
loan pool.) The entity, then, utilizes a migration analysis to determine the
historical Expected Loss contained within its loan pools. The Expected Loss
within each pool represents the loss associated with specific loans in each
particular loan pool as of January 1st which migrate to loss over the ensuing
twelve month period (duration of the loan for classified credits). Critical to
the effective establishment of proper expected loss rates for each loan pool is
a thorough understanding of the entity's asset quality and the associated
trends, such as changing portfolio fundamentals (e.g., changes in the volume and
severity of non-performing loans, historical charge-off and provision
experience, etc.). This assessment is performed via the evaluation of eight
specific qualitative factors, as outlined in regulatory guidance. This
qualitative assessment provides support for the determination of the appropriate
migration period, as well as adjustments, if necessary, to historical loss rates
in light of current trends and conditions. The evaluation of these eight
qualitative factors also provides necessary support for maintaining an excess of
total reserves over expected loss to account for any internal or external
information received which is not yet reflected in the historical loss factors
or risk ratings. The results of this combined assessment are then used to assess
the level of expected loss within the entity's portfolio, along with a margin
for the imprecision inherent in most estimates of expected credit losses.

     Peer ratio analysis is utilized as a supplemental check for the overall
reasonableness of the institution's loan loss reserve assessment. Given that
such an analysis is not, on its own, a sufficient basis for determining the
adequacy of the loan loss reserve, the Corporation undertakes a separate,
comprehensive analysis of each portfolio and the factors affecting loan and
lease collectibility, as outlined above.

     A critical component of establishing and maintaining adequate reserve
protection is the entity's capability to recognize and report changes in its
risk profile (specifically, identifying potential problem loan situations) in an
accurate and timely manner. Accordingly, the Corporation maintains an effective
risk rating system by which it is able to identify, monitor and manage asset
quality issues.

     All the Corporation's entities are required to assess their provisioning
methodologies no less frequently than annually, and must review and ratify their
provisions on a quarterly basis. The adequacy of provisioning is

                                        43
<PAGE>

assessed relative to a variety of factors, including, but not limited to: the
results of the qualitative analysis (including trends in qualitative factors
that may impact future quarters' asset quality); forecasts of loan portfolio
growth (including concentrations); economic conditions; trends in expected loss
(as indicated in risk ratings and actual loss experience, as amended for
qualitative factors) which may impact future quarters' charge-offs; and, trends
in peer ratios and asset quality that may portend weakening industry segments.

     On a regular basis, management identifies portions of specific commercial
and real estate credits as "doubtful." These credits include loans where less
than full repayment is reasonably predictable, the loan is classified as
nonaccrual and the borrower is experiencing serious financial problems.
Approximately 33 percent, 21 percent and 6 percent of the consolidated allowance
for possible loan losses was represented by doubtful portions of loans at
December 31, 2001, 2000 and 1999, respectively. At December 31, 2001, the
Corporation had identified $97.8 million as potential losses in loans internally
categorized as doubtful, compared to $42.8 million at year-end 2000. The
increased level of loans categorized as doubtful at December 31, 2001 related
directly to the increase in nonperforming assets in 2001. See the Nonaccrual,
Restructured and Past Due Loans section on page 41 of this Report for further
discussion.

     At December 31, 2001 and 2000, the Corporation designated all of the
allocated portion of the allowance to cover total domestic credit exposure only;
accordingly, no allocation was deemed necessary for foreign exposure.

     During 2001, the provision for loan losses increased to $220.1 million,
compared to $34.1 million in 2000. The 2001 provision included a special third
quarter charge of $125 million for Bankcorp ($121 million for HTSB and $4
million for Harris Bank Barrington). The increase in provision was necessary due
to the economic deterioration experienced in 2001, which was primarily centered
in the Commercial & Industrial loan portfolios. At year-end 2001, the allowance
for possible loan losses was $292 million, or 1.83 percent of total loans
outstanding, compared to $170 million or 1.10 percent of total loans in 2000.
The provision for loan losses is established and reviewed based on the following
criteria: current economic trends, current status of loan portfolio, Federal
regulatory requirements, expected net charge-offs and peer group analysis. With
regard to establishing the provision and as a monitoring tool, the ratio of the
allowance for possible loan losses to total loans and the ratio of the allowance
for possible loan losses to nonperforming loans are evaluated on a regular
basis. At year-end 2001, the ratios of the allowance for possible loan losses to
total loans and to nonperforming loans were 1.83 percent and 136 percent,
respectively.

     Net charge-offs in 2001 were $104.5 million, or 0.66 percent of average
loans outstanding as compared to $26.3 million, or 0.17 percent of average loans
outstanding in 2000. Net charge-offs of domestic commercial loans amounted to
$98.5 million in 2001, or 1.33 percent of average domestic commercial loans
outstanding, an increase from $23.4 million, or 0.24 percent of average domestic
commercial loans outstanding in 2000. Installment loans, including real estate
mortgages, had net charge-offs of $6.1 million in 2001, or 0.07 percent of
average outstandings, and $2.9 million or 0.05 percent of average outstandings
in 2000. Over the five-year period ending December 31, 2001, combined net
charge-offs for the total portfolio were 0.34 percent of average total loans
outstanding.

     The Federal Reserve Board has established rules requiring banking
institutions to establish special reserves against the risks presented in
certain international assets, as determined by the Board. At December 31, 2001
and 2000, the Corporation was not required to maintain any special reserve under
the aforementioned regulation.

     The following table sets forth the Corporation's allocation of the
allowance for possible loan losses. This allocation is based on management's
subjective estimates. The amount allocated to a particular category should not
be interpreted as the only amount available for future charge-offs that may
occur within that

                                        44
<PAGE>

category; it may not be indicative of future charge-off trends and it may change
from year to year based on management's assessment of the risk characteristics
of the loan portfolio.

Allocation of the Allowance for Possible Loan Losses

<Table>
<Caption>
                                   2001                        2000                        1999
                         -------------------------   -------------------------   -------------------------
                                     LOAN CATEGORY               LOAN CATEGORY               LOAN CATEGORY
                                       AS A % OF                   AS A % OF                   AS A % OF
                         ALLOWANCE    TOTAL LOANS    ALLOWANCE    TOTAL LOANS    ALLOWANCE    TOTAL LOANS
                         ---------   -------------   ---------   -------------   ---------   -------------
                                                          (IN THOUSANDS)
<S>                      <C>         <C>             <C>         <C>             <C>         <C>
Allocated Portion:
  Commercial...........  $208,980         59.5%      $119,123         65.9%      $ 70,235         68.2%
  Retail...............     8,983         40.3         12,944         34.0          7,444         31.5
  Foreign..............        --          0.2             --          0.1             --          0.3
                         --------        -----       --------        -----       --------        -----
Total Allocated
  Portion..............   217,963        100.0%       132,067        100.0%        77,679        100.0%
                                         =====                       =====                       =====
Unallocated Portion....    74,315          N/A         38,350          N/A         84,455          N/A
                         --------                    --------                    --------
       Total...........  $292,278                    $170,417                    $162,134
                         ========                    ========                    ========
</Table>

                                        45
<PAGE>

Analysis of Allowance for Possible Loan Losses

<Table>
<Caption>
                                                        YEARS ENDED DECEMBER 31
                                  -------------------------------------------------------------------
                                     2001          2000          1999          1998          1997
                                     ----          ----          ----          ----          ----
                                                            (IN THOUSANDS)
<S>                               <C>           <C>           <C>           <C>           <C>
Beginning balance...............  $   170,417   $   162,134   $   153,484   $   143,586   $   154,787
                                  -----------   -----------   -----------   -----------   -----------
Charge-offs:
  Commercial, financial and
     agricultural...............      100,726        27,555        18,925        23,090        17,215
  Real estate construction......           --            --            --             1           757
  Installment and real estate
     mortgages..................       11,022         7,415         9,385        10,291         7,271
  Charge card...................           --            --            --            --        58,897
                                  -----------   -----------   -----------   -----------   -----------
          Total charge-offs.....      111,748        34,970        28,310        33,382        84,140
                                  -----------   -----------   -----------   -----------   -----------
Recoveries:
  Commercial, financial and
     agricultural...............        2,249         4,106         4,899         9,088         5,343
  Real estate construction......           --            --            --            --           673
  Installment and real estate
     mortgages..................        4,951         4,540         4,181         3,374         1,502
  Charge card...................           --            --            --            --         5,894
                                  -----------   -----------   -----------   -----------   -----------
          Total recoveries......        7,200         8,646         9,080        12,462        13,412
                                  -----------   -----------   -----------   -----------   -----------
          Net charge-offs.......      104,548        26,324        19,230        20,920        70,728
                                  -----------   -----------   -----------   -----------   -----------
Provisions charged to expense:
  Domestic......................      220,135        34,052        27,880        30,818        59,527
  Foreign.......................           --            --            --            --            --
                                  -----------   -----------   -----------   -----------   -----------
          Total provisions......      220,135        34,052        27,880        30,818        59,527
                                  -----------   -----------   -----------   -----------   -----------
Allowance related to acquired
  loans.........................        6,274           555            --            --            --
                                  -----------   -----------   -----------   -----------   -----------
Ending balance..................  $   292,278   $   170,417   $   162,134   $   153,484   $   143,586
                                  ===========   ===========   ===========   ===========   ===========
Net loans, end of period........  $15,953,439   $15,549,468   $14,447,674   $13,511,091   $12,192,237
                                  ===========   ===========   ===========   ===========   ===========
Net loans, daily averages.......  $15,761,457   $15,225,492   $13,847,429   $12,963,886   $12,180,419
                                  ===========   ===========   ===========   ===========   ===========
Ratios:
  Net charge-offs to average
     loans outstanding..........         0.66%         0.17%         0.14%         0.16%         0.58%
  Allowance for possible loan
     losses to loans outstanding
     (end of period)............         1.83          1.10          1.12          1.14          1.18
  Allowance for possible loan
     losses to nonperforming
     loans (end of period)......          136           164           575           598           616
  Allowance for possible loan
     losses to nonperforming
     assets.....................          135           159           546           577           573
  Net charge-offs to allowance
     for possible loan losses
     (beginning of period)......           61            16            13            15            46
</Table>

                                        46
<PAGE>

INTERNATIONAL BANKING

SUMMARY

     International banking services of the Corporation include extension of
foreign credits, foreign exchange trading activities and dealings in
Eurocurrencies. These services are conducted through the Chicago headquarters;
the Nassau branch office; and HBIC.

     International banking services contributed $17.5 million, or 11 percent, of
the Corporation's 2001 consolidated net income, compared to $22.7 million or 7
percent in 2000. International operating income was $47.5 million in 2001 and
represented 2 percent of the Corporation's total operating income. In both 2000
and 1999, international operating income represented 2 percent of the
Corporation's total operating income. Assets and liabilities associated with
foreign domiciled customers are summarized as follows:

Foreign Assets and Liabilities

<Table>
<Caption>
                                                                       DECEMBER 31
                                                              ------------------------------
                                                                2001       2000       1999
                                                                ----       ----       ----
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Loans:
  Governments and official institutions.....................  $     --   $     --   $    504
  Banks and other financial institutions....................    10,039     12,913     10,751
  Other, primarily commercial and industrial................    14,773     11,300     26,890
                                                              --------   --------   --------
          Total loans.......................................    24,812     24,213     38,145
                                                              --------   --------   --------
Deposits in banks located outside the United States:
  Interest-bearing..........................................   195,722    157,750    239,832
  Other.....................................................     2,401     14,581      4,704
                                                              --------   --------   --------
          Total deposits in banks...........................   198,123    172,331    244,536
                                                              --------   --------   --------
Acceptances and other identifiable assets...................     5,806     37,075     39,616
                                                              --------   --------   --------
          Total identifiable foreign assets.................  $228,741   $233,619   $322,297
                                                              ========   ========   ========
Deposit liabilities:
  Banks located in foreign countries........................  $ 53,180   $ 80,369   $ 83,014
  Foreign governments and official institutions.............        --         --         --
  Other demand..............................................   125,213    144,932    106,209
  Other time and savings....................................   110,097    103,073     74,707
                                                              --------   --------   --------
          Total deposit liabilities.........................   288,490    328,374    263,930
Short-term borrowings.......................................   321,886    418,426    143,333
Acceptances outstanding.....................................     5,789     27,415     39,447
                                                              --------   --------   --------
          Total identifiable foreign liabilities............  $616,165   $774,215   $446,710
                                                              ========   ========   ========
</Table>

                                        47
<PAGE>

GEOGRAPHIC DISTRIBUTION

     As of year-end 2001, substantially all international loans,
interest-bearing deposits at banks and deposits in foreign offices represented
U.S. dollar claims The geographical distribution of international loans and
interest-bearing deposits at banks is presented in the following table:

International Banking by Domicile of Obligor

<Table>
<Caption>
                                             INTERNATIONAL LOANS
                                             --------------------   INTEREST-BEARING
                                             DOMESTIC    FOREIGN      DEPOSITS AT
                                              OFFICES    OFFICES         BANKS          TOTAL      %
                                             --------    -------    ----------------    -----      -
                                                                  (IN THOUSANDS)
<S>                                          <C>         <C>        <C>                <C>        <C>
DECEMBER 31, 2001
Continental Europe.........................   $   279    $ 1,850        $  8,433       $ 10,562     5
Pacific and Far East.......................        --        218          66,350         66,568    30
United Kingdom and Ireland.................     1,085      1,686          16,297         19,068     9
Western Hemisphere (excluding U.S. and
  Canada)..................................       180         21          51,656         51,857    23
Canada.....................................    14,543         --          51,461         66,004    30
Middle East and Africa.....................        --      4,950           1,525          6,475     3
                                              -------    -------        --------       --------   ---
          Total international banking......   $16,087    $ 8,725        $195,722       $220,534   100
                                              =======    =======        ========       ========   ===
DECEMBER 31, 2000
Continental Europe.........................   $   389    $   164        $ 14,170       $ 14,723     8
Pacific and Far East.......................        --      7,038          70,010         77,048    42
United Kingdom and Ireland.................       226      1,504          38,287         40,017    22
Western Hemisphere (excluding U.S. and
  Canada)..................................     7,095      4,017          32,171         43,283    24
Canada.....................................     3,738         --           3,112          6,850     4
Middle East and Africa.....................        --         42              --             42    --
                                              -------    -------        --------       --------   ---
          Total international banking......   $11,448    $12,765        $157,750       $181,963   100
                                              =======    =======        ========       ========   ===
DECEMBER 31, 1999
Continental Europe.........................   $10,483    $   213        $ 28,333       $ 39,029    14
Pacific and Far East.......................        --         --         135,968        135,968    49
United Kingdom and Ireland.................     1,744        214          24,827         26,785    10
Western Hemisphere (excluding U.S. and
  Canada)..................................    10,589        504          30,881         41,974    15
Canada.....................................     4,156         --          18,914         23,070     8
Middle East and Africa.....................        --     10,242             909         11,151     4
                                              -------    -------        --------       --------   ---
          Total international banking......   $26,972    $11,173        $239,832       $277,977   100
                                              =======    =======        ========       ========   ===
</Table>

FOURTH QUARTER 2001 COMPARED WITH FOURTH QUARTER 2000

     Net income for the fourth quarter of 2001 was $60.4 million, down 36
percent from fourth quarter 2000 earnings of $94.5 million. Quarter-to-quarter
comparative results were affected by the sale in first quarter 2000 of the
corporate trust business and related charges, the fourth quarter 2000 sale of
the merchant card business and related operating results, and a special $9
million 2001 fourth quarter charge for impairment of certain equity securities.
Excluding the effect of these items, 2001 fourth quarter earnings were $67.4
million representing an 11 percent increase over fourth quarter 2000. Excluding
the current quarter special charge, gain on merchant card business, and
operating results for businesses sold in 2000, Cash ROE and cash ROA for the
fourth quarter 2001 were 16.85 percent and 1.01 percent, respectively, compared
to cash ROE and cash ROA of 16.79 percent and 0.89 percent, respectively, in the
same quarter a year ago.

                                        48
<PAGE>

     Fourth quarter 2001 net interest income on a fully taxable equivalent basis
was $211.6 million, up $33.3 million or 19 percent from $178.4 million in 2000's
fourth quarter. Average earning assets declined $448 million to $25.43 billion
from $25.88 billion in fourth quarter 2000. Consumer, mortgage and small
business loans grew by $1.6 billion or 23 percent, of which 8 percent was
attributable to the acquisition of Joliet in third quarter 2001. Growth in these
loans was offset by a decrease in corporate loans, money market assets and
investment securities. Net interest margin rose from 2.75 percent to 3.31
percent, primarily reflecting the impact of the declining interest rate
environment in 2001 and a higher mix of retail funding.

     Noninterest income was $110.5 million in the current quarter compared to
$162.7 million in the fourth quarter 2000. Excluding the effect of gains and
related operating revenue from businesses sold in 2000 and the $9.0 million
special write-off for impaired equity securities, noninterest income rose 16
percent quarter-to-quarter. This increase was primarily attributable to higher
service charges on deposits, gains on mortgage sales and higher foreign exchange
income. In the current quarter, service fees and charges increased $7.1 million
and merchant, charge card fees decreased $2.8 million, and foreign exchange
income increased $2.1 million. Securities gains were $9.9 million in fourth
quarter 2001 compared to $8.9 million in the fourth quarter 2000. Other income,
which includes syndication fees, income from tax advantaged investments, gains
on mortgage sales, other gains and fee income, and excluding the special
write-off for impaired equity securities, increased $7.5 million from 2000.

     Fourth quarter 2001 noninterest expenses of $206.0 million rose 14 percent
from fourth quarter last year. Excluding post-acquisition operating expenses for
Joliet and expenses associated with businesses sold in 2000, noninterest
expenses increased 9 percent, reflecting expansion initiatives in our retail,
private client and corporate and investment banking businesses. Employment
expense increased $11.5 million, or 12 percent from the prior year. Income taxes
declined $19.4 million during the current quarter, reflecting lower pretax
income compared to last year's fourth quarter which included a $60.2 million
gain on the sale of the merchant card business.

     The fourth quarter 2001 provision for loan losses of $24.8 million was up
from $12.8 million in the fourth quarter of 2000. Net loan charge-offs during
the current quarter were $28.5 million, compared to $13.5 million in the same
period last year, reflecting higher write-offs primarily in the corporate loan
portfolio.

                                        49
<PAGE>

ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                               SUPPLEMENTARY DATA

                     HARRIS BANKCORP, INC. AND SUBSIDIARIES

                      QUARTERLY FINANCIAL DATA (UNAUDITED)
                  SUMMARY OF EARNINGS AND NET INTEREST INCOME
<Table>
<Caption>
                                                            2001
                                              ---------------------------------
                                               4TH      3RD      2ND      1ST
                                               QTR.     QTR.     QTR.     QTR.
                                               ----     ----     ----     ----
                                              (FULLY TAXABLE EQUIVALENT (FTE) BASIS, IN MILLIONS EXCEPT RATIOS AND PER SHARE DATA)
<S>                                           <C>      <C>      <C>      <C>
Interest income.............................  $351.8   $396.5   $421.8   $456.6
Interest expense............................   148.1    201.3    237.2    282.7
                                              ------   ------   ------   ------
Net Interest Income.........................   203.7    195.2    184.6    173.9
FTE adjustment..............................     7.9      8.5      9.4     10.1
                                              ------   ------   ------   ------
Net interest income --
 FTE basis..................................   211.6    203.7    194.0    184.0
Provision for loan losses...................    24.8    153.3     26.0     16.0
                                              ------   ------   ------   ------
Net Interest Income after Provision for Loan
 Losses.....................................   186.8     50.4    168.0    168.0
                                              ------   ------   ------   ------
Noninterest Income
 Trust and investment management fees.......    29.1     29.5     30.6     29.8
 Money market and bond trading..............     2.7      4.2      4.4      5.5
 Foreign exchange...........................     3.6      1.9      1.7      1.7
 Merchant and charge card fees..............      --       --       --      0.1
 Service fees and charges...................    34.1     32.8     29.2     27.5
 Securities gains...........................     9.9     10.4      9.5     13.2
 Gain on sale of corporate trust business...      --       --       --       --
 Gain on sale of merchant card business.....      --       --       --       --
 Bank-owned insurance.......................    12.1     11.9     11.7     11.6
 Foreign fees...............................     5.8      5.3      5.3      5.1
 Other......................................    13.2     24.2     15.2     18.8
                                              ------   ------   ------   ------
       Total noninterest income.............   110.5    120.2    107.6    113.3
                                              ------   ------   ------   ------
Noninterest Expenses Employment.............   110.7    116.0    109.9    105.8
 Net occupancy..............................    10.9     13.7     13.9     12.8
 Equipment..................................    17.0     14.3     14.2     13.9
 Marketing..................................    10.3     10.9      9.6      7.5
 Communication and delivery.................     6.3      5.7      5.5      5.3
 Deposit insurance..........................     0.8      0.8      0.8      0.8
 Expert services............................     7.9      8.3      6.5      5.3
 Contract programming.......................    11.7      7.7      5.4      6.7
 Other......................................    22.3     18.6      9.4     19.9
                                              ------   ------   ------   ------
                                               197.9    196.0    175.2    178.0
 Goodwill and other valuation intangibles...     8.1      7.3      6.5      6.4
       Total noninterest expenses...........   206.0    203.4    181.7    184.4
                                              ------   ------   ------   ------
FTE income -- pretax........................    91.3    (32.8)    93.9     96.9
Applicable income taxes.....................    23.0    (21.1)    22.8     22.8
FTE adjustment..............................     7.9      8.5      9.4     10.1
                                              ------   ------   ------   ------
Net Income (loss)...........................    60.4    (20.2)    61.7     64.0
Dividends on preferred stock................     4.5      4.5      4.5      4.5
                                              ------   ------   ------   ------
Net income (loss) applicable to common
 stock......................................  $ 55.9   $(24.7)  $ 57.2   $ 59.5
                                              ======   ======   ======   ======
Earnings per common share (based on average
 shares outstanding)........................  $ 8.39   $(3.71)  $ 8.59   $ 8.92
                                              ======   ======   ======   ======
Net Interest Margin
 Yield on earning assets....................    5.62%    6.26%    6.84%    7.47%
 Rate on supporting liabilities.............    2.31     3.11     3.76     4.53
                                              ------   ------   ------   ------
 Net interest margin........................    3.31%    3.15%    3.08%    2.94%
                                              ======   ======   ======   ======

<Caption>
                                                            2000                                1999
                                              ---------------------------------   ---------------------------------
                                               4TH      3RD      2ND      1ST      4TH      3RD      2ND      1ST
                                               QTR.     QTR.     QTR.     QTR.     QTR.     QTR.     QTR.     QTR.
                                               ----     ----     ----     ----     ----     ----     ----     ----
                                            (FULLY TAXABLE EQUIVALENT (FTE) BASIS, IN MILLIONS EXCEPT RATIOS AND PER SHARE DATA)
<S>                                           <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
Interest income.............................  $496.9   $483.0   $457.4   $430.2   $411.6   $381.8   $367.9   $357.0
Interest expense............................   329.5    319.7    295.0    267.2    248.8    224.8    215.6    209.2
                                              ------   ------   ------   ------   ------   ------   ------   ------
Net Interest Income.........................   167.4    163.3    162.4    163.0    162.8    157.0    152.3    147.8
FTE adjustment..............................    11.0     10.8     10.8     10.3     10.3      9.7      9.5      9.3
                                              ------   ------   ------   ------   ------   ------   ------   ------
Net interest income --
 FTE basis..................................   178.4    174.1    173.2    173.3    173.1    166.7    161.8    157.1
Provision for loan losses...................    12.8      7.3      7.3      6.6      5.5      6.8      7.3      8.3
                                              ------   ------   ------   ------   ------   ------   ------   ------
Net Interest Income after Provision for Loan
 Losses.....................................   165.6    166.8    165.9    166.7    167.6    159.9    154.5    148.8
                                              ------   ------   ------   ------   ------   ------   ------   ------
Noninterest Income
 Trust and investment management fees.......    29.8     29.8     30.8     38.2     39.6     41.3     37.7     38.0
 Money market and bond trading..............     3.2      2.5      2.8      0.4      2.0      3.9      1.1      1.9
 Foreign exchange...........................     1.4      1.9      2.1      1.8      2.2      1.9      1.8      2.5
 Merchant and charge card fees..............     2.8      6.3      6.8      5.4      8.0      8.1      8.2      6.1
 Service fees and charges...................    27.0     30.2     29.9     30.1     32.2     32.6     30.4     29.5
 Securities gains...........................     8.9      3.1      3.0       --       --      0.1      6.2      8.2
 Gain on sale of corporate trust business...    (3.2)      --       --     50.2       --       --       --       --
 Gain on sale of merchant card business.....    60.2       --       --       --       --       --       --       --
 Bank-owned insurance.......................    11.8     11.3     11.2     10.8     10.7     10.2     10.7      9.8
 Foreign fees...............................     4.6      4.0      7.5      5.0      4.4      4.4      4.4      5.6
 Other......................................    16.2     19.4     15.6     13.6     16.1     18.0     21.9     19.9
                                              ------   ------   ------   ------   ------   ------   ------   ------
       Total noninterest income.............   162.7    108.5    109.7    155.5    115.2    120.5    122.4    121.5
                                              ------   ------   ------   ------   ------   ------   ------   ------
Noninterest Expenses Employment.............    99.2    102.3    108.0    108.8    111.9    110.8    111.4    109.7
 Net occupancy..............................    13.9     13.5     14.6     13.7     13.4     14.7     14.0     10.5
 Equipment..................................    14.1     13.6     13.5     14.9     16.9     15.8     15.8     15.1
 Marketing..................................     9.1      9.3      7.2      6.0      9.8      8.3      6.9      6.4
 Communication and delivery.................     6.7      5.8      6.1      5.2      6.9      5.8      6.2      6.9
 Deposit insurance..........................     0.8      0.8      0.8      0.8      0.9      0.8      0.9      0.9
 Expert services............................     6.8      5.1      5.3      5.9      6.4      5.7      9.0      7.5
 Contract programming.......................     5.2      4.4      4.5      3.5      3.2      3.5      2.2      3.3
 Other......................................    18.3     16.2     15.4     18.7     20.0     23.6     19.1     20.1
                                              ------   ------   ------   ------   ------   ------   ------   ------
                                               174.1    171.0    175.4    177.5    189.4    189.0    185.5    180.4
 Goodwill and other valuation intangibles...     6.3      6.3      6.3      6.5      6.6      6.5      6.5      6.3
       Total noninterest expenses...........   180.4    177.3    181.7    184.0    196.0    195.5    192.0    186.7
                                              ------   ------   ------   ------   ------   ------   ------   ------
FTE income -- pretax........................   147.9     98.0     93.9    138.2     86.8     84.9     84.9     83.6
Applicable income taxes.....................    42.4     24.1     23.0     40.8     18.7     17.2     19.2     19.9
FTE adjustment..............................    11.0     10.8     10.8     10.3     10.3      9.7      9.5      9.3
                                              ------   ------   ------   ------   ------   ------   ------   ------
Net Income (loss)...........................    94.5     63.1     60.1     87.1     57.8     58.0     56.2     54.4
Dividends on preferred stock................     4.5      4.5      4.5      4.5      4.5      4.5      4.5      4.5
                                              ------   ------   ------   ------   ------   ------   ------   ------
Net income (loss) applicable to common
 stock......................................  $ 90.0   $ 58.6   $ 55.6   $ 82.6   $ 53.3   $ 53.5   $ 51.7   $ 49.9
                                              ======   ======   ======   ======   ======   ======   ======   ======
Earnings per common share (based on average
 shares outstanding)........................  $13.50   $ 8.79   $ 8.34   $12.39   $ 7.99   $ 8.03   $ 7.76   $ 7.49
                                              ======   ======   ======   ======   ======   ======   ======   ======
Net Interest Margin
 Yield on earning assets....................    7.81%    7.78%    7.54%    7.28%    7.03%    6.86%    6.71%    6.83%
 Rate on supporting liabilities.............    5.06     5.04     4.75     4.41     4.15     3.94     3.83     3.90
                                              ------   ------   ------   ------   ------   ------   ------   ------
 Net interest margin........................    2.75%    2.74%    2.79%    2.87%    2.88%    2.92%    2.88%    2.93%
                                              ======   ======   ======   ======   ======   ======   ======   ======
</Table>

            Rows may not add to annual amounts because of rounding.
                                        50
<PAGE>

                              FINANCIAL STATEMENTS

                     HARRIS BANKCORP, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME

<Table>
<Caption>
                                                                   FOR THE YEARS ENDED DECEMBER 31
                                                                --------------------------------------
                                                                   2001          2000          1999
                                                                   ----          ----          ----
                                                                    (IN THOUSANDS EXCEPT PER SHARE
                                                                                DATA)
<S>                                                             <C>           <C>           <C>
INTEREST INCOME
Loans, including fees.......................................    $1,122,823    $1,274,791    $1,028,559
Money market assets:
 Deposits at banks..........................................         3,553         5,589         1,486
 Federal funds sold and securities purchased under agreement
   to resell................................................        13,150        16,817        12,403
Trading account.............................................         3,514         3,522         4,054
Securities available-for-sale:
 U.S. Treasury and Federal agency...........................       447,628       529,853       437,684
 State and municipal........................................        24,539        25,072        25,446
 Other......................................................        11,593        11,893         8,691
                                                                ----------    ----------    ----------
 Total interest income......................................     1,626,800     1,867,537     1,518,323
                                                                ----------    ----------    ----------
INTEREST EXPENSE
Deposits....................................................       567,010       731,743       560,856
Short-term borrowings.......................................       218,085       371,831       217,642
Senior notes................................................        33,997        52,309        69,027
Minority interest -- dividends on preferred stock of
 subsidiary.................................................        18,438        18,437        18,437
Long-term notes.............................................        31,906        37,058        32,486
                                                                ----------    ----------    ----------
 Total interest expense.....................................       869,436     1,211,378       898,448
                                                                ----------    ----------    ----------
Net Interest Income.........................................       757,364       656,159       619,875
Provision for loan losses...................................       220,135        34,052        27,880
                                                                ----------    ----------    ----------
 Net Interest Income after Provision for Loan Losses........       537,229       622,107       591,995
                                                                ----------    ----------    ----------
NONINTEREST INCOME
Trust and investment management fees........................       118,982       128,579       156,577
Money market and bond trading...............................        16,818         8,974         8,893
Foreign exchange............................................         8,833         7,225         8,314
Merchant and charge card fees...............................           151        21,199        30,440
Service fees and charges....................................       123,654       117,196       124,706
Securities gains............................................        43,057        15,015        14,553
Gain on sale of corporate trust business....................            --        46,993            --
Gain on sale of merchant card business......................            --        60,162            --
Bank-owned insurance........................................        47,226        45,076        41,414
Foreign fees................................................        21,540        21,174        18,865
Other.......................................................        71,453        64,781        75,902
                                                                ----------    ----------    ----------
 Total noninterest income...................................       451,714       536,374       479,664
                                                                ----------    ----------    ----------
NONINTEREST EXPENSES
Salaries and other compensation.............................       375,736       351,879       368,818
Pension, profit sharing and other employee benefits.........        66,690        66,383        74,909
Net occupancy...............................................        51,350        55,616        52,617
Equipment...................................................        59,364        56,153        63,695
Marketing...................................................        38,326        31,697        31,395
Communication and delivery..................................        22,796        23,847        25,808
Expert services.............................................        28,048        23,044        28,601
Contract programming........................................        31,479        17,589        12,195
Other.......................................................        73,453        71,866        86,317
                                                                ----------    ----------    ----------
                                                                   747,242       698,074       744,355
Goodwill and other valuation intangibles....................        28,295        25,409        25,828
                                                                ----------    ----------    ----------
 Total noninterest expenses.................................       775,537       723,483       770,183
                                                                ----------    ----------    ----------
Income before income taxes..................................       213,406       434,998       301,476
Applicable income taxes.....................................        47,434       130,171        74,932
                                                                ----------    ----------    ----------
Net Income..................................................       165,972       304,827       226,544
Dividends on preferred stock................................        18,044        18,044        18,044
                                                                ----------    ----------    ----------
Net income applicable to common stock.......................    $  147,928    $  286,783    $  208,500
                                                                ==========    ==========    ==========
Basic Earnings per Common Share (based on 6,667,490 average
 shares outstanding)
 Net income applicable to common stock......................        $22.19        $43.01        $31.27
                                                                ==========    ==========    ==========
</Table>

The accompanying notes to the financial statements are an integral part of these
                                  statements.
                                        51
<PAGE>

                     HARRIS BANKCORP, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<Table>
<Caption>
                                                              FOR THE YEARS ENDED DECEMBER 31
                                                              -------------------------------
                                                                2001       2000       1999
                                                                ----       ----       ----
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Net income..................................................  $165,972   $304,827   $ 226,544
Other comprehensive income:
  Cash flow hedges:
     Cumulative effect of accounting change.................    (7,976)        --          --
     Net unrealized gain on derivative instruments, net of
       tax expense of $4,684 in 2001 and zero in 2000.......     7,976         --          --
  Unrealized gains/(losses) on available-for-sale
     securities:
     Unrealized holding gains/(losses) arising during
       period, net of tax expense/(benefit) of $49,901 in
       2001, $104,160 in 2000 and ($128,131) in 1999........    74,500    159,037    (194,193)
     Less reclassification adjustment for realized gains
       included in income statement, net of tax expense of
       $16,744 in 2001, $5,837 in 2000 and $5,661 in 1999...   (26,313)    (9,178)     (8,892)
                                                              --------   --------   ---------
  Other comprehensive income (loss).........................    48,187    149,859    (203,085)
                                                              --------   --------   ---------
  Comprehensive income......................................  $214,159   $454,686   $  23,459
                                                              ========   ========   =========
</Table>

The accompanying notes to the financial statements are an integral part of these
                                  statements.

                                        52
<PAGE>

                     HARRIS BANKCORP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CONDITION

<Table>
<Caption>
                                                                     DECEMBER 31
                                                              -------------------------
                                                                 2001          2000
                                                                 ----          ----
                                                                    (IN THOUSANDS
                                                                 EXCEPT SHARE DATA)
<S>                                                           <C>           <C>
ASSETS
Cash and demand balances due from banks.....................  $ 1,275,519   $ 1,362,655
Money market assets:
  Interest-bearing deposits at banks........................      195,880       141,430
  Federal funds sold and securities purchased under
    agreement to resell.....................................      535,475       466,273
Securities available-for-sale (including $3.45 billion and
  $3.30 billion of securities pledged as collateral for
  repurchase agreements at December 31, 2001 and December
  31, 2000, respectively)...................................    8,798,745     9,125,654
Trading account assets......................................       96,045        68,925
Loans, net of unearned income...............................   15,953,439    15,549,468
Allowance for possible loan losses..........................     (292,278)     (170,417)
                                                              -----------   -----------
        Net loans...........................................   15,661,161    15,379,051
Premises and equipment......................................      409,303       392,709
Customers' liability on acceptances.........................       13,365        34,100
Bank-owned insurance........................................      952,225       906,103
Loans held for sale.........................................      121,588       242,271
Goodwill and other valuation intangibles....................      358,395       234,714
Other assets................................................      628,406       612,591
                                                              -----------   -----------
        Total assets........................................  $29,046,107   $28,966,476
                                                              ===========   ===========
LIABILITIES
Deposits in domestic offices -- noninterest-bearing.........    3,545,041     3,392,432
                         -- interest-bearing................   13,996,490    13,385,450
Deposits in foreign offices  -- noninterest-bearing.........       38,063        34,780
                         -- interest-bearing................    1,646,755     2,302,314
                                                              -----------   -----------
        Total deposits......................................   19,226,349    19,114,976
Federal funds purchased.....................................      715,599       952,449
Securities sold under agreement to repurchase...............    3,415,369     3,455,136
Commercial paper outstanding................................      391,752       366,614
Short-term borrowings.......................................      709,012     1,492,614
Short-term notes -- senior..................................      860,000       389,500
Acceptances outstanding.....................................       13,365        34,100
Accrued interest, taxes and other expenses..................      398,852       277,778
Other liabilities...........................................      196,723        68,102
Minority interest -- preferred stock of subsidiary..........      250,000       250,000
Long-term notes -- senior...................................      250,000            --
Long-term notes -- subordinated.............................      421,972       534,899
                                                              -----------   -----------
        Total liabilities...................................   26,848,993    26,936,168
                                                              -----------   -----------
STOCKHOLDER'S EQUITY
Series A non-voting, callable, perpetual preferred stock (no
  par value); authorized 1,000,000 shares; issued and
  outstanding 200 shares ($1,000,000 stated value); 7.25%
  dividend rate.............................................      200,000       200,000
Series B non-voting, callable, perpetual preferred stock (no
  par value); authorized 45 shares; issued and outstanding
  45 shares ($1,000,000 stated value); 7.875% dividend
  rate......................................................       45,000        45,000
Common stock ($8 par value); authorized 10,000,000 shares;
  issued and outstanding 6,667,490 shares...................       53,340        53,340
Surplus.....................................................      769,351       534,660
Retained earnings...........................................    1,092,052     1,208,124
Accumulated other comprehensive income (loss)...............       37,371       (10,816)
                                                              -----------   -----------
        Total stockholder's equity..........................    2,197,114     2,030,308
                                                              -----------   -----------
        Total liabilities and stockholder's equity..........  $29,046,107   $28,966,476
                                                              ===========   ===========
</Table>

The accompanying notes to the financial statements are an integral part of these
                                  statements.

                                        53
<PAGE>

                     HARRIS BANKCORP, INC. AND SUBSIDIARIES

                 STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

<Table>
<Caption>
                                                                                                     ACCUMULATED
                                                                                                        OTHER
                                                                                                    COMPREHENSIVE       TOTAL
                                 SERIES A          SERIES B       COMMON                RETAINED       INCOME       STOCKHOLDER'S
                              PREFERRED STOCK   PREFERRED STOCK    STOCK    SURPLUS     EARNINGS       (LOSS)          EQUITY
                              ---------------   ---------------   ------    -------     --------    -------------   -------------
                                                               (IN THOUSANDS EXCEPT SHARE DATA)
<S>                           <C>               <C>               <C>       <C>        <C>          <C>             <C>
Balance at December 31,
  1998......................     $200,000           $45,000       $53,340   $518,639   $  940,610     $  42,410      $1,799,999
  Contribution to capital
    surplus.................           --                --           --       2,786           --            --           2,786
  Net income................           --                --           --          --      226,544            --         226,544
  Cash dividends -- Series A
    preferred stock
    ($72,500.00 per
    share)..................           --                --           --          --      (14,500)           --         (14,500)
  Cash dividends -- Series B
    preferred stock
    ($78,750.00 per
    share)..................           --                --           --          --       (3,544)           --          (3,544)
  Cash dividends -- common
    stock ($11.13 per
    share)..................           --                --           --          --      (74,200)           --         (74,200)
  Other comprehensive
    loss....................           --                --           --          --           --      (203,085)       (203,085)
                                 --------           -------       -------   --------   ----------     ---------      ----------
Balance at December 31,
  1999......................      200,000            45,000       53,340     521,425    1,074,910      (160,675)      1,734,000
  Contribution to capital
    surplus.................           --                --           --      13,235           --            --          13,235
  Net income................           --                --           --          --      304,827            --         304,827
  Cash dividends -- Series A
    preferred stock
    ($72,500.00 per
    share)..................           --                --           --          --      (14,500)           --         (14,500)
  Cash dividends -- Series B
    preferred stock
    ($78,750.00 per
    share)..................           --                --           --          --       (3,544)           --          (3,544)
  Cash dividends -- common
    stock ($22.80 per
    share)..................           --                --           --          --     (152,000)           --        (152,000)
  Non cash distribution.....           --                --           --          --       (1,569)           --          (1,569)
  Other comprehensive
    income..................           --                --           --          --           --       149,859         149,859
                                 --------           -------       -------   --------   ----------     ---------      ----------
Balance at December 31,
  2000......................      200,000            45,000       53,340     534,660    1,208,124       (10,816)      2,030,308
  Contribution to capital
    surplus.................           --                --           --     234,691           --            --         234,691
  Net income................           --                --           --          --      165,972            --         165,972
  Cash dividends -- Series A
    preferred stock
    ($72,500.00 per
    share)..................           --                --           --          --      (14,500)           --         (14,500)
  Cash dividends -- Series B
    preferred stock
    ($78,750.00 per
    share)..................           --                --           --          --       (3,544)           --          (3,544)
  Cash dividends -- common
    stock ($39.60 per
    share)..................           --                --           --          --     (264,000)           --        (264,000)
  Other comprehensive
    income..................           --                --           --          --           --        48,187          48,187
                                 --------           -------       -------   --------   ----------     ---------      ----------
Balance at December 31,
  2001......................     $200,000           $45,000       $53,340   $769,351   $1,092,052     $  37,371      $2,197,114
                                 ========           =======       =======   ========   ==========     =========      ==========
</Table>

The accompanying notes to the financial statements are an integral part of these
                                  statements.

                                        54
<PAGE>

                     HARRIS BANKCORP, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                   FOR THE YEARS ENDED DECEMBER 31
                                                              -----------------------------------------
                                                                  2001           2000          1999
                                                                  ----           ----          ----
                                                                           (IN THOUSANDS)
<S>                                                           <C>            <C>            <C>
OPERATING ACTIVITIES:
Net Income..................................................  $    165,972   $    304,827   $   226,544
Adjustments to reconcile net income to net cash provided
  (used) by operating activities:
  Provision for loan losses.................................       220,135         34,052        27,880
  Depreciation and amortization, including intangibles......        83,582         80,600        81,193
  Deferred tax (benefit) expense............................       (27,977)         1,289        (5,427)
  Gain on sales of securities...............................       (43,057)       (15,015)      (14,553)
  Gain on sale of corporate trust business..................            --        (46,993)           --
  Gain on sale of merchant card business....................            --        (60,162)           --
  Trading account net cash (purchases) sales................       (27,120)           (15)       51,758
  Decrease (increase) in interest receivable................        77,085        (27,917)      (40,139)
  (Decrease) increase in interest payable...................       (23,914)       (13,420)       34,606
  Decrease (increase) in loans held for sale................       120,683       (242,271)      152,521
  Other, net................................................        78,643        (21,750)        5,245
                                                              ------------   ------------   -----------
        Net cash provided (used) by operating activities....       624,032         (6,775)      519,628
                                                              ------------   ------------   -----------
INVESTING ACTIVITIES:
Net (increase) decrease in interest-bearing deposits at
  banks.....................................................       (54,450)        98,554      (141,043)
Net increase in Federal funds sold and securities purchased
  under agreement to resell.................................       (69,202)       (81,417)     (171,761)
Proceeds from sales of securities available-for-sale........     2,553,211        827,946       995,730
Proceeds from maturities of securities available-for-sale...    11,384,711      9,125,351     7,680,698
Purchases of securities available-for-sale..................   (13,078,296)   (10,224,322)   (9,772,264)
Net increase in loans.......................................      (508,520)    (1,127,563)   (1,108,334)
Proceeds from sale of premises and equipment................        33,702             --            --
Purchases of premises and equipment.........................       (66,953)       (56,792)      (78,304)
Net increase in bank-owned insurance........................       (46,122)      (133,524)      (47,277)
Acquisition of net assets of acquired bank..................      (220,249)        (8,370)           --
Other, net..................................................       (70,944)       (19,783)       65,187
                                                              ------------   ------------   -----------
        Net cash used by investing activities...............      (143,112)    (1,599,920)   (2,577,368)
                                                              ------------   ------------   -----------
FINANCING ACTIVITIES:
Net increase (decrease) in deposits.........................       111,373      1,734,501        (8,598)
Net (decrease) increase in Federal funds purchased and
  securities sold under agreement to repurchase.............      (276,617)      (173,301)    1,077,338
Net increase in commercial paper outstanding................        25,138        121,564       515,976
Net (decrease) increase in other short-term borrowings......      (783,602)       808,487       (16,855)
Proceeds from issuance of senior notes......................     2,308,500      3,186,500     3,460,500
Repayment of senior notes...................................    (1,838,000)    (4,297,000)   (2,900,500)
Net cash proceeds from sale of corporate trust business.....            --         88,704            --
Net cash proceeds from sale of merchant card business.......            --         64,103            --
Proceeds from issuance of long-term notes...................       250,000         60,000       180,000
Repayment of long-term notes................................      (100,000)            --      (180,000)
Net cash proceeds from the sale of businesses...............        17,196             --            --
Cash dividends paid on preferred stock......................       (18,044)       (18,044)      (18,044)
Cash dividends paid on common stock.........................      (264,000)      (152,000)      (74,200)
                                                              ------------   ------------   -----------
        Net cash (used) provided by financing activities....      (568,056)     1,423,514     2,035,617
                                                              ------------   ------------   -----------
Net decrease in cash and demand balances due from banks.....       (87,136)      (183,181)      (22,123)
Cash and demand balances due from banks at January 1........     1,362,655      1,545,836     1,567,959
                                                              ------------   ------------   -----------
Cash and demand balances due from banks at December 31......  $  1,275,519   $  1,362,655   $ 1,545,836
                                                              ============   ============   ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest (net of amount capitalized)......................  $    891,252   $  1,224,798   $   863,843
  Income taxes..............................................  $    109,732   $    108,712   $    83,520
</Table>

The accompanying notes to the financial statements are an integral part of these
                                  statements.
                                        55
<PAGE>

                       NOTES TO THE FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Nature of Operations

     Harris Bankcorp, Inc. ("Bankcorp"), a Delaware corporation, is a
wholly-owned subsidiary of Bankmont Financial Corp. ("Bankmont"), a Delaware
corporation and a wholly-owned subsidiary of Bank of Montreal ("BMO").
Throughout these Notes to Financial Statements, the term "Corporation" refers to
Bankcorp and subsidiaries.

     On July 1, 2000, Bankmont contributed 100 percent of the common stock of
its wholly-owned subsidiary, Harris Bankmont, Inc. to the Corporation.
Immediately thereafter, Harris Bankmont, Inc. was liquidated and dissolved into
the Corporation under the corporation law of Delaware. Harris Bankcorp, Inc. was
the surviving corporation. The assets of Harris Bankmont, Inc. consisted
primarily of the stock of thirteen community banks located in the Chicago area.
This combination was accounted for at historical cost, similar to a pooling-of-
interests. All historical information is presented on a combined basis.

     The consolidated financial statements include the accounts of Bankcorp and
its wholly-owned subsidiaries including Harris Trust and Savings Bank ("HTSB").
Significant intercompany accounts and transactions have been eliminated. Certain
reclassifications were made to conform prior years' financial statements to the
current year's presentation. See Note 21 to the Financial Statements for
additional information on business combinations and Note 22 for additional
information on related party transactions on page 94 of this Report.

     The Corporation provides banking, trust and other services domestically and
internationally through 28 bank and 10 active nonbank subsidiaries and an Edge
Act subsidiary. HTSB and the Corporation's other banking and nonbank
subsidiaries provide a variety of banking and financial services to commercial
and industrial companies, financial institutions, governmental units,
not-for-profit organizations and individuals throughout the U.S., primarily the
Midwest, and abroad. Services rendered and products sold to customers include
demand and time deposit accounts and certificates; various types of loans; sales
and purchases of foreign currencies; interest rate management products; cash
management services; underwriting of municipal bonds; and financial consulting.

Basis of Accounting

     The accompanying financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America and
conform to practices within the banking industry.

Foreign Currency and Foreign Exchange Contracts

     Assets and liabilities denominated in foreign currencies have been
translated into United States dollars at respective year-end rates of exchange.
Monthly translation gains or losses are computed at rates prevailing at
month-end. There were no material translation gains or losses during any of the
years presented. Foreign exchange trading positions including spot, forward,
futures, option contracts and swaps are revalued monthly using prevailing market
rates. Exchange adjustments are included with foreign exchange income in the
Consolidated Statements of Income.

Derivative Financial Instruments

     The Corporation uses various interest rate, foreign exchange and equity
derivative contracts in the management of its risk strategy or as part of its
dealer and trading activities. Interest rate contracts may include futures,
forwards, forward rate agreements, option contracts, guarantees (caps, floors
and collars) and swaps. Foreign exchange contracts may include spot, futures,
forwards, option contracts and swaps. Equity contracts may include option
contracts and swaps.

     All derivative instruments are recognized at fair value in the Consolidated
Statements of Condition. All derivative instruments are designated either as
hedges or as held for trading or non-hedging purposes.

                                        56
<PAGE>

     Derivative instruments that are used in the management of the Corporation's
risk strategy may qualify for hedge accounting if the derivatives are designated
as hedges and applicable hedge criteria are met. On the date that the
Corporation enters into a derivative contract, it designates the derivative as a
hedge of the fair value of a recognized asset or liability or an unrecognized
firm commitment, a hedge of a forecasted transaction or the variability of cash
flows that are to be received or paid in connection with a recognized asset or
liability, a foreign currency fair value or cash flow hedge, or a hedge of a net
investment in a foreign operation. Changes in the fair value of a derivative
that is highly effective (as defined) and qualifies as a fair value hedge, along
with changes in the fair value of the underlying hedged item, are recorded in
current period earnings. Changes in the fair value of a derivative that is
highly effective (as defined) and qualifies as a cash flow hedge, to the extent
that the hedge is effective, are recorded in other comprehensive income only
until earnings are recognized from the underlying hedged item. Net gains or
losses resulting from hedge ineffectiveness are recorded in current period
earnings. Changes in the fair value of a derivative that is highly effective (as
defined) and qualifies as a foreign currency hedge are recorded in either
current period earnings or other comprehensive income depending on whether the
hedging relationship meets the criteria for a fair value or cash flow hedge. For
a derivative used as a hedge of a net investment in a foreign operation, changes
in the derivative's fair value, to the extent that the hedge is effective, are
recorded in the cumulative translation adjustment account within other
comprehensive income.

     The Corporation formally documents all hedging relationships at inception
of hedge transactions. The process includes documenting the risk management
objective and strategy for undertaking the hedge transaction and identifying the
specific derivative instrument and the specific underlying asset, liability,
firm commitment or forecasted transaction. The Corporation formally assesses,
both at inception and on an ongoing quarterly basis, whether the derivative
hedging instruments have been highly effective in offsetting changes in the fair
value or cash flows of the hedged items and whether the derivatives are expected
to remain highly effective in future periods.

     Hedge accounting is discontinued prospectively when the Corporation
determines that the hedge is no longer highly effective, the derivative
instrument expires or is sold, terminated or exercised, it is no longer probable
that the forecasted transaction will occur, the hedged firm commitment no longer
meets the definition of a firm commitment, or the designation of the derivative
as a hedging instrument is no longer appropriate.

     When hedge accounting is discontinued because a fair value hedge is no
longer highly effective, the derivative instrument will continue to be recorded
on the balance sheet at fair value but the underlying hedged item will no longer
be adjusted for changes in fair value. When hedge accounting is discontinued
because the hedged item in a fair value hedge no longer meets the definition of
a firm commitment, the derivative instrument will continue to be recorded on the
balance sheet at fair value and any asset or liability that was recorded to
recognize the firm commitment will be removed from the balance sheet and
recognized as a gain or loss in current period earnings. When hedge accounting
is discontinued because it is no longer probable that the forecasted transaction
in a cash flow hedge will occur, the gain or loss on the derivative that was in
accumulated other comprehensive income will be recognized immediately in
earnings and the derivative instrument will be marked to market through
earnings. When hedge accounting is discontinued and the derivative remains
outstanding, the derivative may be redesignated as a hedging instrument as long
as the applicable hedge criteria are met under the terms of the new contract.

     Derivative instruments that are entered into for risk management purposes
and do not otherwise qualify for hedge accounting are marked to market and the
resulting unrealized gains and losses are recognized in noninterest income in
the period of change.

     Derivative instruments that are used as part of the Corporation's dealer
and trading activities are marked to market and the resulting unrealized gains
and losses are recognized in noninterest income in the period of change.

Impact of New Accounting Standards

     The Corporation adopted Statement of Financial Accounting Standards (SFAS)
No. 141, "Business Combinations," on July 1, 2001. The Statement addresses
financial accounting and reporting for business

                                        57
<PAGE>

combinations and supersedes Accounting Principles Board (APB) Opinion No. 16,
"Business Combinations." It requires all business combinations within the scope
of the Statement to be accounted for using one method, the purchase method. It
establishes criteria for the initial recognition of intangible assets acquired
in a business combination. The provisions of the Statement apply to all business
combinations initiated after June 30, 2001 and to all business combinations
accounted for using the purchase method for which the date of acquisition is
July 1, 2001 or later.

     In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 142, "Goodwill and Other Intangible Assets." The Statement addresses
financial accounting and reporting for acquired goodwill and other intangible
assets and supersedes APB Opinion No. 17, "Intangible Assets." Under this
standard, goodwill and other intangible assets that have indefinite useful lives
will not be subject to amortization while intangible assets with finite lives
will be amortized. The Statement is effective for fiscal years beginning after
December 15, 2001. However, goodwill and intangible assets acquired after June
30, 2001 will be subject immediately to the nonamortization and amortization
provisions of the Statement. The Corporation adopted SFAS No. 142 on January 1,
2002. Upon adoption of the Statement, the Corporation discontinued the
amortization of goodwill with a net carrying value of $11 million at December
31, 2001 and annual amortization of approximately $3 million that resulted from
business combinations prior to the adoption of SFAS No. 141. Goodwill will be
periodically assessed for impairment. The Corporation has an unidentifiable
intangible asset that is accounted for in accordance with SFAS No. 72,
"Accounting for Certain Acquisitions of Banking or Thrift Institutions." The
asset is excluded from the scope of SFAS No. 142 and will continue to be
amortized.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." The Statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made. The associated asset retirement costs should be capitalized as part of
the carrying amount of the long-lived asset. The Statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002. The
Corporation does not expect the implementation of this Statement to have a
material effect on its financial position or results of operations.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." The Statement addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
establishes a single accounting model for long-lived assets to be disposed of by
sale. It supersedes SFAS No. 121 and the accounting and reporting provisions of
APB Opinion No. 30 for the disposal of a segment of a business. The Statement is
effective for financial statements issued for fiscal years beginning after
December 15, 2001 and interim periods within those fiscal years. The Corporation
does not expect the implementation of this Statement to have a material effect
on its financial position or results of operations.

Securities

     The Corporation classifies securities as either trading account assets or
available-for-sale. Trading account assets include securities acquired as part
of trading activities and are typically purchased with the expectation of
near-term profit. These assets consist primarily of municipal bonds and U.S.
government securities. All other securities are classified as
available-for-sale, even if the Corporation has no current plans to divest.

     Trading account assets are reported at fair value with unrealized gains and
losses included in trading account income, which also includes realized gains
and losses from closing such positions. Available-for-sale securities are
reported at fair value with unrealized gains and losses included, on an
after-tax basis, in a separate component of stockholder's equity. Purchase
premiums and discounts are recognized in interest income using the interest
method over the terms of the securities. Realized gains and losses, as a result
of securities sales, are included in securities gains, with the cost of
securities sold determined on the specific identification basis.

                                        58
<PAGE>

Loans, Loan Fees and Commitment Fees

     Loans not held for sale are recorded at the principal amount outstanding,
net of unearned income, deferred fees and origination costs. For fair value
hedges that are highly effective, loans designated as the underlying hedged
items are recorded net of changes in fair value attributable to the hedged
risks. Origination fees collected on commercial loans, loan commitments,
mortgage loans and standby letters of credit, that are not held for sale, are
generally deferred and amortized over the life of the related facility. Other
loan-related fees that are not the equivalent of yield adjustments are
recognized as income when received or earned. At December 31, 2001 and 2000, the
Corporation's Consolidated Statements of Condition included approximately $18
million and $22 million, respectively, of deferred loan-related fees net of
deferred origination costs.

     In conjunction with its mortgage and commercial banking activities, the
Corporation will originate loans with the intention of selling them in the
secondary market. These loans are classified as available-for-sale and are
included in "Other Assets" on the Corporation's Consolidated Statements of
Condition. The loans are carried at the lower of allocated cost or current
market value, on a portfolio basis. Deferred origination fees and costs
associated with these loans are not amortized, and are included as part of the
basis of the loan at time of sale. Realized gains and unrealized losses are
included with other noninterest income.

     The Corporation engages in the servicing of mortgage loans and acquires
mortgage servicing rights by purchasing or originating mortgage loans and then
selling those loans with servicing rights retained. The rights to service
mortgage loans for others are recognized as separate assets by allocating the
total cost of the mortgage loans to the mortgage servicing rights and the loans
(without the mortgage servicing rights) based on their relative fair values. The
capitalized mortgage servicing rights are amortized in proportion to and over
the period of estimated net servicing income. The capitalized mortgage servicing
rights are periodically evaluated for impairment based on the fair value of
those rights. Fair values are estimated using discounted cash flow analyses. The
risk characteristics of the underlying loans used to stratify capitalized
mortgage servicing rights for purposes of measuring impairment are interest
rates, loan type and repricing interval.

     Commercial and real estate loans are placed on nonaccrual status when the
collection of interest is doubtful or when principal or interest is 90 days past
due, unless the credit is adequately collateralized and the loan is in process
of collection. When a loan is placed on nonaccrual status, all interest accrued
but not yet collected which is deemed uncollectible is charged against interest
income in the current year. Interest on nonaccrual loans is recognized as income
only when cash is received and the Corporation expects to collect the entire
principal balance of the loan. Loans are returned to accrual status when all the
principal and interest amounts contractually due are brought current and future
payments are reasonably assured. Interest income on restructured loans is
accrued according to the most recently agreed upon contractual terms.

     Commercial and real estate loans are charged off when, in management's
opinion, the loan is deemed uncollectible. Consumer installment loans are
charged off when 180 days past due. Accrued interest on these loans is charged
to interest income. Such loans are not normally placed on nonaccrual status.

     Commercial loan commitments and letters of credit are executory contracts
and are not reflected on the Corporation's Consolidated Statements of Condition.
Fees collected are generally deferred and recognized over the life of the
facility.

     Impaired loans (primarily commercial credits) are measured based on the
present value of expected future cash flows (discounted at the loan's effective
interest rate) or, alternatively, at the loan's observable market price or the
fair value of supporting collateral. Impaired loans are defined as those where
it is probable that amounts due for principal or interest according to
contractual terms, will not be collected. Both nonaccrual and certain
restructured loans meet this definition. Large groups of smaller-balance,
homogeneous loans, primarily residential real estate and consumer installment
loans, are excluded from this definition of impairment. The Corporation
determines loan impairment when assessing the adequacy of the allowance for
possible loan losses.

                                        59
<PAGE>

Allowance for Possible Loan Losses

     The allowance for possible loan losses is maintained at a level considered
adequate to provide for estimated loan losses. The allowance is increased by
provisions charged to operating expense and reduced by net charge-offs. Known
losses of principal on impaired loans are charged off. The provision for loan
losses is based on past loss experience, management's evaluation of the loan
portfolio under current economic conditions and management's estimate of losses
inherent in the portfolio. Such estimates are reviewed periodically and
adjustments, if necessary, are recorded during the periods in which they become
known.

Premises and Equipment

     Premises and equipment are stated at cost less accumulated depreciation and
amortization. Interest costs associated with long-term construction projects are
capitalized and then amortized over the life of the related asset after the
project is completed. For financial reporting purposes, the provision for
depreciation and amortization is computed on the straight-line basis over the
estimated useful lives of the assets.

Bank-Owned Insurance

     The Corporation has purchased life insurance coverage for certain officers.
The one-time premiums paid for the policies, which coincide with the initial
cash surrender value, are recorded as assets on the Consolidated Statements of
Condition. Increases or decreases in cash surrender value (other than proceeds
from death benefits) are recorded as other income or expense. Proceeds from
death benefits first reduce the cash surrender value attributable to the
individual policy and any additional proceeds are recorded as other income.

Goodwill and Other Valuation Intangibles

     The Corporation records specifically identifiable and unidentifiable
(goodwill) intangibles in connection with the acquisition of assets from
unrelated parties or the acquisition of new subsidiaries. Original lives range
from 3 to 15 years. Goodwill originated prior to July 1, 2001 is amortized on
the straight-line basis; goodwill arising subsequent to July 1, 2001 was not
amortized. Identifiable intangibles are amortized on either an accelerated or
straight-line basis depending on the character of the acquired asset. Goodwill
and other valuation intangibles are reviewed for impairment when events or
future assessments of profitability indicate that the carrying value may not be
recoverable. When assessing recoverability, goodwill and other valuation
intangibles are included as part of the group of assets which were acquired in
the transaction that gave rise to the intangibles.

Other Assets

     Property or other assets received in satisfaction of debt are included in
"Other Assets" on the Corporation's Consolidated Statements of Condition and are
recorded at the lower of remaining cost or fair value. Fair values for other
real estate owned generally are reduced by estimated costs to sell. Losses
arising from subsequent write-downs to fair value are charged directly to
expense.

     Loans intended to be sold in the secondary market are classified as
available-for-sale and are included in "Other Assets" on the Consolidated
Statements of Condition. The loans are carried at lower of allocated cost or
current market value, on a portfolio basis.

Retirement and Other Postemployment Benefits

     The Corporation has noncontributory defined benefit pension plans covering
virtually all its employees. For its primary plan, the policy of the Corporation
is to, at a minimum, fund annually an amount necessary to satisfy the
requirements under the Employee Retirement Income Security Act ("ERISA"),
without regard to prior years' contributions in excess of the minimum.

                                        60
<PAGE>

     Postemployment benefits provided to former or inactive employees after
employment but before retirement are accrued if they meet the conditions for
accrual of compensated absences. Otherwise, postemployment benefits are recorded
when expenses are incurred.

Income Taxes

     Deferred tax assets and liabilities, as determined by the temporary
differences between financial reporting and tax bases of assets and liabilities,
are computed using enacted tax rates and laws. The effect on deferred tax assets
and liabilities of a change in tax rates or law is recognized as income or
expense in the period including the enactment date.

     The Corporation and its wholly-owned subsidiaries are included in the
consolidated Federal income tax return of Bankmont. Accordingly, no Federal
income tax is applicable to dividends received from its subsidiaries. Income tax
return liabilities or benefits for all the consolidated entities are not
materially different than they would have been if computed on a separate return
basis.

Management's Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The areas requiring significant management judgment include provision
and allowance for possible loan losses, income taxes, pension cost,
postemployment benefits, valuation of intangible assets, fair values and
temporary vs. other-than-temporary impairment.

Reclassifications

     Certain reclassifications were made to conform prior years' financial
statements to the current year's presentation.

2. SECURITIES

     The amortized cost and estimated fair value of securities
available-for-sale were as follows:

<Table>
<Caption>
                                       DECEMBER 31, 2001                                   DECEMBER 31, 2000
                       -------------------------------------------------   -------------------------------------------------
                       AMORTIZED    UNREALIZED   UNREALIZED      FAIR      AMORTIZED    UNREALIZED   UNREALIZED      FAIR
                          COST        GAINS        LOSSES       VALUE         COST        GAINS        LOSSES       VALUE
                       ---------    ----------   ----------     -----      ---------    ----------   ----------     -----
                                                                  (IN THOUSANDS)
<S>                    <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
US Treasury..........  $1,520,090    $33,250      $    18     $1,553,322   $1,551,705    $ 9,956      $ 4,308     $1,557,353
Federal agency.......   4,151,480     30,569        1,298      4,180,751    3,903,374     11,415        2,564      3,912,225
Mortgage-backed......   2,354,748      7,688        2,699      2,359,737    2,972,774      2,950       25,751      2,949,973
State and municipal..     562,848     12,304        1,592        573,560      489,455      7,168        1,241        495,382
Other................     142,753        189       11,567        131,375      226,835      1,244       17,358        210,721
                       ----------    -------      -------     ----------   ----------    -------      -------     ----------
Total securities.....  $8,731,919    $84,000      $17,174     $8,798,745   $9,144,143    $32,733      $51,222     $9,125,654
                       ==========    =======      =======     ==========   ==========    =======      =======     ==========
</Table>

     At December 31, 2001 and 2000, available-for-sale and trading account
securities having a carrying amount of $5.20 billion and $4.51 billion,
respectively, were pledged as collateral for certain liabilities, securities
sold under agreement to repurchase, public and trust deposits, trading account
activities and for other purposes where permitted or required by law.

                                        61
<PAGE>

     The amortized cost and estimated fair value of total available-for-sale
securities at December 31, 2001, by contractual maturity, are shown below.
Expected maturities can differ from contractual and average life maturities
since borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties.

<Table>
<Caption>
                                                                 DECEMBER 31, 2001
                                                              -----------------------
                                                              AMORTIZED       FAIR
                                                                 COST        VALUE
                                                              ---------      -----
                                                                  (IN THOUSANDS)
<S>                                                           <C>          <C>
Maturities:
  Within 1 year.............................................  $2,347,549   $2,359,410
  1 to 5 years..............................................   3,749,324    3,810,670
  5 to 10 years.............................................     955,119      961,516
  Over 10 years.............................................   1,538,465    1,537,082
Other securities without stated maturity....................     141,462      130,067
                                                              ----------   ----------
Total securities............................................  $8,731,919   $8,798,745
                                                              ==========   ==========
</Table>

     In 2001, 2000 and 1999, proceeds from the sale of securities
available-for-sale amounted to $2.55 billion, $828 million and $996 million,
respectively. Gross gains of $43.1 million and no gross losses were realized on
these sales in 2001, while gross gains of $15.2 million and gross losses of $0.2
million were realized on these sales in 2000, and gross gains of $14.6 million
and no gross losses were realized in 1999. Net unrealized holding gains on
trading securities included in earnings at December 31, 2001 were $0.9 million
compared to an unrealized gain of $1.0 million at December 31, 2000.

3. LOANS

     The following table summarizes loan balances by category:

<Table>
<Caption>
                                                                     DECEMBER 31
                                                              -------------------------
                                                                 2001          2000
                                                                 ----          ----
                                                                   (IN THOUSANDS)
<S>                                                           <C>           <C>
Domestic loans:
  Commercial, financial, agricultural, brokers and
     dealers................................................  $ 7,390,107   $ 8,403,116
  Real estate construction..................................      488,811       248,873
  Real estate mortgages.....................................    6,216,708     5,569,056
  Installment...............................................    1,806,341     1,277,132
  Direct lease financing....................................       26,963        27,491
Foreign loans:
  Banks and other financial institutions....................       10,039        12,913
  Other, primarily commercial and industrial................       14,773        11,300
                                                              -----------   -----------
     Total loans............................................   15,953,742    15,549,881
Less unearned income........................................          303           413
                                                              -----------   -----------
     Loans, net of unearned income..........................   15,953,439    15,549,468
Less allowance for possible loan losses.....................      292,278       170,417
                                                              -----------   -----------
     Loans, net of allowance for possible loan losses.......  $15,661,161   $15,379,051
                                                              ===========   ===========
</Table>

                                        62
<PAGE>

     Nonaccrual loans, restructured loans and other nonperforming assets are
summarized below:

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31
                                                              -----------------------------
                                                                2001       2000      1999
                                                                ----       ----      ----
                                                                     (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Nonaccrual loans............................................  $212,301   $100,916   $25,205
Restructured loans..........................................     2,495      2,949     2,975
                                                              --------   --------   -------
Total nonperforming loans...................................   214,796    103,865    28,180
Other assets received in satisfaction of debt...............     1,020      3,457     1,496
                                                              --------   --------   -------
     Total nonperforming assets.............................  $215,816   $107,322   $29,676
                                                              ========   ========   =======
Gross amount of interest income that would have been
  recorded if year-end nonperforming loans had been accruing
  interest at their original terms..........................  $ 14,847   $  6,106   $ 1,452
Interest income actually recognized.........................        --         --        --
                                                              --------   --------   -------
     Interest shortfall.....................................  $ 14,847   $  6,106   $ 1,452
                                                              ========   ========   =======
</Table>

     At December 31, 2001 and 2000, the Corporation had no aggregate public and
private sector outstandings to any single country experiencing a liquidity
problem which exceeded one percent of the Corporation's consolidated assets. At
December 31, 2001 and 2000 commercial loans with a carrying value of $4.16
billion and $5.02 billion, respectively, were pledged to secure potential
borrowings with the Federal Reserve.

MORTGAGE SERVICING RIGHTS

     The carrying amount of mortgage servicing rights was $15.8 million and
$12.6 million at December 31, 2001 and 2000, respectively. The fair value of
those rights equaled or exceeded the carrying amount at both December 31, 2001
and December 31, 2000. Mortgage servicing rights, included in other assets, of
$6.5 million and $2.3 million were capitalized during 2001 and 2000,
respectively. Amortization expense associated with the mortgage servicing rights
was $3.3 million and $2.8 million in 2001 and 2000, respectively. There were no
direct write-downs in 2001 or 2000.

4. ALLOWANCE FOR POSSIBLE LOAN LOSSES

     The changes in the allowance for possible loan losses are as follows:

<Table>
<Caption>
                                                                  YEARS ENDED DECEMBER 31
                                                              -------------------------------
                                                                2001        2000       1999
                                                                ----        ----       ----
                                                                      (IN THOUSANDS)
<S>                                                           <C>         <C>        <C>
Balance, beginning of year..................................  $ 170,417   $162,134   $153,484
                                                              ---------   --------   --------
Charge-offs.................................................   (111,748)   (34,970)   (28,310)
Recoveries..................................................      7,200      8,646      9,080
                                                              ---------   --------   --------
  Net charge-offs...........................................   (104,548)   (26,324)   (19,230)
Provisions charged to operations............................    220,135     34,052     27,880
Allowance related to acquired loans.........................      6,274        555         --
                                                              ---------   --------   --------
Balance, end of year........................................  $ 292,278   $170,417   $162,134
                                                              =========   ========   ========
</Table>

                                        63
<PAGE>

     Details on impaired loans and related allowance are as follows:

<Table>
<Caption>
                                                  IMPAIRED LOANS         IMPAIRED LOANS        TOTAL
                                                FOR WHICH THERE IS     FOR WHICH THERE IS     IMPAIRED
                                                A RELATED ALLOWANCE   NO RELATED ALLOWANCE     LOANS
                                                -------------------   --------------------    --------
                                                                    (IN THOUSANDS)
<S>                                             <C>                   <C>                     <C>
December 31, 2001
Balance.......................................       $165,484                $49,312          $214,796
Related allowance.............................         74,319                     --            74,319
                                                     --------                -------          --------
Balance, net of allowance.....................       $ 91,165                $49,312          $140,477
                                                     ========                =======          ========
December 31, 2000
Balance.......................................       $ 78,758                $25,107          $103,865
Related allowance.............................         36,098                     --            36,098
                                                     --------                -------          --------
Balance, net of allowance.....................       $ 42,660                $25,107          $ 67,767
                                                     ========                =======          ========
</Table>

<Table>
<Caption>
                                                           YEARS ENDED DECEMBER 31
                                                         ----------------------------
                                                           2001      2000      1999
                                                           ----      ----      ----
                                                                (IN THOUSANDS)
<S>                                                      <C>        <C>       <C>
Average impaired loans.................................  $163,897   $61,639   $36,399
                                                         ========   =======   =======
Total interest income on impaired loans recorded on a
  cash basis...........................................  $     --   $    --   $    --
                                                         ========   =======   =======
</Table>

5. PREMISES AND EQUIPMENT

     Premises and equipment are stated at cost less accumulated depreciation and
amortization. A summary of these accounts is set forth below:

<Table>
<Caption>
                                                              YEARS ENDED DECEMBER 31
                                                              ------------------------
                                                                 2001          2000
                                                                 ----          ----
                                                                   (IN THOUSANDS)
<S>                                                           <C>           <C>
Land........................................................   $ 56,329      $ 48,012
Premises....................................................    311,506       369,098
Equipment...................................................    417,221       384,754
Leasehold improvements......................................     50,382        42,327
                                                               --------      --------
          Total.............................................    835,438       844,191
Accumulated depreciation and amortization...................    426,135       451,482
                                                               --------      --------
          Premises and equipment............................   $409,303      $392,709
                                                               ========      ========
</Table>

     Depreciation and amortization expense was $56.3 million in 2001, $54.3
million in 2000 and $54.0 million in 1999.

     On December 17, 2001 HTSB sold to a third party its fifteen-story
operations center containing approximately 415,000 gross square feet located at
311 West Monroe Street, Chicago, Illinois, and leased back approximately 259,000
rentable square feet. The lease ends on December 31, 2011. HTSB has rights of
first offering to lease additional space and options to extend to December 31,
2026. The remainder of the building will be occupied by third-party tenants. The
sale resulted in a realized gain of $1 million and a deferred gain of $17
million as of December 31, 2001.

     In addition, HTSB owns or leases premises at other locations to conduct
branch banking activities which are part of the Chicagoland Banking group.

6. SECURITIES PURCHASED UNDER AGREEMENT TO RESELL AND SECURITIES SOLD UNDER
   AGREEMENT TO REPURCHASE

     The Corporation enters into purchases of U.S. Treasury and Federal agency
securities under agreements to resell identical securities. The amounts advanced
under these agreements represent short-term loans and

                                        64
<PAGE>

are reflected as receivables in the Consolidated Statements of Condition. There
were no outstanding securities purchased under agreement to resell at December
31, 2001 and at December 31, 2000. The securities underlying the agreements are
book-entry securities. Securities are transferred by appropriate entry into the
Corporation's account with Bank of New York at the Federal Reserve Bank of New
York under a written custodial agreement with Bank of New York that explicitly
recognizes the Corporation's interest in these securities.

     The Corporation also enters into sales of U.S. Treasury and Federal agency
securities under agreements to repurchase identical securities. The amounts
received under these agreements represent short-term borrowings and are
reflected as liabilities in the Consolidated Statements of Condition. Securities
sold under agreement to repurchase totaled $3.42 billion and $3.46 billion at
December 31, 2001 and 2000, respectively. Securities sold under agreement to
repurchase are transferred via book-entry to the counterparty if transacted with
a financial institution or a broker-dealer, or are delivered to customer
safekeeping accounts. The Corporation monitors the market value of these
securities and adjusts the level of collateral for repurchase agreements, as
appropriate.

<Table>
<Caption>
                                                              2001     2000
                                                              ----     ----
                                                              (IN THOUSANDS)
<S>                                                           <C>     <C>
Securities Purchased Under Agreement to Resell
Amount outstanding at end of year...........................  $  --   $   --
Highest amount outstanding as of any month-end during the
  year......................................................     --    8,276
Daily average amount outstanding during the year............    293    7,951
Daily average annualized rate of interest...................   2.60%    5.99%
Average rate of interest on amount outstanding at end of
  year......................................................     --       --
</Table>

<Table>
<Caption>
                                                                 2001         2000
                                                                 ----         ----
                                                                  (IN THOUSANDS)
<S>                                                           <C>          <C>
Securities Sold Under Agreement to Repurchase
Amount outstanding at end of year...........................  $3,415,369   $3,455,136
Highest amount outstanding as of any month-end during the
  year......................................................   3,998,287    3,830,811
Daily average amount outstanding during the year............   3,605,979    3,674,182
Daily average annualized rate of interest...................        3.91%        6.17%
Average rate of interest on amount outstanding at end of
  year......................................................        1.76%        6.32%
</Table>

7. SHORT, MEDIUM AND LONG-TERM NOTES AND UNUSED LINES OF CREDIT

     The following table summarizes the Corporation's long-term notes:

<Table>
<Caption>
                                                                  DECEMBER 31
                                                              -------------------
                                                                2001       2000
                                                                ----       ----
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Fixed rate 9 3/8% subordinated notes due June 1, 2001
  ($100,000 par value)......................................  $     --   $ 99,899
Floating rate subordinated note to Bankmont due March 31,
  2005......................................................    50,000     50,000
Floating rate subordinated note to Bankmont due December 1,
  2006......................................................    50,000     50,000
Fixed rate 6 1/2% subordinated note to Bankmont due December
  27, 2007..................................................    20,000     20,000
Floating rate subordinated note to BMO subsidiary due June
  29, 2009..................................................   166,972    180,000
Fixed rate 6 1/8% subordinated note to Bankmont due August
  31, 2010..................................................    75,000     75,000
Floating rate subordinated note to Bankmont due July 28,
  2010......................................................    60,000     60,000
                                                              --------   --------
          Total subordinated notes..........................  $421,972   $534,899
Floating rate senior note to Bankmont due May 31, 2004......   100,000         --
Floating rate senior note to Bankmont due August 15, 2006...   150,000         --
                                                              --------   --------
          Total senior notes................................  $250,000   $     --
Total subordinated and senior notes.........................  $671,972   $534,899
                                                              ========   ========
</Table>

                                        65
<PAGE>

     All of the Bankcorp notes are unsecured obligations, ranking on a parity
with all unsecured and subordinated indebtedness of the Corporation and are not
subject to redemption prior to maturity at the election of the debtholders. The
interest rate on the floating rate subordinated notes reprices semiannually and
floats at 50 basis points above 180 day LIBOR. The interest rate on the floating
rate senior notes reprices semiannually and floats at 38 basis points above 180
day LIBOR. At year-end 2001, 180 day LIBOR was 1.98 percent.

     The Corporation, in connection with the issuance of commercial paper and
for other corporate purposes, had a $150 million revolving credit agreement with
five nonaffiliated banks and BMO that terminated on December 7, 2001. At that
time the Corporation renewed the $150 million revolving credit agreement, which
will expire on December 6, 2002. There were no borrowings under either credit
facility during 2001 or 2000.

     HTSB offers to institutional investors from time to time, unsecured
short-term and medium-term bank notes in an aggregate principal amount of up to
$1.50 billion outstanding at any time. The term of each note could range from
fourteen days to fifteen years. The notes are subordinated to deposits and rank
pari passu with all other unsecured senior indebtedness of HTSB. As of December
31, 2001, $860 million of senior short-term notes were outstanding with original
maturities ranging from 365 to 392 days (remaining maturities ranging from 98 to
206 days) and stated interest rates ranging from 1.78 percent to 4.41 percent.
As of December 31, 2000, $390 million of senior short-term notes were
outstanding with original maturities ranging from 28 to 365 days (remaining
maturities ranging from 23 to 163 days) and stated interest rates ranging from
6.52 percent to 6.66 percent.

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

     Generally accepted accounting principles require the disclosure of
estimated fair values for both on- and off-balance-sheet financial instruments.
The Corporation's fair values are based on quoted market prices when available.
For financial instruments not actively traded, such as certain loans, deposits,
off-balance-sheet transactions and long term borrowings, fair values have been
estimated using various valuation methods and assumptions. Although management
used its best judgment in estimating these values, there are inherent
limitations in any estimation methodology. In addition, accounting
pronouncements require that fair values be estimated on an item-by-item basis,
thereby ignoring the impact a large sale would have on a thin market and
intangible values imbedded in established lines of business. Therefore, the fair
value estimates presented herein are not necessarily indicative of the amounts
the Corporation could realize in an actual transaction. The fair value
estimation methodologies employed by the Corporation were as follows:

     The carrying amounts for cash and demand balances due from banks along with
short-term money market assets and liabilities reported on the Corporation's
Consolidated Statements of Condition were considered to be the best estimates of
fair value for these financial instruments. Fair values of trading account
assets and investment securities were based on quoted market prices.

     A variety of methods were used to estimate the fair value of loans. Changes
in estimated fair value of loans reflect changes in credit risk and general
interest rates which have occurred since the loans were originated. Fair values
of floating rate loans, including commercial, broker dealer, financial
institution, construction, consumer and home equity, were assumed to be the same
as carrying value since the loans' interest rates automatically reprice to
market. Fair values of residential mortgages were based on current prices for
securities backed by similar loans. For long-term fixed rate loans, including
consumer installment and commercial mortgage loans, fair values were estimated
based on the present value of future cash flows with current market rates as
discount rates. Additionally, management considered appraisal values of
collateral when nonperforming loans were secured by real estate.

     The fair values of customers' liability on acceptances and acceptances
outstanding approximate carrying value due to the short-term nature of these
assets and liabilities and the generally negligible credit losses associated
with them.

     The fair values of accrued interest receivable and payable approximate
carrying values due to the short-term nature of these assets and liabilities.

                                        66
<PAGE>

     The fair values of bank-owned insurance investments approximate carrying
value, because upon liquidation of these investments the Corporation would
receive the cash surrender value, which equals carrying value.

     The fair values of demand deposits, savings accounts, interest checking
deposits, and money market accounts were the amounts payable on demand at the
reporting date, or the carrying amounts. The fair value of time deposits was
estimated using a discounted cash flow calculation with current market rates
offered by the Corporation as discount rates.

     The fair value of senior notes approximates carrying value because the
average maturity on these notes is less than a year.

     The fair value of minority interest -- preferred stock of subsidiary
(Harris Preferred Capital Corporation) approximates carrying value as the
preferred stock has a liquidation preference that equals book value.

     The fair value of long-term notes was determined using a discounted cash
flow calculation with current rates available to the Corporation for similar
debt as discount rates.

     The fair value of credit facilities are presented as an obligation in order
to represent the approximate cost the Corporation would incur to induce third
parties to assume these commitments.

                                        67
<PAGE>

     The estimated fair values of the Corporation's financial instruments at
December 31, 2001 and 2000 are presented in the following table. See Note 9 to
Financial Statements below for additional information regarding fair values of
off-balance-sheet financial instruments.

<Table>
<Caption>
                                                          YEARS ENDED DECEMBER 31
                                                          -----------------------
                                                     2001                        2000
                                           -------------------------   -------------------------
                                            CARRYING        FAIR        CARRYING        FAIR
                                              VALUE         VALUE         VALUE         VALUE
                                            --------        -----       --------        -----
                                                              (IN THOUSANDS)
<S>                                        <C>           <C>           <C>           <C>
ASSETS
Cash and demand balances due from
  banks..................................  $ 1,275,519   $ 1,275,519   $ 1,362,655   $ 1,362,655
Money market assets:
  Interest-bearing deposits at banks.....      195,880       195,880       141,430       141,430
  Federal funds sold and securities
     purchased under agreement to
     resell..............................      535,475       535,475       466,273       466,273
Securities available-for-sale............    8,798,745     8,798,745     9,125,654     9,125,654
Trading account assets...................       96,045        96,045        68,925        68,925
Loans, net of unearned income and
  allowance for possible loan losses.....   15,661,161    15,690,769    15,379,051    15,371,174
Customers' liability on acceptances......       13,365        13,365        34,100        34,100
Accrued interest receivable..............      163,043       163,043       232,601       232,601
Loans held for sale......................      121,588       121,588       242,271       242,271
Bank-owned insurance investments.........      952,225       952,225       906,103       906,103
                                           -----------   -----------   -----------   -----------
       Total on-balance-sheet financial
          assets.........................  $27,813,046   $27,842,654   $27,959,063   $27,951,186
                                           ===========   ===========   ===========   ===========

LIABILITIES
Deposits:
  Demand deposits........................  $12,262,450   $12,262,450   $11,292,920   $11,292,920
  Time deposits..........................    6,963,899     6,995,748     7,822,056     7,850,372
Federal funds purchased..................      715,599       715,599       952,449       952,449
Securities sold under agreement to
  repurchase.............................    3,415,369     3,415,369     3,455,136     3,455,136
Commercial paper outstanding.............      391,752       391,752       366,614       366,614
Other short-term borrowings..............      709,012       709,012     1,492,614     1,492,614
Acceptances outstanding..................       13,365        13,365        34,100        34,100
Accrued interest payable.................       59,150        59,150        80,966        80,966
Short-term notes -- senior...............      860,000       860,000       389,500       389,500
Minority interest -- preferred stock of
  subsidiary.............................      250,000       250,000       250,000       250,000
Long-term notes -- senior................      250,000       250,000            --            --
Long-term notes -- subordinated..........      421,972       421,413       534,899       529,970
                                           -----------   -----------   -----------   -----------
       Total on-balance-sheet financial
          liabilities....................  $26,312,568   $26,343,858   $26,671,254   $26,694,641
                                           ===========   ===========   ===========   ===========
OFF-BALANCE-SHEET CREDIT FACILITIES
  (POSITIVE POSITIONS/(OBLIGATIONS))
Loan commitments.........................  $   (17,120)  $   (17,120)  $   (21,724)  $   (21,724)
Standby letters of credit................         (695)         (695)         (381)         (381)
Commercial letters of credit.............          (48)          (48)          (65)          (65)
                                           -----------   -----------   -----------   -----------
       Total off-balance-sheet credit
          facilities.....................  $   (17,863)  $   (17,863)  $   (22,170)  $   (22,170)
                                           ===========   ===========   ===========   ===========
</Table>

9. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

     The Corporation utilizes various financial instruments with
off-balance-sheet risk in the normal course of business to a) meet its
customers' financing and risk management needs, b) reduce its own risk exposure,
and c) produce fee income and trading profits. The Corporation's major
categories of financial instruments with off-balance-sheet risk include credit
facilities and various securities-related activities. Fair values of off-

                                        68
<PAGE>

balance-sheet instruments are based on fees currently charged to enter into
similar agreements, market prices of comparable instruments, pricing models
using year-end rates and counterparty credit ratings.

Credit Facilities

     Credit facilities with off-balance-sheet risk include commitments to extend
credit, standby letters of credit and commercial letters of credit.

     Commitments to extend credit are contractual agreements to lend to a
customer as long as contract terms have been met. They generally require payment
of a fee and have fixed expiration dates. The Corporation's commitments serve
both business and individual customer needs, and include commercial loan
commitments, home equity lines, commercial real estate loan commitments and
mortgage loan commitments. The Corporation's maximum risk of accounting loss is
represented by the total contractual amount of commitments which was $9.26
billion and $8.76 billion at December 31, 2001 and 2000, respectively. Since
only a portion of commitments will ultimately be drawn down, the Corporation
does not expect to provide funds for the total contractual amount. Risks
associated with certain commitments are reduced by participations to third
parties, which at December 31, 2001, totaled $632 million and at December 31,
2000, totaled $501 million.

     Standby letters of credit are unconditional commitments which guarantee the
obligation of a customer to a third party should that customer default. They are
issued to support financial and performance-related obligations including
brokers' margin maintenance, industrial revenue bond repayment, debt repayment,
construction contract performance and trade agreement performance. The
Corporation's maximum risk of accounting loss for these items is represented by
the total commitments outstanding of $2.38 billion at December 31, 2001 and
$2.39 billion at December 31, 2000. Risks associated with standby letters of
credit are reduced by participations to third parties which totaled $665 million
at December 31, 2001 and $604 million at December 31, 2000.

     Commercial letters of credit are commitments to make payments on behalf of
customers when letter of credit terms have been met. Maximum risk of accounting
loss is represented by total commercial letters of credit outstanding of $36
million at December 31, 2001 and $59 million at December 31, 2000.

     Credit risks associated with all of these facilities are mitigated by
reviewing customers' creditworthiness on a case-by-case basis, obtaining
collateral, limiting loans to individual borrowers, setting restrictions on
long-duration maturities and establishing stringent covenant terms outlining
performance expectations which, if not met, may cause the Corporation to
terminate the contract. Credit risks are further mitigated by monitoring and
maintaining portfolios that are well-diversified.

     Collateral is required to support certain of these credit facilities when
they are drawn down and may include equity and debt securities, commodities,
inventories, receivables, certificates of deposit, savings instruments, fixed
assets, real estate, life insurance policies and seats on national or regional
exchanges. Requirements are based upon the risk inherent in the credit and are
more stringent for firms and individuals with greater default risks. The
Corporation monitors collateral values and appropriately perfects its security
interest. Periodic evaluations of collateral adequacy are performed by
Corporation personnel.

     The fair value of credit facilities (i.e. deferred income) is approximately
equal to their carrying value of $17.9 million at December 31, 2001 and $22.2
million at December 31, 2000.

Derivative Financial Instruments

     The Corporation adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," on January 1, 2001. Under this standard,
all derivative instruments are recognized at fair value in the Consolidated
Statements of Condition. In prior years, if hedge criteria were met, then
unrealized gains and losses on derivative financial instruments other than
interest rate swaps were generally recognized in the same period and in the same
manner in which gains and losses from the hedged item were recognized. For
interest rate swaps designated as hedges, contractual payments were accrued in
the Consolidated Statements of

                                        69
<PAGE>

Income as a component of interest income or expense and there was no recognition
of unrealized gains and losses in the Consolidated Statements of Condition.

     SFAS No. 133 supersedes SFAS No. 119, "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments." Disclosure for
2001 derivative activity is in accordance with SFAS No. 133 and disclosure for
prior year derivative activity is in accordance with SFAS No. 119. Although not
required, selected information for current year derivative activity is also
presented in accordance with SFAS No. 119 for comparative purposes.

     The Corporation uses various interest rate, foreign exchange and equity
derivative contracts as part of its dealer and trading activities or in the
management of its risk strategy. Interest rate contracts include futures,
forwards, forward rate agreements, option contracts, guarantees (caps, floors
and collars) and swaps. Foreign exchange contracts include spot, futures,
forwards, option contracts and swaps. Equity contracts include options and
swaps.

  Dealer and Trading Activity

  Interest rate contracts

     As dealer, the Corporation serves customers seeking to manage interest rate
risk by entering into contracts as counterparty to their (customer)
transactions. In its trading activities, the Corporation uses interest rate
contracts to profit from expected future market movements.

     These contracts may create exposure to both credit and market risk.
Replacement risk, the primary component of credit risk, is the risk of loss
should a counterparty default following unfavorable market movements and is
measured as the Corporation's cost of replacing contracts at current market
rates. The Corporation manages credit risk by establishing credit limits for
customers and products through an independent corporate-wide credit review
process and by continually monitoring exposure against those limits to ensure
they are not exceeded. Credit risk is, in many cases, further mitigated by the
existence of netting agreements that provide for netting of contractual
receivables and payables in the event of default or bankruptcy. Netting
agreements apply to situations where the Corporation is engaged in more than one
outstanding derivative transaction with the same counterparty and also has a
legally enforceable master netting agreement with that counterparty.

     Market risk is the potential for loss arising from potential adverse
changes in underlying market factors, including interest and foreign exchange
rates. The Corporation manages market risk through the imposition of integrated
value-at-risk limits and an active, independent monitoring process.

     Value at risk methodology is used for measuring the market risk of the
Corporation's trading positions. This statistical methodology uses recent market
volatility to estimate the maximum daily trading loss that the Corporation would
expect to incur, on average, 99 percent of the time. The model also measures the
effect of correlation among the various trading instruments to determine how
much risk is eliminated by offsetting positions.

     Futures and forward contracts are agreements in which the Corporation is
obligated to make or take delivery, at a specified future date, of a specified
instrument, at a specified price or yield. Futures contracts are exchange traded
and, because of exchange requirements that gains and losses be settled daily,
create negligible exposure to credit risk.

     Forward rate agreements are arrangements between two parties to exchange
amounts, at a specified future date, based on the difference between an agreed
upon interest rate and reference rate applied to a notional principal amount.
These agreements enable purchasers and sellers to fix interest costs and
returns.

     Options are contracts that provide the buyer the right (but not the
obligation) to purchase or sell a financial instrument, at a specified price,
either within a specified period of time or on a certain date. Interest rate
guarantees (caps, floors and collars) are agreements between two parties that,
in general, establish for the purchaser a maximum level of interest expense or a
minimum level of interest revenue based on a notional principal amount for a
specified term. Options and guarantees written create exposure to market risk.
As a

                                        70
<PAGE>

writer of interest rate options and guarantees, the Corporation receives a
premium at the outset of the agreement and bears the risk of an unfavorable
change in the price of the financial instrument underlying the option or
guarantee. Options and guarantees purchased create exposure to credit risk and,
to the extent of the premium paid or unrealized gain recognized, market risk.

     Interest rate swaps are contracts involving the exchange of interest
payments based on a notional amount for a specified period. Most of the
Corporation's activity in swaps is as intermediary in the exchange of interest
payments between customers, although the Corporation also uses swaps to manage
its own interest rate exposure (see discussion of risk management activity).

  Foreign exchange contracts

     The Corporation is a dealer in foreign exchange (FX) contracts. Foreign
exchange contracts may create exposure to market and credit risk, including
replacement risk and settlement risk. Credit risk is managed by establishing
limits for customers through an independent corporate-wide credit approval
process and continually monitoring exposure against those limits. In addition,
both settlement and replacement risk are reduced through netting by novation,
agreements with counterparties to offset certain related obligations. Market
risk is managed through establishing exposure limits by currency and monitoring
actual exposure against those limits, entering into offsetting positions, and
closely monitoring price behavior.

     HTSB and BMO combine their U.S. FX contracts revenues. Under this
arrangement, FX net profit is shared by HTSB and BMO in accordance with a
specific formula set forth in the agreement. This agreement expires in April
2002 but may be extended at that time. Either party may terminate the
arrangement at its option. FX revenues are reported net of expenses. Net gains
(losses) from dealer/trading foreign exchange contracts, for the year ended
December 31, 2001 totaled $8.8 million of net profit under the aforementioned
agreement with BMO.

     At December 31, 2001, approximately 98 percent of the Corporation's gross
notional positions in foreign currency contracts are represented by eight
currencies: Eurodollar, Canadian dollars, British pounds, Australian dollar,
Swiss francs, Swedish krona, Japanese yen and the Mexican peso.

     Foreign exchange contracts include spot, future, forward, option and swap
contracts that enable customers to manage their foreign exchange risk. Spot,
future and forward contracts are agreements to exchange currencies at a future
date, at a specified rate of exchange. Foreign exchange option contracts give
the buyer the right and the seller an obligation (if the buyer asserts his
right) to exchange currencies during a specified period (or on a certain date in
the case of "European" options) at a specified exchange rate. Cross currency
swap contracts are agreements to exchange principal denominated in two different
currencies at the spot rate and to repay the principal at a specified future
date and exchange rate.

  Equity contracts

     The Corporation enters into equity contracts that enable customers to
manage the risk associated with equity price fluctuations. Equity contracts
include options and swaps.

     At December 31, 2001 the Corporation recorded, for dealer and trading
activities and for risk management activities that do not otherwise qualify for
hedge accounting, the fair value of derivative instrument assets of $118.2
million in other assets and derivative instrument liabilities of $135.4 million
in other liabilities. These amounts reflect the netting of certain derivative
instrument assets and liabilities when the conditions in FASB Interpretation
("FIN") No. 39, "Offsetting of Amounts Related to Certain Contracts," have been
met.

     At December 31, 2001, derivative contracts with BMO represent $14.8 million
and $95.3 million of unrealized gains and unrealized losses, respectively.

                                        71
<PAGE>

  Risk Management Activity

     In addition to its dealer activities, the Corporation uses interest rate
contracts, primarily swaps, and foreign exchange contracts to reduce the level
of financial risk inherent in mismatches between the interest rate sensitivities
and foreign currency exchange rate fluctuations of certain assets and
liabilities. For non-trading risks, market risk is controlled by actively
managing the asset and liability mix, either directly through the balance sheet
or with off-balance sheet derivative instruments. Measures also focus on
interest rate exposure gaps and sensitivity to rate changes.

     The Corporation has an interest rate risk management strategy that
incorporates the use of derivative instruments to minimize significant unplanned
fluctuations in earnings that may be caused by interest rate volatility. The
Corporation manages interest rate sensitivity by modifying the repricing or
maturity characteristics of certain fixed rate assets so that net interest
margin is not adversely affected, on a material basis, by movements in interest
rates. As a result of interest rate fluctuations, fixed rate assets will
appreciate or depreciate in market value. The effect of the unrealized
appreciation or depreciation will generally be offset by the gains or losses on
the derivative instruments.

     The Corporation has a foreign currency risk management strategy that
incorporates the use of derivative instruments to minimize significant unplanned
fluctuations in earnings that may be caused by foreign currency exchange rate
fluctuations. Certain assets and liabilities are denominated in foreign
currency, creating exposure to changes in exchange rates. The Corporation uses
cross currency interest rate swaps and foreign exchange forward contracts to
hedge the risk.

     Risk management activities include the following derivative transactions
that qualify for hedge accounting.

  Fair value hedges

     The Corporation uses interest rate swaps to alter the character of revenue
earned on certain long-term, fixed rate loans. Interest rate swaps convert the
fixed rate loans into variable rate loans. Interest rate swap contracts
generally involve the exchange of fixed and variable rate interest payments
between two parties, based on a common notional amount and maturity date.

     For fair value hedges, as of December 31, 2001 the Corporation recorded the
fair value of derivative instrument liabilities of $8.2 million in other
liabilities. Net losses recorded for the year-to-date period ended December 31,
2001 representing the ineffective portion of the fair value hedges were not
material to the consolidated financial statements of the Corporation. Gains or
losses resulting from hedge ineffectiveness are recorded in noninterest income.

  Cash flow hedges

     The Corporation had used a total return swap to reduce the variability
associated with the cash flows from an equity security. The total return swap
converted the cash flows received on an available-for-sale equity security from
variable to fixed. Changes in the fair value of the swap were recorded in other
comprehensive income. The unrealized holding gain (loss) on the
available-for-sale equity security was recorded in other comprehensive income.
Prior to September 30, 2001 the Corporation redesignated the hedge due to the
expectation of diminished cash flows from the equity security. The unrealized
loss in accumulated other comprehensive income related to the total return swap
was not material to the consolidated financial statements of the Corporation. As
of September 30, 2001 the swap, designated as a nonhedging derivative, was
marked to market and the resulting unrealized gain was recorded in noninterest
income.

     Risk management activities also include the following derivative
transactions that do not otherwise qualify for hedge accounting.

     Foreign exchange contracts are used to stabilize any currency exchange rate
fluctuation for certain senior notes and certain loans. The derivative
instruments, primarily cross currency interest rate swaps and to a lesser extent
forward contracts, do not qualify for hedge accounting and are accounted for at
fair value.

                                        72
<PAGE>

     The Corporation has qualifying mortgage loan commitments that are intended
to be sold in the secondary market. These loan commitments are derivatives and
are accounted for at fair value. The Corporation enters into forward sales of
mortgage-backed securities to minimize its exposure to interest rate volatility.
These forward sales of mortgage-backed securities are also derivatives and are
accounted for at fair value.

  Disclosure under SFAS No. 119

     The following information summarizes the Corporation's dealer and trading
activity and risk management activity for prior years. Although not required,
the Corporation's dealer and trading activity for the current year is also
presented for comparative purposes. The following information is presented in
accordance with SFAS No. 119.

     The following table summarizes the Corporation's dealer/trading interest
rate contracts and their related contractual or notional amounts and maximum
replacement costs. Contractual or notional amount gives an indication of the
volume of activity in the contract. Maximum replacement cost reflects the
potential loss resulting from customer defaults and is computed as the cost of
replacing, at current market rates, all outstanding contracts with unrealized
gains.

<Table>
<Caption>
                                                                    DECEMBER 31
                                                    -------------------------------------------
                                                    CONTRACTUAL OR NOTIONAL        MAXIMUM
                                                            AMOUNT            REPLACEMENT COST
                                                    -----------------------   -----------------
                                                       2001         2000       2001      2000
                                                       ----         ----       ----      ----
                                                                  (IN THOUSANDS)
<S>                                                 <C>          <C>          <C>       <C>
Interest Rate Contracts:
  Futures and forwards............................  $   61,310   $   50,825   $   181   $   121
  Forward rate agreements.........................          --           --        --        --
  Options written.................................      17,500        8,500        --        17
  Options purchased...............................      17,500        5,000        25        17
  Guarantees written..............................     979,555      835,739       452       441
  Guarantees purchased............................     986,005      838,739    12,306     3,947
  Swaps...........................................   5,759,535    3,970,187    82,678    33,202
</Table>

                                        73
<PAGE>

     The following table summarizes average and end of period fair values of
dealer/trading interest rate contracts for the years ended December 31, 2001 and
2000:

<Table>
<Caption>
                                                          2001                            2000
                                              -----------------------------   -----------------------------
                                              END OF PERIOD      AVERAGE      END OF PERIOD      AVERAGE
                                                 ASSETS          ASSETS          ASSETS          ASSETS
                                              (LIABILITIES)   (LIABILITIES)   (LIABILITIES)   (LIABILITIES)
                                              -------------   -------------   -------------   -------------
                                                                     (IN THOUSANDS)
<S>                                           <C>             <C>             <C>             <C>
Interest Rate Contracts:
  Futures and forwards
     Unrealized gains.......................    $    181        $     --        $    121         $   101
     Unrealized losses......................          --              --             (18)           (101)
  Forward rate agreements
     Unrealized gains.......................          --              --              --              --
     Unrealized losses......................          --              --              --              --
  Options
     Purchased..............................          24              --              17              --
     Written................................         (24)             --              14              --
  Guarantees
     Purchased..............................      11,854             600           3,506             714
     Written................................     (11,854)           (600)         (3,506)           (700)
  Swaps
     Unrealized gains.......................      82,678          50,570          33,202           1,288
     Unrealized losses......................     (82,742)        (50,548)        (32,757)         (1,244)
                                                --------        --------        --------         -------
          Total Interest Rate Contracts.....    $    117        $     22        $    579         $    58
                                                ========        ========        ========         =======
</Table>

     Net gains (losses) from dealer/trading activity in interest rate contracts
and nonderivative trading account assets for the years ended December 31, 2001,
2000 and 1999 are summarized below:

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31
                                                              ------------------------------
                                                               GAINS      GAINS      GAINS
                                                              (LOSSES)   (LOSSES)   (LOSSES)
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Interest Rate Contracts:
  Futures and forwards......................................  $    --     $  (52)    $  542
  Forward rate agreements...................................       --         --          2
  Options...................................................       23         (6)       (36)
  Guarantees................................................       --         53        (57)
  Swaps.....................................................      282       (316)       439
Debt Instruments............................................   16,513      9,386      7,594
                                                              -------     ------     ------
          Total Trading Revenue.............................  $16,818     $9,065     $8,484
                                                              =======     ======     ======
</Table>

                                        74
<PAGE>

     The following table summarizes the Corporation's dealer/trading foreign
exchange contracts and their related contractual or notional amounts and maximum
replacement costs.

<Table>
<Caption>
                                                                    DECEMBER 31
                                                    -------------------------------------------
                                                        CONTRACTUAL OR             MAXIMUM
                                                        NOTIONAL AMOUNT       REPLACEMENT COST
                                                    -----------------------   -----------------
                                                       2001         2000       2001      2000
                                                       ----         ----       ----      ----
                                                                  (IN THOUSANDS)
<S>                                                 <C>          <C>          <C>       <C>
Foreign Exchange Contracts:
  Spot, futures and forwards......................  $1,260,109   $2,634,243   $11,239   $39,232
  Options written.................................       7,294       22,450        --        --
  Options purchased...............................       7,294       22,450        52       668
  Cross currency swaps............................      22,867       63,289       583     3,751
</Table>

     The following table summarizes average and end of period fair values of
dealer/trading foreign exchange contracts for the years ended December 31, 2001
and 2000:

<Table>
<Caption>
                                                          2001                            2000
                                              -----------------------------   -----------------------------
                                              END OF PERIOD      AVERAGE      END OF PERIOD      AVERAGE
                                                 ASSETS          ASSETS          ASSETS          ASSETS
                                              (LIABILITIES)   (LIABILITIES)   (LIABILITIES)   (LIABILITIES)
                                              -------------   -------------   -------------   -------------
                                                                     (IN THOUSANDS)
<S>                                           <C>             <C>             <C>             <C>
Foreign Exchange Contracts:
  Spot, futures and forwards
  Unrealized gains..........................    $ 11,239        $ 23,831        $ 39,232        $ 19,525
  Unrealized losses.........................     (11,239)        (23,831)        (39,232)        (19,525)
Options
  Purchased.................................          52           1,052             668           4,120
  Written...................................         (52)         (1,032)           (668)         (4,120)
Cross currency swaps
  Unrealized gains..........................         583              22           3,751           1,716
  Unrealized losses.........................        (583)            (23)         (3,751)         (1,848)
                                                --------        --------        --------        --------
          Total Foreign Exchange............    $     --        $     19        $     --        $   (132)
                                                ========        ========        ========        ========
</Table>

     Net gains (losses) from dealer/trading foreign exchange contracts, for the
years ended December 31, 2001, 2000 and 1999 totaled $8.8 million, $7.2 million
and $8.3 million, respectively, of net profit under the aforementioned agreement
with BMO.

     The following table summarizes the Corporation's dealer/trading equities
contracts and their related contractual or notional amounts and maximum
replacement costs.

<Table>
<Caption>
                                                                        DECEMBER 31
                                                           -------------------------------------
                                                            CONTRACTUAL OR          MAXIMUM
                                                            NOTIONAL AMOUNT    REPLACEMENT COST
                                                           -----------------   -----------------
                                                            2001      2000      2001      2000
                                                            ----      ----      ----      ----
                                                                      (IN THOUSANDS)
<S>                                                        <C>       <C>       <C>       <C>
Equities Contracts:
  Options written........................................  $27,877   $27,877   $   --    $   --
  Options purchased......................................   27,877    27,877    1,836     4,065
  Swaps..................................................   45,408        --    2,373        --
</Table>

                                        75
<PAGE>

     The following table summarizes average and end of period fair values of
dealer/trading equities contracts for the years ended December 31, 2001 and
2000:

<Table>
<Caption>
                                                          2001                            2000
                                              -----------------------------   -----------------------------
                                              END OF PERIOD      AVERAGE      END OF PERIOD      AVERAGE
                                                 ASSETS          ASSETS          ASSETS          ASSETS
                                              (LIABILITIES)   (LIABILITIES)   (LIABILITIES)   (LIABILITIES)
                                              -------------   -------------   -------------   -------------
                                                                     (IN THOUSANDS)
<S>                                           <C>             <C>             <C>             <C>
Equities Contracts:
  Options
     Purchased..............................     $ 1,836          $ 288          $ 4,065          $ 289
     Written................................      (1,836)          (288)          (4,065)          (289)
  Swaps
     Unrealized gains.......................       2,373             43               --             --
     Unrealized losses......................      (2,373)           (43)              --             --
                                                 -------          -----          -------          -----
          Total Equities Contracts..........     $    --          $  --          $    --          $  --
                                                 =======          =====          =======          =====
</Table>

     There were no net gains (losses) from dealer/trading activity in equities
contracts for the years ended December 31, 2001 and 2000.

     During 2000 interest rate swaps were primarily used to alter the character
of revenue earned on certain fixed rate loans and foreign exchange contracts
were used to stabilize any currency exchange rate fluctuations for certain
senior notes. The Corporation had $529 million notional amount of swap
contracts, used for risk management purposes, outstanding at December 31, 2000
with a loss in fair value of $6.0 million. Gross unrealized gains and losses,
representing the difference between fair value and carrying value (i.e. accrued
interest payable or receivable) on these contracts, totaled $2.8 million and
$3.6 million, respectively, at December 31, 2000. Risk management activity,
including the related cash positions, had no material effect on the
Corporation's net income for the year ended December 31, 2000. There were no
deferred gains or losses on terminated contracts at December 31, 2000.

     The following table summarizes swap and forward activity for risk
management purposes:

<Table>
<Caption>
                                                                 NOTIONAL
                                                                  AMOUNT
                                                                 --------
                                                              (IN THOUSANDS)
<S>                                                           <C>
Amount, December 31, 1999...................................     $436,375
Additions...................................................      181,714
Maturities..................................................      (89,316)
Terminations................................................
                                                                 --------
Amount, December 31, 2000...................................     $528,773
                                                                 ========
</Table>

Securities Activities

     The Corporation's securities activities that have off-balance-sheet risk
include municipal bond underwriting and short selling of securities.

     Through its municipal bond underwriting activities, the Corporation commits
to buy and offer for resale newly issued bonds. The Corporation is exposed to
market risk because it may be unable to resell its inventory of bonds profitably
as a result of unfavorable market conditions. In syndicate arrangements, the
Corporation is obligated to fulfill syndicate members' commitments should they
default. The syndicates of which the Corporation was a member had underwriting
commitments totaling $51 million at December 31, 2001 and $53 million at
December 31, 2000.

     Security short selling, defined as selling of securities not yet owned,
exposes the Corporation to off-balance-sheet market risk because the Corporation
may be required to buy securities at higher prevailing

                                        76
<PAGE>

market prices to cover its short positions. The Corporation had no short
position at December 31, 2001 or 2000.

10. CONCENTRATIONS OF CREDIT RISK IN FINANCIAL INSTRUMENTS

     The Corporation had one concentration of credit risk arising from financial
instruments at December 31, 2001 and 2000. This concentration was the Midwest
geographic area. This concentration exceeded 10 percent of the Corporation's
total credit exposure, which is the total potential accounting loss should all
customers fail to perform according to contract terms and all collateral prove
to be worthless.

Midwestern Geographic Area

     A majority of the Corporation's customers are located in the Midwestern
region of the United States, defined here to include Illinois, Indiana, Iowa,
Michigan, Minnesota, Missouri, Ohio and Wisconsin. The Corporation provides
credit to these customers through a broad array of banking and trade financing
products including commercial loans, commercial loan commitments, commercial
real estate loans, consumer installment loans, mortgage loans, home equity loans
and lines, standby and commercial letters of credit and banker's acceptances.
The financial viability of customers in the Midwest is, in part, dependent on
the region's economy. Corporate customers headquartered in the region and
serving a national or international market are not included in this
concentration because their business is broad-based and not dependent on the
region's economy. The Corporation's maximum risk of accounting loss, should all
customers making up the Midwestern concentration fail to perform according to
contract terms and all collateral prove to be worthless, was approximately $21.9
billion or 57 percent of the Corporation's total credit exposure at December 31,
2001 and $19.9 billion or 53 percent of the Corporation's total credit exposure
at December 31, 2000.

     The Corporation manages this exposure by continually reviewing local market
conditions and customers, adjusting individual and industry exposure limits
within the region and by obtaining or closely monitoring collateral values. See
Note 9 to Financial Statements on page 68 of this Report for information on
collateral supporting credit facilities.

11. EMPLOYEE BENEFIT PLANS

     The Corporation has noncontributory defined benefit pension plans covering
virtually all its employees as of December 31, 2001. Most of the employees
participating in retirement plans were included in one primary plan ("primary
plan") during the three-year period ended December 31, 2001. The benefit formula
for this plan is based upon length of service and an employee's highest
qualifying compensation during 60 consecutive months of active employment. The
plan is a multiple-employer plan covering the Corporation's employees as well as
persons employed by certain affiliated entities.

     The policy for this plan is to have the participating entities, at a
minimum, fund annually an amount necessary to satisfy the requirements under
ERISA, without regard to prior years' contributions in excess of the minimum.
For 2001, 2000 and 1999, cumulative contributions were greater than the amounts
recorded as pension expense for financial reporting purposes. The total
consolidated pension expense of the Corporation, including the supplemental plan
(excluding settlement losses and curtailment gains), for 2001, 2000 and 1999 was
$8.8 million, $11.6 million and $16.1 million, respectively.

     In addition to pension benefits, the Corporation provides medical care
benefits for retirees (and their dependents) who have attained age 55 and have
at least 10 years of service. The Corporation also provides medical care
benefits for disabled employees and widows of former employees (and their
dependents). The Corporation provides these medical care benefits through a
self-insured plan. Under the terms of the plan, the Corporation contributes to
the cost of coverage based on employees length of service. Cost sharing with
plan participants is accomplished through deductibles, coinsurance and
out-of-pocket limits. Funding for the plan largely comes from the general assets
of the Corporation, supplemented by contributions to a trust fund created under
Internal Revenue Code Section 401(h).

                                        77
<PAGE>

     Curtailment gains amounting to $7.3 million and $2.3 million for pension
plan and postretirement medical plan, respectively, were recognized in 2000 due
to the sale of corporate trust and the sale of merchant card businesses and the
outsourcing arrangement with Alltel. Of those totals, $2.2 million and $0.5
million, respectively, were recognized as a direct reduction of benefit expense.
Settlement losses amounting to $0.1 million and $1.3 million for the
supplemental plan were recognized in 2000 and 1999, respectively.

                                        78
<PAGE>

     The following tables set forth the change in benefit obligation and plan
assets for the pension and postretirement medical care benefit plans:

<Table>
<Caption>
                                        PENSION BENEFITS           POSTRETIREMENT MEDICAL BENEFITS
                                 ------------------------------   ---------------------------------
                                 2001***    2000***    1999***     2001***     2000***     1999***
                                 -------    -------    -------     -------     -------     -------
                                                           (IN THOUSANDS)
<S>                              <C>        <C>        <C>        <C>         <C>         <C>
CHANGE IN BENEFIT OBLIGATION*
Benefit obligation at beginning
  of year......................  $252,889   $259,725   $279,323   $ 41,214    $ 43,109    $ 41,443
Service cost...................    11,289     12,661     13,467      1,867       1,870       2,424
Interest cost..................    18,269     18,822     19,260      3,095       3,019       3,031
Plan amendments................     5,343         --         --         --          --          --
Acquisitions/transfers.........        94         --         --         --          --          --
Curtailment (gain) or loss.....        --     (7,348)        --         --      (2,276)         --
Benefits paid (net of
  participant contributions)...   (15,228)   (22,676)   (26,765)    (2,436)     (4,104)     (2,984)
Actuarial (gain) or loss.......    11,637     (8,295)   (25,560)     3,378        (404)       (805)
                                 --------   --------   --------   --------    --------    --------
Benefit obligation at end of
  year.........................  $284,293   $252,889   $259,725   $ 47,118    $ 41,214    $ 43,109
                                 ========   ========   ========   ========    ========    ========
CHANGE IN PLAN ASSETS
Fair value of plan assets at
  beginning of year............  $285,575   $258,359   $245,853   $ 30,291    $ 25,135    $ 19,949
Actual return on plan assets...   (23,458)    29,140     28,284     (1,844)      3,211       2,287
Acquisitions/transfers.........     1,193         --         --         --          --          --
Employer contribution..........     4,854     20,752     10,987      2,742       1,945       2,899
Benefits paid..................   (15,228)   (22,676)   (26,765)        --          --          --
                                 --------   --------   --------   --------    --------    --------
Fair value of plan assets at
  end of year **...............  $252,936   $285,575   $258,359   $ 31,189    $ 30,291    $ 25,135
                                 ========   ========   ========   ========    ========    ========
Funded Status..................  $(31,357)  $ 32,686   $ (1,366)  $(15,929)   $(10,923)   $(17,974)
Contributions made between
  measurement date (September
  30) and end of year..........        --         --         --         --          --          --
Unrecognized actuarial (gain)
  or loss......................    52,375     (5,033)     9,953     (8,961)    (17,315)    (15,288)
Unrecognized transition (asset)
  or obligation................       (96)      (449)      (803)    21,172      23,108      25,598
Unrecognized prior service
  cost.........................     1,564     (4,606)    (5,446)     1,718       1,906       2,206
                                 --------   --------   --------   --------    --------    --------
Prepaid (accrued) benefit
  cost.........................  $ 22,486   $ 22,598   $  2,338   $ (2,000)   $ (3,224)   $ (5,458)
                                 ========   ========   ========   ========    ========    ========
COMPONENTS OF NET PERIODIC
  BENEFIT COST
Service cost...................  $ 11,289   $ 12,661   $ 13,467   $  1,867    $  1,870    $  2,424
Interest cost..................    18,269     18,822     19,260      3,095       3,019       3,031
Expected return on plan
  assets.......................   (23,310)   (22,060)   (21,870)    (2,423)     (2,016)     (1,680)
Amortization of prior service
  cost.........................      (842)      (840)      (833)       188         188         195
Amortization of transition
  (asset) or obligation........      (354)      (354)      (354)     1,935       1,935       1,964
Recognized actuarial (gain) or
  loss.........................       (99)      (135)       961       (686)       (603)       (328)
                                 --------   --------   --------   --------    --------    --------
Net periodic benefit cost......  $  4,953   $  8,094   $ 10,631   $  3,976    $  4,393    $  5,606
                                 ========   ========   ========   ========    ========    ========
Additional (gain) or loss
  recognized due to:
  Curtailment..................  $     --   $ (2,223)  $     --   $     --    $   (524)   $     --
</Table>

-------------------------
*   Benefit Obligation is projected for Pension Benefits and accumulated for
    Postretirement Medical Benefits.

**  Plan assets consist primarily of participation units in collective trust
    funds or mutual funds administered by HTSB.

*** Plan assets and obligation measured as of September 30.

                                        79
<PAGE>

<Table>
<Caption>
                                                                        POSTRETIREMENT MEDICAL
                                                 PENSION BENEFITS              BENEFITS
                                               ---------------------   ------------------------
                                               2001    2000    1999     2001     2000     1999
                                               ----    ----    ----     ----     ----     ----
<S>                                            <C>     <C>     <C>     <C>      <C>      <C>
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER
  31:
Discount rate*...............................  7.50%   7.75%   7.50%   7.50%    7.75%    7.50%
Expected return on plan assets...............  9.00%   9.00%   9.00%   8.00%    8.00%    8.00%
Rate of compensation increase................  5.50%   5.50%   5.50%   4.00%    4.00%    4.00%
</Table>

-------------------------
* Discount rates are used to determine service costs for the subsequent year.

     For measurement purposes, a 6.5 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 2000. The rate was
assumed to decrease gradually to 6.0 percent in 2001 and remain level
thereafter.

     Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in
assumed health care cost trend rates would have the following effects:

<Table>
<Caption>
                                                            1-PERCENTAGE      1-PERCENTAGE
                                                           POINT INCREASE    POINT DECREASE
                                                           --------------    --------------
                                                                    (IN THOUSANDS)
<S>                                                        <C>              <C>
Effect on total of service and interest cost
  components.............................................      $  809           $  (641)
Effect on postretirement benefit obligation..............      $6,806           $(5,527)
</Table>

                                        80
<PAGE>

     Certain employees participating in the primary plan are also covered by a
supplemental unfunded retirement plan. The purpose of this plan is to extend
full retirement benefits to individuals without regard to statutory limitations
for qualified funded plans. The following table sets forth the status of this
supplemental plan:

<Table>
<Caption>
                                                                  SUPPLEMENTAL UNFUNDED
                                                                   RETIREMENT BENEFITS
                                                              ------------------------------
                                                                2001       2000       1999
                                                                ----       ----       ----
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year.....................  $ 22,939   $ 16,383   $ 24,792
Service cost................................................     1,785      1,765      2,730
Interest cost...............................................     1,235        979      1,482
Plan amendments.............................................    (5,286)        --         --
Benefits paid (net of participant contributions)............      (385)    (1,957)    (5,094)
Actuarial (gain) or loss....................................     8,714      5,769     (7,527)
                                                              --------   --------   --------
Benefit obligation at end of year...........................  $ 29,002   $ 22,939   $ 16,383
                                                              --------   --------   --------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year..............  $     --   $     --   $     --
Actual return on plan assets................................        --         --         --
Employer contribution.......................................       385      1,957      5,094
Benefits paid...............................................      (385)    (1,957)    (5,094)
                                                              --------   --------   --------
Fair value of plan assets at end of year....................  $     --   $     --   $     --
                                                              --------   --------   --------
Funded Status...............................................  $(29,002)  $(22,939)  $(16,383)
Contributions made between measurement date (September 30)
  and end of year...........................................        45         45         86
Unrecognized actuarial (gain) or loss.......................    14,116      5,744        105
Unrecognized transition (asset) or obligation...............        38        155        284
Unrecognized prior service cost.............................    (3,720)     2,054      2,618
                                                              --------   --------   --------
Prepaid (accrued) benefit cost..............................  $(18,523)  $(14,941)  $(13,290)
                                                              --------   --------   --------
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost................................................  $  1,785   $  1,765   $  2,730
Interest cost...............................................     1,235        979      1,482
Expected return on plan assets..............................        --         --         --
Amortization of prior service cost..........................       488        564        564
Amortization of transition (asset) or obligation............       117        129        129
Recognized actuarial (gain) or loss.........................       245         39        539
                                                              --------   --------   --------
Net periodic benefit cost...................................  $  3,870   $  3,476   $  5,444
                                                              ========   ========   ========
Additional (gain) or loss recognized due to:
  Settlement................................................  $     --   $     92   $  1,314
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31:
Discount rate...............................................      6.00%      6.00%      6.00%
Rate of compensation increase...............................      5.70%      5.70%      5.70%
</Table>

     The Corporation has a defined contribution profit sharing plan covering
virtually all its employees. The plan includes a matching contribution and a
profit sharing contribution. The matching contribution is based on the amount of
eligible employee contributions. The profit sharing contribution is based on the
annual financial performance of the Corporation relative to predefined targets.
The Corporation's total expense for this plan was $10.0 million, $12.2 million
and $12.1 million in 2001, 2000 and 1999, respectively.

                                        81
<PAGE>

12. STOCK OPTIONS

     The Corporation has two remaining primary stock-based compensation plans,
an options program and a performance incentive plan. A stock appreciation rights
plan was fully paid out early in 2000. The option plans are accounted for under
the fair value based method of accounting and they are described below.

Harris Bankcorp Stock Option Program

     The Harris Bankcorp Stock Option Program was established under the Bank of
Montreal Stock Option Plan for certain designated executives and other employees
of the Corporation and affiliated companies in order to provide incentive to
attain long-term strategic goals and to attract and retain services of key
employees.

     The Corporation has two types of option plans. The Fixed Stock Option Plan
consist of standard stock options with a ten-year term which are exercisable
only during the second five years of their term, assuming cumulative performance
goals are met. The Performance Based Option Plan consists of standard and
performance conditioned stock options with a ten-year term and a four-year
vesting period, which are exercisable twenty-five percent per annum. The
standard options may be exercised at any time once vested. The
performance-conditioned options may be exercised provided the Bank of Montreal
shares trade at fifty percent over the price of the stock at date of grant for
twenty consecutive days, after the vesting date. The stock options are
exercisable for Bank of Montreal common stock equal to the market price on the
date of grant.

     The compensation expense related to this program totaled $5.3 million, $3.2
million and $2.8 million in 2001, 2000 and 1999 respectively.

     The following table summarizes the stock option activity for 2001, 2000 and
1999 and provides details of stock options outstanding at December 31, 2001:

<Table>
<Caption>
                                            2001                         2000                         1999
                                 --------------------------   --------------------------   --------------------------
                                               WTD. AVG.                    WTD. AVG.                    WTD. AVG.
OPTIONS                           SHARES     EXERCISE PRICE    SHARES     EXERCISE PRICE    SHARES     EXERCISE PRICE
-------                          ---------   --------------   ---------   --------------   ---------   --------------
<S>                              <C>         <C>              <C>         <C>              <C>         <C>
Outstanding at beginning of
  year.........................  3,137,762       $39.09       2,849,700       $34.39       2,044,700       $34.30
Granted........................  1,488,300        22.70         766,825        50.36         822,500        34.72
Exercised......................   (168,109)       27.80        (238,213)       23.51              --           --
Forfeited, cancelled...........    (99,600)       38.07        (240,550)       34.82          (2,500)       39.06
Transferred....................    (15,900)       50.36              --           --         (15,000)       39.06
Expired........................         --           --              --           --              --           --
                                 ---------                    ---------                    ---------
Outstanding at end of year.....  4,342,453        33.89       3,137,762        39.09       2,849,700        34.39
                                 =========                    =========                    =========
Options exercisable at
  year-end.....................    969,020       $34.31         409,572       $28.16            None
Weighted-average fair value of
  options granted during the
  year.........................      $3.55                       $10.93                        $6.55
</Table>

<Table>
<Caption>
                          OPTIONS OUTSTANDING                                  OPTIONS EXERCISABLE
-----------------------------------------------------------------------   -----------------------------
                       NUMBER            WTD. AVG.                             NUMBER         WTD. AVG.
   RANGE OF          OUTSTANDING         REMAINING         WTD. AVG.         EXERCISABLE      EXERCISE
EXERCISE PRICES   DECEMBER 31, 2001   CONTRACTUAL LIFE   EXERCISE PRICE   DECEMBER 31, 2001     PRICE
---------------   -----------------   ----------------   --------------   -----------------   ---------
<C>               <C>                 <S>                <C>              <C>                 <C>
   $22 - 30           1,925,100        8.83 years            $23.71            436,800         $27.15
    34 - 42           1,438,978        7.44                   36.97            346,339          34.72
    46 - 54             978,375        8.23                   49.39            185,881          50.36
                      ---------                                                -------
    22 - 54           4,342,453        8.23                   33.89            969,020          34.31
                      =========                                                =======
</Table>

                                        82
<PAGE>

     The fair value of the stock options granted has been estimated using the
Bloomberg Model with the following assumptions:

<Table>
<Caption>
                                                               2001        2000        1999
                                                              ------      ------      ------
<S>                                                           <C>         <C>         <C>
Risk-free interest rate.....................................    5.50%       6.10%       6.31%
Expected life, in years.....................................     7.0         7.0         7.0
Expected volatility.........................................   23.29%      22.18%      21.46%
Compound annual dividend growth.............................    9.21%       8.89%       9.02%
Estimated fair value per option (US $)......................  $ 3.55      $10.93      $ 6.55
</Table>

Harris Bankcorp Mid-Term Incentive Plan

     The Bank maintains the Mid-Term Incentive Plan which was established in
January 2000. The Plan is intended to enhance the Bank's ability to attract and
retain high quality employees and to provide a strong incentive to employees to
achieve Bank of Montreal's governing objective of maximizing value for its
shareholders.

     Payouts under the plan to participants depend on the achievement of
specific performance criteria that are set at the grant date. The right to
receive distributions under the plan vest and are paid out after three years
based on various factors including the Bank of Montreal share price. There was
no compensation expense related to this plan in 2000.

Harris Bankcorp Stock Appreciation Rights Plan

     The Harris Bankcorp Stock Appreciation Rights Plan was fully paid out
between November 23, 1999 and January 22, 2000. All rights were exercised at
that time. Compensation expense for this plan totaled $0.4 million in 1999. No
compensation expense was recorded in 2000 or 2001.

     The following table details the rights outstanding at December 31, 2001,
2000 and 1999.

<Table>
<Caption>
                                                              2001    2000       1999
                                                              ----   -------   --------
<S>                                                           <C>    <C>       <C>
Outstanding beginning of the year...........................   --     73,000    412,200
Granted.....................................................   --         --         --
Exercised...................................................   --    (73,000)  (339,200)
Cancelled...................................................   --         --         --
Transferred.................................................   --         --         --
                                                               --    -------   --------
Outstanding end of the year.................................   --         --     73,000
                                                               ==    =======   ========
</Table>

13. LEASE EXPENSE AND OBLIGATIONS

     Rental expense for all operating leases was $18.3 million in 2001, $17.9
million in 2000 and $19.5 million in 1999. These amounts include real estate
taxes, maintenance and other rental-related operating costs of $4.3 million,
$5.0 million and $4.3 million for 2001, 2000, and 1999, respectively, paid under
net lease arrangements. Lease commitments are primarily for office space.

                                        83
<PAGE>

     Minimum rental commitments as of December 31, 2001 for all noncancelable
operating leases are as follows:

<Table>
<Caption>
                                                              (IN THOUSANDS)
<S>                                                           <C>
2002........................................................     $14,248
2003........................................................      12,383
2004........................................................      10,371
2005........................................................       9,996
2006........................................................       9,560
2007 and thereafter.........................................      39,845
                                                                 -------
          Total minimum future rentals......................     $96,403
                                                                 =======
</Table>

     Occupancy expenses for 2001, 2000, and 1999 have been reduced by $16.0
million, $14.2 million and $13.1 million, respectively, for rental income from
leased premises.

14. INCOME TAXES

     The 2001, 2000, and 1999 applicable income tax expense (benefit) was as
follows:

<Table>
<Caption>
                                                              FEDERAL     STATE     TOTAL
                                                              -------     -----     -----
                                                                     (IN THOUSANDS)
<S>                                                           <C>        <C>       <C>
2001 Current................................................  $ 74,873   $   538   $ 75,411
      Deferred..............................................   (26,545)   (1,432)   (27,977)
                                                              --------   -------   --------
          Total.............................................  $ 48,328   $  (894)  $ 47,434
                                                              ========   =======   ========
2000 Current................................................  $123,768   $ 5,114   $128,882
      Deferred..............................................     2,510    (1,221)     1,289
                                                              --------   -------   --------
          Total.............................................  $126,278   $ 3,893   $130,171
                                                              ========   =======   ========
1999 Current................................................  $ 80,642   $  (282)  $ 80,360
      Deferred..............................................    (7,900)    2,473     (5,427)
                                                              --------   -------   --------
          Total.............................................  $ 72,742   $ 2,191   $ 74,933
                                                              ========   =======   ========
</Table>

     Tax benefits of $3 million related to stock options were recorded directly
to stockholder's equity in 2001. There were no tax benefits related to stock
options recorded directly to stockholder's equity in 2000 or 1999.

                                        84
<PAGE>

     Deferred tax assets (liabilities) are comprised of the following at
December 31, 2001, 2000 and 1999:

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31
                                                              ------------------------------
                                                                2001       2000       1999
                                                                ----       ----       ----
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Gross deferred tax assets:
  Allowance for possible loan losses........................  $120,903   $ 69,351   $ 64,446
  Deferred employee compensation............................    14,747     10,143      6,792
  Deferred expense and prepaid income.......................    13,098     11,722     10,395
  Pension and medical trust.................................     2,006      3,324      9,119
  Other assets..............................................    11,642      4,756      7,622
                                                              --------   --------   --------
          Deferred tax assets...............................   162,396     99,296     98,374
                                                              --------   --------   --------
Gross deferred tax liabilities:
  Depreciable assets........................................   (36,365)    (5,573)    (5,592)
  Amortization of intangibles...............................   (18,994)      (590)        --
  Other liabilities.........................................   (18,957)   (10,732)    (9,092)
                                                              --------   --------   --------
          Deferred tax liabilities..........................   (74,316)   (16,895)   (14,684)
                                                              --------   --------   --------
  Net deferred tax assets...................................    88,080     82,401     83,690
                                                              --------   --------   --------
Tax effect of adjustment related to available-for-sale
  securities................................................   (25,484)     7,673    105,996
                                                              --------   --------   --------
Net deferred tax assets including adjustment related to
  available-for-sale securities.............................  $ 62,596   $ 90,074   $189,686
                                                              ========   ========   ========
</Table>

     At December 31, 2001 and 2000, the respective net deferred tax assets of
$88 million and $82 million included $79 million and $70 million for Federal
taxes and $9 million and $12 million for state taxes, respectively. Management
believes that the realization of the recognized net deferred tax asset is more
likely than not based on existing carryback ability and expectations as to
future taxable income. During 2001, the net deferred tax liability increased by
approximately $22 million for acquisition adjustments.

     Total income tax expense of $47.4 million for 2001, $130.2 million for
2000, and $74.9 million for 1999 reflects effective tax rates of 22.2 percent,
29.9 percent, and 24.9 percent, respectively. The reasons for the differences
between actual tax expense and the amount determined by applying the U.S.
Federal income tax rate of 35 percent to income before income taxes were as
follows:

<Table>
<Caption>
                                                        YEARS ENDED DECEMBER 31
                                 ---------------------------------------------------------------------
                                         2001                    2000                    1999
                                 ---------------------   ---------------------   ---------------------
                                            PERCENT OF              PERCENT OF              PERCENT OF
                                              PRETAX                  PRETAX                  PRETAX
                                  AMOUNT      INCOME      AMOUNT      INCOME      AMOUNT      INCOME
                                  ------    ----------    ------    ----------    ------    ----------
                                                            (IN THOUSANDS)
<S>                              <C>        <C>          <C>        <C>          <C>        <C>
Computed tax expense...........  $ 74,692      35.0%     $152,249      35.0%     $105,517      35.0%
Increase (reduction) in income
  tax expense due to:
  Tax-exempt income from loans
     and investments net of
     municipal interest expense
     disallowance..............    (8,391)     (3.9)       (8,158)     (1.9)       (8,966)     (3.0)
  Bank-owned insurance.........   (16,507)     (7.7)      (15,758)     (3.6)      (14,477)     (4.8)
  Equity ownership in
     securitization vehicle....      (278)     (0.1)       (1,673)     (0.4)       (5,601)     (1.9)
  Other, net...................    (2,082)     (1.1)        3,511       0.8        (1,540)     (0.4)
                                 --------      ----      --------      ----      --------      ----
Actual tax expense.............  $ 47,434      22.2%     $130,171      29.9%     $ 74,933      24.9%
                                 ========      ====      ========      ====      ========      ====
</Table>

     The tax expense from net gains on security sales amounted to $16.7 million,
$5.8 million, and $5.7 million in 2001, 2000, and 1999, respectively.

                                        85
<PAGE>

15. REGULATORY CAPITAL

     Bankcorp, as a U.S. bank holding company and HTSB, as a state-member bank,
must each adhere to the capital adequacy guidelines of the Federal Reserve
Board, which are not significantly different than those published by other U.S.
banking regulators. The guidelines specify minimum ratios for Tier 1 capital to
risk-weighted assets of 4 percent and total regulatory capital to risk-weighted
assets of 8 percent.

     Risk-based capital guidelines define total capital to consist primarily of
Tier 1 (core) and Tier 2 (supplementary) capital. In general, Tier 1 capital is
comprised of stockholder's equity, including certain types of preferred stock,
less goodwill and certain other intangibles. Core capital must comprise at least
50 percent of total capital. Tier 2 capital basically includes subordinated debt
(less a discount factor during the five years prior to maturity), other types of
preferred stock and the allowance for possible loan losses. The portion of the
allowance for possible loan losses includable in Tier 2 capital is limited to
1.25 percent of risk-weighted assets.

     The Board also requires an additional measure of capital adequacy, the Tier
1 leverage ratio, which is evaluated in conjunction with risk-based capital
ratios. The Tier 1 leverage ratio is computed by dividing period-end Tier 1
capital by adjusted quarterly average assets. The Board established a minimum
ratio of 3 percent applicable only to the strongest banking organizations
having, among other things, excellent asset quality, high liquidity, good
earnings and no undue interest rate risk exposure. Other institutions are
expected to maintain a minimum ratio of 4 percent.

     The Federal Deposit Insurance Corporation Improvement Act of 1991 contains
prompt corrective action provisions that established five capital categories for
all Federal Deposit Insurance Corporation ("FDIC")-insured institutions ranging
from "well capitalized" to "critically undercapitalized." Classification within
a category is based primarily on the three capital adequacy measures. An
institution is considered "well capitalized" if its capital level significantly
exceeds the required minimum levels, "adequately capitalized" if it meets the
minimum levels, "undercapitalized" if it fails to meet the minimum levels,
"significantly undercapitalized" if it is significantly below the minimum levels
and "critically undercapitalized" if it has a ratio of tangible equity to total
assets of 2 percent or less.

     Noncompliance with minimum capital requirements may result in regulatory
corrective actions that could have a material effect on the Corporation's
financial statements. Depending on the level of noncompliance, regulatory
corrective actions may include the following: requiring a plan for restoring the
institution to an acceptable capital category, restricting or prohibiting
certain activities and appointing a receiver or conservator for the institution.

     As of December 31, 2001, the most recent notification from the FDIC
categorized the Corporation and HTSB as "well capitalized" under the regulatory
framework for prompt corrective action. Management is not aware of any
conditions or events since December 31, 2001 that have changed the capital
category of the Corporation and HTSB.

     At December 31, 2001 the Corporation had $250 million of minority interest
in preferred stock of a subsidiary. The preferred stock is noncumulative,
exchangeable Series A preferred stock. Dividends on the preferred stock are
noncumulative and are payable at the rate of 7 3/8% per annum. During both 2001
and 2000, $18 million of dividends were paid on the preferred stock. The
preferred stock qualifies as Tier 1 Capital for U.S. banking regulatory
purposes.

                                        86
<PAGE>

     The following table summarizes the Corporation's and HTSB's risk-based
capital ratios and Tier 1 leverage ratio for the past two years as well as the
minimum amounts and ratios as per capital adequacy guidelines and FDIC prompt
corrective action provisions.

<Table>
<Caption>
                                                                                              TO BE WELL CAPITALIZED
                                                        FOR CAPITAL                           UNDER PROMPT CORRECTIVE
                             ACTUAL                  ADEQUACY PURPOSES                           ACTION PROVISIONS
                      --------------------   ----------------------------------   -----------------------------------------------
                       CAPITAL     CAPITAL           CAPITAL            CAPITAL           CAPITAL                  CAPITAL
                        AMOUNT      RATIO             AMOUNT             RATIO             AMOUNT                   RATIO
                       -------     -------           -------            -------           -------                  -------
                                                  (IN THOUSANDS)
<S>                   <C>          <C>       <C>           <C>          <C>       <C>           <C>          <C>           <C>
As of December 31,
  2001:
Total Capital to
  Risk-Weighted
  Assets
     Corporation....  $2,736,424   12.31%     greater than               8.00%     greater than               greater than
                                               or equal to $1,778,342               or equal to $2,222,928     or equal to 10.00%
     HTSB...........  $1,995,799   12.26%     greater than               8.00%     greater than               greater than
                                               or equal to $1,302,316               or equal to $1,627,895     or equal to 10.00%
Tier 1 Capital to
  Risk-Weighted
  Assets
     Corporation....  $2,067,205    9.30%     greater than               4.00%     greater than               greater than
                                               or equal to $  889,120               or equal to $1,333,681     or equal to  6.00%
     HTSB...........  $1,596,658    9.80%     greater than               4.00%     greater than               greater than
                                               or equal to $  651,697               or equal to $  977,546     or equal to  6.00%
Tier 1 Capital to
  Average Assets
     Corporation....  $2,067,205    7.32%     greater than               4.00%     greater than               greater than
                                               or equal to $1,129,620               or equal to $1,412,025     or equal to  5.00%
     HTSB...........  $1,596,658    8.23%     greater than               4.00%     greater than               greater than
                                               or equal to $  776,018               or equal to $  970,023     or equal to  5.00%
As of December 31,
  2000:
Total Capital to
  Risk-Weighted
  Assets
     Corporation....  $2,651,036   11.79%     greater than               8.00%     greater than               greater than
                                               or equal to $1,798,837               or equal to $2,248,546     or equal to 10.00%
     HTSB...........  $1,903,085   10.98%     greater than               8.00%     greater than               greater than
                                               or equal to $1,386,583               or equal to $1,733,229     or equal to 10.00%
Tier 1 Capital to
  Risk-Weighted
  Assets
     Corporation....  $2,056,341    9.14%     greater than               4.00%     greater than               greater than
                                               or equal to $  899,930               or equal to $1,349,896     or equal to  6.00%
     HTSB...........  $1,569,134    9.06%     greater than               4.00%     greater than               greater than
                                               or equal to $  692,774               or equal to $1,039,162     or equal to  6.00%
Tier 1 Capital to
  Average Assets
     Corporation....  $2,056,341    7.15%     greater than               4.00%     greater than               greater than
                                               or equal to $1,150,401               or equal to $1,438,001     or equal to  5.00%
     HTSB...........  $1,569,134    7.40%     greater than               4.00%     greater than               greater than
                                               or equal to $  848,181               or equal to $1,060,226     or equal to  5.00%
</Table>

16. INVESTMENTS IN SUBSIDIARIES AND STATUTORY RESTRICTIONS

     Bankcorp's investment in the combined net assets of its wholly-owned
subsidiaries was $2.51 billion and $2.21 billion at December 31, 2001 and 2000,
respectively.

     Provisions of both Illinois and Federal banking laws place restrictions
upon the amount of dividends that can be paid to Bankcorp by its bank
subsidiaries. Illinois law requires that no dividends may be paid in an amount
greater than the net profits then on hand, reduced by certain loan losses (as
defined). In addition to these restrictions, Federal Reserve member banking
subsidiaries require prior approval of Federal banking authorities if dividends
declared by a subsidiary bank, in any calendar year, will exceed its net profits
(as defined in the applicable statute) for that year, combined with its retained
net profits, as so defined, for the preceding two years. Based on these and
certain other prescribed regulatory limitations, Bankcorp subsidiaries could
have declared, without regulatory approval, $629 million of dividends at
December 31, 2001. Actual dividends paid, however, would be subject to prudent
capital maintenance. Cash dividends paid to Bankcorp by its subsidiaries
amounted to $133 million and $126 million in 2001 and 2000, respectively.

     The Federal Reserve Act also places restrictions on certain transactions
between the Corporation's banking subsidiaries and Bankcorp (parent only) and
its affiliates, including loans from subsidiary banks. Such restrictions include
collateralization requirements and quantitative limitations. Essentially, a
member bank's

                                        87
<PAGE>

aggregate involvement in these restricted transactions may not exceed 20 percent
of its capital and surplus, as defined by the Federal Reserve Board. In
addition, restricted transactions involving an individual affiliate are limited
to 10 percent of its capital and surplus.

     The bank subsidiaries of Bankcorp are required by the Federal Reserve Act
to maintain reserves against certain of their deposits. Reserves are held either
in the form of vault cash or balances maintained with the Federal Reserve Bank.
Required reserves are essentially a function of daily average deposit balances
and statutory reserve ratios prescribed by type of deposit. During 2001 and
2000, daily average reserve balances of $295 million and $227 million,
respectively, were required for those subsidiaries of Bankcorp that must
maintain such balances. At year-end 2001 and 2000, balances on deposit at the
Federal Reserve Bank totaled $277 million and $292 million, respectively.

17. CONTINGENT LIABILITIES

     Certain subsidiaries of Bankcorp are defendants in various legal
proceedings arising in the normal course of business. In the opinion of
management, based on the advice of legal counsel, the ultimate resolution of
these matters will not have a material adverse effect on the Corporation's
financial position and results of operations.

18. SEGMENT INFORMATION

     The Corporation's segments are identified by the customers served, the
products and services they offer and the channels by which the products and
services are delivered. The Corporation's reportable segments are Personal and
Commercial Client Group, Investment Banking Group, Private Client Group, and
Emfisys and Corporate Support. Personal and Commercial Client Group comprises
community banking, which serves individuals through a Chicagoland retail bank
network and small business/lower middle-market banking. The Investment Banking
Group is comprised of the Corporation's corporate banking distribution to
middle-market companies across the Midwest and nationally in selected
specialties, and the Corporation's Treasury group which serves as the
Corporation's funding unit. The Private Client Group serves the needs of
affluent individuals both within Chicagoland and nationally through the
integrated delivery of a comprehensive offering of wealth management services,
including investment management, personal trust, customized lending and
financial planning. Businesses within this group include private banking, mutual
fund management, retirement plan services and Harris Investment Management (the
Corporation's institutional investment manager). Emfisys is the technology and
e-business group that provides information technology planning, strategy and
development services, together with transaction-processing capabilities, North
American cash management solutions and real estate operations. Corporate Support
includes the corporate units that provide expertise and governance support for
the Bank in areas such as law, finance, internal audit, risk management,
corporate communications, human resources, and learning. Corporate Support also
reflects income from bank-owned insurance and inter-group eliminations and
residual revenues and expenses, representing the difference between actual
amounts incurred and the amounts allocated to operating segments. The gain on
the sale of the corporate trust business and the results of the corporate trust
and the merchant card businesses, prior to their sale in 2000, are also
reflected in this segment.

     The accounting policies of the segments are the same as those described in
Note 1 to Financial Statements, Summary of Significant Accounting Policies,
except that segment results are presented on a fully taxable equivalent ("FTE")
basis and income tax expense is allocated to the segments by an application of
the Corporation's statutory tax rate to the pretax FTE basis profit or loss of
each segment. Segment data includes intersegment revenues, as well as corporate
overhead costs allocated to each segment based upon estimated usage of centrally
provided services. The Corporation evaluates the performance of its segments and
allocates resources to them based on FTE basis income before income taxes.
Selected segment information is included in the following table.

                                        88
<PAGE>

     Selected segment information is included in the following table:

<Table>
<Caption>
                             PERSONAL AND
                              COMMERCIAL     INVESTMENT       PRIVATE         EMFISYS AND      CONSOLIDATED
                             CLIENT GROUP   BANKING GROUP   CLIENT GROUP   CORPORATE SUPPORT      TOTAL
                             ------------   -------------   ------------   -----------------   ------------
                                                             (IN MILLIONS)
<S>                          <C>            <C>             <C>            <C>                 <C>
2001
Net interest income (FTE
  basis)...................    $ 433.8         $ 285.6         $ 73.0           $  1.0           $ 793.4
Noninterest income.........      117.1           101.6          135.1             97.9             451.7
Provision for loan
  losses...................       30.0           189.8            0.3             (0.0)            220.1
Noninterest expense........      391.0            99.2          161.8            123.5             775.5
                               -------         -------         ------           ------           -------
Income before income
  taxes....................      129.9            98.2           46.0            (24.6)            249.5
Income taxes...............       50.7            39.0           18.9            (25.1)             83.5
                               -------         -------         ------           ------           -------
Net income.................    $  79.2         $  59.2         $ 27.1           $  0.5           $ 166.0
                               =======         =======         ======           ======           =======
Average Assets.............    $10,122         $13,546         $1,575           $3,383           $28,626
                               =======         =======         ======           ======           =======
Average Loans..............    $ 6,924         $ 7,183         $1,414           $  266           $15,787
                               =======         =======         ======           ======           =======
Average Deposits...........    $11,399         $ 3,775         $1,272           $2,412           $18,858
                               =======         =======         ======           ======           =======
2000
Net interest income (FTE
  basis)...................    $ 368.4         $ 257.6         $ 57.7           $ 15.4           $ 699.1
Noninterest income.........       91.4            74.1          132.7            238.2(1)          536.4
Provision for loan
  losses...................        9.4            23.6            0.2              0.9              34.1
Noninterest expense........      342.9           105.9          152.7            122.0             723.5
                               -------         -------         ------           ------           -------
Income before income
  taxes....................      107.5           202.2           37.5            130.7             477.9
Income taxes...............       43.4            80.4           15.5             33.8             173.1
                               -------         -------         ------           ------           -------
Net income.................    $  64.1         $ 121.8         $ 22.0           $ 96.9           $ 304.8
                               =======         =======         ======           ======           =======
Average Assets.............    $ 8,502         $14,958         $1,351           $3,397           $28,208
                               =======         =======         ======           ======           =======
Average Loans..............    $ 5,748         $ 8,136         $1,228           $  113           $15,225
                               =======         =======         ======           ======           =======
Average Deposits...........    $10,353         $ 4,115         $1,195           $2,815           $18,478
                               =======         =======         ======           ======           =======
1999
Net interest income (FTE
  basis)...................    $ 366.1         $ 247.6         $ 55.3           $(10.3)          $ 658.7
Noninterest income.........       88.0            75.0          132.0            184.7             479.7
Provision for loan
  losses...................        9.4            18.2            0.2              0.1              27.9
Noninterest expense........      343.4           104.9          149.4            172.5             770.2
                               -------         -------         ------           ------           -------
Income before income
  taxes....................      101.3           199.5           37.7              1.8             340.3
Income taxes...............       41.5            79.3           16.1            (23.1)            113.8
                               -------         -------         ------           ------           -------
Net income.................    $  59.8         $ 120.2         $ 21.6           $ 24.9           $ 226.5
                               =======         =======         ======           ======           =======
Average Assets.............    $ 7,981         $13,087         $1,194           $3,595           $25,857
                               =======         =======         ======           ======           =======
Average Loans..............    $ 5,237         $ 7,325         $1,055           $  230           $13,847
                               =======         =======         ======           ======           =======
Average Deposits...........    $10,049         $ 3,496         $1,219           $2,466           $17,230
                               =======         =======         ======           ======           =======
</Table>

-------------------------
(1) Includes pretax gains on sale of the corporate trust and merchant card
    businesses of $47.0 million and $60.2 million, respectively.

                                        89
<PAGE>

19. FOREIGN ACTIVITIES (BY DOMICILE OF CUSTOMER)

     Income and expenses identifiable with foreign and domestic operations are
summarized in the table below:

<Table>
<Caption>
                                                          FOREIGN     DOMESTIC     CONSOLIDATED
                                                          -------     --------     ------------
                                                                     (IN THOUSANDS)
<S>                                                       <C>        <C>           <C>
2001
Total operating income..................................  $ 47,534   $ 2,030,980   $ 2,078,514
Total expenses..........................................    18,525     1,846,583     1,865,108
                                                          --------   -----------   -----------
Income before taxes.....................................    29,009       184,397       213,406
Applicable income taxes.................................    11,530        35,904        47,434
                                                          --------   -----------   -----------
Net income..............................................  $ 17,479   $   148,493   $   165,972
                                                          ========   ===========   ===========
Identifiable assets at year-end.........................  $228,741   $28,817,366   $29,046,107
                                                          ========   ===========   ===========
2000
Total operating income..................................  $ 53,698   $ 2,350,213   $ 2,403,911
Total expenses..........................................    15,995     1,952,918     1,968,913
                                                          --------   -----------   -----------
Income before taxes.....................................    37,703       397,295       434,998
Applicable income taxes.................................    14,985       115,186       130,171
                                                          --------   -----------   -----------
Net income..............................................  $ 22,718   $   282,109   $   304,827
                                                          ========   ===========   ===========
Identifiable assets at year-end.........................  $233,619   $28,732,857   $28,966,476
                                                          ========   ===========   ===========
1999
Total operating income..................................  $ 46,974   $ 1,951,013   $ 1,997,987
Total expenses..........................................    15,187     1,681,324     1,696,511
                                                          --------   -----------   -----------
Income before taxes.....................................    31,787       269,689       301,476
Applicable income taxes.................................    12,634        62,298        74,932
                                                          --------   -----------   -----------
Net income..............................................  $ 19,153   $   207,391   $   226,544
                                                          ========   ===========   ===========
Identifiable assets at year-end.........................  $322,297   $26,858,199   $27,180,496
                                                          ========   ===========   ===========
</Table>

     Determination of rates for foreign funds generated or used are based on the
actual external costs of specific interest-bearing sources or uses of funds for
the periods. Internal allocations for certain unidentifiable income and expenses
were distributed to foreign operations based on the percentage of identifiable
foreign income to total income. As of December 31, 2001, 2000 and 1999,
identifiable foreign assets accounted for 1 percent of total consolidated
assets.

                                        90
<PAGE>

20. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

     Presented below are the statements of income, statements of condition and
statements of cash flows for Harris Bankcorp, Inc. (parent company only):

Statements of Income

<Table>
<Caption>
                                                                FOR THE YEARS ENDED DECEMBER 31
                                                                --------------------------------
                                                                  2001        2000        1999
                                                                  ----        ----        ----
                                                                         (IN THOUSANDS)
<S>                                                             <C>         <C>         <C>
Interest on securities purchased from bank subsidiary under
  agreement to resell.......................................    $  6,274    $  9,803    $  6,751
Interest on advances to bank subsidiaries...................      14,315      16,635      15,534
Interest on investments.....................................      10,678      14,804      14,490
Dividends from bank subsidiaries............................     132,600     125,987     117,467
Other operating income(loss)................................      (6,150)      5,030          44
                                                                --------    --------    --------
     Total operating income.................................     157,717     172,259     154,286
                                                                --------    --------    --------
Interest expense on commercial paper........................       9,374      17,322      13,876
Interest expense on long-term notes.........................      31,906      37,058      31,186
Other operating expense.....................................       6,493       2,666       7,136
                                                                --------    --------    --------
     Total operating expenses...............................      47,773      57,046      52,198
                                                                --------    --------    --------
Income before income taxes and equity in undistributed net
  income of subsidiaries....................................     109,944     115,213     102,088
Applicable income tax benefit...............................     (10,236)     (5,779)     (7,527)
                                                                --------    --------    --------
Income before equity in undistributed net income of
  subsidiaries..............................................     120,180     120,992     109,615
Equity in undistributed net income of bank subsidiaries.....      43,552     183,557     108,244
Equity in undistributed net income of nonbank
  subsidiaries..............................................       3,024         719       9,028
Equity in undistributed net loss of 20% owned bank
  subsidiary................................................        (784)       (441)       (343)
                                                                --------    --------    --------
     Net income.............................................    $165,972    $304,827    $226,544
                                                                ========    ========    ========
</Table>

                                        91
<PAGE>

Statements of Condition

<Table>
<Caption>
                                                                    DECEMBER 31
                                                              -----------------------
                                                                 2001         2000
                                                                 ----         ----
                                                                  (IN THOUSANDS)
<S>                                                           <C>          <C>
ASSETS
Demand balances due from bank subsidiary....................  $      600   $      320
Investments.................................................     213,315      249,835
Securities purchased from bank subsidiary under agreement to
  resell....................................................     310,404      225,859
Advances to bank subsidiaries...............................     230,000      230,000
Equity investment in wholly-owned subsidiaries:
  Banks.....................................................   2,453,474    2,123,679
  Nonbanks..................................................      55,208       83,930
Equity investments in 20% owned bank subsidiary.............       4,493        4,277
Other assets................................................      16,973       26,814
                                                              ----------   ----------
       TOTAL ASSETS.........................................  $3,284,467   $2,944,714
                                                              ==========   ==========

LIABILITIES AND STOCKHOLDER'S EQUITY
Commercial paper outstanding................................  $  391,752   $  366,614
Other liabilities...........................................      23,629       12,892
Long-term notes.............................................     671,972      534,900
                                                              ----------   ----------
       Total liabilities....................................   1,087,353      914,406
Stockholder's equity........................................   2,197,114    2,030,308
                                                              ----------   ----------
       TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY...........  $3,284,467   $2,944,714
                                                              ==========   ==========
</Table>

                                        92
<PAGE>

Statements of Cash Flows

<Table>
<Caption>
                                                             FOR THE YEARS ENDED DECEMBER 31
                                                           -----------------------------------
                                                             2001         2000         1999
                                                             ----         ----         ----
                                                                     (IN THOUSANDS)
<S>                                                        <C>         <C>           <C>
OPERATING ACTIVITIES:
  Net income.............................................  $ 165,972   $   304,827   $ 226,544
  Adjustments to reconcile net income to net cash
     provided by operating activities:
     Undistributed net income of subsidiaries............    (45,792)     (183,835)   (116,929)
     Accretion and amortization..........................      1,179         1,321         706
     Deferred income tax (benefit) provision.............        (57)          (79)         81
     Net decrease (increase) in interest receivable......      3,936           386      (3,365)
     Other, net..........................................      2,193        (2,914)     (3,498)
                                                           ---------   -----------   ---------
       Net cash provided by operating activities.........    127,431       119,706     103,539
                                                           ---------   -----------   ---------
INVESTING ACTIVITIES:
     Net (increase) decrease in securities purchased
       under agreement to resell.........................    (84,545)     (137,679)     44,676
     Proceeds from maturities of portfolio securities....    606,428     1,130,919     722,263
     Purchases of portfolio securities...................   (565,877)   (1,116,593)   (754,465)
     Additional capital invested in bank subsidiaries....   (228,249)      (28,200)     (9,350)
     Net decrease in advances to subsidiaries............         --        10,000          --
     Other, net..........................................     31,749            --          --
                                                           ---------   -----------   ---------
       Net cash (used) provided by investing
          activities.....................................   (240,494)     (141,553)      3,124
                                                           ---------   -----------   ---------
FINANCING ACTIVITIES:
     Net increase (decrease) in commercial paper
       outstanding.......................................     25,138       121,564     (16,855)
     Proceeds from issuance of long-term notes...........    250,000        60,000     180,000
     Repayment of long-term notes........................   (100,000)           --    (180,000)
     Contribution to capital surplus.....................    220,249        10,000       2,785
     Cash dividends paid on Series A preferred stock.....    (14,500)      (14,500)    (14,500)
     Cash dividends paid on Series B preferred stock.....     (3,544)       (3,544)     (3,544)
     Cash dividends paid on common stock.................   (264,000)     (152,000)    (74,200)
                                                           ---------   -----------   ---------
       Net cash provided (used) by financing
          activities.....................................    113,343        21,520    (106,314)
                                                           ---------   -----------   ---------
Net increase (decrease) in demand balances due from
  banks..................................................        280          (327)        349
Demand balances due from banks at January 1..............        320           647         298
                                                           ---------   -----------   ---------
Demand balances due from banks at December 31............  $     600   $       320   $     647
                                                           =========   ===========   =========
</Table>

21. BUSINESS COMBINATIONS AND DISPOSITIONS/INTANGIBLES

     At December 31, 2001 and 2000, intangible assets, including goodwill
resulting from business combinations, amounted to $358 million and $235 million,
respectively. Amortization of these intangibles amounted to $28.3 million in
2001, $25.4 million in 2000, and $25.8 million in 1999. The impact of purchase
accounting adjustments, other than amortization of intangibles, was not material
to the Corporation's reported results.

     In March 2000, the Corporation sold its corporate trust business. In
separate and unrelated transactions, the indenture trust business was sold to a
subsidiary of The Bank of New York Company, Inc., and the shareholder services
business to Computershare Limited. The combined sales resulted in a pretax gain
to the Corporation of $47.0 million.

     On July 1, 2000, Bankmont contributed 100 percent of the common stock of
its wholly-owned subsidiary, Harris Bankmont, Inc. to the Corporation.
Immediately thereafter, Harris Bankmont, Inc. was liquidated and dissolved into
the Corporation under the corporation law of Delaware. Harris Bankcorp, Inc. was
the surviving corporation. The assets of Harris Bankmont, Inc. consisted
primarily of the stock of thirteen community banks

                                        93
<PAGE>

located in the Chicago area. This combination was accounted for at historical
cost, similar to a pooling-of-interests. All historical information is presented
on a combined basis.

     On December 1, 2000, the Corporation sold its merchant card business to the
credit card processing joint venture (Moneris) formed between Bank of Montreal
and Royal Bank of Canada. The sale resulted in a pretax gain to the Corporation
of $60.2 million, which was eliminated in the consolidation of the Bank's
results with Bank of Montreal.

     On December 15, 2000, the Corporation acquired Century Bank, a Scottsdale,
Arizona based bank for a purchase price of $16.2 million. Of this amount, $9.7
million was recorded as goodwill with an amortization period of fifteen years.
On the date of acquisition, Century Bank had total assets amounting to $67
million and total deposits amounting to $62 million.

     In July 2001, Bankmont acquired First National Bancorp, Inc. and its wholly
owned subsidiary, First National Bank of Joliet ("Joliet"). First National
Bancorp, Inc. was merged with and into Bankmont, followed by a capital
contribution of Joliet stock to the Corporation which resulted in approximately
$220 million of incremental capital. The purchase price was $220.3 million. The
transaction moves the Corporation into the fastest growing county in Illinois
and brings it closer to the goal of becoming the dominant full-service bank in
Chicagoland. Of this amount, $101.6 million was recorded as goodwill and $50.1
million as a core deposit premium intangible with an expected life of eight
years. Under the provisions of SFAS No. 142, goodwill will not be subject to
periodic amortization. On the date of acquisition, First National Bank of Joliet
had total assets amounting to $1.1 billion, total deposits amounting to $860
million and total liabilities amounting to $1.0 billion.

22. RELATED PARTY TRANSACTIONS

     Bankcorp is a wholly-owned subsidiary of Bankmont, a Delaware corporation.
Bankmont is a wholly-owned subsidiary of BMO. Unamortized goodwill of $7.7
million at December 31, 2001 associated with the acquisition of Bankcorp in 1984
is reflected on the accounting records of Bankmont and has not been "pushed
down" to the Corporation.

     During 2001, 2000 and 1999, the Corporation engaged in various transactions
with BMO and its subsidiaries. These transactions included the payment and
receipt of service fees and occupancy expenses, and purchasing and selling
Federal funds, repurchase and reverse repurchase agreements, long-term
borrowings, interest rate and foreign exchange rate contracts. The purpose of
these transactions was to facilitate a more efficient use of combined resources
and to better serve customers. Fees for these services were determined in
accordance with applicable banking regulations. During 2001, 2000 and 1999, the
Corporation received from BMO approximately $24.9 million, $14.7 million and
$14.6 million respectively, primarily for trust services, data processing and
other operations support provided by the Corporation. The Corporation made
payments to BMO of approximately $46.0 million, $17.0 million and $17.2 million
in 2001, 2000 and 1999, respectively.

     HTSB and BMO combine their U.S. foreign exchange activities. Under this
arrangement, FX net profit is shared by HTSB and BMO in accordance with a
specific formula set forth in the agreement. This agreement expires in April
2002 but may be extended at that time. Either party may terminate the
arrangement at its option. FX revenues are reported net of expenses. 2001, 2000
and 1999 foreign exchange revenues included $8.8 million, $7.2 million and $8.3
million of net profit, respectively, under this agreement.

     On June 29, 1999, Bankcorp borrowed (Canadian) $266.4 million from BMO (US)
Finance, LLC ("FinCo"), a Delaware limited liability company and an indirect
subsidiary of BMO. The loan is subordinated debt, due to mature July 29, 2009.
Bankcorp entered into a currency and interest rate swap agreement to exchange
the C$266.4 million for U.S.$180.0 million and makes quarterly interest payments
on the swap. The loan interest rate is BA + 43 bps and converts to 90 day LIBOR
+ 44.5 bps under the swap.

                                        94
<PAGE>

                           JOINT INDEPENDENT AUDITORS

     The Board of Directors of Harris Bankcorp, Inc. engaged the firms of KPMG
LLP and PricewaterhouseCoopers LLP to serve as joint auditors for each of the
years in the three year period ended December 31, 2001.

     BMO has elected to appoint two firms of independent public accountants to
be auditors of BMO and all significant subsidiaries. The Corporation's
independent public accountants are identical to the appointments made by BMO.

                          INDEPENDENT AUDITORS' REPORT

To the Stockholder and Board
of Directors of Harris Bankcorp, Inc.:

     We have audited the accompanying consolidated statements of condition of
Harris Bankcorp, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the
related consolidated statements of income, comprehensive income, changes in
stockholder's equity and cash flows for each of the years in the three year
period ended December 31, 2001. These consolidated financial statements are the
responsibility of Harris Bankcorp, Inc.'s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Harris
Bankcorp, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the years in the
three year period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America.

<Table>
<S>                                              <C>

                                                 /s/ PricewaterhouseCoopers LLP
/s/ KPMG LLP                                     PricewaterhouseCoopers LLP
KPMG LLP
Chicago, Illinois
January 16, 2002
</Table>

                                        95
<PAGE>

ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

     There were no disagreements between the Corporation and its independent
auditors related to accounting matters and/or financial disclosures.

                                    PART III

ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Bankcorp's Board of Directors consists of thirteen members. Directors are
elected annually. Except as noted, each present director has been employed in an
executive capacity by his or her employer for more than five years. Set forth
below is certain biographical information concerning each director, including
principal occupation, age, the year first elected a director of Bankcorp and
HTSB and other directorships.

     PASTORA SAN JUAN CAFFERTY, age 61, Professor, University of Chicago School
of Social Service Administration and a Director of Waste Management, Inc.,
Peoples Energy Corporation and Kimberly-Clark Corporation. Elected in 1997.

     HAVEN E. COCKERHAM, age 54, Senior Vice President, Human Resources, R. R.
Donnelley & Sons Company (printing company) and a Director of Metropolitan
Family Services. Prior to joining R. R. Donnelley & Sons in 1998, Mr. Cockerham
headed Human Resources for Detroit Edison. Elected in 1999.

     F. ANTHONY COMPER, age 56, Chairman and Chief Executive Officer and a
Director of Bank of Montreal. Elected in 1990.

     SUSAN T. CONGALTON, age 55, Managing Director, Lupine L.L.C. (consulting
and private investments) and a Director of Pulitzer, Inc. Elected in 1988.

     WILBUR H. GANTZ, age 64, Former Chairman of the Board and Chief Executive
Officer of PathoGenesis Corporation (diagnostic health care) and a Director of
W.W. Grainger and Gillette Corporation. Elected in 1984.

     JAMES J. GLASSER, age 67, Chairman Emeritus of GATX Corporation (capital
equipment and services for extracting, processing and distributing dry and
liquid bulk commodities) and a Director of The B. F. Goodrich Company. Elected
in 1980.

     DR. LEO M. HENIKOFF, age 62, President Emeritus of Rush University (medical
school). Elected in 1986.

     RICHARD M. JAFFEE, age 66, Chairman, Oil-Dri Corporation of America (a
developer, manufacturer and marketer of sorbent products). Elected in 1995.

     EDWARD W. LYMAN, JR., age 59, Vice Chair of the Board of Bankcorp and
Harris Trust and Savings Bank. Elected in 1995.

     ALAN G. MCNALLY, age 56, Chairman of the Board and Chief Executive Officer
of Bankmont, Bankcorp and Harris Trust and Savings Bank and a Director of
Walgreen Co. Elected in 1993.

     CHARLES H. SHAW, age 69, Chairman, The Shaw Company (real estate
development). Elected in 1990.

     RICHARD E. TERRY, age 64, Chairman and Chief Executive Officer, Peoples
Energy Corporation (public utility) and a Director of Amsted Industries. Elected
in 1992.

     JAMES O. WEBB, age 70, President, James O. Webb & Associates, Inc.
(consultant in new ventures and business development). Elected in 1995.

     In addition to Messrs. McNally and Lyman, the Corporation had twenty-three
executive officers at December 31, 2001 E. Beverly A. Blucher, age 51; David R.
Casper, age 45; Timothy S. Crane, age 40; Dennis L. Dean, age 50; Emilia
DiMenco, age 47; Louis F. Lanwermeyer, age 53; Michael W. Lewis, age 52;

                                        96
<PAGE>

Michael B. Lowe, age 56; Erin E. McInerney, age 46; Peter B. McNitt, age 47;
Richard J. Moreland, age 55; Daniela O'Leary-Gill, age 37; Sunday R. Perry, age
48; Pamela C. Piarowski, age 42 Charles R. Piermarini, age 45; Paul V. Reagan,
age 55; Randall W. Teteak, age 57; William E. Thonn, age 53; Charles R. Tonge,
age 54; Philip A. Washburn, age 55; William W. Whipple, age 49; Edward J.
Williams, age 59; and Thomas C. Wright, age 54. Each officer, other than Messrs.
Piermarini and Teteak, has held executive positions with the Corporation or an
affiliate for at least the past five years. Prior to 1997, Mr. Piermarini was
Senior Vice President, Portfolio Management, NationsBank. Prior to 1997, Mr.
Teteak was Senior Vice President at First Union National Bank responsible for
technology and automation planning.

ITEM 11 -- OMITTED PURSUANT TO GENERAL INSTRUCTION (I)(2)(c) OF FORM 10-K.

ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Bank of Montreal, through its subsidiary, Bankmont Financial Corp., a U.S.
bank holding company chartered in Delaware, owns all 6,667,490 issued and
outstanding shares of Bankcorp's common stock.

ITEM 13 -- OMITTED PURSUANT TO GENERAL INSTRUCTION (I)(2)(c) OF FORM 10-K.

                                    PART IV

ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) Documents filed with Report:

          (l) Financial Statements (See page 1 for a listing of all financial
     statements included in Item 8)

          (2) Financial Statement Schedules

All Schedules normally required by Form 10-K are omitted since they are either
not applicable or the required information is shown in the financial statements
or the notes thereto.

          (3) Exhibits:

              3. Articles of Incorporation and By-laws

               a) Restated Certificate of Incorporation and amendments thereto.

               b) By-laws of Bankcorp (filed as an Exhibit to Bankcorp's 1999
                  Form 10-K and incorporated herein by reference)

           4. Bankcorp has issued two Floating Rate Senior Notes, three Floating
              Rate Subordinated Notes and two Fixed Rate Subordinated Notes to
              its parent company, Bankmont. Bankcorp has also issued a Floating
              Rate Subordinated Note to FinCo. The principal amount of these
              notes totals $250 million for the floating rate senior notes, $327
              million for the floating rate subordinated notes and $95 million
              for the fixed rate notes respectively. The floating rate notes
              mature in 2004, 2005, 2006, 2009 and 2010, respectively. The fixed
              rate notes mature in 2007 and 2010, respectively. Bankcorp hereby
              agrees to file a copy of the agreement relating to any such notes
              with the Commission upon request.

             24. Power of Attorney

     (b) A Current Report on Form 8-K was filed on November 1, 2001.
-------------------------

* Copies of Exhibits (a) (3) 3, 4, 24 and (b) not contained herein, may be
  obtained at a cost of 25 cents per page upon written request to the Secretary
  of Harris Bankcorp, Inc.

                                        97
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Harris Bankcorp, Inc. has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized on the 21st
day of March 2002.

<Table>
<C>                                                <S>

            /s/ ALAN G. MCNALLY                    Chairman of the Board and Chief Executive
--------------------------------------------       Officer
              Alan G. McNally

          /s/ PAMELA C. PIAROWSKI                  Senior Vice President and Chief Financial
--------------------------------------------       Officer
            Pamela C. Piarowski

             /s/ PAUL R. SKUBIC                    Chief Accounting Officer
--------------------------------------------
               Paul R. Skubic
</Table>

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by Alan G. McNally, Chairman of the Board and Chief
Executive Officer of the Corporation, as attorney-in-fact for the following
Directors on behalf of Harris Bankcorp, Inc. on the 22nd day of March 2002.

<Table>
<S>                                <C>                                <C>
Pastora San Juan Cafferty          Wilbur H. Gantz                    Edward W. Lyman, Jr.
Haven E. Cockerham                 James J. Glasser                   Charles H. Shaw
F. Anthony Comper                  Leo M. Henikoff                    Richard E. Terry
Susan T. Congalton                 Richard M. Jaffee                  James O. Webb
Alan G. McNally
Attorney-In-Fact
</Table>

Supplemental Information

     No annual report or proxy statement will be sent to security holders in
2002.

                                        98