<PAGE>


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

                                   FORM 10-KSB
             /X/      Annual Report Pursuant to Section 13 or
                15(d) of the Securities Exchange Act of 1934 (FEE
                                    REQUIRED)

            / /      Transition Report under Section 13 or 15(d)
            of the Securities Exchange Act of 1934 (NO FEE REQUIRED)

                   For the fiscal year ended December 31, 1998
                         Commission file number 0-13343

                               ILLINI CORPORATION
                 (Name of small business issuer in its charter)

                                    Illinois
                            (State of Incorporation)
                           (I.R.S. Employer I.D. No.)
                                   37-1135429

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

                            Issuer's telephone number
                                 (217) 787-5111

                    Securities registered pursuant to Section
                           12(b) of the Exchange Act:
                                      None

                    Securities registered pursuant to Section
                           12(g) of the Exchange Act:
                    Common Stock, par value $10.00 per share
                                (Title and Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months, and (2) has been
subject to such filing requirements for the past 90 days. Yes X No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. X

The Registrant's revenues for fiscal year 1998 were $13,262,000.

On March 1, 1999, 448,456 shares of common stock were outstanding. The aggregate
market value of such shares held by non-affiliates of the registrant was
approximately $13,229,452 (based on the average of the bid and asked prices of
securities traded through Dean Witter Reynolds, Inc., Springfield, Illinois).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Corporation's definitive proxy statement dated March 22, 1999,
are incorporated by reference into Part III, hereof.



                                       1
<PAGE>



TABLE OF CONTENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

PART I                                                                                                          Page
                                                                                                                ----
<S>                                                                                                             <C>
1.   Description of Business.......................................................................................2
2.   Properties....................................................................................................7
3.   Legal Proceedings.............................................................................................7
4.   Submission of Matters to a Vote of Security Holders...........................................................8

PART II
5.   Market for Common Equity and Related Stockholder Matters......................................................8
6.   Management's Discussion and Analysis of Financial Condition & Results of Operations...........................9
7.   Financial Statements.........................................................................................30
8.   Changes in and Disagreements with Accountants
     on Accounting and Financial Disclosure.......................................................................53

PART III
9.   Directors and Executive Officers of the Registrant...........................................................53
10.  Executive Compensation.......................................................................................53
11.  Security Ownership of Certain Beneficial Owners and Management...............................................53
12.  Certain Relationships and Related Transactions...............................................................53
13.  Exhibits and Reports on Form 8-K.............................................................................54

Signatures.......................................................................................................55

</TABLE>


PART I
--------------------------------------------------------------------------------


ITEM 1. - DESCRIPTION OF BUSINESS

     Illini Corporation ("Illini" or "Corporation"), a bank holding company as
defined in the Bank Holding Company Act of 1956, as amended, was incorporated
under the laws of the State of Illinois in 1983. Illini presently operates one
wholly owned subsidiary bank, Illini Bank, with 18 locations throughout five
counties in central Illinois. Illini's executive offices are located at 3200
West Iles Avenue, Springfield, Illinois 62707, and its telephone number is
217/787-5111.

     Illini's management philosophy is to centralize overall corporate policies,
procedures, and administrative functions and provide operational support for the
subsidiary bank. Within these parameters, each location is allowed flexibility
in responding to local market conditions and customer and community needs.
Illini is committed to being a well managed, profitable financial institution
providing a broad range of financial services and products and contributing to
the economic and social environment of its communities.

     Illini Bank (the "Bank") is an Illinois state bank, which had total assets
of $160.6 million at December 31, 1998. The Bank maintains 18 banking facilities
in the following Illinois communities: Springfield, Lincoln, Petersburg, Auburn,
Danvers, Dawson, Divernon, Elkhart, Greenview, Hudson, Mechanicsburg, Owaneco,
Sherman, Stonington, and Tallula.

     The Bank offers its customers a wide variety of financial services and
products. Deposit products include a variety of checking, NOW, money market,
savings, investment sweep accounts, and certificates of deposit. Lending
products include short, intermediate, and long-term business and agricultural
loans, commercial and residential real estate loans, personal and consumer
purchase loans, home equity, and personal secured and unsecured lines of credit.
Additional product offerings include letters of credit, credit cards, notary
services, safe deposit boxes, and check imaging.

     The Bank's deposit accounts are insured by the Federal Deposit Insurance
Corporation (the "FDIC") under the Bank Insurance Fund ("BIF") to the maximum
amount allowed by law. Illini is supervised and



                                       2
<PAGE>


regulated by the Board of Governors of the Federal Reserve ("FRB") and the Bank
is supervised and regulated by the FDIC and the Office of Banks and Real Estate
of the State of Illinois.

-    COMPETITION

     The activities and geographic markets in which Illini is engaged are highly
competitive. Competition among financial institutions is based upon interest
rates offered on deposit accounts, interest rates charged on loans and other
credit and service charges, the quality of services rendered, the convenience of
banking facilities and, in the case of loans to large commercial borrowers,
relative lending limits.

     The Bank competes with other banks, savings and loan associations, credit
unions, industrial loan associations, securities firms, insurance companies,
small loan companies, finance companies, mortgage companies, certain
governmental agencies, and credit organizations.

-    SUPERVISION AND REGULATION - GENERAL

     Various federal and state banking laws and regulations affect the business
of Illini and the Bank. They are subject to supervision, regulation, and
periodic examination by the Board of Governors of the FRB and the Commissioner
and the FDIC, respectively. The following is a summary of certain statutes and
regulations affecting Illini and the Bank. This summary is qualified in its
entirety by such statutes and regulations, which are subject to change based on
pending and future legislation and action by regulatory agencies. Proposals to
change the laws and regulations governing the operation of banks and companies
which control banks and other financial institutions are frequently raised in
Congress. The likelihood of any major legislation and the impact such
legislation might have on Illini or the Bank are, however, impossible to
predict.

-    THE BANK HOLDING COMPANY ACT

     As a bank holding company, Illini is subject to regulation by the FRB under
the Bank Holding Company Act of 1956, as amended (the "BHCA"). The BHCA
restricts the product range of a bank holding company by circumscribing the
types of businesses it may own or acquire. The BHCA limits a bank holding
company to owning and managing banks or companies engaged in activities
determined by the FRB to be closely related to banking.

     Among the activities that the FRB has determined are closely related to
banking are activities that are usual in connection with making, acquiring,
brokering or servicing loans, leasing personal or real property, engaging in
trust company functions, acting as investment or financial advisor, providing
securities brokerage services, certain management consulting and counseling
services, engaging in certain insurance agency activities and providing data
processing services.

     The BHCA requires a bank holding company to obtain the prior approval of
the FRB before acquiring substantially all of the assets or direct or indirect
ownership or control of more than five percent of the voting shares of a bank or
a bank holding company or merging or consolidating with any other bank holding
company.

     Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (the "Riegle-Neal Act"), since September 29, 1995, the FRB is permitted,
under specified circumstances, to approve the acquisition by a bank holding
company located in one state of a bank or a bank holding company located in
another state, without regard to any prohibition contained in state law.

     The Riegle-Neal Act permits states to require that a target bank have been
in operation for a minimum period, up to five years, and to impose
non-discriminatory limits on the percentage of the total amount of deposits with
insured depository institutions in the state which may be controlled by a single
bank or bank holding company. In addition, the Riegle-Neal Act imposes federal
deposit concentration limits (10% of nationwide total deposits, and 30% of total
deposits in the host state on applications subsequent to the applicant's initial
entry to the host state), and adds new statutory conditions to FRB approval,
i.e., the applicant meets or exceeds all applicable federal regulatory capital
standards and is "adequately managed."



                                       3
<PAGE>


     The Riegle-Neal Act also authorized, effective June 1, 1997, the 
responsible federal banking agency to approve applications for mergers of 
depository institutions across state lines without regard to whether such 
activity is contrary to state law. Any state could, however, by adoption of a 
non-discriminatory law after September 29, 1994 and before June 1, 1997, 
elect to opt-out of the provision. The effect of opting out is to prevent 
banks chartered by, or having their main office located in, such state from 
participating in any interstate branch merger. Each state was permitted to 
retain a minimum age requirement of up to five years, a non-discriminatory 
deposit cap, and non-discriminatory notice or filing requirements. The 
responsible federal agency will apply the same federal concentration limits 
and capital management adequacy requirements noted above with respect to BHCA 
applications. Only Texas opted-out of the interstate merger provision.

     While Illinois adopted legislation to opt-in to the interstate merger
provision, unlike some states and as permitted by federal law, Illinois law does
not authorize the establishment of de novo branches or the purchase by an
out-of-state bank of one or more branches of a bank with its main office in
Illinois. Since the laws of the various states which do authorize de novo
branches or branch purchases normally have reciprocity provisions, Illinois
state-chartered banks generally are not able to establish or acquire branches in
other states except through the merger with a bank in another state.

     Branches acquired in a host state by both out-of-state state-chartered and
national banks will be subject to community reinvestment, consumer protection,
fair lending, and interstate branching laws of the host state to the same extent
as branches of a national bank having its main office in the host state. Among
other things, the Riegle-Neal Act also preserves state taxation authority,
prohibits the operation by out-of-state banks of interstate branches as deposit
production office, imposes additional notice requirements upon interstate banks
proposing to close branch offices in a low or moderate-income area, and creates
new Community Reinvestment Act evaluation requirements for interstate depository
institutions.

-    DIVIDEND RESTRICTIONS

     Illini's principal source of income is the Bank's payment of dividends 
on the stock of the Bank owned by Illini. Illinois law restricts the Bank's 
ability to pay these dividends. Under the Illinois Banking Act, no dividend 
may be declared by an Illinois state-chartered bank (i) except out of the 
bank's net profits and (ii) unless the bank has transferred to surplus at 
least one-tenth of its net profits since the date of the declaration of the 
last preceding dividend, until the amount of its surplus is at least equal to 
its capital. Net profits under the Illinois Banking Act must be adjusted for 
losses and bad debts (i.e. debts owing to the bank on which interest is past 
due and unpaid for a period of six months or more unless such debts are well 
secured and in the process of collection).

     Under the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), no insured depository institution may declare any dividend if,
following the payment of such dividend, the institution would be under-
capitalized.

-    TRANSACTIONS WILL AFFILIATES AND INSIDERS

     The Bank and Illini are affiliates of each other and, as such, are subject
to certain federal restrictions on loans and extensions of credit to Illini, on
investments in Illini's and its affiliates' securities, on acceptance of such
securities as collateral for loans to any borrower and on leases and services
and other contracts between the Bank and Illini. Additionally, regulations allow
the Bank to extend credit to the Bank's and its affiliates' executive officers,
directors, and principal shareholders or their related interests only if the
loan is made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
non-insiders. Moreover, loans to insiders must not involve more than the normal
risk or repayment or present other unfavorable features and must, in certain
circumstances, be approved in advance by a majority of the entire board of
directors of the Bank. The aggregate amount that can be lent to all insiders is
limited to the Bank's unimpaired capital and surplus. There are additional 
limitations on the amount of loans that can be made to the Bank's executive 
officers.



                                       4
<PAGE>


-    DEPOSIT INSURANCE

     Deposits held by the Bank are insured, to the extent permitted by law, by
the Bank Insurance Fund ("BIF") administered by the FDIC. A minimum designated
reserve ratio of 1.25 percent of insured deposits has been established for the
BIF. However, the FDIC may set a higher designated reserve ratio if
circumstances raise a significant risk of substantial future losses to the BIF.
Assessment rates are established sufficient to maintain reserves at the
designated reserve ratio or, if the ratio is less than the designated ratio, to
increase the ratio to the designated ratio within a reasonable period of time.

     As required under FDICIA, the FDIC has established a system of risk-based
deposit insurance premiums. Under this system each insured institution's
assessment is based on the probability that the BIF will incur a loss related to
that institution, the likely amount of the loss, and the revenue needs of the
BIF.

     Under the risk-based assessment system, currently, a depository institution
pays an assessment of between 0 cents and 27 cents per $100 of insured deposits
based on its capital level and risk classification. To arrive at a risk-based
assessment for an insured institution, the FDIC places it in one of nine risk
categories using a two step analysis based first on capital ratios and then on
relevant supervisory information. In addition, in 1996, pursuant to the Deposit
Insurance Funds Act, enacted by Congress in September, the FDIC imposed a
special assessment on bank deposits at a rate not tied to risk classification in
order to service debt on the Financing Corporation (FICO) bonds issued in
connection with the federal government's bail out of the thrift industry. Any
further significant changes in the deposit insurance assessment rate imposed by
the FDIC could have a material effect on the earnings of Illini.

-    CAPITAL REQUIREMENTS

     The FRB has imposed risk-based capital guidelines applicable to Illini.
These guidelines require that bank holding companies maintain capital
commensurate with both on and off balance sheet credit and other risks of their
operations. Under the guidelines, a bank holding company must have a minimum
ratio of total capital to risk-weighted assets of 8 percent. In addition, a bank
holding company must maintain a minimum ratio of Tier 1 capital equal to 4
percent of risk-weighted assets. Tier 1 capital includes common shareholders'
equity, qualifying perpetual preferred stock and minority interests in equity
accounts of consolidated subsidiaries, less goodwill. As a supplement to
risk-based capital requirements, the FRB has also imposed leverage capital ratio
requirements. The leverage ratio requirements establish a minimum required ratio
of Tier 1 capital to total assets less goodwill of 3 percent for the most highly
rated bank holding companies. All other bank holding companies are required to
maintain additional Tier 1 capital yielding a leverage ratio of 4 percent to 5
percent, depending on the particular circumstances and risk profile of the
institution. Refer to the Capital Resources Section of Item 6 and Note 12
included under Item 7 for a summary of Illini's capital ratios as of December
31, 1998 and 1997.

     The Bank is also subject to risk-weighted capital standards and leverage
measures which are similar, but in some cases not identical, to the requirements
for bank holding companies which apply to Illini. At December 31, 1998, the Bank
met all applicable capital requirements. Under FDICIA, the federal bank
regulators must take various specified prompt corrective actions based on levels
of an insured depository institution's capital that are below the adequately
capitalized level. These prescribed actions increase restrictions on the
institution as its capital declines.

-    SAFETY AND SOUNDNESS GUIDELINES

     As required by federal law, the federal banking regulators have adopted
interagency guidelines (the "Guidelines") establishing standards for safety and
soundness for depository institutions on matters such as internal controls,
internal audit systems, loan documentation, credit underwriting, interest rate
risk exposure, asset growth and quality, earnings, and compensation and other
benefits. In general, the Guidelines prescribe the goals to be achieved in each
area, and each institution will be responsible for establishing its own
procedures to achieve these goals. If an institution fails to comply with any of
the standards set forth in the Guidelines, the institution's primary federal
regulator may require the institution to submit a plan for achieving and
maintaining compliance. The preamble to the Guidelines states that an



                                       5
<PAGE>


agency expects to require a compliance plan from an institution whose failure to
meet one or more standards is of such severity that it would threaten the safe
and sound operation of the institution. Failure to submit an acceptable
compliance plan, or failure to adhere to a compliance plan that has been
accepted by the appropriate regulator, would constitute grounds for further
enforcement action.

     FDIC regulations also require all depository institutions with assets 
in excess of $250 million to be examined annually by the banking regulators. 
Depository institutions with assets of $250 million or less which are well 
capitalized, well managed, have a CAMELS rating of 1 or 2, are not subject to 
a formal enforcement proceeding or order and have not undergone a change in 
control in the previous twelve months are eligible to be examined every 
eighteen months. FDIC regulations also require insured depository 
institutions having $500 million or more in total assets to prepare annual 
financial statements which are audited by an independent public accountant, 
to have an audit committee comprised solely of outside directors, and to hire 
outside auditors to evaluate the institution's internal control structure. 
For institutions that are subsidiaries of bank holding companies, the 
financial statement requirement can be satisfied by audited financial 
statements of the consolidated bank holding company. Other audit related 
requirements for subsidiary institutions that have total assets of less than 
$5 billion or assets of $5 billion or more and a composite CAMELS rating of 1 
or 2 also may be satisfied by the parent bank holding company. The FDIC, in 
adopting the regulations, reiterated its belief that every depository 
institution, regardless of size, should have an annual independent audit and 
an independent audit committee.

-    MONETARY POLICY AND ECONOMIC CONDITIONS

     The business of commercial banks, such as the Bank is affected by monetary
and fiscal policies of various regulatory agencies, including the FRB. Among the
regulatory techniques available to the FRB are open market operations in United
States Government securities, changing the discount rate for member bank
borrowings, and imposing and changing the reserve requirements applicable to
member bank deposits and to certain borrowings by member banks and their
affiliates (including parent companies). These policies influence to a
significant extent the overall growth and distribution of bank loans,
investments and deposits and the interest rates charged on loans, as well as the
interest rates paid on savings and time deposits.

     The monetary policies of the FRB have had a significant effect on the
operating results of commercial banks in the past and are expected to continue
to do so in the future. In view of constantly changing conditions in the
national economy and the money market, as well as the effect of acts by the
monetary and fiscal authorities, including the FRB, no definitive predictions
can be made by Illini or the Bank as to future changes in interest rates, credit
availability, deposit levels, or the effect of any such changes on Illini's or
the Bank's operations and financial condition.

-    EMPLOYEES

     As of December 31, 1998, Illini and the Bank had 99 total employees and 72
full-time employees.



                                       6
<PAGE>


-    STATISTICAL DISCLOSURE
<TABLE>
<CAPTION>

                                                                                                             Page(s)
                                                                                                             ------
<S>                                                                                                         <C>
Consolidated Average Balances, Interest
     Income/Expense and Yields/Rates........................................................................20 & 21
Rate/Volume Variance Analysis....................................................................................19
Investment Securities Available for Sale.........................................................................10
Investment Securities Available for Sale Maturity Schedule.......................................................12
Loan Portfolio...................................................................................................12
Selected Loan Maturity and Interest Rate Sensitivity.............................................................13
Nonperforming Assets.............................................................................................24
Summary of Loan Loss Experience..................................................................................23
Allocation of Allowance for Loan Losses..........................................................................23
Maturities of Time Deposits......................................................................................14
Return on Equity and Assets......................................................................................18
Interest Rate Sensitivity Analysis...............................................................................15
Noninterest Income...............................................................................................26
Noninterest Expense..............................................................................................27

</TABLE>


ITEM 2. - PROPERTIES

         Illini's corporate offices are located at 3200 West Iles Avenue,
Springfield, Illinois. The Bank owns 15 and leases three of the banking offices
at which it operates. Operating leases are further discussed in Note 5 in Item
7. The Bank operates four banking offices in Springfield, Illinois and one each
in the following Illinois communities: Auburn, Danvers, Dawson, Divernon,
Elkhart, Greenview, Hudson, Lincoln, Mechanicsburg, Owaneco, Petersburg,
Sherman, Stonington, and Tallula. The Bank leases space for the banking offices
in Lincoln, Petersburg and 615 W. Jefferson, Springfield.

ITEM 3. - LEGAL PROCEEDINGS

         On or about July 17, 1998, Ida R. Noll filed a 14 count complaint
against Illini Corporation and all members of Illini Corporation's Board of
Directors except William Walschleger Jr. in the Seventh Judicial Circuit,
Sangamon County, Illinois. On September 28, 1998, Judge Carmody dismissed the
complaint and granted Plaintiff 21 days in which to file an amended complaint.
The Plaintiff filed her amended pleading on October 19, 1998. This pleading was
also dismissed, but Plaintiff was granted leave to file a second amended
complaint. Illini and the directors recently answered the second amended
complaint. The second amended complaint arises out of Illini Corporation's
adoption of a Shareholder Rights Agreement on June 20, 1997, Illini
Corporation's subsequent adoption of a First Amendment to the Rights Agreement
on July 1, 1998, and the Plaintiff's assertion that she became an "acquiring
person" under the Rights Agreement on April 16, 1998. The Plaintiff seeks
declaratory and injunctive relief from Illini and the directors regarding the
alleged triggering of the Rights Agreement and the enforceability and validity
of the First Amendment to the Rights Agreement. The Plaintiff also seeks
compensatory and punitive damages against the directors arising out of the
directors' alleged breaches of fiduciary duty committed in connection with the
Rights Agreement and the First Amendment to the Rights Agreement. The Plaintiff
seeks recovery of her attorneys' fees and costs in connection with her action.
Ida Noll asserted that her attorneys' fees through October 23, 1998 were
approximately $50,000 and that her expenses at that time were approximately
$5,000. Illini and the directors intend to vigorously contest and oppose the
allegations made by Ida R. Noll, and the parties are just beginning discovery in
the case.

     The Company adopted a Shareholder Rights Agreement on June 20, 1997 and
named Illinois Stock Transfer Company ("ISTC") as its rights agent thereunder.
The Company was notified in May, 1998 of a threatened complaint against ISTC by
an Illini shareholder. The shareholder, Mary K. Quinn, who owns 21 shares of
stock in Illini, filed suit against ISTC on June 9, 1998 in the Seventh Judicial
Circuit Court, Sangamon County, Illinois. Quinn seeks to compel ISTC to
distribute rights certificates to Illini's



                                       7
<PAGE>


shareholders and further seeks to certify all Illini shareholders as a class.
Ms. Quinn asserts that Ida R. Noll became an acquiring person under the Rights
Agreement on April 16, 1998, and that the Rights Agreement was triggered. ISTC
is being represented in the litigation by Howard & Howard, which vigorously
contests Quinn's assertions that Ida R. Noll is an acquiring person, that the
Rights Agreement has been triggered, and that ISTC has a duty to distribute
rights certificates.

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

ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders during the fourth
quarter of 1998.


PART II.
--------------------------------------------------------------------------------


ITEM 5. - MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The common stock of Illini is traded on the Nasdaq over the counter
bulletin board (OTCBB). The following table sets forth the high and low bid
prices by calendar quarter of the common stock of Illini as reported by Dean
Witter Reynolds, Inc. and A.G. Edwards & Sons, St. Louis, Missouri in 1998 and
1997. The prices shown do not reflect retail mark-ups, markdowns, or commissions
and may not represent actual transactions.





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

                                                                         CASH
                                                                    DIVIDENDS
  1998                          HIGH                LOW              DECLARED
  ---------------------------------------------------------------------------
<S>                         <C>                <C>                       <C> 
  1ST QUARTER               $ 28.50            $ 28.00                   $.25
  2ND QUARTER                 28.50              28.50                    .25
  3RD QUARTER                 28.75              28.50                    .25
  4TH QUARTER                 28.75              28.75                    .25

                                                                         Cash
                                                                    Dividends
  1997                          High                Low              Declared
  ---------------------------------------------------------------------------

  1st Quarter                $25.50             $25.50                   $.25
  2nd Quarter                 27.00              25.50                    .25
  3rd Quarter                 27.00              27.00                    .25
  4th Quarter                 28.00              27.00                    .25

</TABLE>


            As of December 31, 1998, there were 1,495 shareholders of record of
Illini common stock.

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



                                       8
<PAGE>


ITEM 6. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

-    INTRODUCTION

     The following discussion highlights the significant factors affecting the
operations and financial condition of Illini for the two years ended December
31, 1998. The discussion should be read in conjunction with the consolidated
financial statements, accompanying notes, and selected financial data appearing
elsewhere within this report.

     Illini cautions that any forward looking statements contained in this
report, in a report incorporated by reference to this report, or made by
management involve estimates and uncertainties and are subject to change based
upon various important factors. Actual results for 1999 and beyond could differ
materially from results expressed or implied by forward looking statements in
this report.

-    SUMMARY

     Management views 1998 as an investment in the future of Illini Corporation.
Short term profitability was sacrificed to stabilize the organization and
prepare Illini to compete in the ever changing financial environment. Net income
for 1998 was $630,000 or $1.40 per share. This represents 3.1% decrease from
1997's net income of $650,000. A complete reengineering of the Bank's operations
began in early 1998 and will continue throughout 1999. Management believes the
new operational design will allow for future growth and help in stabilizing our
overhead structure.

     The recent earnings decline has been primarily due to the intensive effort
to solidify the loan portfolio and reduce net charge-offs to an acceptable
level. Interest and fee income on loans declined slightly in 1998 due to a
falling rate environment and slow growth in the portfolio. A centralized credit
department was organized in late 1998 and management now feels we are positioned
to increase our loan volume in 1999 while maintaining an acceptable amount of
credit risk in the loan portfolio.

     The increase in operating expenses was primarily in three areas. Increased
occupancy and equipment expense relating to the opening of a new main banking
facility in December 1997, increased data processing costs, and a large increase
in fees paid to outside consultants and attorneys to assist management in
strategic planning and shareholder related activities. The Bank reduced
marketing expense by $230,000 in 1998. Management will initiate a more
aggressive marketing campaign in 1999 to promote new products and services.

     Non interest income rose significantly in 1998. The gain on the sale of
other real estate represented 71% of the increase. The additional increase was
associated with the refinancing of fixed rate mortgages. Management believes the
restructuring of our deposit pricing will help to increase fee income in 1999.

     Management will focus on maintaining improved credit quality, controlling
operating costs, and increasing the Bank's revenues through improved sales
efforts in 1998 and beyond. Management is committed to investing in our future
by developing our team of associates and implementing the necessary technology
to become a "customer first" organization. We believe we built a foundation in
1998 to prepare our organization for growth and leverage our position as a
locally owned community bank in the markets we serve.




                                       9
<PAGE>


     The following table details changes in Illini's net income per share over
the last two fiscal years.

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

                       CHANGE IN EARNINGS PER SHARE (EPS)
                                FOR 1998 AND 1997
<TABLE>
<CAPTION>

                                                  1998-97               1997-96
                                                  -------               -------
<S>                                                <C>                   <C>
    PER SHARE
    Net income prior period                       $ 1.45                $ 1.04
    Change in EPS attributable to change in:
        Net interest income                        (1.08)                (0.12)
        Provision for loan losses                   0.22                  1.85
        Noninterest income                          1.45                  0.08
        Noninterest expense                        (0.56)                (1.30)
        Income tax expense                         (0.08)                (0.10)
                                                --------              ---------

    Net increase (decrease)                        (0.05)                  .41
                                                --------              ---------

    Net income current period                   $   1.40                $ 1.45
                                                --------              ---------
                                                --------              ---------

</TABLE>


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

-    OVERVIEW-BALANCE SHEET REVIEW

     Average assets were $153.7 million in 1998, an increase of $7.0 million or
4.8% from 1997. Average loans were $84.0 million in 1998, a decline of $3.5
million or 4.0% from 1997. Management believes the decrease in loan volume is an
expected outcome from the reengineering of the Corporation. Efforts to
aggressively pursue new loan relationships will be the primary focus in 1999 in
both consumer and commercial loan services. Average deposits were $136.6 million
in 1998, an increase of $8.2 million or 6.4% from 1997. We believe this trend of
growth will continue as our product offerings become more sophisticated and the
level of merger and acquisition activity continues to rise.

-    SECURITIES

     Total securities as of December 31, 1998 were $53.3 million, an increase of
$6.5 million or 13.8% over the prior year-end. At December 31, 1998 and 1997,
the total securities portfolio comprised 33.1% and 30.2%, respectively, of total
assets.

     Illini's investment strategy is to maximize portfolio yields commensurate
with credit risk and liquidity considerations. The decision to purchase or sell
securities is based upon the current assessment of economic and financial
conditions, including the interest rate environment. Approximately $9.4 million
or 17.7% of the securities portfolio at December 31, 1998 matures or reprices
within one year. Scheduled maturities and the prepayment of mortgage-backed
securities represent a source of liquidity for the Bank as well as federal funds
sold, federal funds purchased lines, and lines of credit established at other
banks which are discussed further in the Liquidity section of this report.

     Mortgage-backed securities as of December 31, 1998 totaled $25.4 million
and represent 47.6% of total securities. The distribution of mortgage-backed
securities include $16.9 million of U.S. government agency mortgage-backed pass
through securities and $8.5 million of private issue collateral mortgage
obligations, all of which are rated AAA.

     At December 31, 1998, securities available for sale totaled $53.3 million.
There were no securities classified as held to maturity or trading at the end of
1998 or 1997. The securities available for sale portfolio at the end of 1998
included gross unrealized gains of $744,000 and gross unrealized losses of
$81,000, of which the combined effect, net of tax, is included as an unrealized
gain in stockholders' equity. For comparative purposes, at December 31, 1997,
gross unrealized gains of $339,000 and gross unrealized losses of $88,000 were
included in the securities available for sale portfolio. For further analysis of
the securities portfolio, see Note 2 in Item 7.



                                       10
<PAGE>


-    MATURITIES AND DURATION

     The maturities and weighted average yields of the investment portfolio at
the end of 1998 are presented in the following table. Maturities of private
mortgage-backed securities are based on their average expected lives and include
the effects of anticipated prepayments. All other securities are listed at their
actual maturity or contractual repricing interval. The amounts and yields
disclosed reflect the net carrying value, which is the same as fair value.
Taxable equivalent adjustments, using a 34% tax rate, have been made in
calculating yields on tax-exempt obligations.

     The securities portfolio at December 31, 1998 contained no securities of
any issuer with an aggregate book or market value in excess of 10% of Illini's
shareholders' equity, excluding those issued by the United States government, or
its agencies or corporations.














                                       11
<PAGE>


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

                       MATURITIES AND YIELD OF SECURITIES
<TABLE>
<CAPTION>
                                                                                  WEIGHTED AVERAGE
                                                                TOTAL         TAX EQUIVALENT YIELD
                                                                -----         --------------------
                                                                    (dollars in thousands)
<S>                                                             <C>          <C>
U.S. Treasury securities:
     0 to 1 year                                                      $ 1,263      5.89%
     1 to 5 years                                                       1,031      5.20
                                                                      -------      -----
     Total                                                            $ 2,294      5.58%
                                                                      -------      -----
                                                                      -------      -----

U.S. government agencies:

     1 to 5 years                                                     $11,761      6.24%
     5 to 10 years                                                      5,516      5.92
                                                                      -------      -----
     Total                                                            $17,277      6.14%
                                                                      -------      -----
                                                                      -------      -----

Mortgage-backed securities and
 Collateralized mortgage obligations:

     0 to 1 year                                                      $ 1,972      5.66%
     1 to 5 years                                                      11,649      6.29
     5 to 10 years                                                      5,103      6.34
     Over 10 years                                                      6,634      5.91
                                                                      -------      -----
     Total                                                            $25,358      6.15%
                                                                      -------      -----
                                                                      -------      -----

States of the U.S. and political subdivisions:

     0 to 1 year                                                      $   965      7.22%
     1 to 5 years                                                         878      7.22
     5 to 10 years                                                      3,366      7.32
     Over 10 years                                                      2,685      7.64
                                                                      -------      -----
     Total                                                            $ 7,894      7.40%
                                                                      -------      -----
                                                                      -------      -----

FHLB stock and other
  equity securities, no stated maturity                               $   453          --

Total securities:

     0 to 1 year                                                      $ 4,200      6.09%
     1 to 5 years                                                      25,319      6.25
     5 to 10 years                                                     13,985      6.41
     Over 10 years                                                      9,319      6.40
     No stated maturity                                                   453
                                                                      -------      -----
     Total                                                            $53,276      6.31%
                                                                      -------      -----
                                                                      -------      -----

</TABLE>


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

-    LOANS

     Illini's loan portfolio consists of a diverse variety of loan types within
the following major categories: commercial real estate, residential real estate,
consumer, commercial, and agricultural loans.

     Average total loans declined $3.5 million from $87.5 million in 1997 to
$84.0 million in 1998. Contraction in the loan portfolio resulted primarily from
management's priority on evaluating and managing credit risk in existing loan
relationships over new business development.

     The largest contraction was in commercial loans for which the average
balance declined $4.4 million to $10.7 million in 1998. Consumer loans declined
$3.6 million to $10.8 million and residential real estate loans declined $3.8
million to $20.8 million. Commercial real estate loans increased $6.4 million to
$31.0



                                       12
<PAGE>


million and agricultural loans increased $1.6 million to $7.4 million.
Agricultural real estate loans at $2.7 million remained relatively stable in
1998.

     All of Illini's loans are domestic. Illini does not currently engage in
foreign loans, lease financing, or loans to financial institutions.
Additionally, Illini does not have any concentration of loans exceeding 10% of
total loans, which are not otherwise disclosed under "types of loans."

     Each major type of loan will normally have different risk elements. Real
estate loans and installment loans to individuals can be affected by the general
strength of the economy in a given geographical area. A wide range of economic
and other factors can impact the businesses to which commercial loans are
extended. Such things as drought, floods, U.S. and foreign market prices, and
federal government subsidies and programs can affect agricultural loans.
Illini's susceptibility to these risk elements has decreased as prior
deficiencies in overall loan portfolio management and credit risk management
systems and controls have been corrected.

-    TYPES OF LOANS

     A summary of loans by type as of December 31, 1998 and 1997 is set forth in
Note 3 in Item 7.

-    MATURITIES AND INTEREST RATE SENSITIVITY OF LOANS

     $27.5 million or 31.5% of the Bank's loan portfolio reprices within one
year. $82.4 million or 94.6% of the portfolio reprices within five years. The
relatively short duration of the loan portfolio requires diligence on the part
of management to replace and/or renew maturing loans more frequently. However,
it benefits the Bank by decreasing its susceptibility to rising interest rates
and by allowing management more frequent opportunities to reassess and adjust
loan agreements with borrowers and to exit deteriorating loan relationships.
62.1% of commercial, financial, and agricultural loans mature within one year.

LOANS

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

                                                                                   MATURITY
                                                         ------------------------------------------------------
                                                         ONE YEAR         ONE TO           AFTER
                                                          OR LESS       FIVE YEARS       FIVE YEARS       TOTAL
                                                         --------       ----------       ----------       -----
                                                                             (dollars in thousands)

<S>                                                    <C>               <C>             <C>            <C>
Commercial, financial, and agricultural                $  12,756         $  6,508        $   1,289      $  20,553
Real estate construction                                   5,486            1,024              594          7,104
                                                        --------          -------         --------       --------

                                                       $  18,242         $  7,532        $   1,883      $  27,657
                                                        --------          -------         --------       --------
                                                        --------          -------         --------       --------

</TABLE>


<TABLE>
<CAPTION>

                                                                             INTEREST SENSITIVITY
                                                        ---------------------------------------------------------
                                                           FIXED                FLOATING OR
                                                         INTEREST               ADJUSTABLE
                                                           RATES              INTEREST RATES            TOTAL
                                                         --------             --------------            -----
                                                                          (dollars in thousands)
<S>                                                       <C>                    <C>                 <C>
Loans due after one but within five years                 $  5,938               $  1,594            $   7,532
Loans due after five years                                     643                  1,240                1,883
                                                           -------                -------             --------

                                                          $  6,581               $  2,834            $   9,415
                                                           -------                -------             --------
                                                           -------                -------             --------

</TABLE>


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



                                       13
<PAGE>


DEPOSITS

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

                                                                      AVERAGE BALANCES OF DEPOSITS AND
                                                                                COST OF FUNDS
                                                          -------------------------------------------------------
                                                                   1998                               1997
                                                                  AVERAGE                            AVERAGE
                                                          ------------------------            -------------------
                                                          BALANCE             RATE            BALANCE        RATE
                                                          -------             ----            -------        ----
                                                                              (dollars in thousands)
<S>                                                    <C>                   <C>             <C>             <C>
Noninterest bearing demand deposits                    $   21,103            ---             $ 20,246        ---
NOW and money market deposit accounts                      35,319            3.61 %            27,311        2.92 %
Savings deposits                                           17,474            2.41              18,287        2.47
Time deposits                                              62,676            5.53              62,533        5.46
                                                       ----------            ------          --------        ------

                                                       $  136,572            3.78 %          $128,377        3.63 %
                                                       ----------            ------          --------        ------
                                                       ----------            ------          --------        ------

</TABLE>


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

                                                             MATURITY OF TIME DEPOSITS GREATER THAN $100,000
                                                                           AT DECEMBER 31, 1998
                                                       ------------------------------------------------------
                                                           TIME                   OTHER
                                                       CERTIFICATES                TIME
                                                        OF DEPOSIT               DEPOSITS               TOTAL
                                                       ------------              --------               -----
                                                                          (dollars in thousands)
<S>                                                       <C>                    <C>                 <C>
Three months or less                                      $  6,085               $    ----           $   6,085
Three to six months                                          1,246                    ----               1,246
Six to twelve months                                         3,089                   2,400               5,489
Over twelve months                                           2,244                    ----               2,244
                                                           -------                --------            --------
                                                          $ 12,664               $  2,400            $  15,064
                                                           -------                --------            --------
                                                           -------                --------            --------

</TABLE>


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

     Average deposits increased $8.2 million or 6.4% to $136.6 million in 1998.
Due to the reduction in deposits required to fund loan growth, management was
able to hold deposit rates steady. The Bank's overall cost of funds related to
deposits increased 15 basis points to 3.78% in 1998. Noninterest bearing
accounts increased $1.1 million to $26.2 million, NOW and Money Market accounts
were up $8.3 million to $38.9 million, and Time Deposits decreased $3.3 million
to $60.8 million in 1998. Total deposits increased $5.4 million or 3.9% to
$143.0 million in 1998.


-    LIQUIDITY

     Liquidity represents the availability of funding to meet obligations to
depositors, borrowers, and creditors at a reasonable cost without adverse
consequences. Accordingly, the liquidity position is influenced by the funding
base and asset mix.

     Illini requires adequate liquidity to pay its expenses and pay stockholder
dividends. Liquidity is provided to Illini from the Bank in the form of
dividends. In 1998, dividends from the Bank amounted to $0.7 million compared to
$0.9 million in 1997. The Bank's liquidity is provided by bank cash balances,
liquidation of short-term investments, loan payments, an overnight federal funds
line of credit, and borrowings on a line of credit available with the Federal
Home Loan Bank of Chicago. While the Bank is limited in the amount of dividends
it pays, as of December 31, 1998, approximately $0.2 million was available for
payment to Illini in the form of dividends without prior regulatory approval.

     Cash and cash equivalents which includes federal funds remained relatively
unchanged from December



                                       14
<PAGE>


31, 1997 to December 31, 1998.

     The asset portion of the balance sheet provides liquidity primarily through
loan principal repayments, maturities of investment securities, and sales of
investment securities available for sale.

     The liability portion of the balance sheet provides liquidity through
federal funds purchased, securities sold under agreements to repurchase, and
other short-term borrowings. As of December 31, 1998 Illini has established an
overnight federal funds line of credit with an unaffiliated financial
institution in the amount of $3.5 million, with the entire amount available for
borrowing. The Bank is also a member of the Federal Home Loan Bank of Chicago
and has established a line of credit of approximately $4.0 million as of
December 31, 1998, with the entire amount available for additional borrowings.
The various sources of liquidity available to the Bank provide ample long-term
as well as short-term funding alternatives.

-    INTEREST RATE SENSITIVITY

     In conjunction with maintaining a satisfactory level of liquidity,
management monitors the degree of interest rate risk assumed on the balance
sheet. Illini monitors its interest rate risk by the use of static and dynamic
gap models at the one-year interval. The static gap model monitors the
difference in interest rate sensitive assets and interest rate sensitive
liabilities that mature within the specified time frame as a percentage of total
interest earning assets. The dynamic gap model goes further in that it assumes
that interest rate sensitive assets and liabilities will be reinvested. Illini
uses a computerized model to monitor its interest rate risk.

     The Bank's static interest rate gap position as of December 31, 1998 is
presented below.

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

                                                                 INTEREST RATE SENSITIVITY ANALYSIS
                                               ----------------------------------------------------------------
                                                   UP TO 3         4 TO       TOTAL         OVER
                                                   MONTHS      12 MONTHS      1 YEAR        1 YEAR        TOTAL
                                                   -------     ---------      ------        ------        -----
                                                                        (dollars in thousands)
<S>                                            <C>               <C>           <C>         <C>           <C>
Interest-earning assets:
     Loans                                     $    16,846       10,629        27,475      59,699        87,174
     Debt and marketable equity securities           4,151        5,286         9,437      43,839        53,276
     Federal funds sold                              6,675          ---         6,675         ---         6,675
                                               -----------     --------      --------   ---------      --------
            Total interest-earning assets      $    27,672       15,915        43,587     103,538       147,125
Interest-bearing liabilities:
     Savings, NOW, and money market            $    27,990          ---        27,990      27,989        55,979
     Time deposits                                  18,355       29,826        48,181      12,609        60,790
     Federal funds purchased and securities
        sold under agreements to repurchase            290          ---           290         ---           290
                                               -----------     --------      --------   ---------      --------
            Total interest-bearing liabilities $    46,635       29,826        76,461      40,598       117,059

Gap by period                                  $  (18,963)     (13,911)      (32,874)      62,940        30,066

Cumulative gap                                 $  (18,963)     (32,874)      (32,874)      30,066        30,066

Cumulative gap as a percent of earning assets      -12.88%      -22.33%       -22.33%      20.44%        20.44%


</TABLE>


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

     In June of 1998, Illini engaged consultants to assist in Asset/Liability
management efforts. Management believes that periodic reviews will enable Illini
to proactively react to financial conditions in our market place. An ALM policy
is currently being reviewed for implementation and will assist management in
maximizing our yields while accepting appropriate risk levels. There can be no
assurance, however, that such steps will have the desired result.



                                       15
<PAGE>


-    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Derivative financial instruments include futures, forwards, interest rate
swaps, option contracts, and other financial instruments with similar
characteristics. The Bank currently does not enter into futures, forwards,
swaps, or options. However, the Bank is party to financial instruments with
off-balance sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments include commitments to
extend credit and standby letters of credit. These instruments involve to
varying degrees, elements of credit and interest rate risk in excess of the
amount recognized in the consolidated balance sheets. Commitments to extend
credit are agreements to lend to a customer as long as there is no violation of
any condition established in the contract. Commitments generally have fixed
expiration dates and require collateral from the borrower if deemed necessary by
the Bank. Standby letters of credit are conditional commitments issued by the
Bank to guarantee the performance of a customer to a third party up to a
stipulated amount and within specified terms and conditions.

     Commitments to extend credit and standby letters of credit are not recorded
as an asset or liability by the Bank until and unless the instrument is
exercised.

     The Bank's exposure to market risk is reviewed by the Asset/Liability
Committee. Interest rate risk is the potential of economic losses due to future
interest rate changes. These economic losses can be reflected as a loss of
future net interest income and/or a loss of current fair market values. The
objective is to measure the effect on net interest income and to adjust the
balance sheet to minimize the inherent risk while at the same time maximize
income. Management realizes certain risks are inherent, such as the uncertainty
of market interest rates, and that its goal is to identify and minimize the
risks. The primary tool management uses to monitor and manage interest rate risk
is a static gap report. The Bank has no market risk sensitive instruments held
for trading purposes.



                                       16
<PAGE>



The condensed gap report summarizing the Bank's interest rate sensitivity is as
follows:


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

                                                                 MARKET RISK SENSITIVE INSTRUMENTS
                                            --------------------------------------------------------------------
                                                            OVER 1         OVER 3
                                                         YEAR THROUGH   YEARS THROUGH      OVER
                                            1 YEAR        3 YEARS         5 YEARS        5 YEARS           TOTAL
                                            ------        -------         -------        -------           -----
                                                                    (dollars in thousands)
<S>                                      <C>                <C>            <C>            <C>             <C>
Assets:
   Debt and marketable equity securities $      9,437       7,168          11,010         25,661          53,276
   Loans                                       27,475      41,664          13,306          4,729          87,174
   Federal funds sold                           6,675         ---             ---            ---           6,675
                                           ----------  ----------      ----------     ----------     -----------

                                         $     43,587      48,832          24,316         30,390         147,125
                                           ----------  ----------      ----------     ----------     -----------
                                           ----------  ----------      ----------     ----------     -----------

Liabilities:
   Savings, NOW and money market (1)     $     27,990      27,989             ---            ---          55,979
   Time deposits                               48,181      12,373             236            ---          60,790
   Federal funds purchased and securities
      sold under agreements to repurchase         290         ---             ---            ---             290
                                           ----------  ----------      ----------     ----------     -----------

                                         $     76,461      40,362             236            ---         117,059
                                           ----------  ----------      ----------     ----------     -----------
                                           ----------  ----------      ----------     ----------     -----------


</TABLE>


<TABLE>
<CAPTION>

                                                                           AVERAGE
                                                            TOTAL       INTEREST RATE        FAIR VALUE
                                                            -----       -------------        ----------
<S>                                                 <C>                 <C>                  <C>
Assets:
   Debt and marketable equity securities (2)        $      53,276            6.28 %          $   53,276
   Loans (2)                                               87,174            9.24                85,921
   Federal funds sold                                       6,675            5.08                 6,675

Liabilities:
   Savings, NOW and money market                    $      55,979            3.21 %          $   55,979
   Time deposits                                           60,790            5.53                61,197
   Federal funds purchased and securities
      sold under agreements to repurchase                     290            5.38                   290

</TABLE>


(1) Management's experience with interest bearing checking accounts, money
    market and savings deposits has been that, although these deposits are
    subject to immediate withdrawal or repricing, a portion of the balances has
    remained relatively constant in periods of both rising and falling rates.
    Therefore, a portion of these deposits is included in the over 1 year
    through 3 years.

(2) Interest rates are presented on a fully taxable equivalent basis.

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


-    CAPITAL RESOURCES

     Total shareholders' equity increased from $15.0 million at December 31,
1997 to $15.4 million at December 31, 1998. The primary source of capital of
Illini is retained earnings. Cash dividends per share were $1.00 for 1998 and
$1.00 for 1997. Illini retained 28.9% of its earnings for 1998 and 31.1% for
1997.

     Regulatory guidelines require bank holding companies, commercial banks, and
thrifts to maintain certain minimum ratios and define companies as "well
capitalized" that sufficiently exceed the minimum ratios. The banking regulators
may alter minimum capital requirements as a result of revising their internal
policies and their ratings of individual institutions. To be "well capitalized,"
banks must maintain a Tier 1 leverage ratio of no less than 5.0%, a Tier 1 risk
based ratio of no less than 6.0%, and a total risk based ratio of no less than
10.0%. The Bank's ratios as of December 31, 1998 were 9.35%, 14.19%, and 15.52%,
respectively, which meet the criteria for "well capitalized." The Corporation's
ratios as of December 31,



                                       17
<PAGE>


1998 were 9.57%, 14.53%, and 15.87%, respectively.

     As of December 31, 1998, management is not aware of any current
recommendations by banking regulatory authorities which, if they were to be
implemented, would have, or are reasonably likely to have, a material adverse
impact on the Corporation's liquidity, capital resources, or operations.

RESULTS OF OPERATIONS

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

                                                                            KEY RATIOS
                                                                 FOR THE YEARS ENDED DECEMBER 31,

                                              1998           1997            1996           1995            1994
                                              ----           ----            ----           ----            ----
<S>                                           <C>            <C>             <C>            <C>             <C> 
Return on average assets                      0.41  %        0.44   %        0.31  %        0.89  %         0.86   %
Return on average equity                      4.19           4.44            3.25          10.08           10.77
Dividend payout ratio                        71.15          69.00           91.17          29.29           26.23
Average equity to assets ratio                9.77           9.98            9.58           8.87            7.94

</TABLE>


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

-    NET INTEREST INCOME

     Net interest income is the principal component of Illini's net income
stream and represents the difference between interest and fee income generated
from earning assets and interest expense paid on deposits and borrowed funds.
Fluctuations in interest rates as well as volume and mix changes in earning
assets and interest bearing liabilities can materially impact net interest
income. The discussion of net interest income is presented on a taxable
equivalent basis to facilitate performance comparisons among various taxable and
tax-exempt assets.

     Interest income decreased marginally and interest expense increased $0.4
million from 1997 to 1998, resulting in a decline in net interest income.
Constricting interest margins plagued the banking community as a whole and
Illini was no exception. Our net interest margin fell from a three year high of
4.96% in 1997 to 4.34% in 1998. The decline in interest income was primarily the
result of a decrease of $3.5 million in average loans from 1997 to 1998. The
average yield earned on loans also decreased 18 basis points over the same
period. The slow loan growth resulted in a $5.9 million increase in our total
securities average balance. The securities portfolio has an average yield of
6.28% while our loan portfolio has an average yield of 9.24%. Management plans
to maintain our existing level of securities and utilize our funding sources to
fuel future loan growth.

         The $0.4 million increase in interest expense was primarily the result
of a significant growth in the NOW and money market accounts. Our average
interest bearing liabilities grew $5.5 million while experiencing only a 13
basis point increase to our cost of funds. Management believes our demonstrated
ability to raise low cost funds together with our redesigned lending environment
will provide an excellent opportunity to increase net interest income
performance in 1999.




                                       18
<PAGE>


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

NET INTEREST INCOME - RATE/VOLUME VARIANCE ANALYSIS

<TABLE>
<CAPTION>

                                                   1998-97                                  1997-96
                                  -----------------------------------------   --------------------------------------
                                    Changes in          Volume        Rate      Changes in        Volume       Rate
                                  Income/expense        Effect       Effect   Income/expense      Effect      Effect
                                  --------------        ------       ------   --------------      ------      ------
                                                                   (dollars in thousands)
<S>                                  <C>           <C>           <C>            <C>           <C>         <C>
Short-term investments               $   175       $     191     $    (16)      $   126       $    132    $    (6)
Investment securities:
    Taxable                              376             625         (249)          454            306        148
    Nontaxable                          (252)           (259)           7          (171)          (208)        37
Loans                                   (479)           (341)        (138)         (652)          (779)       127
                                     --------       ---------      -------       -------       ---------    -------
    Total interest income               (180)            216         (396)         (243)          (549)       306
                                     --------       ---------      -------       -------       ---------    -------

Savings and NOW accounts                 446             214          232            22            (48)        70
Time deposits                             54               6           48          (167)          (111)       (56)
Short-term borrowings                   (108)           (107)          (1)          (14)           (15)         1
Long-term borrowings                       0               0            0             0              0          0
                                     --------       ---------      -------       -------       ---------    -------
    Total interest expense               392             113          279          (159)          (174)        15
                                     --------       ---------      -------       -------       ---------    -------

    Net interest income              $  (572)       $    103     $  (675)       $   (84)       $  (375)    $  291
                                     --------       ---------      -------       -------       ---------    -------
                                     --------       ---------      -------       -------       ---------    -------

</TABLE>


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

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



                                       19
<PAGE>


CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND YIELD/RATES
<TABLE>
<CAPTION>

                                                                 Year ended December 31,
                                     ---------------------------------------------------------------------------------
                                                       1998                                    1997
                                     ------------------------------------------  -------------------------------------
                                                 PERCENT    INTEREST    AVERAGE            Percent  Interest   Average
                                     AVERAGE    OF TOTAL     INCOME/    YIELD/   Average  of Total   Income/    Yield/
                                     BALANCE     ASSETS      EXPENSE     RATE    Balance   Assets    Expense    Rate
                                     -------    --------    --------    -------  -------  --------  --------   -------
                                                                     (dollars in thousands)
<S>                                  <C>        <C>         <C>         <C>      <C>      <C>       <C>         <C>
ASSETS
Interest-earning assets:
   Short-term investments        $   6,662         4.3%  $     338      5.08% $   3,067       2.1% $     163       5.32%
     Investment securities (3)
       Taxable                      41,563        27.1       2,514      6.05     32,161      21.9      2,138       6.65
       Tax-exempt (1)                7,873         5.1         591      7.51     11,357       7.8        843       7.43
         Total securities           49,436        32.2       3,105      6.28     43,518      29.7      2,981       6.85
     Loans
       Commercial (1)               10,668         6.9         990      9.28     15,089      10.3      1,466       9.72
       Agriculture                   7,363         4.8         664      9.02      5,716       3.9        526       9.20
       Real estate
         Commercial                 30,959        20.2       2,803      9.05     24,554      16.7      2,251       9.17
         Agriculture                 2,718         1.8         245      9.02      2,370       1.6        217       9.14
         Residential                20,846        13.6       1,888      9.06     24,680      16.8      2,267       9.19
       Consumer, net                10,797         7.0       1,060      9.82     14,439       9.9      1,404       9.73
       Credit card                     630         0.4         108     17.13        637       0.4        106      16.60
                                    ------                   -----               ------                -----
         Total loans                83,981        54.7       7,758      9.24     87,485      59.6      8,237       9.42
   Allowance for loan losses        (1,331)       (0.9)                          (1,246)     (0.8)
                                    ------                   -----               ------
   Net loans (1) (2)                82,650        53.8       7,758      9.39     86,239      58.8      8,237       9.55
                                    ------        ----       -----      ----     ------      ----      -----
         Total interest
            earning assets         138,748        90.3      11,201      8.07    132,824      90.6     11,381       8.57
                                   -------                  ------              -------               ------
   Cash and due from banks           4,224         2.8                            4,570      3.1
   Premises and equipment            7,695         5.0                            6,512      4.4
   Other real estate owned             654         0.4                              583      0.4
   Other assets (3)                  2,356         1.5                            2,183      1.5

         TOTAL ASSETS            $ 153,677       100.0%                       $ 146,672    100.0%
                                 ---------       ------                       ---------    ------
                                 ---------       ------                       ---------    ------

LIABILITIES
   Deposits:
     Non interest bearing
       deposits                   $ 21,103        13.7%                       $  20,246     13.8%
     Interest bearing demand        35,319        23.0    $  1,274       3.61%   27,311     18.6      $  798       2.92 %
     Savings                        17,474        11.4         421       2.41    18,287     12.5         451       2.47
     Time deposits less than 
       $100,000                     46,753        30.4       2,584       5.53    46,206     31.5       2,479       5.36
                                   -------                   -----              -------                -----
     Total core deposits           120,649        78.5       4,279       3.55   112,050     76.4       3,728       3.33
     Time deposits $100,000 and
       over                         15,923        10.4         885       5.56    16,327     11.1         936       5.74
                                   -------                   -----              -------                -----
       Total deposits              136,572        88.9       5,164       3.78   128,377     87.5       4,664       3.63
   Short-term borrowings               292         0.2          16       5.38     2,103      1.4         124       5.89
                                                             -----                                     -----
   Total interest bearing
     liabilities                   115,761        75.4       5,180       4.47   110,234     75.1       4,788       4.34
                                                             -----                                     -----
Other liabilities                    1,792         1.1                            1,556      1.1
                                  --------       ------                        --------    -----
   Total liabilities               138,656        90.2                          132,036     90.0
Shareholders' Equity                15,021         9.8                           14,636     10.0
                                  --------       ------                        --------    -----
   TOTAL LIABILITIES AND
   SHAREHOLDERS' EQUITY           $153,677       100.0%                        $146,672    100.0%
                                  --------       ------                        --------    ------
                                  --------       ------                        --------    ------
NET INTEREST MARGIN                                       $  6,021       4.34%                        $6,593       4.96%
                                                          --------       -----                        ------       ----
                                                          --------       -----                        ------       ----

</TABLE>


(1)    Income amounts are presented on a fully taxable equivalent basis (FTE),
       which is defined as income on earning assets that is subject to either a
       reduced rate or zero rate of income tax, adjusted to give effect to the
       appropriate incremental federal income tax rate and adjusted for
       non-deductible carrying costs, where applicable. Where appropriate, yield
       calculations include these adjustments. The federal statutory rate was
       34% for all years presented.

(2)    Nonaccrual loans are included in the loan balances. Interest income
       includes related fee income of $246,000 in 1998 and $242,000 in 1997.

(3)    Average securities balances are based on amortized historical cost,
       excluding SFAS 115 adjustments to fair value, which are included in other
       assets.




                                       20
<PAGE>


CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND YIELD/RATES
<TABLE>
<CAPTION>

                                                               Year ended December 31,
                                           -------------------------------------------------------------
                                                                        1996
                                           -------------------------------------------------------------
                                                               Percent            Interest       Average
                                           Average            of Total             Income/        Yield/
                                           Balance              Assets             Expense          Rate
                                           -------            --------            --------       -------
                                                               (dollars in thousands)
<S>                                        <C>             <C>                 <C>            <C>
ASSETS
Interest-earning assets:
   Short-term investments               $     679                 0.5  %        $      37          5.52  %
     Investment securities (3)
       Taxable                             27,217                18.2               1,684          6.19
       Tax-exempt (1)                      14,282                 9.6               1,014          7.10
                                        ---------          ----------           ----------    ---------
         Total securities                  41,499                27.8               2,698          6.50
     Loans
       Commercial (1)                      13,885                 9.3               1,224          8.81
       Agriculture                          5,510                 3.7                 465          8.45
       Real estate
         Commercial                        28,586                19.2               2,650          9.27
         Agriculture                        2,567                 1.7                 235          9.14
         Residential                       26,877                18.0               2,503          9.31
       Consumer, net                       17,792                11.9               1,717          9.65
       Credit card                            634                 0.4                  95         15.00
                                        ---------                               ---------
         Total loans                       95,851                64.2               8,889          9.27
   Allowance for loan losses               (1,162)               (0.8)                    
                                        ----------                              ----------
   Net loans (1) (2)                       94,689                63.4               8,889          9.39
                                        ---------                               ---------
       Total interest earning assets      136,867                91.7              11,624          8.49
                                                                                ---------
   Cash and due from banks                  4,856                 3.2
   Premises and equipment                   4,983                 3.3
   Other real estate owned                    573                 0.4
   Other assets (3)                         2,151                 1.4 
                                        ----------         -----------
       TOTAL ASSETS                     $ 149,430               100.0  %
                                        ----------         -----------
                                        ----------         -----------
 LIABILITIES
   Deposits:
     Non interest bearing deposits      $  18,965                12.7  %
     Interest bearing demand               27,678                18.5           $     734          2.65 %
     Savings                               19,802                13.3                 493          2.49
     Time deposits less than $100,000      48,919                32.7               2,700          5.52
                                        ---------                               ---------
     Total core deposits                  115,364                77.2               3,927          3.40
     Time deposits $100,000 and over       15,628                10.5                 882          5.65
                                        ---------                               ----------
       Total deposits                     130,992                87.7               4,809          3.67
   Short-term borrowings                    2,454                 1.6                 138          5.61
                                                                                ----------
   Total interest bearing liabilities     114,481                76.6               4,947          4.32
                                                                                ----------
Other liabilities                           1,664                 1.1
                                        ---------          ----------
     Total liabilities                    135,110                90.4
Shareholders' Equity                       14,320                 9.6
                                        ---------          ----------
   TOTAL LIABILITIES AND
     SHAREHOLDERS' EQUITY               $ 149,430               100.0  %
                                        ----------         -----------
                                        ----------         -----------
NET INTEREST MARGIN                                                             $   6,677          4.88   %
                                                                                ---------     ---------
                                                                                ---------     ---------

</TABLE>


(1)  Income amounts are presented on a fully taxable equivalent basis (FTE),
     which is defined as income on earning assets that is subject to either a
     reduced rate or zero rate of income tax, adjusted to give effect to the
     appropriate incremental federal income tax rate and adjusted for
     non-deductible carrying costs, where applicable. Where appropriate, yield
     calculations include these adjustments. The federal statutory rate was 34%
     for all years presented.

(2)  Nonaccrual loans are included in the loan balances. Interest income
     includes related fee income of $244,000 in 1996.

(3)  Average securities balances are based on amortized historical cost,
     excluding SFAS 115 adjustments to fair value, which are included in other
     assets.



                                       21
<PAGE>


-    PROVISION FOR LOAN LOSSES, NET CHARGE-OFFS AND ALLOWANCE FOR LOAN LOSSES

     The provision for loan losses charged to earnings was $0.2 million for
1998, a decrease of $0.1 million or 32.0% from the $0.3 million in 1997. During
1996, the provision for loan losses was $1.1 million. The ratio of net
charge-offs to average loans outstanding has improved from 1.17% to 0.29% to
0.16% for the years ended December 31, 1996, 1997 and 1998, respectively.
Provision expense decreased in 1998. While nonaccrual loans increased to
$1,029,000 at December 31, 1998 compared to $636,000 at December 31, 1997, net
loan losses and other asset quality indicators reflected continued improvement
in the overall quality of the loan portfolio. The large provision expense in
1996 had a significant effect on Illini's net income. Management detected
deficiencies in asset quality and credit processes in late 1995 and took steps
to improve asset quality. Initiatives including a new loan policy,
centralization of commercial loan underwriting, and a more proactive approach to
identifying and resolving problem loans were undertaken in late 1996 and have
resulted in improved loan loss experience and lower provision expense.

     The management of Illini considers a number of factors in determining the
amount of the allowance for loan losses. These factors include, but are not
limited to, the following:

-    Historical data and trends relating to net charge-offs, average loans, and
     the level of the allowance for loan losses;
-    Other historical data and trends, including the allowance as a percentage
     of total loans outstanding and loan volume;
-    Borrowers identified on the Bank's watch list, borrowers with significant
     credit exposure, and loans that are past due or on nonaccrual status;
-    The capability of management's credit risk management processes to
     successfully underwrite credit and identify and resolve problem loans on an
     ongoing basis;
-    Results of continuing reviews of individual higher risk loans by management
     personnel; and
-    Consideration as to the impact of present economic conditions on the loan
     portfolio.

     The allowance for loan losses as a percent of total loans increased from
1.51% at December 31, 1997 to 1.57% at December 31, 1998. The allowance as a
percent of nonperforming loans decreased from 204.72% at December 31, 1997 to
132.95% at December 31, 1998 due to an increase in nonperforming loans. This
percentage has been adversely affected by several individual loans that have
large balances that have been in nonaccrual status since June 1998, and are in a
collection status. The overall quality of loans has still improved overall.
After full consideration of these factors, with particular emphasis on review of
potential problem loans identified by management, Illini's management concluded
the allowance for loan losses was adequate as of December 31, 1998.





                                       22
<PAGE>


-    SUMMARY OF LOAN LOSS EXPERIENCE

     The following summary presents the changes in the allowance for loan losses
for the years ended December 31, 1998, 1997, and 1996:

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

                                                           1998                   1997                    1996    
                                                      ------------           -------------          --------------
                                                                         (dollars in thousands)
<S>                                                   <C>                     <C>                    <C>
Average loans outstanding                             $     83,981            $     87,485           $      95,851
                                                      ------------            ------------           -------------
                                                      ------------            ------------           -------------
Allowance for loan losses:
   Balance at beginning of year                       $      1,302            $      1,258           $       1,247
                                                      ------------            ------------           -------------
   Loans charged-off:
     Commercial, financial, and agricultural                  (54)                    (48)                   (736)
     Real estate                                               (9)                   (136)                   (163)
     Consumer                                                (152)                   (180)                   (290)
                                                      ------------           -------------          --------------
       Total                                                 (215)                   (364)                 (1,189)
   Recoveries of loans previously charged-off:
       Commercial, financial, and agricultural                 13                      61                      37
       Real estate                                             31                       8                      11
       Consumer                                                33                      39                      22 
                                                      ------------           -------------           -------------
         Total                                                 77                     108                      70 
                                                      -----------            ------------           --------------
   Net charge-offs                                           (138)                   (256)                 (1,119)
                                                      ------------           -------------          --------------
   Provision charged to expense                               204                     300                   1,130 
                                                      -----------            ------------           --------------
   Balance at end of year                            $      1,368            $      1,302           $       1,258 
                                                      -----------            ------------           --------------
                                                      -----------            ------------           --------------

Ratio of net charge-offs to average loans
   outstanding during the period                             0.16   %                0.29    %               1.17   %
                                                      -----------            ------------           --------------
                                                      -----------            ------------           --------------

</TABLE>


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

     In 1998, as illustrated in the preceding chart, loan losses decreased
significantly in all areas except commercial, financial, and agricultural, which
has a slight increase. Real estate loans ended the year with net recoveries.
This decrease reflects improvement in the overall quality of the loan portfolio
resulting from decisive action Illini's management has taken to improve credit
quality over the last two years.

     Efforts continue to maintain this improved quality, and to enhance credit
quality processes and controls. 

-    ALLOWANCE ALLOCATION

     The risk of losses inherent in the loan portfolio is not precisely
attributable to a particular loan or category of loans. However, based on its
review for adequacy, management has estimated those portions of the allowance
that could be attributable to major categories of loans as follows:









                                       23
<PAGE>

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

                                                           1998                                   1997

                                                                % OF TOTAL                           % of Total
                                                                LOANS, NET                           Loans, net
                                              AMOUNT              OF UED              Amount            of UED  
                                            ----------          ---------           ----------       -----------
                                                                     (dollars in thousands)
<S>                                         <C>                    <C>              <C>               <C>
Commercial, financial, and agriculture      $      430             23.58   %        $      124          19.20   %
Real estate                                        203             65.32                   323          65.94
Consumer                                           346             11.10                   421          14.86
Unallocated                                        389            ------                   434         ------
                                            ----------            ------               -------         ------

   Total allowance for loan losses          $    1,368            100.00   %           $ 1,302         100.00   %
                                            ----------            ------               -------         ------    
                                            ----------            ------               -------         ------    

</TABLE>


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

     These allocation estimates do not specifically represent that loan
charge-offs of that magnitude will be incurred, nor do these allocations
restrict future loan losses attributable to a particular category from being
absorbed by the allowance attributable to other categories or the unallocated
portion of the allowance. The risk factors considered when estimating the
allocations for major loan categories are the same as the factors considered
when determining the adequacy of the overall allowance as specified in the
allowance summary.

     The large increase in the commercial, financial, and agriculture category
is a result of several agricultural loans downgraded during the quarter. The
decrease in the real estate category is due mainly to improved real estate loan
performance during the last two years.

-    NONPERFORMING ASSETS

     Nonperforming assets consist of nonaccrual loans, loans with restructured
terms and other real estate owned. Loans are generally classified as nonaccrual
when there are reasonable doubts as to the collectibility of principal and
interest or when payment becomes 90 days past due, except loans which are well
secured and in the process of collection. Interest collection on nonaccrual
loans for which the ultimate collectibility of principal is uncertain is applied
as principal reduction. Otherwise, such collections are applied to interest when
received. The following table presents information concerning the aggregate
amount of nonperforming assets and loans 90 days or more past due but still
accruing interest.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                   December 31,
                                                                   1998                                 1997   
                                                              -------------                        ------------
                                                                              (dollars in thousands)
<S>                                                           <C>                                  <C>
Nonaccrual                                                    $      1,029                         $       636
Renegotiated                                                             0                                   0
Other real estate owned                                                366                                 551
                                                              -------------                        -----------

   Nonperforming assets                                       $      1,395                         $     1,187
                                                              -------------                        -----------
                                                              -------------                        -----------
Accruing loans past due 90 days                               $          0                         $         0
                                                              -------------                        -----------
                                                              -------------                        -----------
Nonperforming loans to total loans                                     1.18 %                             0.74 %
                                                              -------------                        -----------
                                                              -------------                        -----------
Nonperforming assets to total assets                                   0.87 %                             0.77 %
                                                              -------------                        -----------
                                                              -------------                        -----------
Accruing loans past due 90 days to total loans                         0.00 %                             0.00 %
                                                              -------------                        -----------
                                                              -------------                        -----------

</TABLE>


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

     Nonperforming assets totaled $1,395,000 as of year-end 1998, an increase of
$208,000 or 17.5% from the $1,187,000 at year-end 1997. Total nonperforming
assets represent 0.87% of total assets at December



                                       24
<PAGE>


31, 1998, compared to 0.77% at December 31, 1997.

     Nonperforming loans increased $393,000 or 61.8% to a total of $1,029,000 at
year-end 1998. This is largely the result of three large loans totaling $378,000
that are currently in the process of collection. At the current time, Illini
Bank feels that collection of these three loans should not result in any loss.
As of December 31, 1998, nonperforming loans to total loans were 1.18% compared
to 0.74 % at year-end 1997. Illini Bank did not carry any loans past due more
than 90 days and still accruing interest as of December 31, 1998 and 1997.
Individual nonaccrual loans are written down to management's estimate of the net
realizable value of collateral and/or realistic estimates of other payments from
the borrower. Additionally, specific allocations to the allowance for loan
losses are made on loans where there may be uncertainties as to the collection
of the estimated value of collateral. Because these loans have been written down
and/or allocated for, the potential impact on future net income is minimized.
Additional interest income of $61,000 in 1998 and $35,000 in 1997 would have
been recognized had these nonaccrual loans remained current.

     Other real estate owned declined $185,000 or 33.6% to $366,000 at December
31, 1998, when compared to year-end 1997. One former bank property which the
Bank has entered into an option agreement to sell in 1998 comprised $298,000 or
81.4% of the total Other Real Estate Owned. In September 1998, the option to buy
was extended for an additional six month period. The Bank now expects to
complete this sale in 1999. The remaining $68,000 or 18.6% represents real
estate acquired in satisfaction of debts. Other Real Estate Owned is carried at
the lower of cost or fair value. Management is actively marketing these
properties to minimize the potential affects of market fluctuations and so that
proceeds can be deployed to earning assets as soon as possible.

     As previously discussed, management has taken steps to improve credit
quality. In addition to the specific actions discussed in the PROVISION FOR LOAN
LOSSES, NET CHARGE-OFFS AND ALLOWANCE FOR LOAN LOSSES section, in late 1996,
executive management empowered the credit administration function (developed in
1995) to monitor and enforce loan policy compliance, to proactively identify and
resolve problem loans, and to perform detailed credit analyses on all
significant loan relationships. These efforts have improved the Bank's ability
to identify problem and potential problem loans, and has allowed management
opportunities to resolve problem loans while minimizing the potential loss to
the Bank.

-    POTENTIAL PROBLEM LOANS 

     As of December 31, 1998, approximately $300,000 of loans not included in
the above table were identified by management as having potential weaknesses
which, if not corrected, could affect the borrower's ability to comply with the
current loan repayment terms. This amount represents one loan that is currently
being handled by legal counsel. However, if weaknesses are not promptly
addressed, management believes that this loan may result in disclosure at some
future time as nonaccrual, past due or restructured. All significant potential
problem loans are analyzed on a periodic basis to ensure that adequate reserves
have been allocated to the allowance for loan losses to cover management's
estimate of the inherent loss.


                                       25
<PAGE>


-    NONINTEREST INCOME

     The following table depicts the amount of and annual changes in noninterest
income categories:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                        Year Ended December 31,                  Percent Change
                                             ---------------------------------------       ------------------------
                                               1998              1997           1996       1998/1997      1997/1996
                                               ----              ----           ----       ---------      ---------
                                                                       (dollars in thousands)
<S>                                          <C>              <C>              <C>             <C>          <C>  
Service charges on deposit accounts          $ 1,065          $ 1,054          $  981          1.0 %        7.4 %
Other fee income                                 172              162             216          6.2        (25.0)
Mortgage loan servicing fees                     264              198             183         33.3          8.2
Gain on sale of mortgage loans                   216              105              64        105.7         64.1
Securities gains (losses), net                     8               50               1        (84.0)     4,900.0
Gains (losses) on sale of other real estate      460             (105)            (24)      (538.1)       337.5
Other                                             90               54             144         66.7        (62.5)
                                             -------          -------          ------
                                             $ 2,275          $ 1,518          $1,565         49.9         (3.0)
                                             -------          -------          ------
                                             -------          -------          ------

</TABLE>


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

     Total noninterest income increased $0.7 million from 1997 to 1998.

     Service charges on deposit accounts and other fee income remained
relatively steady in 1998 as compared to 1997 and 1996. Illini realized a net
gain of $50,000 in 1997 due to securities sold to shorten the duration of its
securities portfolio. Gains realized in 1998 were $8,000.

     Due to declining long term rates on mortgage loans, and effective marketing
strategies, Illini experienced a significant increase in mortgage loan
originations in 1998. This, in turn, led to an increase in the gain of sale of
mortgage loans to the secondary market and, to a lesser extent, increased
servicing income.

     Illini completed strategic planning in January 1998 that, among other
subjects, covered the changing nature of the retail delivery systems of
financial institutions. During this planning, management identified potentially
significant opportunities for expense reductions in staffing and occupancy
achievable through more efficient use of retail bank space. As a consequence,
Illini completed two real estate transactions during 1998 resulting in
substantial gains. A 22,000 square foot property the Company owned in
Springfield was sold for $1,350,000 and a lot in Bloomington being held for
future expansion was sold for $556,000, resulting in a combined gain of
$482,000. The transaction for the sale of the property in Springfield is a
sale-leaseback arrangement. The carrying value of the property was $634,000 and
the Bank recognized $460,000 as a gain in 1998 and deferred $256,000 to be
recognized over the 10 year life of the lease.




                                       26
<PAGE>


-    NONINTEREST EXPENSE

     The following table depicts the amount of and annual changes in noninterest
expense categories:

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

                                                        Year Ended December 31,                  Percent Change
                                            -----------------------------------------------------------------------
                                               1998              1997           1996       1998/1997      1997/1996
                                               ----              ----           ----       ---------      ---------
                                                                       (dollars in thousands)
<S>                                         <C>               <C>            <C>               <C>          <C>  
Salaries and employee benefits              $  3,218          $ 3,246        $ 3,281           (0.9) %      (1.1)%
Net occupancy expense                            692              666            540            3.9         23.3
Equipment expense                                353              300            306           17.7         (2.0)
Data processing                                  708              614            559           15.3          9.8
Supplies                                         200              131            143           52.7         (8.4)
Communication and transportation                 396              347            298           14.1         16.4
Marketing and advertising                         19              253            238          (92.5)         6.3
Correspondent and processing fees                144              132            127            9.1          3.9
Loan and other real estate owned expenses         52               58             27          (10.3)       114.8
Professional fees                                875              573            348           52.7         64.7
Directors' and regulatory fees                   192              163            156           17.8          4.5
Other                                            328              341            301           (3.8)        13.3
                                            ---------          ------        -------
     Total noninterest expense              $  7,177          $ 6,824        $ 6,324            5.2          7.9
                                            --------          -------        -------            ---          ---
                                            --------          -------        -------            ---          ---

</TABLE>


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

     Total noninterest expense increased $0.2 million or 3.6% to $7.2 million in
1998 as compared to $6.9 million in 1997. The non-interest expense of Illini
Bank is customarily comprised of four major components. First, salaries and
benefits represents the largest portion of our noninterest expense from year to
year. In 1998, we reduced our staffing level from 97 full time equivalents to
72. While this represents a significant reduction in staff, the expense was
fairly constant from 1997 to 1998. While the reductions occurred in 1998, we
were obligated to pay severance packages and partial benefits to the employees
that decided to terminate their employment. As a result of the reengineered
staffing levels, management implemented a new salary structure for our remaining
staff. Second, our occupancy expense continues to grow. Management is closely
monitoring our net occupancy expense for ways to reduce costs. In 1998, we sold
one of our locations in Springfield and leased back the necessary space for our
branch operations. Similar alternatives will be explored in 1999 for possible
space reductions where feasible. Third, equipment and data processing costs
increased 18% and 15%, respectively, from 1997 to 1998. Technology continues to
be a primary investment for Illini Bank. We believe by utilizing the latest
technology, we can provide better customer service. Lastly, professional fees
increased $302,000 to $875,000 in 1998. This increase resulted from a large
increase in fees paid to outside consultants and attorneys to assist management
in strategic planning and shareholder related activities. The strategic plan
began to take shape in 1998 by reducing staff levels and evaluating our current
team of associates. While management does not expect the reduction in personnel
to translate into savings on the income statement, we believe our actions will
position us to take advantage of our investment in technology and gain
efficiencies from current staffing levels. As a component of our strategic
initiative to redesign our operations, marketing expense was virtually
eliminated in 1998. Management expects an increase in marketing in 1999 to
promote our reengineering and our movement to a sales and service environment
focusing on customer relationships.



                                       27
<PAGE>


-    YEAR 2000 ISSUES

     Illini Bank is committed to taking the necessary steps to enable both new
and existing systems, applications, and equipment to effectively process
transactions up to and beyond the Year 2000. To that end, Illini Bank is well
underway with its Year 2000 readiness program, having incurred $118,000 in
expenses for the year ended December 31, 1998. Because of such ongoing readiness
efforts, Year 2000 processing issues and risks are not expected to have a
material adverse impact on the ability of Illini Bank to continue its general
business operations.

     Currently, Illini Bank is actively engaged in completing the following Year
2000 program initiatives:

o                Complete a comprehensive analysis of current functions which
                 might be impacted by Year 2000 issues, and document the results
                 in a Year 2000 Assessment report.
o                Develop and implement a detailed plan to address Year 2000
                 issues as identified, particularly as they pertain to software
                 and hardware applications.
o                Survey outside vendors to determine the degree of preparedness
                 for the Year 2000, to uncover potential issues arising from
                 such business counterparties.
o                Raise organizational awareness not only with top management,
                 but also at the staff level, and involve relevant business
                 group leaders in reaching solutions.

     The risk of failures of computer applications, systems and networks due to
improper Year 2000 data processing are substantial, not only for users of
information technologies, but also for any entities and individuals which
interact with them. Moreover, when aggregated multiple individual malfunctions
and failures relating to Year 2000 issues occur, they can potentially cause
broader, systemic disruptions across industries and economies. The risks arising
from Year 2000 issues which face many companies, including Illini Bank, include
the potential diminished ability to respond to the needs and expectations of
customers in a timely manner, and the potential for inaccurate processing of
information. In recognition of this, Illini Bank began focusing on mission
critical applications in order that programming changes are largely completed,
and that testing was underway as of December 31, 1998.

     In addition, Illini Bank has begun developing contingency plans to
complement the Year 2000 readiness efforts already in progress, including backup
and offsite processing of certain information and functions. Illini Bank
anticipates that such contingency plans will provide an additional level of
security to its Year 2000 efforts already underway.

     The foregoing discussion of Year 2000 issues is based on current estimates
of the management of Illini Bank as to the amount of time and costs necessary to
remediate and test our systems. Such estimates are based on the facts and
circumstances existing at this time, and were derived utilizing multiple
assumptions of future events, including, but not limited to, the continued
availability of certain resources, third-party modification plans and
implementation success, and other factors. However, there can be no guarantee
that these estimates will be achieved, and actual costs and results could differ
materially from the costs and results currently anticipated. Specific factors
that might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer code, the impact of third party systems
interacting with Illini Bank systems, the planning and modification success
attained by the business counterparties of Illini Bank and similar
uncertainties.

-    NEW ACCOUNTING PRONOUNCEMENTS

     Statement of Financial Accounting Standards (SFAS) 130, REPORTING
COMPREHENSIVE INCOME, was issued in June 1997. Comprehensive income is defined
as net income plus certain items that are recorded directly to shareholders'
equity, such as unrealized gains and losses on available for sale securities.
Components of Illini's comprehensive income is reported in the consolidated
statements of changes in shareholders' equity. SFAS 130's disclosure
requirements have no impact on Illini's financial condition or results of
operations.

     SFAS 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION, is effective for financial statements for periods beginning after
December 15, 1997, but interim period reporting is not required in 1998. An
operating segment is defined under SFAS 131 as a component of an enterprise that
engages in business activities that generate revenue and expense for which
operating results are reviewed



                                       28
<PAGE>


by the chief operating decision maker in the determination of resource
allocation and performance. Illini operates as a single business segment through
its subsidiary Illini Bank.

     During 1998, the Financial Accounting Standards Board (FASB) issued SFAS
133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS 133 is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
This statement should not be applied retroactively to financial statements of
prior periods. This statement requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. The accounting for changes in the fair
value of a derivative (that is, gains and losses) depends on the intended use of
the derivative and the resulting designation. Illini is currently evaluating the
impact of SFAS 133 on future financial statements and related disclosures.

     During 1998, the FASB issued SFAS 134, ACCOUNTING FOR MORTGAGE-BACKED
SECURITIES RETAINED AFTER THE SECURITIZATION OF MORTGAGE LOANS HELD FOR SALE BY
A MORTGAGE BANKING ENTERPRISE. SFAS 134 is effective for the first fiscal
quarter beginning after December 15, 1998. On the date the statement is
initially applied, an enterprise may reclassify mortgage-backed securities and
other beneficial interest retained after the securitization of mortgage loans
held for sale from the trading category, except for those with sales commitments
in place. Transfers from the trading category that result from implementing this
statement shall be accounted for in accordance with paragraph 15(a) of SFAS 115.
Illini is currently evaluating the impact of SFAS 134 on future financial
statements and disclosures, but does not currently believe such impact will be
material as Illini Bank has historically not securitized originated mortgage
loans.


-    EFFECTS OF INFLATION

     The effects of inflation on financial institutions are different from the
effects on other commercial enterprises since financial institutions make few
significant capital or inventory expenditures which are directly affected by
changing prices. Because bank assets and liabilities are virtually all monetary
in nature, inflation does not affect a financial institution as much as do
changes in interest rates. The general level of inflation does, in fact,
underlie the general level of most interest rates; however, interest rates do
not increase at the rate of inflation as do the prices of goods and services.
Rather, interest rates react more to the changes in the expected rate of
inflation and to changes in monetary and fiscal policy.

          Inflation, however, does have an impact on the growth of total assets
in the banking industry, often resulting in a need to increase capital at higher
than normal rates to maintain an appropriate capital-to-asset ratio.





                                       29
<PAGE>


ITEM 7. - FINANCIAL STATEMENTS

Index to Illini's Consolidated Financial Statements.
<TABLE>
<CAPTION>

                                                                                                             Page(s)
                                                                                                             -------
<S>                                                                                                          <C>
Independent Auditors' Report......................................................................................31
Consolidated Balance Sheets as of December 31, 1998 and 1997......................................................32
Consolidated Statements of Income for the three years ended December 31, 1998, 1997, and 1996.....................33
Consolidated Statements of Changes in
     Shareholders' Equity for the three years ended December 31, 1998, 1997, and 1996.............................34
Consolidated Statements of Cash Flows for the three years ended December 31, 1998, 1997, and 1996.................35
Notes to Consolidated Financial Statements.....................................................................36-52

</TABLE>





                                       30
<PAGE>


[GRAPHIC OMITTED]



                          INDEPENDENT AUDITORS' REPORT





The Board of Directors
Illini Corporation:

     We have audited the consolidated balance sheets of Illini Corporation and
subsidiary (the Company) as of December 31, 1998 and 1997, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1998.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

     We conducted our audits in accordance with 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 audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Illini
Corporation and subsidiary as of December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1998, in conformity with generally accepted accounting
principles.




                                                KPMG LLP

St. Louis, Missouri
February 26, 1999 except
for Note 13 for which the
date is March 2, 1999






                                       31

<PAGE>


                        ILLINI CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1998 AND 1997

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

<TABLE>
<CAPTION>

                                                                  1998      1997 
                                                               --------  --------
                                                              (dollars in thousands)

ASSETS:
   <S>                                                         <C>       <C>     
   Cash and due from banks                                     $  5,624  $  5,361
   Interest-bearing deposits in other banks                          19        77
   Federal funds sold                                             6,675     6,755
                                                               --------  --------
     Cash and cash equivalents                                   12,318    12,193
   Debt and marketable equity securities
     available for sale, at fair value                           53,276    46,834
   Loans, net of allowance for loan losses                       85,806    84,987
   Premises and equipment                                         7,250     8,077
   Accrued interest receivable                                    1,390     1,500
   Other real estate owned                                          366       551
   Other assets                                                     359       772
                                                               --------  --------
                                                               $160,765  $154,914
                                                               --------  --------
                                                               --------  --------

LIABILITIES AND SHAREHOLDERS' EQUITY:
   Noninterest-bearing demand deposits                         $ 26,190  $ 25,083
   Interest-bearing deposits:
     NOW and money market accounts                               38,877    30,596
     Savings deposits                                            17,102    17,820
     Time deposits, $100,000 and over                            15,064    18,659
     Other time deposits                                         45,726    45,418
                                                               --------  --------
       Total deposits                                           142,959   137,576

   Securities sold under agreements to repurchase                   290       715
   Accrued interest payable                                         827       784
   Other liabilities                                              1,270       861
                                                               --------  --------
     Total liabilities                                          145,346   139,936
                                                               --------  --------
   Shareholders' equity:
     Common stock-authorized 800,000 shares of $10
       par value; 448,456 shares issued and outstanding           4,485     4,485
     Capital surplus                                              1,886     1,886
     Retained earnings                                            8,632     8,450
     Accumulated other comprehensive income                         416       157
                                                               --------  --------
       Total shareholders' equity                                15,419    14,978
                                                               --------  --------
                                                               $160,765  $154,914
                                                               --------  --------
                                                               --------  --------


</TABLE>










See accompanying notes to consolidated financial statements.

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


                                       32
<PAGE>

                        ILLINI CORPORATION AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996

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

<TABLE>
<CAPTION>

                                                                          1998       1997        1996 
                                                                       --------   --------    --------
                                                                           (dollars in thousands)
<S>                                                                  <C>        <C>         <C>     
Interest income:
   Interest and fees on loans                                         $  7,727   $  8,200    $  8,871
   Interest on debt and marketable equity securities:
     Taxable                                                             2,514      2,137       1,685
     Exempt from federal income taxes                                      408        582         700
   Interest on short-term investments                                      338        163          36
                                                                      --------   --------    --------
       Total interest income                                            10,987     11,082      11,292
                                                                      --------   --------    --------
Interest expense:
   Interest on deposits:
     NOW and money market accounts                                       1,274        798         734
     Savings deposits                                                      421        451         493
     Time deposits, $100,000 and over                                      885        936         882
     Other time deposits                                                 2,584      2,479       2,700
   Interest on borrowings                                                   16        124         138
                                                                      --------   --------    --------
       Total interest expense                                            5,180      4,788       4,947
                                                                      --------   --------    --------

       Net interest income                                               5,807      6,294       6,345
Provision for loan losses                                                  204        300       1,130
                                                                      --------   --------    --------
       Net interest income after provision for loan losses               5,603      5,994       5,215
                                                                      --------   --------    --------

Noninterest income:
   Service charge on deposit accounts                                    1,065      1,054         981
   Other fee income                                                        172        162         216
   Mortgage loan servicing fees                                            264        198         183
   Gain on sale of mortgage loans                                          216        105          64
   Securities gains                                                          8         50           1
   Gains (losses) on sale of other real estate owned                       460       (105)        (24)
   Other                                                                    90         54         144
                                                                      --------   --------    --------
       Total noninterest income                                          2,275      1,518       1,565
                                                                      --------   --------    --------
Noninterest expense:
   Salaries and employee benefits                                        3,218      3,246       3,281
   Net occupancy expense                                                   692        666         540
   Equipment expense                                                       353        300         306
   Data processing                                                         708        614         559
   Supplies                                                                200        131         143
   Communication and transportation                                        396        347         298
   Marketing and advertising                                                19        253         238
   Correspondent and processing fees                                       144        132         127
   Loan and other real estate owned expenses                                52         58          27
   Professional fees                                                       875        573         348
   Directors' and regulatory fees                                          192        163         156
   Other                                                                   328        341         301
                                                                      --------   --------    --------
       Total noninterest expense                                         7,177      6,824       6,324
                                                                      --------   --------    --------

       Income before income tax expense                                    701        688         456
Income tax expense (benefit)                                                71         38          (9)
                                                                      --------   --------    --------
       Net income                                                     $    630   $    650    $    465
                                                                      --------   --------    --------
                                                                      --------   --------    --------
Basic earnings per share
   (based on weighted average common
   shares outstanding of 448,456 in 1998, 1997, and 1996)             $   1.40   $   1.45    $   1.04
                                                                      --------   --------    --------
                                                                      --------   --------    --------

</TABLE>

See accompanying notes to consolidated financial statements.

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


                                       33
<PAGE>

                        ILLINI CORPORATION AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                 YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996

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

<TABLE>
<CAPTION>

                                                                                     ACCUMULATED
                                                                                       OTHER
                                                    COMMON     CAPITAL    RETAINED   COMPREHENSIVE
                                                     STOCK     SURPLUS   EARNINGS     INCOME       TOTAL
                                                   --------   --------   --------    --------    --------
                                                                    (dollars in thousands)

<S>                                               <C>        <C>        <C>         <C>         <C>     
Balance at January 1, 1996                        $  4,485   $  1,886   $  8,209    $     26    $ 14,606

Comprehensive income:
   Net income                                           --         --        465          --         465
   Change in unrealized gains (losses)
     on securities available for sale, net              --         --         --        (132)       (132)
                                                                                                --------
       Total comprehensive income                       --         --         --          --          333
                                                                                                 --------
Cash dividends paid $.95 per share                      --         --       (426)         --         (426)
                                                   --------   --------   --------    --------    --------

Balance at December 31, 1996                         4,485      1,886      8,248        (106)     14,513

Comprehensive income:
   Net income                                           --         --        650          --         650
   Change in unrealized gains (losses)
     on securities available for sale, net              --         --         --         263         263
                                                                                                --------
       Total comprehensive income                       --         --         --          --         913
                                                                                                --------
Cash dividends paid $1.00 per share                     --         --       (448)         --        (448)
                                                  --------   --------   --------    --------    --------

Balance at December 31, 1997                         4,485      1,886      8,450         157      14,978

Comprehensive income:
   Net income                                           --         --        630          --         630
   Change in unrealized gains (losses)
     on securities available for sale, net              --         --         --         259         259
                                                                                                --------
       Total comprehensive income                       --         --         --          --         889
                                                                                                --------
Cash dividends paid $1.00 per share                     --         --       (448)         --        (448)
                                                  --------   --------   --------    --------    --------

Balance at December 31, 1998                      $  4,485   $  1,886   $  8,632    $    416    $ 15,419
                                                  --------   --------   --------    --------    --------
                                                  --------   --------   --------    --------    --------



</TABLE>




See accompanying notes to consolidated financial statements.


                                       34
<PAGE>



                        ILLINI CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996

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

<TABLE>
<CAPTION>

                                                                                        1998        1997        1996 
                                                                                     --------    --------    --------
                                                                                            (dollars in thousands)
<S>                                                                                 <C>         <C>         <C>     
Cash flows from operating activities:
   Net income                                                                       $    630    $    650    $    465
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation and amortization                                                     978         738         543
       Provision for loan losses                                                         204         300       1,130
       Securities gains, net                                                              (8)        (50)         (1)
       Gain on sale of premises and equipment                                             (1)         --        (108)
       Deferred tax expense (benefit)                                                      6         (78)         (1)
       (Gains) losses on sale of other real estate owned                                (460)        105          24
       Decrease (increase) in accrued interest receivable                                110          (6)         48
       Increase (decrease) in accrued interest payable                                    43          91        (187)
       Origination of secondary market mortgage loans                                (44,152)    (18,740)    (17,629)
       Proceeds from the sale of secondary market mortgage loans                      44,299      18,446      17,255
       Other, net                                                                        477        (474)       (609)
                                                                                    --------    --------    --------
         Net cash provided by operating activities                                     2,126         982         930
                                                                                    --------    --------    --------
Cash flows from investing activities:
   Proceeds from sales of debt and marketable equity securities
     available for sale                                                                2,028      20,530      13,064
   Proceeds from maturities and paydowns of debt securities
     available for sale                                                               16,109      12,764      10,037
   Purchases of debt and marketable equity securities available for sale             (24,307)    (39,318)    (28,814)
                                                                                             
   Net (increase) decrease in loans, net                                              (1,272)      7,295       6,995
   Purchases of premises and equipment                                                (1,136)     (3,346)     (1,287)
   Proceeds from sale of premises and equipment                                            1          --         491
   Proceeds from sales of other real estate                                            2,066         331           5
                                                                                    --------    --------    --------
         Net cash (used in) provided by investing activities                          (6,511)     (1,744)        491
                                                                                    --------    --------    --------
Cash flows from financing activities:
   Net increase in non-interest bearing deposit accounts                               1,107       4,330         239
   Net increase (decrease) in savings, NOW and money market accounts                   7,563       5,141      (4,267)
   Net (decrease) increase in time deposits $100,000 and over                         (3,595)      3,738         171
   Net increase (decrease) increase in other time deposits                               308      (1,404)     (3,659)
   Net (decrease) increase in federal funds purchased                                     --      (1,130)      1,130
   Net (decrease) increase in securities sold under agreements to repurchase            (425)        215        (175)
                                                                                                        
   Net (decrease) increase in other short-term borrowings                                 --      (3,000)      3,000
   Cash dividends paid                                                                  (448)       (448)       (426)
                                                                                    --------    --------    --------
         Net cash provided by (used in) financing activities                           4,510       7,442      (3,987)
                                                                                    --------    --------    --------

Net increase (decrease) in cash and cash equivalents                                     125       6,680      (2,566)

Cash and cash equivalents at beginning of year                                        12,193       5,513       8,079
                                                                                    --------    --------    --------

Cash and cash equivalents at end of year                                            $ 12,318    $ 12,193    $  5,513
                                                                                    --------    --------    --------
                                                                                    --------    --------    --------
Supplemental information:
   Interest paid                                                                    $  5,137    $  4,697    $  5,134
   Income taxes paid                                                                      77         112         145
                                                                                    --------    --------    --------
                                                                                    --------    --------    --------
Other non-cash investing activities:
   Transfer of premises to other real estate                                        $  1,168    $     --    $     --
   Transfer of loans to other real estate                                                102         154         260
                                                                                    --------    --------    --------
                                                                                    --------    --------    --------


See accompanying notes to consolidated financial statements.

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

</TABLE>


                                       35
<PAGE>


ILLINI CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998, 1997, and 1996

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     Illini Corporation ("Illini") provides a full range of banking services to
individual, corporate, and institutional customers through its 18 locations
throughout central Illinois. Illini and its banking subsidiary, Illini Bank, are
subject to competition from other financial and nonfinancial institutions
providing financial products in central Illinois. Additionally, Illini and
Illini Bank are subject to the regulations of certain federal and state agencies
and undergo periodic examinations by those regulatory authorities.
     The accounting and reporting policies of Illini conform to generally
accepted accounting principles within the banking industry. The preparation of
the consolidated financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions,
including the determination of the allowance for loan losses, 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.
     Following is a description of the more significant of these policies:

(a)  PRINCIPLES OF CONSOLIDATION
         The consolidated financial statements include the accounts of Illini
     and Illini Bank after elimination of all significant intercompany accounts
     and transactions.

(b)  CONSOLIDATED STATEMENTS OF CASH FLOWS
         For purposes of the consolidated statements of cash flows, cash and
     cash equivalents include cash and due from banks, interest-bearing deposits
     in other banks, and federal funds sold, all of which are considered to be
     highly liquid assets.

(c)  DEBT AND MARKETABLE EQUITY SECURITIES
         At the time of purchase, debt and equity securities are classified into
     one of two categories: held to maturity or available for sale.
         Investments in debt securities classified as held to maturity whereby
     management has the positive ability and intent to hold to maturity are
     stated at cost, adjusted for amortization of premiums and accretion of
     discounts, using the interest method, over the period to maturity of the
     respective securities.
         Investment securities designated as available for sale, which include
     any security which Illini has no immediate plan to sell but which may be
     sold in the near future under different circumstances, are stated at fair
     value. Amortization of premiums and accretion of discounts on securities
     available for sale are recorded using the interest method over the period
     to maturity of the respective security. Unrealized holding gains and losses
     for available for sale securities are excluded from earnings and reported
     as a net amount in a separate component of shareholders' equity until
     realized.
         Mortgage-backed securities represent a significant portion of the debt
     security portfolio. Amortization of premiums and accretion of discounts on
     mortgage-backed securities are analyzed in relation to the corresponding
     prepayment rates, both historical and estimated, using a method which
     approximates the interest method.
         Transfers of securities between categories are recorded at fair value
     at the date of transfer. Unrealized gains and losses associated with
     transfers of securities from held to maturity to available for sale are
     recorded as a separate component of shareholders' equity. The unrealized
     gains or losses included in the separate component of shareholders' equity
     for securities transferred from available for sale to held for maturity are
     maintained and amortized into earnings over the remaining life of the
     security as an adjustment to yield in a manner consistent with the
     amortization or accretion of premium or discount on the associated
     security. Realized gains and losses for securities are included in earnings
     using the specific identification method for determining the cost basis of
     securities sold.


                                       36
<PAGE>

(d)  LOAN INCOME
         Interest income on certain installment loans is recognized using the
     sum-of-the-years' digits method.
         Interest on commercial, financial, agricultural, real estate, and all
     other installment loans is recognized based on the principal amounts
     outstanding using the simple-interest method. It is the policy of Illini to
     discontinue, generally when a loan becomes ninety days past due, the
     accrual of interest when full collectibility of principal or interest on
     any loan is in doubt. Subsequent interest payments received on such loans
     are applied to principal if there is any doubt as to the collectibility of
     such principal. Otherwise, these receipts are recorded as interest income.
     Accrual of interest may be resumed on a loan when performance is in
     accordance with the contract and the borrower demonstrates the ability to
     pay and remain current.
         Loan origination fees and certain direct loan origination costs are
     deferred and recognized over the lives of the related loans as an
     adjustment of the loan yield using a method approximating the interest
     method on a loan-by-loan basis.

(e)  ACCOUNTING FOR IMPAIRED LOANS
         A loan is considered impaired when it is probable Illini will be unable
     to collect all amounts due, both principal and interest, according to the
     contractual terms of the loan agreement. When measuring impairment, the
     expected future cash flows of an impaired loan are discounted at the loan's
     effective interest rate. Alternatively, impairment is measured by reference
     to an observable market price, if one exists, or the fair value of the
     collateral for a collateral-dependent loan. Regardless of the measurement
     method used historically, Illini measures impairment based on the fair
     value of the collateral when foreclosure is probable. Additionally,
     impairment of a restructured loan is measured by discounting the total
     expected future cash flow at the loan's effective rate of interest as
     stated in the original loan agreement.
         Illini uses its existing nonaccrual methods for recognizing interest on
     impaired loans.

(f)  ALLOWANCE FOR LOAN LOSSES
         The allowance for loan losses is increased by provisions charged to
     operations and is available to absorb loan losses. Illini utilizes a
     systematic, documented approach in determining the appropriate level of the
     allowance for loan losses. Management's approach, which provides for
     general and specific allowances, is based on current economic conditions,
     past loan losses, collection experience, risk characteristics of the
     portfolio, assessing collateral values by obtaining independent appraisals
     for significant properties, and such other factors which, in management's
     judgment, deserve recognition in estimating loan losses.
         Management believes the allowance for loan losses is adequate to absorb
     losses in the loan portfolio. While management uses available information
     to recognize losses on loans, future additions to the allowance for loan
     losses may be necessary based on changes in economic conditions. In
     addition, various regulatory agencies, as an integral part of the
     examination process, periodically review Illini's allowance for loan
     losses. Such agencies may require Illini to increase the allowance for loan
     losses based on their judgment about and interpretation of information
     available to them at the time of their examinations.

(g)  SECONDARY MORTGAGE MARKET OPERATIONS
         Illini originates Federal National Mortgage Association (FNMA) mortgage
     loans for sale in the secondary market to FNMA. Mortgage loans held for
     sale are recorded at the lower of cost or market value on an individual
     loan basis. Deferred fees on loans held for sale are not amortized. Gains
     and losses on the sale of these loans and loan origination fees are
     recognized upon sale of the related loans and included in the consolidated
     statements of income as noninterest income. Additionally, loan
     administration fees, representing income earned from servicing these loans
     sold in the secondary market to FNMA, are calculated on the outstanding
     principal balances of the loans serviced and recorded as noninterest income
     as earned.


                                       37
<PAGE>

(h)  PREMISES AND EQUIPMENT
         Premises and equipment are stated at cost less accumulated
     depreciation. Depreciation is computed using primarily the straight-line
     method. The estimated useful lives are 40 years for premises and 5 to 7
     years for furniture and equipment. Costs for maintenance and repairs are
     expensed as incurred.

(i)  INCOME TAXES
         Illini and Illini Bank file a consolidated federal income tax return.
         Deferred tax assets and liabilities are recognized for the future tax
     consequences attributable to differences between the financial statement
     carrying amounts of existing assets and liabilities and their respective
     tax bases. Deferred tax assets and liabilities are measured using enacted
     tax rates expected to apply to taxable income in the years in which those
     temporary differences are expected to be recovered or settled. The effect
     on deferred tax assets and liabilities of a change in tax rates is
     recognized in income in the period that includes the enactment date.

(j)  INTANGIBLE ASSETS
         The fair value of the individual assets acquired and liabilities
     assumed through acquisitions accounted for under the purchase method of
     accounting is recorded as an investment by Illini. The excess of cash or
     market value of Illini's common stock over the fair value of the net assets
     acquired is recorded as the excess of cost over fair value of net assets
     acquired and is included in other assets on the consolidated balance
     sheets. This amount is amortized on a straight-line basis over various
     periods not exceeding 25 years. The premiums paid to acquire the deposits
     of certain subsidiaries are being amortized over a 15-year period.
         Illini assesses the recoverability of intangible assets by determining
     whether the amortization of the balance over its remaining life can be
     recovered through undiscounted future operation cash flows of the acquired
     operation or deposits. The amount of impairment, if any, is measured based
     on projected discounted future operating cash flows using a discount rate
     reflecting the Illini's average cost of funds. The assessment of the
     recoverability of intangibles will be impacted if estimated future
     operating cash flows are not achieved.

(k)  OTHER REAL ESTATE OWNED
         Other real estate owned (OREO) represents property acquired through
     foreclosure or deeded to the Bank in lieu of foreclosure on loans on which
     the borrowers have defaulted. OREO also includes former bank premises that
     management no longer intends to use as banking facilities. OREO is recorded
     on an individual asset basis at the lower of fair value less estimated
     disposal costs or cost. If the fair value less estimated disposal costs is
     less than cost, the deficiency is recorded by a direct write down of the
     individual OREO asset. Any subsequent write downs to reflect current fair
     value are charged to noninterest expense.

(l)  EARNINGS PER SHARE
         Basic earnings per share is computed by dividing income available to
     common shareholders by the weighted-average number of common shares
     outstanding for the period. Diluted earnings per share gives effect to
     potential common stock such as stock options or convertible notes. Illini
     has no instruments which are dilutive.

(m)  FINANCIAL INSTRUMENTS
         Financial instruments are defined as cash, evidence of an ownership
     interest in an entity, or a contract that both imposes on one entity a
     contractual obligation to deliver cash or another financial instrument to a
     second entity or to exchange other financial instruments on potentially
     unfavorable terms with the second entity, and conveys to that second entity
     a contractual right to receive cash or another financial instrument from
     the first entity or to exchange other financial instruments on potentially
     favorable terms with the first entity.


                                       38
<PAGE>


(n)      NEW ACCOUNTING PRONOUNCEMENTS
         Illini adopted Statement of Financial Accounting Standards No. 130
     (SFAS 130), REPORTING COMPREHENSIVE INCOME, during 1998. SFAS 130
     establishes standards for reporting and displaying comprehensive income and
     its components in a full set of general purpose financial statements.
     Illini reports comprehensive income in the consolidated statements of
     changes in shareholders' equity. The adoption of SFAS 130 did not have an
     effect on the financial position of Illini. 

         SFAS 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED 
     INFORMATION, is effective for financial statements for periods beginning 
     after December 15, 1997, but interim period reporting is not required in 
     1998. An operating segment is defined under SFAS 131 as a component of 
     an enterprise that engages in business activities that generate revenue 
     and expense for which operating results are reviewed by the chief 
     operating decision maker in the determination of resource allocation and 
     performance. Illini operates as a single business segment through its 
     subsidiary Illini Bank.

(o)  RECLASSIFICATIONS
         Certain amounts in the 1996 and 1997 consolidated financial statements
     have been reclassified to conform to the 1998 presentation. Such
     reclassifications have no effect on previously reported consolidated net
     income or shareholders' equity.




















                                       39
<PAGE>




(2)  DEBT AND MARKETABLE EQUITY SECURITIES
     The amortized cost and fair value of debt and marketable equity securities
classified as available for sale at December 31, 1998 and 1997 are presented
below.

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

<TABLE>
<CAPTION>

                                                     DECEMBER 31, 1998

                                                      GROSS       GROSS
                                          AMORTIZED  UNREALIZED  UNREALIZED   FAIR
                                            COST       GAINS      LOSSES     VALUE
                                           -------   -------     -------    -------
                                                   (dollars in thousands)
<S>                                        <C>       <C>       <C>       <C>    
United States Treasury and
   United States agencies                  $19,397   $   204   $    30   $19,571
Mortgage-backed securities                  16,828        69        19    16,878
Collateralized mortgage obligations          8,487        25        32     8,480
Obligations of state and
   political subdivisions                    7,448       446        --     7,894
FHLB stock and other
   equity securities                           453        --        --       453
                                           -------   -------   -------   -------
                                           $52,613   $   744   $    81   $53,276
                                           -------   -------   -------   -------
                                           -------   -------   -------   -------

</TABLE>

<TABLE>
<CAPTION>

                                                     DECEMBER 31, 1997

                                                        GROSS     GROSS     ESTIMATED
                                          AMORTIZED  UNREALIZED  UNREALIZED   MARKET
                                            COST      GAINS       LOSSES       VALUE
                                           -------   ----------   ---------  ---------
                                                    (dollars in thousands)
<S>                                        <C>       <C>       <C>       <C>    
United States Treasury and
   United States agencies                  $26,516   $   121   $    27   $26,610
Mortgage-backed securities                   7,829        38        24     7,843
Collateralized mortgage obligations          2,565         3         2     2,566
Obligations of state and
   political subdivisions                    9,231       174        35     9,370
FHLB stock and other
   equity securities                           442         3        --       445
                                           -------   -------   -------   -------
                                           $46,583   $   339   $    88   $46,834
                                           -------   -------   -------   -------
                                           -------   -------   -------   -------

</TABLE>

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

     As a member of the Federal Home Loan Bank System administered by the
Federal Housing Finance Board, Illini Bank is required to maintain an investment
in the capital stock of the Federal Home Loan Bank of Chicago (FHLB) in an
amount equal to the greater of 1% of the aggregate outstanding balance of loans
secured by dwelling units at the beginning of each year or 0.3% of the total
assets of Illini Bank. The stock is recorded at cost which represents redemption
value, and is recalculated semi-annually. Illini Bank's portfolio of residential
real estate loans, subject to minor adjustments, is available to secure advances
from the FHLB. As of December 31, 1998, the Bank did not have any borrowings
outstanding from the FHLB.
     The amortized cost and fair value of debt and marketable equity securities
classified as available for sale at December 31, 1998, by contractual maturity,
are shown below. Expected maturities may differ from contractual maturities
because certain issuers have the right to call or prepay obligations with or
without call or prepayment penalties.


                                       40
<PAGE>


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

<TABLE>
<CAPTION>

                                              AMORTIZED   FAIR
                                              COST        VALUE
                                              -------    -------
                                            (dollars in thousands)

<S>                                            <C>       <C>    
Due in one year or less                        $ 2,204   $ 2,228
Due after one year through five years           13,464    13,670
Due after five years through ten years           8,693     8,882
Due after ten years                              2,484     2,685
                                               -------   -------
                                                26,845    27,465
Mortgage-backed securities                      16,828    16,878
Collateralized mortgage obligations              8,487     8,480
FHLB stock and other equity
   securities, no stated maturity                  453       453
                                               -------   -------
                                               $52,613   $53,276
                                               -------   -------
                                               -------   -------

</TABLE>

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

     Proceeds from sales of debt and marketable equity securities during 1998,
1997 and 1996 were $2.0 million, $20.5 million, and $13.0 million, respectively.
Gross gains of $10,000, $109,000, and $51,000 and gross losses of $2,000,
$59,000, and $50,000 for 1998, 1997, and 1996, respectively, were realized on
those sales. All sales during 1998, 1997, and 1996 were from the available for
sale category.
     The market value of debt securities pledged to secure United States
government and other public deposits, securities sold under agreements to
repurchase, and for other purposes as required by law was approximately $16.7
million and $19.0 million at December 31, 1998 and 1997, respectively.

(3)  LOANS
     The loan portfolio at December 31, 1998 and 1997 is composed of the
following loan types:

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

<TABLE>
<CAPTION>

                                                 1998        1997 
                                               --------    --------
                                              (dollars in thousands)

<S>                                            <C>         <C>     
Commercial, financial, and agricultural        $ 20,553    $ 16,565
Real estate:
   Construction                                   7,104       6,537
   Mortgage loans held for investment            49,592      50,069
   Mortgage loans held for sale                     245         295
Consumer, net of unearned income                  9,680      12,823
                                               --------    --------
        Total loans                              87,174      86,289
Allowance for loan losses                        (1,368)     (1,302)
                                               --------    --------
        Net loans                              $ 85,806    $ 84,987
                                               --------    --------
                                               --------    --------

</TABLE>

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

     Loans serviced for others totaled approximately $87.7 million and $71.7
million at December 31, 1998 and 1997, respectively.
     Illini grants commercial, industrial, residential, and consumer loans to
customers in central Illinois through its network of banking offices. Illini
does not have any particular concentration of credit in any one economic sector;
however, a majority of Illini's lending occurs in and around Springfield,
Illinois, with a substantial portion of such loans secured by real estate. As
such, Illini is susceptible to changes in the economic environment in the
Springfield, Illinois area.


                                       41
<PAGE>

     A summary of impaired loans, which includes nonaccrual loans, at December
31, 1998, 1997, and 1996 is as follows:

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

<TABLE>
<CAPTION>

                                                          1998     1997     1996 
                                                         ------   ------   ------
                                                          (dollars in thousands)

<S>                                                      <C>      <C>      <C>   
Nonaccrual loans                                         $1,029   $  636   $  869
Impaired loans continuing to accrue interest                300       50      309
                                                         ------   ------   ------
Total impaired loans                                     $1,329   $  686   $1,178
                                                         ------   ------   ------
                                                         ------   ------   ------

Allowance for losses on specific impaired loans          $   25   $   26   $  435
Impaired loans with no specific related allowance
   for loan losses                                        1,268      595       69
Average balance of impaired loans during the year         1,074      977    1,665
                                                         ------   ------   ------
                                                         ------   ------   ------

</TABLE>

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

     Additional interest income of $61,000 in 1998, $35,000 in 1997, and $71,000
in 1996 would have been recognized had nonaccrual loans remained current. The
amount recognized as interest income on other impaired loans continuing to
accrue interest was $29,000 in 1998, $5,000 in 1997, and $29,000 in 1996. The
amount recognized as interest income on nonaccrual loans was $9,679, $13,300,
and $19,491 for the years ended December 31, 1998, 1997, and 1996, respectively.
     A summary of changes in the allowance for loan losses for the years ended
December 31, 1998, 1997, and 1996 is as follows:

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

<TABLE>
<CAPTION>

                                                     1998       1997       1996 
                                                   -------    -------    -------
                                                      (dollars in thousands)

<S>                                                <C>        <C>        <C>    
Balance at beginning of year                       $ 1,302    $ 1,258    $ 1,247
Provision charged to expense                           204        300      1,130

Loans charged off                                     (215)      (364)    (1,189)
Recoveries of loans previously charged off              77        108         70
                                                   -------    -------    -------
     Net loan charge-offs                             (138)      (256)    (1,119)
                                                   -------    -------    -------
Balance at end of year                             $ 1,368    $ 1,302    $ 1,258
                                                   -------    -------    -------
                                                   -------    -------    -------

</TABLE>

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

     The following table recaps the 1998 activity for loans made by Illini Bank
to executive officers, directors, and principal shareholders (insiders) of
Illini and Illini Bank and/or their related interests. Such loans were made in
the normal course of business on substantially the same terms, including
interest rates and collateral requirements, as those prevailing at the same time
for comparable transactions with other persons and did not involve more than
normal credit risk or present other unfavorable features.

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

<TABLE>
<CAPTION>

                                                                INSIDER LOANS
                                                             ----------------
                                                             (dollars in thousands)

<S>                                                          <C>            
Balance at December 31, 1997                                 $           291
Advances on existing loans                                               208
Payments received                                                       (253)
                                                             ----------------
Balance at December 31, 1998                                 $           246
                                                             ----------------
                                                             ----------------

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

</TABLE>


                                       42
<PAGE>



(4)  PREMISES AND EQUIPMENT
     A summary of premises and equipment at December 31, 1998 and 1997 by major
category is as follows:

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

<TABLE>
<CAPTION>

                                            1998      1997 
                                          -------   -------
                                       (dollars in thousands)

<S>                                   <C>           <C>    
Land                                  $     1,043   $ 1,812
Bank premises                               6,549     7,417
Furniture and equipment                     4,771     3,695
                                          -------   -------
                                           12,363    12,924
Less accumulated depreciation               5,113     4,847
                                          -------   -------
                                          $ 7,250   $ 8,077
                                          -------   -------
                                          -------   -------

</TABLE>

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

     Depreciation charged to noninterest expense amounted to $795,000, $638,000,
and $406,000 in 1998, 1997, and 1996, respectively.
     Illini completed two real estate transactions during 1998 resulting in
substantial gains. A 22,000 square foot property the Company owned in
Springfield was sold for $1,350,000 and a lot in Bloomington being held for
future expansion was sold for $556,000, resulting in a combined gain of
$482,000. The transaction for the sale of the property in Springfield is a
sale-leaseback arrangement. The carrying value of the property was $634,000 and
Illini Bank recognized $460,000 as a gain in 1998 and deferred $256,000 to be
recognized over the 10 year life of the lease.
     Illini leases certain premises and equipment under noncancellable operating
leases which expire at various dates through December 2008. Such noncancellable
operating leases also include options to renew on an annual basis. Minimum
rental commitments under all noncancellable operating leases at December 31,
1998 are as follows:

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

<TABLE>
<CAPTION>

                                      Year                     Amount
                                     ------                   --------
                                                       (dollars in thousands)

                                      <S>                    <C>        
                                      1999                   $       108
                                      2000                            97
                                      2001                            87
                                      2002                            33
                                                            ------------
                                                             $       325
                                                            ------------
                                                            ------------

</TABLE>

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

     Total rental income received in 1998, 1997, and 1996 was $104,000,
$177,000, and $182,000, respectively. Total rent expense charged to noninterest
expense in 1998, 1997, and 1996 was $155,000, $213,000, and $222,000,
respectively.




                                       43
<PAGE>




(5)  DEPOSITS
     At December 31, 1998, the scheduled maturities of time deposits are as
follows:

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

<TABLE>
<CAPTION>

                                      Year                     Amount
                                     ------                   --------
                                                       (dollars in thousands)

                                    <S>                       <C>    
                                    1999                      $48,182
                                    2000                       10,148
                                    2001                        2,224
                                    2002                          163
                                    2003 and thereafter            73
                                                              -------
                                                              $60,790
                                                              -------
                                                              -------
</TABLE>

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

6)   INCOME TAXES
     The components of income tax expense (benefit) for the years ended December
31, 1998, 1997, and 1996 are as follows:

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

<TABLE>
<CAPTION>

                                   1998     1997     1996 
                                   -----    -----    -----
                                  (dollars in thousands)
Current income taxes:
   <S>                            <C>      <C>      <C>  
   Federal                        $ 122    $ 167    $  25
   State                            (57)     (51)     (33)
Deferred income taxes                 6      (78)      (1)
                                  -----    -----    -----
                                  $  71    $  38    $  (9)
                                  -----    -----    -----
                                  -----    -----    -----

</TABLE>

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

     A reconciliation of expected income tax expense to federal income tax
expense, computed by applying the federal statutory rate of 34% to income before
income tax expense for the years ended December 31, 1998, 1997, and 1996 to
reported income tax expense, is as follows:

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

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

<TABLE>
<CAPTION>

                                                        1998    1997    1996 
                                                        -----   -----   -----
                                                       (dollars in thousands)

<S>                                                      <C>     <C>     <C>  
Income tax expense at statutory rate                     $ 239   $ 234   $ 155
Increase (decrease) in income taxes resulting from:
   Tax-exempt income                                      (137)   (195)   (215)
   Goodwill amortization                                     4       4       4
   State income taxes, net of federal
     income tax benefit                                    (38)    (34)    (22)
   Alternative minimum tax                                  --      --      60
   Other, net                                                3      29       9
                                                         -----   -----   -----
Income tax expense                                       $  71   $  38   $  (9)
                                                         -----   -----   -----
                                                         -----   -----   -----

</TABLE>

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

     The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1998 and 1997 are presented below:


                                       44
<PAGE>


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

<TABLE>
<CAPTION>

                                                         1998    1997 
                                                        -----   -----
                                                    (dollars in thousands)
<S>                                                     <C>     <C>  
Deferred tax assets:
   Loans, principally due to allowance for loan losses  $ 250   $ 224
   Alternative minimum tax carryforward                   284     140
   Other                                                   60      35
                                                        -----   -----
       Gross deferred tax assets                          594     399
   Less valuation allowance                               (60)    (60)
                                                        -----   -----
       Deferred tax assets, net                           534     339
                                                        -----   -----
Deferred tax liabilities:
   Available for sale securities market valuation         247      94
   Premises and equipment, basis differences              233      31
   Intangible assets                                       --       1
                                                        -----   -----
       Total gross deferred tax liabilities               480     126
                                                        -----   -----
       Net deferred tax asset                           $  54   $ 213
                                                        -----   -----
                                                        -----   -----

</TABLE>

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

     The alternative minimum tax carry forward has no expiration date. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences
become deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning strategies in
making this assessment. A valuation allowance is provided on deferred tax assets
when it is more likely than not that some portion of the assets will not be
realized. Illini has established a valuation allowance in the amount of $60,114
for deferred tax assets at December 31, 1998 and 1997.

(7)  EMPLOYEE BENEFITS
     Illini has a defined contribution 401(k) plan that covers substantially all
employees. Both Illini and the employee may contribute to the plan. Illini's
contributions are voluntary and at the discretion of the Board of Directors. All
contributions are subject to statutory restrictions. Illini made contributions
of $37,000, $48,000, and $40,000 to the plan in 1998, 1997, and 1996,
respectively.

(8)  OTHER COMPREHENSIVE INCOME
     Illini's other comprehensive income for the years ended December 31, 1998,
1997, and 1996 included the following components:

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

<TABLE>
<CAPTION>

                                                     1998    1997     1996
                                                     -----   -----   -----
         <S>                                         <C>     <C>     <C>   
         Net realized and unrealized gains (losses)
           on securities available for sale, net     $ 264   $ 294   $(131)
         Less adjustment for net securities gains
           realized in net income, net                  (5)    (31)     (1)
                                                     -----   -----   -----
         Other comprehensive income (loss)           $ 259   $ 263   $(132)
                                                     -----   -----   -----
                                                     -----   -----   -----

</TABLE>

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




                                       45
<PAGE>








(9)  CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
     Following are condensed balance sheets as of December 31, 1998 and 1997 and
the related condensed schedules of income and cash flows for each of the years
in the three-year period ended December 31, 1998 of Illini (parent company
only):

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

<TABLE>
<CAPTION>

                            CONDENSED BALANCE SHEETS
                           DECEMBER 31, 1998 AND 1997

                                                    1998     1997 
                                                (dollars in thousands)
<S>                                              <C>      <C>    
ASSETS:
   Cash                                          $   315  $   186
   Investment in Illini Bank                      14,927   14,535
   Other investments                                  --        4
   Excess of cost over fair value
     of net assets acquired                          124      160
   Other assets                                      196      133
                                                 -------  -------
                                                 $15,562  $15,018
                                                 -------  -------
                                                 -------  -------
LIABILITIES AND
SHAREHOLDERS' EQUITY:
   Other liabilities                             $   143  $    40
   Shareholders' equity                           15,419   14,978
                                                 -------  -------
                                                 $15,562  $15,018
                                                 -------  -------
                                                 -------  -------

</TABLE>


                          CONDENSED SCHEDULES OF INCOME
                  YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996

<TABLE>
<CAPTION>

                                                              1998      1997      1996 
                                                           --------  --------  --------
                                                               (dollars in thousands)
<S>                                                        <C>       <C>       <C>     
REVENUE:
   Dividends received from Illini Bank                     $    735  $    900  $    601
   Other                                                          4        --        --
                                                           --------  --------  --------
                                                                739       900       601
                                                           --------  --------  --------
EXPENSES:
   Professional fees                                            291       314       120
   Other                                                         89       140       103
                                                           --------  --------  --------
                                                                380       454       223
                                                           --------  --------  --------

   Income before income tax benefit and
     equity in undistributed income of Illini Bank              359       446       378
Income tax benefit                                              139       154        92
Equity in undistributed (distributed)
   income of Illini Bank                                        132        50        (5)
                                                           --------  --------  --------
   Net income                                              $    630  $    650  $    465
                                                           --------  --------  --------
                                                           --------  --------  --------


</TABLE>



                                       46
<PAGE>



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


                        CONDENSED SCHEDULES OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996

<TABLE>
<CAPTION>

                                                           1998    1997    1996 
                                                        -------  -------  -------
                                                          (dollars in thousands)
<S>                                                       <C>     <C>     <C>  
Cash flows from operating activities:
   Net income                                             $ 630   $ 650   $ 465
   Adjustments to reconcile net income
     to net cash provided by (used in)
     operating activities:
       Depreciation and amortization                         35      75      67
       Equity in (undistributed) distributed
         income of Illini Bank                             (132)    (50)      5
       Other, net                                            40    (110)   (114)
                                                         -------  -------  -------
       Net cash provided by operating activities            573     565     423
Cash flows from investing activities:
   Proceeds from sales of debt and marketable
     equity securities available for sale                     4      --      --
                                                         -------  -------  -------
       Net cash provided by investing activities              4      --      --
Cash flows from financing activities:
   Dividends paid                                          (448)   (448)   (426)
                                                         -------  -------  -------
       Net cash used in financing activities               (448)   (448)   (426)
       Net increase (decrease) in cash                      129     117      (3)

Cash at beginning of year                                   186      69      72
                                                         -------  -------  -------
Cash at end of year                                       $ 315   $ 186   $  69
                                                         -------  -------  -------
                                                         -------  -------  -------
Supplemental information:
   Income taxes paid                                      $  77   $ 112   $ 145
                                                         -------  -------  -------
                                                         -------  -------  -------

</TABLE>

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


                                       47
<PAGE>

(10) DISCLOSURES ABOUT FINANCIAL INSTRUMENTS
     Illini is party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit and standby letters
of credit. Such instruments may involve, to varying degrees, elements of credit
risk in excess of the amounts recognized in the consolidated balance sheets. The
contractual amounts of these instruments reflect the extent of involvement
Illini has in particular classes of financial instruments.
     Illini's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of these
instruments. Illini uses the same credit policies in making commitments and
conditional obligations as it does for financial instruments recorded in the
consolidated balance sheets. The off-balance-sheet financial instruments of
Illini at December 31, 1998 and 1997 are presented below.

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

<TABLE>
<CAPTION>

                                                                                     1998     1997 
                                                                                   -------  -------
                                                                               (dollars in thousands)
<S>                                                                               <C>      <C>    
Financial instruments whose contractual
 amounts represent credit risk:
        Commitments to extend credit                                              $11,050  $11,588
        Standby letters of credit                                                   1,295    1,223
                                                                                  -------  -------
                                                                                  $12,345  $12,811
                                                                                  -------  -------
                                                                                  -------  -------

</TABLE>

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

     Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract. Of the
total commitments to extend credit at December 31, 1998 and 1997, approximately
$6.4 million and $6.5 million, respectively, represent fixed-rate loan
commitments. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since certain of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. Illini
evaluates each customer's creditworthiness on a case-by-case basis. The amount
of collateral obtained upon extension of credit is based on management's credit
evaluation of the counterparty. Collateral held varies, but generally includes
residential or income-producing commercial property, inventory, accounts
receivable, and/or equipment.
     Standby letters of credit are conditional commitments issued by Illini to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing such letters of credit is essentially the same as that
involved in extending other financing arrangements with customers. Illini holds
collateral to support such commitments for which collateral is deemed necessary.
     Illini has established overnight federal funds lines of credit of $3.5
million with an unaffiliated bank. As a member of the FHLB, Illini has a line of
credit of approximately $4.0 million.


                                       48
<PAGE>

     Following is a summary of the carrying amounts and fair values of Illini's
financial instruments at December 31, 1998 and 1997.

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

<TABLE>
<CAPTION>

DECEMBER 31, 1998                                    CARRYING       FAIR
                                                      AMOUNT        VALUE
                                                    ---------     -------
                                                    (dollars in thousands)
<S>                                                    <C>       <C>     
Balance sheet assets:
   Cash and due from banks                             $  5,624  $  5,624
   Interest-bearing deposits in other banks                  19        19
   Federal funds sold                                     6,675     6,675
   Debt and marketable equity securities                 53,276    53,276
   Loans, net                                            85,806    85,921
   Accrued interest receivable                            1,390     1,390
                                                       --------  --------
                                                       $152,790  $152,905
                                                       --------  --------
                                                       --------  --------
Balance sheet liabilities:
   Deposits                                            $142,959  $143,366
   Securities sold under agreements to repurchase           290       290
   Accrued interest payable                                 827       827
                                                       --------  --------
                                                       $144,076  $144,483
                                                       --------  --------
                                                       --------  --------

DECEMBER 31, 1997                                    CARRYING       FAIR
                                                      AMOUNT        VALUE
                                                     ---------    -------
Balance sheet assets:
   Cash and due from banks                             $  5,361  $  5,361
   Interest-bearing deposits in other banks                  77        77
   Federal funds sold                                     6,755     6,755
   Debt and marketable equity securities                 46,834    46,834
   Loans, net                                            84,987    86,024
   Accrued interest receivable                            1,500     1,500
                                                       --------  --------
                                                       $145,514  $146,551
                                                       --------  --------
                                                       --------  --------
Balance sheet liabilities:
   Deposits                                            $137,576  $137,974
   Securities sold under agreements to repurchase           715       715
   Accrued interest payable                                 784       784
                                                       --------  --------
                                                       $139,075  $139,473
                                                       --------  --------
                                                       --------  --------

</TABLE>

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

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
such value:

CASH AND OTHER SHORT-TERM INSTRUMENTS
     For cash and due from banks, interest-bearing deposits in other banks,
federal funds sold, and securities sold under agreements to repurchase, the
carrying amount is a reasonable estimate of fair value, as such instruments
reprice in a short time period.

DEBT AND MARKETABLE EQUITY SECURITIES
     Fair values of debt and marketable equity securities are based on quoted
market prices or dealer quotes.

LOANS
     Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type such as commercial, commercial
real estate, residential mortgage, and installment. Each loan category is
further segmented into fixed- and adjustable-rate interest terms and by
performing and

                                       49
<PAGE>

nonperforming categories.
     For certain homogeneous categories of performing loans, such as certain
residential mortgages and other consumer loans, fair value is estimated using
the quoted market prices for securities backed by similar loans, adjusted for
differences in loan characteristics. The fair value of other types of loans is
estimated by discounting the future cash flows using the current rates at which
similar loans would be made to borrowers with similar credit ratings and for the
same remaining maturities.
     Fair value for nonperforming loans is based on recent external appraisals.
If appraisals are not available, estimated cash flows are discounted using a
rate commensurate with the risk associated with the estimated cash flows.
Assumptions regarding credit risk, cash flows, and discount rates are
judgmentally determined using available market information and specific borrower
information.

ACCRUED INTEREST RECEIVABLE AND PAYABLE
     For accrued interest receivable and payable, the carrying amount is a
reasonable estimate of fair value because of the short maturity for this
financial instrument.

DEPOSITS
     The fair value of deposits with no stated maturity, such as
noninterest-bearing demand deposits, NOW and money market accounts, and savings
accounts is equal to the amounts payable on demand. The fair value of time
deposits is based on the discounted value of contractual cash flows. The
discount rate is estimated using the rates currently offered for deposits of
similar remaining maturities.

COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT
     The fair value of commitments to extend credit and standby letters of
credit are estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements, the
likelihood of the counterparties drawing on such financial instruments, and the
present creditworthiness of such counterparties. Illini believes such
commitments have been made on terms which are competitive in the markets in
which it operates; however, no premium or discount is offered thereon and,
accordingly, Illini has not assigned a value to such instruments for purposes of
this disclosure.

(11) LITIGATION
     Various legal claims have arisen against Illini Bank, Illini's wholly owned
subsidiary, in the normal course of business, which, in the opinion of Illini
management, will not result in any material liability to Illini.
     Two complaints were filed against Illini in 1998. One complaint seeks to
compel Illinois Stock Transfer Company, Illini's transfer agent, to distribute
rights certificates to Illini's shareholders and further seeks to certify all
Illini shareholders as a class. The other complaint seeks declaratory and
injunctive relief from Illini and its directors regarding an alleged triggering
of the Company's Shareholder Rights Agreement and the enforceability of an
amendment thereto. The plaintiff in the second complaint also seeks compensatory
and punitive damages arising out of the directors' alleged breach of fiduciary
duty. The plaintiffs in both actions seek to recover their attorneys' fees from
Illini.
     Illini and its directors intend to vigorously contest and oppose the
allegation made in both complaints.

(12) REGULATORY RESTRICTIONS
     Illini and Illini Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory and possibly
additional discretionary actions by regulators that, if undertaken, could have a
direct material effect on Illini's consolidated financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, Illini and Illini Bank must meet specific capital guidelines that
involve quantitative measures of Illini and Illini Bank's assets, liabilities,
and certain off-balance-sheet items as calculated under regulatory accounting
principals. Illini and Illini Bank capital amounts and classification are also
subject to qualitative judgments by the regulators about components,
risk-weightings, and other factors.
     Quantitative measures established by regulations to ensure capital adequacy
require Illini and Illini Bank to maintain minimum amounts and ratios (set forth
in the table below) of total and Tier I capital (as

                                       50
<PAGE>

defined in the regulations) to risk-weighted assets (as defined), and of Tier I
capital to average assets (as defined). Management believes, as of December 31,
1998, Illini and Illini Bank meet all capital adequacy requirements to which
they are subject.
     As of September 30, 1997, the most recent notification from regulatory
agencies categorized Illini Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized,
Illini Bank must maintain minimum total risk-based, Tier I risk-based, and Tier
I leverage ratios as set forth in the table. There are no conditions or events
since that notification that management believes have changed Illini Bank's
category.
     Illini and Illini Bank actual and required capital amounts and ratios as of
December 31, 1998 and 1997 are as follows:

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

<TABLE>
<CAPTION>

                                                                DECEMBER 31, 1998
                                   ----------------------------------------------------------------------------
                                                                                         TO BE WELL CAPITALIZED
                                                                                        UNDER PROMPT CORRECTIVE
                                         ACTUAL            CAPITAL REQUIREMENTS          ACTION PROVISIONS
                                    ----------------       -----------------------       -----------------------
                                    AMOUNT     RATIO       AMOUNT       RATIO            AMOUNT    RATIO
                                    ------     -----       ------       -----           -------   --------
                                                           (dollars in thousands)
<S>                                 <C>         <C>   <C>                <C>         <C>           <C>
Total capital (to risk-
 weighted assets):
    Illini                          $16,247     15.87%  $  8,189         8.00%               --       --
    Illini Bank                      15,880     15.52      8,183         8.00        $   10,229    10.00%
Tier I capital (to risk-
 weighted assets):
    Illini                           14,878     14.53%     4,095         4.00%                --       --
    Illini Bank                      14,511     14.19      4,091         4.00              6,137     6.00%
Tier I capital (to quarterly
 average assets):
    Illini                           14,878      9.57%     4,663         3.00%                --       --
    Illini Bank                      14,511      9.35      4,656         3.00              7,761     5.00%

</TABLE>


<TABLE>
<CAPTION>

                                                                DECEMBER 31, 1997
                                   ----------------------------------------------------------------------------
                                                                                         TO BE WELL CAPITALIZED
                                                                                        UNDER PROMPT CORRECTIVE
                                         ACTUAL            CAPITAL REQUIREMENTS          ACTION PROVISIONS
                                    ----------------       -----------------------       -----------------------
                                    AMOUNT     RATIO       AMOUNT       RATIO            AMOUNT    RATIO
                                    ------     -----       ------       -----           -------   --------
                                                           (dollars in thousands)
<S>                                 <C>         <C>   <C>                <C>         <C>           <C>
Total capital (to risk-
 weighted assets):
    Illini                          $15,985     15.67%  $  8,159         8.00%               --        --
    Illini Bank                      15,681     15.39      8,151         8.00         $   10,188     10.00%
Tier I capital (to risk-
 weighted assets):
    Illini                           14,683     14.40%     4,080         4.00%               --        --
    Illini Bank                      14,379     14.11      4,075         4.00              6,113      6.00%
Tier I capital (to quarterly
 average assets):
    Illini                           14,683      9.78%     4,506         3.00%               --        --
    Illini Bank                      14,379      9.59      4,498         3.00              7,497      5.00%

</TABLE>

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


     Dividends from Illini Bank are the principal source of funds for payment of
dividends by Illini to its shareholders.

                                       51
<PAGE>

     Illini Bank is subject to certain restrictions on the amount of dividends
that may be declared without prior regulatory approval. At December 31, 1998,
approximately $176,000 of retained earnings were available for dividends without
prior regulatory approval.
     At December 31, 1998 and 1997, approximately $984,000 and $1,053,000,
respectively, of cash and due from banks represented required reserves on
deposits maintained by Illini in accordance with Federal Reserve Bank
requirements.

(13) ACQUISITION ACTIVITY
     On March 2, 1999, Illini announced a definitive agreement to acquire all of
the outstanding shares of Farmers State Bank of Camp Point in exchange for
123,333 shares of Illini's common stock and cash of $3,456,260. Farmers State
Bank of Camp Point is headquartered in Camp Point, Illinois and had assets of
approximately $33 million at December 31, 1998. Illini expects to close the
acquisition during the third quarter of 1999.





































                                       52
<PAGE>






ITEM 8. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.


-------------------------------------------------------------------------------
PART III.

ITEM 9. - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     Information required by this item is incorporated by reference from the
sections entitled "Election of Directors", "Directors and Executive Officers",
"Executive Officers", "Business Experience of Non Director Executive Officers"
and "Section 16(a) Beneficial Ownership Reporting Compliance" in the proxy
statement for the Annual Meeting of Shareholders to be held on May 20, 1999 (the
"Proxy Statement").

ITEM 10. - EXECUTIVE COMPENSATION

     Information required by this item is incorporated by reference from the
section entitled "Executive Compensation", "Employment Agreement" and
"Compensation of Directors" in the Proxy Statement.

ITEM 11. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information required by this item is incorporated by reference from the
section entitled "Security Ownership of Certain Beneficial Owners and
Management" in the Proxy Statement.

ITEM 12. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information required by this item is incorporated by reference from the
section titled Transactions with Directors, Executive Officers and Associates in
the Proxy Statement.



                                       53
<PAGE>

ITEM 13. - EXHIBITS LIST AND REPORTS ON FORM 8-K

(a) The following exhibits have been filed with the Securities and Exchange
Commission as required:

       (2)        Not applicable.
       (3)        Articles of Incorporation. Incorporated by reference to
                  Illini's Form 10-KSB for the year ended December 31, 1984,
                  Commission File No. 0-13343. Amended and Restated Bylaws of
                  Illini Corporation, effective October 30, 1998 (Incorporated
                  by reference as Exhibit 99 to Registrant's Report on Form 8-K
                  filed November 6, 1998).
       (4)        Rights Agreement by and between Illini Corporation and
                  Illinois Stock Transfer Company, as rights agent. Incorporated
                  by reference to Illini's Form 8-K filed on June 25, 1997,
                  Commission File No. 0-13343. First Amendment to Rights
                  Agreement dated July 1, 1998 incorporated by reference to
                  Illini's Form 8-K filed on July 13, 1998.
       (9)        Not applicable.
       (10)       (1) Form of data processing agreement. Incorporated by
                  reference to Illini's Form 10- KSB for the year ended December
                  31, 1996, Commission File No. 0-13343. (2) Employment
                  agreement by and between Illini Corporation and Burnard K.
                  McHone dated November 24, 1998. (3) Employment agreement by
                  and between Illini Corporation and William B. Littreal dated
                  November 24, 1998. (4) Employment agreement by and between
                  Illini Corporation and Ronald W. Wenger dated November 24,
                  1998.
       (11)       Statement regarding computation of earnings per share is
                  included in note 1(L) to the financial statements which is
                  part of this Form 10-KSB.
       (13)       Not applicable.
       (16)       Not applicable.
       (18)       Not applicable.
       (21)       Subsidiaries of the Registrant: Illini Bank, an Illinois 
                  state chartered bank.
       (22)       Not applicable.
       (23)       Not applicable.
       (24)       Not applicable.
       (27)       Financial data schedule.
       (99)       Not applicable.

(b) The Company filed a Form 8-K on November 6, 1998 in connection with certain
amendments to the Company's Bylaws.


                                       54
<PAGE>

SIGNATURES

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


Dated:   March 25, 1999
      -----------------------------
Illini Corporation, Registrant, by

/s/ Burnard K. McHone
-------------------------------------------------------------------------------
Burnard K. McHone, President

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







<TABLE>

<S>                                                       <C> 
/S/ THOMAS A. BLACK                  MARCH 25, 1999
---------------------------------------------------
Thomas A. Black, Chairman            Date
                                                          /S/ ROBERT F. OLSON                  MARCH 25, 1999
                                                          ---------------------------------------------------
                                                          Robert F. Olson, Director            Date
/S/ RONALD E. CRAMER                 MARCH 25, 1999
---------------------------------------------------
Ronald E. Cramer, Director           Date
                                                          /S/ JOHN H. PICKRELL                 MARCH 25, 1999
                                                          ---------------------------------------------------
                                                          John H. Pickrell, Director           Date
/S/ LAWRENCE B. CURTIN               MARCH 25, 1999
---------------------------------------------------
Lawrence B. Curtin, Director         Date
                                                          /S/ N. RONALD THUNMAN                MARCH 25, 1999
                                                          ---------------------------------------------------
                                                          N. Ronald Thunman,                   Director Date
/S/ KENNETH G. DEVERMAN              MARCH 25, 1999
---------------------------------------------------
Kenneth G. Deverman, Director        Date
                                                          /S/ WILLIAM G. WALSCHLEGER           MARCH 25, 1999
                                                          ---------------------------------------------------
                                                          William G. Walschleger, Director     Date
/S/ WILLIAM N. ETHERTON              MARCH 25, 1999
---------------------------------------------------
William N. Etherton, Director        Date
                                                          /S/ PERRY WILLIAMS                   MARCH 25, 1999
                                                          ---------------------------------------------------
                                                          Perry Williams, Director             Date
/S/ WILLIAM B. MCCUBBIN              MARCH 25, 1999
---------------------------------------------------
William B. McCubbin, Director        Date
                                                          /S/ C. DEANN HAGER                   MARCH 25, 1999
                                                          ---------------------------------------------------
                                                          C. Deann Hager, Finance Manager      Date
                                                          (Principal Financial and Accounting Officer)
/S/ BURNARD K. MCHONE                MARCH 25, 1999
---------------------------------------------------
Burnard K. McHone, Director & Pres.  Date
(Principal Executive Officer)

</TABLE>



                                       55
<PAGE>






EXHIBIT INDEX

     (10)(2)      Employment agreement by and between Illini Corporation and
                  Burnard K. McHone dated November 24,  1998.
     (10)(3)      Employment  agreement  by and  between  Illini  Corporation
                  and  William  B.  Littreal  dated
                  November 24, 1998.
     (10)(4)      Employment agreement by and between Illini Corporation and
                  Ronald W. Wenger dated November 24, 1998.
     (27)         Financial data schedules.




                                       56
<PAGE>




<TABLE>

ILLINI CORPORATION AND ILLINI BANK OFFICERS          ILLINI BANK LOCATIONS
-------------------------------------------          ----------------------------------------------------------
<S>                                                  <C>                                <C>
ILLINI CORPORATION                                   3200 West Iles Avenue              2201 Woodlawn, Ste. 100
                                                     Springfield                        Lincoln
Burnard K. McHone                                    DOUG FINN, BANK MANAGER II         SHARON AWE, BANK MANAGER
President
                                                     120 South Chatham Road             120 Governor Oglesby
William Littreal                                     Springfield                        Elkhart
Sr. Vice President / Operations                      BRENDA RICH, BANK MANAGER          RODNEY GOWIN, BANK MANAGER

Ronald Wenger                                        615 West Jefferson St.             116 East Exchange
Sr. Vice President / Credit Administration           Springfield                        Danvers
                                                     STEVE TATE, BANK MANAGER           TOM CAISLEY, BANK MANAGER
James L. Adkins
Vice President / Commercial Sales                    2120 Peoria Road                   103 Franklin
                                                     Springfield                        Hudson
Doug F. Finn                                         TERESA JUDD, BANK MANAGER          GREG BIRKY, BANK MANAGER II
Vice President / Sales & Service
                                                     375 West Andrew Road               100 East Third St.
C. Deann Hager                                       Sherman                            Stonington
Finance Manager                                      NANCY MANNING, BANK MANAGER        CAROLYN WINN, BANK MANAGER

ILLINI BANK                                          133 Dodds Street                   130 Main St.
                                                     Divernon                           Dawson
Burnard K. McHone                                    VICKIE BLY, BANK MANAGER II        ANGELA FLECK, BANK MANAGER
President
                                                     Route 4 and Jefferson              101 Main St.
William Littreal                                     Auburn                             Tallula
Sr. Vice President / Operations                      MOLLY APPELT, BANK MANAGER         JANE KING, BANK MANAGER

Ronald Wenger                                        West Main St.                      Lincoln & Douglas
Sr. Vice President / Credit Administration           Mechanicsburg                      Owaneco
                                                     LORI JARRETT, BANK MANAGER         CAROLYN WINN, BANK MANAGER
James L. Adkins
Vice President / Commercial Sales                    420 East Sangamon
                                                     Petersburg
Doug F. Finn                                         DIANE HOPP, BANK MANAGER
Vice President / Sales & Service
                                                     106 East Washington
C. Deann Hager                                       Greenview
Finance Manager                                      DIANE HOPP,  BANK MANAGER

Nancy Richards
Relationship Banker

Alan D. Fulk
Relationship Banker

STOCK TRANSFER AGENT
-----------------------
Illinois Stock Transfer
209 West Jackson Blvd.
Suite 903
Chicago, IL 60606
1-800-757-5755

</TABLE>

                                       57
<PAGE>