<PAGE>
<PAGE>
                          FORM 10-QSB

                  SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.


           Quarterly Report under Section 13 or 15 (d)
           of the Securities and Exchange Act of 1934

              For Quarter Ended September 30, 1998

                Commission File Number:  0-28442
                                         -------

                    Heartland Bancshares, Inc.
    -------------------------------------------------------
    (Exact name of registrant as specified in its charter)


     Illinois                                    37-1356594
------------------------                   ---------------------
(State of incorporation)                      (I.R.S. Employer
                                           Identification Number)


318 South Park Avenue, Herrin, Illinois            62948-3604
---------------------------------------           ------------
(Address of principal executive officer)           (Zip Code)


Issuer's telephone number, including area code: (618) 942-7373
                                                --------------

     Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past ninety days:  
Yes   X      No     


     As of November __, 1998, there were _______ shares of the
registrant's Common Stock, par value $0.01 per share, issued and
outstanding.


     Transitional small business disclosure format (check one):  
Yes         No   X 
    ------     -----


<PAGE>
<PAGE>
                  HEARTLAND BANCSHARES, INC.
                   --------------------------
                        AND SUBSIDIARY
                        --------------
       CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
       ----------------------------------------------
                       (IN THOUSANDS)
                       -------------
<TABLE>
<CAPTION>
                                                  September 30,
                                                     1998       December 31,
                                                  ------------       1997
                                                  (Unaudited)   ------------
                    ASSETS                        ------------
<S>                 ------                          <C>          <C>
Cash and cash equivalents                                  
  Interest-bearing                                  $  8,029     $  3,319
  Noninterest-bearing                                  1,626        1,651
Certificates of deposit                                1,263           95
Investment securities available-for-sale at
 estimated market value                                1,152        1,714
Investment securities held-to-maturity                 4,486        5,627
Mortgage-backed and related securities 
 available-for-sale at estimated market value            809        1,249
Mortgage-backed and related securities held-to- 
 maturity                                              4,701        5,737
Loans receivable, net                                 38,830       46,307
Investments required by law                              585          577
Property, equipment, and property held  
 for investment, net                                     462          461
Accrued interest receivable                              278          292 
Prepaid expenses and other assets                        168           32
Foreclosed real estate                                   321          239
Deferred tax asset                                       256          161
                                                    --------     --------
TOTAL ASSETS                                        $ 62,966     $ 67,461
------------                                        ========     ========
      LIABILITIES AND STOCKHOLDERS' EQUITY
      ------------------------------------
Liabilities
-----------
  Deposits                                          $ 51,156     $ 54,022
  Accrued interest on deposits                            47           63
  Advances from borrowers for taxes and insurance        149          228
  Other liabilities                                      336          127
  Accrued income taxes                                     -          126
  Short-term borrowings                                    -          750
                                                    --------     --------
      Total Liabilities                             $ 51,688     $ 55,316
      -----------------                             --------     --------
Commitments and Contingencies
-----------------------------
Stockholders' Equity
--------------------
  Preferred stock, $.01 par value per share: 
   1,000,000 shares authorized, - 0 - issued        $      -     $      -
  Common stock, $.01 par value per share:  
   4,000,000 shares authorized; 876,875 
   shares issued; 832,833 and 876,875 
   outstanding at September 30, 1998 and 
   December 31, 1997, respectively                         9            9
  Additional paid-in capital                           8,253        8,212
  Unearned employee stock ownership plan 
    (ESOP) shares                                       (445)        (519)
  Management recognition plan shares                    (450)        (496)
  Treasury stock (44,042 shares at cost)                (684)           -
  Retained earnings - substantially restricted         4,577        4,938
  Accumulated other comprehensive income:
    Unrealized gains (losses) on securities               18            1
                                                    --------     --------
      Total Stockholders' Equity                    $ 11,278     $ 12,145
      --------------------------                    --------     --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $ 62,966     $ 67,461
------------------------------------------          ========     ========
</TABLE>
See accompanying notes to consolidated financial statements.
                               1<PAGE>
<PAGE>
                       HEARTLAND BANCSHARES, INC.
                       --------------------------
                            AND SUBSIDIARY
                            --------------
                   CONSOLIDATED STATEMENTS OF INCOME
                   ---------------------------------
                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
                  ------------------------------------
                             (UNAUDITED)
<TABLE>                            -----------
<CAPTION>
                                                 Three Months Ended   Nine Months Ended 
                                                 ------------------   ------------------
                                                    September 30,       September 30,
                                                   1998      1997      1998      1997   
                                                 --------  --------   -------  --------
<S>                                              <C>       <C>        <C>      <C>
Interest Income
---------------
  Interest on first mortgage loans                $    766  $    835  $  2,423  $  2,454
  Interest on other loans                               64        48       165       125
  Interest on investments, securities, and
   deposits with banks                                 194       152       512       510
  Interest on mortgage backed securities                85       132       290       423
                                                  --------  --------  --------  --------
      Total Interest Income                       $  1,109  $  1,167  $  3,390  $  3,512 
      ---------------------
Interest Expense
----------------
  Interest on deposits                            $    644  $    641  $  1,925  $  1,923
  Interest on borrowings                                 -        23         3        56
                                                  --------  --------  --------  --------
     Total Interest Expense                       $    644  $    664  $  1,928  $  1,979
     ----------------------                       --------  --------  --------  --------
Net Interest Income                               $    465  $    503  $  1,462  $  1,533
-------------------         
Provision for Loan Losses                                9        60       106        70
-------------------------                         --------  --------  --------  --------
Net Interest Income After Provision
-----------------------------------
 for Loan Losses                                  $    456  $    443  $  1,356  $  1,463
 ---------------                                  --------  --------  --------  --------
Non-Interest Income
-------------------
  Initial service charges and other loan fees     $      9  $     13  $     31  $     38
  Gain on sale of other real estate                      -         -         8        12
  Other                                                 40        28        95        90
  Gain on sale of investments                            1         7         1        11
                                                  --------  --------  --------  --------
      Total Non-Interest Income                   $     50  $     48  $    135  $    151
      -------------------------                   --------  --------  --------  --------
Non-Interest Expense
--------------------
  Compensation to directors, officers, and 
   employees                                      $    185  $    187  $    580  $    536
  Pension expense and other employee benefits           44        36       123       130
  Office properties and equipment expense 
   including depreciation                               36        32       103        96
  Advertising                                            4        11        20        35
  Federal insurance premiums                            13        13        37        30
  Stationery, postage, and office supplies              15        13        47        53 
  Checking account expense                              (1)       37        20       108
  Service bureau expense                                38        25       117        67
  Other                                                 65        54       176       163
  Legal and professional services                      156        44       338       202
  Adjustment for mortgage loan rebates                 148         -       148         -
  Loss on sale of investments                            -         -         1         -
  Loss on sale of other real estate                      -         1         -         1
                                                  --------  --------  --------  --------
      Total Non-Interest Expense                  $    703  $    453  $  1,710  $  1,421
      --------------------------                  --------  --------  --------  --------

Income Before Income Taxes                        $   (197) $     38  $   (219) $    193 
--------------------------
Income Tax Expense (Benefit)                           (76)        8       (97)       50 
                                                  --------  --------  --------  --------
Net Income (Loss)                                 $   (121) $     30  $   (122) $    143
-----------------                                 ========  ========  ========  ========

<PAGE>
Earnings (Loss) Per Common Share - Basic
----------------------------------------   
 Net income                                       $   (.15) $    .04  $   (.15) $    .18
                                                  ========  ========  ========  ========
 
Earnings (Loss) Per Common Share - Assuming 
-------------------------------------------
  Dilution
  --------
  Net income                                      $   (.15) $    .04  $   (.15) $    .17
                                                  ========  ========  ========  ========
</TABLE>
See accompanying notes to consolidated financial statements.
                               2<PAGE>
<PAGE>
             HEARTLAND BANCSHARES, INC.  AND SUBSIDIARY
             ------------------------------------------
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
            -----------------------------------------------
                           (IN THOUSANDS)
                           -------------
                            (UNAUDITED)
                            -----------
<TABLE>
<CAPTION>
                                                                Management                        Accumulated
                                         Additional   Unearned  Recognition                          Other
                                Common    Paid-in      ESOP      Plan      Treasury   Retained  Comprehensive
                                Stock     Capital     Shares     Shares     Stock     Earnings     Income       Total
                                ------  ----------   --------   --------  ---------  ---------- ------------   --------
<S>                             <C>      <C>         <C>        <C>         <C>      <C>         <C>           <C>
Balance at December 31, 1997    $   9    $ 8,212     $ (519)     $(496)     $    -      $4,938    $   1        $12,145
---------------------------
Comprehensive income:

  Net income (loss)             $   -    $     -     $    -      $   -           -        (122)   $   -        $  (122)

  Other comprehensive income,
     net of tax:

    Unrealized gains (losses)
      on securities:
    Unrealized holding gains
      (losses) arising during
      the period (net of 
      tax of $10)                   -          -          -          -           -           -       17             17
                                -----    -------      -----      -----      ------      ------    -----        -------
Total comprehensive income
  (loss)                        $   -    $     -      $   -      $   -      $    -      $ (122)   $  17        $  (105)

Cash dividends paid                 -          -          -          -           -        (239)       -           (239)

Purchase of treasury stock
  (44,042 shares at cost)           -          -          -          -        (684)          -        -           (684)

Amortization of management
  recognition plan expense          -          -          -         46           -           -        -             46

Amortization of ESOP expense        -         41         74          -           -           -        -            115
                                -----    -------      -----      -----      ------      ------    -----        -------
Balance at September 30, 1998   $   9    $ 8,253      $(445)     $(450)     $ (684)     $4,577    $  18        $11,278
-----------------------------   =====    =======      =====      =====      ======      ======    =====        =======
</TABLE>

See accompanying notes to consolidated financial statements.
                              3<PAGE>
<PAGE>
                   HEARTLAND BANCSHARES, INC. 
                   -------------------------
                           AND SUBSIDIARY
                           --------------
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                  -------------------------------------
                             (IN THOUSANDS)
                             --------------
                              (UNAUDITED)
                              -----------
<TABLE>
<CAPTION>
                                                                Nine Months Ended 
                                                              --------------------- 
                                                                  September 30,
                                                                1998         1997   
                                                              ---------   ---------
<S>                                                           <C>          <C> 
Cash Flows From Operating Activities
------------------------------------
  Net income (loss)                                           $   (122)    $    143
                                                              --------     --------
  Adjustments to reconcile net income       
  to net cash provided (used) by operating
  activities      
    Depreciation                                              $     44     $     40
    Discount accretion/premium amortization-securities (net)        (1)          (2)
    Amortization of deferred loan origination fees                 (16)         (17)
    Amortization of ESOP expense                                   115           80
    Amortization of MRP expense                                     46           41
    Provision for loan losses                                      106           70
    (Gain) loss on sale of investments                               -          (11)
    (Gain) loss on sale of other real estate                        (8)         (10)
    (Increase) decrease in accrued interest receivable              14          (27)
    (Increase) decrease in prepaid expenses/other assets          (136)          12
    (Increase) decrease in prepaid income taxes                      -           73
    (Increase) decrease in deferred income taxes                  (105)         (47)
    Increase (decrease) in accrued interest payable                (16)          16
    Increase (decrease) in accrued income taxes                   (126)          51
    Increase (decrease) in other liabilities                       209           17
                                                              --------     --------
    Total Adjustments                                         $    126     $    286
    -----------------                                         --------     --------
  Net Cash Provided by Operating Activities                   $      4     $    429
  -----------------------------------------                   --------     --------
Cash Flows From Investing Activities
------------------------------------
  Net (increase) decrease in certificates of deposit          $ (1,168)    $     99
  Proceeds from maturities of investment securities
   and mortgage-backed securities                                2,370        3,135
  Principal payments on mortgage-backed securities               1,715        1,105
  Net (increase) decrease in loans receivable                    7,223       (4,787)
  Purchases of property and equipment                              (45)         (37)
  Purchase of investment securities held-to-maturity            (1,149)        (251)
  Purchase of investment securities available-for-sale               -         (200)
  Purchase of mortgage-backed securities held to maturity         (228)           -
  Proceeds from sale of mortgage-backed securities 
    available-for-sale                                               -        1,085
  Proceeds from sale of investment securities 
    available-for-sale                                             374          252
  Proceeds from sale of investment securities held-to-
    maturity                                                       125            -
  Purchase of Federal Home Loan Bank stock                          (8)         (88)
  Proceeds from sale of other real estate                           90          105
                                                              --------     --------
  Net Cash Provided by Investing Activities                   $  9,299     $    418  
  -----------------------------------------                   --------     -------- 
Cash Flows From Financing Activities
------------------------------------
  Net increase (decrease) in deposits                         $ (2,866)    $   (785)
  Net increase (decrease) in mortgage escrow funds                 (79)         (90)
  Proceeds from Federal Home Loan Bank advances                      -        4,250
  Payments on Federal Home Loan Bank advances                     (750)      (2,500)
  Shares acquired by management recognition plan                     -         (552)
  Dividends on common stock                                       (239)        (244)
  Purchase of treasury stock                                      (684)           -
                                                              --------     --------
  Net Cash Provided by (Used in) Financing Activities         $ (4,618)    $     79
  ---------------------------------------------------         --------     --------
<PAGE>
Net  Increase in Cash and Cash Equivalents                    $  4,685     $    926 
-----------------------------------------                             
Cash and Cash Equivalents at Beginning of Period                 4,970        1,872
                                                              --------     --------
Cash and Cash Equivalents at End of Period                    $  9,655     $  2,798
------------------------------------------                    ========     ========

Supplemental Disclosures
------------------------
Cash Paid (Received) During the Period for:
  Interest                                                    $  1,944     $  1,963
  Income taxes                                                $    244     $    (27)

Loans Transferred to Foreclosed Real Estate During Period     $    230     $    106

Proceeds from Sales of Foreclosed Real Estate Financed
 Through Loans                                                $     19     $      -
</TABLE>

See accompanying notes to consolidated financial statements. 
                              4<PAGE>
<PAGE>
              HEARTLAND BANCSHARES, INC.
              --------------------------

                    AND SUBSIDIARY
                    --------------

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      ------------------------------------------

                      (UNAUDITED)
                      -----------

              SEPTEMBER 30, 1998 AND 1997
              ---------------------------

1.  Business
    --------

 On June 28, 1996, First Federal Savings and Loan Association
 of Herrin (the "Association") completed its conversion from a
 federal mutual savings and loan association to a federal
 stock savings and loan association, and then from a stock
 association to a national bank known as Heartland National
 Bank (the "Bank").  Simultaneously, Heartland National Bank
 was acquired by Heartland Bancshares, Inc. (the "Company"),
 which was formed to act as the holding company of the Bank. 
 At the date of the conversion, the Company completed the sale
 of 876,875 shares of common stock, $.01 par value at $10.00
 per share.  Net proceeds from the above transactions, after
 deducting offering expenses, underwriting fees, and amounts
 retained to fund the Company's employee stock ownership plan
 ("ESOP") totaled approximately $7.4 million.

 The Company (through the Bank) provides a full range of
 financial services to individual and corporate customers from
 two office locations in Herrin and Carterville, Illinois. 
 The Company is subject to competition from other financial
 institutions in the area, is subject to the regulations of
 certain federal agencies, and undergoes periodic examinations
 by those regulatory authorities.

 The Company is primarily engaged in the business of
 directing, planning and coordinating the business activities
 of the Bank.  These activities primarily consist of accepting
 deposits from the general public and investing these funds in
 loans in the Bank's market area and in investment securities
 and mortgage-backed securities.  In the future, the holding
 company structure will permit the Company to expand the
 financial services currently offered through the Bank,
 although there are no definitive plans or arrangements for
 such expansion at present.

2.  Basis of Presentation
    ---------------------

 The accompanying unaudited consolidated financial statements
 were prepared in accordance with the instructions for Form
 10-QSB and, therefore, do not include all information and
 footnotes necessary for a complete presentation of financial
 position, results of operations, changes in stockholders'
 equity, and cash flows in conformity with generally accepted
 accounting principles.  However, all adjustments which, in
 the opinion of management, are necessary for a fair
 presentation of the unaudited consolidated financial
 statements for the three months and nine months ended
 September 30, 1998 and 1997 have been recorded.  Operating
 results for the three months and nine months ended September
 30, 1998 are not necessarily indicative of the results that
 may be expected for the year ending December 31, 1998.

 Certain reclassifications have been made for the three months
 and nine months ended September 30, 1997 to conform with the
 financial statement presentation for the three months and
 nine months ended September 30, 1998.  The reclassifications
 had no effect on previously reported net income or retained
 earnings.
<PAGE>
3.  Principles of Consolidation
    ---------------------------

 The accompanying unaudited consolidated financial statements
 include the accounts of Heartland Bancshares, Inc., Heartland
 National Bank, and
                              5<PAGE>
<PAGE>
 Herrin First Service Corporation, a wholly owned subsidiary of
 Heartland National Bank.  All significant intercompany items
 have been eliminated.

4.  Earnings per Share
    ------------------

 In accordance with Statement of Financial Accounting
 Standards No. 128, "Earnings per Share" (SFAS No. 128),
 earnings per common share are being computed and presented on
 both a basic and diluted basis.  Basic earnings per share are
 computed based on the weighted average number of shares
 actually outstanding during the period in question.  In
 addition to using the weighted average number of outstanding
 shares, diluted earnings per share computations also consider
 the dilutive effect of stock options.  The number of shares
 that would be issued from the exercise of stock options has
 been reduced by the number of shares that could have been
 purchased from the proceeds at the average market price of
 the Company's stock.  In accordance with Statement of
 Position 93-6, "Employers' Accounting for Employee Stock
 Ownership Plans" (SOP 93-6), only employee stock ownership
 plan (ESOP) shares that have been committed to be released
 are considered outstanding shares.  The number of shares
 outstanding has also been reduced by shares repurchased by
 the Company and held as treasury stock (see Note 11).  The
 weighted average numbers of shares used for basic earnings
 per share for the three months and nine months ended
 September 30, 1998 were 786,802 and 803,768, respectively. 
 The weighted average numbers of shares used for basic
 earnings per share for the three months and nine months ended
 September 30, 1997 were 818,112 and 816,373, respectively. 
 The weighted average numbers of shares used for diluted
 earnings per share for the three months and nine months ended
 September 30, 1998 were 786,802 and 808,557, respectively. 
 The weighted average numbers of shares used for diluted
 earnings per share for the three months and nine months ended
 September 30, 1997 were 825,954 and 823,900, respectively.   

 Earnings per share amounts for the three months and nine
 months ended September 30, 1997 have been restated to give
 effect to the application of SFAS No. 128, which was adopted
 by the Company at the end of 1997.  This restatement caused
 an increase of $0.01 in basic earnings per share for the nine
 months ended September 30, 1997, as compared to the primary
 earnings per share of $0.17 which were originally reported
 for that period in 1997.  This restatement did not affect the
 other earnings per share amounts previously presented for the
 three months and nine months ended September 30, 1997. 

5.  Dividends per Share
    -------------------

 In accordance with the provisions of SOP 93-6, dividends paid
 on unallocated ESOP shares are not considered dividends for
 financial reporting purposes.

6.  Employee Stock Ownership Plan
    -----------------------------

 The Company has established a tax qualified employee stock
 ownership plan (ESOP) for employees of the Company and its
 subsidiary.  Employees who have attained age 21 and completed
 one year of service are eligible to participate in the plan. 
 On June 28, 1996, the Company loaned the ESOP $701,500 to
 finance the plan's initial purchase of 70,150 shares.  The
 loan is due and payable in ten (10) annual payments of
 principal and interest, beginning December 31, 1996.  The
 principal is to be repaid in equal installments, with
 interest at a variable rate of 1% above prime.  The Company
 intends to contribute sufficient funds to the ESOP to enable
 it to repay the loan, plus such other amounts as the
 Company's Board of Directors may determine in its discretion. 
 The Company accounts for its ESOP in accordance with
 Statement of Position 93-6, "Employers' Accounting for
 Employee Stock Ownership Plans."  As shares are committed to
 be released to participants, the Company reports employee
 benefits expense based on the average market price of the
 shares during the period and the shares become outstanding
 for earnings per share computations.  Dividends on allocated
 ESOP shares are recorded as a reduction of retained earnings;
 dividends on unallocated ESOP shares are recorded as a
 reduction of debt.  ESOP benefits expense recorded during the
 three months and nine months ended September 30, 1998 was
 $33,693 and $108,576, respectively.  ESOP benefits expense
 recorded during the three months and nine months ended
                              6<PAGE>
<PAGE>
 September 30, 1997 was $33,278 and $99,580, respectively. 

7.  Director Retirement Plan
    ------------------------

 In connection with the stock conversion of the Association to
 the Bank, the Board of Directors of the Association (now the
 Bank) has adopted a director retirement plan, effective
 December 31, 1995, for its directors who are members of the
 Board of Directors at some time on or after the plan's
 effective date.  Under the plan, a bookkeeping account in
 each participant's name is credited with "Performance Units"
 according to the following formula: (i) 70 Performance Units
 for each full year of service as a director prior to 1996,
 plus (ii) 100 Performance Units for each full year of service
 as a director after 1995, with the value of each Performance
 Unit equal to the average fair market value of one share of
 the Company's common stock as of December 31st of each of the
 three years preceding the determination date (or such shorter
 period as to which trading information is available). 
 Additional Performance Units are to be credited at the end of
 each year after 1995, based upon the amount of
 dividends paid on the Company's common stock.  A
 participant's vested interest in Performance Units credited
 on the plan's effective date equals 50% if the participant
 serves on the Board for less than a year after 1995, 75%
 after the second year, and 100% after the third year.  In the
 event a participant's service on the Board is terminated due
 to death or disability, the vested percentage becomes 100%
 regardless of the number of years of service.  Performance
 Units credited after the plan's effective date are fully
 vested at all times.

 As of September 30, 1998, a liability of $111,182 has been
 recognized in the financial statements based on the vested
 value of the interests in the director retirement plan as of
 that date.  The amount of expense recognized in the financial
 statements for the three months and nine months ended
 September 30, 1998 was $9,500 and $28,526, respectively.  The
 amount of expense recognized in the financial statements for
 the three months and nine months ended September 30, 1997 was
 $8,307 and $24,921, respectively.

8.  Management Recognition Plan
    ---------------------------

 On January 28, 1997, the stockholders of the Company approved
 a management recognition plan ("MRP").  With funds
 contributed by the Company, the MRP has purchased, in the
 aggregate, 35,075 shares of the Company's common stock (the
 maximum number of shares allowed to be purchased).  Such
 shares were purchased in the open market.  In June, 1997, the
 MRP's administrative committee voted to grant awards of
 common stock totaling 21,917 shares to certain executive
 officers and directors of the Company and the Bank.  These
 awards are deemed to be effective as of the date of
 stockholder approval of the MRP.  Common stock granted under
 the MRP vests over a five year period at twenty percent per
 year.  Under current accounting standards, when MRP awards
 are granted, the Company recognizes compensation expense
 based on the fair market value of the common stock on the
 date the awards are granted with such amount being amortized
 over the expected vesting period for the award.  As of
 September 30, 1998, 35,075 shares had been purchased on the
 open market by the MRP to fund the plan at a total cost of
 approximately $552,000.  This amount has been recorded in the
 consolidated financial statements as an increase in a contra
 equity account.  This contra equity account will be amortized
 to expense in the future over the period over which the MRP
 awards become vested.  The amount of expense recognized in
 the financial statements for the three months and nine months
 ended September 30, 1998 was $15,342 and $46,026,
 respectively.  The amount of expense recognized in the
 financial statements for the three months and nine months
 ended September 30, 1997 was $15,342 and $40,912,
 respectively.
<PAGE>
9.  Stock Option and Incentive Plan
    -------------------------------

 Also on January 28, 1997, the stockholders of the Company
 approved a stock option and incentive plan.  The option plan
 provides for the granting of stock options and stock
 appreciation rights to certain employees and directors of the
 Company and the Bank and has a term of ten years from the
 effective date of the plan after which no awards may be
 granted.  The plan intends to reserve 87,687 authorized, but
 unissued shares (or treasury
                              7<PAGE>
<PAGE>
 shares) of common stock for issuance upon the future exercise
 of options or stock appreciation rights.  At the effective date
 of the plan, certain executive officers and directors of the
 Company and the Bank will receive a grant of an option under
 the plan to purchase up to 87,683 shares of common stock at an
 exercise price per share equal to its fair market value on that
 date.  The plan provides for one-fifth of the options granted
 to be exercisable on each of the first five anniversaries of
 the date the option was granted.  The Company applies APB
 Opinion 25 in accounting for its stock option plan. 
 Recognition of compensation expense for stock options is not
 required when options are granted at an exercise price equal to
 or exceeding the fair market value of the Company's common
 stock on the date the option is granted.  Therefore, no expense
 related to the stock option plan is reflected on the
 accompanying financial statements.

10. Regulatory Capital
    ------------------

 The Bank is required to maintain certain levels of regulatory
 capital.  At September 30, 1998, the Bank was in compliance
 with all regulatory capital requirements.  In addition to
 these requirements, the Bank must maintain sufficient capital
 for the "liquidation account" for the benefit of eligible
 account holders.  In the event of a complete liquidation of
 the Bank, eligible depositors would have an interest in the
 account.

11. Stock Repurchase Plan and Treasury Stock
    ----------------------------------------

 The Board of Directors of the Company has adopted a program
 to repurchase 43,843 shares, or 5% of the Company's
 outstanding common stock.  It is management's current
 intention that all repurchased shares will be held as
 treasury stock and will be used for general corporate
 purposes, including the exercise of stock options.  As of
 September 30, 1998, the repurchase program has been
 completed, with 43,843 shares being repurchased under the
 plan.  During the third quarter of 1998, the Company acquired
 another 199 shares of treasury stock in a transaction
 unrelated to the stock repurchase plan.

12. Securities Transaction
    ----------------------

 During the second quarter of 1998, the holding company
 (Heartland Bancshares, Inc.) sold a municipal security which
 had been classified as held-to-maturity for total proceeds of
 $124,909, resulting in a net loss of $91.  As a result of
 this transaction, the other securities of that issue held by
 the holding company (which comprise all of the held-to-
 maturity securities held by the holding company) were
 transferred to the available-for-sale category.  These
 securities are currently shown at estimated market value as
 required by SFAS No. 115.  These securities had an amortized
 cost of approximately $250,000, with an unrealized gain of
 approximately $2,199 at transfer.

13.  Subsequent Events
     -----------------

 Subsequent to the end of the third quarter of 1998, the Bank
 conducted a review of interest rate adjustments made in the 
 past relating to adjustable rate mortgages.  Based upon this
 review, the Bank has determined that it is probable that
 rebates of excess interest income should be made to a portion
 of the Bank's adjustable rate loan customers.  The Bank 
 currently estimates the amount of these potential rebates at
 $148,300.  This amount has been recorded as a liability on the 
 September 30, 1998 consolidated statement of financial
 condition, and has been recorded as a charge to current 
 period operations on the consolidated statements of income.
 The after-tax effect of this charge is approximately $87,000.
<PAGE>
Item 2.   Management's Discussion and Analysis or Plan of
          Operations
          -----------------------------------------------

General              
-------

 The following discussion reviews the consolidated financial
 condition of Heartland Bancshares, Inc. (the "Company"),
 Heartland National Bank (the "Bank"), and Herrin First
 Service Corporation, a wholly owned subsidiary of Heartland
 National Bank, as of September 30, 1998 and December 31,
 1997, and the results of operations for the three months and
 nine months ended September 30, 1998 and 1997.

 The business of the Bank has historically been to function as
 a financial intermediary, accepting deposits from the general
 public and investing these funds primarily in loans for one-
 to four-family residences located in the Bank's market area. 
 To a lesser extent, the Bank engages in various forms of
 consumer and home equity lending and invests in mortgage-
 backed securities, U.S. Government and federal agency
 securities, municipal securities and interest-bearing
 deposits.

 The Company is currently primarily investing the funds
 received from its issuance of common stock in mortgage-backed
 securities, U.S. Government and federal agency securities,
 municipal securities and interest-bearing
                              8<PAGE>
<PAGE>
 deposits.

 The Bank's net income is dependent primarily on its net
 interest income, which is the difference between interest
 income earned on loans and investments, and the interest paid
 on interest-bearing liabilities, primarily deposits.  Net
 interest income is determined by (i) the difference between
 yields earned on interest-earning assets and rates paid on
 interest-bearing liabilities ("interest rate spread") and
 (ii) the relative amounts of interest-earning assets and
 interest-bearing liabilities.  The Bank's interest rate
 spread is affected by regulatory, economic and competitive
 factors that influence interest rates, loan demand and
 deposit flows.  The Bank's net earnings are also affected by
 the level of non-interest income, which primarily consists of
 fees and service charges, and by the level of its operating
 expenses and provisions for loan losses.

 The operations of the Bank are significantly affected by
 prevailing economic conditions, competition and the monetary,
 fiscal and regulatory policies of governmental agencies. 
 Lending activities are influenced by the demand for and
 supply of housing, competition among lenders, the level of
 interest rates and the availability of funds.  Deposit flows
 and costs of funds are influenced by prevailing market rates
 of interest, primarily on competing investments, account
 maturities and the levels of personal income and savings in
 the Bank's market area.

Liquidity and Capital Resources
-------------------------------

 As a holding company, the Company conducts its business
 through its subsidiary, the Bank.  The Bank's primary sources
 of funds are deposits and proceeds from maturing investment
 securities, maturing mortgage-backed and related securities
 and principal and interest payments on loans, investment
 securities and mortgage-backed and related securities.  While
 maturities and scheduled amortization of investment
 securities, mortgage-backed and related securities and loans
 are a predictable source of funds, deposit flows and mortgage
 prepayments are greatly influenced by general interest rates,
 economic conditions, competition and other factors.  The Bank
 uses its liquidity resources principally to fund the
 origination of loans, to purchase investment securities and
 mortgage-backed and related securities, to fund deposit
 withdrawals, to maintain liquidity, and to meet operating
 expenses.  Management believes that its sources of funds will
 be adequate to meet the Bank's liquidity needs for the
 immediate future.

 A portion of the Bank's liquidity consists of cash and cash
 equivalents, which include investments in highly liquid,
 short-term deposits.  The levels of these assets are
 dependent on the Bank's operating, financing, and investing
 activities during any given period.  At September 30, 1998
 and December 31, 1997, the consolidated amounts of cash and
 cash equivalents totaled $9.7 million and $5.0 million,
 respectively.  

 Liquidity management is both a daily and long-term function
 of business management.  The Company has other sources of
 liquidity if there is a need for funds.  The Company has a
 portfolio of investment securities and mortgage-backed and
 related securities with a consolidated aggregate market value
 of $2.0 million at September 30, 1998 classified as available
 for sale.  Another source of liquidity is the Bank's ability
 to obtain advances from the Federal Home Loan Bank of Chicago
 ("FHLB").  At September 30, 1998, the Bank had no outstanding
 advances from the FHLB.

 At September 30, 1998, the Bank had $331,000 in outstanding
 commitments to extend credit.  The Bank anticipates that it
 will have sufficient funds available to meet its current loan
 origination commitments.

 The Bank is required to maintain certain levels of regulatory
 capital.  At September 30, 1998, the Bank was in compliance
 with all regulatory capital requirements.

Financial Condition
-------------------

 Total assets decreased by $4.5 million, or 6.66%, from $67.5
 million at December 31, 1997 to $63.0 million at September
 30, 1998.  The decrease
                              9<PAGE>
<PAGE>
 was due primarily to decreases of $7.5 million in loans
 receivable and $3.2 million in investment and mortgage-backed
 securities.  These decreases were partially offset by an
 increase of $5.9 million in cash and cash equivalents and
 certificates of deposit from December 31, 1997 to September 30,
 1998.    

 The Bank's loan portfolio decreased by $7.5 million, or
 16.15%, from $46.3 million at December 31, 1997 to $38.8
 million at September 30, 1998.  The decrease in loan activity
 during the period is attributed to the level of repayments on
 existing loans exceeding new loan demand for the nine months
 ended September 30, 1998. 

 The Bank's allowance for loan losses totaled $386,000 and
 $400,000 at September 30, 1998 and December 31, 1997,
 respectively.  During the nine months ended September 30,
 1998, net loan charge-offs amounted to $120,000.  An
 additional provision of $106,000 was made during the period.

 The Company's consolidated investment securities portfolio
 totaled $5.6 million at September 30, 1998, a decrease of
 $1.7 million from $7.3 million at December 31, 1997.  This
 decrease was due to maturities and sales of investment
 securities totaling $2.9 million exceeding purchases of such
 securities totaling $1.2 million for the nine months ended
 September 30, 1998.  The Company's mortgage-backed and
 related securities portfolio totaled $5.5 million as of
 September 30, 1998, a decrease of $1.5 million from $7.0
 million at December 31, 1997.  This decrease was due to
 principal payments received on mortgage-backed and related
 securities of $1.7 million for the nine months ended
 September 30, 1998, partially offset by $228,000 of new
 purchases of such securities during the same period.  During
 the nine months ended September 30, 1998, the institution's
 portfolio of investment securities and mortgage-backed and
 related securities classified as available for sale increased
 capital by $17,000 (net of taxes) as a result of an increase
 in the market value of such securities classified as
 available for sale pursuant to Statement of Financial
 Accounting Standards ("SFAS") No. 115.
  
 Total liabilities decreased by $3.6 million, or 6.56%, from
 $55.3 million at December 31, 1997 to $51.7 million at
 September 30, 1998.  Total deposits decreased by $2.9
 million, or 5.31%, from $54.0 million at December 31, 1997 to
 $51.2 million at September 30, 1998.  The decrease in total
 liabilities is primarily attributable to that decrease in
 deposits, and to the $750,000 decrease in borrowings from the
 Federal Home Loan Bank during the nine months ended September
 30, 1998.  Management attributes the decrease in deposits to
 competition from other local banks to attract deposit
 business.  The decrease has to date primarily affected the
 Bank's levels of one-year maturity certificates of deposit.

 Stockholders' equity decreased by $867,000 during the nine
 months ended September 30, 1998.  This decrease is primarily
 due to the $684,000 repurchase of Company stock  performed by
 the Company during the nine months ended September 30, 1998,
 along with dividends of $239,000 paid on Company stock and a
 net loss of $122,000 from operations.   These decreases were
 offset by amortization of ESOP and MRP expense of $161,000 and
 $17,000 in unrealized holding gains on securities (net of tax).

Results of Operations
---------------------

 Net Income.  The Company incurred a net loss of $121,000 for
 the three months ended September 30, 1998, as compared to net
 income of $30,000 for the three months ended September 30,
 1997.  The decrease of $151,000, or 503.33%, reflects a
 decrease of $38,000, or 7.55%, in net interest income.  Also
 contributing to the decrease in net income were an increase
 of $250,000, or 55.19%, in non-interest expense for the three
 months ended September 30, 1998, as compared with the same
 period in 1997.  These changes were partially offset by an
 increase of $2,000, or 4.17%, in non-interest income, a
 decrease of $51,000 in the provision for loan losses, and by
 a decrease of $84,000 in income tax expense.  

 The Company incurred a net loss of $122,000 for the nine
 months ended September 30, 1998, as compared to net income of
 $143,000 for the nine months ended September 30, 1997.  The
 decrease of $265,000, or 185.31%, reflects a decrease of
 $71,000, or 4.63%, in net interest income, a
                              10<PAGE>
<PAGE>
 $36,000 increase in the provision for loan losses, a decrease
 of $16,000, or 10.60%, in non-interest income, an increase of
 $289,000, or 20.34%, in non-interest expense, and a $147,000
 decrease in the provision for income taxes.
 
 Net Interest Income.  Net interest income decreased $38,000,
 or 7.55%, to $465,000 for the three months ended September
 30, 1998, as compared to $503,000 for the three months ended
 September 30, 1997.  This decrease was primarily due to a
 decrease in the ratio of average interest-earning assets to
 average interest-bearing liabilities from 119.62% for the
 three months ended September 30, 1997 to 117.96% for the
 three months ended September 30, 1997, while the net interest
 margin decreased from 2.35% for the three months ended
 September 30, 1997 to 2.32% for the three months ended
 September 30, 1998.  The decrease in the net interest margin
 was coupled with the fact that average interest-earning
 assets decreased more than average interest-bearing
 liabilities for the periods in question.

 Net interest income decreased $71,000, or 4.63%, totaling
 $1.5 million both for the nine months ended September 30,
 1998 and the nine months ended September 30, 1997.  This
 decrease was primarily due to the decrease in the ratio of
 average interest-earning assets to average interest-bearing
 liabilities from 119.91% for the nine months ended September
 30, 1997 to 118.89% for the nine months ended September 30,
 1998.  This decrease was partially offset by an increase in
 the net interest margin from 2.38% for the nine months ended
 September 30, 1997 to 2.39% for the nine months ended
 September 30, 1998.  The small increase in the net interest
 margin was more than offset by the fact that average
 interest-earning assets again decreased more than average
 interest-bearing liabilities for the periods in question.
 
 Interest Income.  Total interest income decreased by $58,000,
 or 4.97%, to $1.1 million for the three months ended
 September 30, 1998 as compared to $1.2 million for the three
 months ended September 30, 1997.  The decrease in interest
 income is primarily the result of a decrease of $3.5 million,
 or 5.52%, in average interest-earning assets from $63.7
 million for the three months ended September 30, 1997 to
 $60.2 million for the three months ended September 30, 1998. 
 This decrease was primarily due to a decrease of $5.7 million
 in the average balance of loans receivable during the three
 months ended September 30, 1998 as compared to the three
 months ended September 30, 1997.  The decrease in loans
 reflects a decline in the new loans being originated by the
 Bank compared with the level of repayments on existing loans. 
 The decrease in the average balance of loans receivable was
 partially offset by an increase of $2.2 million in the
 average balance of the securities and short-term investment
 portfolios during the three months ended September 30, 1998
 as compared to the three months ended September 30, 1997,
 resulting from new investments exceeding maturities and
 repayments on such assets in this area.  The decrease in
 average interest-earning assets was partially offset by an
 increase of 3 basis points in the average yield on interest-
 earning assets for the three months ended September 30, 1998
 as compared to the three months ended September 30, 1997.

 Total interest income decreased by $122,000, or 3.47%,
 totaling $3.4 million for the nine months ended September 30,
 1998 as compared to $3.5 million for the nine months ended
 September 30, 1997.  Average interest-earning assets
 decreased by $2.5 million, or 3.89%, from $63.9 million for
 the nine months ended September 30, 1997 to $61.4 million for
 the nine months ended September 30, 1998.  The decrease in
 average interest-earning assets was primarily caused by
 decreases of $1.6 million in the average balance of loans
 receivable and $916,000 in the average balance of the
 securities and short-term investment portfolios during the
 nine months ended September 30, 1998 as compared to the nine
 months ended September 30, 1997.  The decrease in average
 interest-earning assets was partially offset by an increase
 of 3 basis points in the average yield on interest-earning
 assets for the nine months ended September 30, 1998 as
 compared to the nine months ended September 30, 1997.
<PAGE>
 Interest Expense.  Interest expense decreased by $20,000, or
 3.01%, to $644,000 for the three months ended September 30,
 1998 as compared to $664,000 for the three months ended
 September 30, 1997.  This decrease was primarily due to a
 decrease of $2.2 million in the average balance of
                              11<PAGE>
<PAGE>
 interest-bearing liabilities from $53.2 million for the three
 months ended September 30, 1997 to $51.0 million for the three
 months ended September 30, 1998.  This decrease is primarily
 attributed to a $1.8 million decrease in the average balance
 of borrowings from the Federal Home Loan Bank, with no such
 borrowings outstanding as of September 30, 1998.  The average
 balance of deposit liabilities also decreased by $481,000
 during the same periods.  The decrease in interest expense
 also reflected a 6 basis point increase in the average cost
 of interest-bearing liabilities, from 4.99% for the three
 months ended September 30, 1997 to 5.05% for the three months
 ended September 30, 1998.

 Interest expense decreased by $51,000, or 2.58%, to $1.9
 million for the nine months ended September 30, 1998 as
 compared to $2.0 million for the nine months ended September
 30, 1997.  Average interest-bearing liabilities decreased by
 $1.6 million, or 3.06%, from $53.3 million for the nine
 months ended September 30, 1997 to $51.7 million for the nine
 months ended September 30, 1998.  This decrease in the level
 of average interest-bearing liabilities was again primarily
 attributed to the decrease in the average balance of
 borrowings from the Federal Home Loan Bank, such decrease
 totaling $1.4 million.  The decrease in average interest-
 bearing liabilities was slightly offset by a 2 basis point
 increase in the average cost of interest-bearing liabilities,
 from 4.95% for the nine months ended September 30, 1997 to
 4.97% for the nine months ended September 30, 1998.  

 Provision for Loan Losses.  The allowance for loan losses is
 established through a provision for loan losses based on
 management's evaluation of the risk inherent in its loan
 portfolio and the general economy.  Such evaluation is based
 on an analysis of various factors, including the market value
 of the underlying collateral, growth and composition of the
 loan portfolio, the relationship of the allowance for loan
 losses to outstanding loans, historical loss experience,
 delinquency trends and prevailing and projected economic
 conditions.  A $9,000 provision for loan losses was made
 during the three months ended September 30, 1998, while a
 provision of $60,000 was made during the three months ended
 September 30, 1997.  A $106,000 provision for loan losses was
 made for the nine months ended September 30, 1998, as
 compared with a provision of $70,000 for the nine months
 ended September 30, 1997.  The increase in the provision was
 deemed necessary due to charge-offs of $23,000 during the
 third quarter of 1998, and $120,000 during the first nine
 months of 1998.  Although the Company believes that the
 present level of the allowance for loan losses is adequate to
 reflect the risks inherent in its loan portfolio, there can
 be no assurance that the Company will not experience
 increases in its nonperforming assets, that it will not
 increase the level of the allowance for loan losses in the
 future or that significant provisions for losses will not be
 required based on factors such as deterioration in market
 conditions, changes in borrowers' financial conditions,
 delinquencies and defaults.

 Non-Interest Income.  Non-interest income increased $2,000,
 or 4.17%, from $48,000 for the three months ended September
 30, 1997 to $50,000 for the three months ended September 30,
 1998.  The largest components of non-interest income for the
 three month periods ended September 30, 1998 and 1997
 included $9,000 and $13,000, respectively, in loan and other
 service fees and $40,000 and $28,000, respectively, in other
 service charges and other miscellaneous operating income.  In
 addition, the Company recognized $1,000 of realized gains on
 the sale of investment securities and real estate owned
 during the three months ended September 30, 1998, as compared
 to $7,000 of corresponding gains during the three months
 ended September 30, 1997.

 Non-interest income decreased $16,000, or 10.60%, from
 $151,000 for the nine months ended September 30, 1997 to
 $135,000 for the nine months ended September 30, 1998.  The
 largest components of non-interest income for the nine month
 periods ended September 30, 1998 and 1997 included $31,000
 and $38,000, respectively, in loan and other service fees and
 $95,000 and $90,000, respectively, in other service charges
 and other miscellaneous operating income.  In addition, the
 Company recognized $9,000 of realized gains on the sale of
 real estate owned during the nine months ended September 30,
 1998, as compared with $23,000 of realized gains on the sale
 of investments and real estate owned during the nine months
 ended
                              12<PAGE>
<PAGE>
 September 30, 1997.   

 Non-Interest Expense.  Non-interest expense increased
 $250,000, or 55.19%, from $453,000 for the three months ended
 September 30, 1997 to $703,000 for the three months ended
 September 30, 1998.  The components of this increase included
 increases of $6,000 in compensation and employee benefits
 expense, $112,000 in legal and professional services, the
 $148,000 adjustment for mortgage loan rebates discussed in Note
 13 to the financial statements, and net  decreases of $16,000
 in various other expense items.  The  increase in legal and
 professional services was attributed to  fees connected with
 ongoing litigation, as well as payments
 for consulting and other professional services.

 On May 7, 1998, Barrett Rochman, a stockholder of the
 Company, filed suit against the Company and each of the
 directors individually seeking an injunction requiring the
 Company to install him and David Burns as directors of the
 Company and prohibiting the Company from installing Directors
 Hileman and Stevens as directors.  This matter was settled in
 November 1998, and Mr. Rochman and Mr. Burns, as well as James
 Cripps were appointed to the  Board of Directors, which was
 increased in size from six to nine directors.  The Company also
 agreed to pay $60,000 in Mr. Rochman's expenses as part of the
 settlement.  Final judicial approval of the settlement is
 pending.  The Company and each director individually are also
 party to litigation involving three former employees of the
 Bank, one of whom alleges that she was terminated in
 retaliation for her voting of shares in opposition to
 management and certain other matters, while the other two
 employees filed suit claiming that they were "constructively
 discharged" and entitled to certain payments due under their
 employment agreements.  The Company and the Bank believe the
 claims of these former employees are without merit.  Such
 litigation is ongoing and, as such, the Company anticipates
 that it will continue to incur legal expenses related to such
 litigation in future periods.

 Non-interest expense increased $289,000, or 20.34%, from $1.4
 million for the nine months ended September 30, 1997 to $1.7
 million for the nine months ended September 30, 1998.  This
 increase included increases of $37,000 in compensation and
 employee benefits expense, $136,000 in legal and professional
 services, the $148,000 adjustment for mortgage loan rebates
 mentioned above, and net decreases of $32,000 in various other
 expense items.  The increase in compensation and employee
 benefits expense was attributed to increases in employee
 wages, while the increase in legal and professional services
 is attributable to the same factors described in the previous
 paragraph relating to the operating results for the three
 month periods ended September 30, 1998 and 1997, as well as
 expenses incurred earlier in 1998 resulting from proxy
 contests involving the Company.

 Income Tax Expense.  Income tax expense was $(76,000) for the
 three months ended September 30, 1998 as compared with $8,000
 for the three months ended September 30, 1997.  The $84,000
 decrease is primarily due to the decrease in income before
 income taxes from $38,000 for the three months ended
 September 30, 1997 to $(197,000) for the three months ended
 September 30, 1998.  The negative tax expense (or tax
 benefit) of $76,000 for the three months ended September 30,
 1998 also reflects the effect of items such as tax-exempt
 interest income upon the Company's income tax computation.

 Income tax expense was $(97,000) for the nine months ended
 September 30, 1998 as compared with $50,000 for the nine
 months ended September 30, 1997.  The $147,000 decrease is
 primarily due to the decrease in income before income taxes
 from $193,000 for the nine months ended September 30, 1997 to
 $(219,000) for the nine months ended September 30, 1998. 
 Again, the negative tax expense (or tax benefit) of $97,000
 for the nine months ended September 30, 1998 also reflects
 the effect of items such as tax-exempt interest income upon
 the Company's income tax computation. 
<PAGE>
Impact of Inflation and Changing Prices
---------------------------------------

 The unaudited consolidated financial statements and related
 data presented herein have been prepared in accordance with
 generally accepted accounting principles, which require the
 measurement of financial position and
                              13<PAGE>
<PAGE>
 operating results in terms of historical dollars without
 considering the change in the relative purchasing power of
 money over time and due to inflation.  The impact of inflation
 is reflected in the increased cost of the Bank's operations. 
 Unlike most industrial companies, nearly all the assets and
 liabilities of the Bank are monetary in nature.  As a result,
 interest rates have a greater impact on the Bank's performance
 than do the effects of general levels of inflation.  Interest
 rates do not necessarily move in the same direction or to the
 same extent as the price of goods and services.

Impact of New Accounting Standards
----------------------------------

 Accounting for Transfers and Servicing of Financial Assets. 
 In June, 1996, the Financial Accounting Standards Board
 ("FASB") issued SFAS No. 125, "Accounting for Transfers and
 Servicing of Financial Assets and Extinguishments of
 Liabilities."  SFAS No. 125 establishes accounting and
 reporting standards for transfers and servicing of financial
 assets and extinguishments of liabilities based on the
 consistent application of the financial components approach. 
 This approach requires the recognition of financial assets
 and servicing assets that are controlled by the reporting
 entity, the derecognition of financial assets when control is
 surrendered, and the derecognition of liabilities when they
 are extinguished.  Specific criteria are established for
 determining when control has been surrendered in the transfer
 of financial assets.  SFAS No. 125 is effective for transfers
 and servicing of financial assets and extinguishments of
 liabilities occurring after December 31, 1996.  Subsequent to
 the issuance of SFAS No. 125, the FASB issued SFAS No. 127,
 "Deferral of the Effective Date of Certain Provisions of FASB
 Statement No. 125."  This statement defers for one year the
 effective date of SFAS No. 125 as applies to secured
 borrowings and collateral and certain other transactions. 
 The Company adopted the relevant provisions of the statement
 during 1997, and is now adopting the provisions of the
 statement which become effective in 1998.  The provisions of
 the statement adopted in 1998 did not have a material effect
 on the Company's financial position or operating results.

 Comprehensive Income.  In June, 1997, the FASB issued SFAS
 No. 130, "Reporting Comprehensive Income".  SFAS No. 130
 establishes standards for reporting and display of
 comprehensive income and its components (revenues, expenses,
 gains, and losses) in a full set of general-purpose financial
 statements.  This statement requires that all items that are
 required to be recognized under accounting standards as
 components of comprehensive income be reported in a financial
 statement that is displayed with the same prominence as other
 financial statements.

 This statement requires that an enterprise (a) classify items
 of other comprehensive income by their nature in a financial
 statement and (b) display the accumulated balance of other
 comprehensive income separately from retained earnings and
 additional paid-in capital in the equity section of a
 statement of financial position.  This statement is effective
 for fiscal years beginning after December 15, 1997.  The
 Company has adopted the provision of this statement in 1998,
 and has presented comprehensive income information in the
 consolidated statements of financial condition and statements
 of stockholders' equity.

 Disclosures about Segments of an Enterprise and Related
 Information.  In June, 1997, the FASB issued SFAS No. 131,
 "Disclosures about Segments of an Enterprise and Related
 Information".  SFAS No. 131 establishes standards for the way
 that public business enterprises report information about
 operating segments in annual financial statements and
 requires that those enterprises report selected information
 about operating segments in interim financial reports issued
 to shareholders.  It also establishes standards for related
 disclosures about products and services, geographic areas,
 and major customers.  This statement is effective for
 financial statements for periods beginning after December 15,
 1997.  The statement provides that its provisions need not be
 applied to interim financial statements in the initial year
 of its application.  Therefore, the Company plans to adopt
 the appropriate provisions of the statement for its financial
 statements for the year ended December 31, 1998, and does not
 believe that the adoption of this statement will have a
 material effect on the Company's financial position or
 operating results.
                              14<PAGE>
<PAGE>
 Employers' Disclosure about Pensions and Other Postretirement
 Benefits.  In February, 1998, the FASB issued SFAS No. 132,
 "Employers' Disclosures about Pensions and Other
 Postretirement Benefits".  SFAS No. 132 standardizes the
 disclosure requirements for pensions and other postretirement
 benefits.  This statement is effective for financial
 statements for periods beginning after December 15, 1997. 
 The Company is adopting the appropriate provisions of this
 statement during 1998, and does not believe that the adoption
 of this statement will have a material effect on the
 Company's financial position or operating results. 

 Accounting for Derivative Instruments and Hedging Activities. 
 In June, 1998, the FASB issued SFAS No. 133, "Accounting for
 Derivative Instruments and Hedging Activities".  SFAS No. 133
 establishes a new model for accounting for derivatives and
 hedging activities and supersedes and amends a number of
 existing standards.  SFAS No. 133 is effective for fiscal
 years beginning after June 15, 1999, but earlier application
 is permitted as of the beginning of any fiscal quarters
 subsequent to June 15, 1998.  Upon the statement's initial
 application, all derivatives are required to be recognized in
 the statement of financial position as either assets or
 liabilities and measured at fair value.  In addition, all
 hedging relationships must be designated, reassessed and
 documented pursuant to the provisions of SFAS No. 133. 
 Adoption of SFAS No. 133 is not expected to have a material
 effect on the Company's financial position or operating
 results.

 Regulatory Developments
 -----------------------

 On June 3, 1998, the Bank entered into a formal agreement
 with the Office of the Comptroller of the Currency ("OCC"). 
 The agreement requires that the Bank adopt a formal strategic
 plan, a written plan with timetables to ensure that all of
 its information systems are Year 2000 compliant and to take
 certain other actions with respect to the internal audit and
 compliance functions and its policies and procedures.  The
 Bank does not expect that such written agreement will have a
 material adverse effect on its operations.

 Year 2000
 ---------

 As with all providers of financial services, the Bank's
 operations are heavily dependent on information technology
 systems.  The Bank is addressing the potential problems
 associated with the possibility that the computers that
 control or operate the Bank's information technology system
 and infrastructure may not be programmed to read four-digit
 date codes and, upon arrival of the year 2000, may recognize
 the two-digit code "00" as the year 1900, causing systems to
 fail to function or to generate erroneous data.  As of the
 date hereof, the Board of Directors of the Bank has adopted a
 formal policy with respect to this Year 2000 problem and has
 tested its primary mission critical systems.  The Bank is
 working with the companies that supply or service its
 information technology systems to identify and remedy any
 year 2000 related problems.

 As of the date of this Form 10-QSB, the Bank does not
 anticipate that any expenses that are reasonably likely to be
 incurred by the Bank in connection with this issue will be
 material.  No assurance can be given, however, that
 significant expense will not be incurred in future periods. 
 In the event that the Bank is ultimately required to purchase
 replacement computer systems, programs and equipment, or
 incur substantial expense to make the Bank's current systems,
 programs and equipment year 2000 compliant, the Bank's net
 earnings and financial condition could be adversely affected.

 In addition to possible expense related to its own systems,
 the Bank could incur losses if loan payments are delayed due
 to year 2000 problems affecting any major borrowers in the
 Bank's primary market area.  Because the Bank's loan
 portfolio is highly diversified with regard to individual
 borrowers and types of businesses and the Bank's primary
 market area is not significantly dependent upon one employer
 or industry, the Bank does not expect any significant or
 prolonged difficulties that will affect net earnings or cash
 flow.

[ADD INFORMATION AS NECESSARY REGARDING REGULATORY DEVELOPMENTS,
MANAGEMENT PLANS, ETC.]
                              15<PAGE>
<PAGE>

                   PART II.   OTHER INFORMATION

Item 1.   Legal Proceedings

     On May 7, 1998, Barrett Rochman, a stockholder of the
Company, filed suit in the Circuit Court of the First Judicial
Circuit, Williamson County, Illinois, (Rochman v. Heartland
Bancshares, Inc., Roger O. Hileman, Charles Stevens, James C.
Walker, Randall A. Youngblood, Paul R. Calcaterra and B. D.
Cross) against Heartland Bancshares, Inc. and each of the
individual directors of the Company seeking a preliminary and
permanent injunction and damages.  Mr. Rochman alleges certain
wrongdoings in  connection with the exclusion of votes at the
Annual Meeting of Stockholders.  Mr. Rochman is seeking an
injunction prohibiting the Company from installing Messrs.
Hileman and Stevens as directors and requiring that Mr. Rochman
and Mr. Burns be installed as directors of the Company.  Mr.
Rochman is also seeking damages although no specific amount is
specified in the complaint.  

     On June 16, 1998, Vicki Gower, a former employee of the
Bank, filed suit in the Circuit Court of the First Judicial
Circuit, Williamson County, Illinois (Vicki Gower v. Heartland
Bancshares, Inc., Roger O. Hileman, Charles Stevens, James C.
Walker, Randall A. Youngblood, Paul R. Calcaterra and B.D.
Cross) against the Company and each director individually
seeking money damages of an unspecified amount.  Ms. Gower
alleges that she was wrongfully terminated in retaliation for
voting shares of stock owned by her and in the Bank's employee
stock ownership plan against management.  She also claims that
such discharge constituted intentional infliction of emotional
distress and is seeking monetary damages of an unspecified
amount.  

Item 2.   Changes in Securities

     None


Item 3.   Defaults Upon Senior Securities

     None


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

     Not applicable

Item 5.   Other Information

     None


Item 6.   Exhibits and Reports on Form 8-K

     None.

     The following exhibits are filed as a part of this report:

     Exhibit 27   Financial Data Schedule (EDGAR Only)

                           16<PAGE>
<PAGE>
                            SIGNATURES



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



                              HEARTLAND BANCSHARES, INC.


Date:  December __, 1998        By: /s/ Roger O. Hileman         
                                    ------------------------
                                  Roger O. Hileman
                                  (Principal Executive,
                                   Accounting and Financial
                                   Officer)

                             17