U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

        [X]  Annual Report Pursuant to Section 13 or 15(d) of the Securities
             Exchange Act of 1934
                  For the fiscal year ended December 31, 1997;

                                       OR

        [ ]  Transition Report Pursuant to Section 13 or 15(d) of the
             Securities Exchange Act of 1934
        For the Transition Period from ____________ to __________________

                        Commission File Number :811-3787

                      BANDO McGLOCKLIN CAPITAL CORPORATION
             (Exact name of registrant as specified in its charter)

                    Wisconsin                           39-1364345
         (State or other jurisdiction of             (I.R.S. Employer
         incorporation or organization)             Identification No.)

              W239 N1700 Busse Road
                  P.O. Box 190
               Pewaukee, Wisconsin                      53072-0190
    (Address of principal executive offices)            (Zip Code)

       Registrant's telephone number, including area code:  (414) 523-4300
                             -----------------------
           Securities registered pursuant to Section 12(b) of the Act:

                                      None

           Securities registered pursuant to Section 12(g) of the Act:
           Title of Class                  Title of Class
      Common Stock, 6-2/3 cents     Preferred Stock, 6-2/3 cents
              Par Value                      Par Value

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

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

        The aggregate market value of voting and non-voting common equity
   held by non-affiliates of the registrant at March 20, 1998 was $_________.

   The number of shares of common stock outstanding at March 20, 1998 was
   3,689,102 

                      DOCUMENTS INCORPORATED BY REFERENCE:

   Portions of Bando McGlocklin Capital Corporation Proxy Statement for the
   1998 Annual Meeting of Shareholders (to be filed with the Securities and
   Exchange Commission under Regulation 14A within 120 days after the end of
   the Registrant's fiscal year and, and upon such filing, to be incorporated
   by reference into Part III). 

   <PAGE>
                      BANDO McGLOCKLIN CAPITAL CORPORATION

                       Index to Annual Report on Form 10-K
                            For the Fiscal Year Ended
                                December 31, 1997
                                                                         Page

   Part I  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
        Item 1.   Description of Business  . . . . . . . . . . . . . . . .  1
        Item 2.   Properties . . . . . . . . . . . . . . . . . . . . . . .  6
        Item 3.   Legal Proceedings  . . . . . . . . . . . . . . . . . . .  6
        Item 4.   Submission of Matters to a Vote of Security Holders  . .  6

   Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
        Item 5.   Market for Common Equity and Related Stockholder
                  Matters  . . . . . . . . . . . . . . . . . . . . . . . .  6
        Item 6.   Selected Financial Data (In thousands, except per
                  share data)  . . . . . . . . . . . . . . . . . . . . . .  7
        Item 7.   Management's Discussion and Analysis of Financial
                  Condition and Results of Operation (for the fiscal
                  years ended December 31, 1997 and June 30, 1996 and
                  1995)  . . . . . . . . . . . . . . . . . . . . . . . . .  7
        Item 7A.  Quantitative and Qualitative Disclosures About Market
                  Risk   . . . . . . . . . . . . . . . . . . . . . . . . . 13
        Item 8.   Financial Statement and Supplementary Data.  . . . . . . 14

   Part III  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
        Item 9.   Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure  . . . . . . . . . . 48
        Item 10.  Directors and Executive Officers of the Registrant . . . 48
        Item 11.  Executive Compensation . . . . . . . . . . . . . . . . . 48
        Item 12.  Security Ownership of Certain Beneficial Owners and
                  Management . . . . . . . . . . . . . . . . . . . . . . . 48
        Item 13.  Certain Relationships and Related Transactions . . . . . 48
        Item 14.  Exhibits, Financial Statement Schedules, and Reports
                  on Form 8-K  . . . . . . . . . . . . . . . . . . . . . . 48

   <PAGE>
                                     Part I

   Item 1.   Description of Business

                                  Introduction

             Bando McGlocklin Capital Corporation (the "Company"), was
   originally incorporated in February 1980 to provide long-term secured
   loans to finance the growth, expansion and modernization of small
   businesses.

             Beginning January 1, 1997, the Company, together with its
   wholly-owned subsidiary has, and continues to, operate as a real estate
   investment trust ("REIT") pursuant to the provisions of Section 856 of the
   Internal Revenue Code of 1986, as amended.  The Company is now engaged in
   two business segments:  the business of managing loan portfolios secured
   by real estate, participating in loans with third party loan originators
   and owning industrial and commercial real property and leasing such
   property to small businesses (the "Lending Business") and manufacturing
   dolls, plastic clocks and other licensed consumer products for
   distribution through major retailers, as well as fourteen hundred dealers
   across the country (the "Consumer Products Business").

             On May 5, 1993, the Company formed Bando McGlocklin Investment
   Company, a subsidiary of the Company ("BMIC").  In May 1993, the Company
   transferred a fully developed real estate parcel to BMIC.  In December
   1996 one percent of the economic interest in BMIC was sold to an unrelated
   third party.  In January 1997, this one percent interest was sold to
   George R. Schonath, President and Chief Executive Officer of the Company. 
   In a subsequent recapitalization of BMIC, the 99% voting common stock
   interest in BMIC then held by the Company was converted to the ownership
   of 100% of the non-voting common stock of BMIC.  After the
   recapitalization, the Company held 100% of the non-voting common stock of
   BMIC, representing 99% of the total equity interest, and George R.
   Schonath owned 100% of the voting common stock of BMIC, representing one
   percent of the total equity interest.  The recapitalization was effected
   because applicable REIT tax provisions do not permit a REIT to own more
   than 10% of the voting stock of any corporation.

             On March 26, 1993, the Company transferred substantially all of
   its assets and liabilities to Bando McGlocklin Small Business Lending
   Corporation ("BMSBLC"), a wholly-owned subsidiary of the Company.  In
   1997, BMSBLC contributed its ownership interest in Lee Middleton Original
   Dolls, Inc. ("Middleton Doll") and License Products, Inc. ("License
   Products"), both 51% owned subsidiaries engaged in the consumer products
   business, to BMIC.  BMIC thus owns 51% of the common stock of both
   Middleton Doll and License Products, with the other 49% interest in each
   corporation being owned by unaffiliated parties.  The consolidated
   accounts of the Company reflect the consolidated financial position and
   results of operations of BMIC, Middleton Doll and License Products.

             Prior to January 2, 1997, the Company and BMSBLC were registered
   as investment companies under the Investment Company Act of 1940 ("1940
   Act").  Effective January 2, 1997, the Company and BMSBLC deregistered as
   investment companies under the 1940 Act.  The Company now reports under
   the Securities Exchange Act of 1934 ("1934 Act") and operates as a REIT.

             On September 3, 1997, the Company capitalized InvestorsBancorp,
   Inc., a bank holding company, with approximately $6.2 million and then
   distributed all its shares of InvestorsBancorp, Inc. to the Company's
   shareholders.

             The Company and InvestorsBancorp, Inc., together with its
   wholly-owned subsidiary, InvestorsBank (the "Bank") share common offices
   and personnel.  Expenses are shared between the two entities in accordance
   with a Management Services and Allocation of Expenses Agreement (the
   "Management Agreement").  See "Management's Discussion and Analysis of
   Financial Condition and Results of Operation - Liquidity and Capital
   Resources."

                                Lending Business

   Loans

             The Company, through its Lending Business, (i) manages its loan
   portfolio comprised primarily of loans to small business entities secured
   by first or second mortgages, (ii) purchases loan participants from banks,
   including the Bank, specializing in lending to small business entities,
   and (iii) owns industrial and commercial real estate for lease to small
   businesses.

             Until the distribution of the shares of InvestorsBancorp, Inc.
   in September 1997, the Company had engaged in the business of originating
   loans to small businesses.  Concurrent with such distribution, the Company
   and the Bank agreed in the Management Agreement that the Company would not
   originate any loans unless agreed to by the Bank in writing.  Thus, except
   for the making of loans to Company customers who desire to increase their
   loan amounts with the Company, the Company does not originate any loans.

             The Company's loan portfolio is managed by the Bank for an
   annual fee, payable monthly, equal to 25 basis points of the total dollar
   amount of loans under management.  Overhead expenses and rent are also
   shared by the Bank and the Company, as well as certain expenses of
   employees providing accounting, reporting and related services to the
   Company.

             The Company's loan portfolio is primarily comprised of long-
   term, primarily variable rate, secured loans to small business entities.
   The loans are primarily secured by first mortgages on real estate,
   although some loans are secured by second mortgages.  Over 95% of the
   Company's loans by dollar volume are loans to borrowers located in the
   State of Wisconsin.  Substantially all of the Company's loan portfolio is
   held by BMSBLC.

             The Company's borrowers include manufacturers, wholesalers,
   retailers, professionals and service providers.  The Company funds its
   lending operations through its equity capital, bank and institutional
   borrowings, commercial paper sales and the sale of loan participations.

   Real Estate

             The Company currently owns two parcels of real estate on which
   two multi-purpose buildings are being constructed.  The Company has
   entered into long-term lease agreements for such properties with two small
   businesses.  The Company anticipates that it will construct or purchase
   additional industrial or commercial properties to lease.

             The Company anticipates that substantially most of its rental
   properties will be for industrial real estate, but also anticipates that
   it may also own and lease commercial real estate properties, such as
   office buildings and retail stores.  The Company expects that
   substantially all of its properties will be located in Wisconsin.

   Competition

             The Company, in managing its loan portfolio, competes primarily
   with commercial banks and commercial finance companies, many of which have
   substantially more assets and capital than the Company.  Banks, in
   particular, have been active in seeking to refinance outstanding loans. 
   The Company believes, however, that it is able to compete effectively to
   maintain its loan portfolio because of its smaller size and more flexible
   structure.

             In owning and leasing real estate, the Company competes
   primarily with other REITs and other investors such as insurance companies
   and a variety of investment vehicles which seek to own and lease real
   estate.  In addition, the Company competes with banks and other financial
   institutions, which seek to lend money to potential tenants of the Company
   which would allow the potential tenants to construct and own the building
   rather than lease a building owned by the Company.

   Employees

             On December 31, 1997, the Company employed only its President
   and a Senior Vice President.  All other duties are performed by Bank
   employees pursuant to the Management Agreement.

                           Consumer Products Business

             (a)  Middleton Doll.  Middleton Doll, located in Belpre, Ohio,
   is a 51% owned subsidiary of BMIC and manufactures and distributes vinyl
   dolls.  Middleton Doll uses a three step process to manufacture its dolls
   that include:  (1) molding liquid vinyl to create the various body parts
   of its dolls; (2) inserting weighted pellets on the inside of the dolls to
   give the dolls the specified weight and (3) dressing the dolls in various
   clothing and accessories.

             Although it has one retail location, Middleton Doll does not
   sell directly to the retail market.  The majority of its dealers are small
   independent owned stores and specialty shops that are located in shopping
   malls, plazas, freestanding buildings and various other locations. 
   Middleton Doll uses a database of approximately 1,700 to 2,000 stores to
   target potential customers.  In addition, Middleton Doll sells directly to
   a limited number of large retailers.  In particular, it sells its dolls to
   approximately 600 J.C. Penney stores.

             Middleton Doll sells its products throughout the United States. 
   It competes with various other doll manufacturers including:  Madam
   Alexander, LL Nickerbocker, Ashton Drake and Pleasant Company.  Middleton
   Doll's strategy for future growth is to expand its channels of
   distribution and its product lines.  Middleton Doll purchases liquid vinyl
   and weighted pellets from a number of suppliers in the United States and
   its principal source of clothing and accessories is the Far East and
   considers such items to be available from a number of sources.

             Middleton Doll plans to expand its physical plant and
   distribution during 1998.

             (b)  License Products.  License Products is a 51% owned
   subsidiary of BMIC.  License Products, located in New Berlin, Wisconsin,
   designs, manufactures and markets a selection of clocks under four
   different brand names.  It sells its products through more than 100 field
   sales representatives that are associated with eleven geographically
   placed sales agencies and sells directly to high volume retailers.

             (c)  Employees.  The Consumer Products Business employs
   approximately 135 persons.

             (d)  Seasonality.  The Consumer Products Business tends to be
   seasonal with the strongest months being September, October and November.

             (e)  Large Customers.  Middleton Doll had one customer, J.C.
   Penney, that accounted for approximately 17% of its total revenues for
   fiscal 1997.

             (f)  Backlog.  The backlog of the Consumer Products Business was
   approximately $500,000 as of December 31, 1997, all of which should be
   filled during 1998.

   Segment Information

        Financial information concerning the Company's business segments is
   incorporated by reference in Note 17 to the Company's consolidated
   financial statements on page 41 herein.

   Executive Officers

             George R. Schonath, 56, has served as Chief Executive Officer of
   the Company since 1983 and President since July 1997.  Mr. Schonath has
   also served as President and Chief Executive Officer of InvestorsBancorp,
   Inc. and the Bank since they were established in 1997.  Until July, 1997,
   he served as a director (since 1980) and Chairman of the Board (since
   1983) of the Company.

             Jon McGlocklin, 54, has served as a Senior Vice President of the
   Company since July 1997.  Mr. McGlocklin has also served as Senior Vice
   President and Secretary of InvestorsBancorp, Inc. and Senior Vice
   President of the Bank since they were established in 1997.  He has also
   served as President of Healy Manufacturing, Inc., Menomonee Falls,
   Wisconsin, since 1997, and as an announcer for the Milwaukee Bucks since
   1976.  Until July 1997, he served as a director (since 1980) and President
   (since 1991) of the Company.

             Susan J. Hauke, 32, has been the Company's Vice
   President - Finance, Secretary and Treasurer since 1997.  In 1997, Ms.
   Hauke was also appointed Controller, Vice President - Finance and
   Assistant Secretary of InvestorsBancorp, Inc., and Controller, Vice
   President-Finance, Secretary and Treasurer of the Bank.  From 1991 until
   1997, Ms. Hauke served as Controller for the Company, and was a senior
   accountant at Price Waterhouse LLP before joining the Company.

             Scott J. Russell, 38, has been a Senior Vice President of the
   Company since 1997 and InvestorsBancorp, Inc. since February 1998 and a
   Senior Vice President and Lending Officer of the Bank since 1997.  From
   1994 until 1997, Mr. Russell served as a Vice President of the Company and
   was a corporate banker with the Bank of Tokyo, Chicago, Illinois, prior to
   joining the Company.

   Item 2.   Properties

             BMCC leases an approximately 16,000 square feet building from
   Bando McGlocklin Real Estate Investment Corporation, a related party.  The
   term of the lease expires March 31, 2007 with the option to extend for
   five years to March 31, 2012.  The monthly rent is variable based upon
   LIBOR interest rates.  BMCC subleases approximately 11,200 square feet of
   a building, of which approximately 4,750 square feet is subleased to the
   Bank and approximately 6,450 is subleased to two other subleasors.  Each
   sublease has a one year term.

             Middleton Doll owns an approximately 36,000 square feet building
   that serves as its headquarters and manufacturing facility located at 1301
   Washington Boulevard, Belpre, Ohio.  The building is a one-story retail,
   office and warehouse.  In addition, Middleton Doll leases approximately
   40,000 square feet warehouse in Belpre, Ohio which it uses to store raw
   material and finished goods.

             License Products leases approximately 9,500 square feet in a
   multi-tenant building located at 16200 West Rogers Drive, New Berlin,
   Wisconsin at a monthly rental rate of $3,790.  The term of the lease is
   month-to-month.

   Item 3.   Legal Proceedings

             As of the date of this filing, neither the Company nor any of
   its subsidiaries is a party to any legal proceedings, the adverse outcome
   of which, in management's opinion, would have a material effect on the
   Company's results of operations or financial position.

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

             No matters were submitted to a vote of security holders during
   the quarter ended December 31, 1997.

                                     Part II

   Item 5.   Market for Common Equity and Related Stockholder Matters

             The common stock of the Company is traded on The Nasdaq Stock
   Market under the symbol BMCC.

             The table below represents the high and low sales prices for the
   Company common stock as reported on The Nasdaq Stock Market and cash
   dividends paid per share for fiscal 1997 and 1996:

                                                        Cash
                                                      Dividends
                                   Common Stock       per share
               1997              High       Low

               First Quarter    $13.50    $11.25            -    
               Second Quarter   $14.25    $11.25           0.18
               Third Quarter    $14.75     $8.625          0.18
               Fourth Quarter   $13.00     $8.75           0.18

               1996              High       Low

               First Quarter    $13.00    $10.50           0.24
               Second Quarter   $12.00    $10.00           0.24
               Third Quarter    $12.25    $10.00           0.24
               Fourth Quarter   $12.50    $10.25           0.755

             As of March 20, 1998, there were approximately 1,200
   shareholders of record of the Company's common stock.

   Item 6.   Selected Financial Data (In thousands, except per share data)

             The following table sets forth certain Selected Consolidated
   Financial Data for the periods and as of the dates indicated:

                           Twelve       Six     Twelve months ended June 30,
                           months      months
                           ended       ended
                          December    December
                          31, 1997    31, 1996       1996           1995

    (In thousands, except per share data)

    Total Revenues        $ 30,984    $ 10,940     $ 10,617     $ 11,738
    Net Income               3,506       1,142        3,130        3,208
    Total Assets           140,337      79,519       85,379(1)    91,033(1)
    Total Liabilities      111,002      46,370       50,285(1)    52,823(1)
    Basic Earnings Per
      Share                  $0.95       $0.31        $0.82        $0.82

    (1)  Unaudited and restated.

   Item 7.   Management's Discussion and Analysis of Financial Condition and
             Results of Operations (for the fiscal years ended December 31,
             1997 and June 30, 1996 and 1995)

   GENERAL

             The following discussion provides additional analysis of the
   financial statements presented in Item 8. Financial Statement and
   Supplementary Data and should be read in conjunction with this
   information.

             Amounts presented as of December 31, 1997 and December 31, 1996
   and for the twelve months ended December 31, 1997 and the six months ended
   December 31, 1996 include the consolidation of the operations of the
   following companies: Bando McGlocklin Capital Corporation (the "Company");
   Bando McGlocklin Small Business Lending Corporation ("BMSBLC"), a 100%
   owned subsidiary of the Company; Bando McGlocklin Investment Corporation
   ("BMIC"), a 99%-owned subsidiary of the Company; Lee Middleton Original
   Doll, Inc. ("Middleton Doll") and License Products, Inc. ("License
   Products"), 51%-owned subsidiaries.  The twelve months ended June 30, 1996
   and June 30, 1995 and the six months ended December 31, 1995 include the
   consolidation of the operations of the following companies: the Company;
   BMSBLC and BMIC, 100%-owned subsidiaries of the Company; and License
   Products, a 51%-owned subsidiary of the Company.  The Company has owned
   49% of Middleton Doll since 1993; the acquisition of an additional two
   percent of Middleton Doll was completed at the end of June 1996.  Prior to
   this acquisition, Middleton Doll was accounted for on the equity method. 

             The 1996 and 1995 reporting periods reflect the Company's
   financial statements on a restated basis.  Prior to January 2, 1997, the
   Company and BMSBLC were registered investment companies, and therefore
   they did not consolidate BMIC, Middleton Doll and License Products, which
   were not registered investment companies.  The 1997, 1996 and 1995
   consolidated financial position and results of operations and cash flows
   include the accounts of the Company and its 51% or greater owned
   subsidiaries and are offset by the minority interest in BMIC's, Middleton
   Doll's and License Products' ownership, as applicable.

                              RESULTS OF OPERATIONS

   For the Twelve Months Ended December 31, 1997 and June 30, 1996

             The Company's net income after income taxes and minority
   interest for the twelve months ended December 31, 1997 equaled $3.5
   million or $0.95 per share as compared to $3.1 million or $0.82  per share
   for the twelve months ended June 30, 1996, a 13% increase. 

             Total revenues for the twelve months ended December 31, 1997
   increased 192% to $31.0 million compared to $10.6 million for the twelve
   months ended June 30, 1996.  This increase is primarily due to the
   consolidation of Middleton Doll's sales of $17.7 million for the twelve
   months ended December 31, 1997.  The acquisition of an additional two
   percent of Middleton Doll was completed at the end of June 1996;
   previously it was accounted for on the equity method and was not
   consolidated in the financial statements.  Primarily as a result of the
   change in accounting for Middleton Doll, sales increased by $17.3 million. 
   Middleton Doll's sales of $17.7 million were offset by a decrease in
   License Products' sales of $0.4 million for the twelve months ended
   December 31, 1997.

             Interest on loans increased $2.6 million for the twelve months
   ended December 31, 1997 as a result of the new loans and the repurchase of
   loans that were previously sold to a third party.  Average loans under
   management increased $5.7 million to $136.9 million for the twelve months
   ended December 31, 1997, compared to $131.2 million for the twelve months
   ended June 30, 1996.  However, the increase in interest income as a result
   of buying back loans is reduced by the decreasing yield on the portfolio
   of loans due to the market's competitive pricing.  The average prime rate
   of 8.44% was slightly lower for the twelve months ended December 31, 1997
   compared to 8.52% for the twelve months ended June 30, 1996.

             The remaining $0.5 million increase in total revenues during
   1997 was a result of receiving $0.5 million from an executive's life
   insurance policy where BMCC was the beneficiary.  This is non-recurring
   income for 1997.  

             Total operating expenses for the twelve months ended December
   31, 1997 increased 215% to $24.9 million compared to $7.9 million for the
   year ended June 30, 1996.  The consolidation of the Middleton Doll
   operations was responsible for $13.3 million or 78% of the increase. 
   License Products' operating expenses decreased $0.3 million for the twelve
   months ended December 31, 1997 compared to the twelve months ended June
   30, 1996.

             Interest expense increased 106% to $7.0 million from $3.4
   million for the twelve months ended December 31, 1997 and June 30, 1996,
   respectively.  Interest expense increased for the twelve months ended
   December 31, 1997 as a result of the repurchase of loans by BMSBLC.  Those
   repurchased loans were funded with new debt.  This repurchase had no
   impact on net operating income as both interest income and interest
   expense increased by the same amount.  Interest expense, which is offset
   by swap income, increased by $0.2 million for the twelve months ended
   December 31, 1997 because of a decline in swap income due to some
   investment swaps maturing and no new ones being entered into.

             The remaining $0.4 million increase in expenses over the
   corresponding prior period are non-recurring expenses, of which $0.1
   million is the result of a salary adjustment and $0.3 million are
   restructuring expenses of the Company, including legal and accounting
   fees, salaries and other miscellaneous expenses.  Beginning in September
   of 1997, certain operating expenses were allocated based on a Management
   Services and Allocation of Operating Expenses Agreement between the
   Company and the Bank.  The effect of such agreement will be to reduce the
   level of operating expenses in the Company.

             As a result of the change in accounting for Middleton Doll,
   equity earnings in this subsidiary decreased $0.4 million for the twelve
   months ended December 31, 1997.

             The minority interest ownership in the net earnings of Middleton
   Doll and the net consolidated earnings of BMIC has reduced the Company's
   consolidated net income by $1.0 million for the year ended December 31,
   1997.  Also, the Company's December 31, 1997 consolidated net income for
   the year has been reduced by $1.6 million as an income tax provision for
   Middleton Doll.

   For the Twelve Months Ended June 30, 1996 and 1995

             The Company's net income after income taxes and minority
   interest for the twelve months ended June 30, 1996 equaled $3.1 million or
   $0.82 per share as compared to $3.2 million or $0.82 per share for the
   twelve months ended June 30, 1995, a 3% decrease. 

             Total revenues for the twelve months ended June 30, 1996
   decreased 9% to $10.6 million compared to $11.7 million for the twelve
   months ended June 30, 1995.  Interest on loans decreased $1.6 million as a
   result of the Company selling loans to a third party, offsetting the
   increase in new loans.  Average loans under management increased $15.3
   million to $131.2 million for the twelve months ended June 30, 1996 from
   $115.9 million for the twelve months ended June 30, 1995.  Offsetting the
   decrease in interest income is an increase of $0.5 million in License
   Products' sales.

             Total operating expenses for the twelve months ended June 30,
   1996 decreased 6% to $7.9 million compared to $8.4 million for the twelve
   months ended June 30, 1995.  Interest expense for the twelve months ended
   June 30, 1996 decreased 39% to $3.4 million compared to $5.6 million for
   the twelve months ended June 30, 1995.  Interest expense decreased by $1.6
   million as a result of the sale of loans by BMSBLC to third parties.  This
   sale had no impact on net operating income as both interest income and
   interest expense decreased by the same amount.  Interest expense, which is
   offset by swap income, decreased by $0.6 million for the twelve months
   ended June 30, 1996 because of an increase in swap income due to the
   Company's investment swaps and more favorable LIBOR rates.  

             Cost of goods sold for the twelve months ended June 30, 1996
   increased $0.3 million as a result of License Products' increased sales. 
   Salaries and employee benefits increased $0.2 million as a result of a
   supplemental benefit paid to executive officers and $0.2 million as a
   result of salary increases and additional staff.  The change in loan loss
   reserve was a reduced benefit of $0.1 million as a result of reducing the
   reserve during 1995 because of a change in status on a loan.  The expense
   resulting from the change in appreciation on investment swaps increased
   $2.2 million for the twelve months ending June 30, 1996.  No new
   investment swaps were entered into during fiscal 1996.  Realized losses
   decreased $2.0 million as a result of minimal realized losses during
   fiscal 1996.  License Products had an increase of other operating expenses
   of $0.5 million for the twelve months ended June 30, 1996.  The remaining
   $0.2 million increase in other operating expenses for the twelve months
   ended June 30, 1996 is a non-recurring expense for prepayment of a long-
   term debt obligation.

             Equity earnings in subsidiary increased $0.5 million due to
   Middleton Doll's increased profits during the twelve months ended June 30,
   1996.

   For the Six Months Ended December 31, 1996 and December 31, 1995.

             The Company's net income after income taxes and minority
   interest for the six months ended December 31, 1996 equaled $1.1 million
   or $0.31 per share compared to $1.8 million or $0.47 per share for the six
   months ended December 31, 1995, a 39% decrease.

             Total revenues for the six months ended December 31, 1996
   increased 91% to $10.9 million compared to $5.7 million for the six months
   ended December 31, 1995. The increase is primarily due to the
   consolidation of Middleton Doll's sales of $6.3 million for the six months
   ended December 31, 1996.  The acquisition of an additional two percent of
   Middleton Doll was completed at the end of June 1996.  For the six months
   ended December 31, 1995 Middleton Doll was accounted for on the equity
   method and was not consolidated in the financial statements.  As a result
   of the change in accounting for Middleton Doll, sales increased $6.3
   million.  License Products' sales for the six months ended December 31,
   1996 decreased $0.1 million compared to the six months ended December 31,
   1995.

             Interest on loans for the six months ended December 31, 1996
   decreased $1.0 million as compared to the six months ended December 31,
   1995.  The decrease was the result of declining interest rates and loans
   sold.  The average prime rate for the six months ended December 31, 1996
   decreased to 8.25% from 8.74%.  The decrease in interest income is offset
   by the $1.0 million decrease in interest expense as a result of the
   declining interest rates and loans sold.  Average loans under management
   for the six months ended December 31, 1996 increased $8.7 million to
   $137.8 million compared to $129.1 million for the six months ended
   December 31, 1995.  Increase in interest income as a result of the
   increase in loans under management was offset by the decrease in the prime
   rate and the sale of loans to third parties.

             Total operating expenses for the six months ended December 31,
   1996 increased 105% to $8.4 million compared to $4.1 million for the six
   months ended December 31, 1995.  The consolidation of the Middleton Doll
   operations resulted in $4.4 million of the increase.  License Products'
   operating expenses decreased by $0.2 million for the six months ended
   December 31, 1996 compared to the six months ended December 31, 1995.

             Interest expense for the six months ended December 31, 1996
   decreased 48% to $1.1 million from $2.1 million.  The decrease in interest
   expense is the result of declining interest rates and loans sold as noted
   above.  Interest expense, which is offset by swap income, decreased
   $0.6 million because of the increase in swap income due to LIBOR rates
   decreasing as the prime rate decreases.

             The change in loan loss reserve was an increase of $0.4 million
   in operating expenses as a result of increasing the general reserve during
   the six months ended December 31, 1996.  The expense resulting from the
   change in appreciation on investment swaps increased $0.4 million for the
   six months ended December 31, 1996.  The remaining $0.3 million increase
   in other operating expenses for the six months ended December 31, 1996
   compared to the six months ended December 31, 1995 were non-recurring
   expenses, of which $0.2 million relates to a prepayment of a long-term
   obligation and $0.1 million relates to professional fees incurred during
   the Company's restructuring.

             As a result of the change in accounting for Middleton Doll,
   equity earnings in subsidiary decreased $0.2 million for the six months
   ended December 31, 1996.

             The Company's consolidated net income for the six months ended
   December 31, 1996 has been reduced by the minority interest ownership in
   the net earnings of Middleton Doll, which have been consolidated by the
   Company.  The minority interest in earnings of Middleton Doll equaled $0.6
   million for the six months ended December 31, 1996.   Also, the Company's
   December 31, 1996 consolidated net income has been reduced by $0.8 million
   as an income tax provision for Middleton Doll.

   Liquidity and Capital Resources

             Total investment in loans and loan-backed certificates on the
   balance sheet increased $59.5 million, or 83% to $131.0 million at
   December 31, 1997 from $71.5 million at December 31, 1996.   During the
   twelve months ending December 31, 1997 the Company repurchased $49.6
   million of loans previously sold to a third party and made new loans of
   $53.7 million.  The increase in loans on the balance sheet was primarily
   financed through secured borrowings.  As a result of the repurchasing of
   loans, retained loan discount and excess servicing asset decreased by $1.4
   million and $1.5 million, respectively, for fiscal 1997 compared to fiscal
   1996.  The Company also collected $43.8 million of principal payments on
   loans on the balance sheet and collected $13.4 million of principal
   payments on loans that were sold to third parties.  The Company's loans
   under management decreased to $135.5 million as of December 31, 1997 from
   $138.9 million as of December 31, 1996.

             Cash and short-term securities decreased to $0.2 million at
   December 31, 1997 from $1.3 million at December 31, 1996.

             Accounts receivable increased to $2.0 million at December 31,
   1997 from $1.1 million at December 31, 1996.  An increase of $0.8 million
   resulted from Middleton Doll's increased sales volume; the remaining $0.1
   million resulted from License Products' increased sales volume.

             Inventory is up $1.6 million at December 31, 1997 as compared to
   December 31, 1996.  An increase of $1.2 million resulted from Middleton
   Doll's anticipated sales and $0.4 million resulted from License Products'
   anticipated sales in a new merchandise line.

             Interest receivable decreased from $1.3 million to $0.9 million
   due to the Company sending out its invoices sooner and receiving more loan
   payments by the end of the month.

             Fixed assets increased by $0.5 million due to a $0.4 million
   increase in Middleton Doll's fixed assets and a $0.1 million increase in
   the Company's fixed assets.

             The Company's total consolidated indebtedness at December 31,
   1997 increased 148% to $107.8 million from $43.5 million as of December
   31, 1996.  The Company, as of December 31, 1997, had $75.3 million
   outstanding in long-term debt and $32.5 million outstanding in short-term
   borrowings compared to $12.0 million of long-term debt and $31.5 million
   of short-term borrowings at December 31, 1996.  The $64.3 million increase
   in consolidated indebtedness is primarily the result of repurchasing loans
   previously sold to third parties and the capitalization of the bank
   holding company referred to below.

             On September 3, 1997, the Company capitalized InvestorsBancorp,
   Inc., a bank holding company with approximately $6.2 million.  On
   September 6, 1997, the Company distributed its shares of InvestorsBancorp,
   Inc. to shareholders. The capitalization of the bank holding company
   resulted in the reduction of additional paid-in capital by $6.2 million,
   thereby reducing shareholders' equity from approximately $15.6 million at
   December 31, 1996 to approximately $10.7 million at December 31, 1997,
   after accounting for additions.  The principal business of the Company
   will be management of its loan portfolio and participation in new loans
   with third party loan originators, including InvestorsBancorp, Inc. and
   possibly other banks.  The Company is also expanding its real estate
   lending business into ownership of real property, including related
   buildings and improvements, for lease to small businesses.  As a result of
   expanding its business, the Company purchased additional land of $0.3
   million for two new leased buildings.  The Company anticipates that
   adequate cash will be available to fund loans and new investments. On
   March 11, 1998, the Company replaced its $37.5 million short-term credit
   facility with a $50 million short-term credit facility.  An additional $10
   million long-term facility may close in the near future.

             All employees of the Company terminated their employment with
   the Company to become employees of InvestorsBank (the "Bank"), a wholly
   owned subsidiary of InvestorsBancorp, Inc., except for certain executive
   officers who are employees of both the Company and the Bank. The Company
   and the Bank entered into a Management Services and Allocation of
   Operating Expenses Agreement (the "Agreement").  The effect of such
   agreement will be to reduce the level of operating expenses in the
   Company.  The investment and subsequent distribution of approximately $6.2
   million of capital to InvestorsBancorp, Inc. is expected to lower the
   Company's operating income.  Management is unable to measure the net
   impact of the Agreement and the capitalization of InvestorsBancorp, Inc.
   on net operating income.

   Year 2000 Compliance

             A critical issue facing the financial services industry is
   concern over the ability of computer systems to process year-data beyond
   the year 1999.  This issue could affect a variety of the Company's
   computer systems, from its data processing systems used to process loan
   information to ancillary systems such as alarms and locking devices. 
   Management has considered this issue and has attempted to ensure that the
   data processing and other systems used by the Company are Year 2000
   compliant, and based on representations made by its vendors, management
   does not expect to incur material expenses in connection with upgrading
   its computer systems to handle Year 2000 data.  Nevertheless, if not
   properly addressed, Year 2000 related computer issues could result in
   interruptions to the operations of the Company and have a material adverse
   effect on the Company's results of operations.

   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 1934 Act.  The Company intends such forward-looking
   statements to be covered by the safe harbor provisions for forward-looking
   statements contained in the Private Securities 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 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 affect on the operations and future prospects of the Company and
   the subsidiaries include, but are not limited to, changes in:  interest
   rates, general economic conditions guidelines, including the condition of
   the local real estate market, legislative/regulatory changes, monetary and
   fiscal policies of the U.S. Government, including policies of the U.S.
   Treasury and the Federal Reserve Board, the quality or composition of the
   loan or investment portfolios, demand for loan products, competition,
   demand for financial services in the Company's market area and accounting
   principles and policies.  These risks and uncertainties should be
   considered in evaluating forward-looking statements and undue reliance
   should not be placed on such statements.

   Item 7A.  Quantitative and Qualitative Disclosures About Market Risk 

             Not Applicable.

   <PAGE>

   Item 8.   Financial Statement and Supplementary Data.

                      Bando McGlocklin Capital Corporation

                        Consolidated Financial Statements

                                    Contents

   Report of BDO Seidman LLP, Independent Auditors . . . . . . . . . . . . 15

   Report of Price Waterhouse LLP, Independent Accountants . . . . . . . . 16

   Consolidated Balance Sheets as of December 31, 1997 and 1996  . . . . . 17

   Consolidated Statements of Operations - For the Twelve Months Ended
      December 31, 1997 and June 30, 1996 and 1995 and six months
      ended December 31, 1996 and December 31, 1995 (unaudited)  . . . . . 19

   Consolidated Statement of Changes in Shareholders' Equity . . . . . . . 21

   Consolidated Statements of Cash Flows - For the Twelve Months Ended
      December 31, 1997 and June 30, 1996 and 1995 and six months
      ended December 31, 1996 and December 31, 1995 (unaudited)  . . . . . 22

   Notes to Consolidated Financial Statements  . . . . . . . . . . . . . . 26

   Financial Statement Schedules

   Schedule I     -    Condensed Financial Information of Registrant . . . 46

   Schedule II    -    Valuation and Qualifying Accounts . . . . . . . . . 46

   Schedule IV    -    Mortgage Loans on Real Estate . . . . . . . . . . . 47

   <PAGE>

   To the Shareholders and Board of Directors
      of Bando McGlocklin Capital Corporation:

   We have audited the accompanying consolidated balance sheets of Bando
   McGlocklin Capital Corporation as of December 31, 1997 and the related
   consolidated statements of income, stockholders' equity and cash flows for
   the year then ended in conformity with generally accepted accounting
   principles.  We have also audited the schedules listed in Item 8.  These
   financial statements and schedules are the responsibility of the Company's
   management.  Our responsibility is to express an opinion on these
   financial statements and schedules based on our audits.

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

   In our opinion, the consolidated financial statements referred to above
   present fairly, in all material respects, the financial position of Bando
   McGlocklin Capital Corporation at December 31, 1997, and the results of
   its operations and its cash flows for the year then ended in conformity
   with generally accepted accounting principles.

   Also, in our opinion, the schedules present fairly, in all material
   respects, the information set forth therein.


   BDO Seidman, LLP
   Milwaukee, Wisconsin
   March 17, 1998

   <PAGE>

   To the Shareholders and Board of Directors
   of Bando McGlocklin Capital Corporation:

   In our opinion, the consolidated balance sheet as of December 31, 1996 and
   the related consolidated statements of operations, of changes in
   shareholders' equity and of cash flows for the six months ended
   December 31, 1996 and the twelve months ended June 30, 1996 and 1995
   present fairly, in all material respects, the financial position, results
   of operations and cash flows of Bando McGlocklin Capital Corporation and
   its subsidiaries as of December 31, 1996 and for the six months ended
   December 31, 1996 and the twelve months ended June 30, 1996 and 1995, in
   conformity with generally accepted accounting principles.  These financial
   statements are the responsibility of the Company's management; our
   responsibility is to express an opinion on these financial statements
   based on our audits.  We conducted our audits of these statements in
   accordance with generally accepted auditing standards which require that
   we plan and perform the audit to obtain reasonable assurance about whether
   the financial statements are free of material misstatement.  An audit
   includes examining, on a test basis, evidence supporting the amounts and
   disclosures in the financial statements, assessing the accounting
   principles used and significant estimates made by management, and
   evaluating the overall financial statement presentation.  We believe that
   our audits provide a reasonable basis for the opinion expressed above.  We
   have not audited the consolidated financial statements of Bando McGlocklin
   Capital Corporation for any period subsequent to December 31, 1996.

   Our audits of the consolidated financial statements referred to in the
   preceding paragraph also included an audit of the financial statement
   schedules listed in the accompanying index as of December 31, 1996 and for
   the six months ended December 31, 1996 and the twelve months ended June
   30, 1996 and 1995.  In our opinion, these financial statement schedules,
   for the periods indicated, present fairly, in all material respects, the
   information set forth therein when read in conjunction with the related
   consolidated financial statements.

   As discussed in Note 1, prior to January 2, 1997, the Company was
   registered as an investment company under the Investment Company Act of
   1940 ("1940 Act").  Effective January 2, 1997, the Company deregistered as
   an investment company under the 1940 Act.  The Company continues to
   operate as a registrant under the Securities Act of 1933, but now reports
   under the Securities Exchange Act of 1934 ("1934 Act").  The financial
   position as of December 31, 1996 and the results of operations and cash
   flows for the six months ended December 31, 1996 and for the twelve months
   ended June 30, 1996 and June 30, 1995 have been restated as if the Company
   had always reported under the 1934 Act.  Under the 1940 Act, certain
   investments were accounted for as common stock investments and stated at
   "fair value" as determined in good faith by the Board of Directors.  Under
   the 1934 Act, these investments are consolidated or accounted for as
   equity investments, as appropriate.  The format and manner of presentation
   of the financial statements has also been changed to conform with the
   reporting requirements of the 1934 Act.


   Price Waterhouse LLP
   Milwaukee, Wisconsin
   March 17, 1998

   <PAGE>

                BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
                               CONSOLIDATED BALANCE SHEETS                   
      
                                                       December 31,
                                                   1997           1996*
    ASSETS
    Loans                                    $131,035,245     $69,468,291
    Loan-backed certificates                            -       1,988,056
    Land                                          635,745         369,577
    Construction in progress                        4,001               -
    Less: reserve for loan losses                (450,000)       (450,000)
    Less: retained loan discount                  (48,875)     (1,482,657)
                                              -----------      ----------
        Investments                           131,176,116      69,893,267

    Excess servicing asset                         62,219       1,555,231
    Investment in swap contracts at market 
      value                                       123,013         444,257
    Accounts receivable (net of allowance
      of $268,796 and $98,083 as of
      December 31, 1997 and 1996,
      respectively)                             1,958,672       1,044,777
    Inventory                                   3,280,172       1,700,814
    Interest receivable                           860,347       1,348,860
    Cash                                          197,576       1,337,556
    Fixed assets (net of accumulated
      depreciation of $993,770 and $617,997,
      as of December 31, 1997 and 1996,
      respectively)                             2,094,398       1,549,198
    Other assets                                  584,717         645,438
                                              -----------      ----------
        Total Assets                         $140,337,230     $79,519,398
                                             ============     ===========

    LIABILITIES, MINORITY INTEREST,
    PREFERRED STOCK AND SHAREHOLDERS' EQUITY

    Commercial Paper                          $25,009,972     $21,768,394
    Notes payable to banks                      7,500,000       9,700,000
                                              -----------      ----------
        Short-term borrowings                  32,509,972      31,468,394
    State of Wisconsin Investment Board   
     note payable                               6,000,000       6,666,667
    Loan participations with repurchase 
     options                                   69,250,467       5,348,619
    Accounts payable                              948,075         565,803
    Other notes payable                            22,936          29,469
    Other liabilities                           2,270,441       2,290,570
                                              -----------      ----------
       Total Liabilities                      111,001,891      46,369,522

    Minority interest in subsidiaries           1,684,512         602,150
    Redeemable Preferred stock, 1 cent par
     value, 3,000,000 shares authorized in
     1997 and 1996; 674,791 shares issued
     and outstanding after deducting 
     15,209 shares in treasury as of
     December 31, 1997 and 1996                16,908,025      16,908,025
    Shareholders' Equity
       Common Stock, 6 2/3 cents par value,
        15,000,000 shares authorized in 1997
        and 1996, 4,001,540 and 3,955,744
        shares issued and outstanding as of
        December 31, 1997 and 1996,  
        respectively, before deducting
        shares in treasury                        266,769         263,716
       Additional paid-in capital              13,671,947      19,498,326
       Retained earnings (deficit)                656,597        (859,728)
       Treasury stock, at cost (312,438 and
       266,650 shares, as of December 31,
       1997 and 1996, respectively)            (3,852,511)     (3,262,613)
                                              -----------      ----------
    Total Shareholders' Equity                 10,742,802      15,639,701
                                              -----------      ----------
       Total Liabilities, Minority Interest,
       Preferred Stock and Shareholders'
       Equity                                $140,337,230     $79,519,398
                                             ============     ===========

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

   *Restated - See Note 1.

   <PAGE>
              BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                         Twelve Months Ended
                                   December 31,              June 30,
                                   1997        1996*          1995*

    Revenues:

     Interest on loans          $11,021,265  $8,409,597     $10,058,072
     Net sales of manufacturing
     subsidiaries                19,000,778   1,702,357       1,183,165
     Interest on short-term
     securities                      83,810      83,336         103,706
     Premium (expense) income       (59,230)     78,978           8,805
     Other income                   937,737     342,959         384,573
                                 ----------  ----------      ----------
        Total Revenues           30,984,360  10,617,227      11,738,321
                                 ----------  ----------      ----------

    Expenses:
     Interest expense             6,943,304   3,399,344       5,648,895
     Cost of goods sold of
     manufacturing subsidiaries  10,381,039   1,116,876         784,131
     Salaries and employee benefits
                                  2,001,488   1,318,677         921,363
     Provision for loan loss
    reserve                           6,335     (10,501)        (72,093)
     Change in appreciation
     on investment swaps            321,244     253,796      (1,933,054)
     Realized losses                      -      20,286       2,031,928
     Other operating expenses     5,202,943   1,782,818       1,082,569
                                 ----------  ----------      ----------
        Total Expenses           24,856,353   7,881,296       8,463,739
                                 ----------  ----------      ----------
    Equity earnings (loss) in
    subsidiary                            -     358,967        (116,077)
                                 ----------  ----------      ----------
    Net operating income before
    income taxes and minority
    interest                      6,128,007   3,094,898       3,158,505

    (Provision) Benefit for income
    taxes                        (1,539,265)     35,074          49,665

    Minority interest in earnings                      
    of Subsidiaries              (1,082,362)          -               -
                                 ----------  ----------      ----------
    Net Income                   $3,506,380  $3,129,972      $3,208,170
                                 ==========  ==========      ==========

    Basic Earnings Per Share          $0.95       $0.82           $0.82
                                      =====       =====           =====
    Diluted Earnings Per Share        $0.95       $0.82           $0.81
                                      =====       =====           =====

   The accompanying notes are an integral part of the financial statements.
   *Restated - See Note 1.

   <PAGE>
              BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

                                               Six Months Ended
                                                   December 31, December 31,
                                                      1996*        1995*
                                                                 (Unaudited)
    Revenues:  
      Interest on loans                               $3,579,266  $4,547,651
      Net sales of manufacturing subsidiaries          7,226,130   1,049,870
      Interest on short-term securities                   43,452      50,958
      Premium (expense) income                           (15,209)     12,994
      Other income                                       105,951      64,230
                                                      ----------   ---------
        Total Revenues                                10,939,590   5,725,703
                                                      ----------   ---------
    Expenses:
      Interest expense                                 1,120,882   2,133,830
      Cost of goods sold of 
       manufacturing subsidiaries                      3,413,772     717,731
      Salaries and employee benefits                     931,908     635,381
      Provision for loan loss reserve                    411,209     (10,501)
      Change in appreciation on investment swaps         263,345    (104,659)
      Realized losses                                          -       4,360
      Other operating expenses                         2,238,881     677,970
                                                      ----------   ---------
        Total Expenses                                 8,379,997   4,054,112
                                                      ----------   ---------
    Equity earnings in subsidiary                              -     176,760
                                                      ----------   ---------
    Net operating income before income
     taxes and minority interest                       2,559,593   1,848,351
                                                      ----------   ---------
    Provision for income taxes                          (844,262)          -

    Minority interest in earnings of subsidiaries       (573,371)          -
                                                      ----------   ---------
    Net Income                                        $1,141,960  $1,848,351
                                                      ==========  ==========
    Basic Earnings Per Share                               $0.31       $0.47
                                                           =====       =====
    Diluted Earnings Per Share                             $0.31       $0.47
                                                           =====       =====

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

   *Restated - See Note 1.

   <PAGE>
                            CONSOLIDATED STATEMENT OF CHANGES IN 
                                  SHAREHOLDERS' EQUITY

                                    Additional      Retained
                         Common      Paid-in        Earnings      Treasury 
                         Stock       Capital       (Deficit)        Stock
   BALANCE,
    June 30, 1994*      $ 261,590   $24,076,784   $(1,870,811)   $        -
   Proceeds from 
   exercise of
    stock options           1,078       113,179             -             -
   Purchase of treasury
    stock                       -             -             -      (566,250)
   Net income                   -             -     3,208,170             -
   Cash dividends on
    common stock                -    (2,436,610)   (1,484,634)            -
   BALANCE,        
    June 30, 1995*        262,668    21,753,353      (147,275)     (566,250)
   Proceeds from
    exercise of 
    stock options           1,048       109,712             -             -
   Purchase of     
   treasury stock               -             -             -    (2,696,363)
   Net income                   -             -     3,129,972             -
   Cash dividends  
   on common stock              -      (156,560)   (3,521,916)            -
   BALANCE, 
    June 30, 1996*        263,716    21,706,505      (539,219)   (3,262,613)
   Net income                   -             -     1,141,960             -
   Cash dividends  
   on common stock              -    (2,208,179)   (1,462,469)            -
   BALANCE,        
    December 31, 1996*    263,716    19,498,326      (859,728)   (3,262,613)
   Proceeds from  
   exercise of stock
   options                  3,053       333,621             -             -
   Purchase of   
   treasury stock               -             -             -      (589,898)
   Net income                   -             -     3,506,380             -
   Cash dividends 
   on common stock              -             -    (1,990,055)            -
   Capitalization of
   InvestorsBancorp, Inc.       -    (6,160,000)            -             -
   BALANCE,   
    December 31, 1997    $266,769   $13,671,947     $ 656,597   $(3,852,511)


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

                             *Restated - See Note 1.

   <PAGE>

             BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                Twelve Months Ended
                                          December 31,          June 30,
                                          1997         1996*        1995*
   Cash Flows from Operating
    Activities:
    Net income                        $ 3,506,380   $3,129,972  $ 3,208,170
    Adjustments to reconcile net
     income to net cash (used)
     provided by operating
     activities:
      Change in appreciation on
       investment swaps                   321,244      253,796  (1,933,054)
      Provision for loan loss
       reserve                              6,335     (10,501)     (72,093)
      Amortization                         92,169       86,739       92,169
      Depreciation                        375,773       54,348       48,493
      Equity (earnings) loss in
       subsidiary                               -    (358,967)      116,077
      Change in minority interest
       in subsidiaries                  1,082,362            -            -
    Increase (decrease) in cash
     due to changes in:
      Accounts receivable               (913,895)      228,597    (316,695)
      Inventory                       (1,579,358)        7,686    (109,712)
      Interest receivable                 488,513     (95,000)    (276,339)
      Other assets                       (31,448)     (90,303)    (171,767)
      Accounts payable                    382,272      143,398       70,678
      Other liabilities                   (20,129)    (288,946)      24,906
   Net Cash Provided by Operations      3,710,218    3,060,819      680,833
   Cash Flows from Investing
    Activities:
    Loans made                         (53,759,887) (42,745,527) (39,318,018)
    Principal collected on loans       43,821,836   23,881,211   23,586,361
    Loans sold                                  -   28,087,037   33,644,334
    Certificate purchased from
     trust                                      -  (1,213,315)  (1,294,198)
    Premium expense (income) - net         59,230     (78,978)      (8,805)
    Loans purchased                   (49,647,182)            -          -
    Land purchased and
     construction in progress           (399,844)            -           -
    Purchase of fixed assets            (920,973)    (272,318)     (36,705)
    Real Estate sold                      129,675      557,073      308,750
    Purchase of short-term
     securities                                 -  (1,439,255)            -
    Proceeds from maturity of
     securities                                 -            -   15,652,000
    Consolidation of Middleton
     Doll                                       -      400,325            -
   Net Cash (Used) Provided by
    Investing Activities             (60,717,145)    7,176,253   32,533,719


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

                             *Restated - See Note 1.

   <PAGE>

             BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)     

                                              Twelve Months Ended
                                          December 31, June 30,
                                       1997              1996*         1995*
   Cash Flows from Financing
    Activities:
    Increase (decrease) in
     short-term borrowings            $1,041,578    $  (3,435)  $(9,024,189)
    Proceeds from loan
     participations with
     repurchase options   net         63,901,848     3,983,990             -
    Repayment of SWIB note             (666,667)   (7,333,334)   (1,333,333)
    Repayment of SBA debenture                 -             -     (560,000)
    Decrease in other notes
     payable                             (6,533)             -  (17,600,000)
    Capitalization and
     distribution of
     InvestorsBank                   (6,160,000)             -             -

    Dividends paid                   (1,990,055)   (3,678,476)   (3,921,244)
    Proceeds from exercise
     of stock options                    336,674       110,760       114,257
    Repurchase of common stock         (589,898)   (2,696,363)     (566,250)
    Repurchase of preferred
     stock                                     -             -     (341,975)
   Net Cash Provided (Used) in
    Financing Activities              55,866,947   (9,616,858)  (33,232,734)
   Net (decrease) increase in
    cash                             (1,139,980)       620,214      (18,182)
   Cash, beginning of year             1,337,556       106,717       124,899
   Cash, end of year                  $  197,576     $ 726,931    $  106,717

   Supplemental Disclosure of 
    Cash Flow Information:

   Interest paid                      $7,113,282    $3,680,381    $5,373,395
   Taxes paid                          1,179,023             -             -


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

                             *Restated - See Note 1.

   <PAGE>

          BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS          

                                          Six Months Ended December 31,

                                                                       1995*
                                                         1996*   (Unaudited)
    Cash Flows from Operating Activities:
      Net income                                    $1,141,960    $1,848,351
      Adjustments to reconcile net income to
        net cash (used) provided by operating
        activities:
        Change in appreciation on investment
         swaps                                         263,345     (104,659)
        Provision for loan loss reserve                411,209      (10,501)
        Amortization                                    96,743        92,169
        Depreciation                                    77,537        46,326
        Equity earnings in subsidiary                        -     (176,760)
        Change in minority interest in
         subsidiaries                                  573,371             -
        Other                                           10,533             -
    Increase (decrease) in cash due to
     changes in:
      Accounts receivable                            (270,315)       346,458
      Inventory                                      (580,662)      (14,520)
      Interest receivable                             (71,189)      (66,960)
      Other assets                                       1,377     (269,452)
      Accounts payable                                  76,989      (65,046)
      Other liabilities                                538,321       753,003

    Net Cash Provided by Operations                  2,269,219     2,378,409

    Cash Flows from Investing Activities:                     
      Loans made                                  (23,729,026)  (23,003,932)
      Principal collected on loans                  13,600,355    14,094,074
      Loans sold                                    15,140,783    15,400,490
      Certificate purchased from trust                       -   (1,213,315)
      Premium expense (income) - net                    15,209      (12,994)
      Purchase of fixed assets                       (314,166)      (74,164)
      Real estate sold                                       -        74,575
      Purchase of short-term securities                      -   (1,442,778)
      Proceeds from maturity of securities           1,829,255             -

    Net Cash Provided by Investing Activities        6,542,410     3,821,956


    Cash Flows from Financing Activities:
     Increase (decrease) in short-term
      borrowings                                    $7,179,507  $(1,632,110)
     Proceeds from loan participations
      with repurchase options   net                  1,364,629             -
     Repayment of SWIB note                          (333,333)     (666,667)
     Repayment of SBA debenture                   (12,620,000)             -
     Decrease in other notes payable                 (121,159)             -
     Dividends paid                                (3,670,648)   (1,876,173)
     Proceeds from exercise of stock options                 -       110,760
     Repurchase of common stock                              -   (1,234,045)
    Net Cash Used in Financing Activities          (8,201,004)   (5,298,235)
    Net increase in cash                               610,625       902,130

    Cash, beginning of period                          726,931       106,717
    Cash, end of period                             $1,337,556    $1,008,847

    Supplemental Disclosure of 
     Cash Flow Information:
    Interest paid                                 $  1,779,092  $  2,004,408
    Taxes paid                                         903,202             -


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

   *Restated - See Note 1.

   <PAGE>
              BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS          

   NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   NATURE OF BUSINESS - Bando McGlocklin Capital Corporation (the "Company'),
   was originally incorporated in February 1980 to provide long-term secured
   loans to finance the growth, expansion and modernization of small
   businesses.

   On March 26, 1993, the Company completed the formation of a holding
   company structure by transferring substantially all of its assets and
   liabilities to Bando McGlocklin Small Business Lending Corporation
   ("BMSBLC"), a wholly owned subsidiary of the Company.  At the close of the
   day on December 31, 1996, BMSBLC surrendered its Small Business
   Administration ("SBA") license.  BMSBLC was formerly known as Bando
   McGlocklin Small Business Investment Corporation; the entity formerly
   known as BMSBLC was liquidated on December 1, 1996.

   On May 5, 1993, the Company formed Bando McGlocklin Investment Corporation
   ("BMIC"), a subsidiary of the Company.  In May 1993, a partially developed
   real estate parcel was transferred to BMIC.  In December 1996, one percent
   of the economic interest in BMIC was sold to an unrelated party.  In
   January 1997, this one percent interest was sold by the unrelated party to
   an officer of the Company and he received 100% of the voting stock of BMIC
   by the Company.  In 1997, BMSBLC contributed its ownership interest in Lee
   Middleton Original Doll, Inc. ("Middleton Doll") and License Products,
   Inc. ("License Products"), both 51% owned subsidiaries engaged in the
   manufacturing business, to BMIC.

   Middleton Doll, located in Belpre, Ohio, manufactures and distributes
   vinyl dolls that are considered collectors' dolls.  License Products,
   located in New Berlin, Wisconsin, designs, manufactures and markets a
   selection of clocks under four different brand names.

   Prior to January 2, 1997, the Company and BMSBLC were registered as
   investment companies under the Investment Company Act of 1940 ("1940
   Act").  Effective January 2, 1997, the Company and BMSBLC deregistered as
   investment companies under the 1940 Act.  The Company continues to operate
   as a registrant under the Securities Act of 1933, but now reports under
   the Securities Exchange Act of 1934 ("1934 Act").  The balance sheet as of
   December 31, 1996 and the statements of operations and cash flows for the
   six months ended December 31, 1996 and December 31, 1995 and for the
   twelve months ended June 30, 1996 and June 30, 1995 have been restated as
   if the Company had always reported under the 1934 Act.  Under the 1940
   Act, the investments in BMIC, Middleton Doll and License Products were
   accounted for as common stock investments and stated at "fair value" as
   determined in good faith by the Board of Directors.  Under the 1934 Act,
   these three investments are consolidated or accounted for as equity
   investments, as appropriate.  The format and manner of presentation of the
   financial statements has also been changed to conform with the reporting
   requirements of the 1934 Act.  (See Note 3).

   During 1996 the Company changed its year-end from June 30 to December 31.

   On September 3, 1997, the Company capitalized InvestorsBancorp, Inc., a
   bank holding company, with approximately $6.2 million and then distributed
   all of its outstanding shares of InvestorsBancorp, Inc. to the Company's
   shareholders.  Subsequent to the spin-off of the bank holding company, the
   principal business of the Company will be to manage its loan portfolio and
   to participate in loans with third party loan originators.  The Company is
   also expanding its real estate lending business into ownership of real
   property including related buildings and improvements for lease to small
   businesses.

   BASIS OF PRESENTATION - These financial statements are prepared in
   accordance with generally accepted accounting principles.  The preparation
   of financial statements in conformity with generally accepted accounting
   principles requires management to make estimates and assumptions that
   affect the reported amounts of assets and liabilities and disclosure of
   contingent assets and liabilities at the date of the financial statements
   and the reported amounts of revenues and expenses during the reporting
   period.  Actual results could differ from those estimates.

   PRINCIPLES OF CONSOLIDATION - The consolidated financial statements as of
   December 31, 1997 and December 31, 1996 and for the twelve months ended
   December 31, 1997 and the six months ended December 31, 1996 include the
   accounts of the Company, BMSBLC, BMIC, Middleton Doll and License
   Products.  During the twelve months ended June 30, 1996 and June 30, 1995
   and for the six months ended December 31, 1995, the Company owned only 49%
   of Middleton Doll and as a result during this period the investment is
   accounted for on the equity method and is not consolidated.  In late June
   1996, BMCC acquired an additional 2% interest in Middleton Doll and,
   therefore, the balance sheet of Middleton Doll was consolidated as of June
   30, 1996.  All significant intercompany accounts and transactions have
   been eliminated in consolidation.

   TREASURY STOCK - Preferred stock has been reduced by the cost of shares
   acquired for treasury.  The common treasury stock is shown as a reduction
   in shareholders' equity at cost.

   INVESTMENT VALUATION - The Company's investment swap contracts are valued
   at current market value.  Loans and loan-backed certificates are stated at
   unpaid principal balance unless loss reserves are considered necessary. 
   Land owned is stated at the lower of cost or net realizable value.

   When a portion of a loan is sold, the basis of the retained portion of the
   loan is discounted by the differential between the face amount of the sold
   portion of the loan and the relative market value of the sold portion of
   the loan.  This difference is referred to as the retained loan discount. 
   The relative market value is determined by the expected cash flows
   discounted with assumptions made on prepayments and rate of return.  At
   the time of sale, premium income is reduced by the retained loan discount. 
   The retained loan discount is amortized over the life of the underlying
   loan.  When a loan is prepaid, the remaining retained loan discount is
   recognized as an increase to interest income.  When a loan is sold, the
   remaining retained loan discount is included as a reduction to the basis
   of the underlying loan.

   EXCESS SERVICING ASSET - The excess servicing asset represents the
   unamortized balance of the present valued cash flows of the interest rate
   differential resulting from the sale of a loan with servicing rights
   retained.  For transactions entered into prior to January 1, 1997, the
   interest rate differential is the difference between the interest rate on
   the underlying loan and the interest rate paid to the purchaser on the
   sold portion after considering normal servicing fees and transaction fees. 
   This amount is amortized over the life of the underlying loan, subject to
   periodic review of prepayment speeds.

   INTEREST RATE SWAP AGREEMENTS - The Company enters into interest rate swap
   agreements as a means of managing its interest rate exposure.  The
   differential to be paid or received on all interest rate swap agreements
   is accrued as interest rates change and is recognized over the life of the
   agreements.  Those agreements which are considered to be investments are
   accounted for at market value in the financial statements.

   ACCOUNTS RECEIVABLE - Accounts receivable represent sales on credit made
   by Middleton Doll and License Products, net of an allowance for doubtful
   accounts.

   INVENTORY - Inventories of Middleton Doll and License Products are valued
   at the lower of cost or market.  Middleton Doll and License Products
   utilize the average cost method to determine cost.  The components of
   inventory are as follows:

                                           December 31,
                                      1997             1996

    Raw materials               $ 1,975,002       $1,138,440
    Work in process                 282,484          170,779
    Finished goods                1,230,298          517,951
    Inventory reserve              (207,612)        (126,356)
            Total                $3,280,172       $1,700,814


   FIXED ASSETS - Fixed assets primarily represent manufacturing property,
   plant and equipment of Middleton Doll and License Products.  Fixed assets
   are stated at cost and are depreciated using the straight-line method for
   financial statement purposes and accelerated methods for income tax
   purposes.  Maintenance and repair costs are charged to expense as
   incurred, and renewals and improvements that extend the useful life of the
   assets are added to the plant and equipment accounts.  The major classes
   of fixed assets are as follows:

                                          December 31,
                                    1997               1996

    Land                       $   173,590       $   173,590
    Building                       698,876           694,360
    Furniture & fixtures           551,838           424,118
    Machinery & equipment        1,663,864           875,127
         Total                  $3,088,168        $2,167,195

   RECOGNITION OF INTEREST INCOME - Interest income is recorded on the
   accrual basis to the extent that  management anticipates that such amounts
   will be collected.  In all other cases, no entry is made to accrue
   interest, but the unpaid interest is monitored, and interest is recorded
   upon receipt.

   PREMIUM (EXPENSE) INCOME - Premium (expense) income represents the
   differential at the time a portion of a loan is sold between the present
   valued excess servicing income on the sold portion and the retained loan
   discount, and subsequent to sale, amortization of the retained loan
   discount and excess servicing asset.

   INCOME TAXES - The Company and BMSBLC qualified as regulated investment
   companies ("RICs") meeting certain requirements under the Internal Revenue
   Code (the "Code") for the six months ended December 31, 1996 and the
   twelve months ended June 30, 1996 and 1995.  As such, the Company and
   BMSBLC were not subject to income tax on investment company taxable income
   which had been distributed to shareholders.  Subsequent to December 31,
   1996, the Company intends to qualify as a real estate investment trust
   ("REIT") under the code.  Under REIT status, the Company, together with
   its qualified REIT subsidiary, BMSBLC, will continue to not be subject to
   income tax on taxable income which is distributed to shareholders.  Due to
   the change in status, the Company has changed its year end to December 31
   for both tax and financial reporting purposes.

   In order to qualify as a REIT under the Code, the Company, together with
   its qualified REIT subsidiary, among other requirements, must meet certain
   annual income and quarterly asset diversification tests including not
   holding the securities of any one issuer valued at more than 5% of total
   assets, and not holding more than 10% of the outstanding voting securities
   of any one issuer.

   For the non-qualified REIT subsidiaries of the Company, taxes are provided
   using the liability approach which generally requires that deferred income
   taxes be recognized when assets and liabilities have different values for
   financial statement and tax reporting purposes.

   During the year ended June 30, 1995, the Company made payments to modify
   the terms of certain investment swap contracts which resulted in a
   $2,031,928 realized loss for financial statement purposes.  For tax
   purposes, the realized loss has been amortized through 1997.  As a result,
   ordinary taxable income was reduced by $223,911 for the 12 months ended
   December 31, 1997, $355,721 for the six months ended December 31, 1996 and
   $820,598 and $631,698 for the years ended June 30, 1996 and 1995,
   respectively.

   NEW ACCOUNTING PRONOUNCEMENTS - In June 1997, the FASB issued SFAS No.
   130, Reporting Comprehensive Income, and SFAS No. 131, Disclosures about
   Segments of an Enterprise and Related Information.  SFAS No. 130 requires
   that an enterprise report, by major components and as a single total, the
   change in its net assets during the period from nonowner sources; and SFAS
   No. 131 establishes annual and interim reporting standards for an
   enterprise's operating segments and related disclosures about its
   products, services, geographic areas and major customers.  Adoption of
   these statements will not impact the Company's financial position, results
   of operations or cash flows and any effect will be limited to the form and
   content of its disclosures.  Both statements are effective for fiscal
   years beginning after December 15, 1997, with earlier application
   permitted.

   NOTE 2 - INVESTORSBANCORP, INC.

   InvestorsBancorp, Inc. is a bank holding company that was incorporated on
   June 12, 1996 and capitalized on September 3, 1997 primarily by the
   Company.  The Company distributed all of its outstanding shares of
   InvestorsBancorp, Inc. to its shareholders on September 6, 1997 to
   shareholders of record on September 5, 1997.

   InvestorsBank (the "Bank") is a newly-organized Wisconsin chartered
   commercial bank with depository accounts insured by the Federal Deposit
   Insurance Corporation.  The Bank started providing a full range of
   commercial and consumer banking services on September 8, 1997.

   All employees ceased their employment with the Company on September 8,
   1997 and became employees of the Bank.  The officers of the Company became
   officers of both the Company and the Bank.

   The Company and the Bank entered into a Management Services and Allocation
   of Expenses Agreement (the "Agreement") on September 2, 1997.  The
   Agreement allows the employees of the Bank to provide loan management and
   accounting services to the Company for a fee, payable monthly.  Management
   fee expenses relating to the Agreement were $229,285 for the period from
   September 3, 1997 to December 31, 1997.  Overhead expenses and rent are
   also shared between the two entities in accordance with the Agreement.

   NOTE 3 - RESTATEMENT

   As discussed in Note 1, previously reported amounts have been restated to
   reflect the Company's accounts as required under the Securities Exchange
   Act of 1934.  The Company originally reported under the Investment Company
   Act of 1940.  The restatement primarily reflects the consolidation of

   BMIC, Middleton Doll and License Products.  The impact of these
   adjustments on the consolidated financial statements of the Company is as
   follows:

   <TABLE>
   <CAPTION>
                                           Six Months
                                       December      Ended        Year Ended     Year Ended
                                          31,      December 31,     June 30,       June 30,
                                         1996         1996           1996           1995
     <S>                 <C>                  <C>          <C>        <C>           <C>
     Total Assets
     As originally       $ 79,449,366         N/A          N/A        N/A
      reported
     As restated           79,519,398         N/A          N/A        N/A

    Total shareholders'
     equity
     As originally       $ 17,573,872         N/A          N/A        N/A
      reported
     As restated           15,639,701         N/A          N/A        N/A

    Net income
     (net operating
     income, realized
     gain on investments
     and unrealized
     appreciation/
     depreciation on
     investments in
     securities)
     As originally                $ -  $2,549,124   $3,211,556  $2,997,895
      reported
     As restated                    -   1,141,960    3,129,972   3,208,170

   </TABLE>

   NOTE 4 - LOANS

   The Company's exposure to loss in the event of nonperformance by the
   borrower is represented by the outstanding principal amount of the loans. 
   Substantially all loans are fully secured by first or second mortgages on
   owner-occupied real estate.  Approximately 95% of the Company's loan
   portfolio at December 31, 1997 is comprised of loans to borrowers located
   within the State of Wisconsin.  At December 31, 1997, the Company had
   loans outstanding to its largest borrower totaling $12,848,595.  No other
   individual borrower had loans outstanding exceeding $4,000,000.

   The Company routinely monitors its loan portfolio for evidence of loan
   impairment.  A loan is considered impaired when, based on current
   information and events, it is probable that the Company will be unable to
   collect all amounts due according to the contractual terms of the loan. 
   In determining the need for a loss reserve on the impaired loans,
   management looks to the underlying collateral.  A loss reserve is
   established if the estimated value of the underlying collateral is
   insufficient to cover the impaired loan.  At December 31, 1997, a loss
   reserve of $100,491 was recorded on impaired loans totaling $1,583,981. 
   At December 31, 1996, a loss reserve of $38,791 was recorded on impaired
   loans totaling $1,022,434.  The average impaired loan balance during the
   twelve months ended December 31, 1997 was $1,313,813.  The accrued
   interest on the impaired loans totals $96,197 at December 31, 1997 and all
   is considered fully collectible except for approximately $18,000.

   The Company's loan portfolio consists primarily of variable-rate loans
   with terms of five to fifteen years.  The Company writes interest rate
   caps for terms not exceeding five years on certain variable rate loans to
   meet the financing needs of its borrowers.  Interest rate caps written by
   the Company enable borrowers to modify or reduce their interest rate risk. 
   The Company is exposed to interest rate risk to the extent that its cost
   of funds exceeds the interest rate caps.  Interest rate caps do not
   represent exposure to credit loss for the Company in that they do not
   affect the outstanding principal amounts of the loans.

   The Company has made loans which have outstanding balances at December 31,
   1997 of $4,428,578 to Bando McGlocklin Real Estate Investment Corporation,
   a related party.

   Undisbursed construction loan commitments and lines of credit totaled
   $6,058,052 at December 31, 1997.  The Company has entered into two
   construction contracts totaling $2,683,644 as of December 31, 1997.  In
   addition the Company issued letters of credit totaling $4,165,514 as of
   December 31, 1997.

   NOTE 5 - LOANS SOLD

   Since 1994, the Company has sold loans to third parties.  During 1997 no
   new loans were sold to third parties.  The following table summarizes the
   outstanding balance of loans sold.

    Principal                                   Principal 
    Balance Sold at            Percentage     Balance sold at    Recourse 
    Date of Sale                  Sold         December 31,      Provision
                                                   1997
    During the six months ended
     December 31, 1996:
                   $ 197,795       75%        $196,977             None

    During the year ended 
     June 30, 1996:
                  $1,757,275      100%      $1,003,827             None

    During the year ended
     June 30, 1995:
                  $2,837,677     75%-80%    $  632,555             None

    During the year ended
     June 30, 1994:
                 $10,397,410       75%      $2,636,813             None


   During the twelve months ended December 31, 1997, the Company repurchased
   certain loans that had been sold to third parties, at unpaid principal
   balances totaling $41,549,621.  As a result of these transactions, the
   excess servicing asset and retained loan discount related to the original
   sale were reduced $859,172 and $842,649, respectively.  Premium expense of
   $16,523 was also recognized due to these transactions.

   The Company also sells loans with the option to repurchase them at a later
   date.  As of December 31, 1997, the balance of loan participations with
   repurchase options was $69,250,467.  During the twelve months ended
   December 31, 1997, the Company resold, with an option to repurchase, the
   loans referred to in the preceding paragraph at unpaid principal balances
   totaling $41,549,621.  These sales have been accounted for as secured
   financings.

   For the loans sold with no recourse, the Company is susceptible to loss on
   the loans up to the percentage of the retained interest to the extent the
   underlying collateral is insufficient in the event of nonperformance by
   the borrower.  The Company's retained interest is subordinated to the
   portion sold.  For the loans sold with full recourse, the Company is
   susceptible to loss equal to the total principal balance of the loan to
   the extent the underlying collateral is insufficient in the event of
   nonperformance.  No associated loss reserve has been established as of
   December 31, 1997 for loans which have been sold.

   Under the terms of the agreements, the Company retains servicing rights
   for the entire loan.  (See Note 7).  As servicer and provider of recourse,
   certain agreements require the Company to comply with various covenants,
   including the maintenance of net worth.  As of December 31, 1997, the
   company was in compliance with these covenants.

   NOTE 6 - LOAN BACKED CERTIFICATES 

   During the years ended June 30, 1996 and June 30, 1995, the Company sold
   loans to a trust, which issued two classes of certificates as noted in the
   table below:

    Principal Balance         A Certificate                   B Certificate
    Sold at                      Sold to       A Certificate     Sold to
    Date of Sale                Third Party    Interest Rate     Company

    For year ended June 30, 1996:
    $8,666,538                  $7,453,223          (1)         $1,213,315

    For year ended June 30, 1995:
    $6,540,358                  $5,246,160          (2)         $1,294,198

   (1)  The interest rate was reset monthly based upon the 30 day London
        Interbank Offered Rate (LIBOR) plus one and one-half percent.
   (2)  The interest rate was reset every three years based upon the three-
        year U.S. Treasury Bond yield plus one and one-half percent.

   On May 1, 1997 the Company repurchased all of the loans sold to the trust. 
   The unpaid principal balances for the A and B certificates were $8,097,561
   and $1,497,499, respectively.  As a result of these transactions, the
   excess servicing asset and retained loan discount related to the original
   sale were reduced by $202,437 and $201,140, respectively.  Premium expense
   of $1,297 was also recognized due to these transactions.

   NOTE 7 - EXCESS SERVICING ASSET

   The Company has retained the servicing rights on each of the loans it has
   sold to third parties.  By retaining the right to service the loan, the
   Company earns an interest rate spread equal to the difference between the
   interest rate on the loan and the interest rate paid to the purchaser on
   the sold portion (this difference is referred to as the "Servicing
   Spread").

   The value of this excess servicing asset has been estimated based upon the
   present valued cash flow of the Servicing Spread after considering the
   effects of estimated prepayments, normal servicing fees and transaction
   fees.  The value of the excess servicing asset is recognized as premium
   income at the time of the sale and is concurrently capitalized on the
   consolidated balance sheet.  It is then amortized over the life of the
   loan.  If actual cash flows exceed the excess servicing asset, the Company
   will recognize additional income in excess of the value of the excess
   servicing asset.  A shorter loan life than that estimated at the time the
   excess servicing asset was established, will result in the carrying value
   of the excess servicing asset being written down through a charge to
   earnings.  During 1997 no excess servicing fees were generated from the
   sale of loans to third parties.

   The carrying value of the excess servicing asset is analyzed quarterly by
   the Company to determine whether prepayment and default experience has any
   impact on this carrying value.

   NOTE 8 - SHORT-TERM BORROWINGS

   Commercial paper is issued for working capital purposes with maturities of
   up to 90 days.  The average yield on commercial paper outstanding at
   December 31, 1997 was 6.07%.

   BMSBLC has entered into three loan agreements with certain banks.  The
   current loan agreements provide for a maximum of $37,500,000 less the
   outstanding principal amount of commercial paper.  Two facilities bear
   interest at the prime rate while the other facility bears interest at the
   30-, 60- or 90-day LIBOR plus one and three-eighths percent. Interest is
   payable monthly, and the loan agreements expire on February 28, 1998. 
   BMSBLC is also required to pay an availability fee to the two facilities
   that bear interest at the prime rate for the use of those facilities. The
   banks are party to an Intercreditor Agreement which grants each party a
   proportionate security interest in substantially all of BMSBLC's assets
   which are not securing long-term debt.  (See Note 9.)  At December 31,
   1997, under these agreements, the outstanding principal balance was
   $7,500,000.

   Subsequent to year-end BMSBLC replaced the $37,500,000 loan agreements
   with a new $50,000,000 commercial paper facility.  The new facility
   expires on April 30, 1999 and includes four participating banks.

   NOTE 9 - LONG-TERM DEBT

   Small Business Administration Debenture.  This debenture had a maturity in
   November, 1997 and an interest rate of 10.35%.  On September 3, 1996 the
   debenture was prepaid.  A prepayment penalty of $261,234 was expensed in
   other operating expenses during the six month period ended December 31,
   1996.

   State of Wisconsin Investment Board Notes Payable.  On July 9, 1990,
   BMSBLC entered into an agreement with the State of Wisconsin Investment
   Board ("SWIB") providing for a term note of $10,000,000 bearing interest
   at 10.1%.  This note was prepaid as of January 30, 1996.  A prepayment
   penalty of $285,000 was expensed in other operating expenses during the
   year ended June 30, 1996.

   On November 7, 1991, BMSBLC borrowed an additional $10,000,000 from The
   State of Wisconsin Investment Board ("SWIB") pursuant to a term note which
   bears interest at a fixed rate of 9.05% per year through its maturity. 
   The note is payable in equal quarterly installments of $166,667 with a
   final payment of unpaid principal due on November 7, 2006, and is secured
   by specific loans.  At December 31, 1997, the outstanding principal
   balance was $6,000,000.

   Revolving Line of Credit.  On August 9, 1993, BMSBLC entered into a
   revolving line of credit facility with a single bank providing for a
   maximum amount of $5,000,000.  Outstanding borrowings under this facility
   were at the prime rate announced from time to time by such bank. 
   Outstanding indebtedness under this facility was secured by specific loans
   of BMSBLC.  On September 30, 1994, BMSBLC terminated this facility.

   Notes Payable to Banks.  On April 12, 1994, the Company entered into a
   credit agreement with a bank for a maximum amount of $5,000,000 which was
   secured by specific loans.  On September 29, 1994, the note was paid in
   full.

   On May 19, 1994, BMSBLC entered into an additional credit agreement with
   the bank for a maximum amount of $15,000,000 which was secured by specific
   loans.  On June 28, 1995, the note was paid in full.

   The SWIB agreement and the loan agreements described in Note 8 contain
   restrictions on BMSBLC's new indebtedness, acquisition of its common
   stock, return of capital dividends, past due loans, and realized losses on
   loans, and require maintenance of collateral, minimum equity and loan to
   debt ratios, among others.  As of December 31, 1997, BMSBLC is in
   compliance with all such requirements.

   Future annual maturities of long-term debt as of December 31, 1997 are as
   follows:

             December 31, 1998        $666,667
             December 31, 1999        666,666
             December 31, 2000        666,667
             December 31, 2001        666,666
             December 31, 2002        666,667
             Later Years            2,666,667
                                   $6,000,000

   Based on the borrowing rates currently available to BMSBLC for loans with
   similar maturities, the estimated fair market value of the long-term debt
   at December 31, 1997 was approximately $6.2 million.

   NOTE 10 - INTEREST RATE SWAPS

   The Company enters into interest rate swap agreements primarily as a means
   of managing interest rate risk.  To the extent that the Company's
   variable-rate loans are funded with fixed-rate debt, the Company is
   subject to interest rate risk.  To reduce interest rate risk, the Company
   enters into certain interest rate swaps designed to convert variable-rate
   loans into fixed-rate loans.  Although these swaps reduce interest rate
   risk, the potential for profit or loss on interest rate swaps still exists
   depending upon fluctuations in interest rates.  In addition, the Company
   enters into interest rate swaps in an attempt to further manage interest
   rate risk resulting from interest rate movements.

   In accordance with applicable accounting principles, the Company's
   interest rate swap agreements are held for purposes other than trading and
   are further classified as either hedges or as investment contracts.  Both
   hedges and investment contracts have the potential for profit and loss. 
   Hedges are accounted for using the designation method, which matches the
   swaps with the assets that are being hedged.  When the designated asset
   matures, or is sold, extinguished or terminated, the hedge would be
   reclassified as an investment.  Accounting principles dictate that those
   contracts not meeting hedge criteria be classified as investments and
   marked-to-market with any associated unrealized gain or loss recorded in
   the financial statements, whereas those contracts meeting hedge criteria
   are not to be classified as investments or marked-to-market in the
   financial statements.  On December 31, 1997 and December 31, 1996, the
   investment contracts at market resulted in an unrealized gain of $123,013
   and $444,257, respectively.  The difference in the unrealized gain at
   December 31, 1997 and December 31, 1996 is a decrease of $321,244 recorded
   in the consolidated statement of operations for the twelve months ended
   December 31, 1997.

   The average notional amount of investment swaps outstanding during the
   twelve months ended December 31, 1997, June 30, 1996 and June 30, 1995,
   and for the six months ended December 31, 1996 was $45,750,000,
   $142,750,00, $152,750,000, and $124,178,570, respectively.

   Based on quoted market valuations, the estimated market value of the hedge
   swaps at December 31, 1997 and December 31, 1996 was approximately $1.6
   million and $1.9 million, respectively.

   The following table summarizes the interest rate swap agreements in effect
   at December 31, 1997.  No funds were borrowed or are to be repaid under
   these agreements:

   <TABLE>
   <CAPTION>
                                                                  Current Interest
                                                                      Rates Paid
                                                                                          Original
                                     Company     Bank                                     Notional            Expiration
                  Bank               Payment     Payment     By Company     By Bank       Amount              Date
    <S>                              <C>         <C>         <C>            <C>           <C>                 <C>
    Norwest Bank Minnesota, N.A.     Floating    Fixed       5.90625%(2)    5.29000%      $15,000,000         09/16/98
      Minneapolis, Minnesota
    First Bank National Association  Floating    Fixed       6.10838%(3)    9.20000%      $ 8,000,000(4)      06/16/99
      Minneapolis, Minnesota (1)
    LaSalle National Bank            Floating    Fixed       5.90625%(2)    6.34000%      $ 5,400,000         03/21/01
      Chicago, Illinois
    Firstar Bank Milwaukee, N.A.     Floating    Fixed       6.05469%(2)    7.43500%      $10,325,000(5)      09/28/01
      Milwaukee, Wisconsin
    LaSalle National Bank            Floating    Fixed       5.93750%(2)    7.60000%      $ 5,000,000         03/10/05
      Chicago, Illinois
    LaSalle National Bank            Floating    Fixed       5.87500%(2)    6.66000%      $ 5,250,000(6)      05/23/05
      Chicago, Illinois
    LaSalle National Bank            Floating    Fixed       5.90625%(2)    6.50000%      $ 5,000,000(7)      09/29/05
      Chicago, Illinois
    LaSalle National Bank            Floating    Fixed       5.91797%(2)    7.09000%      $12,500,000         09/05/06
      Chicago, Illinois

   (1)  Investment Swap
   (2)  Adjusted every three months to the three-month LIBOR then in effect.
   (3)  Adjusted every month to the one-month LIBOR then in effect.
   (4)  The notional amount decreases by $83,333 each quarter and was $5,083,345 at December 31, 1997; $2,333,345 of this
        contract was designated as a hedge; $2,750,000 was accounted for as an investment.
   (5)  The notional amount decreases by $166,667 each quarter and was $6,158,333 at December 31, 1997.
   (6)  The notional amount decreases by $100,000 each quarter and was $4,250,000 at December 31, 1997.
   (7)  The notional amount decreases by $75,000 each quarter and was $4,325,000 at December 31, 1997.


   </TABLE>

   As a result of hedge arrangements, the Company recognized a $1,193,877 and
   $1,382,751, $1,193,506 and $732,066 reduction in interest expense for the
   twelve months ended December 31, 1997, June 30, 1996 and June 30, 1995 and
   for the six months ended December 31, 1996, respectively.  In addition,
   the Company recognized a $353,962, $412,129, $73,239 and $445,568
   reduction in interest expense for the twelve months ended December 31,
   1997, June 30, 1996 and June 30, 1995 and for the six months ended

   December 31, 1996, respectively, as a result of the investment swap
   contracts.

   The Company may be susceptible to risk with respect to interest rate swap
   agreements to the extent of nonperformance by the financial institutions
   participating in the interest rate swap agreements.  However, the Company
   does not anticipate nonperformance by these counterparties. 

   NOTE 11 - MANDATORILY REDEEMABLE PREFERRED STOCK

   On October 20, 1993, the Company issued 690,000 shares of Adjustable Rate
   Cumulative Preferred Stock, Series A in a public offering at $25.00 per
   share less an underwriting discount of $1.0625 per share and other
   issuance costs amounting to $295,221.  The preferred stock is redeemable,
   in whole or in part at the option of the Company, on any dividend payment
   date during the period from July 1, 2001 to June 30, 2003 and from July 1,
   2006 to June 30, 2008 at $25 per share plus accrued and unpaid dividends. 
   Any shares of preferred stock not redeemed prior to July 1, 2008 are
   subject to mandatory redemption on that date by the Company at a price of
   $25 plus accrued dividends.  Dividends on the preferred stock are paid
   quarterly at the annual rate of 7.625% which is subject to adjustment
   effective for the five year periods commencing July 1, 1998 and July 1,
   2003.  The adjusted dividend rate for each of the two five-year periods
   will be a fixed dividend rate equal to the five year treasury rate plus
   300 basis points.  Through December 31, 1997, the Company purchased 15,209
   shares for treasury.

   Based on quoted market prices, the estimated fair market value of the
   preferred stock outstanding as of December 31, 1997 was approximately
   $16.2 million.

   NOTE 12 - RETIREMENT PLANS

   On September 8, 1997 the Company terminated its profit sharing plan and
   money purchase plan.  The Company continues to have an employee benefit
   expense through the sharing of employees and expenses according to the
   Agreement.  (See Note 2.)

   Prior to September 8, 1997 the Company maintained a profit sharing plan in
   accordance with Section 401(k) of the Internal Revenue Code ("the Code")
   and a money purchase plan covering all of its employees to provide for
   their retirement.  Participants in the 401(k) plan had elected to have the
   Company make contributions to their accounts through payroll deductions
   ranging from 2% to 10% of the participant's total cash compensation up to
   the maximum amounts permitted by the Code.  Contributions by the Company
   to the 401(k) plan were dependent both upon the Company's earnings and
   upon decisions made by the Compensation Committee of the Board of
   Directors.  The Company was obligated to make contributions to its money
   purchase plan in amounts equal to 5% of each participant's total cash
   compensation.  All contributions were funded annually.  Expense for
   Company contributions to the 401(k) or money purchase plans for the twelve
   months ended December 31, 1997, June 30, 1996 and June 30, 1995 were
   $38,413, $56,407 and $47,826, respectively.  In addition, the expense for
   the Company for the six months ended December 31, 1996 was $29,180.

   During 1997 the Company provided an additional supplemental retirement
   benefit for an executive officer, such benefit totaled $38,347 for the
   twelve months ended December 31, 1997.  In the prior periods this benefit
   was given to two executive officers.  The benefits paid during the six
   months ended December 31, 1996 and the fiscal year ended June 30, 1996
   were $71,683 and $194,882, respectively.  The Company paid nothing for the
   year ended June 30, 1995.  The payments were made in the sole discretion
   of the outside members of the Board of Directors.

   NOTE 13 - STOCK OPTION PLANS

   The Company has four stock option plans, the 1987 Stock Option Plan, the
   1990 Stock Option Plan, the 1993 Stock Option Plan and the 1997 Stock
   Option Plan (the "Plans").  In accordance with the Plans' provisions, the
   exercise prices for stock options may  not be less than the fair market
   value of the optioned stock at the date of grant.  The exercise price of
   all options granted was equal to the market value of the stock on the date
   of grant.  All of the options, except for the options granted under the
   1997 Stock Option Plan, are "incentive stock options" as defined under
   Section 422 of the Code.  Options granted under the 1997 Stock Option Plan
   are considered "non-qualified stock options" as defined by the Code.  All
   options must be exercised within ten years of the date of grant.

   Additional information relating to the Plans is shown below:

   <TABLE>
   <CAPTION>
                              For the twelve months   For the twelve months    For the twelve months
    Stock Option Plans      ended December 31, 1997     ended June 30, 1996      ended June 30, 1995

                                               Average                Average                 Average
                                     Number    Option    Number of    Option    Number of     Option
                                       of       Price     Options      Price     Options       Price
                                     Options
    <S>                           <C>        <C>         <C>        <C>        <C>           <C>
    Options outstanding at January
    1, 1997, July 1, 1995 and 1994
    respectively                   169,424   $10.45      147,144    $ 9.92     149,551       $  8.92
      Options granted              189,450    12.90       22,500      11.00      30,000        14.50

      Options exercised            (45,796)    7.35      (15,720)      7.05     (16,157)        7.07
      Options terminated
      unexercised                 (107,208)   11.70            -          -     (16,250)       12.00

    Options outstanding at
    December 31, 1997, June 30,
    1996 and June 30, 1995,
    respectively                   205,870    12.73      153,924      10.37     147,144         9.92

    Options available for grant at
    December 31, 1997, June 30,
    1996 and June 30, 1995,
    respectively                   173,188        -       70,930          -      93,430            -
    Total Reserved Shares          379,058        -      224,854          -     240,574            -

    Options exercisable at
    December 31, 1997, June 30,
    1996 and June 30, 1995,
    respectively                   187,950   $12.94       46,780    $ 8.58      47,968       $ 7.66

   </TABLE>

   <TABLE>
   <CAPTION>
                                   For the six months ended        For the six months ended
        Stock Option Plans             December 31, 1996              December 31, 1995
                                                                         (Unaudited)
                                                    Average                        Average
                                   Number of        Option        Number of        Option
                                    Options          Price         Options          Price
    <S>                            <C>           <C>            <C>             <C> 
    Options outstanding at
    July 1, 1996 and 1995,
    respectively                   153,924       $10.37         147,144         $ 9.92
      Options granted               15,500        11.25               -              -

      Options exercised                  -            -         (15,720)          7.05

      Options terminated
      unexercised                        -            -               -              -

    Options outstanding at
    December 31, 1996 and
    1995, respectively             169,424        10.45         131,424          10.26

    Options available for
    grant at December 31, 1996
    and 1995, respectively          55,430            -          93,430              -

    Total reserved shares          224,854            -         224,854              -
    Options exercisable at
    December 31, 1996 and
    1995, respectively              46,780       $ 8.58          32,248         $ 7.96

   </TABLE>

   <TABLE>
   <CAPTION>
                                           Options Outstanding           Options Exercisable

                                         Remaining       Average
     Exercise Price                    Average Life      Exercise                    Exercise
          Range            Shares         (years)         Price         Shares         Price
   <S>                   <C>                <C>         <C>           <C>           <C>

      $6.50-8.50          10,920            2.9         $ 8.00              -            -
   $11.00-$14.50         194,950            9.1         $13.00        187,950       $12.94

           Total         205,870            8.8         $12.73        187,950       $12.94

   </TABLE>

   The Company adopted the disclosure only option under Statement of
   Financial Accounting Standards No. 123, "Accounting for Stock-Based
   Compensation."  If the accounting provisions of the new statement had been
   adopted as of July 1, 1995, the effect on net income would have been
   immaterial.

   NOTE 14 - EARNINGS PER SHARE

   The Company has adopted the provisions of Statement of Financial
   Accounting Standards No. 128, "Earnings Per Share."  All prior-period
   earnings per share data has been restated in accordance with SFAS 128.

   Basic earnings per share is computed by dividing net income available to
   common shareholders by the weighted-average number of common shares
   outstanding during the period.  Diluted earnings per share is computed by
   giving effect to all dilutive potential common shares.  A reconciliation
   of the income and shares issued in computing the basic and diluted
   earnings per share for the years ended December 31, 1997, June 30, 1996
   and 1995, and the six month periods ended December 31, 1996 and 1995,
   respectively, are as follows:

                                      For the Twelve Months Ended

                                December 31,  June 30, 1996   June 30, 1995 
                                       1997                                 

    Net income                $ 3,506,380(1)   $ 3,129,972(1) $ 3,208,170(1)
    Determination of
    shares:

     Weighted
      average common
      shares outstanding
      (basic)                   3,685,990        3,812,131      3,916,315

      Assumed conversion of
      stock options                11,597           27,354         43,925
    Weighted average
    common shares
    outstanding (diluted)       3,697,587        3,839,485      3,960,240

    Basic earnings per
    share                          $ 0.95           $ 0.82         $ 0.82

    Diluted earnings per
    share                          $ 0.95           $ 0.82         $ 0.81


                                For the Six Months Ended
                                      December 31,

                                     1996          1995      
                                              (Unaudited)    

    Net income                $ 1,141,960(1)   $ 1,848,351(1)
    Determination of
    shares:

      Weighted average
      common shares
      outstanding
      (basic)                   3,689,094        3,895,070

      Assumed conversion
      of stock options             22,261           30,180

    Weighted average
     common shares
     outstanding
     (diluted)                  3,711,355        3,925,250

    Basic earnings per
     share                         $ 0.31           $ 0.47
    Diluted earnings per
     share                         $ 0.31           $ 0.47

   (1)  Net income includes the preferred stock dividend that was expensed
        during those periods.  The preferred stock dividend was $1,286,320
        for the twelve months ended December 31, 1997 and June 30, 1996 and
        $1,297,286 for the twelve months ended June 30, 1995.  For the six
        months ended December 31, 1996 and 1995 the preferred stock dividend
        was $643,160.

   NOTE 15 - INCOME TAXES

   Taxes on income consist of the following:


                         Twelve Months ended            Six Months ended 
                    December
                      31,            June 30,             December 31,
                     1997            1996     1995          1996       1995   
     Current                                                      (Unaudited)
      Federal       $1,311,496        $-         $-  $  860,201      $     -
      State            227,126         -          -      40,288            -
                     1,538,622         -          -     900,489            -
    Deferred
     Federal               642  (35,074)   (49,665)    (55,102)            -
     State                   -         -          -     (1,125)            -
                           642  (35,074)   (49,665)    (56,227)            -
    Taxes on 
    income          $1,539,264  $(35,074)   (49,665)    $844,262           $-

    A  reconciliation  of  the statutory  federal  income tax  rate  and the
    effective tax rate as a percentage of income before taxes is as follows:

                         Twelve Months ended            Six Months ended

                    December
                      31,            June 30,             December 31,
                          1997   1996      1995      1996          1995   
                                                                 (Unaudited)
    Federal
    Statutory
    rate                 34.0%     34.0%      34.0%       34.0%        34.0%

    State income
    taxes, net
    of federal
    tax benefits           2.3         -          -         0.4            -
    Income
    passed
    through to
    shareholders        (15.1)    (35.4)     (34.7)      (10.2)       (33.7)

    Loss not
    benefited              3.2       5.5        1.4         3.1          3.0

    Equity in
    (earnings)
    loss of
    subsidiary               -     (3.9)        1.2           -        (3.3)
    Other                  0.6     (1.3)      (3.5)         5.7          0.0

                         25.0%    (1.1)%     (1.6)%       33.0%            -

    Temporary differences and carryforwards which gave  rise to deferred tax
    assets and liabilities, which were  classified in other assets and other
    liabilities in the Consolidated Balance Sheet, included:

                                                 December 31,            
                                           1997            1996

    Deferred tax assets:
      Accrued expenses and  reserves    $195,100          $106,421
      Net operating loss carryforwards   584,600           612,145
                                         779,700           718,566
    Valuation allowance                 (584,600)         (476,344)
                                         195,100           242,222
    Deferred tax liabilities
     
    Depreciation                        (5,290)            (51,770)
    Net deferred tax assets           $189,810            $190,452

    The valuation  allowance represents net operating loss carryforwards for
    which utilization is uncertain. A portion of the deferred income tax
    assets may be realized through carrybacks with the remainder dependent
    on future income.  Management believes that sufficient income will be
    earned in the future to realize the remaining net deferred income tax
    assets. The increase in the valuation allowance is a result of the
    increased deferred tax asset associated with the net operating loss
    carryforwards.

   NOTE 16 - DISTRIBUTIONS

   For the year ended December 31, 1997, the Company's board of directors
   declared the following common stock distributions:

                                     For the
                                   year ended
                                   December 31,
                                       1997      
   Total distributions          $ 8,150,055
   Distributions per share (tax basis):
     Ordinary income                  $0.61
     Capital gains                       -
     Return of capital                1.67
   Total distributions declared per
     share                           2.28
   Distribution in cash               0.61
   Distribution in stock             1.67


   NOTE 17 - SEGMENT INFORMATION

   <TABLE>
   <CAPTION>
                                                     Lending       Manufacturing
                                                    Operations      Operations       Eliminations       Consolidated
     <S>                                         <C>               <C>                  <C>              <C>
    TOTAL REVENUES
    Twelve months ended December 31, 1997        $12,250,149       $19,065,022          $(330,811)       $30,984,360
    Twelve months ended June 30, 1996              9,054,401         1,693,976           (131,150)        10,617,227
    Twelve months ended June 30, 1995             10,596,534         1,251,151           (109,364)        11,738,321
    Six months ended December 31, 1996             3,961,673         7,343,481           (365,564)        10,939,590
    Six months ended December 31, 1995(1)          4,757,116         1,034,556            (65,969)         5,725,703

    NET OPERATING INCOME BEFORE INCOME
    TAXES AND MINORITY INTEREST

    Twelve months ended December 31, 1997        $ 2,714,995       $ 3,413,012       $          -        $ 6,128,007
    Twelve months ended June 30, 1996              3,224,708          (129,810)                 -          3,094,898
    Twelve months ended June 30, 1995              3,219,988           (61,483)                 -          3,158,505
    Six months ended December 31, 1996               768,108         1,791,485                  -          2,559,593
    Six months ended December 31, 1995(1)          1,830,733            17,618                  -          1,848,351

    NET INCOME

    Twelve months ended December 31, 1997        $ 2,707,898        $  798,482     $            -        $ 3,506,380
    Twelve months ended June 30, 1996              3,224,708           (94,736)                 -          3,129,972
    Twelve months ended June 30, 1995              3,219,988           (11,818)                 -          3,208,170
    Six months ended December 31, 1996               768,108           373,852                  -          1,141,960
    Six months ended December 31, 1995(1)          1,830,733            17,618                  -          1,848,351

    ASSETS

    December 31, 1997                           $135,993,230        $8,636,647        $(4,292,647)      $140,337,230
    December 31, 1996                             77,179,905         6,032,672         (3,693,179)        79,519,398

   </TABLE>

   (1)  Unaudited

   <PAGE>

   NOTE 18 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

                                              Quarters Ended
                                   (In thousands, except per share data)

                                  December    September    June    March
                                     31,         30,       30,      31,
                                    1997         1997      1997     1997

    Total revenues                    $9,629     $7,920   $7,993    $5,442
    Net operating income
       before income taxes
       and minority interest           1,277      1,653    2,153     1,045
    Net income                           720        853    1,303       630
    Basic earnings per share          $ 0.20     $ 0.23   $ 0.35    $ 0.17
    Diluted earnings per share        $ 0.20     $ 0.23   $ 0.35    $ 0.17

                                  December    September    June    March
                                     31,         30,       30,      31,
                                    1996*       1996*     1996*    1996*

    Total revenues                    $6,311     $4,629   $2,538    $2,353
    Net operating income
       before income taxes
       and minority interest             995      1,565      518       729
    Net income                           167        975      533       749
    Basic earnings per share          $ 0.05     $ 0.26   $ 0.14    $ 0.20
    Diluted earnings per share        $ 0.04     $ 0.26   $ 0.14    $ 0.20

   *Restated - See Note 1.
   NOTE 19- BANDO McGLOCKLIN CAPITAL CORPORATION (PARENT ONLY)

             Pursuant to covenants contained in its debt agreements, BMSBLC
   is prohibited from declaring or paying any dividend on its common stock
   which would constitute a return-of-capital dividend for income tax
   purposes.  The Company's balance sheet as of December 31, 1997 and 1996
   and related statements of operations and cash flows for the years ended
   December 31, 1997, June 30, 1996 and 1995 and the six months ended
   December 31, 1996 and 1995 on an unconsolidated basis follow.

                      Bando McGlocklin Capital Corporation
                          Balance Sheets (Parent Only)

                                                     December 31,
                                                1997              1996
    Assets
    Loans                                      $ 1,600,000       $ 5,838,861
    Loan-backed certificates                             -         1,988,056
    Less: Retained loan discount                  (48,875)         (507,197)

    Investments in BMSBLC                       26,236,596        24,187,906
    Investments in other subsidiaries            1,126,677           335,290
      Investments                               28,914,398        31,842,916
    Other assets - net                             757,750         1,577,997
      Total Assets                             $29,672,148       $33,420,913

    Liabilities
    Loan participations with repurchase        $ 1,600,000    $            -
    options
    Other liabilities                              421,321           873,187
      Total Liabilities                          2,021,321           873,187

    Preferred stock                             16,908,025        16,908,025
    Shareholders' Equity
    Common stock                                   266,769           263,716
    Additional paid-in capital                  13,671,947        19,498,326
    Retained earnings/(deficit)                    656,597         (859,728)
    Treasury stock, at cost                    (3,852,511)       (3,262,613)
      Total Shareholders Equity                 10,742,802        15,639,701
      Total Liabilities,
      Preferred Stock, Common
      Stock & Other
      Shareholders' Equity                     $29,672,148       $33,420,913


                      Bando McGlocklin Capital Corporation
                     Statements of Operations (Parent Only)

                                              For the Years Ended
                                   December 31,            June 30,

                                       1997            1996          1995
    Revenues:
    Interest on loans                 $  551,793     $1,071,037   $1,208,168
    Equity in income of BMSBLC         4,791,300      4,792,902    4,429,445
    Equity in income of other
    subsidiaries                         798,482        146,110      234,679
    Other income                         881,967        168,762      103,741
    Total Revenues                     7,023,542      6,178,811    5,976,033

    Expenses:
    Interest expense                   1,443,739      1,358,422    1,392,218
    Salaries and employee
    benefits                             916,574      1,081,106      760,896
    Other operating expenses           1,156,849        609,311      614,749
    Total Expenses                     3,517,162      3,048,839    2,767,863

         Net Income                   $3,506,380     $3,129,972   $3,208,170


                                                For the Six Months Ended
                                                      December 31,
                                                              1995          
                                             1996            (Unaudited)    
                                                                            

    Revenues:

    Interest on loans                            $  477,729       $  613,782
    Equity in income of BMSBLC                    2,018,071        2,615,094
    Equity in income of other subsidiaries          425,944           47,879
    Other income                                     23,051           64,055
    Total Revenues                                2,944,795        3,340,810

    Expenses:
    Interest expense                                667,908          691,788
    Salaries and employee benefits                  601,361          510,368
    Other operating expenses                        533,566          290,303

    Total Expenses                                                 1,492,459
                                                  1,802,835
    Net operating income before minority                           1,848,351
    interest                                      1,715,331
    Minority interest                                                      -
                                                  (573,371)
         Net Income                              $1,141,960       $1,848,351


                      Bando McGlocklin Capital Corporation
                     Statements of Cash Flows (Parent Only)


                                      For the       For the Twelve Months
                                       Twelve           Ended June 30,
                                    Months Ended
                                    December 31,
                                        1997          1996          1995
    Cash Flows from Operating
    Activities:
      Net income                      $3,506,380    $3,129,972    $3,208,170
    Adjustments to reconcile net
    income to net cash
    provided by operating
    activities:
      Equity in subsidiaries'        (5,693,211)   (4,939,012)   (4,664,124)
       earnings
      Dividends from subsidiaries      2,846,038     4,677,698     4,889,884

      Other                            (162,070)        53,794     (236,814)
    Net Cash Provided by                 497,137     2,922,452     3,197,116
    Operations

    Cash Flows from Investing
    Activities:
      Loans made                               -   (2,951,633)   (4,054,913)
      Principal collected on           6,226,917     1,658,743     1,376,500
      loans
      Loans sold                               -    11,173,648     8,685,504
      Certificate purchased from               -   (1,213,315)   (1,294,198)
       trust
      Loans purchased                          -   (4,767,544)             -
      Proceeds from maturity of                -             -     2,245,000
       securities
      Increase in note receivable              -     (543,689)     (746,171)
       from subsidiary
      Other                            (235,290)       110,291       (7,328)
    Net Cash Provided by               5,991,627     3,466,501     6,204,394
    Investing Activities


    Cash flows from Financing
    Activities:
      Proceeds from loan               1,600,000             -             -
      participations with
      repurchase options - net
      Decrease in other notes                  -             -   (3,600,000)
       payable
      Capitalization &               (6,160,000)             -             -
      distribution of
      InvestorsBank
      Dividends paid                 (1,990,055)   (3,678,476)   (3,921,244)
      Repurchase of common stock       (589,898)   (2,696,363)     (566,250)
      Common stock investment in               -             -     (999,000)
       subsidiaries
      Other                              336,674       110,760     (227,718)
    Net Cash Used in Financing       (6,803,279)   (6,264,079)   (9,314,212)
    Activities
    Net (decrease) increase in         (314,515)       124,874        87,298
    cash
    Cash, beginning of year              341,725       103,379        16,081

    Cash, end of year               $     27,210   $   228,253   $   103,379


                      Bando McGlocklin Capital Corporation
                 Statements Cash Flows - continued (Parent Only)

                                                   For the Six Months Ended
                                                         December 31,

                                                   1996         1995        

    Cash Flows from Operating Activities:
     Net income                                     $1,141,960    $1,848,351
     Other adjustments to reconcile net
      income to net cash (used) by 
      operating activities:
       Equity in subsidiaries' earnings            (2,444,015)   (2,662,973)
       Dividends from subsidiaries                   3,857,425     2,418,731
       Other                                           439,316       812,901
    Net Cash Provided by Operations                  2,994,686     2,417,010

    Cash Flows from Investing Activities:

     Loans made                                    (5,269,882)     (630,149)
     Principal collected on loans                      631,872       233,092
     Loans sold                                      4,340,001     8,666,538
     Certificate purchased from trust                        -   (1,213,315)
     Loans purchased                                         -   (4,767,544)
     Proceeds from maturity of securities                    -       250,000
     Decrease (increase) in note receivable
      from subsidiary                                1,087,443   (1,054,120)
     Other                                                   -      (27,040)
    Net Cash Provided by Investing Activities          789,434     1,457,462

    Cash Flows from Financing Activities:
     Dividends paid                                (3,670,648)   (1,876,173)

     Repurchase of common stock                              -   (1,234,045)
     Other                                                   -       110,760
    Net Cash Used in Financing Activities
                                                   (3,670,648)   (2,999,458)
    Net increase in cash                               113,472       875,014
    Cash, beginning of period                          228,253       103,379
    Cash, end of period                            $   341,725   $   978,393


   <PAGE>

   Schedule I
   Condensed Financial Information of Registrant
   (Refer to footnote 19 of the financial statements)

   Schedule II
   Valuation and Qualifying Accounts

   Changes in the reserves deducted from assets in the consolidated balance
   sheet other than accumulated depreciation for the years ended December 31,
   1997 and June 30, 1996 and 1995, respectively and for the six months ended
   December 31, 1996 and 1995, respectively.

                                                     Charges for
                                        Additions   purposes for
    Reserve for loan        Beginning    charged    which reserve    Ending
    losses:                  balance    to Income    was created    balance
    Year ended:
      December 31, 1997       $450,000  $   6,335        $   6,335  $450,000
      June 30, 1996             51,943   (10,501)            2,651    38,791
      June 30, 1995            124,036   (72,093)                -    51,943
    Six months ended:
      December 31, 1996         38,791    411,209                -   450,000
      December 31, 1995(1)      51,943   (10,501)                -    41,442

                                                       Charges for
                                        Additions     purposes for
    Reserve for doubtful     Beginning    charged    which reserve    Ending
    accounts:                  balance  to Income      was created   balance

    Year ended:
      December 31, 1997       $ 98,083   $170,713        $       -  $268,796
      June 30, 1996              2,450     58,377                -    60,827
      June 30, 1995(2)           2,450          -                -     2,450
    Six months ended:
      December 31, 1996         60,827     37,256                -    98,083
      December 31,               2,450          -                -     2,450
       1995(1)(2)
    (1) Unaudited.
    (2) These  periods include  only License  Products reserve for  doubtful
    accounts.


   Schedule IV
   Mortgage Loans on real estate

   <TABLE>
   <CAPTION>
                                                                                                                     Principal
                                                                                                                     amount of
                                                                                                                       loans
                                                                                                                      subject
                                                                                                      Carrying          to
                                                                                           Face       amount of     delinquent
                                                                       Periodic           Amount    Mortgages as     Principal
                                                      Final            Payment   Prior      of       of December        or
        Description        Interest Rate          Maturity Date         Terms    Liens   Mortgages    31, 1997      Interest(1)
    <S>                   <C>                 <C>                        <C>      <C>       <C>      <C>               <C>
    Residential
      1st Mortgage        7.75% to 10.99%     09/01/98 to 11/01/27       N/A      N/A       N/A        $1,710,576
      2nd Mortgage        8.50% to 11.00%     06/01/98 to 05/01/11       N/A      N/A       N/A         1,058,952
      Construction         6.75% to 8.13%     05/01/98 to 09/01/27       N/A      N/A       N/A         1,423,364
    Total Residential                                                                                   4,192,892

    Commercial
      1st Mortgage        7.18% to 12.00%     04/01/98 to 01/01/16       N/A      N/A       N/A      $106,308,327      $816,214
      2nd Mortgage        8.25% to 12.00%     01/01/99 to 09/01/07       N/A      N/A       N/A         6,868,048        65,049
      3rd Mortgage        9.50% to 11.50%     05/01/02 to 11/01/07       N/A      N/A       N/A         1,123,396
      Construction         8.75% to 9.25%     01/01/07 to 05/01/07       N/A      N/A       N/A         3,497,929
    Total Commercial                                                                                  117,797,700

    All others(2)               N/A                    N/A               N/A      N/A       N/A         9,044,653

    Total loans(3)                                                                                   $131,035,245

    Footnotes to Schedule IV:

    (1) Delinquent is defined as 90 days or more past due.
    (2) This category includes all non-mortgage loans on the balance sheet.
    (3) No individual mortgage loan exceeded 3% of the total carrying value of mortgages.


   </TABLE>

   <TABLE>
   Reconciliation of Loans on the Balance Sheet

   <CAPTION>
                                                                                                               06/30/95
                                                   12/31/96        06/30/95       06/30/94       06/30/96         to
                                                      to              to             to             to         12/31/95
                                                   12/31/97        06/30/96       06/30/95       12/31/96    (Unaudited)
    <S>                                            <C>            <C>            <C>            <C>           <C>
    Loans on balance sheet,
      beginning of period(1)                        $71,456,347   $86,571,594    $103,190,073   $76,468,459   $86,571,594
      Additions during period:
         Loans made                                  53,759,887    42,745,527      39,318,018    23,729,026    23,003,932
         Loans purchased                             49,647,182             -               -             -             -
         Certificate purchased from trust                     -     1,213,315       1,294,198             -     1,213,315

      Deductions during period:
         Principal collected on loans                43,821,836    23,881,211      23,586,361    13,600,355    14,094,074
         Loans sold                                           -    28,087,037      33,644,334    15,140,783    15,400,490

         Principal charged off                            6,335         2,651               -             -             -
         Consolidation of Middleton Doll                      -     2,091,078               -             -             -
    Loans on balance sheet, end of period(1)       $131,035,245   $76,468,459     $86,571,594   $71,456,347   $81,294,277

    (1) Loans on balance sheet includes Loan-backed certificates where applicable.

   </TABLE>

   <PAGE>
                                    Part III

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

        Not Applicable because required information has been previously
   reported as that term is defined in Rule 12b-2 under the Securities
   Exchange Act of 1934, as amended.  Reference should be made to a report on
   Form 8-K filed by the Company on December 30, 1997 regarding change in
   accountants.

   Item 10.  Directors and Executive Officers of the Registrant

        Pursuant to Instruction G, the information required by this item
   (with respect to directors of the registrant) is incorporated herein by
   reference from the Company's definitive Prosy Statement involving the
   election of directors.  The information with respect to executive officers
   of the Company has been included in Part I hereof.  The definitive proxy
   statement will be filed with the Securities and Exchange Commission within
   120 days after the end of the Company's fiscal year.

   Item 11.  Executive Compensation

        Pursuant to Instruction G, information required by this item is
   hereby incorporated by reference from the Company's definitive proxy
   statement for its 1998 annual meeting of shareholders under the caption
   "Board of Directors-Director Compensation" and "Executive Compensation";
   provided, however, that the subsection entitled "Executive Compensation-
   Report on Executive Compensation" shall not be deemed to be incorporated
   herein by reference.  The definitive proxy statement will be filed with
   the Securities and Exchange Commission within 120 days after the end of
   the Company's fiscal year.

   Item 12.  Security Ownership of Certain Beneficial Owners and Management

        Pursuant to Instruction G, information required by this item is
   hereby incorporated by reference from the Company's definitive proxy
   statement for its 1998 annual meeting of shareholders under the caption
   "Principal Shareholders".  The definitive proxy statement will be filed
   with the Securities and Exchange Commission within 120 days after the end
   of the Company's fiscal year.

   Item 13.  Certain Relationships and Related Transactions

        Pursuant to Instruction G, information required by this item is
   hereby incorporated by reference from the Company's definitive proxy
   statement for its 1998 annual meeting of shareholders under the caption
   "Related Party Transactions".  The definitive proxy statement will be
   filed with the Securities and Exchange Commission with 120 days after the
   end of the Company's fiscal year.

   Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

        1.   Exhibits
             Reference is made to the separate exhibit index contained on
             pages I-1 through I-2 hereof.

        2.   Financial Statements and Financial Statement Schedules
             Reference is made to the separate index in Item 8 of this Annual
             Report on Form 10-K with respect to the financial statements and
             schedules filed herewith.

        3.   Reports on Form 8-K
             A Report on Form 8-K was filed by the Company dated December 30,
             1997.

   <PAGE>
                                   SIGNATURES

        In accordance with Section 13 or 15(d) of the Securities Exchange Act
   of 1934, the registrant caused this report to be signed on its behalf by
   the undersigned, thereunto duly authorized on March 30, 1998.

                                      BANDO McGLOCKLIN CAPITAL
                                         CORPORATION

                                      By:  /s/ George R. Schonath
                                           George R. Schonath,
                                           President and Chief Executive
   Officer

        In accordance with the Securities Exchange Act of 1934, this report
   has been signed below by the following persons on behalf of the registrant
   and in the capacities indicated on March 30, 1998.

        Signature                          Title


   /s/ George R. Schonath        President and Chief Executive Officer
   George R. Schonath            (Principal Financial Officer)


   /s/ Susan J. Hauke            Vice President Finance
   Susan J. Hauke                (Principal Accounting Officer)

   /s/ Robert A. Cooper          Director
   Robert A. Cooper


   /s/ Peter A. Fischer          Director
   Peter A. Fischer


   /s/ David A. Geraldson, Sr.   Director
   David A. Geraldson, Sr.


   /s/ Albert O. Nicholas        Director
   Albert O. Nicholas

   <PAGE>

                                INDEX TO EXHIBITS

    Exhibit No.                      Exhibit Description

        3.1       Articles of  Incorporation,  as  amended  (incorporated  by
                  reference  to Exhibit  3.1 to the  Company's Form  10-Q for
                  the quarterly period ended March 31, 1997).

        3.2       By-laws (incorporated  by reference to  Exhibit 3.2 to  the
                  Company's  Form   10-Q  for  the  quarterly   period  ended
                  March 31, 1997). 

        4.1       Loan  and Security Agreement, dated  March 11, 1998, by and
                  between  Firstar  Bank  Milwaukee   and  Bando   McGlocklin
                  Capital Corporation.

        4.2       Amended  and Restated  Loan Agreement dated  as of June 28,
                  1996 between First  Bank (N.A.) and Bando  McGlocklin Small
                  Business Investment Corporation (incorporated by  reference
                  to  Exhibit  4.1  to   the  Company's  Form  10-Q  for  the
                  quarterly period ended March 31, 1997).

        4.3       Modification   Agreement  dated  as  of  October  31,  1996
                  between  First  Bank  (N.A.)  and  Bando  McGlocklin  Small
                  Business Investment Corporation (incorporated by  reference
                  to  Exhibit  4.1  to  the  Company's  Form   10-Q  for  the
                  quarterly period ended March 31, 1997).

        4.4       Loan Agreement  dated as  of June 28,  1996 between LaSalle
                  National   Bank   and  Bando   McGlocklin   Small  Business
                  Investment   Corporation  (incorporated   by  reference  to
                  Exhibit 4.2  to the Company's  Form 10-Q for the  quarterly
                  period ended March 31, 1997).

        4.5       First Amendment to Loan  Documents dated as of  December 2,
                  1996   by  LaSalle  National   Bank  and  Bando  McGlocklin
                  (incorporated by reference to Exhibit 4.3  to the Company's
                  Form 10-Q for the quarterly period ended March 31, 1997).

        4.6       First  Amendment to  Amended  and  Restated Loan  Agreement
                  dated  as  of   October  31,  1996  between   Firstar  Bank
                  Milwaukee,  N.A.  and  Bando   McGlocklin  Small   Business
                  Investment   Corporation  (incorporated   by  reference  to
                  Exhibit  4.4 to the Company's  Form 10-Q  for the quarterly
                  period ended March 31, 1997).

        4.7       First  Amendment to  Amended  and  Restated Loan  Agreement
                  dated  as  of   October  31,  1996  between   Firstar  Bank
                  Milwaukee,  N.A.   and  Bando  McGlocklin  Small   Business
                  Investment   Corporation  (incorporated   by  reference  to
                  Exhibit  4.5 to  the Company's Form  10-Q for the quarterly
                  period ended March 31, 1997).

        4.8       Second Amendment  to Amended  and  Restated Loan  Agreement
                  dated as  of May 14,  1997 between Firstar Bank  Milwaukee,
                  N.A.  and   Bando  McGlocklin   Small  Business  Investment
                  Corporation (incorporated  by reference  to Exhibit  4.6 to
                  the  Company's Form  10-Q for  the  quarterly period  ended
                  March 31, 1997).

        4.9       Master Note Purchase Agreement dated as of January 1,  1997
                  between  the  State of  Wisconsin  Investment Board,  Bando
                  McGlocklin  Small  Business Lending  Corporation  and Bando
                  McGlocklin  Capital Corporation  (incorporated by reference
                  to  Exhibit  4.7  to  the  Company's  Form  10-Q   for  the
                  quarterly period ended March 31, 1997).

        10.1      Bando McGlocklin  Capital Corporation  1987 Incentive Stock
                  Option Plan  (incorporated by reference  to Exhibit 7.3  to
                  the    Company's    Form   N-5    Registration   Statement,
                  Registration No. 33-12939).

        10.2      Bando McGlocklin  Capital Corporation 1990 Incentive  Stock
                  Option Plan  (incorporated by reference  to Exhibit 7.4  to
                  the    Company's    Form   N-5    Registration   Statement,
                  Registration No. 33-51406).

        10.3      Bando McGlocklin Capital Corporation  1993 Incentive  Stock
                  Option  Plan (incorporated by  reference to  Exhibit (i)(6)
                  to the Company's Pre-Effective Amendment No.  1 to Form N-2
                  Registration Statement, Registration No. 33-66258).

        10.4      Bando  McGlocklin  Capital  Corporation  1997 Stock  Option
                  Plan  (incorporated by  reference to  Exhibit  10.4 to  the
                  Company's Form  10-Q for the  quarterly period ended  march
                  31, 1997).

        10.5      Management Services  and Allocation of Expenses  Agreement,
                  dated  September 2, 1997, by  and between InvestorsBank and
                  Bando McGlocklin Capital Corporation.

         21       List   of   subsidiaries   of   Bando  McGlocklin   Capital
                  Corporation

         27       Financial Data Schedule (with EDGAR filing only)

         27.1     Revised Financial Data Schedule for the Quarter Ended
                  September 30, 1997

         27.2     Revised Financial Data Schedule for the Qurater Ended
                  June 30, 1997

         27.3     Revised Financial Dat Schedule for the Qurater Ended 
                  March 31, 1997

         99       Proxy Statement for 1998 Annual Meeting of Shareholders

                  The  Proxy  Statement  for  the  1998   Annual  Meeting  of
                  Shareholders  will  be   filed  with  the   Securities  and
                  Exchange  Commission under  Regulation 14A  within 120 days
                  after the end of the  Company's fiscal year; except  to the
                  extent  incorporated by reference,  the Proxy statement for
                  the  1998  Annual  Meeting of  Shareholders  shall  not  be
                  deemed  to  be  filed  with  the  Securities  and  Exchange
                  Commission as part of this Annual Report on Form 10-K