<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 June 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 August 1, 1998, there were 833,032 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>
                                                     June 30,
                                                       1998     December 31,
                                                    ----------       1997
                                                    (Unaudited)  ------------
                    ASSETS                          -----------
<S>                 ------                          <C>          <C>
Cash and cash equivalents                                  
  Interest-bearing                                   $  7,002     $  3,319
  Noninterest-bearing                                   1,844        1,651
Certificates of deposit                                   471           95
Investment securities available-for-sale at
 estimated market value                                 1,516        1,714
Investment securities held-to-maturity                  4,736        5,627
Mortgage-backed and related securities available-
 for-sale at estimated market value                     1,012        1,249
Mortgage-backed and related securities held-to- 
 maturity                                               4,840        5,737
Loans receivable, net                                  42,324       46,307
Investments required by law                               585          577
Property, equipment, and property held 
 for investment, net                                      465          461
Accrued interest receivable                               250          292 
Prepaid expenses and other assets                          81           32
Foreclosed real estate                                    209          239
Deferred tax asset                                        191          161
                                                     --------     --------
TOTAL ASSETS                                         $ 65,526       67,461
------------                                         ========     ========

      LIABILITIES AND STOCKHOLDERS' EQUITY
      ------------------------------------
Liabilities
-----------
  Deposits                                           $ 53,426     $ 54,022
  Accrued interest on deposits                             52           63
  Advances from borrowers for taxes 
    and insurance                                         418          228
  Other liabilities                                       211          127
  Accrued income taxes                                      -          126
  Short-term borrowings                                     -          750
                                                     --------     --------
      Total Liabilities                              $ 54,107     $ 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; 833,032 and 876,875 outstanding at 
   June 30, 1998 and December 31, 1997,
   respectively                                             9            9
  Additional paid-in capital                            8,242        8,212
  Unearned employee stock ownership plan 
    (ESOP) shares                                        (470)        (519)
  Management recognition plan shares                     (466)        (496)
  Treasury stock (43,843 shares at cost)                 (682)           -
  Retained earnings - substantially restricted          4,776        4,938
  Accumulated other comprehensive income:
    Unrealized gains (losses) on securities                10            1 
                                                     --------     --------
      Total Stockholders' Equity                     $ 11,419     $ 12,145
      --------------------------                     --------     --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $ 65,526     $ 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   Six Months Ended 
                                                 ------------------   ----------------
                                                       June 30,            June 30,
                                                   1998      1997      1998      1997   
                                                 --------  --------   -------  --------
<S>                                              <C>       <C>        <C>      <C>
Interest Income
---------------
  Interest on first mortgage loans               $   807   $    822   $ 1,657   $ 1,619
  Interest on other loans                             49         39       101        77
  Interest on investments, securities, and
   deposits with banks                               171        169       318       358
  Interest on mortgage backed securities              96        141       205       291
                                                 -------   --------   -------   ------- 
      Total Interest Income                      $ 1,123   $  1,171   $ 2,281   $ 2,345 
      ---------------------
Interest Expense
----------------
  Interest on deposits                           $   639   $    639   $ 1,281   $ 1,282
  Interest on borrowings                               -         17         3        33
                                                 -------   --------   -------   ------- 
     Total Interest Expense                      $   639   $    656   $ 1,284   $ 1,315
     ----------------------                      -------   --------   -------   ------- 
Net Interest Income                              $   484   $    515   $   997   $ 1,030
-------------------
Provision for Loan Losses                             16          -        97        10
-------------------------                        -------   --------   -------   ------- 
Net Interest Income After Provision
-----------------------------------
 for Loan Losses                                 $   468   $    515   $   900   $ 1,020
 ---------------                                 -------   --------   -------   ------- 
Non-Interest Income
-------------------
  Initial service charges and other loan fees    $    10   $     12   $    22   $    25
  Gain on sale of other real estate                    -         12         8        12
  Other                                               28         34        55        62
  Gain on sale of investments                          -          4         -         4
                                                 -------   --------   -------   ------- 
      Total Non-Interest Income                  $    38   $     62   $    85   $   103
      -------------------------                  -------   --------   -------   ------- 
Non-Interest Expense
--------------------
  Compensation to directors, officers, and 
   employees                                     $   194   $    190   $   395   $   349
  Pension expense and other employee benefits         40         35        79        94
  Office properties and equipment expense                 
   including depreciation                             33         34        67        64 
  Advertising                                          7         11        16        24
  Federal insurance premiums                          12          8        24        17
  Stationery, postage, and office supplies            18         18        32        40 
  Checking account expense                             2         38        21        71
  Service bureau expense                              36         19        79        42
  Other                                               52         58       111       109
  Legal and professional services                    136        125       182       158
  Loss on sale of investments                          1          -         1         -
                                                 -------   --------   -------   ------- 
      Total Non-Interest Expense                 $   531   $    536   $ 1,007   $   968
      --------------------------                 -------   --------   -------   ------- 

Income Before Income Taxes                       $   (25)  $     41   $   (22)  $   155
--------------------------
Income Tax Expense (Benefit)                         (17)         7       (21)       42 
                                                 -------   --------   -------   ------- 
Net Income (Loss)                                $    (8)  $     34   $    (1)  $   113
-----------------                                =======   ========   =======   ======= 
<PAGE>
Earnings (Loss) Per Common Share - Basic
----------------------------------------
 Net income                                      $  (.01)  $   .04    $     -   $   .14
                                                 =======   =======    =======   ======= 
Earnings (Loss) Per Common Share - 
--------------------------------
  Assuming Dilution
  -----------------
 Net income                                      $  (.01)  $   .04    $    -  $     .14
                                                 =======   =======    =======   ======= 
</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                    $   -    $     -     $    -      $   -           -          (1)   $   -        $    (1)

  Other comprehensive income,
     net of tax:
    Unrealized gains (losses)
      on securities:
    Unrealized holding gains
      (losses) arising during
      the period (net of 
      tax of $6)                    -          -          -          -           -           -        9              9
                                -----    -------      -----      -----      ------      ------    -----        -------
Total comprehensive income      $   -    $     -      $   -      $   -      $    -      $   (1)   $   9        $     8

Cash dividends paid                 -          -          -          -           -        (161)       -           (161)

Purchase of treasury stock
  (43,843 shares at cost)           -          -          -          -        (682)          -        -           (682)

Amortization of management
  recognition plan expense          -          -          -         30           -           -        -             30

Amortization of ESOP expense        -         30         49          -           -           -        -             79
                                -----    -------      -----      -----      ------      ------    -----        -------
Balance at June 30, 1998        $   9    $ 8,242      $(470)     $(466)     $ (682)     $4,776    $  10        $11,419
------------------------        =====    =======      =====      =====      ======      ======    =====        =======
</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>
                                                                Six Months Ended 
                                                              ---------------------- 
                                                              June 30,     June 30,
                                                               1998         1997   
                                                              ----------------------
<S>                                                           <C>          <C> 
Cash Flows From Operating Activities
------------------------------------
  Net income                                                  $    (1)     $    113
                                                              -------      --------
  Adjustments to reconcile net income       
  to net cash provided (used) by operating
  activities      
    Depreciation                                              $    29      $     27
    Discount accretion/premium amortization-securities (net)       (3)           (2)
    Amortization of deferred loan origination fees                (12)          (12)
    Amortization of ESOP expense                                   79            55
    Amortization of MRP expense                                    30            25
    Provision for loan losses                                      97            10
    (Gain) loss on sale of investments                              1            (4)
    (Gain) loss on sale of other real estate                       (8)          (12)
    (Increase) decrease in accrued interest receivable             42            (1)
    (Increase) decrease in prepaid expenses/other assets          (49)           13
    (Increase) decrease in prepaid income taxes                     -            73
    (Increase) decrease in deferred income taxes                  (35)          (31)
    Increase (decrease) in accrued interest payable               (11)            9
    Increase (decrease) in accrued income taxes                  (126)           37
    Increase (decrease) in other liabilities                       84            (6)
                                                              -------      --------
    Total Adjustments                                         $   118      $    181
    -----------------                                         -------      --------

  Net Cash Provided by Operating Activities                   $   117      $    294 
  -----------------------------------------                   -------      --------
Cash Flows From Investing Activities
------------------------------------
  Net (increase) decrease in certificates of deposit          $  (376)     $     99
  Proceeds from maturities of investment securities
   and mortgage-backed securities                               1,620         2,135
  Principal payments on mortgage-backed securities              1,145           705
  Net (increase) decrease in loans receivable                   3,846        (3,170)
  Purchases of property and equipment                             (33)          (34)
  Purchase of investment securities held-to-maturity             (900)         (251)
  Purchase of investment securities available-for-sale              -          (200)
  Proceeds from sale of investment securities 
    available-for-sale                                            249           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            98
                                                              -------      --------
  Net Cash Provided by (Used in) Investing Activities         $ 5,758      $   (454) 
  ---------------------------------------------------         -------      --------
Cash Flows From Financing Activities
------------------------------------
  Net increase (decrease) in deposits                         $  (596)     $   (377)
  Net increase (decrease) in mortgage escrow funds                190           215
  Proceeds from Federal Home Loan Bank advances                     -         1,500
  Payments on Federal Home Loan Bank advances                    (750)         (500)
  Shares acquired by management recognition plan                    -          (501)
  Dividends on common stock                                      (161)         (163)
  Purchase of treasury stock                                     (682)            -
                                                              -------      --------
  Net Cash Provided by (Used in) Financing Activities         $(1,999)     $    174
  ---------------------------------------------------         -------      --------
<PAGE>
Net Increase in Cash and Cash Equivalents                     $ 3,876      $     14
----------------------------------------- 
Cash and Cash Equivalents at Beginning of Period                4,970         1,872
                                                              -------      --------

Cash and Cash Equivalents at End of Period                    $ 8,846      $  1,886
                                                              =======      ========
Supplemental Disclosures
------------------------
Cash Paid (Received) During the Period for:
  Interest                                                    $ 1,295      $  1,306
  Income taxes                                                $   166      $    (37)

Loans Transferred to Foreclosed Real Estate During Period     $   118      $      -

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)
                     -----------
                June 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 six months ended June
     30, 1998 and 1997 have been recorded.  Operating results
     for the three months and six months ended June 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 six months ended June 30, 1997 to conform with
     the financial statement presentation for the three months
     and six months ended June 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 six months ended June
     30, 1998 were 799,489 and 812,251, respectively.  The
     weighted average numbers of shares used for basic earnings
     per share for the three months and six months ended June
     30, 1997 were 816,354 and 815,489, respectively.  The
     weighted average numbers of shares used for diluted
     earnings per share for the three months and six months
     ended June 30, 1998 were 806,358 and 819,434,
     respectively.  The weighted average numbers of shares used
     for diluted earnings per share for the three months and
     six months ended June 30, 1997 were 826,495 and 822,859,
     respectively.   

     Earnings per share amounts for the three months and six
     months ended June 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 did not affect the earnings per share amounts
     previously presented for the three months and six months
     ended June 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 six months ended June
     30, 1998 was $37,296 and $74,883, respectively.  ESOP
     benefits expense recorded during the three months and six
     months ended June 30, 1997 was $34,077 and $66,302,
     respectively. 

7.   Director Retirement Plan
     ------------------------
     In connection with the stock conversion of the Association
     to the Bank,

                              6<PAGE>
<PAGE>
     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 June 30, 1998, a liability of $101,683 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 six months
     ended June 30, 1998 was $9,513 and $19,026, respectively. 
     The amount of expense recognized in the financial
     statements for the three months and six months ended June
     30, 1997 was $8,307 and $16,614, 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 June 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 six months
     ended June 30, 1998 and 1997 was $30,384 and $25,570,
     respectively.

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 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

                              7<PAGE>
<PAGE>
     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 June 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
     ---------------------
     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
     June 30, 1998, the repurchase program has been completed,
     with 43,843 shares being repurchased under the 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.

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 the Bank, as of June 30, 1998 and December
     31, 1997, and the results of operations for the three
     months and six months ended June 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
     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
                              8<PAGE>
<PAGE>
     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 June 30,
     1998 and December 31, 1997, the consolidated amounts of
     cash and cash equivalents totaled $8.8 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 $2.5 million at June 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 June
     30, 1998, the Bank had no outstanding advances from the
     FHLB.

     At June 30, 1998, the Bank had $243,000 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 June 30, 1998, the Bank was in
     compliance with all regulatory capital requirements.

Financial Condition
-------------------
     Total assets decreased by $1.9 million, or 2.87%, from
     $67.5 million at December 31, 1997 to $65.5 million at
     June 30, 1998.  The decrease was due primarily to
     decreases of $4.0 million in loans receivable and $2.2
     million in investment and mortgage-backed securities. 
     These decreases were partially offset by an increase of
     $4.3 million in cash and cash equivalents and certificates
     of deposit from December 31, 1997 to June 30, 1998.    

     The Bank's loan portfolio decreased by $4.0 million, or
     8.60%, from $46.3 million at December 31, 1997 to $42.3
     million at June 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 six
     months ended June 30, 1998. 
                              9<PAGE>
<PAGE>
     The Bank's allowance for loan losses totaled $401,000 and
     $400,000 at June 30, 1998 and December 31, 1997,
     respectively.  During the six months ended June 30, 1998,
     net loan charge-offs amounted to $96,000.  An additional
     provision of $97,000 was made during the period.

     The Company's consolidated investment securities portfolio
     totaled $6.2 million at June 30, 1998, a decrease of $1.1
     million from $7.3 million at December 31, 1997.  This
     decrease was due to maturities and sales of investment
     securities totaling $2.0 million exceeding purchases of
     such securities totaling $900,000 for the six months ended
     June 30, 1998.  The Company's mortgage-backed and related
     securities portfolio totaled $5.9 million as of June 30,
     1998, a decrease of $1.1 million from $7.0 million at
     December 31, 1997.  This decrease was due to principal
     payments received on mortgage-backed and related
     securities.  During the six months ended June 30, 1998,
     the institution's portfolio of investment securities and
     mortgage-backed and related securities classified as
     available for sale increased capital by $9,000 (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 $1.2 million, or 2.19%,
     from $55.3 million at December 31, 1997 to $54.1 million
     at June 30, 1998.  Total deposits decreased by $596,000,
     or 1.10%, from $54.0 million at December 31, 1997 to $53.4
     million at June 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 six months ended
     June 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 $726,000 during the six
     months ended June 30, 1998.  This decrease is primarily
     due to the $682,000 repurchase of Company stock performed
     by the Company during the second quarter of 1998, along
     with dividends of $161,000 paid on Company stock and a net
     loss of $1,000 from operations.  These decreases were
     offset by amortization of ESOP and MRP expense of $109,000
     and $9,000 in unrealized holding gains on securities (net
     of tax).

Results of Operations
---------------------
     Net Income.  The Company incurred a net loss of $8,000 for
     the three months ended June 30, 1998, as compared to net
     income of $34,000 for the three months ended June 30,
     1997.  The decrease of $42,000, or 123.53%, reflects a
     decrease of $31,000, or 6.02%, in net interest income. 
     Also contributing to the decrease in net income were a
     decrease of $24,000, or 38.71%, in non-interest income,
     and a $16,000 increase in the provision for loan losses,
     as compared with the same period in 1997.  These changes
     were partially offset by a decrease of $5,000, or 0.93%,
     in non-interest expense, and by a decrease of $24,000 in
     income tax expense.  

     The Company incurred a net loss of $1,000 for the six
     months ended June 30, 1998, as compared to net income of
     $113,000 for the six months ended June 30, 1997.  The
     decrease of $114,000, or 100.88%, reflects a decrease of
     $33,000, or 3.20%, in net interest income, an $87,000
     increase in the provision for loan losses, a decrease of
     $18,000, or 17.48%, in non-interest income, an increase of
     $39,000, or 4.03%, in non-interest expense, and a $63,000
     decrease in the provision for income taxes.
 
     Net Interest Income.  Net interest income decreased
     $31,000, or 6.02%, to $484,000 for the three months ended
     June 30, 1998, as compared to $515,000 for the three
     months ended June 30, 1997.  This decrease was primarily
     due to a decrease in the ratio of average interest-earning
     assets to average interest-bearing liabilities from
     120.28% for the three months ended June 30, 1997 to
     118.84% for the three months ended June 30, 1997, while
     the net interest margin decreased from 2.40% for the three
     months ended June 30, 1997 to 2.37% for the three months
     ended June 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.
                              10<PAGE>
<PAGE>
     Net interest income decreased $33,000, or 3.20%, to
     $997,000 for the six months ended June 30, 1998 as
     compared to $1.0 million for the six months ended June 30,
     1997.  This decrease was primarily due to the decrease in
     the ratio of average interest-earning assets to average
     interest-bearing liabilities from 120.05% for the six
     months ended June 30, 1997 to 119.34% for the six months
     ended June 30, 1998.  This decrease was partially offset
     by an increase in the net interest margin from 2.39% for
     the six months ended June 30, 1997 to 2.41% for the six
     months ended June 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
     $48,000, or 4.10%, to $1.1 million for the three months
     ended June 30, 1998 as compared to $1.2 million for the
     three months ended June 30, 1997.  The decrease in
     interest income is primarily the result of a decrease of
     $2.3 million, or 3.60%, in average interest-earning assets
     from $63.7 million for the three months ended June 30,
     1997 to $61.4 million for the three months ended June 30,
     1998.  This decrease was primarily due to a decrease of
     $1.3 million in the average balance of loans receivable
     during the three months ended June 30, 1998 as compared to
     the three months ended June 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 average interest-earning
     assets was also due to a decrease of $995,000 in the
     average balance of the securities and short-term
     investment portfolios during the three months ended June
     30, 1998 as compared to the three months ended June 30,
     1997, resulting from maturities and repayments on such
     assets exceeding new investments in this area.  The
     decrease in interest income also reflects a decrease of 4
     basis points in the average yield on interest-earning
     assets for the three months ended June 30, 1998 as
     compared to the three months ended June 30, 1997.

     Total interest income decreased by $64,000, or 2.73%,
     totaling $2.3 million for both the six months ended June
     30, 1998 and the six months ended June 30, 1997.  Average
     interest-earning assets decreased by $2.0 million, or
     3.07%, from $64.1 million for the six months ended June
     30, 1997 to $62.1 million for the six months ended June
     30, 1998.  The decrease in average interest-earning assets
     was primarily caused by a decrease of $2.5 million in the
     average balance of the securities and short-term
     investment portfolios during the six months ended June 30,
     1998 as compared to the six months ended June 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 six
     months ended June 30, 1998 as compared to the six months
     ended June 30, 1997.

     Interest Expense.  Interest expense decreased by $17,000,
     or 2.59%, to $639,000 for the three months ended June 30,
     1998 as compared to $656,000 for the three months ended
     June 30, 1997.  This decrease was primarily due to a
     decrease of $1.3 million in the average balance of
     interest-bearing liabilities from $53.0 million for the
     three months ended June 30, 1997 to $51.7 million for the
     three months ended June 30, 1998.  This decrease is
     primarily attributed to a $1.0 million decrease in the
     average balance of borrowings from the Federal Home Loan
     Bank, with no such borrowings outstanding as of June 30,
     1998.  The average balance of deposit liabilities also
     decreased by $290,000 during the same periods.  The
     decrease in interest expense also reflected a 1 basis
     point decrease in the average cost of interest-bearing
     liabilities, from 4.95% for the three months ended June
     30, 1997 to 4.94% for the three months ended June 30,
     1998.

     Interest expense decreased by $31,000, or 2.36%, totaling
     $1.3 million for both the six months ended June 30, 1998
     and the six months ended June 30, 1997.  Average interest-
     bearing liabilities decreased by $1.3 million, or 2.50%,
     from $53.4 million for the six months ended June 30, 1997
     to $52.0 million for the six months ended June 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 $1.3 million.  The
     decrease in average interest-bearing liabilities was
     slightly offset by a 1 basis

                              11<PAGE>
<PAGE>
     point increase in the average cost of interest-bearing
     liabilities, from 4.93% for the six months ended June 30,
     1997 to 4.94% for the six months ended June 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 $16,000 provision for
     loan losses was made during the three months ended June
     30, 1998, while no provision was made during the three
     months ended June 30, 1997.  A $97,000 provision for loan
     losses was made for the six months ended June 30, 1998, as
     compared with a provision of $10,000 for the six months
     ended June 30, 1997.  The increase in the provision was
     deemed necessary due to charge-offs of $15,000 during the
     second quarter of 1998, and $97,000 during the first six
     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 decreased
     $24,000, or 38.71%, from $62,000 for the three months
     ended June 30, 1997 to $38,000 for the three months ended
     June 30, 1998.  The largest components of non-interest
     income for the three month periods ended June 30, 1998 and
     1997 included $10,000 and $12,000, respectively, in loan
     and other service fees and $28,000 and $34,000,
     respectively, in other service charges and other
     miscellaneous operating income.  In addition, the Company
     recognized $16,000 of realized gains on the sale of
     investment securities and real estate owned during the
     three months ended June 30, 1997, with no corresponding
     gains during the three months ended June 30, 1998.

     Non-interest income decreased $18,000, or 17.48%, from
     $103,000 for the six months ended June 30, 1997 to $85,000
     for the six months ended June 30, 1998.  The largest
     components of non-interest income for the six month
     periods ended June 30, 1998 and 1997 included $22,000 and
     $25,000, respectively, in loan and other service fees and
     $55,000 and $62,000, respectively, in other service
     charges and other miscellaneous operating income.  In
     addition, the Company recognized $8,000 of realized gains
     on the sale of real estate owned during the six months
     ended June 30, 1998, as compared with $16,000 of realized
     gains on the sale of investments and real estate owned
     during the six months ended June 30, 1997.   

     Non-Interest Expense.  Non-interest expense decreased
     $5,000, or 0.93%, from $536,000 for the three months ended
     June 30, 1997 to $531,000 for the three months ended June
     30, 1998.  The components of this decrease included
     increases of $9,000 in compensation and employee benefits
     expense, $11,000 in legal and professional services, and
     net decreases of $25,000 in various other expense items. 
     The increase in legal and professional services was
     attributed to expenses resulting from proxy contests
     involving the Company, as well as fees connected with
     ongoing litigation.

     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.  Mr. Rochman is
     also seeking money damages of an unspecified amount.  In
     connection with the 1998 Annual Meeting of Stockholders,
     Mr. Rochman solicited proxies in opposition to management
     and in favor of his nominees for director.  The Board of
     Directors determined that Mr. Rochman, together with
     certain other stockholders were acting in concert and
     controlled in excess of 10% of the outstanding shares of
     Company common stock in violation of the Company's Articles
     of Incorporation and, in accordance with the provisions of
     the Articles of Incorporation, the Board invalidated the 
     voting rights of shares owned by such group of stockholders
     in excess of the limit. The Company and each director
     individually are also party to litigation involving a
     former employee of the Bank who alleges that she was
     terminated in retaliation for her voting of shares in
     opposition to management and certain other matters.  The
     Company and the Bank believe the former employee's claims
     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 $39,000, or 4.03%, from
     $968,000 for the six months ended June 30, 1997 to $1.0
     million for the six months ended June 30, 1998.  This
     increase included increases of $31,000 in compensation and
     employee benefits expense, $24,000 in legal and
     professional services, and net decreases of $16,000 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 June
     30, 1998 and 1997.

     Income Tax Expense.  Income tax expense was $(17,000) for
     the three months


                              12<PAGE>
<PAGE>
     ended June 30, 1998 as compared with $7,000 for the three
     months ended June 30, 1997.  The $24,000 decrease is
     primarily due to the decrease in income before income taxes
     from $41,000 for the three months ended June 30, 1997 to
     $(25,000) for the three months ended June 30, 1998.  The
     negative tax expense (or tax benefit) of $17,000 for the
     three months ended June 30, 1998 arises from the effect of
     items such as tax-exempt interest income upon the Company's
     income tax computation.

     Income tax expense was $(21,000) for the six months ended
     June 30, 1998 as compared with $42,000 for the six months
     ended June 30, 1997.  The $63,000 decrease is primarily
     due to the decrease in income before income taxes from
     $155,000 for the six months ended June 30, 1997 to
     $(22,000) for the six months ended June 30, 1998.  Again,
     the negative tax expense (or tax benefit of $21,000 for
     the six months ended June 30, 1998 arises from the effect
     of items such as tax-exempt interest income upon the
     Company's income tax computation. 

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
     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
                              13<PAGE>
<PAGE>
     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.

     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.

                              14<PAGE>
<PAGE>
     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.

                              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:  August 14, 1998        By: /s/ Roger O. Hileman           
                                  ------------------------
                                  Roger O. Hileman
                                  (Principal Executive,
                                   Accounting and Financial
                                   Officer)

                             17