UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X]      QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY  PERIOD ENDED JUNE 30, 1999.

[ ]      TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION  PERIOD FROM ___ TO ___.

Commission file number 000-22469

                            LAFAYETTE BANCORPORATION
             (Exact name of registrant as specified in its charter)

         INDIANA                                         35-1605492
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                       Identification No.)

133 North 4th Street, Lafayette, Indiana               47902
(Address of principal executive offices)             (Zip Code)

                                 (765) 423-7100
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1994 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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:

Class                                            Outstanding at August 13, 1999
Common Stock, without par value                  2,387,868 shares


<PAGE>2

                            LAFAYETTE BANCORPORATION

                                      INDEX


PART I.             FINANCIAL INFORMATION

Item 1.

       Consolidated Balance Sheets  --  June 30, 1999 and December 31, 1998

       Consolidated Statements of Income  and
              Comprehensive Income--  Three Months Ended June 30, 1999 and 1998

       Consolidated Statements of Income  and
              Comprehensive Income --  Six Months Ended June 30, 1999 and 1998

       Consolidated Statements of Cash Flows  --  Six Months Ended
              June 30, 1999 and 1998

       Notes to Consolidated Financial Statements  --  June 30, 1999

Item 2.

     Management's  Discussion and Analysis of Financial Condition and Results of
     Operations

Item 3.

       Quantitative and Qualitative Disclosures About Market Risk


PART II.            OTHER INFORMATION


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

Item 6.       Exhibits and Reports on Form 8-K

       a)     Exhibits

              27  Financial Data Schedule

       b)     Reports on Form 8-K


SIGNATURES

<PAGE>3

-------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

ITEM 1.
                            LAFAYETTE BANCORPORATION
                           CONSOLIDATED BALANCE SHEETS
                          (Dollar amounts in thousands)
                                   (Unaudited)

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                 June 30,    December 31,
                                                                   1999          1998
                                                                   ----          ----
<S>                                                              <C>          <C>
ASSETS
Cash and due from banks                                          $  21,075    $  17,368
Federal funds sold                                                   5,300        1,400
                                                                 ---------    ---------
    Total cash and cash equivalents                                 26,375       18,768
Interest-bearing balances with other financial institutions            684          671
Securities available-for-sale (at market)                           95,850       76,956
Securities held-to-maturity (market value $6,916
  and $5,063)                                                        6,859        4,879
Loans held for sale                                                  8,244       10,086
Loans                                                              457,583      353,828
    Less:  Allowance for loan losses                                (4,135)      (4,241)
                                                                 ---------    ---------
       Loans, net                                                  453,448      349,587
Federal Home Loan Bank stock (at cost)                               1,897        1,539
Premises, furniture and equipment, net                               9,040        7,953
Intangible assets                                                   14,105          827
Accrued interest receivable and other assets                        15,252       12,703
                                                                 ---------    ---------

          Total assets                                           $ 631,754    $ 483,969
                                                                 =========    =========


LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
    Noninterest-bearing deposits                                 $  61,417    $  48,657
    Interest-bearing demand and savings deposits                   230,553      170,308
    Interest-bearing time deposits                                 222,721      176,581
                                                                 ---------    ---------
       Total deposits                                              514,691      395,546
    Short-term borrowings                                           29,690       16,402
    Long-term debt                                                  36,922       23,854
    Accrued interest payable and other liabilities                   6,642        5,553
                                                                 ---------    ---------
       Total liabilities                                           587,945      441,355


Shareholders' equity
    Common stock, no par value:  5,000,000 shares authorized;
    2,398,827 and 2,394,035 shares issued; and 2,385,219
    and 2,380,427 shares outstanding                                 2,399        2,394
    Additional paid-in capital                                      32,737       32,620
    Retained earnings                                               10,248        7,747
    Unrealized gain / (loss) on securities available-for-sale,
      net of tax (($965) and ($27))                                 (1,470)         (42)
    Less:  Treasury stock, at cost (13,608 shares)                    (105)        (105)
                                                                 ---------    ---------
       Total shareholders' equity                                   43,809       42,614
                                                                 ---------    ---------

          Total liabilities and shareholders' equity             $ 631,754    $ 483,969
                                                                 =========    =========
</TABLE>
<PAGE>4

                            LAFAYETTE BANCORPORATION
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                For the three months ended June 30, 1999 and 1998
              (Dollar amounts in thousands, except per share data)
                                   (Unaudited)

------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                             1999       1998
                                                             ----       ----
<S>                                                       <C>         <C>
Interest income
    Loans                                                 $  9,647    $  7,337
    Taxable securities                                       1,040         812
    Tax exempt securities                                      379         220
    Other                                                      201         180
                                                          --------    --------
       Total interest income                                11,267       8,549
Interest expense
    Deposits                                                 4,505       3,690
    Short-term borrowings                                      368         169
    Long-term debt                                             579         318
                                                          --------    --------
       Total interest expense                                5,452       4,177
                                                          --------    --------
Net interest income                                          5,815       4,372
Provision for loan losses                                      190         180
                                                          --------    --------
Net interest income after provision for loan losses          5,625       4,192
Noninterest income
    Income from fiduciary activities                           250         226
    Service charges on deposit accounts                        408         333
    Net realized gain on securities                             12          --
    Net gain on loan sales                                     259         269
    Other service charges and fees                             244         196
    Other operating income                                     176         129
                                                          --------    --------
       Total noninterest income                              1,349       1,153
                                                          --------    --------
Noninterest expense
    Salaries and employee benefits                           2,474       1,957
    Occupancy expenses, net                                    266         217
    Equipment expenses                                         343         252
    Intangible asset amortization                              184          21
    Other operating expenses                                 1,233         874
                                                          --------    --------
       Total noninterest expense                             4,500       3,321
                                                          --------    --------
Income before income taxes                                   2,474       2,024
Income taxes                                                   824         683
                                                          --------    --------
Net income                                                   1,650       1,341
                                                          --------    --------
Other comprehensive income, net of tax:
    Change in unrealized gains / (losses) on securities     (1,347)         78
                                                          --------    --------
Comprehensive income                                      $    303    $  1,419
                                                          ========    ========

Basic earnings per share                                  $    .69   $     .56
                                                          ========   =========
Diluted earnings per share                                $    .68   $     .55
                                                          ========   ==========
Dividend per share                                        $    .14   $     .12
                                                          ========   ==========
</TABLE>
<PAGE>5

                            LAFAYETTE BANCORPORATION
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                 For the six months ended June 30, 1999 and 1998
              (Dollar amounts in thousands, except per share data)
                                   (Unaudited)

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                             1999        1998
                                                             ----        ----
<S>                                                       <C>         <C>
Interest income
    Loans                                                 $ 17,777    $ 14,466
    Taxable securities                                       1,930       1,632
    Tax exempt securities                                      740         411
    Other                                                      303         350
                                                          --------    --------
       Total interest income                                20,750      16,859
Interest expense
    Deposits                                                 8,406       7,259
    Short-term borrowings                                      643         332
    Long-term debt                                             975         615
                                                          --------    --------
       Total interest expense                               10,024       8,206
                                                          --------    --------
Net interest income                                         10,726       8,653
Provision for loan losses                                      370         360
                                                          --------    --------
Net interest income after provision for loan losses         10,356       8,293
Noninterest income
    Income from fiduciary activities                           503         452
    Service charges on deposit accounts                        715         658
    Net realized gain on securities                             12         --
    Net gain on loan sales                                     567         494
    Other service charges and fees                             422         352
    Other operating income                                     326         360
                                                          --------    --------
       Total noninterest income                              2,545       2,316
                                                          --------    --------
Noninterest expense
    Salaries and employee benefits                           4,640       3,914
    Occupancy expenses, net                                    509         432
    Equipment expenses                                         629         506
    Intangible asset amortization                              239          41
    Other operating expenses                                 2,140       1,678
                                                          --------    --------
       Total noninterest expense                             8,157       6,571
                                                          --------    --------
Income before income taxes                                   4,744       4,038
Income taxes                                                 1,575       1,372
                                                          --------    --------
Net income                                                   3,169       2,666
                                                          --------    --------
Other comprehensive income, net of tax:
    Change in unrealized gains / (losses) on securities     (1,429)         52
                                                          --------    --------
Comprehensive income                                      $  1,740    $  2,718
                                                          ========    ========

Basic earnings per share                                  $   1.33    $   1.12
                                                          ========    ========
Diluted earnings per share                                $   1.30    $   1.10
                                                          ========    ========
Dividend per share                                        $    .28    $   . 24
                                                          ========    ========

</TABLE>
<PAGE>6

                            LAFAYETTE BANCORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the six months ended June 30, 1999 and 1998
                          (Dollar amounts in thousands)
                                   (Unaudited)

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                     1999            1998
                                                                                     ----            ----
<S>                                                                                <C>          <C>
Cash flows from operating activities
    Net income                                                                     $   3,169    $   2,666
    Adjustments to reconcile net income to net cash
      from operating activities
       Depreciation                                                                      414          316
       Premium amortization, net of discount accretion                                   307          146
       Provision for loan losses                                                         370          360
       Net realized gain on securities                                                   (12)          --
       Net realized (gain) loss on sale of :
          Other real estate                                                               --          (43)
       Change in assets and liabilities:
          Loans originated for sale                                                  (43,513)     (36,375)
          Loans sold                                                                  45,355       36,106
          Accrued interest receivable and other assets                                (1,687)         378
          Accrued interest payable and other liabilities                               1,089          505
                                                                                   ---------    ---------
              Net cash from operating activities                                       5,492        4,059
Cash flows from investing activities
    Change in interest-bearing balances with other financial institutions                (13)         --
    Purchase of securities available-for-sale                                       (121,173)     (27,845)
    Proceeds from sales of securities available-for-sale                               5,333        3,286
    Proceeds from maturities of securities available-for-sale                         94,531       19,174
    Purchase of securities held-to-maturity                                           (2,000)      (1,107)
    Proceeds from maturities of securities held-to-maturity                               16        1,858
    Loans made to customers, net of payments collected                               (45,926)     (10,693)
    Purchase of FHLB stock                                                              (358)        (297)
    Property and equipment expenditures                                               (1,501)        (625)
    Proceeds from sales of other real estate                                            --            251
                                                                                   ---------    ---------
              Net cash from investing activities                                     (71,091)     (15,998)
Cash flows from financing activities
    Net change in deposit accounts                                                     2,130       14,816
    Cash received in branch acquisition for liabilities assumed, net
       of assets acquired                                                             45,266         --
    Net change in short-term borrowings                                               13,288       (1,129)
    Proceeds from long-term debt                                                      14,000        2,800
    Payments on long-term debt                                                          (932)        (575)
    Common stock issued                                                                  122           69
    Dividends paid                                                                      (668)        (563)
                                                                                   ---------    ---------
              Net cash from financing activities                                      73,206       15,418
Net change in cash and cash equivalents                                                7,607        3,479
Cash and cash equivalents at beginning of year                                        18,768       30,901
                                                                                   ---------    ---------
Cash and cash equivalents at end of period                                         $  26,375    $  34,380
                                                                                   =========    =========

Supplemental  disclosures of cash flow  information  Cash paid during the period
    for:
       Interest                                                                    $   9,298    $   7,925
       Income taxes                                                                    1,478        1,277
Non-cash investing activity
    Loans transferred to other real estate                                         $     104    $     --
</TABLE>

<PAGE>7


                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                          (Dollar amounts in thousands)
                                   (Unaudited)

-------------------------------------------------------------------------------

NOTE 1 - BASIS OF PRESENTATION

The significant  accounting  policies followed by Lafayette  Bancorporation (the
"Corporation")   for  interim  financial   reporting  are  consistent  with  the
accounting  policies followed for annual financial  reporting.  The consolidated
interim  financial  statements  have been prepared in accordance  with Generally
Accepted Accounting  Principles and in accordance with instructions to Form 10-Q
and may not include all  information and footnotes  normally  disclosed for full
annual  financial  statements.  All  adjustments  which are,  in the  opinion of
management,  necessary  for a fair  presentation  of the results for the periods
reported have been included in the accompanying unaudited consolidated financial
statements and all such adjustments are of a normal recurring nature.


NOTE 2 - PER SHARE DATA

The following  illustrates  the  computation  of basic and diluted  earnings per
share,  and includes the weighted  average  number of shares used in calculating
earnings and dividends per share amounts for the periods presented. The weighted
average number of shares have been retroactively restated for stock dividends.

<TABLE>
<CAPTION>

                                                         Six Months Ended         Six Months Ended
                                                           June 30, 1999            June 30, 1998
                                                           -------------            -------------
<S>                                                        <C>                      <C>
Basic earnings per share
 Net income                                                $       3,169            $       2,666
Weighted average shares outstanding                            2,384,954                2,380,255
                                                           -------------            -------------

    Basic earnings per share                               $        1.33            $        1.12
                                                           =============            =============



Diluted earnings per share
 Net income                                                $       3,169            $       2,666

Weighted average shares outstanding                            2,384,954                2,380,255
Diluted effect of assumed shares
  exercised of Stock Options                                      60,371                   40,937
                                                           -------------            -------------
    Diluted average shares outstanding                         2,445,325                2,421,192
                                                           -------------            -------------

    Diluted earnings per share                             $        1.30           $         1.10
                                                           =============           ==============
</TABLE>

<PAGE>8

                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                          (Dollar amounts in thousands)
                                   (Unaudited)

-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                        Three Months Ended       Three Months Ended
                                                           June 30, 1999            June 30, 1998
                                                           -------------            -------------
<S>                                                        <C>                      <C>
Basic earnings per share
 Net income                                                $       1,650            $       1,341
Weighted average shares outstanding                            2,385,219                2,380,186
                                                           -------------            -------------

    Basic earnings per share                               $         .69            $         .56
                                                           =============            =============


Diluted earnings per share
 Net income                                                $       1,650            $       1,341

Weighted average shares outstanding                            2,385,219                2,380,186
Diluted effect of assumed shares
  exercised of Stock Options                                      60,619                   44,723
                                                           -------------            -------------
    Diluted average shares outstanding                          2,445,838               2,424,909
                                                           ---------------          --------------

    Diluted earnings per share                             $          .68           $         .55
                                                           ==============           =============
</TABLE>

NOTE 3 - SECURITIES
The amortized  cost and estimated  market values of securities are as follows at
June 30, 1999:

<TABLE>
<CAPTION>

                                                         Amortized                      Estimated
                                                           Cost                       Market Value
<S>                                                    <C>                            <C>
Securities Available-for-Sale
U.S. Government and its agencies                       $    16,239                    $    16,065
Obligations of states and political subdivisions            27,646                         26,768
Corporate obligations                                        3,516                          3,465
Mortgage-backed and other asset-backed securities           50,853                         49,521
Other securities                                                31                             31
                                                       -----------                    -----------
                                                       $    98,285                    $    95,850
                                                       ===========                    ===========
Securities Held-to-Maturity

Obligations of states and political subdivisions       $     6,859                    $     6,916
                                                       ===========                    ===========
</TABLE>

<PAGE>9

The amortized  cost and estimated  market values of securities are as follows at
December 31, 1998:

<TABLE>
<CAPTION>
                                                         Amortized                      Estimated
                                                           Cost                       Market Value
<S>                                                    <C>                            <C>
Securities Available-for-Sale
U.S. Government and its agencies                       $    14,039                    $    14,110
Obligations of states and political subdivisions            23,526                         23,637
Corporate obligations                                        2,520                          2,513
Mortgage-backed and other asset-backed securities           36,940                         36,696
                                                       -----------                    -----------
                                                       $    77,025                    $    76,956
                                                       ===========                    ===========
Securities Held-to-Maturity

Obligations of states and political subdivisions       $     4,879                    $     5,063
                                                       ===========                    ===========
</TABLE>
<PAGE>

                            LAFAYETTE BANCORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
                          (Dollar amounts in thousands)
                                   (Unaudited)

-------------------------------------------------------------------------------

NOTE 4 - LOANS

Loans are comprised of the following:

                                              June 30,  December 31,
                                               1999        1998

         Commercial and agricultural loans   $181,591   $115,198
         Real estate construction loans        40,011     28,043
         Residential real estate loans        178,819    160,655
         Installment loans to individuals      57,162     49,932
                                             --------   --------

             Total loans                     $457,583   $353,828
                                             ========   ========


NOTE 5 - ALLOWANCE FOR LOAN LOSSES

The activity in the allowance for loan losses is as follows:

                                              1999       1998
                                              ----       ----

Balance, January 1                           $ 4,241    $ 3,464
Provision charged to operations                  370        360
Loans charged off                               (549)      (190)
Recoveries on loans previously charged off        73        107
                                             -------    -------

Balance, June 30                             $ 4,135    $ 3,741
                                             =======    =======


NOTE 6 - SHORT-TERM BORROWINGS

Short-term borrowings are comprised of the following:

                                      June 30, December 31,
                                       1999       1998

Repurchase agreements                 $27,762   $15,788
Treasury tax and loan open-end note     1,928       614
                                      -------   -------

    Total short-term borrowings       $29,690   $16,402
                                      =======   =======
<PAGE>10

                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
         (Dollar amounts in thousands, except share and per share data)
                                   (Unaudited)
-------------------------------------------------------------------------------

NOTE 7 - BRANCH ACTIVITY

On March 12, 1999 the Bank completed the acquisition of three Bank One,  Indiana
branches located in DeMotte, Remington, and Rensselaer,  Indiana. The fair value
of assets acquired was $58,584 (predominately  commercial loans and the physical
facilities),  the fair value of liabilities assumed was $117,360  (predominately
deposits),  and the Bank received  $45,266 of cash at  settlement.  Goodwill and
core deposit intangibles associated with this purchase amounted to $13,510.

The branch  acquisition  was not  considered to be an  acquisition of a business
since,  among other things,  approximately 39% of the assets acquired was in the
form of cash, loans consisted almost entirely of commercial  loans, the branches
represented a small portion of the seller's  operations in the market area,  and
the seller's products differ from the Corporation's  products. In addition,  the
future  earnings from the net assets acquired will be dependent on the effective
use of the cash and the  generation  of other  types of  loans,  including  real
estate,  home equity,  credit  cards,  and other  consumer  loans.  Accordingly,
historical operating results of the branches acquired would not be indicative of
future  results,  and only  the  above  summary  information  on the net  assets
acquired is presented.

In an unrelated  event,  the Corporation  closed the branch located in Chalmers,
Indiana on March 27, 1999.


NOTE 8 - SEGMENT INFORMATION

The Corporation's operations include three primary segments:  banking,  mortgage
banking,  and trust.  Through  its banking  subsidiary's  sixteen  locations  in
Tippecanoe,  White, and Jasper Counties,  the Corporation  provides  traditional
community banking services,  such as accepting  deposits and making  commercial,
residential  and  consumer  loans.   Mortgage  banking  activities  include  the
origination of residential mortgage loans for sale on a servicing released basis
to various investors.  The Corporation's trust department provides both personal
and corporate trust services.

The Corporation's  three reportable  segments are determined by the products and
services offered. Loans,  investments and deposits comprise the primary revenues
and expenses of the banking  operation,  net gains on loans sold account for the
revenues in the mortgage banking segment,  and trust administration fees provide
the primary revenues in the trust department.

The following segment  financial  information has been derived from the internal
profitability  reporting system utilized by management to monitor and manage the
financial  performance of the Corporation.  The accounting policies of the three
segments  are  the  same  as  those  described  in the  summary  of  significant
accounting  policies of the annual report.  The  Corporation  evaluates  segment
performance based on profit or loss before income taxes. The evaluation  process
for the mortgage banking and trust segments include only direct expenses,  while
certain  indirect  expenses,  including  goodwill,  are  absorbed by the banking
operation.

<PAGE>11

                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
         (Dollar amounts in thousands, except share and per share data)
                                   (Unaudited)
-------------------------------------------------------------------------------

NOTE 8 - SEGMENT INFORMATION (Continued)

Quarter ended June 30:


1999                                          Mortgage                   Total
                                 Banking      Banking       Trust       Segments

Net interest income             $  5,966     $     56     $     --     $  6,022
Net gain on loan sales                --          259           --          259
Other revenue                        818           22          250        1,090
Noncash items:
    Depreciation                     202           12            6          220
    Provision for loan loss          190           --           --          190
Segment profit                     2,445          142           87        2,674
Segment assets                   622,432        8,419          163      631,014





1998                             Mortgage                                Total
                                 Banking      Banking     Trust        Segments

Net interest income             $  4,318     $     48     $   --       $  4,366
Net gain on loan sales              --            269         --            269
Other revenue                        658         --            226          884
Noncash items:
    Depreciation                     147            6            6          159
    Provision for loan loss          180         --           --            180
Segment profit                     1,908          190           51        2,149
Segment assets                   448,823        8,051          180      457,054

<PAGE>12

                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
         (Dollar amounts in thousands, except share and per share data)
                                   (Unaudited)
-------------------------------------------------------------------------------

NOTE 8 - SEGMENT INFORMATION (Continued)

Significant  segment  totals  are  reconciled  to the  financial  statements  as
follows:

Quarter ended June 30:

                                 Reportable                Consolidated
1999                              Segments      Other         Totals
----                              --------      -----         ------

Net interest income (expense)     $  6,022     $   (207)     $  5,815
Provision for loan loss                190         --             190
Net gain on loan sales                 259         --             259
Other revenue                        1,090         --           1,090
Profit                               2,674       (1,024)        1,650
Assets                             631,014          740       631,754



                            Reportable                Consolidated
1998                         Segments      Other         Totals
----                         --------      -----         ------

Net interest income         $  4,366     $      6      $  4,372
Provision for loan loss          180         --             180
Net gain on loan sales           269         --             269
Other revenue                    884         --             884
Profit                         2,149         (808)        1,341
Assets                       457,054          616       457,670



Amounts included in the "other" column are as follows.

                                       1999       1998
                                       ----       ----

Income:
     Holding company net interest
       income (expense)               $(207)     $   6

Profit:
     Holding company net interest
       income (expense)                (207)         6
     Holding company expenses             7       (131)
     Income tax expense                (824)      (683)


Assets:
     Holding company assets             740        616

<PAGE>13

                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
         (Dollar amounts in thousands, except share and per share data)
                                   (Unaudited)
-------------------------------------------------------------------------------

NOTE 8 - SEGMENT INFORMATION (Continued)

Six months ended June 30:

<TABLE>
<CAPTION>

1999                                                              Mortgage                               Total
                                                Banking            Banking            Trust            Segments

<S>                                         <C>                <C>                <C>               <C>
     Net interest income                    $        10,848    $          117     $            -    $        10,965
     Net gain on loan sales                               -               567                  -                567
     Other revenue                                    1,431                44                503              1,978
     Noncash items:
         Depreciation                                   383                19                 12                414
         Provision for loan loss                        370                 -                  -                370
     Segment profit                                   4,554               355                174              5,083
     Segment assets                                 622,432             8,419                163            631,014

</TABLE>

<TABLE>
<CAPTION>

1998                                                              Mortgage                               Total
                                                Banking            Banking            Trust            Segments

<S>                                         <C>                <C>                <C>               <C>
     Net interest income                    $         8,559    $           85     $            -    $         8,644
     Net gain on loan sales                               -               494                  -                494
     Other revenue                                    1,358                12                452              1,822
     Noncash items:
         Depreciation                                   291                13                 12                316
         Provision for loan loss                        360                 -                  -                360
     Segment profit                                   3,926               296                 97              4,319
     Segment assets                                 448,823             8,051                180            457,054

</TABLE>
<PAGE>14

                            LAFAYETTE BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1999
         (Dollar amounts in thousands, except share and per share data)
                                   (Unaudited)
-------------------------------------------------------------------------------

NOTE 8 - SEGMENT INFORMATION (Continued)

Significant  segment  totals  are  reconciled  to the  financial  statements  as
follows:

Six months ended June 30:
<TABLE>
<CAPTION>
                                                Reportable                          Consolidated
1999                                             Segments             Other            Totals
----                                             --------             -----            ------

<S>                                         <C>                <C>                <C>
     Net interest income (expense)          $        10,965    $         (239)    $       10,726
     Provision for loan loss                            370                 -                370
     Net gain on loan sales                             567                 -                567
     Other revenue                                    1,978                 -              1,978
     Profit                                           5,083            (1,914)             3,169
     Assets                                         631,014               740            631,754
</TABLE>

<TABLE>
<CAPTION>

                                                Reportable                          Consolidated
1998                                             Segments             Other            Totals
----                                             --------             -----            ------

<S>                                         <C>                <C>                <C>
     Net interest income                    $         8,644    $            9     $        8,653
     Provision for loan loss                            360                 -                360
     Net gain on loan sales                             494                 -                494
     Other revenue                                    1,822                 -              1,822
     Profit                                           4,319            (1,653)             2,666
     Assets                                         457,054               616            457,670
</TABLE>

Amounts included in the "other" column are as follows.

                                         1999        1998
                                         ----        ----

Income:
     Holding company net interest
       income (expense)               $  (239)     $     9

Profit:
     Holding company net interest
       income (expense)                  (239)           9
     Holding company expenses            (100)        (290)
     Income tax expense                (1,575)      (1,372)


Assets:
     Holding company assets               740          616

<PAGE>15

ITEM 2.
                            LAFAYETTE BANCORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
              (Dollar amounts in thousands, except per share data)

Lafayette  Bancorporation  (the  "Corporation")  is a one-bank  holding  company
located  in  Lafayette,  Indiana.  The  Corporation's  wholly-owned  subsidiary,
Lafayette Bank and Trust Company ("Bank") conducts business from sixteen offices
in Tippecanoe,  White, and Jasper Counties,  Indiana. The Corporation provides a
wide range of commercial and personal banking  activities,  including  accepting
deposits;  making  commercial and consumer  loans;  originating  mortgage loans;
providing personal and corporate trust services;  providing  investment advisory
and brokerage  services;  and providing  auto,  homeowners,  and other insurance
products.


RESULTS OF OPERATIONS


Mergers and Acquisitions

On March 12, 1999 the  Corporation  completed the acquisition of three Bank One,
Indiana branches located in DeMotte,  Remington,  and Rensselaer,  Indiana.  The
Corporation added  approximately  $117 million in deposits and approximately $58
million  in loans as a result of this  transaction.  Goodwill  and core  deposit
intangibles  associated with this purchase was approximately $13.5 million. This
acquisition  is the  first  for the  Corporation  in this  market  and it  added
approximately 25% to the Corporation's deposit base.


Net Income

The Corporation  earned $1,650, or $.69 per share for the second quarter of 1999
compared to $1,341, or $.56 per share for the second quarter of 1998. Net income
increased $503, or 18.9% to $3,169 for the six month period ending June 30, 1999
compared to that same 1998 time period.  Basic earnings per share were $1.33 and
$1.12 for the six month period ending June 30, 1999 and 1998,  respectively.  In
general,  the addition of the three Jasper  County  branches  acquired from Bank
One, Indiana on March 12, 1999 gave rise to the higher earnings  realized in the
second quarter of 1999. Aside from the loans acquired in the branch acquisition,
actual loan  growth of $30,879  was  achieved  during the second  quarter  which
resulted in increased interest income. The increase in interest income, however,
was offset by certain  transition and overhead costs incurred in connection with
the purchase of the three branches.

Return on average  assets (ROA) and return on average equity (ROE) for the three
and six months ending June 30, 1999 and 1998 are summarized below:


                              Three months ending             Six months ending
                                   June 30,                       June 30,
                                1999       1998               1999       1998
                                ----       ----               ----       ----

              ROA               1.12%     1.21%               1.06%      1.20%

              ROE              14.48%    13.45%              14.95%     13.36%

<PAGE>16

Net Interest Income

Net  interest  income is the most  significant  component  of the  Corporation's
earnings.  Net  interest  income is the  difference  between  interest  and fees
realized on earning assets, primarily loans and securities, and interest paid on
deposits and other borrowed  funds.  The net interest  margin is this difference
expressed as a percentage  of average  earning  assets.  Net interest  income is
determined  by several  factors,  including  the  volume of  earning  assets and
liabilities,  the mix of earning assets and liabilities, and interest rates. For
the six months ended June 30, 1999 and 1998, net interest income was $10,726 and
$8,653, respectively. This represents a $2,073, or 24.0% increase over the prior
year. Net interest  income for the second  quarter of 1999 was $1,443,  or 33.0%
higher  than for that  same  three  month  period  ending  June  30,  1998.  The
Corporation's  loan  growth  continued  during the second  quarter  through  the
deployment of the excess funds obtained in the Jasper County branch acquisition.

Total interest income for the six month period ending June 30, 1999 and 1998 was
$20,750 and $16,859, respectively.  Total interest income for the second quarter
of 1999 was  $2,718,  or 31.8%  greater  than for  that  same  quarter  in 1998.
Interest and fees on loans increased  $3,311, or 22.9%, to $17,777 for the first
six months of 1999,  compared to $14,466  for the first six months of 1998.  For
the second  quarter of 1999,  interest and fees on loans  increased  $2,310,  or
31.5%  compared  to the second  quarter of 1998.  Although  investment  security
income rose during 1999 through increased investing activities,  the significant
loan growth experienced by the Corporation  continued to account for the largest
portion of the total interest income increase. As previously  mentioned,  actual
loan growth of $30,879 was  recognized  during the second  quarter of this year.
That increase, along with the loans acquired in the branch acquisition, led to a
$128,191,  or 39.5%  increase in average  loan  balances  from June 1998 to June
1999.

Total  interest  expense for the six month period  ending June 30, 1999 and 1998
was $10,024  and $8,206,  respectively.  For the second  quarter of 1999,  total
interest  expense  increased  $1,275,  or 30.5%,  compared to the same 1998 time
period.  Total average  interest-bearing  liabilities,  including short-term and
long-term borrowings,  increased $164,283, or 45.1% from June 1998 to June 1999.
The deposits  acquired in the branch  acquisition,  in addition to the long-term
debt  incurred by the  Corporation  for  injection  into its  subsidiary  bank's
capital accounted for approximately 80% of the increase.

While the  increase  in  average  interest-bearing  liabilities  gave rise to an
increase in overall  interest  expense,  the overall cost of funds  continued to
decline.  Despite  the slight  increase  in  interest  rates  during the period,
certain interest-bearing  deposits repriced at a lower rate when compared to the
rates offered and paid two and three years ago.

The following  table  summarizes  the  Corporation's  net interest  income (on a
tax-equivalent  basis) for each of the  periods  presented.  A marginal  federal
income tax rate of 34% for each period was used.

<TABLE>
<CAPTION>
                                       Six Months                          Change from
                                     Ended June 30,                       Prior Period
                                   1999             1998             Amount        Percent
                                   ----             ----             ------        -------


<S>                              <C>               <C>               <C>             <C>
Interest income                  $21,145           $17,129           $4,016          23.4%

Interest expense                  10,024             8,206            1,818          22.2%
                                  ------            ------           ------
     Net interest income        $ 11,121           $ 8,923          $ 2,198          24.6%
                                ========           =======          =======
</TABLE>

<PAGE>17
<TABLE>
<CAPTION>
                                      Three Months                         Change from
                                     Ended June 30,                       Prior Period
                                   1999             1998             Amount        Percent
                                   ----             ----             ------        -------

<S>                              <C>                <C>              <C>             <C>
Interest income                  $11,471            $8,692           $2,779          32.0%

Interest expense                   5,452             4,177            1,275          30.5%
                                   -----             -----            -----
     Net interest income          $6,019            $4,515          $ 1,504          33.3%
                                  ======            ======          =======
</TABLE>

Net interest income, on a tax equivalent basis, for the first six months of 1999
was $2,198,  or 24.6% higher than for that same six month period ending June 30,
1998. For the second quarter of 1999, net interest  income,  on a tax equivalent
basis, was $1,504,  or 33.3% higher than for the same 1998 time period.  The net
interest  margin,  on a tax equivalent  basis for the six months ending June 30,
1999 and 1998 was 4.22% and  4.37%,  respectively.  Although  the growth in loan
volume has contributed to higher net interest income,  the competitive nature of
the market in which the Corporation operates has led to lower yields realized on
those loans funded. These lower yields coupled with the loan growth has resulted
in the lower net interest margin posted during the current year.

Provision for Loan Losses and Asset Quality

The provision for loan losses represents charges made to earnings to maintain an
adequate  allowance  for loan losses.  The  allowance is maintained at an amount
believed by management to be sufficient to absorb losses  inherent in the credit
portfolio.  Management conducts,  on a quarterly basis, a detailed evaluation of
the adequacy of the allowance.

Loans with a fair value of $56,398 were acquired in the Bank One, Indiana branch
acquisition.  The fair value of loans acquired is net of a fair value adjustment
for credit  risk of $563.  This credit risk  valuation  account  will be used to
absorb future charge-offs recorded on the acquired loans.

The  consolidated  provision for loan losses was $370 and $360 for the first six
months of 1999 and 1998, respectively.  The allowance for loan losses was $4,137
and $4,241 at June 30, 1999 and December 31, 1998, respectively. When adding the
credit valuation account amount with the allowance for loan loss account balance
at June 30, 1999,  the allowance as a percentage  of loans was 1.03%.  This same
ratio at December 31, 1998 was 1.20%. The increased net charge-offs  resulted in
a lower allowance for loan loss account balance at June 30, 1999 than existed at
December 31, 1998.  Specifically,  net charge-offs for the six months ended June
30, 1999 exceeded the  contribution  to the provision for loan loss by $106. The
lower  allowance  for loan loss  account  balance in  conjunction  with the loan
growth  experienced  during the second  quarter  yielded a lower  allowance as a
percentage  of  loans.  One  commercial  and one  mortgage  loan  accounted  for
approximately  62% of the  Corporation's  $282  net  charge-offs  in the  second
quarter.

Nonperforming  loans include  nonaccrual  loans,  restructured  loans, and loans
delinquent 90 days or more.  Loans are classified as nonaccrual  when management
believes that  collection of interest is doubtful,  typically  when payments are
past due 90 days,  unless  the  loans are well  secured  and in the  process  of
collection.

The following table indicates the composition of nonperforming loans:

                                                        June 30,    December 31,
                                                          1999           1998

Loans past due 90 days or more                           $  831           $  775
Nonaccrual loans                                          1,318            1,468
Restructured loans                                          173              197
                                                         ------           ------

    Total nonperforming loans                            $2,322           $2,440
                                                         ======           ======
<PAGE>18

Total  nonperforming  loans have  decreased  slightly in the first six months of
1999 primarily as a result of  charging-off  one nonaccrual  commercial loan and
one significantly delinquent mortgage loan.

The Corporation  currently has  approximately  17% of its  outstanding  loans to
agricultural-related  borrowers.  Given the  recent  decline in both the hog and
grain markets,  management is monitoring  these specific  industry credits on an
on-going basis.

Despite  the  higher  net  charge-offs  and  the  current  situation   involving
agricultural-related   credits,   management  believes  overall  credit  quality
continues to be good.


Noninterest Income and Expense

Noninterest income totaled $2,545 for the first six months of 1999,  compared to
$2,316 for that same period of 1998, an increase of $229,  or 9.9%.  Noninterest
income for the second quarter increased $196, or 17.0% to $1,349 compared to the
prior year.

Income from fiduciary activities increased for the first six months and also for
the second  quarter of 1999 when  compared  to the same 1998 time  periods.  The
number and size of new  accounts,  along with the increase in the fee  structure
has led to higher earnings.

Service  charges  on  deposit  accounts   comprise  the  largest   component  of
noninterest income. The number of accounts being assessed fees, primarily due to
the three branch  acquisitions  earlier in the year resulted in a 8.7% and 22.5%
increase in revenue for the six months and the three months ended June 30, 1999,
respectively, when compared to that same 1998 time period.

Net gain on loans originated and sold in the secondary mortgage market were $567
and $494 for the first six months of 1999 and 1998 respectively,  an increase of
$73, or 14.8%.  Loan  fundings for the six months ended June 30, 1999  increased
$9,250, or 25.6% compared to the prior year, while fundings for the three months
ended June 30, 1999 rose $1,807,  or 9.1% when compared to that same time period
one year earlier.  Although the local economy  continues to remain  strong,  the
slight  rise in  interest  rates  impacted  the number of  fundings,  especially
refinancings, during the second quarter of 1999.

Other  service  charges  and fees were $422 and $352 for the first six months of
1999 and 1998,  respectively,  an  increase  of $70,  or 19.9%.  For the  second
quarter of 1999, other service charges and fees increased $48, or 24.5% compared
to the prior year. The majority of the increase is  attributable to ATM and safe
deposit box fees as a result of the expanded Jasper County customer base.

Noninterest expense totaled $8,157 for the first six months of 1999, compared to
$6,571 for that same  period of 1998,  an increase  of $1,586,  or 24.1%.  Total
noninterest  expense for the second quarter of 1999 was $1,179,  or 35.5% higher
than the prior year.

Salary  and  employee  benefits  expense  was $4,640 for the first six months of
1999, an increase of $726, or 18.5%, from the $3,914 for the first six months of
1998.  Total  salaries and employee  benefits for the second quarter of 1999 was
$2,474,  a $517,  or 26.4%  increase  from the 1998 amount.  Total  salaries and
benefits  increased  significantly  due to the first full quarter  effect of the
three branch  acquisitions in Jasper County.  Approximately  fifty-six employees
were added to the  Corporation's  staff as a result of the  acquisition.  Health
insurance  costs were also  impacted  through the higher  staffing  level of the
Corporation.

Occupancy and equipment expenses were also affected by the branch  acquisitions,
as certain repairs and upgrades were made to the facilities,  in addition to the
depreciation recorded on the fixed assets acquired.

Intangible asset  amortization  increased  significantly for both the six months
and three months ended June 30, 1999 solely as a result of the goodwill and core
deposit amortization related to the acquisition of the Jasper County branches.

<PAGE>19

Other  operating  expenses  were  $2,140  for the first six  months of 1999,  an
increase of $462, or 27.5%, compared to $1,678 for the first six months of 1998.
For the second quarter of 1999,  other  operating  expenses  increased  $359, or
41.1% from the prior year.  The majority of this increase for the six months and
three  months ended June 30, 1999 relate to increased  overhead  items,  such as
office supplies,  telephone,  postage, insurance, credit card and ATM processing
fees, all of which are directly associated with the addition of the three Jasper
County branches.

Income Taxes

The  Corporation's  effective tax rate for the three months ending June 30, 1999
and 1998 was 33.3% and 33.7%,  respectively.  For the six months  ended June 30,
1999 and 1998, the effective tax rate for the  Corporation  was 33.2% and 34.0%,
respectively.  Increased  interest  on  tax-exempt  securities  and  loans was a
significant factor in the lower effective tax rate realized.


FINANCIAL CONDITION

Total assets were $631,754 at June 30, 1999 compared to $483,969 at December 31,
1998, an increase of $147,785, or 30.5%. As previously mentioned,  approximately
$117 million in deposits and $58 million in loans were attributable to the three
Bank One,  Indiana  branches  acquired  in March,  1999.  Increases  of  $7,607,
$20,874,  and $103,861  were realized in cash and cash  equivalents,  investment
securities, and net loans, respectively, for the first six months of 1999.

Total  deposits  increased  $119,145 to  $514,691  at June 30, 1999  compared to
$395,546 at December 31, 1998.  Short-term  borrowings  increased $13,288 during
the first six  months  primarily  due to  increases  in  repurchase  agreements.
Long-term  debt at June 30,  1999 was  $36,922,  an  increase  of  $13,068  when
compared to December 31, 1998. Loan proceeds of $14,000,  of which $350 has been
repaid,  was  obtained  by the  Corporation  and  injected  into  capital of its
wholly-owned  subsidiary bank.  Principal repayments of $582 to the Federal Home
Loan Bank of Indianapolis for other long-term  borrowing  obligations  accounted
for the remainder of the change.

Capital

The Corporation and Bank are subject to various regulatory capital guidelines as
required by federal and state  banking  agencies.  These  guidelines  define the
various components of core capital and assign risk weights to various categories
of assets.

Tier 1 capital consists of  shareholders'  equity less goodwill and core deposit
intangibles,  as defined by bank  regulators.  The  definition of Tier 2 capital
includes the amount of allowance  for loan losses which does not exceed 1.25% of
gross  risk  weighted  assets.  Total  capital  is the sum of Tier 1 and  Tier 2
capital.

The minimum requirements under the capital guidelines are a 4.00% leverage ratio
(Tier 1 capital divided by average assets less intangible  assets and unrealized
gains/losses),  a 4.00% Tier 1 risk-based  capital ratio (Tier 1 capital divided
by risk-weighted  assets), and an 8.00% total capital ratio (Tier 1 capital plus
Tier 2 capital divided by risk-weighted assets).

The Federal  Deposit  Insurance  Corporation  Improvement  Act of 1991  (FDICIA)
requires  federal  regulatory  agencies  to define  capital  tiers.  These  are:
well-capitalized,   adequately  capitalized,   undercapitalized,   significantly
undercapitalized,  and critically  undercapitalized.  Under these regulations, a
"well-capitalized" institution must achieve a Tier 1 risk-based capital ratio of
at least 6.00%,  a total capital ratio of at least 10.00%,  and a leverage ratio
of at least 5.00% and not be under a capital  directive  order.  Failure to meet
capital  requirements can initiate  regulatory action. If an institution is only
adequately  capitalized,  regulatory  approval is  required  to accept  brokered
deposits.  If  undercapitalized,   capital  distributions,   asset  growth,  and
expansion is limited,  in addition to the institution being required to submit a
capital restoration plan.

<PAGE>20

At June 30, 1999 and December 31, 1998,  management was not aware of any current
recommendations  by banking  regulatory  authorities  which,  if they were to be
implemented,  would have, or are reasonably likely to have, a material effect on
the Corporation's consolidated liquidity, capital resources or operations

The  Corporation's  actual  consolidated  capital  amounts are  presented in the
following table.

<TABLE>
<CAPTION>
                                                                                June 30,          December 31,
                                                                                   1999                1998

       <S>                                                                   <C>                 <C>
       Tier 1 capital
         Shareholders' equity                                                $         43,809    $        42,614
         Less:  Intangibles                                                           (14,090)              (806)
         Add/less:  Unrealized loss/(gain) on securities                                1,470                 42
                                                                             ----------------    ---------------

             TOTAL TIER 1 CAPITAL                                            $         31,189    $        41,850
                                                                             ================    ===============

       Total capital
         Tier 1 capital                                                      $         31,189    $        41,850
         Allowable allowance for loan losses                                            4,135              4,241
                                                                             ----------------    ---------------

             TOTAL  CAPITAL                                                  $         35,324    $        46,091
                                                                             ================    ===============

       RISK WEIGHTED ASSETS                                                  $        462,581    $       353,215
                                                                             ================    ===============

       AVERAGE ASSETS                                                        $        607,993    $       475,438
                                                                             ================    ===============
</TABLE>

The Corporation and Bank's actual capital ratios and minimum required levels are
presented in the following table.

<TABLE>
<CAPTION>

                                   Actual ratios as of                       Minimum
                                June 30,       December 31,             Capital Adequacy          Well-Capitalized
                                  1999             1998                    Requirement               Requirement
                                  ----             ----                    -----------               -----------

<S>                               <C>               <C>                       <C>                        <C>
Tier I Capital
 (to average assets)
    Consolidated                  5.1%               8.8%                      4.0%                      5.0%
    Lafayette Bank and Trust      7.1%               8.7%                      4.0%                      5.0%


Tier I Capital
 (to risk weighted assets)
    Consolidated                  6.7%              11.9%                      4.0%                      6.0%
    Lafayette Bank and Trust      9.3%              11.8%                      4.0%                      6.0%


Total Capital
 (to risk weighted assets)
    Consolidated                   7.6%             13.1%                     8.0%                      10.0%
    Lafayette Bank and Trust      10.2%             13.0%                     8.0%                      10.0%
</TABLE>
<PAGE>21

As discussed earlier,  the Corporation's  wholly-owned  subsidiary bank acquired
three branches on March 12, 1999.  Management was aware this  transaction  would
reduce  consolidated and bank-only capital levels. As a result,  the Corporation
borrowed $14 million and contributed $13 million of capital to the Bank in order
for the Bank to maintain its  well-capitalized  status.  As of June 30, 1999 the
Bank  continued  its position as  well-capitalized.  Management  was also aware,
however,  that the Corporation's  capital level would temporarily drop below the
minimum  required level for capital adequacy  purposes.  As of June 30, 1999 the
Corporation's  consolidated  capital level was slightly below the required level
for  capital  adequacy  purposes.   Management  will  continue  to  monitor  the
Corporation's  consolidated  capital level and is currently  analyzing  possible
alternatives  that would  permit the  Corporation  to meet the minimum  required
level for capital  adequacy  purposes  prior to December 31,  1999.  The Federal
Reserve Bank considers the holding company  capital  adequacy in connection with
any  application  activity  which requires their  approval.  Further,  since the
Corporation's capital levels are below the well-capitalized category, the use of
expedited  Federal  Reserve Bank  procedures in any  application  activity which
requires their approval will not be available to the  Corporation  until it once
again becomes well-capitalized. Certain statements in this paragraph relating to
future capital levels of the Corporation and Bank are forward-looking  which may
or may not be accurate due to the  impossibility  of predicting  future economic
and  business  events,  including  the  ability  of  the  Corporation  to  raise
additional  capital,  if needed,  as well as other  factors  that are beyond the
control of the Corporation.

Liquidity

The  consolidated  statement of cash flows  illustrates  the elements which gave
rise to the change in the  Corporation's  cash and cash  equivalents for the six
months  ended June 30, 1999 and 1998.  Including  net income of $3,169,  the net
cash from operating activities for the first six months of 1999 generated $5,492
of  available  cash.  Net cash from  investing  activities  utilized  $71,091 of
available  cash,  primarily  as a result of $23,293 in net  investment  security
purchases,  in  addition  to $45,926 of net loan  fundings  by the  Corporation.
Proceeds  from the three  branches  acquired,  in  addition  to the  increase in
short-term  borrowings  and long-term  debt  generated  $73,206 in net cash from
financing activities.

Total cash inflows for the six month period in 1999  exceeded  cash  outflows by
$7,607  resulting in a cash and cash  equivalent  balance of $26,375 at June 30,
1999.

Year 2000

The  Corporation's  Board of Directors  and  management is aware of the possible
consequences  the Y2K may pose with regard to the computer  systems  utilized to
conduct  business  on a daily  basis.  A "Year 2000  Committee",  which  reports
monthly to the Board of Directors,  has prepared a detailed plan to address this
issue.  In  addition  to  developing  contingency  plans,  the  Corporation  has
conducted internal employee training,  as well as customer awareness seminars in
an effort  to not only  communicate  the Y2K  issue,  but also to  inform  these
individuals of the Corporation's  approach to address this issue. Testing of the
Corporation's  core processing  systems began early in the third quarter of 1998
and was  temporarily  delayed due to the  installation  of a new proof system in
conjunction  with  the  time  restrictions   resulting  from  the  three  branch
acquisitions. Testing was completed, however, as of April 30, 1999.

Because the Y2K issue could affect the ability of the Corporation's customers to
conduct their business and operations in a timely and effective manner,  any Y2K
disruptions could adversely impact the Corporation. The Corporation's ability to
process  loan and  deposit  transactions  could be  affected,  which could limit
sources of revenues and funding from customers, as well as impact the quality of
the  loan  portfolio.  In order  to  assess  the  potential  credit  risk in the
Corporation's  loan  portfolio,  a  comprehensive  review of all commercial loan
customers whose aggregate borrowings were $200,000 or greater was performed.  No
borrowers were classified as having a high credit risk.

<PAGE>22

While  management  does not believe the necessary steps involved to resolve this
issue will  significantly  impair  the  organization's  ability  to operate  and
conduct  business in a normal fashion,  the Corporation  does estimate the total
cost to address this issue to be approximately $1.6 million.  Approximately $1.3
million of the estimated  $1.6 million has been incurred  through June 30, 1999.
The  expenditures  related  to this  issue  are  comprised  primarily  of system
upgrades,  consisting  both of hardware and  software,  in addition to dedicated
personnel costs.

The above discussion of Y2K issues includes numerous forward-looking  statements
reflecting  management's  current  assessment  and estimates with respect to the
Corporation's  Y2K  compliance  efforts  and the  impact  of Y2K  issues  on the
Corporation's  business  and  operations.  Various  factors  could cause  actual
results  to  differ  materially  from  those  contemplated  by such  assessment,
estimates and forward-looking statements, including many factors that are beyond
the control of the Corporation.  These factors included, but are not limited to,
representations by vendors and customers,  technological advancements,  economic
conditions, and competitive considerations.


ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk of the Corporation  encompasses  exposure to both liquidity risk and
interest rate risk and is reviewed  quarterly by the  asset/liability  committee
("ALCO") and the Board of Directors.

The  liquidity  of the parent  company is  dependent on the receipt of dividends
from the banking subsidiary.  Certain  restrictions exist regarding the transfer
of funds from the  subsidiary as explained in the  "Capital"  section of Item 2.
Management  expects that in the aggregate,  the banking subsidiary will continue
to have the  ability  to  dividend  adequate  funds to the parent  company.  The
statements in this paragraph relating to the parent company receiving  dividends
from the subsidiary bank are forward-looking  statements which may or may not be
accurate due to the  impossibility  of predicting  future  economic and business
events.

The  banking  subsidiary's  source of funding  is  predominantly  core  deposits
consisting of both commercial and individual deposits, maturities of securities,
repayments of loan principal and interest,  federal funds purchased,  securities
sold under  agreements to repurchase,  and long-term  borrowings from the FHLBI.
The deposit base is diversified between individual and commercial accounts which
helps avoid  dependence on large  concentrations  of funds. The Corporation does
not solicit certificates of deposit from brokers.

The Corporation's  interest rate risk is measured by computing estimated changes
in net interest  income and the net  portfolio  value  ("NPV") of its cash flows
from assets and liabilities in the event of adverse movements in interest rates.
Interest  rate risk  exposure is measured  using an  interest  rate  sensitivity
analysis to determine the change in NPV in the event of hypothetical  changes in
interest  rates.  Another  method also used to enhance  the  overall  process is
interest rate sensitivity gap analysis. This method is utilized to determine the
repricing characteristics of the Corporation's assets and liabilities.

NPV represents  the market value of portfolio  equity and is equal to the market
value of assets minus the market value of liabilities.  This particular analysis
assesses the risk of loss in market risk sensitive instruments in the event of a
sudden and  sustained  1% - 2% increase  and  decrease in  interest  rates.  The
Corporation's  Board of  Directors  adopted an interest  rate risk policy  which
established  a 45% minimum and maximum  increase  and decrease in the NPV in the
event of a sudden and sustained 1% - 2% increase or decrease in interest rates.

<PAGE>23

The following table represents the Corporation's projected change in NPV for the
various rate shock levels as of June 30, 1999:

<TABLE>
<CAPTION>
June 30, 1999
                              -----------------------  Net Portfolio Value --------------------

      Change                     Dollar                    Dollar                  Percentage
     in Rates                    Amount                    Change                    Change

     <S>                      <C>                      <C>                          <C>
       + 200                   $ 25,205                 $ (24,691)                   (49.48) %
       + 100                     37,008                   (12,888)                   (25.83)
       Base                      49,896                         -                        -
       - 100                     61,742                    11,846                     23.74
       - 200                     73,513                    23,617                     47.33
</TABLE>

The above table indicates that as of June 30, 1999 the  Corporation's  estimated
NPV would be expected to decrease in the event of sudden and sustained increases
in prevailing interest rates.  Conversely,  in the event of sudden and sustained
decreases in prevailing interest rates, the Corporation's estimated NPV would be
expected  to  increase.  In the  event of a sudden  and  sustained  increase  or
decrease  in  interest  rates  of 2%  or  greater  as  of  June  30,  1999,  the
Corporation's  estimated  net  portfolio  value  ("NPV") would exceed the policy
guidelines  established  by the  Corporation's  Board of  Directors.  Management
believes since the remaining expected life of the Corporation's  assets are over
three and one-half times greater than the expected life of the liabilities,  any
upward movement in the interest rate  environment will result in a larger degree
of change in the value of the assets  over that of the  liabilities.  Management
has reported this policy exception to the  Corporation's  Board of Directors and
will  continue to monitor the results on an on-going  basis.  As of December 31,
1998,  the  Corporation's  estimated  changes in NPV were  within  the  approved
guidelines established by the Board of Directors.

Computations of prospective  effects of  hypothetical  interest rate changes are
based on a number of assumptions,  including  relative levels of market interest
rates,  loan  prepayments and deposit decay rates, and should not be relied upon
as indicative of actual  results.  These  computations  do not  contemplate  any
actions  management may undertake in response to changes in interest rates.  The
NPV  calculation  is based on the net  present  value of  discounted  cash flows
utilizing certain prepayment assumptions and market interest rates.

Certain  shortcomings are inherent in the method of computing the estimated NPV.
Actual  results may differ from that  information  presented  in the table above
should market  conditions vary from the  assumptions  used in preparation of the
table  information.  If interest rates remain or decrease below current  levels,
the proportion of adjustable  rate loans in the loan portfolio could decrease in
future  periods due to refinancing  activity.  Also, in the event of an interest
rate change,  prepayment and early  withdrawal  levels would likely be different
from those assumed in the table.  Lastly, the ability of many borrowers to repay
their   adjustable   rate  debt  may  decline  during  a  rising  interest  rate
environment.

Used in conjunction  with the NPV analysis is the interest rate  sensitivity gap
analysis.  This  analysis  monitors  the  relationship  between the maturity and
repricing of  interest-earning  assets and  interest-bearing  liabilities  while
maintaining an acceptable interest rate spread. Interest rate sensitivity gap is
defined  as the  difference  between  the amount of  maturing  or  repricing  of
interest-earning  assets and  interest-bearing  liabilities  within specific and
defined  time  frames.  A positive  gap occurs when the amount of interest  rate
sensitive  assets  exceed the amount of  interest  rate  sensitive  liabilities.
Conversely,  a gap is  considered  negative  when the  amount of  interest  rate
sensitive  liabilities  exceed the interest rate  sensitive  assets.  Generally,
during a time of rising interest  rates, a negative gap would  adversely  affect
net interest income,  while a positive gap would enhance net interest income. On
the other hand,  during a time period of falling  interest rates, a negative gap
would  increase net  interest  income,  while a positive gap would  decrease net
interest  income.  It is the ALCO's  responsibility  to  maintain  a  reasonable
balance between the exposure to interest rate fluctuations and earnings.

<PAGE>24

PART II.   OTHER INFORMATION

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

        (a) The  Corporation's  Annual Meeting of Shareholders  was held Monday,
April 12, 1999.

        (b)        The following members were elected to the Corporation's Board
                   of  Directors  to  hold  office  as  indicated  by  the  term
                   expiration,  or until  their  successors  are duly chosen and
                   qualified.
<TABLE>
<CAPTION>

       Term                                                Against or                             Broker
     Expiration           Nominee               For         Withheld           Abstain           Non-Votes

       <S>       <C>                         <C>             <C>                  <C>                <C>
       2002       W. L. Hancock              2,021,309       43,691               0                  0
       2002       Roy D. Meeks               2,064,993           7                0                  0
</TABLE>

        (c) There were no other  matters  voted  upon at the  Annual  Meeting of
Shareholders

Item 6.  Exhibits and Reports on Form 8-K

        (a)   Exhibits

                 27   Financial Data Schedule for June 30, 1999

        (b)   Reports on Form 8-K

                      No Form 8-K was  filed  with the SEC  during  the  quarter
                      ended June 30, 1999.

SIGNATURES

Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
registrant  has duly  cause  this  report  to be  signed  on its  behalf  by the
undersigned thereunto duly authorized.


Date:  August 13, 1999                      By /s/ Robert J. Weeder
                                            --------------------------------
                                            Robert J. Weeder
                                            President


Date:  August 13, 1999                      By /s/ Marvin S. Veatch
                                            --------------------------------
                                            Marvin S. Veatch
                                            Controller