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

                                   FORM 10-QSB


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

For the quarterly period ended September 30, 1998

                                       or

{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from______________________ to ______________________

Commission File Number: 0-27700

HBancorporation, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

37-1351506
(I.R.S. Employer identification No.)

619 12th Street, Lawrenceville, Illinois              62439
(Address of principal executive offices)           (Zip Code)

(618) 943-2515
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last
report)

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

As of September 30, 1998, there were 493,320 shares of the  Registrant's  common
stock issued and outstanding.

Transitional Small Business Disclosure Format (Check One):

{ }   Yes                 {X}   No


<PAGE>


                              HBANCORPORATION, INC.

                                      INDEX


<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                 ----
<S>                                                                                              <C>
Part I.  Financial Information

         Item 1.  Financial Statements

         Consolidated Statements of Financial Condition at September 30, 1998
         and June 30, 1998                                                                         1

         Consolidated Statements of Income for the three months ended
         September 30, 1998 and 1997                                                               2

         Consolidated Statement of Changes in Stockholders' Equity for the
         three months ended September 30, 1998 and 1997                                            3

         Consolidated Statements of Cash Flows for the three months
         ended September 30, 1998 and 1997                                                         4

         Notes to Consolidated Financial Statements                                              5-6

         Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                                               7-9

Part II. Other Information

         Item 1.  Legal Proceedings                                                               10

         Item 2.  Exhibits and Reports on Form 8-K                                                10

         Item 3.  Stockholders Voting                                                             10

         Signatures                                                                               11
</TABLE>


<PAGE>


                              HBANCORPORATION, INC.
                             LAWRENCEVILLE, ILLINOIS
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


<TABLE>
<CAPTION>
                                                                   (Unaudited)
                                                                  September 30,     June 30,
                                                                      1998            1998
                                                                  ------------    ------------
                         ASSETS
<S>                                                               <C>             <C>
Cash and equivalents:
   Cash                                                           $    128,474    $    612,736
   Interest bearing deposits                                         3,847,950       2,120,840
                                                                  ------------    ------------
         Total cash and cash equivalents                             3,976,424       2,733,576

Investments available for sale at fair value                         1,510,517       1,628,638
Investments held to maturity at cost                                 3,020,047       1,022,166
Loans receivable, net                                               15,146,387      15,582,966
Federal Home Loan Bank stock at cost                                    87,500          87,500
Federal Reserve Bank stock at cost                                      67,800          67,800
Accrued interest receivable                                            268,608         247,437
Office property and equipment, net                                      52,277          51,451
Other assets                                                            38,310          36,716
                                                                  ------------    ------------
         Total Assets                                             $ 24,167,870    $ 21,458,250
                                                                  ============    ============

    LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Passbook savings                                               $  2,606,456    $  1,871,150
   Money market accounts                                               397,607         681,126
   Certificates of deposit                                           8,660,383       7,969,700
   Certificates of deposit $100,000 and over                         3,287,472       1,771,564
                                                                  ------------    ------------
         Total Deposits                                             14,951,918      12,293,540

   Advances from FHLB                                                1,750,000       1,750,000

Other Liabilities:                                                     436,900         365,237
                                                                  ------------    ------------
         Total Liabilities                                          17,138,818      14,408,777
                                                                  ------------    ------------
Stockholders' Equity:
   Common stock, $.01 par value, 2 million shares authorized,
     493,320 shares issued; 403,460 shares outstanding at
     September 30, 1998; and 409,560 shares outstanding at
     June 30, 1998                                                       4,933           4,933
   Additional paid in capital                                        4,543,776       4,540,644
   Retained earnings                                                 4,202,936       4,166,189
   Treasury stock at cost                                           (1,433,378)     (1,359,078)
   Net unrealized appreciation on available-for-sale securities
     net of deferred tax                                               178,250         164,250
   Unearned ESOP and recognition and retention shares                 (467,465)       (467,465)
                                                                  ------------    ------------

         Total Stockholders' Equity                                  7,029,052       7,049,473
                                                                  ------------    ------------

         Total Liabilities and Stockholders' Equity               $ 24,167,870    $ 21,458,250
                                                                  ============    ============
</TABLE>

See notes to consolidated financial statements.


                                       -1-


<PAGE>


                              HBANCORPORATION, INC.
                             LAWRENCEVILLE, ILLINOIS
                        CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>

                                                                Three months ended
                                                                   September 30,
                                                                ------------------
                                                                    (Unaudited)
                                                                 1998        1997
                                                               --------   --------
<S>                                                            <C>        <C>
INTEREST INCOME
   Loans receivable                                            $358,379   $337,244
   Investments                                                  113,559     74,292
                                                               --------   --------
         Total Interest Income                                  471,938    411,536
                                                               --------   --------
INTEREST EXPENSE
   Interest on deposits                                         173,512    115,765
   Interest on FHLB advances                                     24,721      8,100
                                                               --------   --------
         Total Interest Expense                                 198,233    123,865
                                                               --------   --------

         Net Interest Income                                    273,705    287,671
   Provision for Loan Losses                                      5,000        -0-
                                                               --------   --------
         Net interest income after provision for loan losses    268,705    287,671
                                                               --------   --------
NONINTEREST INCOME
   Customer service fees and other                                6,726      5,768
                                                               --------   --------
         Total Noninterest Income                                 6,726      5,768
                                                               --------   --------
NONINTEREST EXPENSES
   General and administrative
     Compensation and benefits                                   91,190     78,182
     Occupancy and equipment                                     11,471      8,943
     Deposit insurance premium                                    5,189      4,780
     SAIF assessment fee                                            -0-        -0-
     Computer expense                                             3,794      4,033
     Other                                                       32,683     36,171
                                                               --------   --------
         Total Noninterest Expenses                             144,327    132,109
                                                               --------   --------

INCOME BEFORE INCOME TAX                                        131,104    161,330

Income Tax Expense                                               61,602     69,500
                                                               --------   --------

NET INCOME                                                     $ 69,502   $ 91,830
                                                               ========   ========

Earnings Per Share:
   Primary                                                     $   0.14   $   0.19
                                                               ========   ========

   Fully diluted                                               $   0.14   $   0.19
                                                               ========   ========
</TABLE>



See notes to consolidated financial statements.


                                       -2-

<PAGE>

                              HBANCORPORATION, INC.
                             LAWRENCEVILLE, ILLINOIS
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                   Common           Paid in            Retained          Treasury
                                                                   Stock            Capital            Earnings            Stock
                                                                -----------       -----------        -----------        -----------
<S>                                                             <C>               <C>                <C>                <C>
BALANCE, June 30, 1997                                          $     4,933       $ 4,514,279        $ 4,015,104        $   (26,838)
Net income for the quarter ended
   September 30, 1997                                                     0                 0             91,830                  0
Cash dividends                                                            0                 0            (39,468)                 0
Change in net unrealized gain on securities
   available-for-sale, net of applicable
   deferred income taxes of $84,000                                       0                 0                  0                  0
Effect of contribution to fund ESOP                                       0             6,248                  0                  0
Purchase of treasury stock                                                0                 0                  0           (439,867)
                                                                -----------       -----------        -----------        -----------
BALANCE, September 30, 1997                                     $     4,933       $ 4,520,527        $ 4,067,466        $  (466,705)
                                                                ===========       ===========        ===========        ===========

BALANCE, June 30, 1998                                          $     4,933       $ 4,540,644        $ 4,166,189        $(1,359,078)
Net income for the quarter ended
   September 30, 1998                                                     0                 0             69,502                  0
Cash dividends                                                            0                 0            (32,755)                 0
Change in unrealized gain on securities
   available-for-sale, net of applicable
   deferred income taxes of $125,250                                      0                 0                  0                  0
Effect of contribution to fund ESOP                                       0             3,132                  0                  0
Purchase of treasury stock                                                0                 0                  0            (74,300)
                                                                -----------       -----------        -----------        -----------
BALANCE, September 30, 1998                                     $     4,933       $ 4,543,776        $ 4,202,936        $(1,433,378)
                                                                ===========       ===========        ===========        ===========




<CAPTION>
                                                                Unrealized          Unearned            RRP
                                                                Gain (Loss)          Compen-           Compen-             Total
                                                                Securities           sation            sation             Equity
                                                                -----------       -----------        -----------        -----------
<S>                                                             <C>               <C>                <C>                <C>
BALANCE, June 30, 1997                                          $   111,500       $  (335,453)       $         0        $ 8,283,525
Net income for the quarter ended
   September 30, 1997                                                     0                 0                  0             91,830
Cash dividends                                                            0                 0                  0            (39,468)
Change in net unrealized gain on securities
   available-for-sale, net of applicable
   deferred income taxes of $84,000                                   8,500                 0                  0              8,500
Effect of contribution to fund ESOP                                       0                 0                  0              6,248
Purchase of treasury stock                                                0                 0                  0           (439,867)
                                                                -----------       -----------        -----------        -----------

BALANCE, September 30, 1997                                     $   120,000       $  (335,453)       $         0        $ 7,910,768
                                                                ===========       ===========        ===========        ===========

BALANCE, June 30, 1998                                          $   164,250       $  (295,988)       $  (171,477)       $ 7,049,473
Net income for the quarter ended
   September 30, 1998                                                     0                 0                  0             69,502
Cash dividends                                                            0                 0                  0            (32,755)
Change in unrealized gain on securities
   available-for-sale, net of applicable
   deferred income taxes of $125,250                                 14,000                 0                  0             14,000
Effect of contribution to fund ESOP                                       0                 0                  0              3,132
Purchase of treasury stock                                                0                 0                  0            (74,300)
                                                                -----------       -----------        -----------        -----------
BALANCE, September 30, 1998                                     $   178,250       $  (295,988)       $  (171,477)       $ 7,029,052
                                                                ===========       ===========        ===========        ===========
</TABLE>

See notes to consolidated financial statements.


                                      -3-

<PAGE>


                              HBANCORPORATION, INC.
                             LAWRENCEVILLE, ILLINOIS
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                        Three months ended
                                                                                           September 30,
                                                                               ----------------------------------
                                                                                           (Unaudited)
                                                                                   1998                   1997
                                                                               -----------            -----------
<S>                                                                            <C>                    <C>
NET INCOME (Loss)                                                              $    69,502            $    91,830
Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation                                                                    4,575                  3,039
     (Increase) decrease in other assets                                            (1,594)                 1,839
     (Increase) in interest receivable                                             (21,171)               (47,124)
     Increase in other liabilities                                                  71,663                 75,434
     Provision for loan loss                                                         5,000                    -0-
                                                                               -----------            -----------
Cash provided by operating activities                                              127,975                125,018
                                                                               -----------            -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Investments in certificates of deposit in other
     financial institutions, net decrease                                              -0-                100,000
   Proceeds from maturities of investments held to maturity                          4,184                    659
   Purchase of investments held to maturity                                     (2,002,065)                   -0-
   Proceeds from maturities of investments available-for-sale                      132,121                    -0-
   Purchase of investments available-for-sale                                          -0-             (1,013,534)
   Purchase of fixed assets                                                         (5,401)                (1,256)
   Net (increase) decrease in loans                                                431,579               (442,773)
                                                                               -----------            -----------
Cash (used) by investing activities                                             (1,439,582)            (1,356,904)
                                                                               -----------            -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   Advances from FHLB                                                                  -0-              1,000,000
   Payment of dividends                                                            (32,755)               (39,468)
   Allocation of ESOP shares                                                         3,132                  6,248
   Net increase in passbook savings, money market accounts
     and certificates of deposit                                                 2,658,378                763,036
   Purchases of treasury stock                                                     (74,300)              (439,867)
                                                                               -----------            -----------
Cash provided by financing activities                                            2,554,455              1,289,949
                                                                               -----------            -----------
     Net increase in cash and cash equivalents                                   1,242,848                 58,063

Cash and Cash Equivalents at Beginning of Period                                 2,733,576              1,650,294
                                                                               -----------            -----------
Cash and Cash Equivalents at End of Period                                     $ 3,976,424            $ 1,708,357
                                                                               ===========            ===========
Cash paid for:
   Interest                                                                    $   175,894            $   115,862
                                                                               ===========            ===========
   Income taxes                                                                $    19,879            $    21,481
                                                                               ===========            ===========
</TABLE>

See notes to consolidated financial statements.


                                      -4-

<PAGE>


                              HBANCORPORATION, INC.
                             LAWRENCEVILLE, ILLINOIS

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1998 AND 1997



NOTE 1 - BASIS OF PRESENTATION

The unaudited  information  for the quarters ended  September 30, 1998 and 1997,
includes the results of operations of HBancorporation,  Inc. (the "Company") and
its wholly owned subsidiary  Heritage National Bank (the "Bank"). In the opinion
of management of the Company and the Bank, the financial  statements reflect all
adjustments  (consisting  only of normal  recurring  adjustments)  necessary  to
present fairly the consolidated  financial  statements.  These interim financial
statements  should be read in conjunction  with the Company's most recent annual
financial   statements   and   footnotes   included  in  the  annual  report  of
HBancorporation,  Inc. for the fiscal year ended June 30,  1998.  The results of
the  periods  presented  are not  necessarily  representative  of the results of
operations and cash flows which may be expected for the entire year.

NOTE 2 - PRINCIPLES OF CONSOLIDATION

The consolidated  financial  statements  include the accounts of the Company and
the Bank. All  significant  inter-company  balances and  transactions  have been
eliminated in consolidation.

NOTE 3 - STOCK CONVERSION

The Company issued 493,320 shares,  $.01 par value common stock, for proceeds of
$4,510,404 net of expenses of approximately  $423,000. The Bank converted from a
mutual savings association to a stock savings association and then to a national
bank immediately following the formation of the Company and received proceeds of
$2,255,202 in exchange for all its common stock.  This transaction was accounted
for using the pooling of interests  method.  On April 1, 1996, the Company began
trading  as a public  company on the OTC  Electronic  Bulletin  Board  under the
symbol "HBIN".

Federal regulations require that, upon conversion from a mutual to stock form of
ownership,  a  "liquidation  account" be established by restricting a portion of
net worth for the benefit of eligible savings account holders who maintain their
savings  accounts  with the Bank  after  conversion.  In the  event of  complete
liquidation  (and only in such event) each savings  account holder who continues
to maintain his savings account shall be entitled to receive a distribution from
the  liquidation  account  after  payment  of  all  creditors,  but  before  any
liquidation  distribution  with respect to capital  stock.  This account will be
proportionately  reduced for any subsequent  reduction in such holders'  savings
account.  Federal regulations impose limitations on the payment of dividends and
other capital distributions,  including,  among others, that the Company may not
declare or pay a cash dividend on any of its capital stock if the effect thereof
would cause the Bank's  capital to be reduced below the amount  required for the
liquidation  account  or the  capital  requirements  imposed  by  the  Financial
Institutions Reform, Recovery, and Enforcement Act.


                                      -5-

<PAGE>


                              HBANCORPORATION, INC.
                             LAWRENCEVILLE, ILLINOIS

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1998 AND 1997



NOTE 3 - STOCK CONVERSION, CONTINUED

Concurrent with the conversion,  the board of directors approved the adoption of
the Company's  Employee Stock  Ownership  Plan (the "ESOP").  The ESOP qualifies
under Sections  401(a) and 501(a) of the Internal  Revenue Code,  eligibility is
based on hours of service, date of hire, and age.  Contributions to the ESOP are
determined  by the  board of  directors,  in the  form of cash or the  Company's
common  stock.  No  employee  contributions  are  accepted.   Contributions  are
allocated  based  on  the  ratio  of the  participant's  compensation  to  total
compensation  of all  participants.  Participant's  account  balances  are fully
vested after five years of service.

NOTE 4 - EMPLOYEE BENEFIT AND STOCK OPTION PLANS

On  April  28,  1997,  the  stockholders'  approved  the  HBancorporation,  Inc.
Recognition  and  Retention  Plan.  The  purpose  of  this  plan  is to  provide
directors,  officers and employees with a proprietary interest in the Company in
a manner  designed to encourage such  individuals to remain with the Company and
the Bank. The terms of each RRP will be identical, only the participants and the
number of shares awarded to each participant vary. Eligible directors,  officers
and other key employees of the Company will earn (i.e., become vested in) shares
of common stock covered by the award at a rate not to exceed 20% per year,  with
the first installment vesting April 28, 1997.

On April 28, 1997,  the  stockholders  approved the  HBancorporation,  Inc. 1997
Stock Option and Incentive Plan.  Pursuant to the Stock Option Plan, the Company
will reserve for issuance  thereunder either from authorized but unissued shares
or from issued shares  reacquired and held as treasury shares,  59,198 shares of
Common Stock (12.0% of the Company's  current  shares  outstanding).  Management
currently  intends,  to the extent  practicable and feasible,  to fund the Stock
Option Plan from issued  shares  reacquired  by the Company in the open  market.
Awards under the plan may be in the form of stock  options,  stock  appreciation
rights or limited stock appreciation rights.  Awards made under the plan vest at
a rate of one-fifth of the initial  award per year,  subject to the  participant
maintaining continuous service since the date of grant.

NOTE 5 - EARNINGS PER SHARE

Primary earnings per share amounts for the three months ended September 30, 1998
and 1997 are computed based on the  weighted-average  number of shares  actually
outstanding,  486,266 in 1998, and 485,130 in 1997.  Fully diluted  earnings per
share  amounts  are  based  on an  increased  number  of  shares  that  would be
outstanding assuming exercise of the stock options and RRP awards. The number of
shares used in the  computations  of fully  diluted  earnings  per share for the
three  months  ended  September  30,  1998 and 1997 were  495,062  and  495,055,
respectively.


                                       -6-

<PAGE>


                              HBANCORPORATION, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION



General

The  Company  is  incorporated  under  the  laws of  Delaware  and is  generally
authorized  to engage  in any  activity  that is  permitted  for a bank  holding
company under  federal  banking law. The Company owns all the stock of the Bank.
The Company had not engaged in any material  operations  at September  30, 1998,
and had no  significant  assets other than its equity  investment  in the Bank's
stock, cash, investments, and a loan to the Company's ESOP.

Established in 1935, the Bank (formerly named Lawrenceville  Federal Savings and
Loan  Association)  is a  community-oriented  financial  institution  offering a
variety of financial  services to meet the needs of the  communities  it serves.
The Bank's  primary  market  area covers  Lawrence  County,  Illinois,  and Knox
County,  Indiana.  The Bank attracts  deposits from the general  public and uses
such deposits,  together with  borrowings  and other funds,  to originate one to
four family residential  mortgages,  commercial business loans,  consumer loans,
and  finance  leases.  The Bank  also  invests  in U.S.  government  and  agency
obligations and may invest in other permissible investments.

The Bank's results of operations  are primarily  dependent upon its net interest
income, which is the difference between interest earned on loans and investments
and interest paid on deposits and other borrowed  funds.  Net interest income is
directly  affected  by the  relative  amounts  of  interest  earning  assets and
interest  bearing  liabilities  and the  interest  rates  earned or paid on such
amounts. The Bank's results of operations are also affected by the provision for
loan losses and the level of noninterest income and expenses. Noninterest income
consists primarily of service charges. Noninterest expense includes salaries and
employee benefits,  occupancy expenses, federal deposit insurance premiums, data
processing expenses, and other operating expenses.

The  operating  results  of the Bank  are  also  affected  by  general  economic
conditions,  the  monetary  and fiscal  policies  of federal  agencies,  and the
policies of agencies that regulate  financial  institutions.  The Bank's cost of
funds is  influenced  by interest  rates on  competing  investments  and general
market rates of interest.  Lending  activities  are influenced by the demand for
real  estate  loans and other  types of loans,  which in turn is affected by the
rates of  interest  at which  loans are  offered,  general  economic  conditions
affecting loan demand, and the availability of funds for lending activities.

Financial Condition

For  the  three  months  ended  September  30,  1998,   total  assets  increased
approximately  $2,710,000 from $21.5 million to $24.2 million.  Assets increased
as a result of an increase in investments available for sale. Deposits increased
by  approximately  $2,660,000 to $15.0 million at September 30, 1998, from $12.3
million at June 30, 1998.  Management  believes  the increase in deposits  stems
from customers seeking higher yielding  investment  alternatives.  For the three
months  ended  September  30,  1998,   total   stockholders'   equity  decreased
approximately  $20,000.  The decrease was  primarily a result of the purchase of
treasury stock and payment of dividends offset by net income.


                                      -7-

<PAGE>


                              HBANCORPORATION, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION



Results of Operations:

Comparison of the three months ended September 30, 1998 and 1997.

General.  Net income  decreased to $69,000 for the three months ended  September
30,  1998,  compared to $92,000 for the same period in 1997.  The  decrease  was
primarily related to higher interest expense on deposits and FHLB advances.

Interest Income. Total interest income increased by $60,000 or 14.6% to $472,000
for the three months ended September 30, 1998,  compared to the same period last
year. Income from loans grew by $21,000 for the three months.  Investment income
increased  by $39,000  for the three  months due  primarily  to the  purchase of
investment securities.

Interest  Expense.  Total  interest  expense  increased by $74,000 for the three
months  ended  September  30,  1998,  to  $198,000  compared  to $124,000 in the
previous  three  month  period.  The  amount of  certificates  of  deposit  have
increased  substantially  for the most recent three month period compared to the
same period a year ago. The Bank paid  $25,000  interest to FHLB on advances for
the three months ended September 30, 1998.

Net  Interest  Income.  Net interest  income  before  provision  for loan losses
decreased $14,000 or 4.9% for the recent three month period compared to the same
period a year ago, from $288,000 to $274,000.

Nonperforming  Assets and  Provisions  for Loan Losses.  The  provision for loan
losses is a result of  management's  periodic  analysis  of the  adequacy of the
Bank's allowance for loan losses.  During the three month period ended September
30, 1998 the Bank recorded a $5,000  provision  for loan losses,  compared to no
provision  for the  three  month  period  ended  September  30,  1997.  The Bank
continues to monitor and adjust its  allowance  for loan losses as  management's
analysis  of its  loan  portfolio  and  economic  conditions  dictate.  The Bank
believes it has taken an appropriate approach toward reserve levels,  consistent
with the  Bank's  loan  portfolio,  the level of the Bank's  allowance  for loan
losses and any change in the related  ratio of the  allowance for loan losses to
non-performing  loans are  dependent  upon the  economy,  changes in real estate
values and interest  rates.  Because the Bank has had  extremely low loan losses
during its history,  management  also  considers the loss  experience of similar
portfolios in comparable  lending markets.  In addition,  federal regulators may
require  additional  reserves  as a result  of their  examination  of the  Bank.
Accordingly, the calculation of the adequacy of the allowance for loan losses is
not based directly on the level of nonperforming  assets. The allowance for loan
losses  reflects  what the  Bank  currently  believes  is an  adequate  level of
resources, although there can be no assurance that future losses will not exceed
the estimated amounts, thereby adversely affecting future results of operations.
As of September 30, 1998 and June 30, 1998, the Bank's allowance for loan losses
was $138,000 and $133,000, respectively.

The Bank had no  nonperforming  assets at  September  30, 1998 or June 30, 1998.
There was no  foreclosed  real estate owned by the Bank at September 30, 1998 or
June 30, 1998.

Noninterest Income.  Noninterest income was substantially the same for the three
month periods ended September 30, 1998 and 1997.

Noninterest  Expense.  For the three months ended  September 30, 1998, the total
noninterest  expense was $144,000 compared to $132,000 for the same three months
in 1997. General and administrative costs have increased as a result of the ESOP
and the RRP.


                                      -8-

<PAGE>


                              HBANCORPORATION, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION



Income Tax  Expense.  Income tax expense  decreased  to $62,000  during the most
recent  three months  compared to $70,000 for the same period a year ago.  Lower
taxes were the result of  decreased  income  before tax of $131,000 for the most
recent three months compared to $161,000 for a year ago.

Capital Requirements.  The Company's main sources of funds are deposits and loan
and investment repayments. Other potential sources would include borrowings from
the Federal Home Loan Bank of Chicago  (FHLB).  As a national  bank, the Bank is
not subject to any prescribed liquidity requirement.

The  Bank  uses its  capital  resources  to meet  ongoing  commitments,  to fund
maturing  certificates of deposit and deposit  withdrawals,  to invest,  to fund
existing  and  future  loan  commitments,  to  maintain  liquidity,  and to meet
operating  expenses.  The company  anticipates it will have sufficient  funds to
meet  current  loan  commitments.  At  September  30,  1998,  the  Bank  had  no
outstanding  commitments to extend credit.  Management  believes loan repayments
and other  sources of funds  will be  adequate  to meet the  Bank's  foreseeable
liquidity  needs.  FHLB advances  could be used to take  advantage of investment
opportunities, but are not relied upon in the regular course of business.

The Bank is required to maintain specific amounts of regulatory capital pursuant
to federal  regulations.  The table  below  presents  the  capital  position  at
September 30, 1998 relative to the regulatory capital requirements for the Bank.


                                                                Amount
                                                            (in thousands)
                                                           ----------------
         Tier 1 Capital                                    $          6,353
         Tier 1 Capital Requirement                                     719
                                                           ----------------
         Excess                                            $          5,634
                                                           ================

         Total Risk-Based Capital                          $          6,491
         Risk-Based Capital Requirement                               1,215
                                                           ----------------
         Excess                                            $          5,276
                                                           ================


                                      -9-

<PAGE>


                           PART II. OTHER INFORMATION



Item 1    Legal Proceedings

          There are no material  legal  proceedings  to which the Company or the
          Bank is a party or of which any of their  property  is  subject.  From
          time-to-time, the Bank is a party to legal proceedings incident to its
          business.

Item 2.   Exhibits and Reports on Form 8-K

          Form 8K filed August 5, 1998 Amending By-Laws


Item 3.   (a) On October 27, 1998,  HBancorporation,  Inc., (the  "Corporation")
          held its Annual Meeting of Stockholders

          (b) At the  meeting,  Kevin  J.  Kavanaugh  and Mary E.  Denison  were
          elected for terms to expire in 2001.

          (c) Stockholders voted on the following matters:


               i)  The  election  of  the   following   two   directors  of  the
          Corporation;

<TABLE>
<CAPTION>

                VOTES:                            FOR           AGAINST    ABSTAIN       BROKER-NON-VOTES
                ------                            ---           -------    -------       ----------------

<S>                                               <C>            <C>        <C>           <C>
              Kevin J. Kavanaugh                  375,496        0          4,970         0


              Mary E. Denison                     375,496        0          4,970         0


               ii) The  ratification  of the  appointment  of Kemper  CPA Group,
          L.L.C. as independent  auditors of the corporation for the fiscal year
          ending June 30, 1998

<CAPTION>
                VOTES:                            FOR           AGAINST    ABSTAIN       BROKER-NON-VOTES
                ------                            ---           -------    -------       ----------------
<S>                                               <C>            <C>        <C>           <C>
                                                  375,996        4,470      0             0
</TABLE>


                                      -10-

<PAGE>


                                   SIGNATURES



Pursuant  to the  requirement  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.

                                       HBANCORPORATION, INC.
                                       Registrant



Date: November 3, 1998                 /s/  Kevin J. Kavanaugh
                                       -----------------------------------------
                                       Kevin J. Kavanaugh, President and Chief
                                       Executive Officer




Date: November 3, 1998                 /s/  Cleora Gillespie
                                       -----------------------------------------
                                       Cleora Gillespie, Secretary and Treasurer


                                      -11-