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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549




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FORM 10-Q/A

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the Quarterly Period ended September 30, 2002


Commission File Number: 001-13735



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MIDWEST BANC HOLDINGS, INC.

(Exact name of Registrant as specified in its charter.)


|                                         |  |                                        
|---------------------------------------- |  | ---------------------------------------
|Delaware                                 |  | 36-3252484                             
|(State or other jurisdiction of          |  | (I.R.S. Employer Identification Number)
|incorporation or organization)           |  |                                        
|                                         |  |                                        
|501 W. North Ave                         |  |                                        
|Melrose Park, Illinois                   |  | 60160                                  
|(Address of principal executive offices) |  | (ZIP code)                             



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(708) 865-1053(Registrants telephone number, including area code)

Indicate by checkmark 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 [   ] No [X]

Indicate by checkmark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). 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                  |  | November 1, 2002
|                      
|Common, par value $.01 |  | 16,154,030      
|                      





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TABLE OF CONTENTS



|                                             |                                                                                                |  |  |  |  |  |  | 
|-------------------------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                             | ITEM 1 FINANCIAL STATEMENTS                                                                  
|                                             | ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                             | ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                             | ITEM 4  CONTROLS AND PROCEDURES                                                              
|PART II                                     
|                                             | Items 1- 5. Other Information                                                                 
|                                             | Item 6. Exhibits and Reports on Form 8-K                                                      
|SIGNATURES                                  
|CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
|EXHIBITS                                    
|Certification of CEO                        
|Certification of CFO                        



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Explanatory Note

This Form 10-Q/A for the quarter ended September 30, 2002 is being filed to
amend the report previously filed by the Company on November 1, 2002 to provide
restated interim financial statements as of and for the period ended September
30, 2002 and related appropriate amendments to Managements Discussion and
Analysis of Financial Condition and Results of Operations. The restatement of
financial information results from the Companys
reclassification of certain loans as of September 30, 2002 based on a review of
those loans by federal and state bank
regulatory authorities during the first quarter of 2003. The Company previously reported on March 7, 2003 that
it was in discussions with the regulators regarding a reclassification of
certain loans to one borrower and its affiliates.

See accompanying notes to unaudited consolidated financial statements.

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ITEM 1  FINANCIAL STATEMENTS

MIDWEST BANC HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In Thousands)

|                                               |                            |                                            |           |               |           |              |           |           |           | 
|---------------------------------------------- | -------------------------- | ------------------------------------------ | --------- | ------------- | --------- | ------------ | --------- | --------- | --------- | 
|                                               |                            |                                            |           | September 30, |           | December 31,
|                                               |                            |                                            |           | 2002          |           | 2001        
|                                               |                            |                                            |           | (Restated)    |           |             
|                                               |                            |                                            |           |               |           |             
|ASSETS                                         |                            |                                            |           |               |           |              |           |          
|Cash and cash equivalents                      |                            | $                                          | 72,148    |               |           | $            | 49,812    |          
|Securities available-for-sale                  |                            |                                            | 537,321   |               |           |              | 683,474   |          
|Securities held-to-maturity                    |                            |                                            | 115,813   |               |           |              | 21,445    |          
|Loans                                          |                            |                                            | 1,133,282 |               |           |              | 1,003,386 |          
|Allowance for loan losses                      |                            |                                            | (20,950   | )             |           |              | (10,135   | )        
|                                               |                            |                                            |           |               |           |              |           |          
|                                               | Net loans                  |                                            |           | 1,112,332     |           |              |           | 993,251   |          
|Cash value of life insurance                   |                            |                                            | 20,256    |               |           |              | 19,554    |          
|Premises and equipment, net                    |                            |                                            | 18,619    |               |           |              | 19,477    |          
|Other real estate                              |                            |                                            | 225       |               |           |              | 355       |          
|Goodwill                                       |                            |                                            | 4,548     |               |           |              | 3,524     |          
|Other assets                                   |                            |                                            | 25,636    |               |           |              | 19,530    |          
|                                               |                            |                                            |           |               |           |              |           |          
|                                               | Total assets               |                                            | $         | 1,906,898     |           |              | $         | 1,810,422 |          
|                                               |                            |                                            |           |               |           |              |           |          
|LIABILITIES AND STOCKHOLDERS EQUITY           |                            |                                            |           |               |           |              |           |          
|LIABILITIES                                    |                            |                                            |           |               |           |              |           |          
|Deposits                                       |                            |                                            |           |               |           |              |           |          
|                                               | Non-interest-bearing       |                                            | $         | 131,507       |           |              | $         | 134,707   |          
|                                               | Interest-bearing           |                                            |           | 1,222,489     |           |              |           | 1,076,813 |          
|                                               |                            |                                            |           |               |           |              |           |          
|                                               |                            | Total deposits                             |           |               | 1,353,996 |              |           |           | 1,211,520 | 
|Federal funds purchased                        |                            |                                            |          |               |           |              | 24,350    |          
|Securities sold under agreements to repurchase |                            |                                            | 138,227   |               |           |              | 146,800   |          
|Advances from the Federal Home Loan Bank       |                            |                                            | 237,500   |               |           |              | 244,500   |          
|Junior subordinated debt                       |                            |                                            | 20,000    |               |           |              | 20,000    |          
|Note payable                                   |                            |                                            | 11,300    |               |           |              | 6,500     |          
|Due to broker                                  |                            |                                            | 10,715    |               |           |              | 46,432    |          
|Other liabilities                              |                            |                                            | 21,308    |               |           |              | 14,106    |          
|                                               |                            |                                            |           |               |           |              |           |          
|                                               | Total liabilities          |                                            |           | 1,793,046     |           |              |           | 1,714,208 |          
|                                               |                            |                                            |           |               |           |              |           |          
|STOCKHOLDERS EQUITY                           |                            |                                            |           |               |           |              |           |          
|Preferred stock                                |                            |                                            |          |               |           |              |          |          
|Common stock                                   |                            |                                            | 114       |               |           |              | 114       |          
|Surplus                                        |                            |                                            | 29,392    |               |           |              | 29,587    |          
|Retained earnings                              |                            |                                            | 85,444    |               |           |              | 77,256    |          
|Accumulated other comprehensive income (loss)  |                            |                                            | 7,552     |               |           |              | (1,057    | )        
|Treasury stock, at cost                        |                            |                                            | (8,650    | )             |           |              | (9,686    | )        
|                                               |                            |                                            |           |               |           |              |           |          
|                                               | Total stockholders equity |                                            |           | 113,852       |           |              |           | 96,214    |          
|                                               |                            |                                            |           |               |           |              |           |          
|                                               |                            | Total liabilities and stockholders equity |           | $             | 1,906,898 |              |           | $         | 1,810,422 | 
|                                               |                            |                                            |           |               |           |              |           |          

See accompanying notes to unaudited consolidated financial statements.

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MIDWEST BANC HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended September 30, 2002 and 2001
(In Thousands, Except Per Share Data)

|                                                                           |                                  |                        |        |            |        |      |        |       |        | 
|-------------------------------------------------------------------------- | -------------------------------- | ---------------------- | ------ | ---------- | ------ | ---- | ------ | ----- | ------ | 
|                                                                           |                                  |                        |        | 2002       |        | 2001
|                                                                           |                                  |                        |        | (Restated) |        |     
|                                                                           |                                  |                        |        |            |        |     
|Interest Income                                                            |                                  |                        |        |            |        |      |        |      
|Loans                                                                      |                                  | $                      | 19,114 |            |        | $    | 19,205 |      
|Securities                                                                 |                                  |                        |        |            |        |      |        |      
|                                                                           | Taxable                          |                        |        | 8,383      |        |      |        | 8,872 |       
|                                                                           | Exempt from federal income taxes |                        |        | 817        |        |      |        | 363   |       
|Trading account securities                                                 |                                  |                        |       |            |        |      | 16     |      
|Federal funds sold and other short-term investments                        |                                  |                        | 39     |            |        |      | 37     |      
|                                                                           |                                  |                        |        |            |        |      |        |      
|                                                                           |                                  | Total interest income  |        |            | 28,353 |      |        |       | 28,493 | 
|Interest Expense                                                           |                                  |                        |        |            |        |      |        |      
|Deposits                                                                   |                                  |                        | 8,617  |            |        |      | 12,027 |      
|Advances from the Federal Home Loan Bank                                   |                                  |                        | 3,328  |            |        |      | 3,415  |      
|Note payable                                                               |                                  |                        | 63     |            |        |      | 96     |      
|Federal funds purchased and
securities sold under agreements to repurchase |                                  |                        | 1,119  |            |        |      | 613    |      
|Junior subordinated debt                                                   |                                  |                        | 210    |            |        |      | 500    |      
|                                                                           |                                  |                        |        |            |        |      |        |      
|                                                                           |                                  | Total interest expense |        |            | 13,337 |      |        |       | 16,651 | 
|                                                                           |                                  |                        |        |            |        |      |        |      
|Net interest income                                                        |                                  |                        | 15,016 |            |        |      | 11,842 |      
|Provision for loan losses                                                  |                                  |                        | 10,915 |            |        |      | 346    |      
|                                                                           |                                  |                        |        |            |        |      |        |      
|Net interest income after provision for loan losses                        |                                  |                        | 4,101  |            |        |      | 11,496 |      
|Other Income                                                               |                                  |                        |        |            |        |      |        |      
|Service charges on deposits                                                |                                  |                        | 1,489  |            |        |      | 1,363  |      
|Net gains on securities transactions                                       |                                  |                        | 97     |            |        |      | 714    |      
|Net trading account profits                                                |                                  |                        |       |            |        |      | 318    |      
|Option income                                                              |                                  |                        | 335    |            |        |      | 288    |      
|Mortgage banking fees                                                      |                                  |                        | 208    |            |        |      | 134    |      
|Insurance and brokerage commissions                                        |                                  |                        | 385    |            |        |      | 206    |      
|Trust income                                                               |                                  |                        | 134    |            |        |      | 157    |      
|Increase in cash surrender value of life insurance                         |                                  |                        | 234    |            |        |      | 234    |      
|Other income                                                               |                                  |                        | 165    |            |        |      | 185    |      
|                                                                           |                                  |                        |        |            |        |      |        |      
|                                                                           | Total other income               |                        |        | 3,047      |        |      |        | 3,599 |       
|Other Expenses                                                             |                                  |                        |        |            |        |      |        |      
|Salaries and employee benefits                                             |                                  |                        | 5,227  |            |        |      | 4,771  |      
|Occupancy and equipment                                                    |                                  |                        | 1,136  |            |        |      | 1,246  |      
|Professional services                                                      |                                  |                        | 708    |            |        |      | 511    |      
|Marketing                                                                  |                                  |                        | 135    |            |        |      | 240    |      
|Other expenses                                                             |                                  |                        | 1,099  |            |        |      | 1,217  |      
|                                                                           |                                  |                        |        |            |        |      |        |      
|                                                                           | Total other expenses             |                        |        | 8,305      |        |      |        | 7,985 |       
|                                                                           |                                  |                        |        |            |        |      |        |      
|Income
(loss) before income taxes                                          |                                  |                        | (1,157 | )          |        |      | 7,110  |      
|Provision (benefit) for income taxes                                       |                                  |                        | (1,487 | )          |        |      | 2,324  |      
|                                                                           |                                  |                        |        |            |        |      |        |      
|Net Income                                                                 |                                  | $                      | 330    |            |        | $    | 4,786  |      
|                                                                           |                                  |                        |        |            |        |      |        |      
|Basic earnings per share                                                   |                                  | $                      | 0.02   |            |        | $    | 0.30   |      
|                                                                           |                                  |                        |        |            |        |      |        |      
|Diluted earnings per share                                                 |                                  | $                      | 0.02   |            |        | $    | 0.29   |      
|                                                                           |                                  |                        |        |            |        |      |        |      

See accompanying notes to unaudited consolidated financial statements.

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MIDWEST BANC HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended September 30, 2002 and 2001
(In Thousands, Except Per Share Data)

|                                                                                                                                |  |            |       |      |  |   |        | 
|------------------------------------------------------------------------------------------------------------------------------- |  | ---------- | ----- | ---- |  | - | ------ | 
|                                                                                                                                |  | 2002       |       | 2001
|                                                                                                                                |  | (Restated) |       |     
|                                                                                                                                |  |            |       |     
|Net income                                                                                                                      |  | $          | 330   |      |  | $ | 4,786  | 
|Net increase in fair value of securities classified
as available-for-sale, net of income taxes and
reclassification adjustments |  |            | 3,687 |      |  |   | 7,257  | 
|                                                                                                                                |  |            |       |      |  |   |        | 
|Comprehensive income                                                                                                            |  | $          | 4,017 |      |  | $ | 12,043 | 
|                                                                                                                                |  |            |       |      |  |   |        | 

See accompanying notes to unaudited consolidated financial statements.

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MIDWEST BANC HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Nine Months Ended September 30, 2002 and 2001
(In Thousands, Except Per Share Data)

|                                                                           |                                  |   |            |        |      |   |        |        | 
|-------------------------------------------------------------------------- | -------------------------------- | - | ---------- | ------ | ---- | - | ------ | ------ | 
|                                                                           |                                  |   | 2002       |        |     
|                                                                           |                                  |   | (Restated) |        | 2001
|                                                                           |                                  |   |            |        |     
|Interest Income                                                            |                                  |   |            |        |      |   |        |       
|Loans                                                                      |                                  | $ | 55,654     |        |      | $ | 58,319 |       
|Securities                                                                 |                                  |   |            |        |      |   |        |       
|                                                                           | Taxable                          |   |            | 27,765 |      |   |        | 25,714 | 
|                                                                           | Exempt from federal income taxes |   |            | 1,808  |      |   |        | 1,157  | 
|Trading account securities                                                 |                                  |   |           |        |      |   | 16     |       
|Federal funds sold and other short-term investments                        |                                  |   | 112        |        |      |   | 238    |       
|                                                                           |                                  |   |            |        |      |   |        |       
|                                                                           | Total interest income            |   |            | 85,339 |      |   |        | 85,444 | 
|Interest Expense                                                           |                                  |   |            |        |      |   |        |       
|Deposits                                                                   |                                  |   | 25,730     |        |      |   | 37,489 |       
|Advances from the Federal Home Loan Bank                                   |                                  |   | 9,921      |        |      |   | 10,114 |       
|Note payable                                                               |                                  |   | 168        |        |      |   | 315    |       
|Federal funds purchased and
securities sold under agreements to repurchase |                                  |   | 3,215      |        |      |   | 1,471  |       
|Junior subordinated debt                                                   |                                  |   | 958        |        |      |   | 1,500  |       
|                                                                           |                                  |   |            |        |      |   |        |       
|                                                                           | Total interest expense           |   |            | 39,992 |      |   |        | 50,889 | 
|                                                                           |                                  |   |            |        |      |   |        |       
|Net interest income                                                        |                                  |   | 45,347     |        |      |   | 34,555 |       
|Provision for loan losses                                                  |                                  |   | 12,392     |        |      |   | 1,550  |       
|                                                                           |                                  |   |            |        |      |   |        |       
|Net interest income after provision for loan losses                        |                                  |   | 32,955     |        |      |   | 33,005 |       
|Other Income                                                               |                                  |   |            |        |      |   |        |       
|Service charges on deposits                                                |                                  |   | 4,198      |        |      |   | 3,519  |       
|Net gains on securities transactions                                       |                                  |   | 1,392      |        |      |   | 2,252  |       
|Net trading account profits                                                |                                  |   | 348        |        |      |   | 815    |       
|Option income                                                              |                                  |   | 989        |        |      |   | 346    |       
|Mortgage banking fees                                                      |                                  |   | 440        |        |      |   | 407    |       
|Insurance and brokerage commissions                                        |                                  |   | 988        |        |      |   | 486    |       
|Trust income                                                               |                                  |   | 430        |        |      |   | 523    |       
|Increase in cash surrender value of life insurance                         |                                  |   | 702        |        |      |   | 702    |       
|Other income                                                               |                                  |   | 503        |        |      |   | 538    |       
|                                                                           |                                  |   |            |        |      |   |        |       
|                                                                           | Total other income               |   |            | 9,990  |      |   |        | 9,588  | 
|Other Expenses                                                             |                                  |   |            |        |      |   |        |       
|Salaries and employee benefits                                             |                                  |   | 15,470     |        |      |   | 13,826 |       
|Occupancy and equipment                                                    |                                  |   | 3,584      |        |      |   | 3,764  |       
|Professional services                                                      |                                  |   | 1,982      |        |      |   | 1,549  |       
|Marketing                                                                  |                                  |   | 601        |        |      |   | 644    |       
|Other expenses                                                             |                                  |   | 3,390      |        |      |   | 3,430  |       
|                                                                           |                                  |   |            |        |      |   |        |       
|                                                                           | Total other expenses             |   |            | 25,027 |      |   |        | 23,213 | 
|                                                                           |                                  |   |            |        |      |   |        |       
|Income before income taxes                                                 |                                  |   | 17,918     |        |      |   | 19,380 |       
|Provision for income taxes                                                 |                                  |   | 4,887      |        |      |   | 6,495  |       
|                                                                           |                                  |   |            |        |      |   |        |       
|Net Income                                                                 |                                  | $ | 13,031     |        |      | $ | 12,885 |       
|                                                                           |                                  |   |            |        |      |   |        |       
|Basic earnings per share                                                   |                                  | $ | 0.81       |        |      | $ | 0.80   |       
|                                                                           |                                  |   |            |        |      |   |        |       
|Diluted earnings per share                                                 |                                  | $ | 0.79       |        |      | $ | 0.79   |       
|                                                                           |                                  |   |            |        |      |   |        |       

See accompanying notes to unaudited consolidated financial statements.

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MIDWEST BANC HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Nine Months Ended September 30, 2002 and 2001
(In Thousands, Except Per Share Data)

|                                                                                                                                |  |            |        |      |  |   |        | 
|------------------------------------------------------------------------------------------------------------------------------- |  | ---------- | ------ | ---- |  | - | ------ | 
|                                                                                                                                |  | 2002       |        |     
|                                                                                                                                |  | (Restated) |        | 2001
|                                                                                                                                |  |            |        |     
|Net income                                                                                                                      |  | $          | 13,031 |      |  | $ | 12,885 | 
|Net increase in fair value of securities classified as
available-for-sale, net of income taxes and
reclassification adjustments |  |            | 8,609  |      |  |   | 8,406  | 
|                                                                                                                                |  |            |        |      |  |   |        | 
|Comprehensive income                                                                                                            |  | $          | 21,640 |      |  | $ | 21,291 | 
|                                                                                                                                |  |            |        |      |  |   |        | 

See accompanying notes to unaudited consolidated financial statements.

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MIDWEST BANC HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (UNAUDITED)
Nine Months Ended September 30, 2002 and 2001
(In Thousands, Except Per Share Data)

|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        |             |  |   |        |   |  |        |         |        |        | 
|------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --- | ------ |  | ------- | ------ | ---------- |  | ------------- | ------ | ------- |  | ---------- | ------ | ----------- |  | - | ------ | - |  | ------ | ------- | ------ | ------ | 
|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        | Accumulated |  |   |        |   |  |        |         |       
|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        | Other       |  |   |        |   |  | Total 
|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        | Compre-     |  |   |        |   |  | Stock-
|                                                                                            |                                                                                                                                 |                            |     | Common |  |         |        |            |  | Retained      |        | hensive |  | Treasury   |        | holders'   
|                                                                                            |                                                                                                                                 |                            |     | Stock  |  | Surplus |        | Earnings   |  | Income/(Loss) |        | Stock   |  | Equity    
|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        | (Restated) |  |               |        |         |  | (Restated)
|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |           
|Balance, January 1, 2001                                                                    |                                                                                                                                 | $                          | 114 |        |  | $       | 29,654 |            |  | $             | 65,814 |         |  | $          | (3,861 | )           |  | $ | (9,145 | ) |  | $      | 82,576  |       
|Cash dividends declared ($0.30
per share)                                                   |                                                                                                                                 |                            |    |        |  |         |       |            |  |               | (4,833 | )       |  |            |       |             |  |   |       |   |  |        | (4,833  | )     
|Issuance of common stock
upon exercise of stock options,
net of tax benefit                 |                                                                                                                                 |                            |    |        |  |         | (109   | )          |  |               |       |         |  |            |       |             |  |   |       |   |  |        | (109    | )     
|Comprehensive income                                                                        |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        |             |  |   |        |   |  |        |         |       
|                                                                                            | Net income                                                                                                                      |                            |     |       |  |         |        |           |  |               |        | 12,885  |  |            |        |            |  |   |        |  |  |        |         | 12,885 |       
|                                                                                            | Net increase in fair value of
securities classified as available-for-sale, net of income taxes and
reclassification adjustments |                            |     |       |  |         |        |           |  |               |        |        |  |            |        | 8,406       |  |   |        |  |  |        |         | 8,406  |       
|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        |             |  |   |        |   |  |        |         |       
|                                                                                            |                                                                                                                                 | Total comprehensive income |     |        |  |         |        |            |  |               |        |         |  |            |        |             |  |   |        |   |  |        |         |        | 21,291 | 
|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        |             |  |   |        |   |  |        |         |       
|Balance, September 30, 2001                                                                 |                                                                                                                                 | $                          | 114 |        |  | $       | 29,545 |            |  | $             | 73,866 |         |  | $          | 4,545  |             |  | $ | (9,145 | ) |  | $      | 98,925  |       
|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        |             |  |   |        |   |  |        |         |       
|Balance, January 1, 2002                                                                    |                                                                                                                                 | $                          | 114 |        |  | $       | 29,587 |            |  | $             | 77,256 |         |  | $          | (1,057 | )           |  | $ | (9,686 | ) |  | $      | 96,214  |       
|Cash dividends declared ($0.30
per share)                                                   |                                                                                                                                 |                            |    |        |  |         |       |            |  |               | (4,843 | )       |  |            |       |             |  |   |       |   |  |        | (4,843  | )     
|Purchase of 25,000 shares of
treasury stock                                                 |                                                                                                                                 |                            |    |        |  |         |       |            |  |               |       |         |  |            |       |             |  |   | (390   | ) |  |        | (390    | )     
|Issuance of common stock
upon acquisition and exercise of
stock options, net of tax benefit |                                                                                                                                 |                            |    |        |  |         | (195   | )          |  |               |       |         |  |            |       |             |  |   | 1,426  |   |  |        | 1,231   |       
|Comprehensive income                                                                        |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        |             |  |   |        |   |  |        |         |       
|                                                                                            | Net income                                                                                                                      |                            |     |       |  |         |        |           |  |               |        | 13,031  |  |            |        |            |  |   |        |  |  |        |         | 13,031 |       
|                                                                                            | Net increase in fair value of
securities classified as available-for-sale, net of income taxes and
reclassification adjustments |                            |     |       |  |         |        |           |  |               |        |        |  |            |        | 8,609       |  |   |        |  |  |        |         | 8,609  |       
|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        |             |  |   |        |   |  |        |         |       
|                                                                                            |                                                                                                                                 | Total comprehensive income |     |        |  |         |        |            |  |               |        |         |  |            |        |             |  |   |        |   |  |        |         |        | 21,640 | 
|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        |             |  |   |        |   |  |        |         |       
|Balance, September 30, 2002                                                                 |                                                                                                                                 | $                          | 114 |        |  | $       | 29,392 |            |  | $             | 85,444 |         |  | $          | 7,552  |             |  | $ | (8,650 | ) |  | $      | 113,852 |       
|                                                                                            |                                                                                                                                 |                            |     |        |  |         |        |            |  |               |        |         |  |            |        |             |  |   |        |   |  |        |         |       

See accompanying notes to unaudited consolidated financial statements.

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MIDWEST BANC HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, 2002 and 2001
(In Thousands)

|                                                 |                                                                                  |                                                         |                                    |          |            |        |        |          |          |        | 
|------------------------------------------------ | -------------------------------------------------------------------------------- | ------------------------------------------------------- | ---------------------------------- | -------- | ---------- | ------ | ------ | -------- | -------- | ------ | 
|                                                 |                                                                                  |                                                         |                                    |          | 2002       |        | 2001  
|                                                 |                                                                                  |                                                         |                                    |          | (Restated) |        |       
|                                                 |                                                                                  |                                                         |                                    |          |            |        |       
|Cash flows from operating activities             |                                                                                  |                                                         |                                    |          |            |        |        |         
|                                                 | Net income                                                                       |                                                         | $                                  | 13,031   |            |        | $      | 12,885   |         
|                                                 | Adjustments to reconcile net income to net cash
provided by operating activities |                                                         |                                    |          |            |        |        |          |         
|                                                 |                                                                                  | Depreciation                                            |                                    |          | 1,688      |        |        |          | 1,910    |       
|                                                 |                                                                                  | Provision for loan losses                               |                                    |          | 12,392     |        |        |          | 1,550    |       
|                                                 |                                                                                  | Proceeds from sales of trading account securities, net  |                                    |          | 348        |        |        |          | 815      |       
|                                                 |                                                                                  | Net gain on sale of securities                          |                                    |          | (1,392     | )      |        |          | (2,252   | )     
|                                                 |                                                                                  | Net trading account profits                             |                                    |          | (348       | )      |        |          | (815     | )     
|                                                 |                                                                                  | Federal Home Loan Bank Stock dividend                   |                                    |          | (517       | )      |        |          | (661     | )     
|                                                 |                                                                                  | Net proceeds from real estate loans originated for sale |                                    |          | (231       | )      |        |          | (643     | )     
|                                                 |                                                                                  | Increase in cash surrender value of life insurance      |                                    |          | (702       | )      |        |          | (702     | )     
|                                                 |                                                                                  | Gain on sale of other real estate                       |                                    |          | (9         | )      |        |          | (1       | )     
|                                                 |                                                                                  | Change in other assets                                  |                                    |          | (7,024     | )      |        |          | (3,573   | )     
|                                                 |                                                                                  | Change in other liabilities                             |                                    |          | 2,952      |        |        |          | 9,286    |       
|                                                 |                                                                                  |                                                         |                                    |          |            |        |        |         
|                                                 |                                                                                  |                                                         | Net cash from operating activities |          |            | 20,188 |        |          |          | 17,799 | 
|Cash flows from investing activities             |                                                                                  |                                                         |                                    |          |            |        |        |         
|                                                 | Sales and maturities of securities available-for-sale                            |                                                         |                                    | 302,191  |            |        |        | 301,941  |         
|                                                 | Principal payments on securities                                                 |                                                         |                                    | 137,315  |            |        |        | 93,657   |         
|                                                 | Purchase of securities available-for-sale                                        |                                                         |                                    | (408,381 | )          |        |        | (476,505 | )       
|                                                 | Maturities of securities held-to-maturity                                        |                                                         |                                    | 900      |            |        |        | 1,424    |         
|                                                 | Net increase in loans                                                            |                                                         |                                    | (131,243 | )          |        |        | (131,585 | )       
|                                                 | Acquisition, net                                                                 |                                                         |                                    | (1,008   | )          |        |        |         |         
|                                                 | Proceeds from sale of other real estate                                          |                                                         |                                    | 261      |            |        |        | 1,156    |         
|                                                 | Property and equipment expenditures, net                                         |                                                         |                                    | (830     | )          |        |        | (570     | )       
|                                                 |                                                                                  |                                                         |                                    |          |            |        |        |         
|                                                 |                                                                                  | Net cash from investing activities                      |                                    |          | (100,795   | )      |        |          | (210,482 | )     
|Cash flows from financing activities             |                                                                                  |                                                         |                                    |          |            |        |        |         
|                                                 | Net increase in deposits                                                         |                                                         |                                    | 142,476  |            |        |        | 126,623  |         
|                                                 | Borrowings                                                                       |                                                         |                                    | 6,300    |            |        |        | 8,750    |         
|                                                 | Repayment of borrowings                                                          |                                                         |                                    | (8,500   | )          |        |        | (2,550   | )       
|                                                 | Dividends paid                                                                   |                                                         |                                    | (4,834   | )          |        |        | (4,833   | )       
|                                                 | Securities sold under agreements to repurchase and federal
funds purchased       |                                                         |                                    | (32,923  | )          |        |        | 62,937   |         
|                                                 | Treasury stock activity, net                                                     |                                                         |                                    | 424      |            |        |        | (109     | )       
|                                                 |                                                                                  |                                                         |                                    |          |            |        |        |         
|                                                 |                                                                                  | Net cash from financing activities                      |                                    |          | 102,943    |        |        |          | 190,818  |       
|                                                 |                                                                                  |                                                         |                                    |          |            |        |        |         
|Increase (decrease) in cash and cash equivalents |                                                                                  |                                                         | 22,336                             |          |            |        | (1,865 | )       
|Cash and cash equivalents at beginning of period |                                                                                  |                                                         | 49,812                             |          |            |        | 46,556 |         
|                                                 |                                                                                  |                                                         |                                    |          |            |        |        |         
|Cash and cash equivalents at end of period       |                                                                                  | $                                                       | 72,148                             |          |            | $      | 44,691 |         
|                                                 |                                                                                  |                                                         |                                    |          |            |        |        |         
|Supplemental disclosures                         |                                                                                  |                                                         |                                    |          |            |        |        |         
|                                                 | Cash paid during the year for                                                    |                                                         |                                    |          |            |        |        |          |         
|                                                 |                                                                                  | Interest                                                |                                    | $        | 39,801     |        |        | $        | 50,320   |       
|                                                 |                                                                                  | Income taxes                                            |                                    |          | 8,757      |        |        |          | 4,256    |       
|                                                 | Amount due to broker for purchases of securities                                 |                                                         |                                    | 10,715   |            |        |        | 46,432   |         
|                                                 | Transfer from available-for-sale securities to
held-to-maturity                  |                                                         |                                    | 99,841   |            |        |        |         |         

See accompanying notes to unaudited consolidated financial statements.

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NOTE 1  BASIS OF PRESENTATION

The consolidated financial information of Midwest Banc Holdings, Inc. (the
Company) included herein is unaudited; however, such information reflects all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation for the interim
periods. The financial statements included herein have been prepared in
accordance with accounting principles generally accepted in the United States
of America for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X and have been restated from the financial
statements included in the Form 10-Q filed by the Company on November 1, 2002
to reflect the impact of subsequent events on the presentation of the allowance
for loan losses. See Note 12.

The annualized results of operations for the three months and nine months
ended September 30, 2002 are not necessarily indicative of the results expected
for the full year ending December 31, 2002.

NOTE 2  STOCK DIVIDEND

On July 9, 2002, the Company effected a three-for-two stock split payable
in the form of a stock dividend. All references to number of shares issued,
outstanding (basic and diluted) and held in treasury, earnings per share, and
book value per share, for all periods presented have been restated as if the
three-for-two stock split had actually occurred on January 1, 2001.

NOTE 3  EARNINGS PER SHARE

For purposes of per share calculations, the Company had 16,164,000 and
16,110,000 shares of common stock outstanding at September 30, 2002 and 2001,
respectively. Basic earnings per share for the three months and nine months
ended September 30, 2002 and 2001 were computed by dividing net income by the
weighted average number of shares outstanding. Diluted earnings per share for
the three and nine months ended September 30, 2002 and 2001 were computed by
dividing net income by the weighted average number of shares outstanding,
adjusted for the dilutive effect of the outstanding stock options.
Computations for basic and diluted earnings per share as of these dates are
provided below.

|        |                                            |  |                                       |        |                     |  |            |        |      |  |   |        |  |  |   |        | 
|------- | ------------------------------------------ |  | ------------------------------------- | ------ | ------------------- |  | ---------- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|        |                                            |  | For the three months                  |        | For the nine months
|        |                                            |  | ended September 30,                   |        | ended September 30,
|        |                                            |  |                                       |        |                    
|        |                                            |  | 2002                                  |        | 2001                |  | 2002       |        | 2001
|        |                                            |  | (Restated)                            |        |                     |  | (Restated) |        |     
|        |                                            |  |                                       |        |                     |  |            |        |     
|        |                                            |  | (In thousands, except per share data)
|Basic   |                                            |  |                                       |        |                     |  |            |        |      |  |   |        |  |  |   |       
|        | Net income                                 |  | $                                     | 330    |                     |  | $          | 4,786  |      |  | $ | 13,031 |  |  | $ | 12,885 | 
|        |                                            |  |                                       |        |                     |  |            |        |      |  |   |        |  |  |   |       
|        | Weighted average common shares outstanding |  |                                       | 16,160 |                     |  |            | 16,110 |      |  |   | 16,122 |  |  |   | 16,110 | 
|        |                                            |  |                                       |        |                     |  |            |        |      |  |   |        |  |  |   |       
|        | Basic earnings per common share            |  | $                                     | 0.02   |                     |  | $          | 0.30   |      |  | $ | 0.81   |  |  | $ | 0.80   | 
|        |                                            |  |                                       |        |                     |  |            |        |      |  |   |        |  |  |   |       
|Diluted |                                            |  |                                       |        |                     |  |            |        |      |  |   |        |  |  |   |       
|        | Net income                                 |  | $                                     | 330    |                     |  | $          | 4,786  |      |  | $ | 13,031 |  |  | $ | 12,885 | 
|        |                                            |  |                                       |        |                     |  |            |        |      |  |   |        |  |  |   |       
|        | Weighted average common shares outstanding |  |                                       | 16,160 |                     |  |            | 16,110 |      |  |   | 16,121 |  |  |   | 16,110 | 
|        | Diluted effect of stock options            |  |                                       | 476    |                     |  |            | 272    |      |  |   | 398    |  |  |   | 206    | 
|        |                                            |  |                                       |        |                     |  |            |        |      |  |   |        |  |  |   |       
|        | Dilutive average common shares             |  |                                       | 16,636 |                     |  |            | 16,382 |      |  |   | 16,519 |  |  |   | 16,316 | 
|        |                                            |  |                                       |        |                     |  |            |        |      |  |   |        |  |  |   |       
|        | Diluted earnings per common share          |  | $                                     | 0.02   |                     |  | $          | 0.29   |      |  | $ | 0.79   |  |  | $ | 0.79   | 
|        |                                            |  |                                       |        |                     |  |            |        |      |  |   |        |  |  |   |       

All outstanding options were included in the computation of diluted
earnings per share for the three months and nine months ended September 30,
2002 and 2001.

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NOTE 4  STOCK OPTIONS

During the first nine months of 2002, 235,500 stock options were granted
at an exercise price of $14.90 per share. In addition, during the first nine
months of 2002, there were 126,330 outstanding options exercised. Total stock
options outstanding were 1,122,447 at September 30, 2002 with exercise prices
ranging between $5.42 and $14.90 and expiration dates between 2006 and 2012.

NOTE 5  ISSUANCE OF TRUST PREFERRED SECURITIES

In May 2000, the Company formed MBHI Capital Trust I (the Trust). The
Trust is a statutory business trust formed under the laws of the State of
Delaware and is wholly-owned by the Company. In June 2000, the Trust issued
10% preferred securities with an aggregate liquidation amount of $20 million
($25 per preferred security) to third-party investors. The Company then issued
10% junior subordinated debentures aggregating $20 million to the Trust. The
junior subordinated debentures are the sole assets of the Trust. The junior
subordinated debentures and the preferred securities pay distributions and
dividends, respectively, on a quarterly basis, which are included in interest
expense. The junior subordinated debentures will mature on June 7, 2030, at
which time the preferred securities must be redeemed. The junior subordinated
debentures and preferred securities can be redeemed contemporaneously, in whole
or in part, beginning June 7, 2005 at a redemption price of $25 per preferred
security. The Company has provided a full, irrevocable and unconditional
guarantee on a subordinated basis of the obligations of the Trust under the
preferred securities in the event of the occurrence of an event of default, as
defined in such guarantee. Debt issuance costs totaling $270,000 and
underwriting fees of $700,000 were capitalized related to the offering and are
being amortized over the estimated life of the junior subordinated debentures.

NOTE 6  HEDGING ACTIVITIES

The Company is involved in certain derivative transactions. The Companys Board
of Directors has implemented policy guidelines and parameters for these types
of transactions. All derivative instruments are recorded at their fair values
and the change in the fair value of a derivative is included in other income.
If derivative instruments are designated as hedges of fair values, both the
change in the fair value of the hedge and the hedged item are included in
current earnings. Fair value adjustments related to cash flow hedges are
recorded in other comprehensive income and reclassified to earnings when the
hedged transaction is reflected in earnings. Ineffective portions of hedges
are reflected in earnings as they occur.

In January 2002, the
Company entered into an interest rate
swap with a counterparty in order to convert its $20 million of outstanding
trust preferred securities and related junior subordinated debentures from a
10% fixed rate instrument into floating rate debt. The interest
rate swap has a notional amount of $20 million and was written to the call date
on the trust preferred securities, which is June 7, 2005. The Company will pay
the interest on the swap quarterly at a rate equal to the 3-month LIBOR. The
counterparty will pay a fixed rate of 4.59% for the term of the agreement. The
Company has documented this to be a fair value hedge of the junior subordinated
debentures and reflects the change in the fair value of the swap as an
adjustment to income, which, to the extent of its effectiveness, offsets the
change in the fair value of the debentures.

During July of 2002, the Company terminated the fair value hedge in
exchange for $718,000. Approximately $294,000 of this amount was determined to
be due to hedge ineffectiveness and recognized into income in the third
quarter. The remaining amount is being accreted into income, as a reduction of
interest expense, over the estimated life of the junior subordinated
debentures.

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In August of 2002, the Company entered into a stand-alone derivative
transaction with a notional amount of $20 million for a term of five years,
maturing August 30, 2007. This transaction is a floating rate interest swap.
The underlying instrument has a credit rating of Aa2/AA and is priced at
3-Month LIBOR plus 125 basis points. Since the swap is not a hedge it is
viewed as a stand-alone derivative. Changes in the market value of stand-alone
derivatives are charged to earnings on a quarterly basis. As of September 30,
2002, there was no impact on earnings.

From time to time, the Company also buys and sells various covered put and
call options, with terms of less than 90 days, on mortgage-backed securities.
The Company had no covered put or call options outstanding at September 30,
2002.

NOTE 7  RECENT REGULATORY DEVELOPMENTS

On July 30, 2002, President Bush signed the Sarbanes-Oxley Act of 2002
(the Sarbanes-Oxley Act). This legislation impacts corporate governance of
public companies, affecting their officers and directors, their audit
committees, their relationships with their accountants and the audit function
itself. Certain provisions of the Act became effective on July 30, 2002. Others
will become effective as the SEC adopts appropriate rules.

The Sarbanes-Oxley Act implements a broad range of corporate governance
and accounting measures for public companies designed to promote honesty and
transparency in corporate America and better protect investors from corporate
wrongdoing. The Sarbanes-Oxley Acts principal legislation includes:



| |  |  | the creation of an independent accounting oversight board to
oversee the audit of public companies and auditors who perform such
audits;                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | auditor independence provisions which restrict non-audit
services that independent accountants may provide to their audit
clients;                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  |  | additional corporate governance and responsibility measures,
including (i) requiring the chief executive officer and chief
financial officer to certify financial statements; (ii) prohibiting
trading of securities by officers and directors during periods in
which certain employee benefit plans are prohibited from trading;
(iii) requiring a companys chief executive officer and chief
financial officer to forfeit salary and bonuses, including profits
on the sale of company securities, in certain situations; and (iv)
protecting whistleblowers and informants;
|
| |  |  | expansion of the power of the audit committee, including the
requirements that the audit committee (i) have direct control of the
engagement of the outside auditor, (ii) be able to hire and fire the
auditor, and (iii) approve all non-audit services;                                                                                                                                                                                                                                                                                                                       
|
| |  |  | expanded disclosure requirements, including accelerated
reporting of stock transactions by insiders and the prohibition of
most loans to directors and executive officers of non-financial
institutions;                                                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | mandatory disclosure by analysts of potential conflicts of interest; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | a range of enhanced penalties for fraud and other violations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

NOTE 8  NEW ACCOUNTING STANDARDS

In 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets, which requires that goodwill no longer be amortized to earnings, but
instead be reviewed for impairment. The

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amortization of goodwill ceases upon adoption of SFAS No. 142, which for most
companies, was January 1, 2002. At September 30, 2002, the Company had $4.5
million of goodwill. Approximately $1.5 million of the goodwill recorded by the
Company is related to a branch acquisition. The Company has adopted SFAS 147,
Acquisition of Certain Financial Institutions, as of September 30, 2002 and
has discontinued the amortization of the $1.5 million of goodwill recorded for
the branch acquisition. The after tax impact of this was not material.

During the second quarter of 2002, the Company completed the first step of
its impairment testing of its goodwill. The Company concluded that there is no
impairment. The impact of this standard on the three and nine-month periods
ended September 30, 2002 and 2001 is as follows:

|                                |  |               |      |               |  |            |       |      |  |   |        |  |  |   |        | 
|------------------------------- |  | ------------- | ---- | ------------- |  | ---------- | ----- | ---- |  | - | ------ |  |  | - | ------ | 
|                                |  | September 30, |      | September 30,
|                                |  |               |      |              
|                                |  | 2002          |      | 2001          |  | 2002       |       | 2001
|                                |  | QTD           |      | QTD           |  | YTD        |       | YTD 
|                                |  | (Restated)    |      |               |  | (Restated) |       |     
|                                |  |               |      |               |  |            |       |     
|Reported net income             |  | $             | 330  |               |  | $          | 4,786 |      |  | $ | 13,031 |  |  | $ | 12,885 | 
|Add back: goodwill amortization |  |               |     |               |  |            | 85    |      |  |   |       |  |  |   | 255    | 
|                                |  |               |      |               |  |            |       |      |  |   |        |  |  |   |        | 
|Adjusted net income             |  | $             | 330  |               |  | $          | 4,871 |      |  | $ | 13,031 |  |  | $ | 13,140 | 
|                                |  |               |      |               |  |            |       |      |  |   |        |  |  |   |        | 
|BASIC EARNINGS PER SHARE        |  |               |      |               |  |            |       |      |  |   |        |  |  |   |        | 
|Reported net income             |  | $             | 0.02 |               |  | $          | 0.30  |      |  | $ | 0.81   |  |  | $ | 0.80   | 
|Goodwill amortization           |  |               |     |               |  |            | 0.01  |      |  |   |       |  |  |   | 0.02   | 
|                                |  |               |      |               |  |            |       |      |  |   |        |  |  |   |        | 
|Adjusted net income             |  | $             | 0.02 |               |  | $          | 0.31  |      |  | $ | 0.81   |  |  | $ | 0.82   | 
|                                |  |               |      |               |  |            |       |      |  |   |        |  |  |   |        | 
|DILUTED EARNINGS PER SHARE      |  |               |      |               |  |            |       |      |  |   |        |  |  |   |        | 
|Reported net income             |  | $             | 0.02 |               |  | $          | 0.29  |      |  | $ | 0.79   |  |  | $ | 0.79   | 
|Goodwill amortization           |  |               |     |               |  |            | 0.01  |      |  |   |       |  |  |   | 0.02   | 
|                                |  |               |      |               |  |            |       |      |  |   |        |  |  |   |        | 
|Adjusted net income             |  | $             | 0.02 |               |  | $          | 0.30  |      |  | $ | 0.79   |  |  | $ | 0.81   | 
|                                |  |               |      |               |  |            |       |      |  |   |        |  |  |   |        | 

NOTE 9  ACQUISITION

On July 22, 2002, the Company jointly announced with Big Foot Financial
Corp. (BFFC), the execution of a definitive agreement providing for the
acquisition of BFFC by the Company in a stock merger. At closing, the Company
will issue 1.104 shares of its common stock for each share of BFFC common stock
outstanding on the effective date, resulting in a deal value of approximately
$33.4 million, based on closing prices of each of the Companys and BFFCs
common stock on July 19, 2002. The price is a 25.5% premium to BFFCs closing
price of $16.95 on that date. BFFC had 1,509,168 shares outstanding as of
September 30, 2002. The exchange ratio is fixed and BFFC has the right to
terminate the transaction if the Companys stock price falls below an average
of $17.12 during the 20 trading days prior to closing, subject to certain
provisions. The transaction, which is subject to approval by regulators and
BFFCs shareholders, is expected to close in the first quarter of 2003.

NOTE 10  RECLASSIFICATION OF SECURITIES AVAILABLE-FOR-SALE

During the third quarter of 2002, the Company reclassified approximately
$100 million of mortgage-backed securities from the available-for-sale category
to the held-to-maturity category. This transfer was required to be at fair
value which resulted in an unrealized gain and accumulated other comprehensive
income at the time of transfer, of $1,396,000 and $842,000, respectively, which
is being amortized/accreted to expense /income over the life of the securities
as a yield adjustment.

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NOTE 11  SUBSEQUENT EVENT (ISSUANCE OF TRUST PREFERRED SECURITIES)

In October 2002, the Company formed MBHI Capital Trust II (the Trust), a
statutory trust formed under the laws of the State of Delaware and a
wholly-owned financing subsidiary of the Company. In October 2002, the Trust
issued $15 million in aggregate liquidation amount of trust preferred
securities in a private placement offering. Simultaneously with the issuance of
the trust preferred securities by the Trust, the Company issued an equivalent
amount of junior subordinated debentures to the Trust. The junior subordinated
debentures are the sole assets of the Trust. The junior subordinated
debentures and the trust preferred securities pay distributions and dividends,
respectively, on a quarterly basis, which are included in interest expense. The
interest rate payable on the debentures and the trust preferred securities
resets quarterly, and is equal to LIBOR plus 3.45%, provided that this rate
cannot exceed 12.5% through the interest payment date in November 2007. The
junior subordinated debentures will mature on November 7, 2032, at which time
the preferred securities must be redeemed. The Company has provided a full,
irrevocable, and unconditional guarantee on a subordinated basis of the
obligations of the Trust under the preferred securities as set forth in such
guarantee agreement. Debt issuance costs and fees of the placement agent in
connection with the offering will be capitalized and will be amortized over the
estimated life of the junior subordinated debentures.

NOTE 12  SUBSEQUENT EVENT (ALLOWANCE FOR LOAN LOSSES)

On March 5, 2003, one
of the Companys subsidiary banks, Midwest Bank and Trust Company
(the Bank), received a joint letter from the Federal
Reserve Bank of Chicago (the FRB) and the Illinois Office
of Banks and Real Estate (the OBRE) regarding loan
classifications and additional
provisions for loan losses that the regulators determined
should be made for the year ended December 31, 2002 based on their review of a series of
loans made by the Bank to an individual borrower and certain
affiliated companies. The total credit relationship with the borrower
approximated $19.6 million as of September 30, 2002. In light of the
regulatory conclusions and additional internal analysis of
available information, management has reclassified the loans as
doubtful as of September 30, 2002 and, as a result, has recorded an
additional provision of $9.8 million in the third quarter of 2002 and
has reversed approximately $226,000 of accrued interest. The effect
of these adjustments decreased net income and retained earnings, $6.0 million, net of tax
as follows:

|                                       |                                  |             |   |        |             |  |   |        |   |  |   |        | 
|-------------------------------------- | -------------------------------- | ----------- | - | ------ | ----------- |  | - | ------ | - |  | - | ------ | 
|Previously Reported                    |                                  | Adjustments |   |        | As restated | 
|                                       |                                  |             |   |        |             | 
|Three Months ended September 30, 2002: |                                  |             |   |        |             |  |   |        |   |  |   |       
|                                       | Net
income (In thousands)        |             | $ | 6,379  |             |  | $ | (6,049 | ) |  | $ | 330    | 
|                                       | Basic Earnings per share         |             |   | .39    |             |  |   | (.37   | ) |  |   | .02    | 
|                                       | Diluted Earning per share        |             |   | .38    |             |  |   | (.36   | ) |  |   | .02    | 
|                                       | Retained
earnings (In thousands) |             |   | 91,493 |             |  |   | (6,049 | ) |  |   | 85,444 | 
|Nine Months ended September 30, 2002:  |                                  |             |   |        |             |  |   |        |   |  |   |       
|                                       | Net
income (In thousands)        |             | $ | 19,080 |             |  | $ | (6,049 | ) |  | $ | 13,031 | 
|                                       | Basic Earnings per share         |             |   | 1.18   |             |  |   | (.37   | ) |  |   | .81    | 
|                                       | Diluted Earning per share        |             |   | 1.16   |             |  |   | (.37   | ) |  |   | .79    | 
|                                       | Retained
earnings (In thousands) |             |   | 91,493 |             |  |   | (6,049 | ) |  |   | 85,444 | 

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ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Recent Developments

As previously
reported by the Company, on March 5, 2003, the Company received a
joint letter from the Federal Reserve Bank of Chicago (the Federal
Reserve) and the Illinois Office of Banks and Real Estate (the
OBRE) regarding additional loan classifications and provisions for loan losses that, based
on their review of certain loans, the regulators determined should be
made by one of the Companys subsidiary banks, Midwest Bank and Trust
Company (the Bank). The loans reviewed consisted of a series of
loans to an individual borrower and certain affiliated companies that
were outstanding as of September 30, 2002. The loans were secured by
receivables and other collateral of other affiliated companies. The
individual was indicted in March 2003 on certain criminal charges.
None of the activities covered by the indictment involves the Bank.
Two of the borrowers affiliated companies (the Affiliated
Companies) that provided collateral for the loans are the subject
of pending voluntary bankruptcy proceedings initiated under Chapter
11 of the United States Bankruptcy Code in July 2002. The total
credit relationship to this borrower consisted of loans with an
aggregate outstanding principal balance of $19.6 million as of
September 30, 2002.

In assessing the
adequacy of its allowance for loan losses on a quarterly basis,
management considers a number of factors including, among other
things, regulatory review of its loan portfolio. The Federal Reserve
and the OBRE concluded that the loans described above should be
classified as nonaccrual loans as of September 30, 2002, due to the
regulators assessment that the ultimate collectibility of the loans as
of the end of the third quarter was doubtful. As a result of
further communications with the Federal Reserve and OBRE through early
April 2003, and additional internal analysis of available
information, the Company reclassified the $19.6 million of loans as
nonaccrual loans as of September 30, 2002, and consistent with its
loan loss reserve methodology, revised its interim financial
statements as of and for the periods ended September 30, 2002,
to record an additional provision to the allowance for loan losses of
$9.8 million during the third quarter. The Company also reversed the
$226,000 of interest income previously accrued on these loans during
the third quarter, with an aggregate after-tax effect on previously
reported earnings of $6.0 million.

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The following tables summarize the balance sheet and income statement items
that have been revised in the restated interim unaudited financial information
for the period ended September 30, 2002 included in this Form 10-Q/A:

|                                     |                            |                                            |           |                          |           |             |        |                |        |             |           |           |           | 
|------------------------------------ | -------------------------- | ------------------------------------------ | --------- | ------------------------ | --------- | ----------- | ------ | -------------- | ------ | ----------- | --------- | --------- | --------- | 
|                                     |                            |                                            |           | As of September 30, 2002
|                                     |                            |                                            |           | (In Thousands)          
|                                     |                            |                                            |           | Previously               |           |             |        |                |        | As Reported
|                                     |                            |                                            |           | Reported in Form 10-Q    |           | Adjustments |        | in Form 10-Q/A
|                                     |                            |                                            |           |                          |           |             |        |               
|Selected Balance Sheet Data          |                            |                                            |           |                          |           |             |        |                |        |             |           |          
|ASSETS                               |                            |                                            |           |                          |           |             |        |                |        |             |           |          
|Loans                                |                            | $                                          | 1,133,282 |                          |           | $           |       |                |        | $           | 1,133,282 |          
|Allowance for loan losses            |                            |                                            | (11,150   | )                        |           |             | (9,800 | )              |        |             | (20,950   | )        
|                                     |                            |                                            |           |                          |           |             |        |                |        |             |           |          
|                                     | Net loans                  |                                            |           | 1,122,132                |           |             |        | (9,800         | )      |             |           | 1,112,332 |          
|Other assets(1)                      |                            |                                            | 22,341    |                          |           |             | 3,295  |                |        |             | 25,636    |          
|                                     |                            |                                            |           |                          |           |             |        |                |        |             |           |          
|                                     | Total assets               |                                            | $         | 1,913,403                |           |             | $      | (6,505         | )      |             | $         | 1,906,898 |          
|                                     |                            |                                            |           |                          |           |             |        |                |        |             |           |          
|LIABILITIES AND STOCKHOLDERS EQUITY |                            |                                            |           |                          |           |             |        |                |        |             |           |          
|LIABILITIES                          |                            |                                            |           |                          |           |             |        |                |        |             |           |          
|Other liabilities(2)                 |                            | $                                          | 21,764    |                          |           | $           | (456   | )              |        | $           | 21,308    |          
|                                     |                            |                                            |           |                          |           |             |        |                |        |             |           |          
|                                     | Total liabilities          |                                            |           | 1,793,502                |           |             |        | (456           | )      |             |           | 1,793,046 |          
|                                     |                            |                                            |           |                          |           |             |        |                |        |             |           |          
|STOCKHOLDERS EQUITY                 |                            |                                            |           |                          |           |             |        |                |        |             |           |          
|Retained earnings                    |                            |                                            | 91,493    |                          |           |             | (6,049 | )              |        |             | 85,444    |          
|                                     | Total stockholders equity |                                            |           | 119,901                  |           |             |        | (6,049         | )      |             |           | 113,852   |          
|                                     |                            |                                            |           |                          |           |             |        |                |        |             |           |          
|                                     |                            | Total liabilities and stockholders equity |           | $                        | 1,913,403 |             |        | $              | (6,505 | )           |           | $         | 1,906,898 | 
|                                     |                            |                                            |           |                          |           |             |        |                |        |             |           |          



---

|(1) |  | Adjusted to reflect the
reversal of $226,000 of accrued interest receivable and
a $3.5 million increase in federal and state deferred income tax assets.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Adjusted to reflect a reduction in
current federal and state deferred income tax payable of $456,000.
|--- |  | -----------------------------------------------------------------------------------------------------

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|                                                    |  |   |        |                                       |  |             |         |                |  |             |          |   |  | 
|--------------------------------------------------- |  | - | ------ | ------------------------------------- |  | ----------- | ------- | -------------- |  | ----------- | -------- | - |  | 
|                                                    |  |   |        | Three Months Ended September 30, 2002
|                                                    |  |   |        | (In Thousands, Except Per Share Data)
|                                                    |  |   |        | Previously                            |  |             |         |                |  | As Reported
|                                                    |  |   |        | Reported in Form 10-Q                 |  | Adjustments |         | in Form 10-Q/A
|                                                    |  |   |        |                                       |  |             |         |               
|Selected Income Statement Data                      |  |   |        |                                       |  |             |         |                |  |             |          |  
|                                                    |  |   |        |                                       |  |             |         |                |  |             |          |  
|Interest income on loans                            |  | $ | 19,340 |                                       |  | $           | (226    | )              |  | $           | 19,114   |  
|Other interest income                               |  |   | 9,239  |                                       |  |             |        |                |  |             | 9,239    |  
|                                                    |  |   |        |                                       |  |             |         |                |  |             |          |  
|Total interest income                               |  |   | 28,579 |                                       |  |             | (226    | )              |  |             | 28,353   |  
|                                                    |  |   |        |                                       |  |             |         |                |  |             |          |  
|Total interest expense                              |  |   | 13,337 |                                       |  |             |        |                |  |             | 13,337   |  
|                                                    |  |   |        |                                       |  |             |         |                |  |             |          |  
|Net interest income                                 |  |   | 15,242 |                                       |  |             | (226    | )              |  |             | 15,016   |  
|Provision for loan losses                           |  |   | 1,115  |                                       |  |             | 9,800   |                |  |             | 10,915   |  
|                                                    |  |   |        |                                       |  |             |         |                |  |             |          |  
|Net interest income
after provision for loan losses |  |   | 14,127 |                                       |  |             | (10,026 | )              |  |             | 4,101    |  
|Total other income                                  |  |   | 3,047  |                                       |  |             |        |                |  |             | 3,047    |  
|Total other expenses                                |  |   | 8,305  |                                       |  |             |        |                |  |             | 8,305    |  
|                                                    |  |   |        |                                       |  |             |         |                |  |             |          |  
|Income (loss) before income taxes                   |  |   | 8,869  |                                       |  |             | (10,026 | )              |  |             | (1,157   | )
|Provision (benefit) for income taxes                |  |   | 2,490  |                                       |  |             | (3,977  | )              |  |             | (  1,487 | )
|                                                    |  |   |        |                                       |  |             |         |                |  |             |          |  
|Net Income                                          |  | $ | 6,379  |                                       |  | $           | (6,049  | )              |  | $           | 330      |  
|                                                    |  |   |        |                                       |  |             |         |                |  |             |          |  
|Basic earnings per share                            |  | $ | 0.39   |                                       |  | $           | (0.37   | )              |  | $           | 0.02     |  
|                                                    |  |   |        |                                       |  |             |         |                |  |             |          |  
|Diluted earnings per share                          |  | $ | 0.38   |                                       |  | $           | (0.36   | )              |  | $           | 0.02     |  
|                                                    |  |   |        |                                       |  |             |         |                |  |             |          |  

|                                                    |  |   |        |                                       |  |             |         |                |  |             |        |  |  | 
|--------------------------------------------------- |  | - | ------ | ------------------------------------- |  | ----------- | ------- | -------------- |  | ----------- | ------ |  |  | 
|                                                    |  |   |        | Nine Months Ended September 30, 2002 
|                                                    |  |   |        | (In Thousands, Except Per Share Data)
|                                                    |  |   |        | Previously                            |  |             |         |                |  | As Reported
|                                                    |  |   |        | Reported in Form 10-Q                 |  | Adjustments |         | in Form 10-Q/A
|                                                    |  |   |        |                                       |  |             |         |               
|Selected Income Statement Data                      |  |   |        |                                       |  |             |         |                |  |             |        | 
|Interest income on loans                            |  | $ | 55,880 |                                       |  | $           | (226    | )              |  | $           | 55,654 | 
|Other interest income                               |  |   | 29,685 |                                       |  |             |        |                |  |             | 29,685 | 
|                                                    |  |   |        |                                       |  |             |         |                |  |             |        | 
|Total interest income                               |  |   | 85,565 |                                       |  |             | (226    | )              |  |             | 85,339 | 
|Total interest expense                              |  |   | 39,992 |                                       |  |             |        |                |  |             | 39,992 | 
|                                                    |  |   |        |                                       |  |             |         |                |  |             |        | 
|Net interest income                                 |  |   | 45,573 |                                       |  |             | (226    | )              |  |             | 45,347 | 
|Provision for loan losses                           |  |   | 2,592  |                                       |  |             | 9,800   |                |  |             | 12,392 | 
|                                                    |  |   |        |                                       |  |             |         |                |  |             |        | 
|Net interest income
after provision for loan losses |  |   | 42,981 |                                       |  |             | (10,026 | )              |  |             | 32,955 | 
|Total other income                                  |  |   | 9,990  |                                       |  |             |        |                |  |             | 9,990  | 
|Total other expenses                                |  |   | 25,027 |                                       |  |             |        |                |  |             | 25,027 | 
|                                                    |  |   |        |                                       |  |             |         |                |  |             |        | 
|Income before income taxes                          |  |   | 27,944 |                                       |  |             | (10,026 | )              |  |             | 17,918 | 
|Provision for income taxes                          |  |   | 8,864  |                                       |  |             | (3,977  | )              |  |             | 4,887  | 
|                                                    |  |   |        |                                       |  |             |         |                |  |             |        | 
|Net Income                                          |  | $ | 19,080 |                                       |  | $           | (6,049  | )              |  | $           | 13,031 | 
|                                                    |  |   |        |                                       |  |             |         |                |  |             |        | 
|Basic earnings per share                            |  | $ | 1.18   |                                       |  | $           | (0.37   | )              |  | $           | 0.81   | 
|                                                    |  |   |        |                                       |  |             |         |                |  |             |        | 
|Diluted earnings per share                          |  | $ | 1.16   |                                       |  | $           | (0.37   | )              |  | $           | 0.79   | 
|                                                    |  |   |        |                                       |  |             |         |                |  |             |        | 

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The following table shows the revised regulatory capital levels and
minimum required levels (dollars in thousands) reported by the Company and its
banking subsidiaries giving effect to the additional loan loss provisions
described above. The Company exceeded the minimum to be well capitalized as of
September 30, 2002, for all regulatory measures.

|                                       |                                  |  |                          |         |                |  |             |      |       |  |        |         |       |  |  |      |   |  |                  |         |  |  |  |      |  
|-------------------------------------- | -------------------------------- |  | ------------------------ | ------- | -------------- |  | ----------- | ---- | ----- |  | ------ | ------- | ----- |  |  | ---- | - |  | ---------------- | ------- |  |  |  | ---- | -
|                                       |                                  |  | As of September 30, 2002
|                                       |                                  |  |                         
|                                       |                                  |  |                          |         |                |  |             |      |       |  |        |         |       |  |  |      |   |  | Minimum Required
|                                       |                                  |  | As Previously Reported   |         | As Reported in |  | To Be Well 
|                                       |                                  |  | in Form 10-Q             |         | Form 10-Q/A    |  | Capitalized
|                                       |                                  |  |                          |         |                |  |            
|                                       |                                  |  | Amount                   |         | Ratio          |  | Amount      |      | Ratio |  | Amount |         | Ratio
|                                       |                                  |  |                          |         |                |  |             |      |       |  |        |         |      
|                                       |                                  |  | (Dollars in thousands)  
|Total capital to risk-weighted assets  |                                  |  |                          |         |                |  |             |      |       |  |        |         |       |  |  |      |   |  |                  |         |  |  |  |     
|                                       | Company                          |  | $                        | 138,909 |                |  |             | 10.9 | %     |  | $      | 137,796 |       |  |  | 10.7 | % |  | $                | 128,685 |  |  |  | 10.0 | %
|                                       | Midwest Bank and Trust Company   |  |                          | 126,193 |                |  |             | 11.2 |       |  |        | 124,184 |       |  |  | 11.0 |   |  |                  | 112,836 |  |  |  | 10.0 |  
|                                       | Midwest Bank of Western Illinois |  |                          | 17,804  |                |  |             | 11.9 |       |  |        | 17,804  |       |  |  | 11.9 |   |  |                  | 14,957  |  |  |  | 10.0 |  
|Tier I capital to risk-weighted assets |                                  |  |                          |         |                |  |             |      |       |  |        |         |       |  |  |      |   |  |                  |         |  |  |  |     
|                                       | Company                          |  |                          | 127,759 |                |  |             | 10.0 |       |  |        | 121,710 |       |  |  | 9.5  |   |  |                  | 77,211  |  |  |  | 6.0  |  
|                                       | Midwest Bank and Trust Company   |  |                          | 116,112 |                |  |             | 10.3 |       |  |        | 110,063 |       |  |  | 9.8  |   |  |                  | 67,702  |  |  |  | 6.0  |  
|                                       | Midwest Bank of Western Illinois |  |                          | 16,719  |                |  |             | 11.2 |       |  |        | 16,719  |       |  |  | 11.2 |   |  |                  | 8,974   |  |  |  | 6.0  |  
|Tier I capital to average assets       |                                  |  |                          |         |                |  |             |      |       |  |        |         |       |  |  |      |   |  |                  |         |  |  |  |     
|                                       | Company                          |  |                          | 127,759 |                |  |             | 6.7  |       |  |        | 121,710 |       |  |  | 6.4  |   |  |                  | 94,880  |  |  |  | 5.0  |  
|                                       | Midwest Bank and Trust Company   |  |                          | 116,112 |                |  |             | 7.1  |       |  |        | 110,063 |       |  |  | 6.8  |   |  |                  | 81,381  |  |  |  | 5.0  |  
|                                       | Midwest Bank of Western Illinois |  |                          | 16,719  |                |  |             | 6.4  |       |  |        | 16,719  |       |  |  | 6.4  |   |  |                  | 13,075  |  |  |  | 5.0  |  

In addition to the third quarter adjustments, as a result of the
regulatory review, the Company has determined to classify as
nonaccrual an additional $5.1 million of unrelated commercial loans, to record additional loan loss
provisions of $4.9 million for the fourth quarter of 2002 and to charge off
approximately $5.6 million in commercial loans during the fourth quarter,
including $4.7 million related to the loans described above.

On March 26,
2003, the Bank received proceeds of approximately $13.3 million from
the non recourse sale of a 2 of 3 of the loans reclassified as
nonaccrual as of September 30, 2002 to a newly formed entity that
will be the sole owner of the Affiliated Companies following the
emergence of these companies from bankruptcy. The purchase price for
the portion of the loans sold was equal to the stated principal
amount of $10.8 million as of September 30, 2002, plus $1.7 million of
additional financing as of December 31, 2002, plus accrued interest
and late charges. The purchaser of the loans is indirectly owned 50%
by current management officials of the Affiliated Companies, and 50%
by 400 VC, LLC (400 VC), an entity owned by the adult son of Leon Wolin,
a director of the Company, the adult son of Leroy Rosasco, a director of
the Company and Angelo DiPaolo, a director of the Company. E.V.
Silveri, Chairman of the Board of the Company, is managing member of
400 VC. Pursuant to an agreement with 400 VC and its present owners,
Mr. Silveri and Brad Luecke, President and Chief Executive Officer of
the Company, will acquire equity ownership interests in 400 VC in the
near future. The funds used by the purchaser to purchase the
identified credits from the Bank were borrowed from 400 VC. 400 VC
obtained those funds from the proceeds of loans extended by an
unrelated financial institution to 400 VC and Mr. Silveri
($3,000,000), Mr. Luecke ($3,000,000), Michael Wolin ($1,500,000),
Angelo DiPaolo ($2,000,000) and Lee Paul Rosasco ($4,000,000), as
co-borrowers. The Company is currently evaluating how the sale of the
identified credits will be treated for financial reporting purposes,
which could include some or all of the repayment being categorized as
a capital contribution. In addition,
subject to approval of a proposed plan of reorganization with respect
to the Affiliated Companies, the Company does not currently anticipate any
additional provisions relating to its loans to this borrower.

A plan of
reorganization was submitted to the bankruptcy court on March 27,
2003, and a hearing on the plan is scheduled for May 8, 2003.
Effectiveness of the plan of reorganization is dependent upon, among
other things, the purchaser of the loans from the Bank obtaining
additional credit in the amount of $8 million to fund the payment of
certain additional indebtedness of the Affiliated Companies. During
March 2003, the Board of Directors of the Bank considered and
approved a proposal for extension of such credit, but management of
the Bank has indicated that no commitment to extend such credit has
been issued and that the Bank has no plans to extend such
credit. In an April 10, 2003 letter to the Company, the Federal
Reserve and the OBRE indicated that they would require the Bank to
reserve which some or all of the repayment being categorized as a
capital contribution as of March 31, 2003, on a dollar for dollar basis up to $8
million, if the Bank had issued a commitment to extend such loan or
if representations had been made to the bankruptcy court of the
Banks willingness to provide credit to fund a plan or reorganization
for the borrowers. The Company is presently in discussions with the
Federal Reserve and OBRE concerning this matter.

On March 3, 2003, the
banking regulators commenced a regularly scheduled examination of the
Banks which is not yet completed. The ongoing examination has involved
further review of the adequacy of the Banks overall risk management
practices. There can be no assurance that the Federal Reserve and
OBRE will not identify other items which may have an impact on the
financial statements of the Company.

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Set forth below are those sections of Managements Discussion and Analysis
that have been revised to reflect the adjustments discussed above. Other
sections are incorporated herein by reference to the
Companys Form 10-Q for the quarter ended
September 30, 2002. Except to the
extent modified below, the Companys MD&A provided in response to Part 1, Item 2, is incorporated by reference to the
previously filed Form 10-Q for the third quarter of 2002.

Results of Operations  Three Months and Nine Months Ended
September 30, 2002 and 2001

Consolidated net income for the third quarter of 2002 was $330,000, or
$0.02 per basic and diluted share a 93.7% decrease compared to $4.8 million, or
$ 0.30 and $0.29 per basic and diluted share, respectively, for the third
quarter of 2001. The significant decline in net income and net income per share
reflects the provision for loan losses discussed above. The return on average
assets for the three months ended September 30, 2002 was 0.07% compared to
1.17% for the similar period in 2001. The return on average equity for the
three months ended September 30, 2002 was 1.14% compared to 20.46% for the
similar period in 2001.

Consolidated net income for the nine months ended September 30, 2002 was
$13.0 million, or $0.81 and $0.79 per basic and diluted share, respectively, a
1.1% increase compared to $12.9 million or $0.80 and $0.79 per basic and
diluted share, respectively, for the similar period in 2001. Basic earnings per
share for the nine months ended September 30, 2002 was 1.3% higher than for
the comparable period in 2001, while diluted earnings per share remained the
same for the two time periods. For the nine months ended September 30, 2002,
the return on average assets was 0.94% compared to 1.11% for the similar period
in 2001. For the nine months ended September 30, 2002, the return on average
equity was 16.30% compared to 19.36% for the similar period in 2001.

Net interest income increased $3.2 million, or 26.8%, to $15.0 million in
the third quarter of 2002 compared to $11.8 million in the third quarter of
2001. During the nine months ended September 30, 2002, net interest income
increased $10.8 million, or 31.2%, to $45.3 million compared to $34.6 million
for the comparable period in 2001. Excluding gains on securities and trading
account profits, other income increased 14.9% to $3.0 million and other
expenses increased 4.0% to $8.3 million in the second quarter of 2002. Other
income, excluding gains on securities and trading account profits, increased
26.5% to $8.3 million for the nine months ended September 30, 2002 compared to
the similar period in 2001. Other expenses for the nine months ended September
30, 2002 increased by $1.8 million or 7.8% compared to the similar period in
2001.

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Net Interest Income

Net interest income was $15.0 million during the quarter ended September
30, 2002 compared to $11.8 million during the three months ended September 30,
2001, an increase of $3.2 million or 26.8%. During the nine months ended
September 30, 2002, net interest income increased $10.8 million, or 31.2%, to
$45.3 million in 2002 compared to $34.6 million for the similar period in 2001.
The Companys net interest margin (tax equivalent net interest income as a
percentage of earning assets) was 3.50% for the three months ended September
30, 2002 compared to 3.24% for the comparable period in 2001. During the nine
months ended September 30, 2002, the net interest margin was 3.58% compared to
3.31% for the similar period in 2001. Net interest income increased because the
decrease in average rates paid on deposits and borrowings was greater than the
decrease in the yields on earning assets. This decrease in yields was a result
of the 11 rate reductions by the Federal Reserve during 2001. The lower
interest rate environment has resulted in lower yields on earning assets and
interest-bearing liabilities, especially certificates of deposit that have been
repriced at current market rates.

The average loan yield was 6.96% during the third quarter of 2002, a
decrease of 15.7% from 8.26% during the comparable period in 2001. For the
nine months ended September 30, 2002, the average loan yield was 6.88%, a
decrease of 21.2% from 8.72% during the comparable period in 2001. Average loan
balances increased $180.3 million, or 19.3%, to $1.1 billion during the third
quarter of 2002 from $935.6 million during the similar period in 2001. During
the first nine months of 2002, average loan balances increased $176.5 million,
or 19.7%, to $1.1 billion from $896.6 million during the similar period of
2001. The Companys net interest income and net income is dependent in part on
stable interest rates. Interest rates were stable during the first three
quarters of 2002.

Yields on securities during the third quarter of 2002 were 5.80%, a
decrease of 10.5% from 6.48% during the comparable period in 2001. During the
nine months ended September 30, 2002, securities yields decreased 9.4% to
6.08% from 6.71% in the comparable period in 2001. A decrease in mortgage loan
rates has sparked an increase in mortgage loan refinancing which has
accelerated the prepayments speeds of the Companys mortgage-backed securities
and increased amortization expense on these securities.

Yields on earning assets decreased 14.6% to 6.44% during the third quarter
of 2002 compared to 7.54% for the third quarter of 2001. During the first nine
months of 2002, yields on earning assets decreased to 6.59%, or 16.8%, from
7.92% for the similar period in 2001. Average earning assets, however,
increased to $1.8 billion for both the three months and nine months ended
September 30, 2002 from $1.5 billion for the three months and nine months ended
September 30, 2001. The decrease in yields on earning assets was offset by a
decrease in rates paid on deposits and borrowings. Average rates paid on
deposits decreased 37.2% to 2.84% for the three months ended September 30, 2002
from 4.52% for the comparable period in 2001. For the first nine months of
2002, average rates paid on deposits decreased 40.3% to 2.92% from 4.89% for
the similar period of 2001. Average rates paid on borrowings were 4.44% for
the third quarter of 2002 compared to 5.52% for the third quarter of 2001.
During the nine months ended September 30, 2002, average rates paid on
borrowings were 4.38% compared to 5.73% for the similar period in 2001.

In January 2002, the
Company entered into an interest rate
swap with a counterparty in order to convert its $20 million of outstanding
trust preferred securities and related junior subordinated debentures from a
10.00% fixed rate instrument into floating rate debt. The average yield on the
$20 million trust preferred securities and related junior subordinated
debentures was 5.80% for the first nine months of 2002. See Note 6 to the
unaudited consolidated financial statements. During July of 2002, the Company
terminated the fair value hedge in exchange for $718,000. Approximately
$294,000 of this amount was determined to be due to hedge ineffectiveness and
recognized into income in the third quarter. The remaining amount is being
accreted into income, as a reduction of interest expense, over the estimated
life of the junior subordinated debentures.

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##### Table of Contents



The net interest margin calculation for the three months ended September
30, 2002 and 2001 is shown below (interest income and average rate on
non-taxable securities and loans are reflected on a tax equivalent basis,
assuming a 35% federal income tax rate for 2002 and 2001):

|                                |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  
|------------------------------- |  | ------- | --------- | -------- |  | ---- | ------ | ------- |  | -------- | ---- | ---- |  | - | --------- | ------- |  | - | ------ |  |  |  | ---- | -
|                                |  | 2002    |           | 2001    
|                                |  |         |           |         
|                                |  | Average |           |          |  |      |        | Average |  | Average  |      |      |  |   |           | Average
|                                |  | Balance |           | Interest |  | Rate |        | Balance |  | Interest |      | Rate
|                                |  |         |           |          |  |      |        |         |  |          |      |     
|Interest-Earning Assets         |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  
|Federal funds sold              |  | $       | 10,500    |          |  | $    | 39     |         |  |          | 1.49 | %    |  | $ | 4,411     |         |  | $ | 37     |  |  |  | 3.36 | %
|Securities taxable              |  |         | 604,115   |          |  |      | 8,603  |         |  |          | 5.70 |      |  |   | 575,651   |         |  |   | 9,286  |  |  |  | 6.45 |  
|Securities tax-exempt           |  |         | 74,149    |          |  |      | 1,257  |         |  |          | 6.78 |      |  |   | 32,154    |         |  |   | 559    |  |  |  | 6.95 |  
|Commercial loans(1)             |  |         | 232,726   |          |  |      | 3,385  |         |  |          | 5.82 |      |  |   | 216,162   |         |  |   | 4,147  |  |  |  | 7.67 |  
|Commercial real estate loans(1) |  |         | 702,720   |          |  |      | 12,604 |         |  |          | 7.17 |      |  |   | 542,431   |         |  |   | 11,495 |  |  |  | 8.48 |  
|Agriculture loans(1)            |  |         | 55,859    |          |  |      | 958    |         |  |          | 6.86 |      |  |   | 49,752    |         |  |   | 999    |  |  |  | 8.03 |  
|Consumer real estate loans(1)   |  |         | 109,125   |          |  |      | 1,965  |         |  |          | 7.20 |      |  |   | 113,096   |         |  |   | 2,339  |  |  |  | 8.27 |  
|Consumer installment loans(1)   |  |         | 15,502    |          |  |      | 322    |         |  |          | 8.31 |      |  |   | 14,181    |         |  |   | 334    |  |  |  | 9.42 |  
|                                |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  
|                                |  | $       | 1,804,696 |          |  | $    | 29,133 |         |  |          | 6.44 | %    |  | $ | 1,547,838 |         |  | $ | 29,196 |  |  |  | 7.54 | %
|                                |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  

|                                                  |  |   |           |  |  |   |        |  |  |  |      |   |  |   |           |  |  |   |        |  |  |  |      |  
|------------------------------------------------- |  | - | --------- |  |  | - | ------ |  |  |  | ---- | - |  | - | --------- |  |  | - | ------ |  |  |  | ---- | -
|Interest-Bearing Liabilities                      |  |   |           |  |  |   |        |  |  |  |      |   |  |   |           |  |  |   |        |  |  |  |      |  
|Interest- bearing demand deposits                 |  | $ | 135,942   |  |  | $ | 517    |  |  |  | 1.52 | % |  | $ | 129,793   |  |  | $ | 842    |  |  |  | 2.59 | %
|Money-market demand deposits
and savings deposits |  |   | 257,096   |  |  |   | 1,081  |  |  |  | 1.68 |   |  |   | 265,564   |  |  |   | 2,017  |  |  |  | 3.04 |  
|Time deposits less than $100,000                  |  |   | 620,261   |  |  |   | 5,508  |  |  |  | 3.55 |   |  |   | 498,255   |  |  |   | 7,060  |  |  |  | 5.67 |  
|Time deposits greater than $100,000               |  |   | 136,847   |  |  |   | 1,044  |  |  |  | 3.05 |   |  |   | 99,421    |  |  |   | 1,318  |  |  |  | 5.30 |  
|Public funds                                      |  |   | 62,093    |  |  |   | 467    |  |  |  | 3.01 |   |  |   | 75,310    |  |  |   | 790    |  |  |  | 4.20 |  
|Federal funds purchased
and repurchase agreements |  |   | 156,107   |  |  |   | 1,119  |  |  |  | 2.86 |   |  |   | 62,108    |  |  |   | 613    |  |  |  | 3.95 |  
|FHLB advances                                     |  |   | 237,500   |  |  |   | 3,328  |  |  |  | 5.61 |   |  |   | 244,500   |  |  |   | 3,415  |  |  |  | 5.59 |  
|Notes and other debentures                        |  |   | 30,659    |  |  |   | 273    |  |  |  | 3.56 |   |  |   | 27,996    |  |  |   | 596    |  |  |  | 8.52 |  
|                                                  |  |   |           |  |  |   |        |  |  |  |      |   |  |   |           |  |  |   |        |  |  |  |      |  
|                                                  |  | $ | 1,636,505 |  |  | $ | 13,337 |  |  |  | 3.24 | % |  | $ | 1,402,947 |  |  | $ | 16,651 |  |  |  | 4.75 | %
|                                                  |  |   |           |  |  |   |        |  |  |  |      |   |  |   |           |  |  |   |        |  |  |  |      |  
|Net Interest Income                               |  |   |           |  |  | $ | 15,796 |  |  |  | 3.20 | % |  |   |           |  |  | $ | 12,545 |  |  |  | 2.79 | %
|                                                  |  |   |           |  |  |   |        |  |  |  |      |   |  |   |           |  |  |   |        |  |  |  |      |  
|Net Interest Margin                               |  |   |           |  |  |   |        |  |  |  | 3.50 | % |  |   |           |  |  |   |        |  |  |  | 3.24 | %



---

|(1) |  | Nonaccrual loans are included in the average balances, however these loans
are not earning any interest.
|--- |  | --------------------------------------------------------------------------------------------------------

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##### Table of Contents



The net interest margin calculation for the nine months ended September
30, 2002 and 2001 is shown below (interest income and average rate on
non-taxable securities and loans are reflected on a tax equivalent basis,
assuming a 35% federal tax rate for 2002 and 2001):

|                                                  |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  
|------------------------------------------------- |  | ------- | --------- | -------- |  | ---- | ------ | ------- |  | -------- | ---- | ---- |  | - | --------- | ------- |  | - | ------ |  |  |  | ---- | -
|                                                  |  | 2002    |           | 2001    
|                                                  |  |         |           |         
|                                                  |  | Average |           |          |  |      |        | Average |  | Average  |      |      |  |   |           | Average
|                                                  |  | Balance |           | Interest |  | Rate |        | Balance |  | Interest |      | Rate
|                                                  |  |         |           |          |  |      |        |         |  |          |      |     
|Interest-Earning Assets                           |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  
|Federal funds sold                                |  | $       | 9,278     |          |  | $    | 112    |         |  |          | 1.61 | %    |  | $ | 7,278     |         |  | $ | 238    |  |  |  | 4.36 | %
|Securities taxable                                |  |         | 631,703   |          |  |      | 28,546 |         |  |          | 6.03 |      |  |   | 533,523   |         |  |   | 26,767 |  |  |  | 6.69 |  
|Securities tax-exempt                             |  |         | 54,866    |          |  |      | 2,782  |         |  |          | 6.76 |      |  |   | 33,860    |         |  |   | 1,780  |  |  |  | 7.01 |  
|Commercial loans(1)                               |  |         | 228,081   |          |  |      | 10,479 |         |  |          | 6.13 |      |  |   | 214,735   |         |  |   | 13,472 |  |  |  | 8.37 |  
|Commercial real estate loans(1)                   |  |         | 670,206   |          |  |      | 36,060 |         |  |          | 7.17 |      |  |   | 506,597   |         |  |   | 33,985 |  |  |  | 8.94 |  
|Agriculture loans(1)                              |  |         | 52,328    |          |  |      | 2,711  |         |  |          | 6.91 |      |  |   | 48,898    |         |  |   | 3,026  |  |  |  | 8.25 |  
|Consumer real estate loans(1)                     |  |         | 108,692   |          |  |      | 5,872  |         |  |          | 7.20 |      |  |   | 111,943   |         |  |   | 7,115  |  |  |  | 8.47 |  
|Consumer installment loans(1)                     |  |         | 13,830    |          |  |      | 864    |         |  |          | 8.33 |      |  |   | 14,420    |         |  |   | 1,011  |  |  |  | 9.35 |  
|                                                  |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  
|                                                  |  | $       | 1,768,984 |          |  | $    | 87,426 |         |  |          | 6.59 | %    |  | $ | 1,471,254 |         |  | $ | 87,394 |  |  |  | 7.92 | %
|                                                  |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  
|Interest-Bearing Liabilities                      |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  
|Interest-bearing demand deposits                  |  | $       | 135,804   |          |  | $    | 1,556  |         |  |          | 1.53 | %    |  | $ | 127,565   |         |  | $ | 2,772  |  |  |  | 2.90 | %
|Money-market demand deposits
and savings deposits |  |         | 258,925   |          |  |      | 3,277  |         |  |          | 1.69 |      |  |   | 265,548   |         |  |   | 7,004  |  |  |  | 3.52 |  
|Time deposits less than $100,000                  |  |         | 577,799   |          |  |      | 15,962 |         |  |          | 3.68 |      |  |   | 475,400   |         |  |   | 21,304 |  |  |  | 5.98 |  
|Time deposits greater than $100,000               |  |         | 132,580   |          |  |      | 3,155  |         |  |          | 3.17 |      |  |   | 88,430    |         |  |   | 3,805  |  |  |  | 5.74 |  
|Public funds                                      |  |         | 70,916    |          |  |      | 1,780  |         |  |          | 3.35 |      |  |   | 65,703    |         |  |   | 2,604  |  |  |  | 5.28 |  
|Federal funds purchased
and repurchase agreements |  |         | 166,582   |          |  |      | 3,215  |         |  |          | 2.57 |      |  |   | 41,609    |         |  |   | 1,471  |  |  |  | 4.71 |  
|FHLB advances                                     |  |         | 238,789   |          |  |      | 9,921  |         |  |          | 5.54 |      |  |   | 243,438   |         |  |   | 10,114 |  |  |  | 5.54 |  
|Notes and other debentures                        |  |         | 28,778    |          |  |      | 1,126  |         |  |          | 5.22 |      |  |   | 26,696    |         |  |   | 1,815  |  |  |  | 9.07 |  
|                                                  |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  
|                                                  |  | $       | 1,610,173 |          |  | $    | 39,992 |         |  |          | 3.31 | %    |  | $ | 1,334,389 |         |  | $ | 50,889 |  |  |  | 5.08 | %
|                                                  |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  
|Net Interest Income                               |  |         |           |          |  | $    | 47,434 |         |  |          | 3.28 | %    |  |   |           |         |  | $ | 36,505 |  |  |  | 2.84 | %
|                                                  |  |         |           |          |  |      |        |         |  |          |      |      |  |   |           |         |  |   |        |  |  |  |      |  
|Net Interest Margin                               |  |         |           |          |  |      |        |         |  |          | 3.58 | %    |  |   |           |         |  |   |        |  |  |  | 3.31 | %



---

|(1) |  | Nonaccrual loans are included in the average balances, however these loans
are not earning any interest.
|--- |  | --------------------------------------------------------------------------------------------------------

Income Taxes

The Company recorded income tax benefit of $1.5 million for the quarter
ended September 30, 2002 compared to the $2.3 million of
expense for the quarter ended September 30, 2001. This decrease
was primarily due to the loss for the three months ended September 30,
2002. For the nine months ended September
30, 2002, the provision for income taxes decreased 24.8% to $4.9 million, or
27.3% of net income. The decrease in income tax expense was due to the impact by a
new regulation issued by the Illinois
Department of Revenue related to apportionment of business income of financial
organizations and various other tax planning strategies. The Company expects to have further
reductions in its state income tax expense for the remainder of 2002 and
potentially for prior tax reporting periods.

Financial Condition

Loans

Total loans increased $129.9 million, or 13.0%, to $1.1 billion as of
September 30, 2002 from $1.0 billion as of December 31, 2001. This increase is
partly due to an overall increase in draws on commercial and commercial real
estate lines of credit. Commercial loans increased $11.9 million, or

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##### Table of Contents



5.4%, to $232.7 million as of September 30, 2002 compared to $220.7
million at December 31, 2001. Commercial real estate loans increased 16.9%, or
$103.6 million, to $715.1 million as of September 30, 2002 from $611.6 million
as of December 31, 2001. Agricultural loans increased 19.1%, or $9.3 million,
to $58.1 million as of September 30, 2002 from $48.8 million as of December 31,
2001.

Consumer real estate loans increased $2.0 million, or 1.8%, to $111.3
million as of September 30, 2002 from $109.3 million as of December 31, 2001.
Consumer loans increased 23.8% to $16.1 million as of September 30, 2002
compared to $13.0 million as of December 31, 2001.

Most mortgage loans the Company originates are sold in the secondary
market. At any point in time, loans will be at various stages of the mortgage
banking process. Included as part of consumer real estate loans are loans held
for sale, which were $3.4 million as of December 31, 2001 and $3.9 million at
September 30, 2002. The carrying value of these loans approximated their
market value at that time.

Allowance for Loan Losses

An allowance for loan losses has been established by management to provide
for those loans that may not be repaid in their entirety for a variety of
reasons. The allowance is maintained at a level considered by management to be
adequate to provide for probable incurred losses. The allowance is increased by
provisions charged to earnings and is reduced by chargeoffs, net of recoveries.
The provision for loan losses is based upon past loan loss experience,
managements evaluation of the loan portfolio under current economic
conditions, and classification of loans by bank regulators. Loans are charged
to the allowance for loan losses when, and to the extent, they are deemed by
management to be uncollectible. The allowance for loan losses is composed of
allocations for specific loans and a historical portion for all other loans.
As discussed above, during a loan review conducted in the first quarter of
2003, federal and state bank regulatory authorities downgraded
the classification of approximately $19.6 million in loans made to one
individual and certain affiliated companies. As a result, the Company recorded
additional provisions to the allowance for loan losses during the third quarter
of 2002 in order to increase the specific reserve allocation to these loans of
approximately $9.8 million.

Following is a summary of changes in the allowance for loan losses for the
nine months ended September 30:

|                                |                       |   |                |        |      |   |       |       | 
|------------------------------- | --------------------- | - | -------------- | ------ | ---- | - | ----- | ----- | 
|                                |                       |   | 2002(Restated) |        | 2001
|                                |                       |   |                |        |     
|                                |                       |   | (In thousands)
|Balance, January 1              |                       | $ | 10,135         |        |      | $ | 8,593 |      
|Provision charged to operations |                       |   | 12,392         |        |      |   | 1,550 |      
|Loans charged-off               |                       |   | (1,770         | )      |      |   | (552  | )    
|Recoveries                      |                       |   | 193            |        |      |   | 142   |      
|                                |                       |   |                |        |      |   |       |      
|                                | Balance, September 30 |   | $              | 20,950 |      |   | $     | 9,733 | 
|                                |                       |   |                |        |      |   |       |      

The Company recognizes that credit losses will be experienced and the risk
of loss will vary with, among other things, general economic conditions; the
type of loan being made; the creditworthiness of the borrower over the term of
the loan and in the case of a collateralized loan, the quality of the
collateral for such loan. The allowance for loan losses represents the
Companys estimate of the allowance necessary to provide for probable incurred
losses in the portfolio. In making this determination, the Company analyzes
the ultimate collectibility of the loans in its portfolio by incorporating
feedback provided by internal loan staff, an independent loan review function,
and information provided by examinations performed by regulatory agencies. The
Company makes quarterly evaluations as to the adequacy of the allowance for
loan losses.

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##### Table of Contents



On a quarterly basis, management of each of the Banks meets to review the
adequacy of the allowance for loan losses. Each bank loan officer grades these
individual credits, and the Companys independent loan review function
validates the officers grades. In the event that loan review downgrades a
loan, it is included in the allowance analysis at the lower grade. The grading
system is in compliance with applicable regulatory classifications, and the
allowance is allocated to the loans based on the regulatory grading, except in
instances where there are known differences (e.g. collateral value is nominal).

The analysis of the allowance for loan losses is comprised of three
components: specific credit allocation; general portfolio allocation; and
subjectively by determined allocation. The specific credit allocation includes
a detailed review of the credit in accordance with SFAS Nos. 114 and 118,
including an assessment of collateral value and sources of repayment, and an
allocation is made based on this analysis. The general portfolio allocation
consists of an assigned reserve percentage based on the credit rating of the
loan. The subjective portion is determined based on loan history and the
Companys evaluation of various factors including current economic conditions
and trends in the portfolio including delinquencies and impairments, as well as
changes in the composition of the portfolio.

The allowance for loan losses is based on estimates, and ultimate losses
will vary from current estimates. These estimates are reviewed quarterly, and
as adjustments, either positive or negative, become necessary, a corresponding
increase or decrease is made in the provision for loan losses.

The Companys provision for loan losses was $10.9 million for the third
quarter of 2002 compared to $346,000 for the similar period in 2001. For the
nine months ended September 30, 2002, the provision for losses was $12.4
million compared to $1.6 million for the comparable period in 2001. This
increase is due to probable incurred losses on problem loans. Net charge-offs
for the nine months ended September 30, 2002 were $1.6 million compared to
$410,000 for the nine months ended September 30, 2001. The Company charged-off
$1.2 million in loans during the three months ended September 30, 2002. These
charge-offs were loans previously identified as workouts during the second and
third quarters of 2002. Commercial loans and commercial real estate loans
represented $679,000 and $375,000, respectively, of the $1.2 million
charged-off during the quarter. Charge-offs totaling $700,000 were related to
one loan relationship in West Central Illinois. The net charge-off percentage
to average loans was 0.15% and 0.05% at September 30, 2002 and September 30,
2001, respectively.

The allowance for loan losses was $21.0 million, or 1.85% of total loans,
as of September 30, 2002 and $10.1 million, or 1.01% of total loans, at
December 31, 2001. Management believes that the allowance as of September 30,
2002 is adequate to provide for inherent losses in the portfolio.

Nonaccrual and Nonperforming Loans

Nonaccrual loans increased to $24.1 million as of September 30, 2002 from
$1.8 million as of December 31, 2001. This was a result of the reclassification
of $19.6 of loans to one borrower where estimated collectibility of the loans
was considered doubtful as discussed above. Most of the nonaccrual loans are
related to several commercial loans which are being addressed by specific
workout plans at this time. As discussed above, on March 26, 2003, $10.8
million of the principal amount of the reclassified loans was repaid by an
investor group consisting of directors and other related parties of the
Company.

Nonperforming loans include nonaccrual loans and accruing loans which are
90 days or more delinquent. Typically, these loans have adequate collateral
protection and/or personal guaranties to provide a source of repayment to the
Bank. Nonperforming loans were $28.3 million as of September 30, 2002 compared
to $5.7 million at June 30, 2002, $2.4 million at December 31, 2001, and $3.4
million at September 30, 2001. Nonperforming loans were 2.50%, 0.53%, 0.24%,
and 0.36% of total loans as of

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##### Table of Contents



September 30, 2002, June 30, 2002, December 31, 2001, and September 30,
2001, respectively. Nonperforming loans were 1.48%, 0.30%, 0.13%, and 0.20% of
total assets as of September 30, 2002, June 30, 2002, December 31, 2001, and
September 30, 2001, respectively. Allowance for loan losses to nonperforming
loans ratio was 0.74x, 1.96x, 4.28x, and 2.86x at September 30, 2002, June 30,
2002, December 31, 2001, and September 30, 2001, respectively.

Other real estate owned was $225,000 at September 30, 2002 and $355,000 at
December 31, 2001 and September 30, 2001. Nonperforming assets were 1.50%,
0.15%, and 0.22% of total assets at September 30, 2002, December 31, 2001, and
September 30, 2001, respectively.

The following table summarizes the nonperforming loans and related ratios that have been
revised in the restated interim unaudited financial information for
the period ended September 30, 2002 included in this Form 10-Q/A:

|                                         |  |                          |       |   |             |   |        |                |             |   |        |  
|---------------------------------------- |  | ------------------------ | ----- | - | ----------- | - | ------ | -------------- | ----------- | - | ------ | -
|                                         |  | As of September 30, 2002 |      
|                                         |  |                          |      
|                                         |  | Previously               |       |   |             |   |        |                | As Reported |  
|                                         |  | Reported in Form 10-Q    |       |   | Adjustments |   |        | in Form 10-Q/A |            
|                                         |  |                          |       |   |             |   |        |                |            
|Total
nonperforming loans (In thousands) |  | $                        | 8,406 |   |             | $ | 19,887 |                |             | $ | 28,293 |  
|Nonperforming loans to total loans       |  |                          | 0.74  | % |             |   | 1.76   | %              |             |   | 2.50   | %
|Nonperforming loans to total assets      |  |                          | 0.44  | % |             |   | 1.04   | %              |             |   | 1.48   | %
|Allowance to nonperforming loans         |  |                          | 1.33x |   |             |   | (0.59) | x              |             |   | 0.74x  |  

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ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

Interest Rate Sensitivity Analysis

The Companys overall interest rate sensitivity is demonstrated by net
interest income analysis. Net interest income analysis measures the change in
net interest income in the event of hypothetical changes in interest rates.
This analysis assesses the risk of change in net interest income in the event
of sudden and sustained 1.0% to 2.0% increases and decreases in market interest
rates. The table below presents the Companys projected changes in net interest
income for the various rate shock levels at September 30, 2002.

|        |  |                        |        |          |  |          |       |   |  |  |       |  
|------- |  | ---------------------- | ------ | -------- |  | -------- | ----- | - |  |  | ----- | -
|        |  | Net Interest Income   
|        |  |                       
|        |  | Amount                 |        | $ Change |  | % Change
|        |  |                        |        |          |  |         
|        |  | (dollars in thousands)
|-200 bp |  | $                      | 62,301 |          |  | $        | 1,043 |   |  |  | 1.70  | %
|-100 bp |  |                        | 62,531 |          |  |          | 1,273 |   |  |  | 2.08  |  
|Base    |  |                        | 61,258 |          |  |          |      |   |  |  |      |  
|+100 bp |  |                        | 60,758 |          |  |          | (500  | ) |  |  | (0.82 | )
|+200 bp |  |                        | 61,697 |          |  |          | 439   |   |  |  | 0.72  |  

As shown above, at September 30, 2002, the effect of an immediate 200
basis point increase in interest rates would increase the Companys net
interest income by 0.72% or $439,000. The effect of an immediate 200 basis
point reduction in rates would increase the Companys net interest income by
1.70% or $1.0 million.

The projected changes in the Companys net interest income for the various
rate shock levels at December 31, 2001 were the following:

|        |  |                        |        |          |  |          |        |   |  |  |       |  
|------- |  | ---------------------- | ------ | -------- |  | -------- | ------ | - |  |  | ----- | -
|        |  | Net Interest Income   
|        |  |                       
|        |  | Amount                 |        | $ Change |  | % Change
|        |  |                        |        |          |  |         
|        |  | (dollars in thousands)
|-200 bp |  | $                      | 69,191 |          |  | $        | 1,565  |   |  |  | 2.31  | %
|-100 bp |  |                        | 69,487 |          |  |          | 1,861  |   |  |  | 2.75  |  
|Base    |  |                        | 67,626 |          |  |          |       |   |  |  |      |  
|+100 bp |  |                        | 64,550 |          |  |          | (3,076 | ) |  |  | (4.36 | )
|+200 bp |  |                        | 64,675 |          |  |          | (2,951 | ) |  |  | (4.55 | )

Computations of the prospective effects of hypothetical interest rate
changes are based on numerous 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. Actual values may differ from
those projections set forth above, should market conditions vary from
assumptions used in preparing the analyses. Further, the computations do not
contemplate any actions the Company may undertake in response to changes in
interest rates.

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ITEM 4  CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Companys Chief
Executive Officer and Chief Financial Officer carried out an evaluation, with
the participation of other members of management as they deemed appropriate, of
the effectiveness of the design and operation of the Companys disclosure
controls and procedures as contemplated by Exchange Act Rule 13a-14. Based
upon, and as of the date of that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the Companys disclosure controls and
procedures are effective, in all material respects, in timely alerting them to
material information relating to the Company (and its consolidated
subsidiaries) required to be included in the periodic reports the Company is
required to file and submit to the SEC under the Exchange Act. While management
concluded that its disclosure controls and procedures are adequate in all
material respects for SEC reporting purposes, the Company is currently
reviewing its policies and procedures regarding identification and
classification of problem loans and its asset quality review process in an
effort to avoid subsequent changes to previously reported financial results.

There have been no significant changes to the Companys internal controls
or in other factors that could significantly affect these controls subsequent
to the date that the internal controls were most recently evaluated nor were
there identified any significant deficiencies or material weaknesses requiring
corrective actions. The Companys management, including the Chief Executive
Officer and the Chief Financial Officer, does not expect that its disclosure
controls or its internal controls will prevent all error and all fraud. A
control system, no matter how well conceived and operated, can provide only
reasonable assurance that the objectives of the control system are met.
Further, the design of a control system will take into account resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdowns can occur because of simple error or
mistake. Additionally, any system of controls can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of the control. The design of any system of controls also
is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions; over time, controls may
become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected. However, the Companys management
believes its system of controls provides reasonable assurances that the
information required to be disclosed in the Companys Exchange Act reports is
recorded, processed, summarized and reported within the time frames specified
in the SECs rules and forms.

As noted in the Recent Developments section under Part I, Item 2 of this
Form 10-Q/A, the Company has restated its interim financial statements for the
period ended September 30, 2002, to reflect additional provisions for loan
losses based on a subsequent joint determination by federal and state bank
regulators that the collectibility of certain problem loans should have been
classified by the Company as doubtful as of September 30, 2002. In addition,
on March 3, 2003, the OBRE commenced its regularly scheduled examination of
Midwest Bank and Trust Company and was joined in the examination by the Federal
Reserve. While this examination is still in progress, the Federal Reserve and
OBRE have expressed concern over this Banks risk management procedures, and
the management of the Company and the Bank has had ongoing communications with
staff of the Federal Reserve and OBRE concerning risk management, proper
identification and classification of problem loans, and other matters. The
Company is currently reviewing its asset quality review policies and procedures
and may implement additional processes and controls to strengthen its risk management.

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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995

This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995 and is including this statement for purposes of these safe
harbor provisions. Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies, and expectations of the
Company, are generally identifiable by use of the words believe, expect,
intend, anticipate, estimate, project, or similar expressions. 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, including its ability to implement its
growth strategies, include, but are not limited
to, fluctuations in interest rates and loan and deposit pricing, which could
reduce the Companys net interest margins, asset valuations and expense
expectations; a deterioration in the economy or business conditions, either
nationally or in the Companys market areas, that could increase credit-related
losses and expenses; increases in defaults by borrowers and other loan
delinquencies resulting in increases in the Companys provision for loan losses
and related expenses; higher than anticipated costs related to the Companys
new banking centers or slower than expected earning assets growth which could
extend anticipated breakeven periods at these locations; monetary and
fiscal policies of the U.S. government, including policies of the
U.S. Treasury and the Federal Reserve; possible administrative or
enforcement action or similar direction of federal or state banking
regulators in connection with any material failure of any of the
Banks to comply with applicable banking laws, rules and regulations;
the quality or composition of the loan or investment portfolios;
demand for loan products; deposit flows; demand for financial
services in the Company's market areas; the Company's ability to
fully integrate the operations and branch offices acquired as a
result of the acquisition of Big Foot Financial Corp.; the likelihood
of the consummation of the acquisition of CoVest Bancshares, Inc.,
changes in accounting principles, policies and guidelines; the potential dilutive effect of future acquisitions, if any;
significant increases in competition; legislative or regulatory changes
applicable to bank holding companies or the Companys banking or other
subsidiaries; and possible changes in tax rates, tax laws, or tax law
interpretation.

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PART II




Items 1- 5.



| |  | The information required by these items in this report on Form 10-Q/A is
incorporated by reference to the Companys report on Form 10-Q for the
quarter ended September 30, 2002 as filed with the SEC on November 1,
2002.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits
| | --- |  | --------

The following exhibits are either filed as part of this report or are
incorporated herein by reference:



| | 3.1  |  | Restated Certificate of Incorporation, as amended
(incorporated by reference to Registrants Registration
Statement on Form S-1, Registration No. 333-42827).                                                                                                                                                                                                                                               
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 3.2  |  | Restated By-laws, as amended (incorporated by
reference to Registrants Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998, File No 0-29652).                                                                                                                                                                                                                                                
|
| | 3.3  |  | Amendment of Restated By-laws (incorporated by
reference to Registrants Quarterly Report on Form 10-Q for
the quarter ended June 30, 2000, File No. 001-13735).                                                                                                                                                                                                                                            
|
| | 3.4  |  | Amendment of Restated By-laws, (incorporated by
reference to the Registrants Form 10-Q for the quarter
ended September 30, 2002, File No. 001-13735).                                                                                                                                                                                                                                                      
|
| | 4.1  |  | Specimen Common Stock Certificate (incorporated by
reference to Registrants Registration Statement on Form
S-1, Registration No. 333-42827).                                                                                                                                                                                                                                                               
|
| | 4.2  |  | Certain instruments defining the rights of the
holders of long-term debt of the Company and certain of its
subsidiaries, none of which authorize a total amount of
indebtedness in excess of 10% of the assets of the Company
and its subsidiaries on a consolidated basis, have not been
filed as Exhibits. The Company hereby agrees to furnish a
copy of any of these agreements to the SEC upon request.
|
| | 99.1 |  | Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, from the Companys Chief Executive Officer.                                                                                                                                                                                                                                         
|
| | 99.2 |  | Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, from the Companys Chief Financial Officer.                                                                                                                                                                                                                                         



| | (b) |  | Reports on Form 8-K
| | --- |  | -------------------



| |  |  | Current Report on Form 8-K dated July 17, 2002, filed with the
SEC on July 17, 2002.
| |  |  | ------------------------------------------------------------------------------------
|
| |  |  | Current Report on Form 8-K dated July 19, 2002, filed with the
SEC on July 22, 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-Q/A to be signed on its behalf
by the undersigned thereunto duly authorized.

|                     |  |                                                                      |  |                      
|-------------------- |  | -------------------------------------------------------------------- |  | ---------------------
|Date: April 15, 2003 |  |                                                                      |  |                      
|                     |  |                                                                      |  |                      
|                     |  | MIDWEST BANC HOLDINGS, INC.
(Registrant)                            
|                     |  |                                                                      |  |                      
|                     |  | By:                                                                  |  | /s/ Brad A. Luecke   
|                     |  |                                                                      |  |                      
|                     |  | Brad A. Luecke,
President and Chief Executive Officer               
|                     |  |                                                                      |  |                      
|                     |  | By:                                                                  |  | /s/ Daniel R. Kadolph
|                     |  |                                                                      |  |                      
|                     |  | Daniel R. Kadolph,
Senior Vice President and
Chief Financial Officer

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##### Table of Contents






CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Brad A. Luecke, President and Chief Executive Officer, certify that:



|1) |  | I have reviewed this quarterly report on Form 10-Q/A of Midwest Banc
Holdings, Inc.;                                                                                                                                                                                                                                          
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2) |  | Based on my knowledge, this quarterly 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 quarterly report;
|  
|3) |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly 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 quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly 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
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                     |  |                |  | 
|---------------------------------------------------- |  | -------------- |  | 
|Date:                                                |  | April 16, 2003 |  | 
|                                                     |  |                |  | 
|                                                     |  |                |  | 
|/s/ Brad A. Luecke                                   |  |               
|                                                     |  |               
|Brad A. Luecke
President and Chief Executive Officer |  |               





---



##### Table of Contents



CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Daniel R. Kadolph, Senior Vice President and Chief Financial Officer,
certify that:



|1) |  | I have reviewed this quarterly report on Form 10-Q/A of Midwest Banc
Holdings, Inc.;                                                                                                                                                                                                                                          
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2) |  | Based on my knowledge, this quarterly 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 quarterly report;
|  
|3) |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly 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 quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly 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
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                    |  |                |  | 
|------------------------------------------------------------------- |  | -------------- |  | 
|Date:                                                               |  | April 16, 2003 |  | 
|                                                                    |  |                |  | 
|                                                                    |  |                |  | 
|/s/ Daniel R. Kadolph                                               |  |               
|                                                                    |  |               
|Daniel R. Kadolph
Senior Vice President and Chief Financial Officer |  |               





---



##### Table of Contents






EXHIBITS



| | 3.1  |  | Restated Certificate of Incorporation, as amended
(incorporated by reference to Registrants Registration
Statement on Form S-1, Registration No. 333-42827).                                                                                                                                                                                                                                               
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 3.2  |  | Restated By-laws, as amended (incorporated by
reference to Registrants Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998, File No 0-29652).                                                                                                                                                                                                                                                
|
| | 3.3  |  | Amendment of Restated By-laws (incorporated by
reference to Registrants Quarterly Report on Form 10-Q for
the quarter ended June 30, 2000, File No. 001-13735).                                                                                                                                                                                                                                            
|
| | 3.4  |  | Amendment of Restated By-laws, (incorporated by
reference to the Registrants Form 10-Q for the quarter
ended September 30, 2002, File No. 001-13735). 4.1 Specimen
Common Stock Certificate (incorporated by reference to
Registrants Registration Statement on Form S-1,
Registration No. 333-42827).                                                                                                    
|
| | 4.2  |  | Certain instruments defining the rights of the
holders of long-term debt of the Company and certain of its
subsidiaries, none of which authorize a total amount of
indebtedness in excess of 10% of the assets of the Company
and its subsidiaries on a consolidated basis, have not been
filed as Exhibits. The Company hereby agrees to furnish a
copy of any of these agreements to the SEC upon request.
|
| | 99.1 |  | Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 from the Companys Chief
Executive Officer.                                                                                                                                                                                                                                          
|
| | 99.2 |  | Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 from the Companys Chief
Financial Officer.