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U.S. Securities and Exchange CommissionWashington, D.C. 20549

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FORM 10-QSB

|/x/ | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------

For quarterly period ended September 30, 2000

|/ / | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|--- | ---------------------------------------------------------------

Commission file number 0-13343

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

Illinois(State or other jurisdiction of
incorporation or organization)

37-1135429(I.R.S. Employer
Identification No.)


3200 West Iles Avenue, Springfield, Illinois 62707(Address of principal executive offices)

(217) 787-5111(Issuer's telephone number)

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Check
whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 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 / /

State
the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 571,789 shares of $10 par value common stock as of
October 31, 2000

Transitional
Small Business Disclosure Format: Yes / /  No /x/

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## 

ILLINI CORPORATION

INDEX TO FORM 10-QSB
September 30, 2000

|                              |  |         |  |                                                                                                            |  | Page
|----------------------------- |  | ------- |  | ---------------------------------------------------------------------------------------------------------- |  | ----
|PART I. FINANCIAL INFORMATION |  |        
|                              |  | Item 1. |  | Financial Statements (Unaudited)                                                                           |  |     
|                              |  |         |  | Condensed Consolidated Balance Sheets
September 30, 2000 and December 31, 1999                             |  | 3   
|                              |  |         |  | Condensed Consolidated Statements of Income
Three Months and Nine Months Ended September 30, 2000 and 1999 |  | 4   
|                              |  |         |  | Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2000 and 1999              |  | 5   
|                              |  |         |  | Notes to Interim Condensed Consolidated Financial Statements                                               |  | 6   
|                              |  | Item 2. |  | Management's Discussion and Analysis of Operations                                                         |  | 9   
|                              |  | Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                                 |  | 20  
|PART II. OTHER INFORMATION    |  | 21     
|SIGNATURES                    |  | 24     
|EXHIBIT INDEX                 |  | 25     
|                              |  |         |  |                                                                                                            |  |     

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Information Concerning Forward-Looking Statements

Statements contained in this Form 10-QSB which are not historical facts are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve important known and unknown risks, uncertainties and
other factors and can be identified by phrases using "estimate," "anticipate," "believe," "project," "expect," "intend," "predict," "potential," "future," "may," "should" and similar expressions or
words. Such forward-looking statements are subject to risk and uncertainties which could cause actual results to differ materially from those projected. Such risks and uncertainties include potential
change in interest rates, competitive factors in the financial services industry, general economic conditions, the effect of new legislation and other risks detailed in documents filed by Illini
Corporation with the Securities and Exchange Commission from time to time.

2

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ILLINI CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2000 and December 31, 1999
(Unaudited)

|                                                                        |                                                                                              | September 30,
2000               |                            | December 31,
1999 |       
|----------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | -------------------------------- | -------------------------- | ----------------- | ------
|
|ASSETS                                                                  |                                                                                             
|Cash and due from banks                                                 |                                                                                              | $                                | 5,571                      |                   | $     
|Interest-bearing deposits in other banks                                |                                                                                              |                                  | 24                         |                   |       
|Federal funds sold                                                      |                                                                                              |                                  | 13,020                     |                   |       
|                                                                        |                                                                                              |                                  |                            |                   |       
|Cash and cash equivalents                                               |                                                                                              |                                  | 18,615                     |                   |       
|Debt and marketable equity securities available for sale, at fair value |                                                                                              |                                  | 55,342                     |                   |       
|Loans, net of the allowance for loan losses and unearned income         |                                                                                              |                                  | 155,617                    |                   |       
|Premises and equipment                                                  |                                                                                              |                                  | 6,932                      |                   |       
|Accrued interest receivable                                             |                                                                                              |                                  | 2,391                      |                   |       
|Other real estate owned                                                 |                                                                                              |                                  | 426                        |                   |       
|Other assets                                                            |                                                                                              |                                  | 2,473                      |                   |       
|                                                                        |                                                                                              |                                  |                            |                   |       
|                                                                        |                                                                                              | $                                | 241,796                    |                   | $     
|                                                                        |                                                                                              |                                  |                            |                   |       
|LIABILITIES AND SHAREHOLDERS' EQUITY                                    |                                                                                             
|Liabilities:                                                            |                                                                                              |                                  |                            |                   |       
|                                                                        | Noninterest-bearing demand deposits                                                          |                                  |                            | 29,595            |       
|                                                                        | Interest-bearing deposits:                                                                   |                                  |                            |                   |       
|                                                                        |                                                                                              | NOW and money market accounts    |                            |                   | 54,440
|                                                                        |                                                                                              | Savings deposits                 |                            |                   | 17,314
|                                                                        |                                                                                              | Time deposits, $100,000 and over |                            |                   | 26,161
|                                                                        |                                                                                              | Other time deposits              |                            |                   | 83,337
|                                                                        |                                                                                              |                                  |                            |                   |       
|                                                                        |                                                                                              |                                  | Total deposits             |                   |       
|                                                                        | Short-term borrowings                                                                        |                                  |                            | 4,256             |       
|                                                                        | Long-term debt                                                                               |                                  |                            | 6,000             |       
|                                                                        | Accrued interest payable                                                                     |                                  |                            | 1,359             |       
|                                                                        | Other liabilities                                                                            |                                  |                            | 1,198             |       
|                                                                        |                                                                                              |                                  |                            |                   |       
|                                                                        |                                                                                              |                                  | Total liabilities          |                   |       
|                                                                        |                                                                                              |                                  |                            |                   |       
|Shareholders' equity:                                                   |                                                                                              |                                  |                            |                   |       
|                                                                        | Common stock$10 par value, authorized 800,000 shares; 571,789 shares issued and outstanding |                                  |                            | 5,718             |       
|                                                                        | Capital surplus                                                                              |                                  |                            | 3,358             |       
|                                                                        | Retained earnings                                                                            |                                  |                            | 9,221             |       
|                                                                        | Accumulated other comprehensive loss                                                         |                                  |                            | (161              | )     
|                                                                        |                                                                                              |                                  |                            |                   |       
|                                                                        |                                                                                              |                                  | Total shareholders' equity |                   |       
|                                                                        |                                                                                              |                                  |                            |                   |       
|                                                                        |                                                                                              | $                                | 241,796                    |                   | $     
|                                                                        |                                                                                              |                                  |                            |                   |       

See accompanying notes to interim condensed financial statements.

3

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ILLINI CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months and Nine Months Ended September 30, 2000 and 1999

(Unaudited)

|                                                                                                                                  |                                                   | Three Months Ended
September 30, |                                                     | Nine Months Ended
September 30, 
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------------- | --------------------------------------------------- | --------------------------------
|
|
|Interest income:                                                                                                                  |                                                   |                                  |                                                     |                                 
|                                                                                                                                  | Interest and fees on loans                        |                                  | $                                                   | 3,447                           
|                                                                                                                                  | Interest on debt and marketable equity securities |                                  |                                                     |                                 
|                                                                                                                                  |                                                   | Taxable                          |                                                     |                                 
|                                                                                                                                  |                                                   | Tax-exempt                       |                                                     |                                 
|                                                                                                                                  | Interest on short term investments                |                                  |                                                     | 75                              
|                                                                                                                                  |                                                   |                                  |                                                     |                                 
|                                                                                                                                  |                                                   |                                  | Total interest income                               |                                 
|                                                                                                                                  |                                                   |                                  |                                                     |                                 
|Interest expense:                                                                                                                 |                                                   |                                  |                                                     |                                 
|                                                                                                                                  | Interest on deposits:                             |                                  |                                                     |                                 
|                                                                                                                                  |                                                   | NOW and money market accounts    |                                                     |                                 
|                                                                                                                                  |                                                   | Savings deposits                 |                                                     |                                 
|                                                                                                                                  |                                                   | Time deposits, $100,000 and over |                                                     |                                 
|                                                                                                                                  |                                                   | Other time deposits              |                                                     |                                 
|                                                                                                                                  | Interest on borrowings                            |                                  |                                                     | 94                              
|                                                                                                                                  |                                                   |                                  |                                                     |                                 
|                                                                                                                                  |                                                   |                                  | Total interest expense                              |                                 
|                                                                                                                                  |                                                   |                                  |                                                     |                                 
|                                                                                                                                  |                                                   |                                  | Net interest income                                 |                                 
|Provision for loan losses                                                                                                         |                                                   |                                  | 135                                                 |                                 
|                                                                                                                                  |                                                   |                                  |                                                     |                                 
|                                                                                                                                  |                                                   |                                  | Net interest income after provision for loan losses |                                 
|Noninterest income:                                                                                                               |                                                   |                                  |                                                     |                                 
|                                                                                                                                  | Service charges on deposit accounts               |                                  |                                                     | 358                             
|                                                                                                                                  | Other fee income                                  |                                  |                                                     | 73                              
|                                                                                                                                  | Mortgage loan servicing fees                      |                                  |                                                     | 47                              
|                                                                                                                                  | Gain on sale of mortgage loans                    |                                  |                                                     | 5                               
|                                                                                                                                  | Securities gains (losses)                         |                                  |                                                     | 0                               
|                                                                                                                                  | Other                                             |                                  |                                                     | 45                              
|                                                                                                                                  |                                                   |                                  |                                                     |                                 
|                                                                                                                                  |                                                   |                                  | Total noninterest income                            |                                 
|Noninterest expense:                                                                                                              |                                                   |                                  |                                                     |                                 
|                                                                                                                                  | Salaries and employee benefits                    |                                  |                                                     | 937                             
|                                                                                                                                  | Net occupancy expense                             |                                  |                                                     | 209                             
|                                                                                                                                  | Equipment expense                                 |                                  |                                                     | 104                             
|                                                                                                                                  | Data processing                                   |                                  |                                                     | 173                             
|                                                                                                                                  | Supplies                                          |                                  |                                                     | 45                              
|                                                                                                                                  | Communication and transportation                  |                                  |                                                     | 120                             
|                                                                                                                                  | Marketing and advertising                         |                                  |                                                     | 58                              
|                                                                                                                                  | Correspondent and processing fees                 |                                  |                                                     | 72                              
|                                                                                                                                  | Loan and other real estate owned expenses         |                                  |                                                     | 15                              
|                                                                                                                                  | Professional fees                                 |                                  |                                                     | 316                             
|                                                                                                                                  | Directors' and regulatory fees                    |                                  |                                                     | 61                              
|                                                                                                                                  | Other                                             |                                  |                                                     | 84                              
|                                                                                                                                  |                                                   |                                  |                                                     |                                 
|                                                                                                                                  |                                                   |                                  | Total noninterest expense                           |                                 
|                                                                                                                                  |                                                   |                                  |                                                     | Income before income tax expense
|Income tax expense                                                                                                                |                                                   |                                  | 76                                                  |                                 
|                                                                                                                                  |                                                   |                                  |                                                     |                                 
|                                                                                                                                  |                                                   |                                  |                                                     | Net income                      
|                                                                                                                                  |                                                   |                                  |                                                     |                                 
|Basic and diluted earnings per share (based on weighted average common shares outstanding of 571,789 in 2000 and 448,456 in 1999) |                                                   | $                                | 0.43                                                |                                 
|                                                                                                                                  |                                                   |                                  |                                                     |                                 

See accompanying notes to interim condensed financial statements.

4

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ILLINI CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2000 and 1999

(Unaudited)

|                                                     |                                                                                   | 2000                                     |                                           | 1999    |       
|---------------------------------------------------- | --------------------------------------------------------------------------------- | ---------------------------------------- | ----------------------------------------- | ------- | ------
|
|Cash flows from operating activities:                |                                                                                   |                                          |                                           |         |       
|                                                     | Net income                                                                        |                                          | $                                         | 825     |       
|                                                     | Adjustments to reconcile net income to net cash provided by operating activities: |                                          |                                           |         |       
|                                                     |                                                                                   | Depreciation and amortization            |                                           |         | 828   
|                                                     |                                                                                   | Provision for loan losses                |                                           |         | 405   
|                                                     |                                                                                   | Securities (gains) losses, net           |                                           |         | 13    
|                                                     |                                                                                   | Gain on sale of premises and equipment   |                                           |         | (2    
|                                                     |                                                                                   | Loss on sale of other real estate owned  |                                           |         | 1     
|                                                     |                                                                                   | Increase in accrued interest receivable  |                                           |         | (483  
|                                                     |                                                                                   | Increase in accrued interest payable     |                                           |         | 237   
|                                                     |                                                                                   | Origination of mortgage loans for sale   |                                           |         | (4,960
|                                                     |                                                                                   | Proceeds from the sale of mortgage loans |                                           |         | 4,850 
|                                                     |                                                                                   | Other, net                               |                                           |         | (78   
|                                                     |                                                                                   |                                          |                                           |         |       
|                                                     |                                                                                   |                                          | Net cash provided by operating activities |         |       
|                                                     |                                                                                   |                                          |                                           |         |       
|Cash flows from investing activities:                |                                                                                   |                                          |                                           |         |       
|                                                     | Proceeds from sales of debt securities available for sale                         |                                          |                                           | 4,757   |       
|                                                     | Proceeds from maturities and paydowns of debt securities available for sale       |                                          |                                           | 4,734   |       
|                                                     | Purchases of debt and marketable equity securities available for sale             |                                          |                                           | (7,256  | )     
|                                                     | Net increase in loans                                                             |                                          |                                           | (21,907 | )     
|                                                     | Purchases of premises and equipment                                               |                                          |                                           | (108    | )     
|                                                     | Proceeds from sale of premises and equipment                                      |                                          |                                           | 2       |       
|                                                     | Proceeds from sales of other real estate owned                                    |                                          |                                           | 124     |       
|                                                     |                                                                                   |                                          |                                           |         |       
|                                                     |                                                                                   |                                          | Net cash used by investing activities     |         |       
|                                                     |                                                                                   |                                          |                                           |         |       
|Cash flows from financing activities:                |                                                                                   |                                          |                                           |         |       
|                                                     | Net increase (decrease) in non-interest bearing demand deposits                   |                                          |                                           | 46      |       
|                                                     | Net increase in NOW, money market accounts and savings deposits                   |                                          |                                           | 2,926   |       
|                                                     | Net increase in time deposits, $100,000 and over                                  |                                          |                                           | 2,609   |       
|                                                     | Net increase in other time deposits                                               |                                          |                                           | 9,613   |       
|                                                     | Net increase in short-term borrowings                                             |                                          |                                           | 2,862   |       
|                                                     | Net increase in long-term debt                                                    |                                          |                                           | 6,000   |       
|                                                     | Cash dividends paid                                                               |                                          |                                           | (429    | )     
|                                                     |                                                                                   |                                          |                                           |         |       
|                                                     |                                                                                   |                                          | Net cash provided by financing activities |         |       
|                                                     |                                                                                   |                                          |                                           |         |       
|Net increase (decrease) in cash and cash equivalents |                                                                                   |                                          | 5,609                                     |         |       
|Cash and cash equivalents at beginning of period     |                                                                                   |                                          | 13,006                                    |         |       
|                                                     |                                                                                   |                                          |                                           |         |       
|Cash and cash equivalents at end of period           |                                                                                   | $                                        | 18,615                                    |         | $     
|                                                     |                                                                                   |                                          |                                           |         |       
|Supplemental Information:                            |                                                                                   |                                          |                                           |         |       
|                                                     | Income taxes paid                                                                 |                                          | $                                         | 448     |       
|                                                     | Interest paid                                                                     |                                          | $                                         | 5,956   |       
|                                                     |                                                                                   |                                          |                                           |         |       
|Other non-cash investing activities:                 |                                                                                   |                                          |                                           |         |       
|                                                     | Transfer of premises to other real estate owned                                   |                                          | $                                         | 43      |       
|                                                     |                                                                                   |                                          |                                           |         |       
|                                                     | Transfer of loans to other real estate owned                                      |                                          | $                                         | 15      |       
|                                                     |                                                                                   |                                          |                                           |         |       

See accompanying notes to interim condensed consolidated financial statements.

5

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ILLINI CORPORATION AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (Unaudited)

September 30, 2000

(1)  Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB
and, therefore, do not include all of the information and notes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the
consolidated financial statements and footnotes included in the Illini Corporation Annual Report on Form 10-KSB for the year ended December 31, 1999.

Basic
earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Illini Corporation
has no potential common shares which are dilutive.

Results
for the three and nine months ended September 30, 2000 may not be indicative of the annual performance of Illini Corporation (or the Banks). Management of the
Corporation has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare the interim condensed consolidated
financial statements (unaudited) in conformity with generally accepted accounting principals. Actual results could differ from those estimates.

(2)  Allowance for Loan Losses and Impaired Loans

The allowance for loan losses is increased by provisions charged to operations and is available to absorb loan losses. Illini Corporation utilizes a
systematic, documented approach in determining the appropriate level of the allowance for loan losses of its subsidiary banks. Management's approach, which provides for general and specific
allowances, is based on current economic conditions, past loan losses, collection experience, risk characteristics of the portfolio, assessing collateral values by obtaining independent appraisals for
significant properties, and such other factors which, in management's judgment, deserve current recognition in estimating potential loan losses. The determination of the allowance for loan losses is
one of the estimates made by management in the preparation of the consolidated financial statements.

September 30,2000

1999(dollars in thousands)Balance at beginning of period

$
1,696

$
1,368Provision charged to expense


405


203Charge-offs


127


174Less: recoveries


104


51Net charge-offs


23


123Balance at end of period

$
2,078

$
1,448


Loans,
except large groups of smaller-balance homogeneous loans, for which the full collection of principal and interest according to the contractual terms of the loan agreement is
not probable, are

6

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evaluated for impairment. Information regarding impaired loans at September 30, 2000 and December 31, 1999 is as follows:

September 30, 2000

December 31, 1999(dollars in thousands)Nonaccrual loans

$
763

$
559Impaired loans continuing to accrue interest





Total impaired loans

$
763

$
559Allowance for losses on specific impaired loans

$
123

$
18Impaired loans with no specific related allowance for loan losses


596


499Average balance of impaired loans during the period


731


1,033


(3)  New Accounting Pronouncements

In June 1998, the FASB issued SFAS No. 133,Accounting for Derivative Instruments and Hedging
Activities(SFAS 133), which establishes standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging
activities. SFAS 133 requires an entity to recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. SFAS 133 is
effective for all fiscal periods beginning after June 15, 1999. Earlier application of SFAS 133 is encouraged but should not be applied retroactively to financial statements of prior
periods. In June 1999, the FASB issued SFAS No. 137,Accounting for Derivative Instruments and Hedging ActivitiesDeferral of the Effective Date of
FASB Statement No. 133, which states SFAS 133 shall be effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. The adoption of
the statement will have no material impact on the Corporation's financial condition or result of operations.

(4)  Other Comprehensive Income

For the three and nine-month periods ended September 30, 2000 and 1999, unrealized gains (losses) on debt and marketable equity securities
available for sale, net of tax, is the Corporation's only

7

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other comprehensive income component. Comprehensive income for the three and nine-month periods ended September 30, 2000 and 1999 is summarized as follows:

|                            |                                                                                  | Three Months Ended September 30,  |     | Nine Months Ended September 30, |    
|--------------------------- | -------------------------------------------------------------------------------- | --------------------------------- | --- | ------------------------------- | ---
|
|
|Net income                  |                                                                                  | $                                 | 248 |                                 | $  
|Other comprehensive income: |                                                                                  |                                   |     |                                 |    
|                            | Net realized and unrealized gains (losses) on securities available for sale, net |                                   |     | 471                             |    
|                            | Less adjustment for net securities gains realized in net income, net             |                                   |     | 0                               |    
|                            |                                                                                  |                                   |     |                                 |    
|                            | Other comprehensive income (loss)                                                |                                   |     | 471                             |    
|                            |                                                                                  |                                   |     |                                 |    
|                            |                                                                                  | Total comprehensive income (loss) |     | $                               | 719
|                            |                                                                                  |                                   |     |                                 |    

(5)  Sale of Menard County Branches

On May 24, 2000, Illini Corporation signed a Branch Purchase and Assumption Agreement with Petefish Skiles & Company of Virginia, Illinois, to
sell Illini Corporation branches located in Tallula, Greenview and Petersburg, Illinois. The sale includes real property, personal property, loans and deposit liabilities. Total average loan and total
average deposit liabilities for these branches at September 30, 2000 were $6.1 million and $14.1 million, respectively. In August the sale was approved by regulatory authorities
and closed in October of 2000.

8

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Item 2. Management's Discussion and Analysis of Operations

This discussion should be read in conjunction with the consolidated financial statements, notes, and tables included elsewhere in this report and in the 1999
Illini Corporation Annual Report on Form 10-KSB (1999 Form 10-KSB).

SUMMARY

|                         |  | Quarter ended September 30, |       |  |   | Nine months ended September 30, |  |       |  
|------------------------ |  | --------------------------- | ----- |  | - | ------------------------------- |  | ----- | -
|
|
|
|Total revenue            |  | $                           | 4,911 |  | $ | 3,576                           |  | 37.31 | %
|Net income               |  |                             | 248   |  |   | 171                             |  | 44.74 | %
|Basic earnings per share |  | $                           | 0.43  |  | $ | 0.38                            |  | 13.52 | %

|                                |  | Quarter ended September 30, |   |       |   | Nine months ended September 30, |    |       |  
|------------------------------- |  | --------------------------- | - | ----- | - | ------------------------------- | -- | ----- | -
|
|
|Return on average assets(1)     |  | 0.43                        | % | 0.40  | % | 0.03                            | %  | 0.49  | %
|Return on average equity(1)     |  | 5.55                        | % | 4.57  | % | 0.98                            | %  | 6.23  | %
|Average equity to assets        |  | 7.66                        | % | 8.77  | % | (1.11                           | )% | 7.84  | %
|Tier 1 leverage ratio           |  | 7.03                        | % | 8.81  | % | (1.78                           | )% |       |  
|Tier 1 risk-based capital ratio |  | 9.63                        | % | 11.54 | % | (1.91                           | )% |       |  
|Total risk-based capital ratio  |  | 10.86                       | % | 12.66 | % | (1.80                           | )% |       |  
|Dividend payout ratio           |  | 57.76                       | % | 65.56 | % | (7.80                           | )% | 52.00 | %
|Net interest margin             |  | 4.11                        | % | 4.55  | % | (0.44                           | )% | 4.17  | %
|Efficiency ratio                |  | 80.20                       | % | 84.07 | % | (3.87                           | )% | 78.07 | %

---

RESULTS OF OPERATION

Earning Assets

Management is pleased with the results of our efforts to grow earning assets. Average earning assets of the Corporation for the first nine months of 2000
increased 39.65% or $58.8 million to $207.1 million from $148.3 million at September 30, 1999.

As
discussed in the asset quality section of this Form 10-QSB, management has actively pursued the improvement of the asset quality of all earning assets, loans,
and investment securities.

Average
net loans increased to $153.1 million for the three months ended September 30, 2000 compared to $108.6 million for the same period in 1999. The increase
of $44.5 million for the three months ended September 30, 2000 as compared to the same period for 1999 was primarily due to an increase of $26.2 million in commercial loans,
including commercial real estate loans, $7.9 million in residential loans, $9.1 million in agriculture loans, including agriculture real estate, and $1.8 million in consumer
loans. The acquisition of Farmers State Bank of Camp Point ("Camp Point") contributed $15.1 million to the total increase of $44.5 million in average net loans. The average yield on the
loan portfolio, net of the allowance for loan losses, increased 11 basis points to 8.95% for the three months ended September 30, 2000, compared to the three months ended September 30,
1999.

Average
net loans increased to $143.6 million for the nine months ended September 30, 2000 compared to $96.3 million for the same period in 1999. The increase of
$47.3 million for the nine

9

---

months ended September 30, 2000 as compared to the same period in 1999 was primarily due to an increase of $29.2 million in commercial loans, including commercial real estate loans,
$8.5 million in residential loans, $8.6 million in agriculture loans, including agriculture real estate, and $1.5 million in consumer loans. The acquisition of Camp Point
contributed $14.7 million to the total increase of $47.3 million in average net loans. The average yield on the loan portfolio, net of the allowance for loan losses, decreased 5 basis
points to 8.85%.

Average
investment securities increased $9.9 million and $7.1 million for the three and nine months ended September 30, 2000, respectively, as compared to the
same periods in 1999. The average yield of the investment securities portfolio was 6.73% and 6.59% for the three and nine months ended September 30, 2000, respectively, an increase of 53 and 50
basis points as compared to the same periods in 1999. The acquisition of Camp Point contributed $14.6 million to the total average investments at September 30, 2000. Investments
decreased from December 31, 1999 to September 30, 2000, and is a result of the increase in loans. Management intends to maintain a balance in the investment portfolio to support basic
surplus.

Funding

The most important and stable source of funding is core deposits, considered by management to include non-interest bearing demand deposits, NOW and
money market accounts, savings deposits and time deposits under $100,000. Average core deposits for the nine months ended September 30, 2000
increased 38.54% or $49.5 million to $178.0 million from $128.5 million for the nine months ended September 30, 1999. The acquisition of Camp Point contributed
$24.1 million to the total increase of $49.5 million in average core deposits. The average rate paid on total interest bearing liabilities for the nine months ended September 30,
2000 increased 57 basis points when compared to the nine months ended September 30, 1999.

The
increase in average core deposits, including noninterest bearing demand deposits, for the nine months ended September 30, 2000 as compared to the same period in 1999 has
provided a low cost funding source for the growth in the loan portfolio. In addition to federal funds purchased, Illini Bank and Camp Point maintain an overnight federal funds line of credit with an
unaffiliated financial institution and a line of credit with the Federal Home Loan Bank of Chicago.

Net Interest Income/Net Interest Margin

The operating results of the Corporation are highly dependent on net interest income, which is the difference between interest income on interest-earning
assets and interest expense on interest-bearing liabilities, consisting primarily of deposits. Net interest income is determined by the difference between yields earned on assets and rates paid on
liabilities and the relative amounts of interest-earning assets and interest-bearing liabilities.

Interest
income, on a fully taxable equivalent basis, was $4.5 million and $12.7 million for the three and nine months ended September 30, 2000, respectively,
compared to $3.1 million and $8.8 million for same periods in 1999, respectively. Interest expense was $2.3 million and $6.2 million for the three and nine months ended
September 30, 2000, respectively, compared to $1.4 million and $3.8 million for the same periods in 1999, respectively. An increase in interest income and interest expense
resulted in a $1.5 million increase in net interest income for the nine months ended September 30, 2000.

Net
interest margin for the nine months ended September 30, 2000 of 4.17% was down from 4.47% reported for the same period in 1999. The decrease in the net interest margin is
primarily due to increases in rates of core time deposits. Management will continue to closely monitor its funding costs to maintain an acceptable spread given the increased demand in commercial
lending. Management will continue to structure the balance sheet to provide insulation for extreme interest rate

10

---

changes. Management is focused on increasing the loan portfolio without jeopardizing the enhanced liquidity that has been gained in prior periods.

Net
interest income is affected by the growth, pricing, mix, and maturity of interest earning-assets and interest-bearing liabilities, as well as other factors, including loan
quality. Also, the Corporation's interest-rate spread is affected by regulatory, economic, and competitive factors that influence interest rates, loan demand, and deposit flow. Individual
components of net interest income and net interest margin are presented in the consolidated average balances, interest income/expense and yield/rates table on page 12 and 13 and a net interest
income-rate/volume variance analysis on page 14 and 15.

11

---

Consolidated Average Balances, Interest Income/Expense and Yield/Rates

|                                     |                                            | Quarter ended September 30,       |                              
|------------------------------------ | ------------------------------------------ | --------------------------------- | -----------------------------
|
|
|
|ASSETS                               |                                           
|Interest-earning assets:             |                                            |                                   |                              
|                                     | Short-term investments                     |                                   | $                            
|                                     | Investment securities(3)                   |                                   |                              
|                                     |                                            | Taxable                           |                              
|                                     |                                            | Tax-exempt(1)                     |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   | Total securities             
|                                     | Loans                                      |                                   |                              
|                                     |                                            | Commercial(1)                     |                              
|                                     |                                            | Agriculture                       |                              
|                                     |                                            | Real estate:                      |                              
|                                     |                                            |                                   | Commercial                   
|                                     |                                            |                                   | Agriculture                  
|                                     |                                            |                                   | Residential                  
|                                     |                                            | Consumer, net                     |                              
|                                     |                                            | Credit card                       |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   | Total loans                  
|                                     | Allowance for loan losses                  |                                   |                              
|                                     |                                            |                                   |                              
|                                     | Net loans(1)(2)                            |                                   |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   | Total interest-earning assets
|                                     |                                            |                                   |                              
|Cash and due from banks              |                                            |                                   | 6,185                        
|Premises and equipment               |                                            |                                   | 7,088                        
|Other real estate owned              |                                            |                                   | 420                          
|Other assets(3)                      |                                            |                                   | 4,140                        
|                                     |                                            |                                   |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   |                              
|LIABILITIES AND SHAREHOLDERS' EQUITY |                                           
|                                     | Deposits:                                  |                                   |                              
|                                     |                                            | Noninterest-bearing demand        |                              
|                                     |                                            | Interest-bearing demand           |                              
|                                     |                                            | Savings                           |                              
|                                     |                                            | Time deposits, less than $100,000 |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   | Total core deposits          
|                                     |                                            | Time deposits, $100,000 and over  |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   | Total deposits               
|                                     | Short-term borrowings                      |                                   |                              
|                                     | Long-term debt                             |                                   |                              
|                                     | Total interest-bearing liabilities         |                                   |                              
|Other liabilities                    |                                            |                                   | 2,216                        
|                                     |                                            |                                   |                              
|                                     | Total liabilities                          |                                   |                              
|Shareholders' equity                 |                                            |                                   | 17,693                       
|                                     |                                            |                                   |                              
|                                     | Total liabilities and shareholders' equity |                                   | $                            
|                                     |                                            |                                   |                              
|Net interest margin                  |                                            |                                   |                              
|                                     |                                            |                                   |                              

---

12

---



Consolidated Average Balances, Interest Income/Expense and Yield/Rates

|                                     |                                            | Nine months ended September 30,   |                              
|------------------------------------ | ------------------------------------------ | --------------------------------- | -----------------------------
|
|
|
|ASSETS                               |                                           
|Interest-earning assets:             |                                            |                                   |                              
|                                     | Short-term investments                     |                                   | $                            
|                                     | Investment securities(3)                   |                                   |                              
|                                     |                                            | Taxable                           |                              
|                                     |                                            | Tax-exempt(1)                     |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   | Total securities             
|                                     | Loans                                      |                                   |                              
|                                     |                                            | Commercial(1)                     |                              
|                                     |                                            | Agriculture                       |                              
|                                     |                                            | Real estate:                      |                              
|                                     |                                            |                                   | Commercial                   
|                                     |                                            |                                   | Agriculture                  
|                                     |                                            |                                   | Residential                  
|                                     |                                            | Consumer, net                     |                              
|                                     |                                            | Credit card                       |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   | Total loans                  
|                                     | Allowance for loan losses                  |                                   |                              
|                                     |                                            |                                   |                              
|                                     | Net loans(1)(2)                            |                                   |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   | Total interest-earning assets
|                                     |                                            |                                   |                              
|Cash and due from banks              |                                            |                                   | 6,100                        
|Premises and equipment               |                                            |                                   | 7,278                        
|Other real estate owned              |                                            |                                   | 548                          
|Other assets(3)                      |                                            |                                   | 3,778                        
|                                     |                                            |                                   |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   |                              
|LIABILITIES AND SHAREHOLDERS' EQUITY |                                           
|                                     | Deposits                                   |                                   |                              
|                                     |                                            | Noninterest-bearing deposits      |                              
|                                     |                                            | Interest-bearing demand           |                              
|                                     |                                            | Savings                           |                              
|                                     |                                            | Time deposits, less than $100,000 |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   | Total core deposits          
|                                     |                                            | Time deposits, $100,000 and over  |                              
|                                     |                                            |                                   |                              
|                                     |                                            |                                   | Total deposits               
|                                     | Short-term borrowings                      |                                   |                              
|                                     | Long-term debt                             |                                   |                              
|                                     | Total interest-bearing liabilities         |                                   |                              
|Other liabilities                    |                                            |                                   | 2,345                        
|                                     |                                            |                                   |                              
|                                     | Total liabilities                          |                                   |                              
|Shareholders' equity                 |                                            |                                   | 17,627                       
|                                     |                                            |                                   |                              
|                                     | Total liabilities and shareholders' equity |                                   | $                            
|                                     |                                            |                                   |                              
|Net interest margin                  |                                            |                                   |                              
|                                     |                                            |                                   |                              

---

13

---



Net Interest IncomeRate/Volume Variance Analysis(*)

|                                  |                        | Quarter ended September 30, 2000 as compared to quarter ended September 30, 1999 |                              
|--------------------------------- | ---------------------- | -------------------------------------------------------------------------------- | -----------------------------
|
|
|Short-term investments            |                        | $                                                                                | 75                           
|Investment securities:            |                        |                                                                                  |                              
|                                  | Taxable                |                                                                                  |                              
|                                  | Tax-exempt             |                                                                                  |                              
|                                  |                        |                                                                                  |                              
|                                  |                        |                                                                                  | Total securities             
|Loans:                            |                        |                                                                                  |                              
|                                  | Commercial             |                                                                                  |                              
|                                  | Agriculture            |                                                                                  |                              
|                                  | Real Estate:           |                                                                                  |                              
|                                  |                        | Commercial                                                                       |                              
|                                  |                        | Agriculture                                                                      |                              
|                                  |                        | Residential                                                                      |                              
|                                  | Consumer, net          |                                                                                  |                              
|                                  | Credit card            |                                                                                  |                              
|                                  |                        |                                                                                  |                              
|                                  |                        |                                                                                  | Total loans                  
|                                  |                        |                                                                                  |                              
|                                  | Total interest income  |                                                                                  |                              
|                                  |                        |                                                                                  |                              
|Interest bearing demand           |                        |                                                                                  | 214                          
|Savings                           |                        |                                                                                  | 7                            
|Time deposits, less than $100,000 |                        |                                                                                  | 505                          
|                                  |                        |                                                                                  |                              
|                                  |                        |                                                                                  | Total core deposits          
|Time deposits, $100,000 and over  |                        |                                                                                  | 140                          
|                                  |                        |                                                                                  |                              
|                                  |                        |                                                                                  | Total deposits               
|Short-term borrowings             |                        |                                                                                  | (18                          
|Long-term debt                    |                        |                                                                                  | 51                           
|                                  |                        |                                                                                  |                              
|                                  |                        |                                                                                  | Total borrowed funds         
|                                  | Total interest expense |                                                                                  |                              
|                                  |                        |                                                                                  |                              
|                                  |                        |                                                                                  | Net interest income (expense)
|                                  |                        |                                                                                  |                              

NOTE:  The
change in interest which can not be attributed to only a change in volume or a change in rate, but instead represents a combination of the two factors, has been allocated to
the rate effect.

14

---

Net Interest IncomeRate/Volume Variance Analysis(*)

|                                  |                        | Nine months ended September 30, 2000 as compared to nine months ended September 30, 1999 |                     
|--------------------------------- | ---------------------- | ---------------------------------------------------------------------------------------- | --------------------
|
|
|Short-term investments            |                        | $                                                                                        | 238                 
|Investment securities:            |                        |                                                                                          |                     
|                                  | Taxable                |                                                                                          |                     
|                                  | Tax-exempt             |                                                                                          |                     
|                                  |                        |                                                                                          |                     
|                                  |                        |                                                                                          | Total securities    
|Loans:                            |                        |                                                                                          |                     
|                                  | Commercial             |                                                                                          |                     
|                                  | Agriculture            |                                                                                          |                     
|                                  | Real Estate:           |                                                                                          |                     
|                                  |                        | Commercial                                                                               |                     
|                                  |                        | Agriculture                                                                              |                     
|                                  |                        | Residential                                                                              |                     
|                                  | Consumer, net          |                                                                                          |                     
|                                  | Credit card            |                                                                                          |                     
|                                  |                        |                                                                                          |                     
|                                  |                        |                                                                                          | Total loans         
|                                  |                        |                                                                                          |                     
|                                  | Total interest income  |                                                                                          |                     
|                                  |                        |                                                                                          |                     
|Interest bearing demand           |                        |                                                                                          | 499                 
|Savings                           |                        |                                                                                          | 13                  
|Time deposits, less than $100,000 |                        |                                                                                          | 1,421               
|                                  |                        |                                                                                          |                     
|                                  |                        |                                                                                          | Total core deposits 
|Time deposits, $100,000 and over  |                        |                                                                                          | 409                 
|                                  |                        |                                                                                          |                     
|                                  |                        |                                                                                          | Total deposits      
|Short-term borrowings             |                        |                                                                                          | (2                  
|Long-term debt                    |                        |                                                                                          | 51                  
|                                  |                        |                                                                                          |                     
|                                  |                        |                                                                                          | Total borrowed funds
|                                  | Total interest expense |                                                                                          |                     
|                                  |                        |                                                                                          |                     
|                                  |                        |                                                                                          |                     
|                                  |                        |                                                                                          |                     

---

NOTE:  The
change in interest which can not be attributed to only a change in volume or a change in rate, but instead represents a combination of the two factors, has been allocated to
the rate effect.

15

---

Noninterest Income

|                                    |  | Three months ended
September 30, |     | Percent Change |   | Nine months ended
September 30, |   | Percent Change |   |  
|----------------------------------- |  | -------------------------------- | --- | -------------- | - | ------------------------------- | - | -------------- | - | -
|
|
|Service charges on deposit accounts |  | $                                | 358 |                | $ | 347                             |   | 3.2            | % | $
|Other fee income                    |  |                                  | 73  |                |   | 46                              |   | 58.7           |   |  
|Mortgage loan servicing fees        |  |                                  | 47  |                |   | 53                              |   | (11.3          | ) |  
|Gain on sale of mortgage loans      |  |                                  | 5   |                |   | 7                               |   | (28.6          | ) |  
|Securities gains (losses)           |  |                                  |    |                |   | (1                              | ) | 100.0          |   |  
|Other                               |  |                                  | 45  |                |   | 43                              |   | 4.7            |   |  
|                                    |  |                                  |     |                |   |                                 |   |                |   |  
|                                    |  | $                                | 528 |                | $ | 495                             |   | 6.7            | % | $
|                                    |  |                                  |     |                |   |                                 |   |                |   |  

Total
noninterest income increased $33,000 and $86,000 for the three and nine months ended September 30, 2000, respectively, when compared to the same periods in 1999. The
increase in noninterest income is reflective of management's decision to increase fees for services offered in 1999, and growth in transaction accounts.

The
decrease in the gain on sale of mortgage loans is due to softening in the real estate market caused by higher interest rates.

Noninterest Expense

|                                          |  | Three months ended
September 30, |       | Percent Change |   | Nine months ended
September 30, |  | Percent Change |   |  
|----------------------------------------- |  | -------------------------------- | ----- | -------------- | - | ------------------------------- |  | -------------- | - | -
|
|
|Salaries and employee benefits            |  | $                                | 937   |                | $ | 745                             |  | 25.8           | % | $
|Net occupancy expense                     |  |                                  | 209   |                |   | 224                             |  | (6.7           | ) |  
|Equipment expense                         |  |                                  | 104   |                |   | 94                              |  | 10.6           |   |  
|Data processing                           |  |                                  | 173   |                |   | 145                             |  | 19.3           |   |  
|Supplies                                  |  |                                  | 45    |                |   | 38                              |  | 18.4           |   |  
|Communication and transportation          |  |                                  | 120   |                |   | 118                             |  | 1.7            |   |  
|Marketing and advertising                 |  |                                  | 58    |                |   | 32                              |  | 81.3           |   |  
|Correspondent and processing fees         |  |                                  | 72    |                |   | 65                              |  | 10.8           |   |  
|Loan and other real estate owned expenses |  |                                  | 15    |                |   | 27                              |  | (44.4          | ) |  
|Professional fees                         |  |                                  | 316   |                |   | 327                             |  | (3.4           | ) |  
|Directors' and regulatory fees            |  |                                  | 61    |                |   | 42                              |  | 45.2           |   |  
|Other                                     |  |                                  | 84    |                |   | 46                              |  | 82.6           |   |  
|                                          |  |                                  |       |                |   |                                 |  |                |   |  
|                                          |  | $                                | 2,194 |                | $ | 1,903                           |  | 15.3           | % | $
|                                          |  |                                  |       |                |   |                                 |  |                |   |  

Salaries
and employee benefits increased $192,000 and $479,000 for the three and nine months ended September 30, 2000, respectively, when compared to the same periods in 1999.
This increase is a result of the acquisition of Camp Point, increased incentive pay, increased insurance benefits for employees, and normal cost of living increases to overall base salaries.

16

---

Net
occupancy expense decreased $15,000 and $2,000 for the three and nine months ended September 30, 2000 when compared to the same periods in 1999. The decrease in occupancy
expense is a result of consolidations of several older branches.

Equipment
expense increased $8,000 for the nine months ended September 30, 2000. Data processing expense increased $5,000 for the nine months ended September 30, 2000
when compared to the same period in 1999. The increase is related to year 2000 compliance expenditures in 1999. Supplies decreased $19,000 for the nine months ended September 30, 2000, and is
due to management's efforts in controlling noninterest expenses. Communication and transportation expense increased $2,000 and $38,000 for the three months and nine months ended September 30,
2000, respectively, when compared to the same periods in 1999. Loan and other real estate owned expenses decreased $12,000 and $19,000 for the three months and nine months ended September 30,
2000, when compared to the same periods in 1999. Marketing and advertising expenses increased $26,000 and $92,000 for the three and nine months ended September 30, 2000, respectively, when
compared to the same periods in 1999. The increase is a direct result of expenses related to community enhancement activities, and increased advertising costs.

Professional
fees decreased $11,000 and $128,000 for the three and nine months ended September 30, 2000. The decrease is a direct result of reduced costs associated with
shareholder litigation, and reduced fees for accounting services. Directors' and regulatory fees increased $19,000 and $57,000 for the three and nine months ended September 30, 2000,
respectively, when compared to the same periods in 1999. The increase is due to the acquisition of Camp Point.

Other
operating expenses increased $38,000 and $101,000 for the three and nine months ended September 30, 2000, respectively, when compared to the same periods in 1999. The
increase is a direct result of the acquisition of Camp Point.

CREDIT QUALITY

Gross loans totaled $157.7 million at September 30, 2000, an increase of $22.0 million, or 16.21%, from $135.7 million at
December 31, 1999. The provision for loan losses has increased to $405,000 for the nine months ended September 30, 2000 as compared to $203,000 for the same period in 1999. At
September 30, 2000 the allowance as a percent of total loans and nonperforming loans increased to 1.32% as compared to 1.25% at December 31, 1999. The increase is a result of the growth
in the loan

17

---

portfolio. Management believes this percentage is adequate to support any unexpected losses, and is consistent with peer group ratios.

|                           |                                | Three months ended
September 30, |   | Nine months ended
September 30, |    
|-------------------------- | ------------------------------ | -------------------------------- | - | ------------------------------- | ---
|
|
|Allowance for Loan Losses: |                                |                                  |   |                                 |    
|                           | Balance at beginning of period |                                  | $ | 1,910                           |    
|                           | Provision charged to expense   |                                  |   | 135                             |    
|                           | Charge-offs                    |                                  |   | 36                              |    
|                           | Less: recoveries               |                                  |   | 69                              |    
|                           |                                |                                  |   |                                 |    
|                           |                                | Net charge-offs                  |   |                                 | (33
|                           |                                |                                  |   |                                 |    
|                           | Balance at end of period       |                                  | $ | 2,078                           |    
|                           |                                |                                  |   |                                 |    
|Net Charge-Off Ratios(1):  |                                |                                  |   |                                 |    
|                           | Commercial                     |                                  |   | (0.40                           | )% 
|                           | Real Estate                    |                                  |   | (0.07                           | )  
|                           | Installment                    |                                  |   | 0.66                            |    
|                           | Credit Cards                   |                                  |   | 2.17                            |    
|                           | Totals                         |                                  |   | (0.08                           | )% 

---

Illini
Corporation's primary business of making commercial, real estate, and consumer loans entails potential losses, the magnitude of which depends on a variety of economic factors
affecting borrowers which are beyond the control of the Corporation. Accordingly, a significant factor in the Corporation's past and future operating results is the level of the provision for loan
losses. The provision for loan losses is up 34% and 99.5% for the three and nine months ended September 30, 2000, respectively, as compared to the comparable periods in the prior year.
Charge-offs increased $2,000 for the three months ended September 30, 2000, and decreased $47,000 for the nine months ended September 30, 2000. Recoveries increased $57,000
and $53,000 for the three and nine months ended September 30, 2000, respectively.

Management
feels that credit quality systems and controls implemented in 1996 and 1997, along with the creation of a formalized credit administration function in 1998, have resulted
in significantly improved credit quality. Illini Corporation has a 1.32% allowance to ending loans ratio as of
September 30, 2000 and 1.25% and 1.27% as of December 31, 1999 and September 30, 1999, respectively. The net charge-off ratio for the three and nine months ended
September 30, 2000 was (0.08)% and 0.02% compared to 0.09% and 0.16% for years ended December 31, 1999 and 1998, respectively.

At
September 30, 2000, impaired loans totaled $763,000 compared to $559,000 at December 31, 1999. At September 30, 2000, allowance for loan losses on impaired
loans totaled $123,000 compared to

18

---

$18,000 at December 31, 1999. Of the total impaired loans at September 30, 2000 and December 31, 1999, there were no loans still accruing interest.

|Credit Quality        |                                                        | September 30,
2000 |   | December 31, 1999 |   | September 30,
1999 |       
|--------------------- | ------------------------------------------------------ | ------------------ | - | ----------------- | - | ------------------ | ------
|
|Nonperforming assets: |                                                        |                    |   |                   |   |                    |       
|                      | Loans delinquent over 90 days, still accruing interest |                    | $ | 0                 |   | $                  | 1     
|                      | Nonaccrual                                             |                    |   | 763               |   |                    | 559   
|                      | Renegotiated                                           |                    |   | 32                |   |                    | 32    
|                      | Other real estate owned                                |                    |   | 426               |   |                    | 618   
|                      |                                                        |                    |   |                   |   |                    |       
|                      | Total nonperforming assets                             |                    | $ | 1,221             |   | $                  | 1,210 
|                      |                                                        |                    |   |                   |   |                    |       
|Key ratios:           |                                                        |                    |   |                   |   |                    |       
|                      | Nonperforming loans to ending loans                    |                    |   | 0.48              | % |                    | 0.41  
|                      | 90 days delinquent to ending loans                     |                    |   | 0.00              |   |                    | 0.00  
|                      | Allowance to ending loans                              |                    |   | 1.32              |   |                    | 1.25  
|                      | Allowance to nonperforming loans                       |                    |   | 272.35            |   |                    | 286.58

Illini
Corporation's loan underwriting guidelines and credit review procedures and policies are designed to protect the Corporation from credit losses. Illini Corporation's process
for monitoring loan quality includes detailed monthly trend analysis of delinquencies and nonperforming assets. Management and the board of directors monitor potential problem loans, changes to the
watchlist, and extensions of credit outside of the loan policy. Management extensively monitors significant credit relationships through appraisals, assessment of the financial condition of borrowers,
restrictions on out-of-area lending, and avoidance of loan concentrations.

As
discussed in the Corporation's 1999 Form 10-KSB and previous Form 10-QSB reports, management has implemented several initiatives to improve
credit quality. These steps included a new officer driven problem loan identification system, a revamped allowance for loan losses adequacy determination process, a new loan policy, and improved
reporting systems (credit quality and production). Management is committed to continuing these initiatives and has supplemented these efforts in 2000 by engaging an outside firm to perform a
comprehensive review of each bank's loan portfolio to assess its credit quality and the effectiveness of management's loan quality systems and controls.

CAPITAL RESOURCES

The current economic and regulatory environment places increased emphasis on capital strength. A strong capital position, which is vital to the continued
profitability of Illini Corporation, also promotes depositor and investor confidence and provides a solid foundation for the future growth of the organization. Illini Corporation has satisfied its
capital requirements principally through the retention of earnings. At September 30, 2000, Tier 1 risk-based capital, total risk-based capital and leverage capital
ratios were 9.63%, 10.86% and 7.03%, respectively, as compared to 10.86%, 12.03% and 7.32% for the period ending December 31, 1999. As of September 30, 2000, the Corporation met the
criteria to be classified as "well capitalized."

Earnings
retention is affected by the board of director's declaration of cash dividends. The dividend payout ratio is an indicator of the level of earnings retained. The Board of
Directors of the Corporation considers the capital strength of the Corporation and the banks in determining the appropriate level of cash dividends to be paid to shareholders. The dividend payout
ratio for the three and nine months ended September 30, 2000 was 57.76% and 52.00%, respectively as compared to

19

---

65.56% and 95.82% for the three and nine months ended September 30, 1999. The dividend per share for the three and nine months ended September 30, 2000 is unchanged from the same period
in 1999.

LIQUIDITY

Illini Corporation's policy is to manage interest rate risk to a level which places limits on the sensitivity of its earnings to changes in market interest
rates. An explanation of the asset/liability management process is found in the Corporation's 1999 Form 10-KSB, beginning on page 15. Interest rate risk management at Illini
Corporation is executed through the use of on-balance sheet investment products.

The
assets portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities of investment securities, and sales of investment securities
available for sale. The liability side of the balance sheet provides liquidity through various customers' interest-bearing and noninterest-bearing deposit accounts. Short-term borrowings
are an additional source of liquidity and represent Illini Corporation's incremental borrowing capacity.

During
the second quarter of 1998, Illini Corporation completed a comprehensive analysis of its asset/ liability function, including a review of its funds management policy and its
principal measure of liquidity. The Corporation implemented a new measure of liquidity measurement, called "Basic Surplus," which redefines liquid assets as the total assets held by the Corporation
which can be converted to cash in thirty days or less, reduced by short term liabilities. As of September 30, 2000, the most recent calculation, Illini Corporation's core liquidity was
$18.8 million, or 8.1% of total average assets.

Management
believes the new formula provides an accurate measurement of liquidity and provides management with a comprehensible and consistent tool to develop pricing and
profitability strategies. Based on the new measurement and as compared to peer banks, management believes the liquidity position of the banks is strong.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Derivative financial instruments include futures, forwards, interest rate swaps, option contracts, and other financial instruments with similar
characteristics. The bank subsidiaries currently do not enter into futures, forwards, swaps, or options. However, they are a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve to
varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. Commitments generally have fixed expiration dates and require
collateral from the borrower if deemed necessary by the banks. Standby letters of credit are conditional commitments issued by the banks to guarantee the performance of a customer to a third party up
to a stipulated amount and within specified terms and conditions. Commitments to extend credit and standby letters of credit are not recorded as an asset or liability by the banks until and unless the
instrument is exercised.

The
bank subsidiaries exposure to market risk and interest rate risk is reviewed by their individual Asset/Liability Committees. Management realizes certain risks are inherent, such
as the uncertainty of market interest rates, and that its goal is to identify and manage such risks. The primary tool management uses to monitor and manage interest rate risk is a static gap report.
The bank subsidiaries have no market risk sensitive instruments held for trading purposes.

The
Corporation's interest rate and market risk profile has not materially changed from the year ended December 31, 1999. Please refer to the Corporation's 1999
Form 10-KSB for further discussion of the Corporation's market and interest rate risk.

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PART II. OTHER INFORMATION

Item
1Legal Proceedings

Mary Quinn v. Illini Corporation and Illinois Stock Transfer Co.,Sangamon County Case No. 98 CH 240

Illini
Corporation adopted a Shareholder Rights Agreement on June 20, 1997, and named Illinois Stock Transfer Company ("ISTC") as its rights agent thereunder. Illini
Corporation was notified in May 1998 of a threatened complaint against ISTC by an Illini Corporation shareholder. The shareholder, Mary K. Quinn ("Quinn"), who owns 21 shares of stock in Illini
Corporation, filed suit against ISTC on June 9, 1998 in the Seventh Judicial Circuit Court, Sangamon County, Illinois. Quinn sought to compel ISTC to distribute rights certificates to Illini
Corporation's shareholders and further sought to certify all Illini Corporation shareholders as a class. Quinn asserted that Ida R. Noll became an acquiring person under the Rights Agreement on
April 16, 1998, and that the Rights Agreement was triggered. ISTC is being represented in the litigation by Howard & Howard, which vigorously contested Quinn's assertions that Ida R.
Noll was an acquiring person, that the Rights Agreement had been triggered, and that ISTC had a duty to distribute rights certificates.

On
June 9, 1998, Quinn filed a Motion to Certify the Class, which was granted on December 29, 1998. On January 13, 1999, Quinn filed an Amended Complaint adding
Illini Corporation as a defendant to her action. Illini Corporation is represented in the litigation by Howard & Howard. Both Illini Corporation and ISTC answered the Amended Complaint and
denied that Ida R. Noll was an acquiring person. Quinn asserted that she was entitled to recover her attorneys' fees from Illini Corporation and ISTC.

Quinn
filed a Motion for Summary Judgment that asked the Court to determine as a matter of law that Ida R. Noll became an acquiring person on April 16, 1998, that the Rights
Agreement was triggered as a result and that Illini Corporation and ISTC had a duty to distribute rights certificates to all shareholders as of April 16, 1998, except for Ida R. Noll. Illini
Corporation opposed Quinn's Motion
for Summary Judgment, which was heard by the Court on June 18, 1999. On June 29, 1999, the Court entered an Opinion and Order denying Quinn's Motion for Summary Judgment.

On
or about May 6, 1999, counsel for Quinn advised Illini Corporation's counsel of their intent to seek an injunction that would preclude Illini Corporation from completing its
acquisition of the Farmers State Bank of Camp Point (Camp Point), pending further order of the Court. Quinn subsequently filed a Motion for Preliminary Injunction and a Memorandum of Law in Support of
her Motion. Quinn argued that the class (consisting of all Illini Corporation's shareholders as of April 16, 1998, except for Ida R. Noll) would be irreparably harmed if the Camp Point merger
closed prior to a determination on the merits of her suit. Illini Corporation filed extensive briefs in opposition to the Motion for Preliminary Injunction, and the Court heard the Motion on
July 1, 1999. The Court entered a written Order on July 13, 1999, denying the Motion for Preliminary Injunction.

Quinn's
counsel filed a Motion for Reconsideration of the Orders denying Quinn's Motion for Summary Judgment and Motion for Preliminary Injunction. Illini Corporation and ISTC filed a
Motion for Summary Judgment on August 25, 1999. At a hearing held on October 18, 1999, the Court granted Illini Corporation and ISTC's Motion for Summary Judgment and denied Quinn's
Motion for Reconsideration. An Order was subsequently entered on January 12, 2000.

Quinn's
counsel announced on October 18, 1999, the intention to petition the Court for an order directing Illini Corporation and ISTC to pay Quinn's attorneys' fees pursuant to
the attorney fee provision of the Rights Agreement. Quinn's fee petition was heard and denied. Quinn has filed a pending appeal as to all adverse orders. The Corporation is vigorously contesting the
appeal. Oral argument was held before the Illinois Appellate Court for the Fourth District on July 18, 2000.

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On July 31, 2000, the Appellate Court issued an order reversing the trial court's order granting summary judgment to Illini and remanding the case for trial. The Appellate
Court found that genuine issue of material fact remained concerning whether the Illini board of directors acted in good faith (1) in determining on April 30, 1998 that Ida Noll's
acquisition of shares was inadvertent and (2) in amending the agreement on June 30, 1998. The Appellate Court also reversed the trial court's order denying Quinn's request for costs,
expenses and attorneys fees, finding that the fee provision of the Rights Agreement did not require one who brought an action to enforce the agreement to prevail in that action in order to recover
fees. Illini currently believes the costs, expenses and attorneys fees to be approximately $250,000 to $350,000, although such amounts shall be subject to further discovery.

The
case has been remanded to the trial court, and the parties will schedule a pretrial conference for the purpose of obtaining a trial date.

Ida R Noll v. Illini Corporation, et al.,Sangamon County Case No. 98 MR 226

On
or about July 17, 1998, Ida R. Noll ("Noll") filed a 14 count complaint against Illini Corporation and all members of Illini Corporation's Board of Directors serving at that
time, except William Walschleger, Jr., in the Seventh Judicial Circuit, Sangamon County, Illinois. On September 28, 1998, Judge Carmody dismissed the complaint and granted Noll 21 days
to file an Amended Complaint. Noll filed an Amended Complaint on October 19, 1998. The Amended Complaint was also dismissed, but Noll was granted leave to file a Second Amended
Complaint. Illini Corporation and the directors answered the Second Amended Complaint.

The
Second Amended Complaint arose out of Illini Corporation's adoption of a Shareholder Rights Agreement on June 20, 1997, Illini Corporation's subsequent adoption of a First
Amendment to the Rights Agreement on July 1, 1998, and the Noll's assertion that she became an "acquiring person" under the Rights Agreement on April 16, 1998. Noll sought declaratory
and injunctive relief from Illini Corporation and the directors regarding the alleged triggering of the Rights Agreement. Noll also challenged the enforceability and validity of the First Amendment to
the Rights Agreement. Noll sought compensatory and punitive damages against the directors arising out of the directors' alleged breaches of fiduciary duty committed in connection with the Rights
Agreement and the First Amendment to the Rights Agreement. Noll sought recovery of her attorneys' fees and costs in connection with her action, alleging attorneys' fees through October 23, 1998
of approximately $50,000 and expenses of approximately $5,000. Illini Corporation and the directors vigorously contested and opposed the allegations.

On
July 6, 1999, Illini Corporation adopted a Second Amendment to its Shareholder Rights Agreement. Illini Corporation moved on August 31, 1999, for summary judgment as
to the counts of the Second Amended Complaint directed against it. Illini Corporation's motion argued that the adoption of the Second Amendment rendered the case against it moot. The Defendant
directors also filed on or about September 15, 1999, a Joint Motion for Summary Judgment as to the counts directed against them. On October 18, 1999, after denying Noll's motion to
continue the hearing, the Court granted both motions. Counsel for the Defendants submitted written orders granting the Defendants' summary judgment motions, which were entered by the Court on
January 12, 2000.

Noll's
counsel filed a petition for payment of her attorneys' fees by Illini Corporation, which was heard on December 9, 1999. The Court denied Noll's fee petition. Noll filed
a Motion for Reconsideration of the Orders granting the Defendants' Motions for Summary Judgment and denying attorneys' fees. Hearing on that Motion was held on April 11, 2000, and the Court
denied the Motion. Noll has appealed. Noll filed her appellant's brief on October 13, 2000. Illini's appellee's brief is due on November 17, 2000. Oral argument is expected in January,
2001, with disposition by the appellate court within sixty days of oral argument.

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Ida R. Noll v. Ernest H. Huls, Illini Corporation, et al,Sangamon County Case No. 99 CH 196

On
or about April 22, 1999, Ida R. Noll ("Noll") filed a new lawsuit against Illini Corporation, Illinois Stock Transfer Company, Ernest H. Huls and Farmers State Bank of Camp
Point in the Seventh Judicial Circuit Court, Sangamon County, Illinois. The Complaint sought specific performance of the Rights Agreement alleging that Ernest Huls became an acquiring person under the
Rights Agreement by reason of his right to receive shares of Illini Corporation common stock pursuant to an Agreement and Plan of Reorganization between Illini Corporation and the Farmers State Bank
of Camp Point. Noll sought to compel Illini Corporation and ISTC to distribute rights certificates to all shareholders of Illini Corporation, except for Mr. Huls. Illini Corporation strongly
disputes Noll's assertion that Ernest Huls has become an acquiring person under the Rights Agreement.

In
June 1999, Illini Corporation and ISTC filed a joint Motion to Dismiss Noll's Complaint on the grounds that the alleged acquiring person, Ernest Huls, was not a beneficial
owner of a substantial block of Illini Corporation common stock. The Motion to Dismiss was scheduled for hearing on July 20, 1999, but on July 16, 1999, Noll's counsel moved for a
substitution of judges. Illini Corporation and ISTC opposed substitution, but the court granted the motion.

The
case has been reassigned to Judge Tim Olson. Briefing of the Motion to Dismiss was completed, but the Court continued the hearing on the Motion to Dismiss. Judge Olson recused
himself just prior to a scheduled case management conference on March 9, 2000. The case has been reassigned to Chief Judge Thomas Russell. On June 1, 2000 Judge Russell reconsidered
Judge Olson's ruling granting the Plaintiff's Motion to Continue. Judge Russell set Illini's Motion to Dismiss for hearing on July 21, 2000. On that date Judge Russell heard argument on
Illini's Motion to Dismiss as well as on Plaintiff's Petition for Discovery, which had been filed on July 18, 2000. On October 6, 2000, the Court granted Illini's Motion to Dismiss all
pending counts with prejudice, but reserving the issue of Plaintiff's
attorney's fees. On October 10, 2000, the Court entered a docket order denying Plaintiff's Petition for Discovery.

Item
2Changes in Securitiesnone

Item
3Defaults Upon Senior Securitiesnone

Item
4Submission of Matters to a Vote of Security Holdersnone

Item
5Other Informationnone

Item
6Exhibits and Reports on Form 8-K





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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|                              |  | ILLINI CORPORATION(Registrant)
|----------------------------- |  | ------------------------------
|November 13, 2000
Date signed |  | By:                           
|November 13, 2000
Date signed |  | By:                           

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EXHIBIT INDEX

|Number |  | Description            
|------ |  | -----------------------
|27     |  | Financial Data Schedule

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