UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2002

                        Commission File Number: 33-90342

                             MAIN STREET TRUST, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


           Illinois                                         37-1338484
--------------------------------                 -------------------------------
  (State or other jurisdiction                   (I.R.S. Employer Identification
of incorporation or organization)                            Number)


                 100 West University, Champaign, Illinois 61820
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (217) 351-6500
              ----------------------------------------------------
              (Registrant's telephone number, including area code)
                    Securities registered pursuant to Section
                               12(b) of the Act:

                                                           Name of Each Exchange
Title of Exchange Class                                     On Which Registered
-----------------------                                    ---------------------
       None                                                         None

Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, $.01 par value per share
                     --------------------------------------
                                (Title of Class)

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

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

The index to  exhibits is located on page 68 of 68 total  sequentially  numbered
pages.

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<PAGE>

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes [ X ]  No [ ]

As of March 17,  2003,  the  Registrant  had issued and  outstanding  10,499,599
shares of the  Registrant's  Common  Stock.  The  aggregate  market value of the
voting and non-voting  common equity held by  non-affiliates  of the registrant,
based on the last reported  price on June 28, 2002, the last business day of the
registrant's  most recently  completed second fiscal quarter,  was approximately
$159,630,562*.


*    Based on the last  reported  price  ($22.75)  of an actual  transaction  in
     Registrant's  Common  Stock on June 28,  2002,  and  reports of  beneficial
     ownership  filed by directors and executive  officers of Registrant  and by
     beneficial owners of more than 5% of the outstanding shares of Common Stock
     of Registrant;  however,  such  determination of shares owned by affiliates
     does not constitute an admission of affiliate status or beneficial interest
     in shares of Registrant's Common Stock.

Documents Incorporated By Reference

Part III of Form 10-K -  Portions  of Proxy  Statement  for  annual  meeting  of
shareholders to be held May 6, 2003.

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<PAGE>


                             MAIN STREET TRUST, INC.

                             Form 10-K Annual Report

                                Table of Contents

                                     Part I

Item 1.   Description of Business..............................................4
          A.    General
          B.    Business of the Company and Subsidiary
          C.    Competition
          D.    Monetary Policy and Economic Conditions
          E.    Regulation and Supervision
          F.    Employees
          G.    Internet Website

Item 2.   Properties..........................................................12
Item 3.   Legal Proceedings...................................................12
Item 4.   Submission of Matters to a Vote of Security Holders.................12

                                     Part II

Item 5.   Market for Registrant's Common Equity and
            Related Shareholder Matters.......................................12
Item 6.   Selected Consolidated Financial Data................................13
Item 7.   Management's Discussion and Analysis
            Financial Condition and Results of Operations.....................13
Item 7a.  Quantitative and Qualitative Disclosures about Market Risk..........35
Item 8.   Financial Statements and Supplementary Data.........................35
Item 9.   Changes in and Disagreements with Accountants
            on Accounting and Financial Disclosure ...........................61

                                    Part III

Item 10.  Directors and Executive Officers of the Registrant..................62
Item 11.  Executive Compensation..............................................62
Item 12.  Security Ownership of Certain Beneficial Owners
            and Management and related shareholder matters....................62
Item 13.  Certain Relationships and Related Transactions......................63
Item 14.  Controls and Procedures.............................................63

                                     Part IV

Item 15.  Exhibits, Financial Statement Schedules and Reports
            on Form 8-K.......................................................64


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<PAGE>

                                     PART I

Item 1.  Description of Business

A.   General

MAIN STREET TRUST,  INC. (the  "Company"),  an Illinois  corporation,  is a bank
holding  company  registered  under the Bank  Holding  Company  Act of 1956,  as
amended (the "BHCA").  The Company was  incorporated  on August 12, 1999, and is
the parent  company of  BankIllinois,  The First  National  Bank of Decatur  and
FirsTech, Inc.

On  March  23,  2000,  the  Company  acquired  all of the  outstanding  stock of
BankIllinois,   The  First  National  Bank  of  Decatur,  First  Trust  Bank  of
Shelbyville and FirsTech,  Inc.  following the merger of BankIllinois  Financial
Corporation  and First Decatur  Bancshares,  Inc. into the Company.  The merger,
which was accounted  for as a pooling of  interests,  was completed on March 23,
2000. Accordingly, prior period consolidated financial data has been restated as
though the prior entities had been consolidated for all periods  presented.  The
Company subsequently merged the Company's former banking subsidiary, First Trust
Bank of Shelbyville, into BankIllinois effective June 19, 2002.

B. Business of the Company and Subsidiaries

General

The Company  conducts the business of banking and offers trust services  through
BankIllinois  and The First National Bank of Decatur (the  "Banks"),  and retail
payment processing through FirsTech, Inc., its wholly owned subsidiaries.  As of
December 31, 2002, the Company had consolidated  total assets of $1.123 billion,
shareholders'  equity of $134.470 million and trust assets under  administration
of approximately $1.415 billion.  Substantially all of the income of the Company
is currently derived from dividends received from the Banks. The amount of these
dividends  is  directly  related to the  earnings of the Banks and is subject to
various regulatory restrictions. See "Regulation and Supervision."

Banking Segment

The Banks conduct a general  banking  business  embracing  most of the services,
both consumer and commercial,  which banks may lawfully  provide,  including the
following  principal  services:  the acceptance of deposits to demand,  savings,
time and  individual  retirement  accounts and the  servicing of such  accounts;
commercial,  consumer and real estate lending,  including  installment loans and
personal  lines of credit;  safe deposit  operations;  and  additional  services
tailored to the needs of  individual  customers,  such as the sale of traveler's
checks,  cashier's  checks and other  specialized  services.  The Company offers
personalized financial planning services through the PrimeVest Investment Center
and through Raymond James, which services include a broad spectrum of investment
products,  including stocks, bonds, mutual funds and tax advantaged investments.
In addition,  the trust & investments  division  offers a wide range of services
such as investment management,  acting as trustee, serving as guardian, executor
or agent, farm management, 401K administration and miscellaneous consulting.

Commercial   lending  at  the  Banks  covers  such  categories  as  agriculture,
manufacturing,  capital,  inventory,  construction,  real estate development and
commercial mortgages. Commercial lending, particularly loans to small and medium
sized  businesses,  accounts for a major portion of the Banks' loan  portfolios.
The  Banks'  retail  banking  divisions  make  loans to  consumers  for  various
purposes, including home equity and automobile loans. The consumer mortgage loan
departments, which are part of the retail banking divisions,  specialize in real
estate loans to  individuals.  The Banks also purchase  installment  obligations
from retailers, primarily without recourse.

The  Banks'  principal  sources  of income  are  interest  and fees on loans and
investments  and service  fees.  Their  principal  expenses are interest paid on
deposits and general  operating  expenses.  The Banks'  primary  service area is
Central Illinois.

                                       4
<PAGE>

Remittance Services Segment

FirsTech,  Inc.  provides  the  following  services to  electric,  water and gas
utilities,  telecommunication  companies,  cable television firms and charitable
organizations: retail lockbox processing of payments delivered by mail on behalf
of the biller;  processing of payments delivered by customers to pay agents such
as grocery stores,  convenience stores and currency exchanges; and concentration
of payments delivered by the Automated Clearing House network,  money management
software such as Quicken and through  networks such as Visa e-Pay and Mastercard
RPS.  For the years ended  December  31,  2002,  2001 and 2000,  FirsTech,  Inc.
accounted  for $7.5 million  (9%),  $7.7 million  (9%),  and $7.6 million  (8%),
respectively,  of the  consolidated  total revenues of the Company and accounted
for $2.4 million (9%),  $2.1 million (9%), and $1.7 million (9%),  respectively,
of the consolidated  income before income tax of the Company.  See Note 2 to the
Consolidated Financial Statements for an analysis of segment operations.

FirsTech,  Inc. provides retail lockbox processing for  organizations.  In 2002,
2001  and  2000,   remittance  processing  for  these  companies  accounted  for
approximately 41%, 42% and 52%, respectively,  of the total revenue of FirsTech,
Inc.

FirsTech,  Inc. processes  payments  delivered by customers to pay agents.  Many
businesses and merchants such as grocery stores and  convenience  stores located
throughout the United States serve as agents of utilities in collecting customer
payments.  In 2002, 2001 and 2000, the remittance  collection business for these
companies  accounted for approximately  54%, 53% and 41%,  respectively,  of the
total revenue of FirsTech, Inc.

FirsTech, Inc. competes in the retail payment processing business with companies
that  range  from  large  national  companies  to small,  local  businesses.  In
addition,  many  companies  do  their  own  remittance  processing  rather  than
out-source  the work to an  independent  processor  such as  FirsTech,  Inc. The
principal  methods of  competition  in the  remittance  processing  industry are
pricing of services, use of technology and quality of service.

C. Competition

The Company faces strong competition both in originating loans and in attracting
deposits.  Competition  in  originating  real estate loans comes  primarily from
other commercial banks,  savings  institutions and mortgage bankers making loans
secured by real estate located in the Company's  market area.  Commercial  banks
and finance  companies,  including  finance  company  affiliates  of  automobile
manufacturers,  provide vigorous  competition in consumer  lending.  The Company
competes  for real  estate  and  other  loans  principally  on the  basis of the
interest  rates and loan fees it charges,  the types of loans it originates  and
the quality of services it provides to borrowers.

The Company faces  substantial  competition  in  attracting  deposits from other
commercial banks,  savings  institutions,  money market and mutual funds, credit
unions and other investment vehicles.  The ability of the Company to attract and
retain deposits depends on its ability to provide investment  opportunities that
satisfy the requirements of investors as to rate of return,  liquidity, risk and
other factors. The Company attracts a significant amount of deposits through its
branch offices, primarily from the communities in which those branch offices are
located;  therefore,  competition  for those deposits is principally  from other
commercial banks and savings institutions  located in the same communities.  The
Company competes for these deposits by offering a variety of deposit accounts at
competitive  rates,  convenient  business hours and convenient  branch locations
with interbranch deposit and withdrawal privileges at each.

Under the Gramm-Leach-Bliley Act which was enacted in 2000, securities firms and
insurance companies that elect to become financial holding companies may acquire
banks  and other  financial  institutions.  This may  significantly  change  the
competitive environment in which the Company and the Banks conduct business. The
financial services industry is also likely to become more competitive as further
technological  advances  enable more  companies to provide  financial  services.
These   technological   advances  may  diminish  the  importance  of  depository
institutions and other financial intermediaries in the transfer of funds between
parties.

                                       5
<PAGE>

D. Monetary Policy and Economic Conditions

The earnings of  commercial  banks and bank holding  companies  are affected not
only by  general  economic  conditions,  but  also by the  policies  of  various
governmental  regulatory agencies. In particular,  the Federal Reserve regulates
money and credit  conditions  and interest  rates in order to influence  general
economic conditions and interest rates, primarily through open market operations
in U. S.  government  securities,  varying the discount rate on member banks and
nonmember  bank  borrowings  and  setting  reserve   requirements  against  bank
deposits. Such Federal Reserve policies and acts have a significant influence on
overall growth and distribution of bank loans, investments, deposits and related
interest rates. The Company cannot  accurately  predict the effect, if any, such
policies and acts may have in the future on its business or earnings.

E. Supervision and Regulation

General

Financial  institutions,  their  holding  companies  and  their  affiliates  are
extensively  regulated under federal and state law. As a result,  the growth and
earnings  performance  of the  Company may be  affected  not only by  management
decisions  and general  economic  conditions,  but also by the  requirements  of
federal and state statutes and by the  regulations  and policies of various bank
regulatory  authorities,  including the Illinois  Commissioner of Banks and Real
Estate (the "Commissioner"),  the Office of the Comptroller of the Currency (the
"OCC"),  the Board of  Governors  of the Federal  Reserve  System (the  "Federal
Reserve")  and  the  Federal  Deposit   Insurance   Corporation   (the  "FDIC").
Furthermore,  taxation laws  administered  by the Internal  Revenue  Service and
state taxing  authorities and securities laws administered by the Securities and
Exchange Commission (the "SEC") and state securities  authorities have an impact
on the business of the Company.  The effect of these  statutes,  regulations and
regulatory  policies may be  significant,  and cannot be  predicted  with a high
degree of certainty.

Federal  and  state  laws and  regulations  generally  applicable  to  financial
institutions regulate,  among other things, the scope of business, the kinds and
amounts  of  investments,  reserve  requirements,  capital  levels  relative  to
operations,  the nature and amount of collateral for loans, the establishment of
branches,  mergers and consolidations and the payment of dividends.  This system
of supervision  and  regulation  establishes a  comprehensive  framework for the
respective  operations  of the  Company  and its  subsidiaries  and is  intended
primarily for the protection of the FDIC insured  deposits and depositors of the
Bank Subsidiaries, rather than shareholders.

The following is a summary of the material elements of the regulatory  framework
that  applies to the Company and its  subsidiaries.  It does not describe all of
the  statutes,  regulations  and  regulatory  policies  that apply,  nor does it
restate  all of the  requirements  of those  that are  described.  As such,  the
following is qualified  in its  entirety by  reference  to  applicable  law. Any
change in  statutes,  regulations  or  regulatory  policies  may have a material
effect on the business of the Company and its subsidiaries.

The Company

General.  The Company,  as the sole shareholder of the Bank  Subsidiaries,  is a
bank holding company. As a bank holding company, the Company is registered with,
and is subject to  regulation  by, the Federal  Reserve  under the Bank  Holding
Company Act of 1956, as amended (the "BHCA"). In accordance with Federal Reserve
policy,  the Company is expected to act as a source of financial strength to the
Bank  Subsidiaries and to commit  resources to support the Bank  Subsidiaries in
circumstances  where the Company might not otherwise do so. Under the BHCA,  the
Company is subject to periodic  examination by the Federal Reserve.  The Company
is also  required  to file with the  Federal  Reserve  periodic  reports  of the
Company's operations and such additional  information  regarding the Company and
its subsidiaries as the Federal Reserve may require.

                                       6
<PAGE>

Acquisitions,  Activities and Change in Control.  The primary  purpose of a bank
holding company is to control and manage banks. The BHCA generally  requires the
prior  approval of the Federal  Reserve for any merger  involving a bank holding
company or any  acquisition  by a bank  holding  company of another bank or bank
holding company acquisition involving a bank holding company. Subject to certain
conditions (including deposit concentration limits established by the BHCA), the
Federal Reserve may allow a bank holding company to acquire banks located in any
state of the United States. In approving  interstate  acquisitions,  the Federal
Reserve is required to give effect to applicable  state law  limitations  on the
aggregate  amount of deposits  that may be held by the  acquiring  bank  holding
company and its insured depository  institution affiliates in the state in which
the target  bank is located  (provided  that  those  limits do not  discriminate
against  out-of-state  depository  institutions or their holding  companies) and
state  laws that  require  that the  target  bank have been in  existence  for a
minimum  period of time (not to exceed five years)  before being  acquired by an
out-of-state bank holding company.

The BHCA  generally  prohibits  the Company  from  acquiring  direct or indirect
ownership or control of more than 5% of the voting shares of any company that is
not a bank and  from  engaging  in any  business  other  than  that of  banking,
managing  and  controlling  banks or  furnishing  services  to banks  and  their
subsidiaries. This general prohibition is subject to a number of exceptions. The
principal  exception  allows  bank  holding  companies  to engage in, and to own
shares of companies engaged in, certain  businesses found by the Federal Reserve
to be "so closely  related to banking ... as to be a proper  incident  thereto."
This   authority   would   permit  the   Company  to  engage  in  a  variety  of
banking-related  businesses,  including  the  operation  of a  thrift,  consumer
finance,   equipment  leasing,  the  operation  of  a  computer  service  bureau
(including software development),  and mortgage banking and brokerage.  The BHCA
generally does not place territorial  restrictions on the domestic activities of
non-bank subsidiaries of bank holding companies.

Additionally,  bank holding companies that meet certain eligibility requirements
prescribed by the BHCA and elect to operate as financial  holding  companies may
engage in, or own shares in  companies  engaged in, a wider range of  nonbanking
activities,  including securities and insurance underwriting and sales, merchant
banking and any other activity that the Federal  Reserve,  in consultation  with
the Secretary of the Treasury, determines by regulation or order is financial in
nature,  incidental to any such financial  activity or complementary to any such
financial  activity  and does  not  pose a  substantial  risk to the  safety  or
soundness of depository  institutions  or the financial  system  generally.  The
Company has received approval to operate as a financial holding company.

Federal law also prohibits any person or company from acquiring  "control" of an
FDIC-insured  depository institution or its holding company without prior notice
to the appropriate federal bank regulator. "Control" is conclusively presumed to
exist upon the acquisition of 25% or more of the outstanding  voting  securities
of a bank or bank holding company, but may arise under certain  circumstances at
10% ownership.

Capital  Requirements.  Bank holding  companies are required to maintain minimum
levels  of  capital  in  accordance  with  Federal   Reserve  capital   adequacy
guidelines.  If capital levels fall below the minimum  required  levels,  a bank
holding  company,  among  other  things,  may be denied  approval  to acquire or
establish additional banks or non-bank businesses.

The  Federal  Reserve's  capital  guidelines  establish  the  following  minimum
regulatory  capital  requirements for bank holding  companies:  (i) a risk-based
requirement  expressed as a percentage  of total  assets  weighted  according to
risk; and (ii) a leverage requirement expressed as a percentage of total assets.
The risk-based requirement consists of a minimum ratio of total capital to total
risk-weighted  assets  of 8%,  and a minimum  ratio of Tier 1  capital  to total
risk-weighted assets of 4%. The leverage requirement consists of a minimum ratio
of Tier 1 capital to total  assets of 3% for the most  highly  rated  companies,
with a minimum  requirement of 4% for all others.  For purposes of these capital
standards,  Tier 1 capital consists primarily of permanent  shareholders' equity
less intangible  assets (other than certain loan servicing  rights and purchased
credit card  relationships).  Total capital consists primarily of Tier 1 capital
plus  certain  other debt and equity  instruments  that do not qualify as Tier 1
capital and a portion of the company's allowance for loan losses.

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<PAGE>

The risk-based and leverage standards described above are minimum  requirements.
Higher   capital  levels  will  be  required  if  warranted  by  the  particular
circumstances or risk profiles of individual banking organizations. For example,
the Federal Reserve's capital guidelines contemplate that additional capital may
be required to take adequate account of, among other things, interest rate risk,
or the risks posed by  concentrations  of credit,  nontraditional  activities or
securities trading activities. Further, any banking organization experiencing or
anticipating  significant  growth would be expected to maintain  capital ratios,
including  tangible capital  positions (i.e., Tier 1 capital less all intangible
assets), well above the minimum levels. As of December 31, 2002, the Company had
regulatory capital in excess of the Federal Reserve's minimum requirements.

Dividend  Payments.  The Company's  ability to pay dividends to its shareholders
may be affected by both general corporate law considerations and policies of the
Federal  Reserve   applicable  to  bank  holding   companies.   As  an  Illinois
corporation,  the Company is subject to the limitations of the Illinois Business
Corporation Act, as amended,  which prohibits the Company from paying a dividend
if, after giving effect to the dividend: (i) the Company would be insolvent;  or
(ii) the net assets of the  Company  would be less than  zero;  or (iii) the net
assets of the  Company  would be less than the maximum  amount  then  payable to
shareholders of the company who would have preferential  distribution  rights if
the Company  were  liquidated.  Additionally,  policies  of the Federal  Reserve
caution that a bank holding  company  should not pay cash  dividends that exceed
its net income or that can only be funded in ways that  weaken the bank  holding
company's  financial  health,  such as by  borrowing.  The Federal  Reserve also
possesses  enforcement  powers over bank holding  companies  and their  non-bank
subsidiaries  to  prevent or remedy  actions  that  represent  unsafe or unsound
practices or  violations  of applicable  statutes and  regulations.  Among these
powers is the ability to  proscribe  the payment of  dividends by banks and bank
holding companies.

Federal Securities Regulation. The Company's common stock is registered with the
SEC under the  Securities Act of 1933, as amended,  and the Securities  Exchange
Act of 1934,  as amended  (the  "Exchange  Act").  Consequently,  the Company is
subject  to the  information,  proxy  solicitation,  insider  trading  and other
restrictions and requirements of the SEC under the Exchange Act.

The Bank Subsidiaries

General.  BankIllinois is an  Illinois-chartered  bank, the deposit  accounts of
which  are  insured  by  the  FDIC's  Bank   Insurance   Fund  ("BIF").   As  an
Illinois-chartered   FDIC-insured   bank,   BankIllinois   is   subject  to  the
examination,   supervision,   reporting  and  enforcement  requirements  of  the
Commissioner,  the  chartering  authority  for  Illinois  banks,  and the  FDIC,
designated  by federal law as the primary  federal  regulator  of insured  state
banks that,  like  BankIllinois,  are not members of the Federal Reserve System.
BankIllinois is a member of the Federal Home Loan Bank System,  which provides a
central credit facility primarily for member institutions.

The First National Bank of Decatur ("Decatur") is a national bank,  chartered by
the OCC under the National Bank Act. The deposit accounts of Decatur are insured
by the BIF,  and  Decatur  is a member of the  Federal  Reserve  System  and the
Federal  Home  Loan  Bank  System.   Decatur  is  subject  to  the  examination,
supervision,  reporting and enforcement  requirements of the OCC, the chartering
authority for national banks.  The FDIC, as  administrator  of the BIF, also has
regulatory authority over Decatur.

Deposit Insurance. As FDIC-insured  institutions,  the Banks are required to pay
deposit  insurance  premium  assessments  to the  FDIC.  The FDIC has  adopted a
risk-based assessment system under which all insured depository institutions are
placed into one of nine  categories and assessed  insurance  premiums based upon
their  respective  levels of capital  and  results of  supervisory  evaluations.
Institutions  classified  as  well-capitalized  (as  defined  by the  FDIC)  and
considered  healthy pay the lowest premium while institutions that are less than
adequately  capitalized  (as defined by the FDIC) and  considered of substantial
supervisory concern pay the highest premium.  Risk classification of all insured
institutions is made by the FDIC for each semi-annual assessment period.

                                       8
<PAGE>

During the year ended  December  31,  2002,  BIF  assessments  ranged from 0% of
deposits to 0.27% of deposits.  For the semi-annual  assessment period beginning
January 1, 2003, BIF assessment rates will continue to range from 0% of deposits
to 0.27% of deposits.

FICO  Assessments.  Since 1987, a portion of the deposit  insurance  assessments
paid by members of the FDIC's  Savings  Association  Insurance Fund ("SAIF") has
been used to cover interest  payments due on the outstanding  obligations of the
Financing  Corporation  ("FICO").  FICO  was  created  in  1987 to  finance  the
recapitalization  of the Federal  Savings and Loan  Insurance  Corporation,  the
SAIF's predecessor insurance fund. As a result of federal legislation enacted in
1996,  beginning as of January 1, 1997, both SAIF members and BIF members became
subject to  assessments  to cover the  interest  payments  on  outstanding  FICO
obligations  until the final maturity of such  obligations  in 2019.  These FICO
assessments  are in  addition  to  amounts  assessed  by the  FDIC  for  deposit
insurance.  During the year ended December 31, 2002 the FICO assessment rate for
BIF and SAIF members was approximately 0.02% of deposits.

Supervisory  Assessments.  All Illinois banks and national banks are required to
pay supervisory  assessments to the Commissioner and the OCC,  respectively,  to
fund the  operations of such agencies.  The amount of the assessment  paid by an
Illinois  bank  to  the   Commissioner   is  calculated  on  the  basis  of  the
institution's total assets, including consolidated subsidiaries,  as reported to
the  Commissioner.  In the case of a national bank, the amount of the assessment
paid to the OCC is calculated using a formula that takes into account the bank's
size and its  supervisory  condition  (as  determined  by the  composite  rating
assigned to the bank as a result of its most recent OCC examination). During the
year ended December 31, 2002,  BankIllinois paid supervisory  assessments to the
Commissioner  totaling $104,000 and Decatur paid supervisory  assessments to the
OCC totaling $107,000.

Capital Requirements. Banks are generally required to maintain capital levels in
excess  of  other  businesses.   The  federal  bank  regulatory   agencies  have
established  the  following  minimum  capital  standards  for insured  state and
national  banks,  such as the  Bank  Subsidiaries:  (i) a  leverage  requirement
consisting  of a minimum  ratio of Tier 1 capital to total  assets of 3% for the
most  highly-rated  banks  with a  minimum  requirement  of at  least 4% for all
others; and (ii) a risk-based capital requirement  consisting of a minimum ratio
of total  capital to total  risk-weighted  assets of 8%, and a minimum  ratio of
Tier 1 capital  to total  risk-weighted  assets  of 4%.  For  purposes  of these
capital  standards,  the  components of Tier 1 capital and total capital are the
same as those for bank holding companies discussed above.

The  capital  requirements  described  above are  minimum  requirements.  Higher
capital levels will be required if warranted by the particular  circumstances or
risk profiles of individual  institutions.  For example,  the regulations of the
FDIC  and the OCC  provide  that  additional  capital  may be  required  to take
adequate  account of, among other things,  interest rate risk or the risks posed
by concentrations  of credit,  nontraditional  activities or securities  trading
activities.

Further,  federal law and regulations  provide  various  incentives to financial
institutions  to  maintain  regulatory  capital  at levels in excess of  minimum
regulatory   requirements.   For  example,  a  financial   institution  that  is
"well-capitalized"  may qualify for exemptions  from prior notice or application
requirements otherwise applicable to certain types of activities and may qualify
for  expedited   processing   of  other   required   notices  or   applications.
Additionally,  one of the criteria  which  determines  a bank holding  company's
eligibility to operate as a financial  holding company is a requirement that all
of its  financial  institution  subsidiaries  be  "well-capitalized".  Under the
regulations  of the  FDIC and the OCC,  in  order  to be  "well-capitalized",  a
financial   institution  must  maintain  a  ratio  of  total  capital  to  total
risk-weighted  assets  of 10% or  greater,  a ratio of Tier 1  capital  to total
risk-weighted  assets of 6% or  greater  and a ratio of Tier 1 capital  to total
assets of 5% or greater.

                                       9
<PAGE>

Federal law also  provides the federal  banking  regulators  with broad power to
take  prompt  corrective  action to resolve  the  problems  of  undercapitalized
institutions.  The extent of the  regulators'  powers  depends  on  whether  the
institution  in  question  is  "adequately   capitalized",   "undercapitalized",
"significantly undercapitalized", or "critically undercapitalized", in each case
as  defined by  regulation.  Depending  upon the  capital  category  to which an
institution  is  assigned,   the  regulators'  corrective  powers  include:  (i)
requiring the  institution to submit a capital  restoration  plan; (ii) limiting
the institution's  asset growth and restricting its activities;  (iii) requiring
the institution to issue additional  capital stock (including  additional voting
stock) or to be acquired; (iv) restricting  transactions between the institution
and its affiliates; (v) restricting the interest rate the institution may pay on
deposits;  (vi) ordering a new election of directors of the  institution;  (vii)
requiring  that senior  executive  officers or  directors be  dismissed;  (viii)
prohibiting the institution from accepting  deposits from  correspondent  banks;
(ix) requiring the institution to divest certain  subsidiaries;  (x) prohibiting
the payment of principal or interest on subordinated  debt; and (xi) ultimately,
appointing a receiver for the institution.

As of December 31,  2002:  (i) none of the Bank  Subsidiaries  were subject to a
directive from the FDIC (in the case of BankIllinois) or the OCC (in the case of
Decatur)  to  increase  its  capital  to an  amount  in  excess  of the  minimum
regulatory capital requirements; (ii) each of the Bank Subsidiaries exceeded its
minimum  regulatory  capital  requirements  under  applicable  capital  adequacy
guidelines;  and (iii) each of the Bank Subsidiaries was  well-capitalized",  as
defined by applicable regulations.

Liability of Commonly Controlled Institutions.  Institutions insured by the FDIC
may be liable for any loss  incurred by, or  reasonably  expected to be incurred
by, the FDIC in connection with the default of commonly controlled  FDIC-insured
depository  institutions  or any  assistance  provided  by the FDIC to  commonly
controlled FDIC insured  depository  institutions in danger of default.  Because
the Company controls each of the Bank  Subsidiaries,  the Bank  Subsidiaries are
commonly controlled.

Dividend Payments. The primary source of funds for the Company is dividends from
the Banks.  Under the Illinois Banking Act,  BankIllinois  generally may not pay
dividends in excess of their net profits.  Under the National Bank Act,  Decatur
may pay dividends out of its undivided profits in such amounts and at such times
as its board of directors  deemed prudent.  Without prior OCC approval,  Decatur
may not pay dividends in any calendar year that,  in the  aggregate,  exceed its
year-to-date  net income  plus its  retained  net  income for the two  preceding
years.

The payment of dividends by any financial  institution or its holding company is
affected by the requirements to maintain adequate capital pursuant to applicable
capital  adequacy  guidelines  and  regulations,  and  a  financial  institution
generally is prohibited from paying any dividends if, following payment thereof,
the institution would be undercapitalized.  As described above, each of the Bank
Subsidiaries   exceeded  its  minimum  capital   requirements  under  applicable
guidelines  as of December  31, 2002.  As of December  31,  2002,  approximately
$51,808,000  was  available to be paid as  dividends  by the Bank  Subsidiaries.
Notwithstanding the availability of funds for dividends,  however,  the FDIC (in
the case of BankIllinois)  and the OCC (in the case of Decatur) may prohibit the
payment of any dividends by the Bank  Subsidiaries if the agency determines such
payment would constitute an unsafe or unsound practice.

Insider Transactions.  The Bank Subsidiaries are subject to certain restrictions
imposed  by  federal  law on  extensions  of  credit  to  the  Company  and  its
subsidiaries, on investments in the stock or other securities of the Company and
its  subsidiaries  and the  acceptance  of the stock or other  securities of the
Company  or  its   subsidiaries  as  collateral  for  loans  made  by  the  Bank
Subsidiaries.  Certain limitations and reporting requirements are also placed on
extensions of credit by the Bank  Subsidiaries  to their directors and officers,
to  directors  and  officers of the Company and its  subsidiaries,  to principal
shareholders  of the  Company,  and to "related  interests"  of such  directors,
officers and principal  shareholders.  In addition,  federal law and regulations
may affect  the terms upon which any person who is a director  or officer of the
Company or one of its subsidiaries or a principal shareholder of the Company may
obtain credit from banks with which the Bank Subsidiaries maintain correspondent
relationships.

Safety and  Soundness  Standards.  The federal  banking  agencies  have  adopted
guidelines that establish  operational  and managerial  standards to promote the
safety  and  soundness  of  federally  insured  depository   institutions.   The
guidelines  set forth  standards  for internal  controls,  information  systems,
internal audit systems, loan documentation,  credit underwriting,  interest rate
exposure,  asset  growth,  compensation,  fees and  benefits,  asset quality and
earnings.


                                       10
<PAGE>

In  general,  the  safety and  soundness  guidelines  prescribe  the goals to be
achieved in each area, and each  institution is responsible for establishing its
own procedures to achieve those goals.  If an  institution  fails to comply with
any of the  standards set forth in the  guidelines,  the  institution's  primary
federal regulator may require the institution to submit a plan for achieving and
maintaining  compliance.  If  an  institution  fails  to  submit  an  acceptable
compliance plan, or fails in any material respect to implement a compliance plan
that has been  accepted by its  primary  federal  regulator,  the  regulator  is
required to issue an order  directing the  institution  to cure the  deficiency.
Until the deficiency cited in the regulator's  order is cured, the regulator may
restrict the institution's  rate of growth,  require the institution to increase
its capital,  restrict the rates the institution pays on deposits or require the
institution  to take any  action  the  regulator  deems  appropriate  under  the
circumstances.  Noncompliance  with the standards  established by the safety and
soundness guidelines may also constitute grounds for other enforcement action by
the federal  banking  regulators,  including  cease and desist  orders and civil
money penalty assessments.

Branching  Authority.  Illinois banks, such as BankIllinois,  have the authority
under  Illinois  law to  establish  branches  anywhere in the State of Illinois,
subject  to  receipt  of  all  required  regulatory  approvals.  National  banks
headquartered  in Illinois,  such as Decatur,  have the same branching rights in
Illinois as banks chartered under Illinois law, subject to OCC approval.

State and national  banks are allowed to establish  interstate  branch  networks
through  acquisitions of other banks,  subject to certain conditions,  including
certain  limitations on the aggregate amount of deposits that may be held by the
surviving bank and all of its insured  depository  institution  affiliates.  The
establishment  of new  interstate  branches  or the  acquisition  of  individual
branches  of a  bank  in  another  state  (rather  than  the  acquisition  of an
out-of-state bank in its entirety) is allowed only if specifically authorized by
state  law.  Illinois  law  permits   interstate   mergers  subject  to  certain
conditions,  including a condition  requiring  an Illinois  bank  involved in an
interstate  merger to have been in existence and  continuous  operation for more
than five years.

State Bank  Investments and Activities.  BankIllinois  generally is permitted to
make  investments and engage in activities  directly or through  subsidiaries as
authorized by Illinois  law.  However,  under federal law and FDIC  regulations,
FDIC insured state banks are  prohibited,  subject to certain  exceptions,  from
making or retaining equity investments of a type, or in an amount,  that are not
permissible for a national bank.  Federal law and FDIC regulations also prohibit
FDIC insured state banks and their subsidiaries,  subject to certain exceptions,
from  engaging as principal in any activity that is not permitted for a national
bank unless the bank  meets,  and  continues  to meet,  its  minimum  regulatory
capital  requirements  and the FDIC  determines  the  activity  would not pose a
significant  risk to the deposit  insurance  fund of which the bank is a member.
These  restrictions  have not had,  and are not  currently  expected to have,  a
material impact on the operations of BankIllinois.

Financial  Subsidiaries.  Under Federal law and OCC regulations,  national banks
are authorized to engage, through "financial subsidiaries", in any activity that
is  permissible  for a  financial  holding  company  and any  activity  that the
Secretary of the Treasury, in consultation with the Federal Reserve,  determines
is financial in nature or incidental to any such financial activity,  except (i)
insurance  underwriting,  (ii) real estate development or real estate investment
activities  (unless  otherwise   permitted  by  law),  (iii)  insurance  company
portfolio  investments  and (iv) merchant  banking.  The authority of a national
bank to invest in a financial  subsidiary is subject to a number of  conditions,
including,  among other things,  requirements that the bank must be well-managed
and  well-capitalized  (after  deducting  from  capital  the bank's  outstanding
investments  in financial  subsidiaries).  Federal law also  provides that state
banks may invest in financial  subsidiaries  (assuming  they have the  requisite
investment  authority under applicable  state law) subject to substantially  the
same   conditions   that  apply  to  national  bank   investments  in  financial
subsidiaries. None of the Bank Subsidiaries has applied for or received approval
to establish any financial subsidiaries.

Federal Reserve System.  Federal  Reserve  regulations,  as presently in effect,
require  depository  institutions  to  maintain  non-interest  earning  reserves
against  their  transaction   accounts   (primarily  NOW  and  regular  checking
accounts),  as follows:  for transaction  accounts  aggregating $42.1 million or
less,  the reserve  requirement  is 3% of total  transaction  accounts;  and for
transaction  accounts  aggregating  in  excess  of $42.1  million,  the  reserve
requirement  is  $1.083  million  plus  10% of the  aggregate  amount  of  total
transaction  accounts  in excess of $42.1  million.  The first  $6.0  million of
otherwise reservable balances are exempted from the reserve requirements.  These
reserve  requirements  are subject to annual  adjustment by the Federal Reserve.
The Bank Subsidiaries are in compliance with the foregoing requirements.

                                       11
<PAGE>

F. Employees

The Company had a total of 439 employees at December 31, 2002, consisting of 330
full-time  employees and 109  part-time.  The Company  places a high priority on
staff development, which involves extensive training, including customer service
training.  New employees are selected on the basis of both technical  skills and
customer service capabilities.  None of the Company's employees are covered by a
collective  bargaining  agreement  with the  Company  or its  subsidiaries.  The
Company  offers a variety of employee  benefits,  and  management  considers its
employee relations to be excellent.

G. Internet Website

The   Company   maintains   internet   sites   for  its   subsidiary   banks  at
www.bankillinois.com and www.1stdecatur.com. The Company makes available free of
charge on these sites its annual report on Form 10-K,  quarterly reports on Form
10-Q,  current reports on Form 8-K and other reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably  practicable
after it  electronically  files such  material  with,  or  furnishes  it to, the
Securities and Exchange Commission.

Item 2. Properties

The Company and its subsidiaries  conduct business in seventeen  locations.  The
Company and BankIllinois'  headquarters are located at 100 W. University Ave. in
Champaign,  Illinois.  The  Company  and/or  its  subsidiaries  own the land and
buildings  for  eleven  locations  and lease six  locations,  three of which are
located in supermarkets.

All of the Banks own their main banking  facilities.  The Company  believes that
its facilities are adequate to serve its present needs.

Item 3. Legal Proceedings

In the course of business,  the Company and its subsidiaries  become involved in
various legal  proceedings,  claims and  litigation  arising out of the ordinary
course of business.  As of the date of filing this report,  there were no causes
of action  which  would  have a  material  adverse  effect  on the  consolidated
financial position of the Company.

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

There  were no items  submitted  to a vote of  security  holders  in the  fourth
quarter of 2002.
                                     PART II

Item 5. Market For Registrant's Common Equity And Related Shareholder Matters

The Company's common stock was held by approximately  700 shareholders of record
as of March 17, 2003 and is traded in the over-the-counter market.

The following table shows,  for the periods  indicated,  the range of prices per
share of the Company's common stock in the over-the-counter  market, as reported
to the  Company by the  brokers  known to the  Company to  regularly  follow the
market  for the  common  stock.  Certain  other  private  transactions  may have
occurred during the periods indicated of which the Company has no knowledge. The
following prices represent inter-dealer prices without retail markups, markdowns
or  commissions,  and have not been  adjusted to reflect the 5% stock  dividends
paid by the Company in the third quarter of 2001.
                                                               Cash
                                        High        Low      Dividends
                                     ---------------------------------

2001     First quarter ..........    $   18.88  $   16.63   $   0.10
         Second quarter .........        19.25      18.33       0.11
         Third quarter ..........        19.25      17.50       0.11
         Fourth quarter .........        18.70      17.55       0.11

2002     First quarter ..........    $   18.95  $   17.85   $   0.13
         Second quarter .........        24.00      18.70       0.13
         Third quarter ..........        24.30      22.60       0.13
         Fourth quarter .........        24.95      24.00       0.13

During the fourth quarter of 2002,  the Company  declared a $0.15 per share cash
dividend,  which was paid on January 24, 2003. The ability of the Company to pay
dividends  in the  future  will be  primarily  dependent  upon  its  receipt  of
dividends from the Banks. In determining cash dividends,  the Board of Directors
considers  the  earnings,  capital  requirements,  debt and  dividend  servicing
requirements,  financial  ratio  guidelines  it has  established,  the financial
condition of the Company and other relevant  factors.  The Banks' ability to pay
dividends  to the  Company and the  Company's  ability to pay  dividends  to its
shareholders are also subject to certain regulatory restrictions.  See "Business
- Supervision and Regulation - The Company - Dividend  Payments" and "Business -
Supervision  and Regulation - The Bank  Subsidiaries - Dividend  Payments" for a
more detailed description of these limitations.

                                       12
<PAGE>

Item 6. Selected Consolidated Financial Data

The following table presents selected consolidated financial information for the
Company  for each of the five  years  ended  December  31,  2002.  The  selected
consolidated  financial data should be read in conjunction with the Consolidated
Financial  Statements  of the Company,  including the related  notes,  presented
elsewhere herein.
<TABLE>
                                                                                       Year Ended December 31,
------------------------------------------------------------------------------------------------------------------------------------
                                                                     2002           2001          2000          1999         1998
                                                                            (dollars in thousands, except per share data)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>           <C>           <C>           <C>           <C>
Interest income ...............................................  $   63,363    $   73,195    $   74,271    $   67,070    $   65,710
Interest expense ..............................................      21,717        33,598        36,599        31,713        31,862
------------------------------------------------------------------------------------------------------------------------------------
Net interest income ...........................................      41,646        39,597        37,672        35,357        33,848
Provision for loan losses .....................................       1,450         2,670           804           573           809
------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses ...........      40,196        36,927        36,868        34,784        33,039
Non-interest income ...........................................      18,866        17,266        16,316        17,991        14,682
Non-interest expense ..........................................      33,161        30,286        34,769        35,922        30,719
Income tax expense ............................................       8,520         7,736         6,426         5,165         5,318
------------------------------------------------------------------------------------------------------------------------------------
     Net income ...............................................  $   17,381    $   16,171    $   11,989    $   11,688    $   11,684
------------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share ......................................  $     1.61    $     1.48    $     1.08    $     1.05    $     1.02
------------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share ....................................  $     1.60    $     1.45    $     1.06    $     1.03    $     1.00
------------------------------------------------------------------------------------------------------------------------------------
Return on average total assets ................................        1.58%         1.47%         1.15%         1.16%         1.23%
Return on average shareholders' equity ........................       12.79%        12.32%        10.03%        10.10%        10.29%
Cash dividends declared per common share1 .....................  $     0.54    $     0.45    $     0.40    $     0.29    $     0.28
------------------------------------------------------------------------------------------------------------------------------------
Total assets ..................................................  $1,122,728    $1,151,511    $1,091,081    $1,035,746    $  979,019
Investment in debt and equity securities ......................     316,210       335,422       303,187       300,040       354,346
Loans held for investment, net ................................     664,142       673,061       659,849       601,594       502,118
Deposits ......................................................     868,586       884,109       839,932       795,075       765,666
Borrowings ....................................................     108,457       120,102       110,636       111,198        88,145
Total shareholders' equity ....................................     134,470       135,993       125,402       116,081       112,586
Total shareholders' equity to total assets ....................       11.98%        11.81%        11.49%        11.21%        11.73%
Average shareholders' equity to average assets ................       12.35%        11.91%        11.45%        11.46%        11.95%
====================================================================================================================================
<FN>
1    Prior to the merger of BankIllinois Financial Corporation and First Decatur
     Bancshares in March 2000, both companies paid cash dividends each year.
</FN>
</TABLE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

The following  discussion  and analysis is designed to provide the reader with a
comprehensive  review of the  consolidated  results of operations for 2002, 2001
and 2000 for the Company,  including  all  subsidiaries,  and an analysis of the
Company's financial condition at December 31, 2002 compared to December 31, 2001
and at December  31, 2001  compared to December 31, 2000.  This  discussion  and
analysis  should  be  read  in  conjunction  with  the  consolidated   financial
statements and related notes, which begin at page 38 of this report.

                                       13
<PAGE>

Overview

The years ended  December 31, 2002,  2001 and 2000 were years of transition  for
the  Company   involving   fundamental   reorganization   of  the   consolidated
organization.  During the first  quarter of 2000,  the  Company  was formed as a
result of the  "merger of equals" of two strong  financial  services  companies.
Despite being in this post-merger  transitional  period,  and facing a worsening
economic environment and sagging consumer confidence,  the Company posted record
results  during 2001 and 2002.  Each of the last three  years had  non-recurring
items.  Non-recurring  items  during  2001 and 2000,  many of which were  merger
related, had significant effects on the Company's reported results.

Merger  and  related  non-recurring  restructuring  expenses  incurred  in  2002
consisted  of  $529,000  of  termination  of  employment  contracts,  $40,000 of
professional fees and $38,000 of data processing expenses, offset by $243,000 of
tax benefit.  The resulting  effect of these items on basic and diluted earnings
per  share  was a  decrease  of $0.03  for the year  2002.  Merger  and  related
non-recurring  restructuring  expenses  incurred in 2001 consisted of $70,000 of
data  processing  expense and $256,000 of termination  of employment  contracts,
offset by $111,000 of tax benefit. Also during 2001, a $2,500,000 reconciliation
liability expense,  net of tax of $1,000,000,  was reversed against non-interest
expense.  The resulting  effect of these items on basic and diluted earnings per
share for 2001, was an increase of approximately  $0.12 and $0.11  respectively.
Costs  incurred in 2000  associated  with the merger and  related  non-recurring
restructuring  consisted of $2,544,000 of professional fees, $1,036,000 of early
retirement  and  termination  of  employment  contracts  and $587,000 of expense
related to computer equipment write-down, offset by $639,000 of tax benefit. The
resulting  effect of these costs on basic and diluted  earnings  per share was a
decrease of approximately $0.32 and $0.31 respectively, for 2000.

During the second quarter of 2002, the Company completed a tender offer in which
711,832 of its shares of common stock were  acquired  for an  aggregate  cost of
$16.556  million.  Also in the second quarter of 2002, one of the Company's bank
subsidiaries, First Trust Bank of Shelbyville, was merged into BankIllinois.

Segment Operations

FirsTech,  Inc.  operates  as a  separate  segment  of the  Company.  Results of
FirsTech, Inc.'s operations are included as non-interest income and non-interest
expense of the Company.

Critical Accounting Policies

The Company's significant accounting policies are more fully described in Note 2
to the Company's  consolidated  financial  statements  located in Item 8 of this
Annual  Report  on  form  10-K.  The  preparation  of  financial  statements  in
conformity with accounting principles generally accepted in the United States of
America  requires  management to make estimates and assumptions  that affect the
reported amounts of assets, liabilities,  revenues, and expenses and the related
disclosures of contingent  assets and  liabilities.  Actual results could differ
from those  estimates  under  different  assumptions or conditions.  The Company
believes that it has one critical accounting policy that is subject to estimates
and judgements used in the preparation of its consolidated financial statements.

                                       14
<PAGE>

Allowance for Loan Losses.  The allowance for loan losses is a material estimate
that is  particularly  susceptible to significant  changes in the near term. The
allowance for loan losses is increased by provisions  charged to operations  and
is reduced by loan charge-offs less recoveries. Management utilizes an approach,
which provides for general and specific valuation  allowances,  that is based on
current  economic  conditions,   past  losses,   collection   experience,   risk
characteristics  of the portfolio,  assessment of collateral values by obtaining
independent appraisals for significant properties, and such other factors which,
in management's judgment, deserve current recognition in estimating loan losses,
to determine the appropriate level of the allowance for loan losses.

The allowance for loan losses  related to impaired loans that are identified for
evaluation is based on discounted  cash flow using the loan's initial  effective
interest  rate or the fair value,  less selling  costs,  of the  collateral  for
collateral  dependent loans.  Loans are categorized as "impaired" when, based on
current information or events, it is probable that the Company will be unable to
collect all amounts due,  including  principal and interest,  in accordance with
the contractual terms of the loan agreement. The Company reviews all non-accrual
and  substantially  delinquent  loans,  as well as problem  loans  identified by
management,  for impairment as defined above. A specific  reserve amount will be
established  for impaired  loans in which the present value of the expected cash
flows to be  generated  is less  than the  amount  of the loan  recorded  on the
Company's books. As an alternative to discounting, the Company may use the "fair
value" of any collateral supporting a collateral-dependent loan in reviewing the
necessity  for  establishing  a  specific  loan loss  reserve  amount.  Specific
reserves  will be  established  for  accounts  having  a  collateral  deficiency
estimated to be $50,000 or more. The Company's  general reserve is maintained at
an adequate level to cover accounts having a collateral  deficiency of less than
$50,000.  Loans  evaluated  as  groups  or  homogeneous  pools of loans  will be
excluded from this analysis.

The Company  utilizes its data  processing  system to identify loan payments not
made by their  contractual  due dates and calculate the number of days each loan
exceeds  the  contractual  due date.  The  accrual  of  interest  on any loan is
discontinued when, in the opinion of management, there is reasonable doubt as to
the collectibility of interest or principal.  Management  believes the allowance
for loan losses is adequate to absorb  probable  credit  losses  inherent in the
loan portfolio.  However,  there can be no assurance that the allowance for loan
losses will be adequate to cover all losses.  While  management  uses  available
information to recognize loan losses, future additions to the allowance for loan
losses may be necessary  based on changes in economic  conditions.  In addition,
various regulatory  agencies,  as an integral part of their examination process,
periodically review the adequacy of the allowance for loan losses. Such agencies
may require the Company to recognize  additions to the allowance for loan losses
based on their  judgments of information  available to them at the time of their
examination.

                                       15
<PAGE>

Results of Operations

The Company had record  earnings of  $17,381,000 in 2002 compared to $16,171,000
in 2001 and  $11,989,000  in 2000. The Company had a return on average assets of
1.58%, 1.47% and 1.15% in 2002, 2001 and 2000, respectively. The rates of return
in 2001 and 2000 were significantly  affected by non-recurring  events discussed
above.  Basic  earnings per share was $1.61,  $1.48 and $1.08 in 2002,  2001 and
2000,  respectively.  Diluted  earnings per share was $1.60,  $1.45 and $1.06 in
2002,  2001 and 2000  respectively.  Management  believes that a strong  balance
sheet and excellent profitability are critical to success, particularly when the
economy experiences a slowdown.

Net Interest Income

Interest  rates and fees charged on loans are  affected  primarily by the market
demand for loans and the supply of money available for lending  purposes.  These
factors are affected by, among other things, general economic conditions and the
policies of the Federal  government,  including  the Board of  Governors  of the
Federal  Reserve System (the "Federal  Reserve"),  legislative  tax policies and
governmental budgetary matters.

Net interest income, the most significant  component of the Company's  earnings,
is the difference  between interest received or accrued on the Company's earning
assets--primarily  loans  and  investments--and  interest  paid  or  accrued  on
deposits  and  borrowings.  In order to  compare  the  interest  generated  from
different  types of earning assets,  the interest  income on certain  tax-exempt
investment  securities  and loans is increased for analysis  purposes to reflect
the income tax savings  provided by these tax-exempt  assets.  The adjustment to
interest  income for tax-exempt  investment  securities and loans was calculated
based on the federal  income tax  statutory  rate of 35%. The  adjustment to net
interest  income  for the tax  effect  of  tax-exempt  assets  is  shown  in the
following schedule.

                  Net Interest Income on a Tax Equivalent Basis

                                                          (in thousands)
-------------------------------------------------------------------------------
                                                      2002      2001     2000
-------------------------------------------------------------------------------
Total interest income ...........................   $63,363   $73,195   $74,271
Total interest expense ..........................    21,717    33,598    36,599
-------------------------------------------------------------------------------
     Net interest income ........................    41,646    39,597    37,672
Tax equivalent adjustment:
     Tax-exempt investments .....................     1,279     1,210     1,046
     Tax-exempt loans ...........................        19        59        52
-------------------------------------------------------------------------------
          Total adjustment ......................     1,298     1,269     1,098
-------------------------------------------------------------------------------
Net interest income (TE) ........................   $42,944   $40,866   $38,770
===============================================================================

                                       16
<PAGE>

The following schedule, "Consolidated Average Balance Sheet and Interest Rates",
provides details of average balances,  interest income or interest expense,  and
the average rates for the Company's major asset and liability categories.

              Consolidated Average Balance Sheet and Interest Rates
<TABLE>
                                                       (dollars in thousands)
------------------------------------------------------------------------------------------------------------------------------------
                                                      2002                            2001                          2000
------------------------------------------------------------------------------------------------------------------------------------
                                        Average                           Average                      Average
                                        Balance     Interest      Rate    Balance   Interest  Rate     Balance     Interest   Rate
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>         <C>          <C>     <C>         <C>       <C>     <C>          <C>        <C>
Assets
Taxable investment

     securities1 ...................   $  262,275  $   12,471   4.75%   $  250,890   $13,831  5.51%   $  259,980   $15,533    5.97%
Tax-exempt investment
  securities1 (TE) .................       55,134       3,654   6.63%       52,836     3,557  6.73%       44,630     3,077    6.89%
Federal funds sold and interest
  bearing deposits2 ................       25,602         437   1.71%       39,526     1,737  4.39%       22,688     1,553    6.85%
Loans 3,4 (TE) .....................      673,423      48,099   7.14%      669,702    55,339  8.26%      623,652    55,206    8.85%
------------------------------------------------------------------------------------------------------------------------------------
     Total interest earning assets
         and interest income (TE) ..   $1,016,434  $   64,661   6.36%   $1,012,954   $74,464  7.35%   $  950,950   $75,369    7.93%
------------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks ............   $   46,771                       $   49,282                    $   48,809
Premises and equipment .............       18,928                           20,336                        21,641
Other assets .......................       18,149                           20,013                        22,034
------------------------------------------------------------------------------------------------------------------------------------
     Total assets ..................   $1,100,282                       $1,102,585                    $1,043,434
====================================================================================================================================

Liabilities and Shareholders' Equity
Interest bearing demand
     deposits ......................   $   90,916  $      944   1.04%   $  107,992   $ 2,229  2.06%   $   81,416   $ 2,112    2.59%
Savings ............................      261,063       3,689   1.41%      229,493     6,743  2.94%      235,935     9,021    3.82%
Time deposits ......................      350,353      14,081   4.02%      360,590    19,859  5.51%      344,305    19,531    5.67%
Federal funds purchased, repurchase
  agreements and notes payable .....       68,615       1,169   1.70%       74,918     2,550  3.40%       75,376     3,764    4.99%
FHLB advances & other borrowings ...       32,889       1,834   5.58%       38,980     2,217  5.69%       36,718     2,171    5.91%
------------------------------------------------------------------------------------------------------------------------------------
     Total interest bearing
          liabilities and interest
          expense ..................   $  803,836  $   21,717   2.70%   $  811,973  $ 33,598  4.14%  $  773,750    $36,599    4.73%
------------------------------------------------------------------------------------------------------------------------------------
Non-interest bearing
  demand deposits ..................   $   93,590                       $  102,136                   $   88,059
Non-interest bearing savings
  deposits .........................       56,204                           42,810                       47,906
Other liabilities ..................       10,738                           14,375                       14,210
------------------------------------------------------------------------------------------------------------------------------------
     Total liabilities .............   $  964,368                       $  971,294                   $  923,925
Shareholders' equity ...............      135,914                          131,291                      119,509
------------------------------------------------------------------------------------------------------------------------------------
     Total liabilities and
          shareholders' equity .....   $1,100,282                       $1,102,585                   $1,043,434
====================================================================================================================================
Interest spread (average
     rate earned minus
     average rate paid) (TE) .......                            3.66%                         3.21%                           3.20%
====================================================================================================================================
Net interest income (TE) ...........               $   42,944                       $   40,866                   $   38,770
====================================================================================================================================
Net yield on interest
     earnings assets (TE) ..........                            4.22%                         4.03%                           4.08%
====================================================================================================================================
<FN>
Notes:  see next page for notes 1-4.
</FN>
</TABLE>

                                       17
<PAGE>

Notes to Consolidated Average Balance Sheet and Interest Rates Table:

1    Investments in debt securities are included at carrying value.
2    Federal  funds sold and interest  earning  deposits  include  approximately
     $61,000,  $114,000 and $154,000 in 2002,  2001 and 2000,  respectively,  of
     interest income from third party processing of cashier checks.
3    Loans are net of allowance for loan losses and include  mortgage loans held
     for sale. Nonaccrual loans are included in the total.
4    Loan fees of approximately $1,269,000,  $1,058,000, and $1,061,000 in 2002,
     2001 and 2000, respectively, are included in total loan income.

The following table presents,  on a fully taxable  equivalent basis, an analysis
of changes in net interest  income  resulting from changes in average volumes of
earning  assets and interest  bearing  liabilities  and average rates earned and
paid. The change in interest due to the combined  rate/volume  variance has been
allocated  to rate and  volume  changes in  proportion  to the  absolute  dollar
amounts of change in each.

                       Analysis of Volume and Rate Changes
                                 (in thousands)
<TABLE>
---------------------------------------------------------------------------------------------------------------------------
                                                                      2002                               2001
---------------------------------------------------------------------------------------------------------------------------
                                                      Increase                             Increase
                                                     (Decrease)                           (Decrease)
                                                        from                                 from
                                                      Previous      Due to      Due to     Previous     Due to     Due to
                                                        Year        Volume       Rate        Year       Volume      Rate
---------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>         <C>         <C>          <C>        <C>
Interest Income
  Taxable investment securities ....................   ($ 1,360)   $    606    ($ 1,966)   ($ 1,702)   ($   530)   ($ 1,172)
  Tax-exempt investment securities .................        (97)        153         (56)        480         554         (74)
  Federal funds sold and interest
    bearing deposits ...............................     (1,300)       (475)       (825)        184         874        (690)
  Loans ............................................     (7,240)        306      (7,546)        133       3,933      (3,800)
---------------------------------------------------------------------------------------------------------------------------
          Total interest income ....................   ($ 9,803)   $    590    ($10,393)   ($   905)   $  4,831    ($ 5,736)
---------------------------------------------------------------------------------------------------------------------------
Interest Expense
  Interest bearing demand
    and savings deposits ...........................   ($ 4,339)   $    370    ($ 4,709)   ($ 2,161)   $    671    ($ 2,832)
  Time deposits ....................................     (5,778)       (550)     (5,228)        328         907        (579)
  Federal funds purchased, repurchase agreements
    and notes payable ..............................     (1,381)       (199)     (1,182)     (1,214)        (23)     (1,191)
  Federal Home Loan Bank advances and other
    borrowings .....................................       (383)       (341)        (42)         46         131         (85)
----------------------------------------------------------------------------------------------------------------------------

          Total interest expense ...................   ($11,881)   ($   720)   ($11,161)   ($ 3,001)   $  1,686    ($ 4,687)
---------------------------------------------------------------------------------------------------------------------------

Net Interest Income (TE) ...........................   $  2,078    $  1,310    $    768    $  2,096    $  3,145    ($ 1,049)
===========================================================================================================================
</TABLE>

Total average  earning  assets  increased  from $1.013 billion in 2001 to $1.016
billion  in 2002,  but  generated  lower  levels  of  interest  income  due to a
significant  decrease in interest rates during 2002.  Average taxable investment
securities  increased  $11.385 million,  but generated  $1,360,000 less interest
income, of which $1,966,000 was due to lower rates,  offset somewhat by $606,000
due to an  increase in volume.  Average  loans  increased  $3.721  million,  but
generated  $7,240,000 less interest income, of which $7,546,000 was due to lower
rates,  offset  slightly by a $306,000  increase  attributable to an increase in
volume.  Average tax-exempt  investment  securities  increased $2.298 million in
2002,  resulting in an increase of $97,000 in interest income. Of this increase,
$153,000  was due to an  increase in volume,  offset  somewhat by $56,000 due to
lower rates.  Somewhat  offsetting  these  increases  in average  balances was a
decrease in average federal funds sold and interest-bearing  deposits of $13.924
million,  resulting  in a  decrease  in  interest  income  in this  category  of
$1,300,000.  Of this decrease,  $825,000 was due to lower rates and $475,000 was
due to a decrease in volume.

                                       18
<PAGE>

Total average earning assets  increased from $950.950  million in 2000 to $1.013
billion  in 2001,  but  generated  lower  levels  of  interest  income  due to a
significant  decrease in interest  rates during 2001.  Average  loans  increased
$46.050  million,  resulting in an increase of $133,000 in interest  income,  of
which $3,933,000 was due to an increase in volume, mostly offset by a $3,800,000
decrease   attributable   to  lower  rates.   Average  federal  funds  sold  and
interest-bearing  deposits  increased  $16.838 million in 2001,  resulting in an
increase in interest  income in this  category of  $184,000.  Of this  increase,
$874,000 was due to an increase in volume,  offset substantially by $690,000 due
to lower  rates.  Average  tax-exempt  investment  securities  increased  $8.206
million,  resulting  in an increase of  $480,000  in interest  income,  of which
$554,000  was due to an  increase in volume,  offset  slightly by $74,000 due to
lower rates.  These  increases in average  balances were offset by a decrease in
average taxable investment securities of $9.090 million, resulting in a decrease
of $1,702,000 in interest income in this category,  of which $530,000 was due to
lower volume and $1,172,000 was due to a decrease in rates.

The Company  establishes  interest  rates on loans and deposits  based on market
rates - such as the 91-day  Treasury Bill rate and the prime rate - and interest
rates offered by other financial institutions in the local community.  The level
of risk and the value of collateral  also are evaluated  when  determining  loan
rates.  Rates were  generally  lower in 2002 compared to 2001.  The average rate
earned on loans  decreased 112 basis points from 8.26% in 2001 to 7.14% in 2002.
The yield on  tax-exempt  investment  securities  decreased 10 basis points from
6.73% in 2001 to  6.63% in 2002.  The  yield on  taxable  investment  securities
decreased  76 basis  points from 5.51% for the year ended  December  31, 2002 to
4.75% for the year ended  December 31, 2002. The yield on federal funds sold and
interest-bearing deposits decreased 268 basis points from 4.39% in 2001 to 1.71%
in 2002.

The total  actual  balance  of loans at  December  31,  2002 was  lower  than at
December 31, 2001. Installment and consumer loans decreased $24.056 million from
2001 to 2002.  This was  primarily  caused  by a  $26.778  million  decrease  in
installment  loans due to competition from special financing offered by the auto
manufacturers'   captive   financing   companies.   Commercial,   financial  and
agricultural  loans  decreased  $11.997 million from 2001 to 2002 as a result of
the slowdown of the economy. Somewhat offsetting these decreases was an increase
of $27.134 million in real estate loans.  Of this increase,  $56.020 million was
attributable  to  commercial  real estate  loans,  offset  somewhat by a $28.886
million  decrease in  residential  mortgage  loans.  The decrease in residential
mortgage loans was caused by a dramatic  increase in  refinancings  to long-term
fixed rate loans, which were subsequently sold on the secondary market.

Average rates on total interest bearing liabilities  decreased 144 basis points,
from 4.14% in 2001 to 2.70% in 2002, resulting in a decrease in interest expense
of  $11,881,000  in 2002  compared  to  2001,  due to the low  rate  environment
throughout  2002.  This was  caused by a  decrease  in  interest  expense on all
categories of interest  bearing  liabilities.  The average rates paid on federal
funds  purchased,  repurchase  agreements and notes payable  decreased 170 basis
points  from 3.40% in 2001 to 1.70% in 2002.  This  resulted  in a  decrease  in
interest  expense of $1,381,000,  of which  $1,182,000 was due to rate decreases
and $199,000  was due to lower  volume.  The average rate paid on time  deposits
decreased 149 basis points,  from 5.51% in 2001 to 4.02% in 2002.  This resulted
in a decrease of $5,778,000 in interest expense,  of which $5,228,000 was due to
lower rates and $550,000 was due to a decrease in volume.  The average rate paid
on interest bearing demand and savings deposits decreased 134 basis points, from
2.66% in 2001 to 1.32% in 2002. This resulted in a decrease in interest  expense
of $4,339,000  in 2002, of which  $4,709,000  was  attributable  to lower rates,
offset  slightly  by a $370,000  increase in volume.  The  average  rate paid on
Federal Home Loan Bank advances and other borrowings  decreased 11 basis points,
from 5.69% in 2001 to 5.58% in 2002.  This  resulted  in a decrease  in interest
expense of  $383,000,  of which  $42,000 was due to lower rates and $341,000 was
due to a decrease in volume.

Interest expense decreased  $3,001,000 in 2001 compared to 2000. This was mainly
caused by a decrease in interest  expense on interest bearing demand and savings
deposits of  $2,161,000 in 2001,  of which  $2,832,000  was due to a decrease in
rates,  offset somewhat by $671,000 due to increased  volume.  The average rates
paid on  federal  funds  purchased,  repurchase  agreements  and  notes  payable
decreased 159 basis points from 4.99% in 2000 to 3.40% in 2001. This resulted in
a decrease in interest  expense of  $1,214,000,  of which  $1,191,000 was due to
rate decreases and $23,000 was due to lower volume.  These decreases were offset
somewhat by an increase of  $328,000 in interest  expense on time  deposits.  Of
this  increase,  $907,000 was due to an increase in volume,  offset  somewhat by
$579,000 due to lower rates. Interest expense on Federal Home Loan Bank advances
and other borrowings  increased  $46,000,  with $131,000  attributable to volume
increases, offset somewhat by $85,000 due to lower rates.

                                       19
<PAGE>

Provision for Loan Losses

The  quality of the  Company's  loan  portfolio  is of prime  importance  to the
Company's  management  and its  board of  directors,  as loans  are the  largest
component of the Company's assets.  The Company maintains an independent  credit
administration function, which performs reviews of all large loans and all loans
that present indications of additional credit risk.

Continued emphasis on loan quality was reflected in the ratio of net charge-offs
to  average  net  loans  of  0.22% in  2002,  compared  to  0.34%  in 2001.  Net
charge-offs decreased to $1,450,000 in 2002 from $2,290,000 in 2001. The Company
charged off $1,927,000 in loans during 2002 compared to $2,673,000 in 2001. This
was due to decreases in charge-offs for commercial,  financial and  agricultural
loans of $1,062,000 in 2002 compared to 2001. The decreased charge-offs were due
largely to charge-offs on two  agriculture  credits  totaling  $847,000 in 2001.
These  decreases were offset somewhat by increases in charge-offs of installment
and consumer loans of $218,000 and in residential  real estate loans of $98,000.
The increased  charge-offs of installment  and consumer loans were in the retail
lending area,  particularly in indirect vehicle loans.  Recoveries of previously
charged off loans  increased from $383,000 in 2001 to $477,000 in 2002, with the
largest  increase in the area of commercial,  financial and  agricultural  loans
that  increased  $66,000  from  2001 to 2002.  The  provision  for  loan  losses
decreased  $1,220,000  from  $2,670,000  in 2001 to  $1,450,000  in  2002.  This
decrease  was  mainly  due to the  reduction  in net  charge-offs.  The  Company
continues to emphasize credit analysis and early detection of problem loans.

Along with other  financial  institutions,  management  shares a concern for the
outlook of the economy in 2003.  A slowdown in economic  activity  beginning  in
2001  severely  impacted  several  major  industries as well as the economy as a
whole. Even though there are indications of emerging strength, it is not certain
that this  strength is  sustainable.  In addition,  consumer  confidence  may be
negatively  impacted by the decline in equity  prices.  These events could still
adversely affect cash flows for both commercial and individual  borrowers,  as a
result of which,  the Company  could  experience  increases  in problem  assets,
delinquencies and losses on loans.

Non-interest Income

Non-interest income increased  $1,600,000,  or 9.3%, from 2001 to 2002. Included
in this increase was an increase of $702,000, or 13.4%, in income from trust and
brokerage fees from $5,227,000 in 2001 to $5,929,000 in 2002. This was primarily
the  result of the  adoption  of a uniform  trust fee  schedule  throughout  the
Company in 2002 that resulted in the  recognition of increased fees as well as a
$29,000,000  increase in assets under management in 2002 compared to 2001. Gains
on sales of mortgage loans  held-for-sale  increased  $540,000,  or 65.2%,  from
$828,000  in  2001  to  $1,368,000  in  2002.  This  increase  resulted  from  a
$34,743,000,  or 33.4%,  increase in mortgage loans sold during 2002 compared to
2001 due to the low  interest  rate  environment.  Service  charges  on  deposit
accounts  increased  $156,000,  or 7.0%, in 2002  compared to 2001.  Income from
securities  transactions increased $101,000, or 91.8%, in 2002 compared to 2001.
This was the result of the sale of some  securities to reposition  the portfolio
in the low rate environment.  Remittance processing income increased $90,000, or
1.3%, during 2002 compared to 2001. Other non-interest income increased $11,000,
or 0.6%, in 2002 compared to 2001.

Non-interest income increased $950,000,  or 5.8%, from 2000 to 2001. Included in
this  increase  was an increase of $616,000,  or 290.6%,  from gains on sales of
mortgage loans  held-for-sale.  This increase  resulted from a  $78,618,000,  or
307.9%,  increase in mortgage loans sold during 2001 compared to 2000 due to the
falling  interest  rate  environment.  Remittance  processing  income  increased
$582,000,  or 8.8%,  during 2001  compared  to 2000.  This  increase  was due to
increased volume coupled with restructured  pricing for some customers.  Service
charges on deposit  accounts  increased  $130,000,  or 6.2%, in 2001 compared to
2000. Also  contributing to the increase in non-interest  income was an $89,000,
or 423.8%, increase in income from securities transactions.  This was the result
of the sale of some  securities to reposition the portfolio in the changing rate
environment.  Somewhat  offsetting  these  increases  was a  decrease  in  other
non-interest income of $220,000, or 11.5%, from $1,917,000 in 2000 to $1,697,000
in 2001.  Proceeds from a life insurance policy of  approximately  $81,000 along
with $22,000 in one-time fee income during 2000,  contributed  to this decrease.
Also,  income from trust and brokerage fees decreased  $247,000,  or 4.5%,  from
$5,474,000 in 2000 to $5,227,000 in 2001. This was due, in part, to the downturn
in the stock  market  during late 2000 and 2001.  Market  values were  depressed
causing fee income, which is based on market valuation, to decline in this area.

                                       20
<PAGE>

Non-interest Expense

During 2002, non-interest expense increased $2,875,000,  or 9.5%, to $33,161,000
in 2002 from $30,286,000 in 2001. The 2001 expense was a decrease of $4,483,000,
or 12.9%,  compared to 2000  non-interest  expense of $34,769,000.  During 2001,
there were no merger related  professional  fees compared to $2,544,000 in 2000.
During 1999, the Company investigated reconciliation differences, which involved
the  Company's  subsidiary,  FirsTech,  Inc. in connection  with its  commercial
remittance  processing  services.   After  consultation  with  its  professional
advisors,  the  Company's  Board of Directors  directed  that a liability in the
amount of $2.5 million be recorded in the fourth quarter of 1999.  Investigation
of these  differences  was completed  during the fourth  quarter of 2001. It was
determined that no liability existed and the $2.5 million liability was reversed
in non-interest expense in 2001. In 2002, there was no reconciliation  liability
effect.  During 2002, salaries and employee benefits expense increased $960,000,
or 5.4%, data processing expense increased $357,000, or 18.4%, occupancy expense
increased  $79,000,  or 3.4%,  and  service  charges  from  correspondent  banks
increased $47,000,  or 5.3%.  Somewhat offsetting these increases were decreases
in equipment expense of $626,000, or 18.4%, office supplies expense of $274,000,
or 17.9%,  and other  non-interest  expense of $168,000,  or 3.4%.  During 2001,
salaries and employee benefits expense decreased  $513,000,  or 2.8%,  equipment
expense  decreased  $247,000,  or 6.8%, and service  charges from  correspondent
banks decreased  $113,000,  or 11.3%.  Somewhat  offsetting these decreases were
increases in other non-interest  expense of $585,000,  or 13.4%, data processing
expense of $473,000,  or 32.2%,  office supplies expense of $299,000,  or 24.2%,
and occupancy expense of $77,000, or 3.5%.

Salaries and employee benefits increased $960,000,  or 5.4%, from $17,761,000 in
2001 to  $18,721,00  in 2002.  Contributing  to the  increase  in  salaries  and
employee  benefits  expense was an increase of $273,000 in salaries and benefits
related  to  organizational   restructuring  that  resulted  in  termination  of
employment  contracts,  and an increase of  $288,000 in group  health  insurance
costs.  Salaries and employee benefits in 2001 decreased $513,000, or 2.8%, from
$18,274,000 in 2000. Salaries and employee benefits in 2001 included $256,000 of
expenses  related  to  the  termination  of  employment  contracts  compared  to
$1,034,000 in expenses in 2000 related to early  retirement  and  termination of
employment contracts as a result of the merger.

Data processing expense increased $357,000, or 18.4%, from $1,943,000 in 2001 to
$2,300,000  in  2002.  Contributing  to this  increase  were a  computer  system
conversion at the Company's  Decatur bank late in the first quarter of 2001 from
in-house  data  processing  to  third  party  service  bureau  data  processing,
conversion to a new system and a software  upgrade at the  Company's  remittance
processing  subsidiary FirsTech,  costs to merge First Trust Bank of Shelbyville
and BankIllinois  computer records,  as well as a continuation in development of
the  Company's  internet  services  during 2002  compared  2001.  In 2001,  data
processing  expense  increased  $473,000,  or 32.2%,  from  $1,470,000  in 2000.
Included in data processing expense were expenses  associated with conversion to
third party service bureau data processing from in-house processing, and $70,000
in expenses related to computer system conversion and early contract termination
as a result of the computer system conversion.

Occupancy  expense  increased  $79,000,  or  3.4%,  from  $2,297,000  in 2001 to
$2,376,000 in 2002. In 2001,  occupancy expense increased $77,000, or 3.5%, from
$2,220,000 in 2000.

Services  charges from  correspondent  banks  increased  $47,000,  or 5.3%, from
$885,000  in 2001 to  $932,000  in  2002.  This  increase  was  mainly  due to a
reduction in monthly  earnings  credits,  which offset a portion of the charges,
due to the falling rate environment. Earnings credits are typically indexed to a
key government  rate,  like the monthly  average 91-day  Treasury bill rate. The
average 91-day T-bill rate dropped from 3.43% in 2001 to 1.64% in 2002. In 2001,
services charges from  correspondent  banks decreased  $113,000,  or 11.3%, from
$998,000 in 2000. The decrease in 2001  reflected a shift from lockbox  payments
to mechanized  payments at the Company's FirsTech  subsidiary,  which have lower
costs.

Equipment  expense  decreased  $626,000,  or 18.4%,  from  $3,405,000 in 2001 to
$2,779,000 in 2002. This decrease was due, in part, to conversion to third party
service bureau data  processing  from in-house data  processing at the Company's
Decatur bank during 2001. In 2001,  equipment  expense  decreased  $247,000,  or
6.8%,  from  $3,652,000  in 2000.  This was  primarily due to $587,000 in merger
related write-downs of computer equipment and software in 2000.

                                       21
<PAGE>

Office supplies expense decreased $274,000, or 17.9%, from $1,535,000 in 2001 to
$1,261,000 in 2002. In 2001,  office supplies  expense  increased  $299,000,  or
24.2%, from $1,236,000 in 2000. Included in office supplies expense in 2001 were
additional  printing and mailing expenses and additional  supplies  purchased to
support  and  announce  a  computer  system  conversion  necessary  to move  the
Company's subsidiaries toward the same data processing system.

In 2002, other non-interest expense decreased $168,000, or 3.4%, from $4,960,000
in 2001 to $4,792,000 in 2002. In 2001,  other  non-interest  expense  increased
$585,000,  or 13.4%,  from  $4,375,000  in 2000.  Included  in this  change  was
$461,000  in other real estate  income in 2000 from the sale of a property  that
had been previously written down.

Income Tax Expense

Income tax expense  increased  $784,000,  or 10.1%,  from  $7,736,000 in 2001 to
$8,520,000  in 2002.  This was mainly due to an increase in taxable  income.  In
2001,  income tax expense  increased  $1,310,000,  or 20.4%,  from $6,426,000 in
2000. This was due to an increase in taxable income. The Company's effective tax
rate was 32.9%,  32.4% and 34.9% for the years ended December 31, 2002, 2001 and
2000,  respectively.   The  effective  tax  rate  was  higher  in  2000  due  to
non-deductible merger related expenses.

The tax  effects  of  temporary  differences,  which  gave  rise to  significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
2002 and  2001,  are  shown in note 11 in the  Notes to  Consolidated  Financial
Statements.

Financial Condition

Total assets decreased $28.783 million, or 2.5%, from $1.152 billion at December
31, 2001 to $1.123 billion at December 31, 2002.  Decreases in cash and due from
banks,  investments  in debt and equity  securities  available-for-sale,  loans,
mortgage  loans  held-for-sale,  accrued  interest  receivable  and premises and
equipment  were somewhat  offset by increases in federal funds sold and interest
earning deposits,  investments in debt and equity  securities  held-to-maturity,
non-marketable equity securities and other assets.

Cash and due from banks  decreased  $28.151  million,  or 32.0%, at December 31,
2002  compared to December  31, 2001,  primarily  due to the purchase of $16.556
million of the  Company's  common stock into  treasury as a result of the second
quarter  2002 tender  offer,  and a smaller  dollar  amount of deposit  items in
process of collection at December 31, 2002 compared to December 31, 2001.

Total investment in debt and equity  securities  decreased  $19.212 million,  or
5.7%,  at December 31, 2002 compared to December 31, 2001.  Investments  in debt
and equity securities  available-for-sale decreased $25.880 million, or 9.7%, at
December  31, 2002  compared to December  31,  2001.  Somewhat  offsetting  this
decrease  was  an  increase  in  investments  in  debt  and  equity   securities
held-to-maturity  of $4.745 million,  or 7.4%, and an increase in investments in
non-marketable  equity  securities of $1.923 million,  or 37.6%, at December 31,
2002 compared to December 31, 2001.

Loans, net of loan allowance, decreased $8.919 million, or 1.3%, at December 31,
2002 compared to December 31, 2001.  Installment  and consumer  loans  decreased
$24.056  million  from  2001 to 2002.  This was  primarily  caused  by a $26.778
million decrease in installment  loans due to competition from special financing
offered by the auto  manufacturers'  captive  financing  companies.  Commercial,
financial and  agricultural  loans  decreased  $11.997 million from 2001 to 2002
primarily as a result of the slowdown of the economy.  Somewhat offsetting these
decreases  was an increase  of $27.134  million in real  estate  loans.  Of this
increase,  $56.020  million was  attributable  to commercial  real estate loans,
offset somewhat by a $28.886 million decrease in residential mortgage loans. The
decrease  in  residential  mortgage  loans was caused by a dramatic  increase in
refinancings to long-term fixed rate loans,  which were subsequently sold on the
secondary market.

Mortgage loans held-for-sale decreased $5.803 million, or 66.1%, at December 31,
2002 compared to December 31, 2001, accrued interest receivable decreased $1.575
million, or 17.7%, and premises and equipment decreased $0.910 million, or 4.7%,
at December 31, 2002 compared to December 31, 2001.

                                       22
<PAGE>

Federal funds sold and interest earning deposits  increased $35.518 million,  or
474.6%,  at December 31, 2002 compared to December 31, 2001.  Federal funds sold
and interest  earning  deposits  fluctuate with loan demand,  deposit volume and
investment  opportunities.  Other assets increased  $0.269 million,  or 2.5%, at
December 31, 2002 compared to December 31, 2001.

The decrease in year-end  assets was a result of total  deposits  being  $15.523
million, or 1.8%, lower at December 31, 2002 compared to December 31, 2001. This
was primarily due to the maturity of a large short-term deposit at the beginning
of 2002. Also,  Federal Home Loan Bank advances and other borrowings were $7.089
million, or 20.3%, lower and federal funds purchased,  repurchase agreements and
other notes were $4.556  million,  or 5.3%,  lower at December  31, 2002 than at
December 31, 2001.

Average assets were $2.303 million,  or 0.2%, lower in 2002 than 2001.  Included
in the decrease in average assets was a decrease of $13.924  million,  or 35.2%,
in average  federal  funds sold and  interest  earning  deposits,  a decrease of
$2.511  million,  or 5.1%,  in cash and due from  banks,  a  decrease  of $1.864
million,  or 9.3% in other assets, and a decrease of $1.408 million, or 6.9%, in
premises and equipment.  These  decreases  were somewhat  offset by increases of
$11.385  million,  or 4.5%,  in taxable  investment  securities,  an increase of
$3.721  million,  or  0.6%,  in  average  net  loans  including  mortgage  loans
held-for-sale,  and an  increase  of  $2.298  million,  or 4.3%,  in  tax-exempt
investment securities.

There were shifts in funding sources as total average deposits  increased $9.105
million, or 1.1%, while average federal funds purchased,  repurchase  agreements
and other notes decreased $6.303 million, or 8.4%, and average Federal Home Loan
Bank advances and other borrowings  decreased $6.091 million,  or 15.6%, in 2002
from 2001.  Included  in the  increase  in average  deposits  was a shift in the
average  deposit mix in 2002  versus  2001.  Average  interest  bearing  savings
increased $31.570 million,  or 13.8%, and average  non-interest  bearing savings
increased $13.394 million,  or 31.3%.  Somewhat  offsetting these increases were
decreases in average  interest  bearing demand deposits of $17.076  million,  or
15.8%,   average  time  deposits  of  $10.237  million,  or  2.8%,  and  average
non-interest bearing demand deposits of $8.546 million, or 8.4%.

Investment Securities

The carrying value of investments in debt and equity securities was as follows:

                          Carrying Value of Securities1
                                 (in thousands)
<TABLE>
---------------------------------------------------------------------------------------------------------------------------
December 31,                                                                                   2002       2001       2000
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>        <C>        <C>
Securities available-for-sale:
    U.S. Treasury ........................................................................   $  3,066   $  8,577   $ 23,812
    Federal agencies .....................................................................    185,469    191,325    156,322
    Mortgage-backed securities ...........................................................     30,884     28,279     11,513
    State and municipal ..................................................................     16,168     15,642     15,349
    Corporate and other obligations ......................................................      1,008      3,099        294
    Marketable equity securities .........................................................      4,021     19,574      6,396
---------------------------------------------------------------------------------------------------------------------------
          Total ..........................................................................   $240,616   $266,496   $213,686
===========================================================================================================================
Securities held-to-maturity:
    Federal agencies .....................................................................   $  1,750   $  1,750   $ 29,428
    Mortgage-backed securities ...........................................................     23,595     19,842     22,642
    State and municipal ..................................................................     43,218     42,226     32,902
---------------------------------------------------------------------------------------------------------------------------
         Total ...........................................................................   $ 68,563   $ 63,818   $ 84,972
===========================================================================================================================
Non-marketable equity securities:
    FHLB and FRB stock2 ..................................................................   $  3,963   $  3,766   $  3,526
    Other equity investments .............................................................      3,068      1,342      1,003
---------------------------------------------------------------------------------------------------------------------------
          Total ..........................................................................   $  7,031   $  5,108   $  4,529
===========================================================================================================================
          Total securities ...............................................................   $316,210   $335,422   $303,187
===========================================================================================================================
<FN>
1    Investment  securities   available-for-sale  are  carried  at  fair  value.
     Investment securities held-to-maturity are carried at amortized cost.
2    FHLB and FRB are  commonly  used  acronyms  for Federal  Home Loan Bank and
     Federal Reserve Bank, respectively.
</FN>
</TABLE>

                                       23
<PAGE>

The  unrealized  gain  on  securities  available-for-sale,  net of  tax  effect,
increased  $1,026,000,  to a gain of $3,776,000 at December 31, 2002 from a gain
of $2,750,000 at December 31, 2001.

The  following  table  shows  the  maturities  and  weighted-average  yields  of
investment securities at December 31, 2002:

            Maturities and Weighted Average Yields of Debt Securities
                             (dollars in thousands)
<TABLE>

------------------------------------------------------------------------------------------------------------------------------------
                                                                             December 31, 2002
------------------------------------------------------------------------------------------------------------------------------------
                                           1 year               1 to 5             5 to 10             Over
                                           or less               years              years            10 years             Total
                                       Amount     Rate     Amount     Rate     Amount    Rate     Amount    Rate     Amount    Rate
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>    <C>          <C>     <C>        <C>     <C>        <C>      <C>       <C>
Securities available-for-sale:
   U.S. Treasury ...................  $  3,066    3.94%  $     --       --    $    --      --    $     --      --    $ 3,066   3.94%
   Federal agencies ................    44,977    4.80%    140,492    4.24%        --      --          --      --    185,469   4.38%
    Mortgage-backed securities1 ....     9,263    3.28%     19,282    5.23%     2,257    8.07%         82    7.86%    30,884   4.86%
    State and municipal ............       769    4.74%      8,271    4.54%     5,335    4.99%      1,793    5.33%    16,168   4.79%
    Other securities ...............     1,008    4.26%         --      --         --      --          --      --      1,008   4.26%
    Marketable equity securities2 ..      --        --          --      --         --      --          --      --      4,021     --
------------------------------------------------------------------------------------------------------------------------------------
        Total ......................  $ 59,083           $ 168,045            $ 7,592            $  1,875           $240,616
====================================================================================================================================
Average Yield ......................              4.51%               4.37%              5.90%               5.44%             4.46%
====================================================================================================================================
Securities held-to maturity:
    Federal agencies ...............  $  1,750    6.03%  $      --      --    $    --      --    $     --      --   $  1,750   6.03%
    Mortgage-backed securities1 ....     8,043    2.75%     11,400    4.38%       275    4.57%      3,877    5.78%    23,595   4.05%
    State and municipal ............     8,161    4.01%     30,729    4.02%     4,328    4.79%         --      --     43,218   4.10%
------------------------------------------------------------------------------------------------------------------------------------
        Total ......................  $ 17,954           $  42,129            $ 4,603            $  3,877           $ 68,563
====================================================================================================================================
Average Yield ......................              3.64%               4.12%              4.77%               5.78%             4.13%
====================================================================================================================================
Non-marketable equity securities2
    FHLB and FRB stock .............  $     --       --   $     --       --   $    --      --    $     --      --   $  3,963     --
    Other equity investments .......        --       --         --       --        --      --          --      --      3,068     --
------------------------------------------------------------------------------------------------------------------------------------

        Total ......................  $     --       --         --       --   $    --      --    $     --      --   $  7,031     --
====================================================================================================================================
<FN>
1    Expected   maturities  may  differ  from  contractual   maturities  because
     borrowers may have the right to call or prepay  obligations with or without
     call or  prepayment  penalties  and certain  securities  require  principal
     repayments prior to maturity.
2    Due to the nature of these  securities,  they do not have a stated maturity
     date or rate.
</FN>
</TABLE>

                                       24
<PAGE>

Loans

The following tables present the amounts and percentages of loans at December 31
for the years indicated according to the categories of commercial, financial and
agricultural; real estate; and installment and consumer loans.

                           Amount of Loans Outstanding
                             (dollars in thousands)
<TABLE>
---------------------------------------------------------------------------------------------------------
                                                       2002       2001       2000       1999       1998
---------------------------------------------------------------------------------------------------------
<S>                                                  <C>        <C>        <C>        <C>        <C>
Commercial, financial and agricultural ...........   $234,045   $246,042   $219,541   $188,430   $168,862
Real estate ......................................    343,827    316,693    319,412    293,761    240,529
Installment and consumer .........................     95,529    119,585    129,775    128,085    101,580
---------------------------------------------------------------------------------------------------------
     Total loans .................................   $673,401   $682,320   $668,728   $610,276   $510,971
=========================================================================================================
</TABLE>

                         Percentage of Loans Outstanding
<TABLE>
--------------------------------------------------------------------------------------------------
                                                     2002      2001      2000      1999     1998
--------------------------------------------------------------------------------------------------
<S>                                                <C>       <C>       <C>       <C>       <C>
Commercial, financial and agricultural ......       34.75%    36.06%    32.83%    30.88%    33.05%
Real estate .................................       51.06%    46.41%    47.76%    48.13%    47.07%
Installment and consumer ....................       14.19%    17.53%    19.41%    20.99%    19.88%
--------------------------------------------------------------------------------------------------
     Total ..................................      100.00%   100.00%   100.00%   100.00%   100.00%
==================================================================================================
</TABLE>

The Company's loan portfolio totaled approximately  $673.401 million at December
31, 2002, representing 60.0% of total assets at that date. Total loans decreased
$8.919  million,  or 1.3%,  from  December 31, 2001 to December  31, 2002,  with
decreases in installment  and consumer  loans and in  commercial,  financial and
agricultural loans of $24.056 million and $11.997 million, respectively,  offset
somewhat by an increase in real estate loans of $27.134 million.

Total loans  increased  $13.592  million,  or 2.0%,  from  December  31, 2000 to
December 31, 2001,  with  increases in  commercial,  financial and  agricultural
loans of $26.501  million,  offset  somewhat by  decreases  in  installment  and
consumer  loans and real estate  loans of $10.190  million  and $2.719  million,
respectively.

The balance of loans  outstanding as of December 31, 2002 by maturities is shown
in the following table:

                          Maturity of Loans Outstanding
                             (dollars in thousands)
<TABLE>
-----------------------------------------------------------------------------------------------------------------------
                                                                                                December 31, 2002
-----------------------------------------------------------------------------------------------------------------------
                                                                           1 year        1-5       Over 5
                                                                           or less      years       Years       Total
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>         <C>         <C>         <C>
Commercial, financial and agricultural .................................   $119,886    $ 96,823    $ 17,336    $234,045
Real estate ............................................................     51,436     146,490     145,901     343,827
Installment and consumer ...............................................     33,689      54,141       7,699      95,529
-----------------------------------------------------------------------------------------------------------------------
     Total .............................................................   $205,011    $297,454    $170,936    $673,401
=======================================================================================================================
Percentage of total loans outstanding ..................................     30.45%      44.17%      25.38%     100.00%
=======================================================================================================================
</TABLE>

                                       25
<PAGE>

As of December 31,  2002,  commercial,  financial  and  agricultural  loans with
maturities  of  greater  than one year were  comprised  of  $49.319  million  in
fixed-rate loans and $64.840 million in floating-rate  loans.  Real estate loans
with  maturities  greater than one year at December 31, 2002  included  $101.656
million  in  fixed-rate  loans and  $190.735  million  in  floating-rate  loans.

Allowance for Loan Losses and Loan Quality

The following table summarizes  changes in the allowance for loan losses by loan
categories for each period and additions to the allowance for loan losses, which
have been charged to operations.

                            Allowance for Loan Losses
                             (dollars in thousands)
<TABLE>
-----------------------------------------------------------------------------------------------------------------
                                                               2002        2001       2000      1999       1998
-----------------------------------------------------------------------------------------------------------------
<S>                                                          <C>         <C>        <C>        <C>        <C>
Allowance for loan losses at beginning of year ...........   $ 9,259     $ 8,879    $ 8,682    $ 8,852    $ 8,837
-----------------------------------------------------------------------------------------------------------------
Charge-offs during period:
     Commercial, financial and agricultural ..............   $  (103)    $(1,165)   $   (99)   $  (506)   $  (200)
     Residential real estate .............................      (125)        (27)       (34)        --        (15)
     Installment and consumer ............................    (1,699)     (1,481)    (1,119)      (750)      (933)
-----------------------------------------------------------------------------------------------------------------
          Total ..........................................   $(1,927)    $(2,673)   $(1,252)   $(1,256)   $(1,148)
-----------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged off:
     Commercial, financial and agricultural ..............   $   245     $   179    $   463    $   268    $    52
     Residential real estate .............................        31          37          9         53         14
     Installment and consumer ............................       201         167        173        192        288
-----------------------------------------------------------------------------------------------------------------
          Total ..........................................   $   477     $   383    $   645    $   513    $   354
-----------------------------------------------------------------------------------------------------------------
               Net charge-offs ...........................   $(1,450)    $(2,290)   $  (607)   $  (743)   $  (794)
Provision for loan losses ................................     1,450       2,670        804        573        809
-----------------------------------------------------------------------------------------------------------------
Allowance for loan losses at end of year .................   $ 9,259     $ 9,259    $ 8,879    $ 8,682    $ 8,852
=================================================================================================================
Ratio of net charge-offs to
     average net loans ...................................     0.22%       0.34%      0.10%      0.14%      0.16%
=================================================================================================================
</TABLE>

Management  reviews  criteria  such  as the  customer's  historic  loan  payment
performance,  financial  statements,  financial  ratios,  cash flow,  net worth,
collateral and guaranties,  as well as local and national economic  factors,  in
determining  whether loans should be written off as  uncollectible.  The Company
records a loss if it is  probable  that a loss will  occur and the amount can be
reasonably estimated.

The  Company's  risk  of loan  loss  is  dependent  on  many  factors:  economic
conditions,  the  extent  and  values  of  underlying  collateral,   significant
concentrations  of loans within the  portfolio,  the ability and  willingness of
borrowers to perform  according to loan terms and  management's  competence  and
judgment in overseeing lending,  collecting and loan-monitoring  activities. The
risk of loss from commercial,  financial and agricultural loans is significantly
impacted  by  economic  factors  and how these  factors  affect  the  particular
industries involved.

An analysis of the  allowance for loan loss adequacy is performed on a quarterly
basis by the  Company's  credit  administration  department.  This  analysis  is
reported to executive  management  and  discussed at a quarterly  meeting  where
specific allocations for problem credits, charge-offs and monthly provisions for
loan losses are reviewed and revised, as necessary.  The results are reported to
the boards of directors.  The analysis includes  assessment of the allowance for
loan loss adequacy  based on historic loan losses and current  quality grades of
specific  credits  reviewed,  credit  concentrations,   current  delinquent  and
nonperforming  loans,  current economic  conditions,  peer group information and
results of recent audits or regulatory examinations.  Charge-offs in commercial,
financial,  and  agricultural  loans  during 2002  decreased  to  $103,000  from
$1,165,000 in 2001, when two agricultural credits totaling $847,000 were charged
off. The level of charge-offs of installment  and consumer loans in 2000,  2001,
and  2002  were  reflective  of the  significant  growth  of the  indirect  loan
portfolio in 1999 and 2000.

                                       26
<PAGE>

The  following  table shows the  allocation  of the allowance for loan losses to
each loan category.

                   Allocation of the Allowance for Loan Losses
                                 (in thousands)
<TABLE>
-----------------------------------------------------------------------------------------------------------------------
                                                                             2002     2001     2000     1999     1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>      <C>      <C>      <C>      <C>
Allocated:
     Commercial, financial and agricultural .............................   $5,732   $5,487   $3,426   $3,476   $4,038
     Residential real estate ............................................      345      419      855      799    1,040
     Installment and consumer ...........................................    1,763    2,000    1,649    1,289    1,332
----------------------------------------------------------------------------------------------------------------------
          Total allocated allowance .....................................   $7,840   $7,906   $5,930   $5,564   $6,410
Unallocated allowances ..................................................    1,419    1,353    2,949    3,118    2,442
----------------------------------------------------------------------------------------------------------------------
Total ...................................................................   $9,259   $9,259   $8,879   $8,682   $8,852
======================================================================================================================
</TABLE>

The allocated  portion of the allowance for loan losses  decreased  $66,000 from
$7,906,000  at December 31, 2001 to  $7,840,000  at December  31, 2002.  Of this
decrease,  the allowance for installment and consumer loans decreased  $237,000,
from  $2,000,000 at December 31, 2001 to $1,763,000 at December 31, 2002 and the
allowance for residential  real estate loans decreased  $74,000 from $419,000 to
$345,000  during  the same  period  as total  loans  in both  retail  categories
decreased  during 2002.  Somewhat  offsetting these decreases was an increase in
the allowance for commercial,  financial and agricultural loans of $245,000 from
$5,487,000 at December 31, 2001 to $5,732,000 at December 31, 2002 as commercial
real estate loans  increased  during 2002. The portion of the allowance for loan
losses which was unallocated  increased by $66,000 to $1,419,000 at December 31,
2002 from $1,353,000 a year earlier.  The unallocated amount is determined based
on  management's  judgment,  which  considers,  in addition to the other factors
previously discussed, the risk of error in the specific allocation.

Management   believes  that   nonperforming  and  potential  problem  loans  are
appropriately  identified  and monitored  based on the  extensive  loan analysis
performed by the credit administration  department, the internal loan committees
and the  boards of  directors.  Historically,  there has not been a  significant
amount of loans charged off which had not been previously  identified as problem
loans by the credit administration department or the loan committees.

The  following  table  presents the aggregate  amount of loans  considered to be
nonperforming  for the periods  indicated.  Nonperforming  loans  include  loans
accounted for on a nonaccrual basis,  accruing loans  contractually  past due 90
days or more as to interest or  principal  payments and loans which are troubled
debt  restructurings as defined in Statement of Financial  Accounting  Standards
No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructurings."

                               Nonperforming Loans
                                 (in thousands)
<TABLE>
--------------------------------------------------------------------------------------------
                                                   2002     2001     2000     1999     1998
--------------------------------------------------------------------------------------------
<S>                                               <C>      <C>      <C>      <C>      <C>
Nonaccrual loans1 .............................   $1,392   $3,341   $  602   $  112   $1,507
============================================================================================
Loans past due 90 days or more ................   $  829   $1,774   $  846   $  440   $1,084
============================================================================================
Renegotiated loans ............................   $   20   $   67   $   88   $  104   $  121
============================================================================================
<FN>
1    Includes $628,000, $3,216,000,  $505,000, $112,000 and $787,000 at December
     31,  2002,  2001,  2000,  1999  and  1998,  respectively,  of  loans  which
     management  does not  consider  impaired  as  defined by the  Statement  of
     Financial  Accounting  Standards  No. 114,  "Accounting  by  Creditors  for
     Impairment of a Loan" (SFAS 114).
</FN>
</TABLE>

                          Other Nonperforming Assets
                                 (in thousands)

--------------------------------------------------------------------------------
                                         2002     2001    2000    1999    1998
--------------------------------------------------------------------------------
Other real estate owned ...........      $58    $ --     $  7    $246     $276
================================================================================
Nonperforming other assets ........      $94    $153     $192    $132     $ 20
================================================================================

                                       27
<PAGE>

There  were no other  interest  earning  assets  that  would be  required  to be
disclosed as being nonperforming if such other assets were loans.

At December  31, 2002,  the Company had  approximately  $7,393,000  in potential
problem loans, excluding  nonperforming loans. Potential problem loans are those
loans  identified  by  management  as being  worthy of  special  attention,  and
although  currently  performing,  may have some underlying  weaknesses.  None of
these potential  problem loans were considered  impaired as defined in SFAS 114.
The $7,393,000 of potential problem loans have either had timely payments or are
adequately  secured  and loss of  principal  or  interest  is  determined  to be
unlikely.

Loans over 90 days past due,  which are not well  secured  and in the process of
collection, are placed on nonaccrual status. There were $1,392,000 of nonaccrual
loans at December 31, 2002  compared to  $3,341,000  at December  31, 2001.  The
decrease in nonaccrual loans was primarily due to the successful resolution of a
$1.8  million  agricultural  credit.  Loans  past due 90 days or more but  still
accruing  interest  decreased  by  $945,000  in 2002 to a balance of $829,000 at
December 31, 2002,  from  $1,774,000 at December 31, 2001.  These loans are well
secured and in the process of collection.

The following table  categorizes  nonaccrual loans as of December 31, 2002 based
on levels of performance  and also details the allocation of interest  collected
during  the period in 2002 in which the loans  were on  nonaccrual.  Substantial
performance,  yet  contractually  past due,  includes  borrowers  making sizable
periodic  payments  relative to the required  periodic  payments due. A borrower
that is not making  substantial  payments but is making some  periodic  payments
would be included in the limited performance category.

                    Nonaccrual and Related Interest Payments
                                 (in thousands)
<TABLE>
--------------------------------------------------------------------------------------------------------------
                                                                          Cash Interest Payments Applied As:
--------------------------------------------------------------------------------------------------------------
                                                 At December 31, 2002                 Recovery of    Reduction
                                                  Book     Contractual    Interest   Prior Partial      Of
                                                 Balance     Balance       Income     Charge-offs    Principal
--------------------------------------------------------------------------------------------------------------
<S>                                              <C>        <C>           <C>        <C>             <C>
Contractually past due with:
     Substantial performance ..................   $  111     $  111        $    6      $     --       $     --
     Limited performance ......................       37         57            --            --             --
     No performance ...........................    1,244      1,311            --            --             --
--------------------------------------------------------------------------------------------------------------
Total .........................................   $1,392     $1,479        $    6      $     --       $     --
===============================================================================================================
</TABLE>

The difference  between the book balance and the contractual  balance represents
charge-offs  made  since the loans were  funded.

Management  believes that the allowance for loan losses at December 31, 2002 was
adequate  to  absorb  credit  losses in the total  loan  portfolio  and that the
policies and procedures in place to identify  potential  problem loans are being
effectively  implemented.  However, there can be no assurance that the allowance
for loan losses will be adequate to cover all losses.

Premises and Equipment

Total premises and equipment  decreased  $0.910 million in 2002 from 2001.  This
decrease was primarily due to depreciation  expense of $2.647 million,  proceeds
from sale of  property  of $71,000  and loss on  disposal of property of $3,000.
These decreases were somewhat offset by $1.811 million of purchases.

Other Assets

Other assets  increased  $269,000 in 2002 from 2001.  Included in this  increase
were increases in cash value life insurance, current tax receivable and deferred
tax assets,  offset  somewhat by decreases in accounts  receivable and servicing
rights.

                                       28
<PAGE>

Deposits

The  following  table shows the average  balance and  weighted  average  rate of
deposits at December 31 for the years indicated:

              Average Balance and Weighted Average Rate of Deposits
                             (dollars in thousands)
<TABLE>
--------------------------------------------------------------------------------------------------------
                                                 2002                  2001                  2000
--------------------------------------------------------------------------------------------------------
                                                    Weighted               Weighted             Weighted
                                           Average   Average    Average    Average     Average   Average
                                           Balance     Rate     Balance      Rate      Balance     Rate
--------------------------------------------------------------------------------------------------------
<S>                                       <C>       <C>         <C>        <C>        <C>       <C>
Demand
     Non-interest bearing .............   $ 93,590       --     $102,136       --     $ 88,059       --
     Interest bearing .................     90,916     1.04%     107,992     2.06%      81,416     2.59%
Savings
     Non-interest bearing .............     56,204       --       42,810       --       47,906       --
     Interest bearing .................    261,063     1.41%     229,493     2.94%     235,935     3.82%
Time
     $100,000 and more ................    121,591     3.89%     110,966     4.73%      93,761     5.81%
     Under $100,000 ...................    228,762     4.09%     249,624     5.85%     250,544     5.62%
--------------------------------------------------------------------------------------------------------
     Totals ...........................   $852,126              $843,021              $797,621
========================================================================================================
</TABLE>

In analyzing  its deposit  activity,  management  has noted that  average  total
deposits  increased  $9.105  million,  or 1.1%,  during  2002.  Included in this
increase were shifts in the average deposit mix in 2002 versus 2001.  There were
increases in average interest  bearing savings  deposits of $31.570 million,  or
13.8%,  average  non-interest bearing savings deposits of $13.394, or 31.3%, and
average time $100,000 and over of $10.625 million,  or 9.6%. Somewhat offsetting
these  increases  were  decreases in average  time  deposits  under  $100,000 of
$20.862  million,  or 8.4%,  average interest bearing demand deposits of $17.076
million, or $15.8%, and average  non-interest  bearing demand deposits of $8.546
million, or 8.4%.

The table below sets forth the  maturity of deposits  greater  than  $100,000 at
December 31, 2002:

                  Maturity of Time Deposits of $100,000 or More
                                 (in thousands)
<TABLE>
-------------------------------------------------------------------------------------------------------------
                                                                                               Total Time
                                          State of Illinois  Brokered                          Deposits of
Maturity at December 31, 2002               Time Deposits       CDs        CDs       IRAs    $100,000 or More
-------------------------------------------------------------------------------------------------------------
<S>                                       <C>                <C>        <C>        <C>       <C>
3 months or less ............................   $  5,000     $     --   $ 25,775   $    747     $ 31,522
3 to 6 months ...............................      5,000           --     18,551        310       23,861
6 to 12 months ..............................         --        5,000     25,926        419       31,345
Over 12 months ..............................         --       12,000     15,334      4,111       31,445
-------------------------------------------------------------------------------------------------------------
     Total ..................................   $ 10,000     $ 17,000   $ 85,586   $  5,587     $118,173
=============================================================================================================
</TABLE>

Federal Funds Purchased, Repurchase Agreements and Notes Payable

This category  includes federal funds purchased,  which are generally  overnight
transactions, securities sold under repurchase agreements, which mature from one
day to three years from the date of sale and U.S.  Treasury  demand  notes.  The
table in note 8 in the  Notes to  Consolidated  Financial  Statements  shows the
balances of federal funds purchased,  repurchase agreements and notes payable at
December 31, 2002 and 2001, the average balance for the years ended December 31,
2002, 2001 and 2000, and the maximum month-end value during each year.

Fair Values of Financial Instruments

The estimated  fair values of financial  instruments  for which no listed market
exists and the fair values of investment  securities,  which are based on listed
market  quotes at December  31, 2002 and 2001,  are  disclosed in note 17 in the
Notes to Consolidated Financial Statements.

                                       29
<PAGE>

Capital

Total  shareholders'  equity  declined  $1.523 million from $135.993  million at
December  31, 2001 to $134.470  million at December  31,  2002.  Included in the
decrease were net treasury stock transactions of $15.369 million,  primarily due
to the completion of the $16.556  million tender offer during the second quarter
of 2002,  offset  partially  by the exercise of stock  options by employees  and
directors of the Company. Cash dividends declared of $5.752 million and a $0.031
million decrease from stock appreciation  rights also contributed to the overall
decrease  in  capital.  Increases  in  capital  included  net  income of $17.381
million, issuance of new shares of common stock of $1.222 million (stock options
exercised  prior to the  completion  of the tender  offer were  fulfilled  using
existing treasury stock, if available,  and through the issuance of new shares),
and an increase in accumulated other comprehensive income of $1.026 million.

Financial  institutions are required by regulatory  agencies to maintain minimum
levels of capital based on asset size and risk characteristics.  Currently,  the
Company  and the Banks are  required  by their  primary  regulators  to maintain
adequate capital based on two measurements:  the total assets leverage ratio and
the risk-weighted assets ratio.

Based on  Federal  Reserve  guidelines,  a bank  holding  company  generally  is
required to  maintain a leverage  ratio of 3% plus an  additional  cushion of at
least 100 to 200 basis points. The Company's total assets leverage ratio at both
December  31, 2002 and 2001 was 11.8%.  The leverage  ratios for the  individual
banks  are  disclosed  in note 19 in the  Notes  to the  Consolidated  Financial
Statements. All are well above the regulatory minimum.

The minimum  risk-weighted  assets ratio for bank  holding  companies is 8%. The
Company's  total  risk-weighted  assets ratio at both December 31, 2002 and 2001
was 18.0%,  which is  significantly  higher  than the  regulatory  minimum.  The
individual banks' total  risk-weighted  assets ratio are disclosed in note 19 in
the Notes to Consolidated  Financial  Statements.  All are significantly  higher
than the regulatory minimum.

Inflation and Changing Prices

Changes  in  interest  rates  and a bank's  ability  to react to  interest  rate
fluctuations have a much greater impact on a bank's balance sheet and net income
than  inflation.  A review of net interest  income  (loss),  liquidity  and rate
sensitivity  should  assist  in the  understanding  of how well the  Company  is
positioned to react to changes in interest rates.

Liquidity and Cash Flows

The Company  requires  cash to fund loan growth and  deposit  withdrawals.  Cash
flows  fluctuate  with changes in economic  conditions,  current  interest  rate
trends  and as a result of  management  strategies  and  programs.  The  Company
monitors the demand for cash and  initiates  programs and policies as considered
necessary to meet funding gaps.

The Company was able to adequately  fund loan demand and meet liquidity needs in
2002. A review of the  consolidated  statement of cash flows in the accompanying
financial  statements  shows  that  the  Company's  cash  and  cash  equivalents
increased  $7.367  million from  December  31, 2001 to December  31,  2002.  The
increase in 2002 resulted from  operating  and  investing  activities,  somewhat
offset by financing  activities.  There were  differences in sources and uses of
cash  during  2002  compared  to 2001.  More  cash  was  provided  by  operating
activities in 2002 compared to 2001.  This was mainly due to more funds provided
by sales of  mortgage  loans  originated  for sale  than  funds  used for  loans
originated for sale in 2002 compared to 2001 when more funds were used for loans
originated for sale than provided by proceeds from sales of loans originated for
sale. Cash was provided in the area of investing activities during 2002 compared
to cash used in 2001. Funding of new loans decreased in 2002 compared to 2001 as
net loans  decreased  $7.172  million  in 2002  compared  to a  $15.882  million
increase in 2001. Principal paydowns from mortgage-backed securities were higher
in 2002 compared to 2001,  reflective of the interest  rate  environment.  Also,
there were less net  purchases  of  investments  in debt and  equity  securities
compared  to  proceeds  from  maturities,  calls  and  sales of the same in 2002
compared to 2001. Cash was used in financing activities in 2002 compared to cash
provided in 2001. This was mainly due to decreases in deposits and federal funds
purchased, repurchase agreements and notes payable in 2002 compared to increases
in 2001.  Also  contributing to the use of funds in 2002 was the Company's stock
tender offer.

                                       30
<PAGE>

The Company's future short-term cash requirements are expected to continue to be
provided by investment maturities, sales of loans and deposits. Cash required to
meet longer-term  liquidity  requirements will mostly depend on future goals and
strategies of management,  the  competitive  environment,  economic  factors and
changes in the needs of  customers.  No outside  borrowing is  anticipated.  The
Company  expects to maintain FHLB advances  near the current  level.  If current
sources of liquidity  cannot provide needed cash in the future,  the Company can
obtain  funds from  several  sources.  The Company is able to borrow  funds on a
temporary basis from the Federal Reserve Bank, the FHLB and correspondent  banks
to meet short-term  requirements.  With no parent company debt and sound capital
levels,  the Company has several options for longer-term cash needs, such as for
future expansion and acquisitions.

Management is not aware of any current  recommendations by the Company's primary
regulators  which if implemented  would have a material  effect on the Company's
liquidity, capital resources or operations.

The following table summarizes significant  obligations and other commitments at
December 31, 2002 (in thousands):
<TABLE>
                                                                                 Short and long-term     Operating
   Years Ended December 31,                                     Time Deposits          borrowings1         leases          Total
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>              <C>                     <C>            <C>
   2003                                                           $  233,120          $     20,023        $  207        $  253,350
   2004                                                               56,484                    23           193            56,700
   2005                                                               30,443                    23           136            30,602
   2006                                                                9,933                 5,023           129            15,085
   2007                                                               15,765                 2,691           110            18,566
   2008 and thereafter                                                     0                    23             2                25
----------------------------------------------------------------------------------------------------------------------------------
   Total                                                          $  345,745          $     27,806        $  777        $  374,328
==================================================================================================================================
   Commitments to extend credit:
   Commitments                                                                                                          $  201,181
   Standby letters of credit                                                                                                11,563
----------------------------------------------------------------------------------------------------------------------------------
<FN>
1    Fixed rate  callable  FHLB  advances  are  included  in the period of their
     modified  duration  rather than in the period in which they are due.  Short
     and  long-term   borrowings   include  fixed  rate  callable   advances  of
     $20,000,000 maturing in fiscal year 2008.
</FN>
</TABLE>

Interest Rate Sensitivity

The concept of interest  sensitivity attempts to gauge exposure of the Company's
net  interest  income to adverse  changes  in market  driven  interest  rates by
measuring  the  amount  of  interest-sensitive   assets  and  interest-sensitive
liabilities  maturing or subject to  repricing  within a specified  time period.
Liquidity  represents the ability of the Company to meet the day-to-day  demands
of deposit customers balanced by its investments of these deposits.  The Company
must also be prepared to fulfill  the needs of credit  customers  for loans with
various  types of  maturities  and  other  financing  arrangements.  One way the
Company  monitors its interest rate sensitivity and liquidity is through the use
of  static  gap  reports,  which  measure  the  difference  between  assets  and
liabilities maturing or repricing within specified time periods.

                                       31
<PAGE>

The following table shows the Company's  interest rate  sensitivity  position at
various intervals at December 31, 2002:

       Rate Sensitivity of Earning Assets and Interest Bearing Liabilities
                                 (in thousands)
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
                                                        1 -30        31 - 90       91 -180      181 - 365        Over
                                                         Days          Days          Days          Days         1 Year         Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>           <C>          <C>           <C>           <C>          <C>
Interest earning assets:
     Federal funds sold and  interest bearing
       deposits ...................................   $   43,002    $       --   $       --    $       --    $       --   $   43,002
     Debt and equity securities1 ..................       33,291        39,230       18,757        26,214       198,718      316,210
     Loans2 .......................................      201,856        24,514       28,080        58,686       363,237      676,373
------------------------------------------------------------------------------------------------------------------------------------
          Total interest earning assets ...........   $  278,149    $   63,744   $   46,837    $   84,900    $  561,955   $1,035,585
------------------------------------------------------------------------------------------------------------------------------------
Interest bearing liabilities:
     Savings and interest bearing demand deposits .   $   39,777    $    1,432   $    2,148    $    4,293    $  163,091   $  210,741
     Money market savings deposits ................      148,197            --           --            --            --      148,197
     Time deposits ................................       24,815        44,271       60,187       103,847       112,625      345,745
     Federal funds purchased, repurchase agreements
       and notes payable ..........................       78,546             9          631         1,365           100       80,651
     FHLB advances and other borrowings ...........        5,000        15,138           --            --         7,668       27,806
------------------------------------------------------------------------------------------------------------------------------------
          Total interest bearing liabilities ......   $  296,335    $   60,850   $   62,966    $  109,505    $  283,484   $  813,140
====================================================================================================================================
Net asset (liability) funding gap .................   $  (18,186)   $    2,894   $  (16,129)   $  (24,605)   $  278,471   $  222,445
------------------------------------------------------------------------------------------------------------------------------------

Repricing gap .....................................         0.94          1.05         0.74          0.78          1.98         1.27

Cumulative repricing gap ..........................         0.94          0.96         0.93          0.89          1.27         1.27
====================================================================================================================================
<FN>
1  Debt and equity securities include securities available-for-sale.
2  Loans include mortgage loans held-for-sale.
</FN>
</TABLE>

Included  in the 1-30 day  category  of  savings  and  interest  bearing  demand
deposits is non-core  deposits plus a percentage,  based upon  industry-accepted
assumptions,  of the core  deposits.  "Core  deposits"  are the  lowest  average
balance  of the prior  twelve  months for each  product  type  included  in this
category. "Non-core deposits" are the difference between the current balance and
core   deposits.   The  time   frames   include   a   percentage,   based   upon
industry-accepted assumptions, of the core deposits, as follows:
<TABLE>
                                     1-30 Days       31-90 Days        91-180 Days     181-365 Days       Over 1 Year
---------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>               <C>             <C>                <C>
Savings and interest bearing
  demand deposits                      0.45%            0.85%             1.25%            2.45%            95.00%
</TABLE>

At December 31, 2002,  the Company  tended to be liability  sensitive due to the
levels of savings and interest bearing demand deposits,  time deposits,  federal
funds purchased, repurchase agreements and notes payable. As such, the effect of
a decrease in the prime rate of 100 basis  points  would  increase  net interest
income by approximately  $182,000 in 30 days and $153,000 in 90 days assuming no
management intervention. A rise in interest rates would have the opposite effect
for the same periods. The Company's Asset and Liability Management Policy states
that the cumulative  ratio of  rate-sensitive  assets ("RSA") to  rate-sensitive
liabilities  ("RSL")  for the  12-month  period  should fall within the range of
0.75-1.25.  As of December 31, 2002, the Company's  RSA/RSL was 0.89,  which was
within the established guidelines.


                                       32
<PAGE>

In addition to managing  interest  sensitivity and liquidity  through the use of
gap reports,  the Company has provided for emergency  liquidity  situations with
informal agreements with correspondent banks, which permit the Company to borrow
federal  funds on an  unsecured  basis.  Additionally,  the  Company  can borrow
approximately  $46.982  million  from the  Federal  Home  Loan Bank on a secured
basis.

The Company uses financial  forecasting/budgeting/reporting software packages to
perform  interest  rate  sensitivity  analysis for all product  categories.  The
Company's  primary  focus of its  analysis  is on the  effect of  interest  rate
increases and decreases on net interest  income.  Management  believes that this
analysis  reflects the  potential  effects on current  earnings of interest rate
changes.  Call criteria and prepayment  assumptions are taken into consideration
for investments in debt and equity  securities.  All of the Company's  financial
instruments  are analyzed by a software  database,  which  includes  each of the
different  product  categories,  which  are  tied to key  rates  such as  prime,
Treasury  Bills,  or the federal funds rate.  The  relationships  of each of the
different  products to the key rate that the product is tied to is proportional.
The software reprices the products based on current offering rates. The software
performs interest rate sensitivity analysis by performing rate shocks of plus or
minus 200 basis points in 100 basis point increments.

The following  table shows  projected  results at December 31, 2002 and December
31,  2001 of the  impact on net  interest  income  from an  immediate  change in
interest  rates.  The results are shown as a  percentage  change in net interest
income over the next twelve months.

Basis Point Change

                                       +200      +100       -100    -200
--------------------------------------------------------------------------

 December 31, 2002 .............       7.6%       3.8%     (3.9%)   (7.8%)
 December 31, 2001 .............       4.2%       2.1%     (2.1%)   (3.6%)

The foregoing computations are based on numerous assumptions, including relative
levels of market  interest  rates,  prepayments  and deposit  mix.  The computed
estimates  should not be relied upon as a projection of actual results.  Despite
the  limitations  on  preciseness  inherent  in these  computations,  management
believes that the information provided is reasonably indicative of the effect of
changes in interest  rate levels on the net  earning  capacity of the  Company's
current  mix of  interest  earning  assets  and  interest  bearing  liabilities.
Management  continues to use the results of these  computations,  along with the
results of its computer model projections, in order to maximize current earnings
while  positioning  the Company to minimize  the effect of a prolonged  shift in
interest rates that would adversely affect future results of operations.

At the present time, the most  significant  market risk affecting the Company is
interest rate risk.  Other market risks such as foreign  currency  exchange risk
and commodity price risk do not occur in the normal business of the Company. The
Company also is not currently using trading activities or derivative instruments
to control interest rate risk.

New Accounting Rules and Regulations

In June 2001,  Statement on Financial  Accounting Standards No. 143, "Accounting
for Asset Retirement  Obligations" was issued to address financial reporting and
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This Statement applies to all entities and to
legal  obligations  associated  with the  retirement of  long-lived  assets that
result from the acquisition, construction, development or normal operations of a
long-lived asset, except for certain  obligations of lessees.  Statement No. 143
is effective for financial  statements  issued for fiscal years  beginning after
June 15, 2002.  Management  does not believe the  adoption of Statement  No. 143
will have a significant impact on its financial statements.

The  Financial  Accounting  Standards  Board has issued  Interpretation  No. 45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees  of  Indebtedness  of Others" - an  interpretation  of FASB
Statement Nos. 5, 57, and 107 and rescission of FASB Interpretation No. 34. This
interpretation  elaborates on the  disclosures  to be made by a guarantor in its
interim  and  annual  financial   statements  about  obligations  under  certain
guarantees that it has issued. It also clarifies that a guarantor is required to
recognize,  at the  inception of a guarantee,  a liability for the fair value of
the obligation undertaken in issuing the guarantee.  The initial recognition and
measurement  of the  Interpretation  are  applicable on a  prospective  basis to
guarantees  issued or modified after December 15, 2002.  Implementation of these
provisions of the  Interpretation  is not expected to have a material  effect on
the Company's consolidated financial statements.  The disclosure requirements of
the  Interpretation  are effective  for the  financial  statements of interim or
annual  periods  ending after  December  15, 2002,  and have been adopted in the
consolidated financial statements for December 31, 2002.

                                       33
<PAGE>

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This document (including  information  incorporated by reference) contains,  and
future  oral and  written  statements  of the  Company  and its  management  may
contain,  forward-looking  statements,  within  the  meaning of such term in the
Private Securities  Litigation Reform Act of 1995, with respect to the financial
condition,  results of operations,  plans,  objectives,  future  performance and
business of the  Company.  Forward-looking  statements,  which may be based upon
beliefs,  expectations  and  assumptions  of  the  Company's  management  and on
information currently available to management, are generally identifiable by the
use of  words  such as  "believe",  "expect",  "anticipate",  "plan",  "intend",
"estimate",   "may",  "will",  "would",  "could",  "should",  or  other  similar
expressions.   Additionally,   all  statements  in  this   document,   including
forward-looking  statements,  speak  only as of the date they are made,  and the
Company  undertakes  no  obligation  to  update  any  statement  in light of new
information or future events.

The Company's ability to predict results or the actual effect of future plans or
strategies is inherently uncertain.  Factors which could have a material adverse
effect  on  the  operations  and  future   prospects  of  the  Company  and  its
subsidiaries include, but are not limited to, the following:

o    The  strength of the United  States  economy in general and the strength of
     the local economies in which the Company  conducts its operations which may
     be less  favorable  then expected and may result in, among other things,  a
     deterioration in the credit quality and value of the Company's assets.

o    The economic impact of past and any future terrorist  attacks,  acts of war
     or threats  thereof,  and the  response  of the  United  States to any such
     threats and attacks.

o    The effects of, and changes in, federal,  state and local laws, regulations
     and policies  affecting  banking,  securities,  insurance  and monetary and
     financial matters.

o    The effects of changes in interest rates  (including the effects of changes
     in the rate of prepayments of the Company's assets) and the policies of the
     Board of Governors of the Federal Reserve System.

o    The ability of the Company to compete with other financial  institutions as
     effectively  as  the  Company   currently   intends  due  to  increases  in
     competitive pressures in the financial services sector.

o    The inability of the Company to obtain new customers and to retain existing
     customers.

o    The timely  development and acceptance of products and services,  including
     products and services offered through alternative delivery channels such as
     the Internet.

o    Technological  changes  implemented  by the Company  and by other  parties,
     including  third  party  vendors,  which  may be  more  difficult  or  more
     expensive than anticipated or which may have unforeseen consequences to the
     Company and its customers.

o    The  ability of the  Company to develop and  maintain  secure and  reliable
     electronic systems.

o    The ability of the Company to retain key  executives  and employees and the
     difficulty  that the Company may experience in replacing key executives and
     employees in an effective manner.

o    Consumer  spending  and saving  habits  which may  change in a manner  that
     affects the Company's business adversely.

o    Business  combinations and the integration of acquired businesses which may
     be more difficult to expensive than expected.

o    The costs, effects and outcomes of existing or future litigation.

o    Changes in accounting  policies and  practices,  as may be adopted by state
     and federal  regulatory  agencies and the  Financial  Accounting  Standards
     Board.

o    The  ability  of the  Company  to  manage  the  risks  associated  with the
     foregoing as well as anticipated.

                                       34
<PAGE>

These risks and uncertainties should be considered in evaluating forward-looking
statements  and  undue  reliance  should  not  be  placed  on  such  statements.
Additional information concerning the Company and its business,  including other
factors  that  could  materially  affect the  Company's  financial  results,  is
included in the Company's filings with the Securities and Exchange Commission

Item 7a. Quantitative and Qualitative Disclosures about Market Risk

See the "Interest Rate  Sensitivity"  section  contained in Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations.

Item 8. Financial Statements and Supplementary Data

The financial  statements  begin  immediately  after the  following  Section 906
Certification pages.

                                       35
<PAGE>


                             MAIN STREET TRUST, INC.
                                AND SUBSIDIARIES

                        Consolidated Financial Statements

                        December 31, 2002, 2001 and 2000



                                       36
<PAGE>


                             MAIN STREET TRUST, INC.
                                AND SUBSIDIARIES

                                TABLE OF CONTENTS

INDEPENDENT AUDITOR'S REPORT                                                   1



CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets                                                    2

Consolidated Statements of Income                                              3

Consolidated Statements of Changes in Shareholders' Equity                     4

Consolidated Statements of Cash Flows                                          5

Notes to Consolidated Financial Statements                                  6-25



                                       37
<PAGE>



                          Independent Auditor's Report

The Board of Directors
Main Street Trust, Inc.
Champaign, Illinois

We have  audited the  accompanying  consolidated  balance  sheets of Main Street
Trust,  Inc. and  subsidiaries as of December 31, 2002 and 2001, and the related
consolidated  statements of income,  changes in shareholders'  equity,  and cash
flows for each of the years in the three year period  ended  December  31, 2002.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial position of Main
Street Trust,  Inc. and  subsidiaries  as of December 31, 2002 and 2001, and the
results  of their  operations  and their cash flows for each of the years in the
three year period  ended  December  31,  2002,  in  conformity  with  accounting
principles generally accepted in the United States of America.


/s/ McGladrey & Pullen, LLP
---------------------------

Champaign, Illinois
February 7, 2003



                                       38
<PAGE>



                             MAIN STREET TRUST, INC.
                                AND SUBSIDIARIES

                           Consolidated Balance Sheets

                           December 31, 2002 and 2001
                        (in thousands, except share data)


<TABLE>
                                                                       2002            2001
                                                                  ----------------------------
<S>                                                               <C>             <C>
Assets
Cash and due from banks .......................................   $     59,744    $     87,895
Federal funds sold and interest bearing deposits ..............         43,002           7,484
                                                                  ----------------------------
        Cash and cash equivalents .............................        102,746          95,379
                                                                  ----------------------------
Investments in debt and equity securities:
  Available-for-sale, at fair value ...........................        240,616         266,496
  Held-to-maturity, at cost (fair value of $70,489 and
    $64,727 at December 31, 2002 and 2001, respectively) ......         68,563          63,818
  Non-marketable equity securities ............................          7,031           5,108
                                                                  ----------------------------
        Total investments in debt and equity securities .......        316,210         335,422
                                                                  ----------------------------
Loans, net of allowance for loan losses of $9,259 at
  December 31, 2002 and 2001 ..................................        664,142         673,061
Mortgage loans held for sale ..................................          2,972           8,775
Premises and equipment ........................................         18,349          19,259
Accrued interest receivable ...................................          7,315           8,890
Other assets ..................................................         10,994          10,725
                                                                  ----------------------------
        Total assets ..........................................   $  1,122,728    $  1,151,511
                                                                  ============================


Liabilities and Shareholders' Equity
Liabilities:
  Deposits:
    Non-interest bearing ......................................   $    163,903    $    158,807
    Interest bearing ..........................................        704,683         725,302
                                                                  ----------------------------
        Total deposits ........................................        868,586         884,109
                                                                  ----------------------------
  Federal funds purchased, repurchase agreements, and notes
    payable ...................................................         80,651          85,207
  Federal Home Loan Bank advances and other borrowings ........         27,806          34,895
  Accrued interest payable ....................................          2,252           3,390
  Other liabilities ...........................................          8,963           7,917
                                                                  ----------------------------
        Total liabilities .....................................        988,258       1,015,518
                                                                  ----------------------------

Shareholders' equity:
  Preferred stock, no par 2,000,000 shares authorized                       --              --
  Common  stock,  $0.01 par value; 15,000,000 shares
    authorized; 11,219,319 and 11,111,281 shares
    issued at December 31, 2002 and 2001, respectively ........            112             111
  Paid in capital .............................................         55,337          54,147
  Retained earnings ...........................................         92,853          83,810
  Accumulated other comprehensive income ......................          3,776           2,750
                                                                 -----------------------------
                                                                       152,078         140,818
  Less:  treasury stock, at cost, 755,047 and 267,783 shares at
    December 31, 2002 and 2001, respectively ..................        (17,608)         (4,825)
                                                                 -----------------------------
        Total shareholders' equity ............................        134,470         135,993
                                                                  ----------------------------
        Total liabilities and shareholders' equity ............   $  1,122,728    $  1,151,511
                                                                  ============================
</TABLE>
See accompanying notes to consolidated financial statements.

                                       39
<PAGE>

                             MAIN STREET TRUST, INC.
                                AND SUBSIDIARIES

                        Consolidated Statements of Income

                  Years Ended December 31, 2002, 2001 and 2000
                        (in thousands, except share data)
<TABLE>
                                                                  2002           2001          2000
                                                              ----------------------------------------
<S>                                                           <C>            <C>           <C>
Interest income:
  Loans and fees on loans .................................   $    48,080    $    55,280   $    55,154
  Investments in debt and equity securities:
    Taxable ...............................................        12,471         13,831        15,533
    Tax-exempt ............................................         2,375          2,347         2,031
  Federal funds sold and interest bearing deposits ........           437          1,737         1,553
                                                              ----------------------------------------
        Total interest income .............................        63,363         73,195        74,271
                                                              ----------------------------------------

Interest expense:
  Deposits ................................................        18,714         28,831        30,664
  Federal funds purchased, repurchase agreements,
    and notes payable .....................................         1,169          2,550         3,764
  Federal Home Loan Bank advances and other borrowings ....         1,834          2,217         2,171
                                                              ----------------------------------------
        Total interest expense ............................        21,717         33,598        36,599
                                                              ----------------------------------------
        Net interest income ...............................        41,646         39,597        37,672
Provision for loan losses .................................         1,450          2,670           804
                                                              ----------------------------------------
        Net interest income after provision for loan losses        40,196         36,927        36,868
                                                              ----------------------------------------

Non-interest income:
  Remittance processing ...................................         7,277          7,187         6,605
  Trust and brokerage fees ................................         5,929          5,227         5,474
  Service charges on deposit accounts .....................         2,373          2,217         2,087
  Securities transactions, net ............................           211            110            21
  Gain on sales of mortgage loans, net ....................         1,368            828           212
  Other ...................................................         1,708          1,697         1,917
                                                              ----------------------------------------
        Total non-interest income .........................        18,866         17,266        16,316
                                                              ----------------------------------------

Non-interest expense:
  Salaries and employee benefits ..........................        18,721         17,761        18,274
  Occupancy ...............................................         2,376          2,297         2,220
  Equipment ...............................................         2,779          3,405         3,652
  Data processing fees ....................................         2,300          1,943         1,470
  Office supplies .........................................         1,261          1,535         1,236
  Service charges from correspondent banks ................           932            885           998
  Merger related professional fees ........................            --             --         2,544
  Reconciliation liability ................................            --         (2,500)           --
  Other ...................................................         4,792          4,960         4,375
                                                              ----------------------------------------
        Total non-interest expense ........................        33,161         30,286        34,769
                                                              ----------------------------------------

        Income before income taxes ........................        25,901         23,907        18,415
Income taxes ..............................................         8,520          7,736         6,426
                                                              ----------------------------------------
        Net income ........................................   $    17,381         16,171        11,989
                                                              ========================================

Per share data:
  Basic earnings per share ................................   $      1.61    $      1.48   $      1.08
  Weighted average shares of common stock outstanding .....    10,792,092     10,930,736    11,077,959
  Diluted earnings per share ..............................   $      1.60    $      1.45   $      1.06
  Weighted average shares of common stock and dilutive
    potential common shares outstanding ...................    10,878,823     11,138,290    11,300,674
</TABLE>
See accompanying notes to consolidated financial statements.

                                       40
<PAGE>

                             MAIN STREET TRUST, INC.
                                AND SUBSIDIARIES

           Consolidated Statements of Changes in Shareholders' Equity

                  Years Ended December 31, 2002, 2001 and 2000
                        (in thousands, except share data)
<TABLE>
                                                                                    Accumulated
                                                                                       Other
                                                                                   Comprehensive
                                            Common Stock      Paid-in    Retained      Income       Treasury Stock
                                          Shares     Amount   Capital    Earnings      (Loss)    Shares       Amount      Total
                                        -----------------------------------------------------------------------------------------
<S>                                     <C>          <C>      <C>        <C>       <C>          <C>         <C>          <C>
Balance, December 31, 1999 .........    11,107,684   $  111   $54,226    $65,106      $(3,362)  $     --    $      --    $116,081
Comprehensive Income:
  Net income .......................            --       --        --     11,989           --         --           --      11,989
  Net change in unrealized gain
    (loss) on securities available-
    for-sale, net of taxes of $2,051            --       --        --         --        3,976         --           --       3,976
  Reclassification adjustment,
    net of tax of $7 ...............            --       --        --         --          (14)        --           --         (14)
                                                                                                                         --------
        Comprehensive income .......                                                                                       15,951
                                                                                                                         --------
Fractional shares of common stock
  purchased following stock dividend
  and merger .......................          (344)      --       (11)        --           --         --           --         (11)
Stock appreciation rights ..........            --       --       (64)        --           --         --           --         (64)
Cash dividends ($0.40 per share) ...            --       --        --     (4,472)          --         --           --      (4,472)
Treasury stock transactions, net ...         4,242       --        71        (32)          --    117,786       (2,122)     (2,083)
                                        -----------------------------------------------------------------------------------------
Balance, December 31, 2000 .........    11,111,582      111    54,222     72,591          600    117,786       (2,122)    125,402
                                                                                                                        ---------
Comprehensive Income:
  Net income .......................            --       --        --     16,171           --         --           --      16,171
  Net change in unrealized gain
   (loss) on securities avaialbe-
   for-sale, net of taxes of
   $1,172 .........................             --       --        --         --        2,221         --           --       2,221
  Reclassification adjustment, net
    of tax of ($39) ...............             --       --        --         --          (71)        --           --         (71)
                                                                                                                        ---------
       Comprehensive income ........                                                                                       18,321
                                                                                                                        ---------
Fractional shares of common stock
  purchased following stock dividend          (301)      --        (6)        --           --         --           --          (6)
  Stock appreciation rights ........            --       --        23         --           --         --           --          23
  Cash dividends ($0.45 per share) .            --       --        --     (4,945)          --         --           --      (4,945)
  Treasury stock transactions, net .            --       --       (92)        (7)          --    149,997       (2,703)     (2,802)
                                        -----------------------------------------------------------------------------------------
  Balance, December 31, 2001 .......    11,111,281      111    54,147     83,810        2,750    267,783       (4,825)    135,993
                                                                                                                        ---------
Comprehensive Income:
  Net income .......................            --       --        --     17,381           --         --           --      17,381
  Net change in unrealized gain
    (loss) on securities available-
    for-sale, net of taxes of
    $1,159 .........................            --       --        --         --        1,153         --           --       1,153
  Reclassification adjustment,
    net of tax of $(84) ............            --       --        --         --         (127)        --           --        (127)
                                                                                                                        ---------
        Comprehensive income .......                                                                                       18,407
                                                                                                                        ---------
Stock appreciation rights ..........            --       --       (31)        --           --         --           --         (31)
  Cash dividends ($0.54 per share) .            --       --        --     (5,752)          --         --           --      (5,752)
  Issuance of new shares of common
    stock ..........................       108,038        1     1,221         --           --         --           --       1,222
  Treasury stock transactions, net .            --       --        --     (2,586)          --    487,264      (12,783)    (15,369)
                                        -----------------------------------------------------------------------------------------
  Balance, December 31, 2002 .......    11,219,319    $ 112   $55,337    $92,853       $3,776    755,047     $(17,608)   $134,470
                                        =========================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.

                                       41
<PAGE>

                             MAIN STREET TRUST, INC.
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                  Years Ended December 31, 2002, 2001 and 2000
                                 (in thousands)
<TABLE>
                                                                                  2002        2001          2000
                                                                               -----------------------------------
<S>                                                                            <C>          <C>          <C>
Cash flows from operating activities:
    Net income .............................................................   $  17,381    $  16,171    $  11,989
    Adjustments to reconcile net income to net cash
       provided by operating activities:
    Depreciation and amortization ..........................................       2,673        2,757        2,839
    Amortization (accretion) of bond premiums, net .........................       1,188          (78)         202
    Provision for loan losses ..............................................       1,450        2,670          804
    Deferred income taxes ..................................................      (1,016)      (1,643)         (26)
    Securities transactions, net ...........................................        (211)        (110)         (21)
    Federal Home Loan Bank stock dividend ..................................        (187)        (240)        (169)
    Gain on sales of mortgage loans, net ...................................      (1,368)        (828)        (212)
    Loss on disposal of premises and equipment .............................           3           41          587
    Proceeds from sales of mortgage loans originated for sale ..............     138,898      104,155       25,537
    Mortgage loans originated for sale .....................................    (131,727)    (110,012)     (25,728)
    Other, net .............................................................       1,283       (2,377)         647
                                                                               -----------------------------------
                  Net cash provided by operating activities ................      28,367       10,506       16,449
                                                                               -----------------------------------
Cash flows from investing activities:
    Net decrease (increase) in loans .......................................       7,172      (15,882)     (59,066)
    Proceeds from maturities and calls of investments in debt securities:
       Held-to-maturity ....................................................       2,956       32,239        3,456
       Available-for-sale ..................................................     116,835      140,054       38,727
    Proceeds from sales of investments in debt and equity securities:
       Available-for-sale ..................................................      44,732       29,567        9,619
    Purchases of investments in debt and equity securities:
       Held-to-maturity ....................................................     (25,158)     (21,744)      (3,054)
       Available-for-sale ..................................................    (150,268)    (223,994)     (51,581)
       Other equity securities .............................................      (1,970)        (750)      (1,099)
    Principal paydowns from mortgage-backed securities:
       Held-to-maturity ....................................................      17,272        9,948        4,503
       Available-for-sale ..................................................      16,012        6,127        2,272
    Return of principal on other equity securities .........................         106           31           --
    Purchases of premises and equipment ....................................      (1,811)      (1,192)      (1,769)
    Proceeds from sale of premises and equipment ...........................          71           35           --
                                                                               -----------------------------------
                  Net cash provided by (used in)  investing activities .....      25,949      (45,561)     (57,992)
                                                                               -----------------------------------
Cash flows from financing activities:
    Net (decrease) increase in deposits ....................................     (15,523)      44,177       44,857
    Net (decrease) increase in federal funds purchased, repurchase
      agreements, and notes payable ........................................      (4,556)      15,549       (9,482)
    Advances from Federal Home Loan Bank and other borrowings ..............      13,000        5,000       10,000
    Payments on Federal Home Loan Bank and other borrowings ................     (20,089)     (11,083)      (1,080)
    Cash dividends paid ....................................................      (5,634)      (4,540)      (3,869)
    Issuance of new shares of common stock, net ............................       1,222           --           --
    MSTI stock transactions, net ...........................................     (15,369)      (2,808)      (2,094)
                                                                               -----------------------------------
                  Net cash (used in) provided by financing activities ......     (46,949)      46,295       38,332
                                                                               ---------    ---------    ---------
                  Net increase (decrease) in cash and cash equivalents .....       7,367       11,240       (3,211)

Cash and cash equivalents at beginning of year .............................      95,379       84,139       87,350
                                                                               -----------------------------------
Cash and cash equivalents at end of year ...................................   $ 102,746    $  95,379    $  84,139
                                                                               ===================================

Supplemental disclosures of cash flow information:
  Cash paid during the year for:
     Interest ..............................................................   $  22,855    $  34,792    $  36,105
     Income taxes ..........................................................       9,061        8,775        6,684
     Real estate acquired through or in lieu of foreclosure ................         297           --           92
     Dividends declared not paid ...........................................       1,570        1,452        1,047
</TABLE>
See accompanying notes to consolidated financial statements.

                                       42
<PAGE>


                             MAIN STREET TRUST, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


1. Organization

Main Street Trust,  Inc. is a holding company whose  subsidiaries  BankIllinois,
The First National Bank of Decatur and FirsTech, Inc., (the "Company") provide a
full range of banking  services to individual  and corporate  customers  located
within  Champaign,  Decatur,  and  Shelbyville,  Illinois,  and the  surrounding
communities.  The  subsidiaries  are subject to competition from other financial
institutions  and  nonfinancial   institutions   providing  financial  products.
Additionally, the Company and its subsidiaries are subject to the regulations of
certain  regulatory   agencies  and  undergo  periodic   examinations  by  those
regulatory agencies.

2. Summary of Significant Accounting Policies

The  consolidated  financial  statements  of the Company  have been  prepared in
conformity with accounting principles generally accepted in the United States of
America and conform to predominant  practices within the banking  industry.  The
preparation  of  the  consolidated   financial  statements  in  conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
requires   management  to  make   estimates  and   assumptions,   including  the
determination  of the allowance for loan losses and the valuation of real estate
acquired in connection with foreclosure or in satisfaction of loans, that affect
the reported  amounts of assets and  liabilities  and  disclosure  of contingent
assets and liabilities at the date of the consolidated  financial statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

The  significant  accounting  policies used by the Company in the preparation of
the consolidated financial statements are summarized below:

(a)  Principles of Consolidation and Financial Statement Presentation

     The consolidated  financial  statements include the accounts of Main Street
     Trust,  Inc. and its wholly  owned  subsidiaries,  BankIllinois,  The First
     National  Bank of Decatur,  (the  "Banks")  and  FirsTech,  Inc.,  a retail
     payment processing  company.  During 2002, First Trust Bank of Shelbyville,
     previously a bank  subsidiary,  was merged into  BankIllinois.  Significant
     intercompany   accounts   and   transactions   have  been   eliminated   in
     consolidation.

     Property  held by the Trust &  Investments  Division in fiduciary or agency
     capacities   for  its  customers  is  not  included  in  the   accompanying
     consolidated  balance  sheets,  since  such  items  are not  assets  of the
     Company.

     The  Company  currently  operates  in two  industry  segments.  The primary
     business involves providing banking services to central Illinois. The Banks
     offer a full  range  of  financial  services  to  business  and  individual
     customers.  These services  include  demand,  savings,  time and individual
     retirement accounts;  commercial,  consumer (including automobile loans and
     personal  lines of credit),  agricultural,  and real estate  lending;  safe
     deposit and night depository services; farm management;  full service trust
     departments  that  offer  a wide  range  of  services  such  as  investment
     management,  acting as trustee, serving as guardian,  executor or agent and
     miscellaneous  consulting;  discount  brokerage  services and  purchases of
     installment  obligations from retailers,  primarily without  recourse.  The
     other  industry  segment  involves  retail  payment  processing.   FirsTech
     provides  the  following  services to  electric,  water and gas  utilities,
     telecommunication   companies,   cable   television  firms  and  charitable
     organizations:  retail lockbox  processing of payments delivered by mail on
     behalf of the biller;  processing of payments delivered by customers to pay
     agents such as grocery stores,  convenience stores and currency  exchanges;
     and  concentration  of payments  delivered by the Automated  Clearing House
     network,  money  management  software such as Quicken and through  networks
     such as Visa e-Pay and MasterCard  RPS. The Company  operates  primarily to
     manage its investment in the subsidiaries.  Company information is provided
     for  informational  purposes  only,  since it is not  considered a separate
     segment for reporting purposes.

                                       43
<PAGE>

     The  following  is a summary  of  selected  data for the  various  business
     segments as of and for the year ending December 31:
<TABLE>
                                   Banking     Remittance
                                  Services      Services       Company     Eliminations       Total
                                ---------------------------------------------------------------------
<S>                             <C>            <C>             <C>         <C>             <C>
2002
-----------------------------
Total interest income .......   $    63,207     $      88      $    210      $    (142)    $   63,363
Total interest expense ......        21,843            --            16           (142)        21,717
Provision for loan losses ...         1,450            --            --             --          1,450
Total non-interest income ...        12,259         7,396           (60)          (729)        18,866
Total non-interest expense ..        27,298         5,051         1,541           (729)        33,161
Income before income tax ....        24,875         2,433        (1,407)            --         25,901
Income tax expense ..........         8,110           974          (564)            --          8,520
Net income ..................        16,765         1,459          (843)            --         17,381
Total assets ................     1,110,691         6,774       137,243       (131,980)     1,122,728
Depreciation and amortization         2,131           512            30             --          2,673

2001
-----------------------------
Total interest income .......   $    73,122     $     135     $     111      $    (173)   $    73,195
Total interest expense ......        33,771            --            --           (173)        33,598
Provision for loan losses ...         2,670            --            --             --          2,670
Total non-interest income ...        10,669         7,543          (148)          (798)        17,266
Total non-interest expense ..        26,964         5,565        (1,445)          (798)        30,286
Income before income tax ....        20,386         2,113         1,408             --         23,907
Income tax expense ..........         6,355           790           591             --          7,736
Net income ..................        14,031         1,323           817             --         16,171
Total assets ................     1,143,675         7,208       138,392       (137,764)     1,151,511
Depreciation and amortization         2,178           549            30             --          2,757

2000
-----------------------------
Total interest income .......   $    74,346   $       137     $     172      $    (384)   $    74,271
Total interest expense ......        36,983            --            --           (384)        36,599
Provision for loan losses ...           804            --            --             --            804
Total non-interest income ...        10,013         7,434           174         (1,305)        16,316
Total non-interest expense ..        25,397         5,849         4,828         (1,305)        34,769
Income before income tax ....        21,175         1,722        (4,482)            --         18,415
Income tax expense ..........         6,587           593          (754)            --          6,426
Net income ..................        14,588         1,129        (3,728)            --         11,989
Total assets ................     1,081,001         6,606       129,942       (126,468)     1,091,081
Depreciation and amortization         2,292           523            24             --          2,839
</TABLE>

(b)  Investments in Debt and Equity Securities

     Debt securities  classified as held-to-maturity  are those securities which
     the  Company  has the  ability  and  intent to hold until  maturity.  These
     securities  are carried at amortized  cost,  in which the  amortization  of
     premiums and accretion of discounts, which are recognized as adjustments to
     interest income,  are recorded using methods which approximate the interest
     method.  These  methods  consider the timing and amount of  prepayments  of
     underlying   mortgages  in  estimating  future  cash  flows  on  individual
     mortgage-related  securities.  Unrealized  holding  gains  and  losses  for
     held-to-maturity  securities  are excluded from earnings and  shareholders'
     equity.

     Debt and  equity  securities  classified  as  available-for-sale  are those
     securities  that the Company  intends to hold for an  indefinite  period of
     time but not  necessarily  to  maturity.  Any  decision  to sell a security
     classified  as  available-for-sale  would  be  based  on  various  factors,
     including  significant movements in interest rates, changes in the maturity
     mix of the Company's  assets and liabilities,  liquidity needs,  regulatory
     capital   considerations,    and   other   similar   factors.    Securities
     available-for-sale  are carried at fair value. The difference  between fair
     value and cost,  adjusted  for  amortization  of premium and  accretion  of
     discounts,  results  in an  unrealized  gain or loss.  Unrealized  gains or
     losses are reported as accumulated other  comprehensive  income (loss), net
     of the  related  deferred  tax  effect.  Gains or  losses  from the sale of
     securities  are  determined  using  the  specific   identification  method.
     Premiums and discounts are  recognized  in interest  income using  methods,
     which approximate the interest method over their contractual lives.

                                       44
<PAGE>

     A decline in the market value of any available-for-sale or held-to-maturity
     security  below  cost that is deemed  other  than  temporary  is charged to
     earnings  and  results  in the  establishment  of a new cost  basis for the
     security.

     Non-marketable  equity  securities  include  other  investments  which  are
     carried at fair value as well as Federal  Reserve Bank stock and the Banks'
     required  investment  in the capital  stock of the  Federal  Home Loan Bank
     which are carried at cost which approximates fair value.

(c)  Loans

     Loans are stated at the principal amount outstanding,  net of the allowance
     for loan losses.  Interest is credited to income as earned,  based upon the
     principal amount outstanding.

     The accrual of interest on loans is  discontinued  when,  in the opinion of
     management,  the  borrower  is unable to meet  payments as they become due.
     Interest  accrued in the current year is reversed  against interest income,
     and prior  years'  interest is charged to the  allowance  for loan  losses.
     Interest  income on impaired  loans is  recognized  to the extent  interest
     payments are received and the principal is considered fully collectible.

     Mortgage  loans held for sale are carried at the lower of aggregate cost or
     estimated market value. Gains or losses on sales of loans held for sale are
     computed  using the  specific-identification  method and are  reflected  in
     income at the time of sale.

     The fair market value of servicing  rights on mortgage  loans that are sold
     with servicing  retained is capitalized.  The capitalized  servicing rights
     are amortized  against  income based on the  estimated  lives of the loans.
     Capitalized servicing rights are evaluated for impairment based on the fair
     value of the servicing rights and any impairment is reflected in income.

(d)  Allowance for Loan Losses

     The  allowance  for loan  losses is  increased  by  provisions  charged  to
     operations and is reduced by loan charge-offs  less recoveries.  Management
     utilizes an approach,  which  provides  for general and specific  valuation
     allowances,  that is based on current  economic  conditions,  past  losses,
     collection experience, risk characteristics of the portfolio, assessment of
     collateral  values by  obtaining  independent  appraisals  for  significant
     properties, and such other factors which, in management's judgment, deserve
     current recognition in estimating loan losses, to determine the appropriate
     level of the allowance for loan losses.

     The allowance for loan losses related to impaired loans that are identified
     for  evaluation is based on discounted  cash flow using the loan's  initial
     effective  interest  rate or the fair value,  less  selling  costs,  of the
     collateral for collateral dependent loans.

     Loans are categorized as "impaired" when,  based on current  information or
     events,  it is  probable  that the  Company  will be unable to collect  all
     amounts due,  including  principal  and interest,  in  accordance  with the
     contractual   terms  of  the  loan  agreement.   The  Company  reviews  all
     non-accrual and  substantially  delinquent  loans, as well as problem loans
     identified  by  management,  for  impairment as defined  above.  A specific
     reserve amount will be established  for impaired loans in which the present
     value of the expected cash flows to be generated is less than the amount of
     the loan recorded on the Company's books. As an alternative to discounting,
     the  Company  may use the  "fair  value"  of any  collateral  supporting  a
     collateral-dependent  loan in reviewing the necessity  for  establishing  a
     specific loan loss reserve  amount.  Specific  reserves will be established
     for  accounts  having a  collateral  deficiency  estimated to be $50,000 or
     more. The Company's  general  reserve is maintained at an adequate level to
     cover accounts having a collateral  deficiency of less than $50,000.  Loans
     evaluated  as groups or  homogeneous  pools of loans will be excluded  from
     this analysis.

     The Company utilizes their data processing system to identify loan payments
     not made by their  contractual  due date and  calculate  the number of days
     each loan exceeds the contractual due dates. The accrual of interest on any
     loan  is  discontinued  when,  in  the  opinion  of  management,  there  is
     reasonable doubt as to the collectibility of interest or principal.

                                       45
<PAGE>

     Management  believes  the  allowance  for loan losses is adequate to absorb
     probable  credit losses inherent in the loan  portfolio.  While  management
     uses available  information to recognize loan losses,  future  additions to
     the allowance for loan losses may be necessary based on changes in economic
     conditions.  In addition,  various regulatory agencies, as an integral part
     of their  examination  process,  periodically  review the  adequacy  of the
     allowance  for loan  losses.  Such  agencies  may  require  the  Company to
     recognize  additions  to the  allowance  for  loan  losses  based  on their
     judgments  of   information   available  to  them  at  the  time  of  their
     examination.

(e)  Premises and Equipment

     Premises and equipment are stated at cost less accumulated depreciation and
     amortization.  Depreciation  and  amortization  applicable to furniture and
     equipment  and  buildings  and  leasehold  improvements  is  charged to the
     related occupancy or equipment expense using  straight-line and accelerated
     methods  over the  estimated  useful lives of the assets.  Maintenance  and
     repairs are charged to operations as incurred.

(f)  Other Real Estate

     Other  real  estate,   included  in  other   assets  in  the   accompanying
     consolidated  balance  sheets,  is initially  recorded at fair value, if it
     will be held and used,  or at its fair  value less costs to sell if it will
     be disposed of. If, subsequent to foreclosure,  the fair value is less than
     the carrying  amount,  the difference is recorded as a valuation  allowance
     through a charge to income. Subsequent increases in fair value are recorded
     through a reversal of the valuation allowance, but not below zero. Expenses
     incurred in maintaining  the  properties  are charged to operations.  Other
     real estate  owned  totaled  $58,000 and $0 at December  31, 2002 and 2001,
     respectively.

(g)  Income Taxes

     Deferred tax assets and liabilities are recognized for the estimated future
     tax  consequences   attributable  to  differences   between  the  financial
     statement  carrying  amounts of existing  assets and  liabilities and their
     respective  tax bases.  Deferred  tax assets and  liabilities  are measured
     using  enacted  tax rates in effect for the year in which  those  temporary
     differences are expected to be recovered or settled. The effect on deferred
     tax assets and liabilities of a change in tax rates is recognized in income
     in the period that includes the enactment date.

(h)  Earnings Per Share

     Basic earnings per share is computed by dividing net income by the weighted
     average  number of common stock shares  outstanding.  Diluted  earnings per
     share is computed by dividing net income by the weighted  average number of
     common stock and dilutive potential common shares  outstanding.  Options to
     purchase shares of the Company's common stock and stock appreciation rights
     are the only dilutive  potential common shares. The weighted average number
     of dilutive  potential common shares is calculated using the treasury stock
     method.

     Earnings per share has been computed as follows:
<TABLE>
                                                                  2002          2001          2000
                                                             -----------------------------------------
<S>                                                          <C>             <C>           <C>
Net income ...............................................   $  17,381,000   $16,171,000   $11,989,000
Shares:
     Weighted average common shares outstanding ..........      10,792,092    10,930,736    11,077,959
     Dilutive effect of outstanding options, as determined
         by the application of the treasury stock method .          86,731       207,554       222,715
                                                             -----------------------------------------
     Weighted average common shares outstanding,
         as adjusted .....................................      10,878,823    11,138,290    11,300,674
                                                             =========================================
Basic earnings per share .................................   $        1.61   $      1.48   $      1.08
                                                             =========================================
Diluted earnings per share ...............................   $        1.60   $      1.45   $      1.06
                                                             =========================================
</TABLE>

(i)  Cash and Cash Equivalents

     For purposes of the  consolidated  statements of cash flows,  cash and cash
     equivalents  include  cash and due from  banks and  federal  funds sold and
     interest bearing  deposits.  Generally,  federal funds are sold for one-day
     periods.


                                       46
<PAGE>

(j)  Reclassification

     Certain amounts in the 2000 and 2001 consolidated financial statements have
     been   reclassified   to   conform   with  the  2002   presentation.   Such
     reclassifications have no effect on previously reported net income.

(k)  Stock Option Plans

     The  Company  has four  stock-based  compensation  plans which have been in
     existence for all periods presented,  and which are more fully described in
     Note 13. As permitted under accounting principles generally accepted in the
     United  States of America,  grants of options under the plans are accounted
     for under the recognition and measurement  principles of APB Opinion No 25.
     Accounting  for Stock  Issued to  Employees,  and related  interpretations.
     Because  options  granted  under the plans had an  exercise  price equal to
     market  value  of the  underlying  common  stock  on  the  grant  date,  no
     stock-based  employee  compensation  cost is  included in  determining  net
     income.  The  following  table  illustrates  the  effect on net  income and
     earnings  per share if the Company  had applied the fair value  recognition
     provisions  of  FASB  Statement  No.  123,   Accounting   for   Stock-Based
     Compensation, to stock-based employee compensation.
<TABLE>

                                                   2002         2001         2000
                                                ------------------------------------
<S>                                             <C>          <C>          <C>
Net income on common stock:
          As reported .......................   $   17,381   $   16,171   $   11,989
Deduct total stock-based compensation expense
  determined under the fair value method
  for all awards, net of related tax effects          (290)        (293)        (246)
                                                ------------------------------------
          Pro forma .........................   $   17,091   $   15,878   $   11,743
                                                ====================================
Basic earnings per share:
          As reported .......................   $     1.61   $     1.48   $     1.08
          Pro forma .........................         1.58         1.45         1.06
Diluted earnings per share:
          As reported .......................   $     1.60   $     1.45   $     1.06
          Pro forma .........................         1.57         1.43         1.04
</TABLE>

     The fair value of the stock options  granted has been  estimated  using the
     Black-Scholes  option-pricing  model with the  following  weighted  average
     assumptions.  The Black-Scholes  option-pricing model was developed for use
     in  estimating  the fair  value of traded  options,  which  have no vesting
     restrictions.  In  addition,  such  models  require  the use of  subjective
     assumptions,  including  expected stock price  volatility.  In management's
     opinion,  such valuation models may not necessarily provide the best single
     measure of option value.

                                         2002             2001           2000
                                        ---------------------------------------
Number of options granted ......        158,000         169,050         133,383
Risk-free interest rate ........          5.20%           5.05%           5.14%
Expected life, in years ........           8.00            6.97            8.80
Expected volatility ............         10.34%          14.10%          11.06%
Expected dividend yield ........          2.80%           2.23%           2.39%

(l)  Emerging Accounting Standards

     In  June  2001,  Statement  on  Financial  Accounting  Standards  No.  143,
     "Accounting  for  Asset  Retirement  Obligations"  was  issued  to  address
     financial  reporting  and  obligations  associated  with the  retirement of
     tangible  long-lived assets and the associated asset retirement costs. This
     Statement applies to all entities and to legal obligations  associated with
     the  retirement  of  long-lived  assets that  result from the  acquisition,
     construction,  development  or normal  operations  of a  long-lived  asset,
     except for certain  obligations of lessees.  Statement No. 143 is effective
     for financial  statements  issued for fiscal years beginning after June 15,
     2002.  Management  does not believe the adoption of Statement  No. 143 will
     have a significant impact on its financial statements.

                                       47
<PAGE>

     The Financial Accounting Standards Board has issued  Interpretation No. 45,
     "Guarantor's   Accounting  and  Disclosure   Requirements  for  Guarantees,
     Including   Indirect   Guarantees   of   Indebtedness   of   Others"  -  an
     interpretation of FASB Statement Nos. 5, 57, and 107 and rescission of FASB
     Interpretation No. 34. This interpretation elaborates on the disclosures to
     be made by a guarantor in its interim and annual financial statements about
     obligations under certain  guarantees that it has issued. It also clarifies
     that a guarantor is required to recognize, at the inception of a guarantee,
     a liability for the fair value of the obligation  undertaken in issuing the
     guarantee.  The initial  recognition and measurement of the  Interpretation
     are  applicable  on a prospective  basis to  guarantees  issued or modified
     after  December  15,  2002.  Implementation  of  these  provisions  of  the
     Interpretation  is not expected to have a material  effect on the Company's
     consolidated  financial  statements.  The  disclosure  requirements  of the
     Interpretation  are effective  for the  financial  statements of interim or
     annual periods ending after December 15, 2002, and have been adopted in the
     consolidated financial statements for December 31, 2002.

3.   Cash and Due from Banks

The  compensating  balances held at  correspondent  banks were  $47,424,000  and
$74,947,000 at December 31, 2002 and 2001, respectively. The Banks maintain such
compensating  balances with  correspondent  banks to offset charges for services
rendered by those  banks.  In addition,  the Banks were  required by the Federal
Reserve Bank to maintain reserves in the form of cash on hand or balances at the
Federal Reserve Bank. The balance of reserves held was $8,312,000 and $9,472,000
at December 31, 2002 and 2001, respectively.

4. Investments in Debt and Equity Securities

The amortized cost and fair values of investments in debt and equity  securities
(in thousands) were as follows:
<TABLE>
                                                                              Available-for-Sale
                                                                  ------------------------------------------
                                                                               Gross       Gross
                                                                  Amortized  Unrealized  Unrealized  Fair
                                                                     Cost      Gains       Losses    Value
                                                                  ------------------------------------------
<S>                                                                <C>        <C>         <C>        <C>
December 31, 2002
   U.S. Treasury and other
            government agencies ................................   $182,726   $  5,815   $      6   $188,535
   Mortgage-backed securities ..................................     29,987        927         30     30,884
   Obligations of states and political subdivisions ............     15,248        922          2     16,168
   Other .......................................................      6,375        322      1,668      5,029
                                                                   -----------------------------------------
                                                                   $234,336   $  7,986   $  1,706   $240,616
                                                                   =========================================

December 31, 2001
   U.S. Treasury and other
            government agencies ................................   $196,628   $  3,500   $    226   $199,902
   Mortgage-backed securities ..................................     27,852        433          6     28,279
   Obligations of states and political subdivisions ............     15,380        293         31     15,642
   Other .......................................................     22,408        959        694     22,673
                                                                   -----------------------------------------
                                                                   $262,268   $  5,185   $    957   $266,496
                                                                   =========================================

                                                                               Held-to-Maturity
                                                                   ------------------------------------------
December 31, 2002
   U.S. Treasury and other
            government agencies ................................   $  1,750   $      4   $     --   $  1,754
   Obligations of states and political subdivisions ............     43,218      1,787          1     45,004
   Mortgage-backed securities ..................................     23,595        184         48     23,731
                                                                   -----------------------------------------
                                                                   $ 68,563   $  1,975   $     49   $ 70,489
                                                                   =========================================

December 31, 2001
   U.S. Treasury and other
            government agencies ................................   $  1,750   $     66   $     --   $  1,816
   Obligations of states and political subdivisions ............     42,226        735         51     42,910
   Mortgage-backed securities ..................................     19,842        179         20     20,001
                                                                   -----------------------------------------
                                                                   $ 63,818   $    980   $     71   $ 64,727
                                                                   =========================================
</TABLE>

                                       48
<PAGE>

A summary of  non-marketable  equity  securities  (in thousands) at December 31,
2002 and 2001 is as follows:

                                                             2002          2001
                                                            --------------------
Federal Home Loan Bank Stock, at cost ..............        $3,732        $3,535

Federal Reserve Bank Stock, at cost ................           231           231
Other investments, at fair value ...................         3,068         1,342
                                                            ------        ------
                                                            $7,031        $5,108
                                                            ======        ======

Realized  gains and losses (in  thousands) on sales and maturities for the years
ended December 31, 2002, 2001 and 2000 were as follows:

                                                   2002        2001       2000
                                                 -------------------------------

Gross gains ............................         $ 1,016      $  563     $  320
Gross losses ...........................            (805)       (453)      (299)
                                                 -------------------------------
Net gains ..............................         $   211      $  110     $   21
                                                 ===============================
Applicable income taxes ................         $    84      $   39     $    7
                                                 ===============================

Investments in debt and equity  securities with a carrying value of $212,414,000
and $217,369,000  were pledged at December 31, 2002 and 2001,  respectively,  to
secure  public  deposits,  repurchase  agreements,  and for  other  purposes  as
required or permitted by law.

The amortized cost and fair value of  investments in debt and equity  securities
(in thousands) at December 31, 2002, by contractual  maturity,  are shown below.
Expected maturities may differ from contractual maturities because borrowers may
have the right to call or prepay  obligations with or without call or prepayment
penalties and certain securities require principal repayments prior to maturity.
Therefore,  these securities and equity securities with no stated maturities are
not included in the following maturity summary.
<TABLE>
                                         Available-for-Sale     Held-to-Maturity
                                        --------------------  --------------------
                                        Amortized    Fair     Amortized     Fair
                                           Cost      Value       Cost       Value
                                        ------------------------------------------
<S>                                     <C>         <C>       <C>         <C>
Due in one year or less ..............   $ 49,227   $ 49,819   $  9,911   $ 10,023
Due after one year through five years     143,061    148,764     30,729     32,075
Due after five years through ten years      4,968      5,335      4,328      4,660
Due after ten years ..................      1,721      1,793       --         --
                                         -----------------------------------------
                                         $198,977   $205,711   $ 44,968   $ 46,758
Mortgage-backed securities ...........     29,987     30,884     23,595     23,731
Marketable equity securities .........      5,372      4,021         --         --
Other equity securities ..............      7,018      7,031         --         --
                                         -----------------------------------------
              Total debt securities ..   $241,354   $247,647   $ 68,563   $ 70,489
                                         =========================================
</TABLE>

5. Loans

A summary of loans (in thousands),  by classification,  at December 31, 2002 and
2001 is as follows:

                                                           2002            2001
                                                         -----------------------
Commercial, financial, and agricultural ..........       $234,045       $246,042
Real estate ......................................        343,827        316,693
Installment and consumer .........................         95,529        119,585
                                                         -----------------------
                                                         $673,401       $682,320
Less:
   Allowance for loan losses .....................          9,259          9,259
                                                         -----------------------
                                                         $664,142       $673,061
                                                         =======================

                                       49
<PAGE>

The Company makes  commercial,  financial,  and agricultural;  real estate;  and
installment and consumer loans to customers  located in central Illinois and the
surrounding  communities.  As such, the Company is susceptible to changes in the
economic environment in central Illinois.

During  2002,  2001 and  2000,  the  Company  sold  approximately  $138,898,000,
$104,155,000 and $25,537,000, respectively, of residential mortgage loans in the
secondary  market,  primarily to Fannie Mae and Bank of America.  Gross gains of
approximately   $1,385,000,   $856,000  and   $228,000,   and  gross  losses  of
approximately  $17,000,  $28,000 and $16,000,  were realized on the sales during
2002, 2001 and 2000, respectively. Capitalized mortgage servicing rights totaled
$544,000 and $634,000 at December 31, 2002 and 2001, respectively.

Mortgage  loans  serviced  for  others  are  not  included  in the  accompanying
consolidated financial statements.  The unpaid balances of these loans consisted
of the following (in thousands) at December 31, 2002, 2001 and 2000:

                                                  2002         2001       2000
                                                --------------------------------

Fannie Mae .................................    $137,888     $107,950   $111,060
Freddie Mac ................................       6,250        4,216      1,051
Illinois Housing Development Authority .....       1,655        2,288      2,759

In the  normal  course  of  business,  loans  are made to  directors,  executive
officers,  and  principal  shareholders  of the Company and to parties which the
Company or its directors,  executive officers, and shareholders have the ability
to  significantly  influence  its  management  or  operating  policies  (related
parties). The terms of these loans, including interest rates and collateral, are
similar to those prevailing for comparable transactions with other customers and
do not involve more than a normal risk of  collectibility.  Activity  associated
with  loans (in  thousands)  made to  related  parties  during  2002,  including
beginning balances attributable to changes in relationship due to new directors,
executive officers and principal shareholders was as follows:

                                                                         2002
                                                                       --------

Balance, January 1 ............................................        $ 32,470
Balances added due to changes in relationship .................          15,289
New loans .....................................................          46,107
Repayments.....................................................         (44,249)
                                                                       --------
Balance, December 31 ..........................................        $ 49,617
                                                                       ========

At  December  31,  2002,  one to four  family  real  estate  mortgage  loans  of
approximately  $95,385,000 were pledged to secure advances from the Federal Home
Loan Bank, and  approximately  $29,098,000 of consumer loans were pledged to the
Federal Reserve Bank to secure potential future borrowings from the Fed Discount
Window.

Activity in the allowance for loan losses (in thousands) for 2002, 2001 and 2000
was as follows:

                                                    2002      2001        2000
                                                  ------------------------------

Balance, beginning of year .....................  $ 9,259    $ 8,879    $ 8,682
Provision charged to expense ...................    1,450      2,670        804
Loans charged off ..............................   (1,927)    (2,673)    (1,252)
Recoveries on loans previously charged off .....      477        383        645
                                                  ------------------------------
Balance, end of year ...........................  $ 9,259    $ 9,259    $ 8,879
                                                  ==============================

                                       50
<PAGE>

The following table presents summary data on nonaccrual and other impaired loans
(in thousands) at December 31, 2002, 2001 and 2000:

                                                 2002     2001      2000
                                               --------------------------
Impaired loans on nonaccrual ...............   $   764   $   125   $   97
Impaired loans continuing to accrue interest        --        --       --
                                               --------------------------
Total impaired loans .......................   $   764   $   125   $   97
                                               ==========================
Other non-accrual loans not classified
    as impaired ............................   $    628   $3,216   $  505
                                               ==========================
Loans contractually past due 90 days or
    more, still accruing interest and not
    classified as impaired .................   $    829   $1,774   $  846
                                               ==========================
Allowance for loan losses on impaired loans    $    115   $   19   $   15
                                               ==========================
Impaired loans for which there is no related
    allowance for loan losses ..............   $    --    $   --   $   --
                                               ==========================
Average recorded investment in impaired
    loans ..................................   $    515   $  142   $   19
                                               ==========================
Interest income recognized from impaired
    loans ..................................   $     --   $   --   $   --
                                               ==========================
Cash basis interest income recognized from
    impaired loans .........................   $      6   $    5   $   --
                                               ==========================

6. Premises and Equipment

A summary of premises and equipment (in thousands) at December 31, 2002 and 2001
is as follows:

                                                               2002        2001
                                                             -------------------
Land ...................................................     $ 4,788     $ 4,783
Furniture and equipment ................................      14,889      14,119
Buildings and leasehold improvements ...................      23,388      22,669
                                                             -------------------
                                                              43,065      41,571
Less accumulated depreciation and amortization .........      24,716      22,312
                                                             -------------------
                                                             $18,349     $19,259
                                                             ===================

Depreciation and amortization expense was $2,647,000,  $2,731,000 and $2,813,000
for 2002, 2001 and 2000, respectively.

The  Company  leases   various   operating   facilities   and  equipment   under
noncancellable  operating  lease  arrangements.  These leases  expire at various
dates through March 2008 and have renewal  options to extend the lease terms for
various  dates.  The rental  expense for these  operating  leases was  $240,000,
$239,000 and $202,000 in 2002, 2001 and 2000, respectively.

Minimum  annual  rental  payments   required  under  the  operating  leases  (in
thousands),  which  have  initial  or  remaining  terms in excess of one year at
December 31, 2002 are as follows:

2003                                                      $         207
2004                                                                193
2005                                                                136
2006                                                                129
2007                                                                110
Thereafter                                                            2
                                                          -------------
                                                          $         777
                                                          =============

                                       51
<PAGE>

7. Deposits

The  aggregate  amount of time  certificate  of  deposits  in  denominations  of
$100,000 or more was  $118,173,000  and  $140,042,000  at December  31, 2002 and
2001,  respectively.  As of December 31, 2002, the scheduled  maturities of time
deposits (in thousands) were as follows:

2003                                                            $233,120
2004                                                              56,484
2005                                                              30,443
2006                                                               9,933
2007                                                              15,765
                                                                --------
                                                                $345,745
                                                                ========

8. Federal Funds Purchased, Repurchase Agreements, and Notes Payable

A summary of short-term  borrowings (in thousands) at December 31, 2002 and 2001
is as follows:

                                                               2002        2001
                                                             -------------------

Federal funds purchased ................................     $ 3,700     $ 5,725
U.S. Treasury demand notes .............................       1,000       2,201
Securities sold under agreements to repurchase .........      75,951      77,281
                                                             -------------------
                                                             $80,651     $85,207
                                                             ===================

Information  relating to  short-term  borrowings  (dollars in  thousands)  is as
follows:
<TABLE>
                                                     2002         2001         2000
                                                 --------------------------------------
<S>                                              <C>           <C>           <C>
Federal funds purchased:
   Average daily balance .....................   $    4,599    $    4,629    $    3,549
   Maximum balance at month-end ..............   $   21,300    $   12,090    $   11,860
   Weighted average interest rate at year-end         0.50%         1.29%         5.13%
   Weighted average interest rate for the year        1.70%         4.36%         4.95%

Securities sold under agreements to
   repurchase:
   Average daily balance .....................   $   62,298    $   68,061    $   64,173
   Maximum balance at month-end ..............   $   75,951    $   77,281    $   80,787
   Weighted average interest rate at year-end         1.36%         2.27%         5.32%
   Weighted average interest rate for the year        1.71%         3.32%         5.28%

U.S. Treasury demand notes
   Average daily balance .....................   $    1,459    $    2,228    $    2,588
   Maximum Balance at month-end ..............   $    4,437    $    5,186    $    5,330
   Weighted average interest rate at year-end         1.14%         2.70%         6.28%
   Weighted average interest rate for the year        1.58%         4.12%         6.29%
</TABLE>

The securities  underlying the agreements to repurchase are under the control of
the Banks.

9. Federal Home Loan Bank Advances and Other Borrowings

A summary  of  Federal  Home  Loan Bank  (FHLB)  advances  and other  borrowings
(dollars in thousands) at December 31, 2002 is as follows:
<TABLE>
                                                                  December 31
                                  --------------------------------------------------------------------
                                                             2002                               2001
                                  -------------------------------------------------------     --------
                                                                                Weighted
                                     FHLB             Other                      Average
                                   Advances        Borrowings       Total          Rate        Total
                                  --------------------------------------------------------------------
<S>                               <C>              <C>             <C>          <C>           <C>
Maturing in year ending:
   2002                           $      -            $  -         $    -              -      $  7,023
   2003                                  -              23             23          4.75%            23
   2004                                  -              23             23          4.75%            23
   2005                                  -              23             23          4.75%            23
   2006                              5,000              23          5,023          5.68%         5,023
   2007                              2,668              23          2,691          6.82%         2,757
   2008                             20,000              23         20,023          5.23%        20,023
                                  --------------------------------------------------------------------
                                  $ 27,668           $ 138       $ 27,806          5.46%     $  34,895
                                  ====================================================================
</TABLE>

                                       52
<PAGE>

The terms of a security  agreement  with the FHLB require the Banks to pledge as
collateral for advances both qualifying  first mortgage loans in an amount equal
to at least  167% of these  advances  and all  stock of the FHLB.  Advances  are
subject to restrictions or penalties in the event of prepayment. The Banks had a
total remaining borrowing capacity with the FHLB of approximately $46,982,000 at
December 31, 2002 at a rate equal to the FHLB current advance rates.

The  other  borrowings  were  for the  purchase  of land at a cost of  $266,000.
Principal of $23,000 and annual interest is due March 8th of each year until the
balance has been paid in full.  Interest is based on the prime rate at March 8th
of each year. The rate at December 31, 2002 was 4.75%.

10. Line of Credit

The Company has an  unsecured  line of credit of  $5,000,000  from a third party
lender. As of December 31, 2002, the entire line was available.

11. Income Taxes

Federal income tax expense (in thousands) for 2002,  2001 and 2000 is summarized
as follows:

                                        2002             2001              2000
                                      ------------------------------------------

Current .....................         $ 9,536          $ 9,379          $ 6,452
Deferred ....................          (1,016)          (1,643)             (26)
                                      ------------------------------------------
Total .......................         $ 8,520          $ 7,736          $ 6,426
                                      ==========================================

Actual income tax expense (in thousands) for 2002, 2001 and 2000 differ from the
"expected" income taxes (computed by applying the maximum U.S. federal corporate
income tax rate of 35% to earnings before income taxes) as follows:

                                                  2002        2001        2000
                                               ---------------------------------

Computed "expected" income taxes .........     $ 9,066      $ 8,367     $ 6,445
Tax-exempt interest income, net of
   disallowed interest expense ...........        (764)        (718)       (646)
Nondeductible merger expenses ............          --           --         509
Other, net ...............................         218           87         118
                                               ---------------------------------
                                               $ 8,520      $ 7,736     $ 6,426
                                               =================================

The tax  effects  of  temporary  differences  (in  thousands)  that give rise to
significant  portions of the deferred tax assets and deferred tax liabilities at
December 31, 2002 and 2001 are as follows:

                                                                2002      2001
                                                              ------------------
Deferred tax assets:
   Allowance for loan losses ..............................   $ 3,347   $ 3,102
   Deferred compensation ..................................     1,611     1,631
   Stock appreciation rights ..............................        73        85
   Other employee benefits ................................       115       133
   Severance payable ......................................        --        15
   Phantom Stock ..........................................       225        49
   Other ..................................................       144        --
                                                              ------------------
         Total deferred tax assets ........................   $ 5,515   $ 5,015
                                                              ------------------
Deferred tax liabilities:
   Unrealized holding gain on available-for-sale securities   $(2,517)  $(1,442)
   Premises and equipment .................................      (852)   (1,124)
   Mortgage servicing rights ..............................      (153)     (229)
   Deferred loan fees .....................................       (93)     (104)
   Discount accretion .....................................      (138)     (161)
   FHLB Stock Dividend ....................................      (248)     (176)
   Other ..................................................        --      (206)
                                                              ------------------
         Total deferred tax liabilities ...................   $(4,001)  $(3,442)
                                                              ------------------
         Net deferred tax assets ..........................   $ 1,514   $ 1,573
                                                              ==================

                                       53
<PAGE>

12. Retirement Plans

The  Company  has  established  a profit  sharing  plan  and a  401(k)  plan for
substantially  all  employees  who meet the  eligibility  requirements.  Through
December 31, 2002, the 401(k) plan allowed for participants' contributions of up
to 15% of gross  salary,  the first 6% of which was  available for the Company's
50% match. The profit sharing plan is non-contributory. All contributions to the
profit sharing plan are at the discretion of the Company. Total contributions by
the Company  totaled  $926,000,  $746,000 and $928,000 for 2002,  2001 and 2000,
respectively.

Certain key officers and directors  participate in various deferred compensation
or supplemental  retirement agreements with the Company. The Company accrues the
liability  for these  agreements  based on the  present  value of the amount the
employee or  director is  currently  eligible to receive.  The Company  recorded
expenses  of  $281,000,   $281,000   and  $280,000  in  2002,   2001  and  2000,
respectively, related to these agreements.

The Company has a deferred  compensation  plan for nonemployee  directors of the
Company in which a participating  director may defer  directors' fees in a fixed
income  fund  or,  alternatively,  in the form of  "phantom  stock  units."  For
directors  electing to receive phantom stock, a deferred  compensation  account,
included in other  liabilities on the  consolidated  balance sheet,  is credited
with  phantom  stock units.  Phantom  stock units shall also be increased by any
dividends  or stock  splits  declared by the  Company.  At December 31, 2002 and
2001,  $305,000 and $286,000 had been deferred from this plan, which represented
23,326 and 22,746 phantom stock units.

13. Stock Options and Related Plans

In 2000, after the merger, the Company established a stock incentive plan, which
provides  for the granting of options of the  Company's  common stock to certain
directors,  officers and employees.  This plan provides for the granting of both
qualified and non-qualified options.  Existing director options are fully vested
and exercisable on the date granted while existing  officer and employee options
vest,  and thus become  exercisable,  ratably over a three-year  period from the
date granted. Under the 2000 incentive plan, the Company has outstanding options
of 441,522 shares and 1,763,478 remain eligible for grant. This is the Company's
only existing stock incentive plan.

Additionally,  in  connection  with the merger,  the Company  assumed all of the
outstanding  options under First  Decatur  Bancshares,  Inc.'s and  BankIllinois
Financial  Corporation's stock option and incentive plans. There were four plans
in place at the time of the merger. All of the options granted under these prior
plans  fully  vested at the time of the merger and no  additional  options  were
available for grant after the merger.  One of the plans included the granting of
options in tandem with stock appreciation  rights ("SAR's").  As of December 31,
2002,  there were options  outstanding for an aggregate of 147,728 shares of the
Company's common stock and 15,252 SAR's under the prior plans.

The following is a summary of the changes in options outstanding under the stock
incentive and stock option plans:
<TABLE>
                                       2002                          2001                         2000
                              -------------------------------------------------------------------------------------
                                              Grant                        Grant                         Grant
                                              Price                        Price                         Price
                               Shares         Range          Shares        Range          Shares         Range
                              -------------------------------------------------------------------------------------
<S>                           <C>         <C>                <C>       <C>                <C>       <C>
Options outstanding,
  beginning of year .......    868,998    $ 5.36 - $19.76    726,273   $ 5.36 - $19.76    604,810   $ 5.36 - $19.76
Granted ...................    158,000    $18.60 - $18.60    169,050   $17.50 - $17.50    133,383   $18.37 - $18.37
Exercised .................   (428,553)   $ 5.36 - $19.76    (17,360)  $ 5.36 - $12.05     (6,827)  $ 5.36 - $16.86
Options forfeited .........     (9,195)   $17.50 - $18.60     (8,965)  $16.86 - $19.76     (5,093)  $12.05 - $19.76
                              -------------------------------------------------------------------------------------
Options outstanding,
  end of year .............    589,250    $ 6.92 - $19.76    868,998   $ 5.36 - $19.76    726,273   $ 5.36 - $19.76
                              =====================================================================================
Options exercisable,
  end of year .............    493,893    $ 6.92 - $19.76    784,769   $ 5.36 - $19.76    687,778   $ 5.36 - $19.76
                              =====================================================================================
Weighted average fair value
  of options granted ......                      $   3.36                    $    3.73                    $    2.20
                                                 ========                    =========                    =========
</TABLE>

                                       54
<PAGE>

<TABLE>
                       Options Outstanding                                Options Exercisable
------------------------------------------------------------------    --------------------------
                                         Weighted
                      Outstanding        Average       Weighted       Exercisable     Weighted
    Range                as of          Remaining       Average          as of        Average
     of               December 31,     Contractual     Exercise       December 31,    Exercise
 Exercise price          2002             Life          Price            2002          Price
------------------------------------------------------------------    -------------------------
<S>                   <C>              <C>             <C>            <C>             <C>
$ 6.92 - $ 7.90          15,252             2.0        $  6.92           15,252       $  6.92
$ 7.90 - $ 9.88          21,147             1.0           9.24           21,147          9.24
$15.81 - $17.78         202,808             6.4          17.36          170,897         17.33
$17.78 - $19.76         350,043             7.0          18.73          286,597         18.77
                      -----------------------------------------------------------------------
                        589,250             6.4        $ 17.61          493,893       $ 17.50
                      =======================================================================
</TABLE>

14. Dividend Restrictions

Without prior approval of the  Comptroller  of the Currency,  The First National
Bank of Decatur is restricted by national  banking laws as to the maximum amount
of  dividends  it can pay in any  calendar  year to The First  National  Bank of
Decatur's  retained net profits (as defined) for that year and the two preceding
years.  At December 31, 2002,  The First  National Bank of Decatur had available
retained  earnings of  approximately  $8,179,000  for the  payment of  dividends
without obtaining prior regulatory approval.

Without  prior  approval,   BankIllinois  is  restricted  by  Illinois  law  and
regulations of the Office of Banks and Real Estate,  State of Illinois,  and the
Federal Deposit  Insurance  Corporation as to the maximum amount of dividends it
can pay to its  parent to the  balance  of the  retained  earnings  account,  as
adjusted (as defined). At December 31, 2002, BankIllinois had available retained
earnings  of  approximately  $43,629,000  for the payment of  dividends  without
obtaining prior regulatory approval.

15. Condensed Financial Information of Parent Company

Following are the condensed  balance sheets as of December 31, 2002 and 2001 and
the related  condensed  statements  of income and cash flows for the years ended
December 31, 2002, 2001 and 2000 for Main Street Trust, Inc.:

                            Condensed Balance Sheets
                            ------------------------
                                 (in thousands)

                                                           2002           2001
                                                        ------------------------
Assets:
   Cash ..........................................       $  2,287       $  5,411
   Investment in banks ...........................        118,251        117,550
   Investment in FirsTech ........................          6,524          7,065
   Investment in other securities ................          6,875          6,708
   Other assets ..................................          3,306          2,384
                                                         -----------------------
                                                         $137,243       $139,118
                                                         =======================
Liabilities and shareholders' equity:
   Dividends payable .............................       $  1,570       $  1,452
   Other liabilities .............................          1,203          1,673
   Shareholders' equity ..........................        134,470        135,993
                                                         -----------------------
                                                         $137,243       $139,118
                                                         =======================

                                       55
<PAGE>

                         Condensed Statements of Income

                                 (in thousands)
<TABLE>

                                                       2002      2001        2000
                                                     -----------------------------
<S>                                                  <C>        <C>        <C>
Revenue:
    Dividends received from subsidiaries .........   $20,000    $12,000    $ 5,359
    Interest income on deposits ..................        54         39         87
    Income on securities .........................       152         72         85
    Securities transactions, net .................      (193)      (279)        42
    Other ........................................       136        131        132
                                                     -----------------------------
       Total revenue .............................    20,149     11,963      5,705
                                                     -----------------------------

Expenses:
    Reconciliation liability .....................        --     (2,500)        --
    Merger related professional fees .............        --         --      2,544
    Other ........................................     1,556      1,055      2,285
                                                     -----------------------------
       Total expense ............................      1,556     (1,445)     4,829
                                                     -----------------------------

       Income before applicable income tax expense
       (benefit) and equity in undistributed
       income of subsidiaries ....................    18,593     13,408        876
Applicable income tax expense (benefit) ..........      (564)       591       (754)
Equity in undistributed income of subsidiaries ...    (1,776)     3,354     10,359
                                                     -----------------------------
       Net income ................................   $17,381    $16,171    $11,989
                                                     =============================
</TABLE>


                       Condensed Statements of Cash Flows

                                 (in thousands)
<TABLE>
                                                           2002        2001        2000
                                                         --------------------------------
<S>                                                      <C>         <C>         <C>
Cash flows from operating activities:
    Net income .......................................   $ 17,381    $ 16,171    $ 11,989
    Adjustments to reconcile net income to net
        cash provided by operating activities:
        Equity in undistributed income of subsidiaries      1,776      (3,354)    (10,359)
        Depreciation .................................         30          30          24
        Other, net ...................................       (812)     (1,649)        964
                                                         --------------------------------
            Net cash provided by operating activities      18,375      11,198       2,618
                                                         --------------------------------

Cash flows from investing activities:
    Equity securities transactions, net ..............     (1,687)        (37)     (2,508)
    Other, net .......................................         --         (12)         27
                                                         --------------------------------
            Net cash used in investing activities ....     (1,687)        (49)     (2,481)
                                                         --------------------------------

Cash flows from financing activities:
    Treasury stock transactions, net .................    (15,369)     (2,802)     (2,057)
    Fractional shares purchased following stock
      dividend and merger ............................         --          (6)        (11)
    Cash dividends paid ..............................     (5,634)     (4,540)     (3,869)
    Issuance of new shares of common stock ...........      1,222          --          --
    Other, net .......................................        (31)         23          37
                                                         --------------------------------
            Net cash used in financing activities
                                                          (19,812)     (7,325)     (5,900)
                                                         --------------------------------
Cash at beginning of year ............................      5,411       1,587       7,350
                                                         --------------------------------
Cash at end of year ..................................   $  2,287    $  5,411    $  1,587
                                                         ================================
</TABLE>

                                       56
<PAGE>

16. Quarterly Results of Operations (Unaudited) (in thousands,  except per share
    data)
<TABLE>
                                                                 Year Ended December 31, 2002
                                                                       Three Months Ended
                                                        ----------------------------------------------
                                                        December 31  September 30   June 30   March 31
                                                        ----------------------------------------------
<S>                                                     <C>          <C>            <C>       <C>
Interest income ......................................    $15,265       $15,871     $16,020   $16,207
Interest expense .....................................      4,951         5,399       5,540     5,827
                                                          -------------------------------------------
          Net interest income ........................     10,314        10,472      10,480    10,380
Provision for losses on loans ........................        460           330         330       330
                                                          -------------------------------------------
          Net interest income after
               provision for losses
               on loans ..............................      9,854        10,142      10,150    10,050
Non-interest income ..................................      4,709         4,638       4,765     4,754
Non-interest expense .................................      7,912         8,091       8,960     8,198
                                                          -------------------------------------------
          Income before income taxes .................      6,651         6,689       5,955     6,606
Income taxes .........................................      2,202         2,210       1,912     2,196
                                                          -------------------------------------------

         Net income ..................................      4,449         4,479       4,043     4,410
                                                          ===========================================

Basic earnings per share .............................    $  0.42       $  0.43     $  0.36   $  0.40
                                                          ===========================================

Diluted earnings per share ...........................    $  0.42       $  0.42     $  0.36   $  0.40
                                                          ===========================================
</TABLE>

<TABLE>
                                                                       Year Ended December 31, 2001
                                                                              Three Months Ended
                                                             ------------------------------------------------
                                                             December 31   September 30    June 30   March 31
                                                             ------------------------------------------------
<S>                                                          <C>           <C>             <C>       <C>
Interest income .............................................   $17,278      $18,040       $18,756   $19,121
Interest expense ............................................     6,868        8,305         8,846     9,579
                                                                --------------------------------------------
          Net interest income ...............................    10,410        9,735         9,910     9,542
Provision for losses on loans ...............................     1,825          235           375       235
                                                                --------------------------------------------
          Net interest income after
               provision for losses
               on loans .....................................     8,585        9,500         9,535     9,307
Non-interest income .........................................     4,468        4,366         4,291     4,141
Non-interest expense ........................................     6,376        7,838         7,952     8,120
                                                                --------------------------------------------
          Income before income taxes ........................     6,677        6,028         5,874     5,328
Income taxes ................................................     2,282        1,984         1,810     1,660
                                                                --------------------------------------------

         Net income .........................................   $ 4,395      $ 4,044       $ 4,064   $ 3,668
                                                                ============================================

Basic earnings per share ....................................   $  0.40      $  0.37       $  0.37   $  0.34
                                                                ============================================

Diluted earnings per share ..................................   $  0.40      $  0.36       $  0.36   $  0.33
                                                                ============================================
</TABLE>

                                       57
<PAGE>

17. Disclosures About Commitments and Financial Instruments

The Company is a party to financial instruments with  off-balance-sheet  risk in
the normal  course of business  to meet the  financing  needs of its  customers.
These  financial  instruments  include  commitments to extend credit and standby
letters of credit.  Those instruments  involve, to varying degrees,  elements of
credit  and  interest  rate  risk  in  excess  of  amounts   recognized  in  the
consolidated  balance  sheets.  The  contractual  amounts  of those  instruments
reflect  the extent of  involvement  the Company  has in  particular  classes of
financial instruments.

The  Company's  exposure  to credit loss in the event of  nonperformance  by the
other party to the financial  instrument  for  commitments  to extend credit and
standby  letters of credit is  represented  by the  contractual  amount of those
instruments. The Company uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments.  Management
does not anticipate any significant losses as a result of these transactions.

The following table summarizes  these financial  instruments and commitments (in
thousands) at December 31, 2002 and 2001:

                                                             2002         2001
                                                           ---------------------
Financial instruments whose contract amounts
  represent credit risk:
  Commitments ........................................     $201,181     $173,705
  Standby letters of credit ..........................       11,563        3,540

The majority of  commitments  are  agreements  to extend credit to a customer as
long as there is no  violation of any  condition  established  in the  contract.
Commitments,   principally   variable  interest  rates,   generally  have  fixed
expiration dates or other termination  clauses and may require payment of a fee.
Since many of the  commitments  are expected to expire without being drawn upon,
the  total  commitment   amounts  do  not  necessarily   represent  future  cash
requirements.  For  commitments  to extend  credit,  the Company  evaluates each
customer's  creditworthiness  on a case-by-case  basis. The amount of collateral
obtained,  if deemed necessary by the Company upon extension of credit, is based
on  management's  credit  evaluation.  Collateral  held varies,  but may include
accounts   receivable;   inventory;   property,   plant   and   equipment;   and
income-producing  commercial  properties.  Also included in commitments is $1.75
million to purchase other equity securities.

Standby  letters of credit are  conditional  commitments  issued by the Banks to
guarantee the performance of a customer to a third party.  Those  guarantees are
primarily  issued to support  public and  private  borrowing  arrangements  and,
generally,  have terms of one year or less.  The credit risk involved in issuing
letters of credit is  essentially  the same as that  involved in extending  loan
facilities to customers.  The Banks may hold collateral,  which include accounts
receivables, inventory, property and equipment, and income producing properties,
supporting those  commitments,  if deemed  necessary.  In the event the customer
does not perform in accordance  with the terms of the  agreement  with the third
party, the Banks would be required to fund the commitment. The maximum potential
amount of future  payments the Banks could be required to make is represented by
the contractual  amount shown in the summary above. If the commitment is funded,
the banks would be entitled to seek recovery from the customer.  At December 31,
2002 and 2001,  no amounts  have been  recorded  as  liabilities  for the Banks'
potential obligations under these guarantees.

Following is a summary of the carrying  amounts and fair values of the Company's
financial instruments at December 31, 2002 and 2001:
<TABLE>
                                                      2002                   2001
                                               -------------------    ------------------
                                               Carrying    Fair      Carrying    Fair
                                                Amount     Value      Amount     Value
                                               -----------------------------------------
<S>                                            <C>        <C>        <C>        <C>
Assets:
   Cash and cash equivalents ...............   $102,746   $102,746   $ 95,379   $ 95,379
   Investments in debt and equity securities    316,210    318,136    335,422    336,331
   Mortgage loans held for sale ............      2,972      2,972      8,775      8,775
   Loans ...................................    664,142    685,675    673,061    705,391
   Accrued interest receivable .............      7,315      7,315      8,890      8,890
   Cash surrender value of life insurance ..      5,026      5,026      4,611      4,611
Liabilities:
   Deposits ................................   $868,586   $885,487   $884,109   $885,208
   Federal funds purchased, repurchase
        and notes payable ..................     80,651     80,692     85,207     83,076
   FHLB advances and other borrowings ......     27,806     28,963     34,895     39,337
   Accrued interest payable ................      2,252      2,252      3,390      3,390
</TABLE>

                                       58
<PAGE>

Management's fair value estimates,  methods, and assumptions are set forth below
for the Company's financial instruments.

Cash and Cash Equivalents

The carrying value of cash and cash equivalents  approximates  fair value due to
the  relatively  short period of time between the  origination of the instrument
and its expected realization.

Investments in Debt and Equity Securities

The fair value of investments in debt and equity  securities is estimated  based
on bid prices received from securities dealers.

Mortgage Loans Held For Sale

Fair values of  mortgage  loans held for sale are based on  commitments  on hand
from investors or prevailing market prices.

Loans

Fair  values  are  estimated  for  portfolios  of loans with  similar  financial
characteristics.  Loans are  segregated by type such as  commercial,  commercial
real estate,  residential mortgage, and consumer.  Each loan category is further
segmented  into fixed and  adjustable  rate interest terms and by performing and
nonperforming  categories.  The fair value of performing  loans is calculated by
discounting  scheduled cash flows through the estimated maturity using estimated
market discount rates equal to rates at which loans,  similar in type,  would be
originated at December 31, 2002 and 2001.  Estimated  maturities  are based upon
the average remaining contractual lives for each loan classification. Fair value
for nonperforming loans is based on the use of discounted cash flow techniques.

Accrued Interest Receivable

The carrying value of accrued interest receivable approximates fair value due to
the  relatively  short period of time between the  origination of the instrument
and its expected realization.

Cash Surrender Value of Life Insurance

Life insurance  agreements  reprice  periodically with no significant  change in
credit risk. Fair values approximate carrying value for these agreements.

Deposit Liabilities

The fair value of deposits with no stated maturity, such as non-interest bearing
and interest  bearing demand deposits and savings deposits is the amount payable
on demand.  The fair value of time deposits is based on the discounted  value of
contractual  cash flows.  The discount rate is estimated  using rates  currently
offered for deposits of similar remaining  maturities.  The fair value estimates
do not include the benefit that results  from the low-cost  funding  provided by
the deposit  liabilities  compared to the cost of borrowing  funds in the market
nor the benefit  derived  from the  customer  relationship  inherent in existing
deposits.

Federal Funds Purchased, Repurchase Agreements, and Notes Payable

The fair value of federal  funds  purchased,  repurchase  agreements,  and notes
payable is based on the discounted value of contractual cash flows. The discount
rate is estimated  using current rates on federal  funds  purchased,  repurchase
agreements, and notes payable with similar remaining maturities.

Federal Home Loan Bank Advances and Other Borrowings

The fair value of FHLB advances is based on the discounted  value of contractual
cash flows.  The discount rate is estimated using rates on current FHLB advances
with similar remaining maturities.

Accrued Interest Payable

The carrying value of accrued  interest payable  approximates  fair value due to
the  relatively  short period of time between the  origination of the instrument
and its expected realization.

                                       59
<PAGE>

Commitments to Extend Credit and Standby Letters of Credit

The fair value of commitments to extend credit is generally  estimated using the
fees currently charged to enter into similar agreements, taking into account the
remaining  terms  of the  agreements  and the  present  creditworthiness  of the
counterparties.  For fixed rate loan commitments,  fair value also considers the
difference between current levels of interest rates and the committed rates. The
fair value of letters of credit is based on fees  currently  charged for similar
agreements or on the estimated  cost to terminate  them or otherwise  settle the
obligations with the counterparties.  The estimated fair value of commitments to
extend credit and standby  letters of credit  approximates  the balances of such
commitments.

18. Litigation

The Company and its  subsidiaries  are  involved in various  legal  proceedings,
claims and litigation arising out of the ordinary course of business.

It is the opinion of management that the  disposition or ultimate  resolution of
any other  claims and lawsuits  arising out of the  ordinary  course of business
will not have a material adverse effect on the consolidated  financial  position
of the Company.

19. Regulatory Capital

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

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Company and its  subsidiary  banks to maintain  minimum  amounts and
ratios (set forth in the table below) of total and Tier I capital (as defined in
the regulations) to risk-weighted assets (as defined), and of Tier I capital (as
defined) to average assets (as defined). Management believes, as of December 31,
2002,  that the Company and its subsidiary  banks exceeded all capital  adequacy
requirements to which they are subject.

As of December 31, 2002, the most recent  notifications  from primary regulatory
agencies  categorized  all the Company's  subsidiary  banks as well  capitalized
under the regulatory  framework for prompt corrective  action. To be categorized
as well capitalized,  banks must maintain minimum total capital to risk-weighted
assets,  Tier I capital to risk-weighted  assets,  and Tier I capital to average
assets ratios as set forth in the table. There are no conditions or events since
that  notification  that  management  believes have changed any of the Company's
subsidiary banks' categories.

                                       60
<PAGE>

The Company's and the Banks'  actual  capital  amounts and ratios as of December
31, 2002 and 2001 are presented in the following tables:
<TABLE>
                                                                                            To be well capitalized
                                                                      For capital adequacy  under prompt corrective
                                                       Actual               purposes:          action provisions:
                                                   -----------------  --------------------  -----------------------
                                                    Amount     Ratio    Amount       Ratio    Amount       Ratio
                                                   --------------------------------------------------------------
<S>                                                <C>         <C>     <C>           <C>     <C>           <C>
As of December 31, 2002:
   Total capital
      (to risk-weighted assets)
      Consolidated .............................   $138,701    18.0%   $ 61,660      8.0%          N/A
      BankIllinois .............................   $ 74,396    15.8%   $ 37,685      8.0%    $  47,107      10.0%
      The First National Bank of Decatur  ......   $ 48,351    16.0%   $ 24,213      8.0%    $  30,266      10.0%
   Tier I capital
      (to risk-weighted assets)
      Consolidated .............................   $129,442    16.8%   $ 30,830      4.0%          N/A
      BankIllinois .............................   $ 68,739    14.6%   $ 18,843      4.0%    $  28,264       6.0%
      The First National Bank of Decatur .......   $ 44,659    14.8%   $ 12,106      4.0%    $  18,160       6.0%
   Tier I capital
      (to average assets)
      Consolidated .............................   $129,442    11.8%   $ 43,732      4.0%          N/A
      BankIllinois .............................   $ 68,739    10.5%   $ 26,236      4.0%    $  32,795       5.0%
      The First National Bank of Decatur .......   $ 44,659    10.3%   $ 17,324      4.0%    $  21,655       5.0%




As of December 31, 2001:

   Total capital
      (to risk-weighted assets)
      Consolidated .............................   $142,403    18.0%   $ 63,212      8.0%          N/A
      BankIllinois .............................   $ 76,292    15.7%   $ 38,825      8.0%    $  48,532      10.0%
      The First National Bank of Decatur .......   $ 47,672    16.3%   $ 23,363      8.0%    $  29,204      10.0%
   Tier I capital
      (to risk-weighted assets)
      Consolidated .............................   $133,053    16.8%   $ 31,606      4.0%          N/A
      BankIllinois .............................   $ 70,514    14.5%   $ 19,413      4.0%    $  29,119       6.0%
      The First National Bank of Decatur .......   $ 44,083    15.1%   $ 11,681      4.0%    $  17,522       6.0%
   Tier I capital
      (to average assets)
      Consolidated .............................   $133,053    11.8%   $ 44,950      4.0%          N/A
      BankIllinois .............................   $ 70,514    10.3%   $ 27,366      4.0%    $  34,207       5.0%
      The First National Bank of Decatur .......   $ 44,083    10.2%   $ 17,274      4.0%    $  21,592       5.0%
</TABLE>


Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure

None.

                                       61
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

The  information  in the  Company's  2003  Proxy  Statement  under  the  caption
"Election of  Directors"  and under the caption  "Security  Ownership of Certain
Beneficial Owners and Management" is incorporated by reference.  The information
regarding  executive  officers not provided in the 2003 Proxy Statement is noted
below.

Executive Officers

The term of office for the executive officers of the Company is from the date of
election until the next annual organizational meeting of the Board of Directors.
In addition to the information  provided in the 2003 Proxy Statement,  the names
and ages of the  executive  officers of the Company as of December 31, 2002,  as
well as the offices of the Company and the  Subsidiaries  held by these officers
on that date,  and principal  occupations  for the past five years are set forth
below.
<TABLE>
Name                                               Position with Main Street, its subsidiaries
(Age)                                              and occupation for the last five years
-----                                              ---------------------------------------------------------------------------------
<S>                                                <C>
David B. White                                     Executive Vice President and Chief Financial
(Age 51)                                           Officer of Main Street, BankIllinois and The First National Bank of Decatur and
                                                   Director of FirsTech; Executive Vice President and Chief Financial Officer of
                                                   BankIllinois Financial and BankIllinois (1993-2000)

Christopher M. Shroyer                             President, Chief Executive Officer and Director of The First
(Age 37)                                           National Bank of Decatur; Executive Vice President, Lending, The First National
                                                   Bank of Decatur (2000-2001); Senior Vice President, Lending, The First National
                                                   Bank of Decatur (1999-2000); Vice President and Department Head, Commercial
                                                   Lending, The First National Bank of Decatur (1997-1999)

Robert F. Plecki, Jr.                              President and Director of BankIllinois; Executive Vice
(Age 42)                                           President, Retail Banking, BankIllinois (1998-2001); Senior Vice President,
                                                   Retail Banking, BankIllinois (1996-1998)

Leanne C. Heacock                                  Executive Vice President, Management Information Systems,
(Age 37)                                           Main Street, BankIllinois and The First National Bank of Decatur and Director of
                                                   FirsTech; Executive Vice President, Management Information Systems, BankIllinois
                                                   and The First National Bank of Decatur (2001-2002); Executive Vice President,
                                                   Management Information Systems, BankIllinois  (1999-2001); Senior Vice
                                                   President, Management Information Systems, BankIllinois (1998-1999)
</TABLE>

Section 16(a) Beneficial Ownership Compliance

Section  16(a) of the  Securities  Exchange  Act  requires  that the  directors,
executive  officers  and persons who own more than 10% of our common  stock file
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission.  These  persons  are also  required to furnish us with copies of all
Section 16(a) forms they file.  Based solely on our review of the copies of such
forms furnished to us and, if appropriate, representations made by any reporting
person concerning whether a Form 5 was required to be filed for 2002, we are not
aware of any failures to comply with the filing  requirements  of Section  16(a)
during 2002, except for Mr. VanBuskirk, who filed a Form 4 reporting an exercise
of options to purchase 5,104 shares one month late,  and Mr. Sloan,  who filed a
Form 4 reporting a purchase of 1,000 shares one day late.

Item 11.  Executive Compensation

The  information  in the 2003  Proxy  Statement  under  the  caption  "Executive
Compensation"  is incorporated by reference,  with the exception of the sections
entitled   "Compensation   Committee  Report  on  Executive   Compensation"  and
"Shareholder  Return  Performance  Presentation",  which  are  not  included  by
reference herein.

Item 12.  Security Ownership Of Certain Beneficial Owners And Management

The  information  in the  2003  Proxy  Statement  under  the  caption  "Security
Ownership  of Certain  Beneficial  Owners and  Management"  is  incorporated  by
reference.

                                       62
<PAGE>

Equity Compensation Plan Information

The table below sets forth the following information as of December 31, 2002 for
(i) all compensation plans previously  approved by our shareholders and (ii) all
compensation plans not previously approved by our shareholders:

(a)  the number of  securities  to be issued upon the  exercise  of  outstanding
     options, warrants and rights;

(b)  the weighted-average  exercise price of such outstanding options,  warrants
     and rights;

(c)  other than  securities  to be issued upon the exercise of such  outstanding
     options,  warrants and rights, the number of securities remaining available
     for future issuance under the plans.
<TABLE>

====================================================================================================================================
                                                   EQUITY COMPENSATION PLAN INFORMATION
------------------------------------------------------------------------------------------------------------------------------------
                                      Number of securities to be                                     Number of securities remaining
            Plan category               issued upon exercise of       Weighted-average exercise       available for future issuance
                                          outstanding options        price of outstanding options
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                            <C>                             <C>
Equity compensation plans approved
by security holders...............             441,522(1)                       $18.14                          1,763,478
------------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders......                      0                         0                                 0
------------------------------------------------------------------------------------------------------------------------------------
Total.............................            441,522 (1)                       $18.14                          1,763,478
====================================================================================================================================
<FN>

(1)  Does not include  options assumed by the Company in 2000 in connection with
     the merger of First Decatur  Bancshares,  Inc. and  BankIllinois  Financial
     Corporation  with and into the  Company.  At the time of the merger,  there
     were options issued under the Central Illinois Financial  Corporation Stock
     Option  Plan,   BankIllinois  Financial  Co.  1994  Stock  Incentive  Plan,
     BankIllinois  Financial Corporation 1996 Stock Incentive Plan and the First
     Decatur  Bancshares,  Inc.  Employee  Stock Option Plan,  each of which was
     approved by  shareholders  of the  respective  company at the time of their
     adoption.  All of the options granted under these plans fully vested at the
     time of the merger and no additional options were available for grant after
     the merger. As of December 31, 2002, there were options  outstanding for an
     aggregate of 147,728  shares of the Company's  common stock under the prior
     plans with a weighted average exercise price of $16.04.
</FN>
</TABLE>

Item 13. Certain Relationships And Related Transactions

The information in the 2003 Proxy Statement under the caption "Transactions with
Management" is incorporated by reference.

Item 14. Controls and Procedures

Based upon an  evaluation  within  the 90 days prior to the filing  date of this
report,  the  Company's  Chief  Executive  Officer and Chief  Financial  Officer
concluded that the Company's  disclosure  controls and procedures are effective.
There have been no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect the Company's  internal controls
subsequent to the date of the evaluation,  including any corrective actions with
regard to significant deficiencies and material weaknesses.

                                       63
<PAGE>

                                     PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1)     Index to Financial Statements

           See page 32.

(a)(2)     Financial Statement Schedules

           N/A

(a)(3)     Schedule of Exhibits

           The Exhibit Index which immediately follows the signature page
           to this Form 10-K is incorporated by reference.

(b)        Reports on Form 8-K

           The  Company  did not file  any  Current  Reports  on Form 8-K
           during the fourth quarter of 2002.

(c)        Exhibits

           The  exhibits  required  to be filed  with  this Form 10-K are
           included with this Form 10-K and are located  immediately  following
           the Exhibit Index to this Form 10-K.

                                       64
<PAGE>


                                   SIGNATURES

Pursuant to the  requirements  of Section 13 of the  Securities  Exchange Act of
1934,  the  Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on March 19, 2003.


By:  /s/ Van A. Dukeman                        By:  /s/ David B. White
-----------------------------------                 ----------------------------
     Van A. Dukeman                                 David B. White
     President, CEO and Director                    Executive Vice President and
                                                    Principal Financial and
                                                    Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities indicated on March 19, 2003.


/s/ Gregory B. Lykins
---------------------------------
Gregory B. Lykins                          Chairman and Director


/s/ Van A. Dukeman
---------------------------------
Van A. Dukeman                             President, CEO and Director


/s/ Phillip C. Wise
---------------------------------
Phillip C. Wise                            Executive Vice President and Director


/s/ David J. Downey
----------------------------------
David J. Downey                            Director


/s/ Larry D. Haab
----------------------------------
Larry D. Haab                              Director


/s/ Frederic L. Kenney
----------------------------------
Frederic L. Kenney                         Director



----------------------------------
August C. Meyer, Jr.                       Director


/s/ Gene A. Salmon
----------------------------------
Gene A. Salmon                             Director


/s/ George T. Shapland
----------------------------------
George T. Shapland                         Director


/s/ Thomas G. Sloan
----------------------------------
Thomas G. Sloan                            Director


/s/ Roy V. VanBuskirk
----------------------------------
Roy V. VanBuskirk                          Director


/s/ H. Gale Zacheis
----------------------------------
H. Gale Zacheis                            Director

                                       65
<PAGE>

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Van A. Dukeman, Chief Executive Officer of the Company, certify that:

1.   I have reviewed this annual report on Form 10-K of Main Street Trust, Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in the Report, fairly present in all material respects
     the  financial  condition,  results  of  operations  and cash  flows of the
     registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a.   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and  procedures  as of a date  within  the 90 days prior to the filing
          date of this annual report (the "Evaluation Date");

     c.   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function);

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to date of their evaluation,  including any corrective
     actions with regard to significant deficiencies and material weaknesses.

Date:   March 21, 2003



                                                    /s/  Van A. Dukeman
                                                         -----------------------
                                                         Van A. Dukeman
                                                         Chief Executive Officer


                                       66
<PAGE>


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, David B. White, Chief Financial Officer of the Company, certify that:

1.   I have reviewed this annual report on Form 10-K of Main Street Trust, Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in the Report, fairly present in all material respects
     the  financial  condition,  results  of  operations  and cash  flows of the
     registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a.   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and  procedures  as of a date  within  the 90 days prior to the filing
          date of this annual report (the "Evaluation Date");

     c.   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function);

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to date of their evaluation,  including any corrective
     actions with regard to significant deficiencies and material weaknesses.

Date:   March 21, 2003



                                                    /s/  David B. White
                                                         -----------------------
                                                         David B. White
                                                         Chief Financial Officer


                                       67
<PAGE>

                             MAIN STREET TRUST, INC.
                                  EXHIBIT INDEX
                                       TO
                           ANNUAL REPORT ON FORM 10-K
<TABLE>
                                                        Incorporated
 Exhibit No.           Description                       Herein by                     Filed
                                                        Reference To                  Herewith
-------------- ---------------------------- ------------------------------------- -----------------
<S>            <C>                          <C>                                       <C>
     3.1       Amended and Restated         Exhibit 3.1 to the Form S-4 filed
               Articles of Incorporation    with the Commission on November 30,
                                            1999 (SEC File No. 33-91759)
     3.2       Bylaws                       Exhibit 3.2 to the Form S-4 filed with
                                            the Commission on November 30,
                                            1999 (SEC File No. 33-91759)
     4.1       Specimen common stock        Exhibit 4.1 to the Form 10-K filed
               certificate                  with the Commission on March 30,
                                            2001 (SEC File No. 000-30031)
     4.2       Second Amended and           Exhibit 4.2 to the Form 10-K filed
               Restated Shareholders'       with the Commission on March 30,
               Agreement, dated as of       2001 (SEC File No. 000-30031)
               November 1, 2000
    10.1       Employment Agreement by      Exhibit 10.1 to the Form 10-K filed
               and between the Company      with the Commission on March 29,
               and Gregory B. Lykins        2002 (SEC File No. 000-30031)
    10.2       Employment Agreement by      Exhibit 10.2 to the Form 10-K filed
               and between the Company      with the Commission on March 29,
               and Van A. Dukeman           2002 (SEC File No. 000-30031)
    10.3       Employment Agreement by      Exhibit 10.5 to the Registration
               and between the Company      Statement on Form S-4 filed with the
               and David B. White           Commisson on March 15, 1996, as
                                            amended (SEC File No. 33-90342)
    10.4       Employment Agreement by      Exhibit 10.4 to the Form 10-K filed
               and between the Company,     with the Commission on March 29,
               FirsTech, Inc. and Phillip   2002 (SEC File No. 000-30031)
               C. Wise
    10.5       Employment Agreement by                                                   X
               and between The First
               National Bank of Decatur
               and Chris Shroyer
    21.1       Subsidiaries of the                                                       X
               Registrant
    23.1       Consent of McGladrey &                                                    X
               Pullen, LLP
    99.1       Section 906 Certification                                                 X
    99.2       Section 906 Certification                                                 X

</TABLE>