VERMILION BANCORP, INC.




                       1998 ANNUAL REPORT

                        TO STOCKHOLDERS

                       TABLE OF CONTENTS

                                                             Page

President's Letter to Stockholders                             2

Selected Consolidated Financial and Other Data                 3

Management's Discussion and Analysis of Financial Condition
  and Results of Operations                                    5

Independent Auditors' Report                                  22

Consolidated Balance Sheet                                    23

Consolidated Statements of Income                             24

Consolidated Statements of Stockholders' Equity               25

Consolidated Statements of Cash Flows                         26

Notes to Consolidated Financial Statements                    27

Directors and Executive Officers                              44

Banking Locations and Stockholder Information                 45

Market Prices and Dividends                                   46





















Dear Stockholders:


Vermilion Bancorp, Inc. completed its first full year of operations with many
positive advances.

In our susidiary, American Savings Bank of Danville, net loan growth of over
4.8 million dollars created a 16 percent increase in total loans over the prior
year. our lending remains heavily concentrated in single family homes but we
achieved over 50 percent growth in our combined consumer, construction and
commercial loan portfolios.

American's first branch facility was substantially completed at September 30,
1998 and opened on November 9, 1998. This expansion will continue American's
growth as a strong community bank.

Vermilion had a net profit of sixty-six cents per share after the cost of the 
Management Recognition Plan approved in April 1998. We view this commitment as 
long term investment in our employees which will benefit stockholders.

The officers and directors of Vermilion Bancorp, Inc. continue to investigate
growth opportunities which will enhance earnings and stockholder value.

I continue to look forward to the future development of Vermilion Bancorp, Inc.
and will strive to improve market recognition of the true value of this 
business. 

Thank you for letting me lead your business.

 
                                Sincerely,




                                Merrill G. Norton
                                President and Chief
                                Executive Officer




                              (2)



         SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

     The following selected consolidated financial and other data
of  the  Company does not purport to be complete and is qualified
in  its  entirety  by  reference to the more  detailed  financial
information, including the Consolidated Financial Statements  and
Related Notes, appearing elsewhere herein.

                                                At September 30,               
                                    1998     1997     1996     1995     1994  
                                          (Dollars in Thousands)
Selected Financial Condition                                              
Data:
 Total assets                      $43,216  $37,816  $35,459  $33,977  $33,198
 Cash and cash equivalents           1,742    1,138      789      571      699
 Interest-bearing time
                  deposits              20       99       99       99      694
 Securities(1)                                                         
  Available for sale                 2,785    3,116    2,222    1,486       --
  Held to maturity                   2,312    3,000    4,337    6,816    9,205
 Loans, net                         34,226   29,411   26,936   23,954   21,627
 Premises and equipment              1,356      461      467      495      468
 Federal Home Loan Bank of
     Chicago stock, at cost            350      283      269      255      236
 Deposits                           30,044   29,098   30,724   31,331   30,698
 Federal Home Loan Bank advances     6,400    2,600    2,000       --       --
 Total equity capital                6,321    5,955    2,355    2,442    2,341
 Full service offices                    1        1        1        1        1
                                  
                                  
                                              Year Ended September 30,
                                  
                                     1998     1997     1996     1995     1994  
                                              (In Thousands)
Selected Operating Data:                                                  
  Total interest income             $ 3,070  $ 2,803  $ 2,634  $ 2,375  $ 2,279
  Total interest expense              1,818    1,741    1,778    1,588    1,355
    Net interest income               1,252    1,062      856      787      924
  Provision for losses on loans          75       17       80       13      105
  Net interest income after                                               
  provision for losses on loans       1,177    1,045      776      774      819
  Non-interest income                    55       42       45       51       49
  Non-interest expense                  843      761      889(2)   710      700
  Income (loss) before taxes            389      326      (68)     115      168
  Provision for income taxes            144       74        3       15       13
  Net income (loss)                     244      252      (71)     100      155
  Net income per share                  .66      N/A      N/A      N/A      N/A
  Book value per share                17.04    16.21      N/A      N/A      N/A
  Dividends per share               $  0.00     0.00      N/A      N/A      N/A

(1) The  Bank  adopted the provisions set forth in  Statement  of
    Financial  Accounting Standards No. 115 on October  1,  1994,
    which   requires  entities  to  carry  securities  that   are





                                    (3)





    available for sale at their market value while continuing  to
    carry   securities  that  are  held  to  maturity  at   their
    amortized  cost.   See  Note 1 to the Consolidated  Financial
    Statements.
(2) Includes a special assessment of $206,000 to recapitalize the
    Savings Association Insurance Fund ("SAIF").
     






                                      At or For the Year Ended September 30,
                                         
                                       1998    1997     1996     1995    1994  
                                                                          
Other Data:                                                                  
  Profitability:                                                             
    Return on average assets           .060%   0.67% (0.20)%(4)  0.29%   0.46%
    Return on average equity           3.99    5.07   (2.89)(4)  4.18    6.86
    Interest rate spread for               
                 period(1)             2.48    2.20    2.17      2.11    2.59
    Net interest margin(2)             3.18    2.92    2.48      2.39    2.83
    Non-interest expenses to                     
                average assets         2.07    2.03    2.49      2.08    2.13
    Average interest-earning assets                                          
    to average interest bearing 
                        liabilities  114.98  115.18  106.05    104.04  104.78
  Capital Ratios:                                                            
    Average equity to average assets  15.07   13.26    6.90      7.02    6.76
  Asset Quality:                                                             
    Non-performing assets to total
    assets(3)                          0.90    1.28    0.93      0.64   0.26 
    Net chargeoffs (recoveries) to 
    average loans                      0.24    0.03    0.04      0.03   0.76  
    Allowance for loan losses to
    total loans                        0.45    0.52    0.53      0.31   0.29 
    Allowance for loan losses to
    non-performing loans              50.99   31.34   43.60     34.26  73.26 
               
                                                                             
Capital Ratios of the Bank(5)                                                
Tier 1 risk-based capital ratio       22.40   26.50   14.45     14.59  15.98    
Total risk-based capital ratio        23.00   27.30   15.33     15.03  16.44    
Tier 1 leverage capital ratio         12.40%  13.50%   6.61%     7.11%  6.92%  
     

(1) The  interest  rate spread represents the difference  between
    the  average yield on interest-earning assets and the average
    rate paid on interest-bearing liabilities.

(2) The  net  interest  margin  represents  net  interest  income
    divided by average interest-earning assets.

(3) Non-performing  assets  include non-accrual  loans,  accruing
    loans delinquent 90 days or more and real estate owned.





                                (4)





(4) When  calculated  without the special  SAIF  assessment,  the
    return  on  average assets and the return on  average  equity
    would have been 0.24% and 3.01%, respectively.

(5) Prior  to  fiscal  [1994],  the Bank  operated  as  a  mutual
    savings  and loan association.  As such, the Bank was subject
    to   the   capital  requirements  of  the  Office  of  Thrift
    Supervision  ("OTS")  and not those of  the  Federal  Deposit
    Insurance  Corporation  ("FDIC") and  was  at  all  times  in
    compliance therewith.
     

     


              MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

     Vermilion  Bancorp,  Inc.  (the "Company")  is  the  holding
company  for  American Savings Bank of Danville(the  "Bank").  The
operating results of the Company depend upon the operating results of 
the Bank.  The results of the Bank are primarily dependent upon  its
net  interest  income,  which  is determined  by  the  difference
between interest income on interest-earning assets, which consist
principally   of   loans,   investment   securities   and   other
investments,    and    interest   expense   on   interest-bearing
liabilities,  which consist principally of deposits and  borrowed
money.   The Bank's net income also is affected by its  provision
for  loan  losses,  as  well as the level of  its  other  income,
including loan fees and service charges and miscellaneous  items,
and its other expenses, including compensation and other employee
benefits, premises and occupancy costs, federal deposit insurance
premiums, data processing expense, net loss on real estate  owned
and other miscellaneous expenses, and income taxes.

    On March 25, 1997, the Bank completed its conversion from the
mutual  to the stock form (the "Conversion") and was acquired  by
the  Company.   In  the  Conversion, the Company  issued  396,750
shares  of  common stock, which resulted in net proceeds  to  the
Company, after costs and employee stock ownership plan shares, of 
approximately $3.3 million.

      In  addition  to  historical  information,  forward-looking
statements  are contained herein that are subject  to  risks  and




                            (5)




uncertainties   that  could  cause  actual  results   to   differ
materially   from   those   reflected  in   the   forward-looking
statements.  Factors that could cause future results to vary from
current expectations, include, but are not limited to, the impact
of  economic conditions (both generally and more specifically  in
the  markets  in  which  the  Company operates),  the  impact  of
competition  for the Company's customers from other providers  of
financial  services,  the  impact of government  legislation  and
regulation  (which changes from time to time and over  which  the
Company has no control), and other risks detailed in this  Annual
Report  and  in  the  Company's  other  Securities  and  Exchange
Commission  filings.  Readers are cautioned not  to  place  undue
reliance  on  these  forward-looking  statements,  which  reflect
management's  analysis only as of the date hereof.   The  Company
undertakes no obligation to publicly revise these forward-looking
statements,  to reflect events or circumstances that arise  after
the  date  hereof.   Readers  should carefully  review  the  risk
factors described in other documents the Company files from  time
to  time  with the Securities and Exchange Commission,  including
the Quarterly Reports on Form 10-Q to be filed by the Company  in
1999 and any Current Reports on Form 8-K filed by the Company.




Changes in Financial Condition

     
     General. Total assets of the Bank increased by $5.4 million, 
or 14.3%, to $43.2 million at September 30, 1998 from $37.8 million 
at September 30, 1997. The increase in total assets during 1998 was 
due primarily to a $4.8 million increase in net loans, an increase 
of $896,000 in premises and equipment, and a $604,000 increase in 
cash and cash equivalents, partially offset by a $1.02 million 
reduction in total investment securities.

     Cash and cash equivalents.  Cash and cash equivalents, 
which consist of cash and due from banks and interest-bearing demand 
deposits at other institutions, increased by $604,000, or 53.1%, to 
$1.7 million at September 30, 1998 compared to $1.1 million at 
September 30, 1997.  The increase in cash and cash equivalents in 
fiscal 1998 was primarily the result of proceeds from maturing 
investment securities.
At September 30, 1998, cash and cash equivalents amounted to 4.0%
of the Company's total assets. Cash and cash equivalents may be utilized
to fund deposit withdrawals or as a source of funds for new loan
originations or for the purchase of investment or mortgage-backed
securities.




                              (6)



     Net Loans.  The Company's net loans amount to $34.2
million at September 30, 1998, a $4.8 million, or a 16.4% increase
over net loans at September 30, 1997.  Such increase was due
primarily to originations of residential mortgage loans.

     Investment securities.  The Company's investment securities
amounted to $5.1 million at September 30, 1998 compared to $6.1
million at September 30, 1997.  The decrease in investment
securities was the result of a $688,000 decrease in
investment securities held to maturity and a $331,000 
decrease in investments available for sale.

     Deposits.  The Company's total deposits amounted to $30.0
million at September 30, 1998 compared to $29.1 million at 
September 30, 1997.  During 1998, the Company's total deposits 
increased by $947,000, or 3.3%.

     Federal Home Loan Bank Advances.  The Company's total 
advances from the FHLB of Chicago amounted to $6.4 million at 
September 30, 1998, compared to $2.6 million at September 30, 1997,
an increase of 246.2%.  The proceeds of these advances were used
to fund growth in the Company's loan portfolio during 1998.









                                 (7)





    Average Balances, Net Interest Income and Yields Earned and Rates Paid.  The
following  table presents for the periods indicated the total dollar  amount  of
interest  income from average interest-earning assets and the resultant  yields,
as  well  as  the  total dollar amount of interest expense on average  interest-
bearing  liabilities and the resultant rates, and the net interest margin.   The
table  does  not reflect any effect of income taxes.  All average  balances  are
based on average monthly balances during the periods.



                                     At
                                 Sept. 30
                                   1998     Year Ended September 30, 1998      
                                             (Dollar in Thousands)             
                                   Yield/   Average                Yield/  
                                    Rate    Balance    Interest     Rate    
                                                              
Interest-earning assets:
  Loans, net(1)                     7.92%   $32,128    $ 2,624      8.17%
     Interest-bearing deposits
     with financial institutions    4.38      2,030         87      4.29
     Investment Securities(2)       5.67      2,115        132      6.24
     Mortgage-backed securities     7.15      3,120        227      7.28

   Total interest-earning assets    7.48     39,393      3,070      7.79

     Non-interest-earning assets              1,251

   Total assets                             $40,644
Interest-bearing liabilities:
     Deposits:
     Now                            0.79      1,229         10      0.81
     Money market investment        3.59        856         33      3.86
     Savings and retirement         4.33      5,119        238      4.65
     Certificates                   5.62     22,238      1,282      5.76
      Total deposits                5.09     29,442      1,563      5.31 
     FHLB advances                  5.14      4,820        255      5.29

Total interest-bearing liabilities  5.10     34,262      1,818      5.31

Non-interest bearing liabilities                257

      Total liabilities                      34,519

Equity capital                                6,125
      Total liabilities and
            equity capital                  $40,644
Net interest income; interest
                rate spread(3)      2.38               $ 1,252      2.48
Net interest margin(4)                                              3.18
Ratio of interest-earning                                         
assets to average interest-
bearing liabilities               114.33%                         114.98%




                                  (8)
                                      
                                 
                                   Year Ended September 30, 1997              
                                    (Dollar in Thousands)                   
                                   Average                Yield/  
                                   Balance    Interest     Rate    
                                                              
Interest-earning assets:
  Loans, net(1)                    $28,290    $ 2,324      8.24%
     Interest-bearing deposits
     with financial institutions     2,252        100      4.44
     Investment Securities(2)        2,477        149      6.02
     Mortgage-backed securities      3,564        230      6.48

   Total interest-earning assets    36,583      2,803      7.68

     Non-interest-earning assets       926

   Total assets                     37,509
Interest-bearing liabilities:
     Deposits:
     Now                               471          8      1.70
     Money market investment         1,016         32      3.15
     Savings and retirement          5,304        263      4.96
     Certificates                   22,820      1,315      5.76
      Total deposits                29,611      1,618      5.32 
     FHLB advances                   2,150        123      5.88

Total interest-bearing liabilities  31,761      1,741      5.48

Non-interest bearing liabilities       776

      Total liabilities             32,537

Equity capital                       4,972
      Total liabilities and
            equity capital         $37,509
Net interest income; interest
                rate spread(3)                $ 1,062      2.20
Net interest margin(4)                                     2.92
Ratio of interest-earning                                         
assets to average interest-
bearing liabilities                116.95%               115.18%
 




                                         (9)



                                      Year Ended September 30, 1996       
                                         Average            Yield/
                                         Balance  Interest   Rate

Interest-earning assets:                                                      
  Loans, net(1)                         $25,869   $ 2,118    8.19% 
    Interest-bearing deposits with                                            
       financial institutions             1,330        67    5.04
    Investment Securities(2)              3,531       204    5.78
    Mortgage-backed securities            3,811       245    6.43       

  Total interest-earning assets          34,541     2,634    7.63 

    Non-interest-earning assets           1,117                                

  Total assets                          $35,658                                 
Interest-bearing liabilities:                                                  
    Deposits:                                                                   
    NOW accounts                        $   469   $    10    2.13 
    Money market investment               1,355        38    2.80  
    Savings and retirement                5,161       236    4.57
    Certificates                         23,672     1,387    5.86

      Total deposits                     30,657     1,671    5.45 

    FHLB advances                         1,917       107    5.58

  Total interest-bearing liabilities     32,574     1,778    5.46

Non-interest bearing liabilities            624                

  Total liabilities                      33,198                  

Equity capital                            2,460                 

  Total liabilities and equity capital  $35,658
Net interest income; interest                     
                        rate spread(3)            $   856    2.17% 
Net interest margin(4)                                       2.48% 
Ratio of interest-earning   
assets to average interest- 
  bearing liabilities                                      106.05%




    
(1) Includes loans on which the Bank has discontinued accruing interest.

(2)  Includes securities available for sale and held to maturity and excludes
mortgage-backed securities. The average balance of securities available for
sale is computed based on the average of the historical amoratized cost balances
without the effects of the fair value adjustment.

(3) Interest rate spread represents the difference between the weighted average
    yield  on interest-earning assets and the weighted average rate on interest-
    bearing liabilities.

(4) Net  interest  margin  is net interest income divided by  average  interest-
    earning assets.



                                  (10)




     Rate/Volume  Analysis.  The following table describes the extent  to  which
changes  in interest rates and changes in volume of interest-related assets  and
liabilities have affected the Bank's interest income and interest expense during
the  periods  indicated.   For  each category  of  interest-earning  assets  and
interest-bearing liabilities, information is provided on changes attributable to
(i)  changes  in volume (change in volume multiplied by prior year  rate),  (ii)
changes  in  rate  (change in rate multiplied by prior year volume),  and  (iii)
total  change in rate and volume.  The combined effect of changes in  both  rate
and  volume has been allocated proportionately to the change due to rate and the
change due to volume.


                                      Year Ended September 30,
                                          1998 vs 1997
                                         Increase
                                        (Decrease)         Total
                                          Due To          Increase
                                     Rate      Volume     Decrease
                                          (In Thousands)
Interest-earning assets:
  Interest-bearing deposits with 
           financial institutions  $  (3)      $ (10)      $ (13)
  Loans, net                         (20)        320         300
  Investment Securities                5         (22)        (17)
  Mortgage-backed securities          25         (28)         (3)

  Total change in interest income      7         260         267
Interest-bearing liabilities:
  Deposits:
    Now accounts                       1           1           2
    Money market investment            6          (5)          1
    Savings and retirement           (16)         (9)        (25)
    Certificates                      --         (33)        (33)
  FHLB advances                       (9)        141         132

  Total change in interest expense   (18)         95          77

Net change in net interest income  $  25       $ 165       $ 190




                               (11)






                                      Year Ended September 30,
                                          1997 vs 1996
                                         Increase
                                        (Decrease)         Total
                                          Due To          Increase
                                     Rate      Volume     Decrease
                                          (In Thousands)
Interest-earning assets:
  Interest-bearing deposits with 
           financial institutions  $  (9)      $  42       $  33
  Loans, net                          13         193         206
  Investment Securities                9         (64)        (55)
  Mortgage-backed securities           2         (17)        (15)

  Total change in interest income     15         154         169
Interest-bearing liabilities:
  Deposits:
    Now accounts                      (2)         --          (2)
    Money market investment            5         (11)         (6)
    Savings and retirement            20           7          27
    Certificates                     (23)        (49)        (72)
  FHLB advances                        5          11          16

  Total change in interest expense     5         (42)        (37)

Net change in net interest income  $  10       $ 196       $ 206





Results of Operations

      Net Income. The Company reported net income of $244,000 and 
$252,000 during the years ended September 30, 1998 and 1997,
respectively.  
      Net Interest Income. Net interest income is determined by interest rate
spread (i.e., the difference between the yields earned on its interest-
earning assets and the rates paid on its interest-bearing liabilities) and
the relative amounts of interest-earning assets and interest-bearing 
liabilities. The Bank's average interest-rate spread was 2.48% and 2.20%
during the years ended September 30, 1998 and 1997, respectively. The Bank's 
net interest margin (i.e., net interest income as a percentage of average
interest-earning assets) was 3.18% and 2.92% during the years ended
September 30, 1998 and 1997 respectively.

    Net interest income increased by $190,000, or 17.9%, during the year
ended September 30, 1998 to $1.3 million compared to $1.1 million for the year 
ended September 30, 1997. The primary reasons for this increase were a 
$300,000 increase in net interest income from loans, a $56,000 decrease in
deposit interest expense offset by a $20,000 decrease in interest income
from investment securities, a $13,000 decrease in interest income from
deposits with financial institutions and an increase in interest expense
from FHLB borrowings of $132,000.

    Interest Income. Total interest income increased by $267,000 or 9.5% in 
the year ended September 30, 1998. Interest income on loans amounted to
$2.6 million in fiscal 1998 compared to $2.3 million in fiscal 1997. The





                                (12)





average balance of the Bank's total loans increased by $4.8 million, or
16.4%, in fiscal 1998 compared to fiscal 1997 and the average yield earned
on loans decreased by 7 basis points (with 100 basis points being equal to
1.0%). Interest income on investment securities decreased by $20,000 or
5.3% in fiscal 1998 compared to fiscal 1997 due primarily to a $806,000 
decrease in the average balance of investment and mortgage backed securities.
Interest income on interest-bearing deposits decreased by $13,000, or 12.8%, 
in fiscal 1998 compared to fiscal 1997 due primarily to a $222,000 decrease in 
the average balance in interest-bearing deposits.

    Interest Expense. The primary component of interest expense during all
periods presented is interest on deposits. Deposit interest expense decreased
by $56,000, or 3.4%, during the year ended September 30, 1998 compared to the
year ended September 30, 1997. The decrease was due primarily to a decrease
in the average balance of certificares of deposit held by the institution
from $22.8 million to $22.2 million and a decrease in the average rate on
savings and retirement accounts of $185,000 4.96% to 4.65%.
Certificates of depost (including certificates of deposit of $100,000 or more)
constituted 75.6% of the Bank's total deposits at September 30, 1998 
compared to 76.8% at September 30, 1997.  The average balance of the
Bank's certificates decreased by $582,000 or 2.6% from fiscal year 1998 to 
1997.

       Provisions for Losses on Loans. Provisions for losses on loans are
charged to earnings to bring the total allowance for loan losses to a level 
considered appropriate by management based on a methodology implemented by  
the Bank which is designed to assess, among other things, experience, the   
volume and type of lending conducted by the Bank, overall portfolio mix,  
the amount of the Bank's classified assets, the status of past due principal
and interest payments, loan-to-value ratios of loans in the Bank's loan  
portfolio, general economic conditions, particularly as they relate to the 
Bank's market area, and other factors related to the collectibility of the 
Bank's loan portfolio. Management of the Bank assesses the allowance for loan
losses on a monthly basis and will make provisions for loan losses as deemed
appropriate by management in order to maintain the adequacy of the allowance
for loan losses.

       The Bank's provisions for loan losses increased to $75,000 in fiscal
1998, compared to $17,000 in fiscal 1997.  At September 30, 1998, the Bank's
allowance for loan losses amounted to 51.0% of total non-performing loans and
to 0.5% of total loans receivable.

       Non-interest Income. Non-interest income increased $13,000 or 31.2% for
the year ended September 30, 1998 compared to the year ended September 30,
1997.

        Non-interest Expenses. Total non-interest expenses were $843,000 in   
the year ended September 30, 1998 which amounted to a $82,000 or 10.7%  
increase compared to the year ended September 30, 1997. The primary reason 
for the increase was due to the increase in legal and professional fees of
$56,000, a $19,000 increase in director and committee fees and an $11,000
increase in data processing fees, offset by a $18,000 decrease in salary and
employee benefits. 



     Income Taxes. The Bank incurred income tax expense of $144,000 for the
year ended September 30, 1998, as compared to $74,000 for fiscal 1997. The
Company's effective tax rate amounted to 37.1% for fiscal 1998.





                                   (13)





Asset and Liability Management

       The ability to maximize net interest income is largely dependent 
upon the achievement of a positive interest rate spread that can be sustained
during fluctuations in prevailing interest rates. Interest rate sensitivity 
is a measure of the difference between amounts of interest-earning assets 
and interest-bearing liabilities which either reprice or mature within a 
given period of time. The difference, or the interest rate repricing "gap,"
provides an indication of the extent to which an institution's interest rate 
spread will be affected by changes in interest rates. A gap is considered 
positive when the amount of interest-rate sensitive assets exceeds the amount
of interest-rate sensitive liabilities, and is considered negative when the 
amount of interest-rate sensitive liabilities exceeds the amount of interest-
rate sensitive assets during a given time period. Generally, during a period 
of rising interest rates, a negative gap within shorter maturities would  
adversely affect net interest income, while a positive gap within shorter  
maturities would result in an increase in net interest income, and during 
a period of falling interest rates, a negative gap within shorter maturities
would result in an increase in net interest income while a positive gap 
within shorter maturities would have the opposite effect.  As of September  
30, 1998, the amount of the Bank's interest-bearing liabilities which were 
estimated to mature or reprice within one year exceeded the Bank's interest-
earning assets with the same characteristics by $2.7 million or 6.19% of the
Bank's total assets.

      The Bank's actions with respect to interest rate risk and its asset/
liability gap management are reviewed periodically by the Bank's Board of 
Directors. As part of the Board's review, it sets interest rate risk targets
and reviews the Bank's current composition of assets and liabilities in light
of the prevailing interest rate environment.

      The Bank has historically emphasized the origination of fixed-rate 
long-term residential real estate loans for retention in its portfolio. At 
September 30, 1998, $23.6 million or 81.2% of the Bank's total loan portfolio
due one year or more after September 30, 1998, consisted of one-to-four-
family fixed-rate long-term residential mortgage loans. Although the Bank 
anticipates that a substantial portion of its loan portfolio will continue to
consist of fixed-rate long-term loans, the Bank has limited the term of such
loans originated since 1983 to no more than 20 years with a substantial 
majority of such loans having a term of 15 years or less. The Bank has
also attempted to mitigate the interest rate risk of holding a significant 
portion of fixed-rate loans in its portfolio through the origination of one-
to-four family fixed-rate balloon loans with terms of one or three years. 
At the end of a balloon loan's term, the entire balance is due. The borrower
has the option of repaying the loan on the due date or, subject to satisfying
the Bank's underwriting criteria, accepting the modified loan rate which is
then offered by the Bank for such loans. In the latter case, the renewed loan
is a new balloon loan with the same term as the initial balloon loan. The 
Bank has generally offered rates on such renewed loans at 1/4 of 1% to 1/2 of
1% higher than rates then offered on its new balloon residential real estate
loans. Renewed balloon loans are amortized over the remaining life of the 
original amortization period. At September 30, 1998, $6.3 million or 18.4% of
the Bank's total loan portfolio consisted of one-to-four family fixed-rate 
balloon loans.


      In addition, the Bank has also invested new funds or reinvested funds 
from maturing securities into shorter-term securities and variable-rate 
mortgage-backed securities in order to increase the interest-rate sensitivity





                                 (14)





of its assets. As of September 30, 1998, the Bank had $1.2 million of 
variable-rate mortgage-backed securities and had $2.9 million of investments
in various and federal agency government securities with terms to maturity of
less than five years. As of September 30, 1998, $2.8 million of the Bank's 
investment securities portfolio were classified as available for sale, which 
will permit the Bank to sell such securities if deemed appropriate in 
response to, among other things, changes in interest rates.

      The Bank's deposits have included a relatively high amount of 
certificates, which are generally higher costing and more interest-rate 
sensitive than "core" deposits. At September 30, 1998, $22.2 million, or 
75.5% of the Bank's total deposits were comprised of certificates of deposit 
(including certificates of deposit of $100,000 or more) and  $14.9 million,
or 50.7% of the Banks total deposits consisted of certificates which are 
scheduled to mature within one year. Certificates generally are costlier and 
a more volatile source of funds than transaction accounts. In addition, 
certificates are more likely to be invested in other instruments than are
transaction accounts. Notwithstanding the foregoing, management believes that
most of its certificates will remain at the Bank upon maturity. The Bank does
not accept brokered deposits.

      The Bank believes that its current interest-rate pricing gap is within 
a range acceptable to the Commissioner and consistent with the Bank's 
internal guidelines. However, as the general interest rate environment and 
the condition in the Bank's market change, the Bank will continue to monitor
the interest-rate sensitivity of its assets and liabilities. In order to 
continue to improve the Bank's interest-rate gap position, it plans to 
continue to focus on increasing consumer and commercial business lending
and investing in shorter-term and variable-rate securities. 





                              (15)






       The following table sets forth the amounts of interest-earning assets 
and interest-bearing liabilities outstanding at September 30, 1998, which are
anticipated by the Bank, based upon certain assumptions, to reprice or mature
in each of the future time periods shown (the "GAP Table"). Except as stated 
below, the amount of assets and liabilities shown which reprice or mature 
during a particular period were determined in accordance with the earlier of 
term to repricing or the contractual maturity of the asset or liability. The 
table sets forth an approximation of the projected repricing of assets and 
liabilities at September 30, 1998, on the basis of contractual maturities, 
anticipated prepayments, and scheduled rate adjustments within a six month
period and subsequent selected time intervals.

                                                   More Than              
                      Within  Six to  More Than    Three Years  Over          
                      six     Twelve  One Year to  to five      Five      
                      Months  Months  Three Years    Years      Years   Total
                      
                               (Dollars in Thousands)
                                                                   
Interest-earning                                                   
           assets:
  Investment 
   Securities(1)(2)  $   850  $1,232   $ 1,010     $   --     $   365 $ 3,457  
  Loans, net(3)        7,491   6,226     5,335       5,335      9,896  34,283   
  Interest-bearing                                                 
deposits(4)            1,688     --        --          --         --    1,688
  Mortgage-backed                                                  
securities               519     679       590         --         161   1,949
    Total interest-
earning assets        10,548   8,137     6,935       5,335     10,422  41,377  
  Interest-bearing                                                   
liabilities:
Deposits(5):                                                       
  NOW accounts           383     383       766         --         --    1,532  
  Money market     
investment accounts      204     204       408         --         --      816  
  Savings accounts       218     219       874         875        --    2,186   
Retirement accounts      152     152       608         608      1,519   3,039   
  Certificates         8,151   6,793     7,341         442        --   22,727   
    Total interest-                                                
bearing deposits       9,108   7,751     9,997       1,925      1,519  30,300
Advances from FHLB     2,500   2,000     1,900         --         --    6,400   
      Total interest-                                              
bearing liabilities   11,608   9,751    11,897       1,925      1,519  36,700
Excess (deficiency)                                                
of interest-earning
  assets over
interest-bearing
liabilities           (1,060) (1,614)   (4,962)      3,410      8,903   4,677
Cumulative excess                                                  
(deficiency) of                                                    
 interest-earning                                                  
assets over interest-
 bearing liabilities  (1,060) (2,674)   (7,636)     (4,226)     4,677   4,677
Cumulative excess                                                  
(deficiency) of
  interest-earning
assets over interest-
  bearing
liabilities as a
percent of
  total assets         (2.45)% (6.19)% (17.67)%     (9.78)%    10.82%  10.82%





 
                                   (16)






(1) Reflects repricing, contractual maturity or anticipated call date.

(2) Includes securities available for sale and held to maturity and FHLB of
    Chicago stock.  Excludes mortgage-backed securities.

(3) Fixed-rate loans, including balloon loans, are included in the periods
    in which they are scheduled to be repaid, based on scheduled
    amortization, adjusted to take into account estimated prepayments.
    Therefore, for purposes of the table, all of the Bank's balloon loans
    are deemed to have a term equal to the initial amortization period.
    
(4) Includes interest-bearing demand and interest-bearing time deposits.

(5) Deposit accounts are assumed to have the following annual decay rates:
    NOW accounts - 50%; money market investment accounts - 50%; savings
    accounts - 20%; and retirement accounts - 10%.




                                    (17)




     Certain assumptions based on regional, state and local  data
for  savings  associations in the state of Illinois  and  on  the
Bank's  historical experience are contained in  the  above  table
which  affect the presentation therein.  Although certain  assets
and  liabilities  may  have  similar  maturities  or  periods  of
repricing,  they  may react in different degrees  to  changes  in
market  interest rates.  The interest rates on certain  types  of
assets  and  liabilities may fluctuate in advance of  changes  in
market  interest rates, while interest rates of  other  types  of
assets  and  liabilities lag behind changes  in  market  interest
rates.   Certain  assets,  such  as adjustable-rate  loans,  have
features which restrict changes in interest rates on a short-term
basis  and over the life of the asset.  In the event of a  change
in  interest rates, prepayment and early withdrawal levels  would
likely  deviate  significantly from those assumed in  calculating
the table.

Liquidity and Capital Resources

      The   Bank's  liquidity,  represented  by  cash  and   cash
equivalents,  is  a  product  of  its  operating,  investing  and
financing  activities.  The Bank's primary sources of  funds  are
deposits, amortization, prepayments and maturities of outstanding
loans  and  mortgage-backed securities, maturities of  investment
securities  and  other short-term investments and funds  provided
from  operations.  While scheduled payments from the amortization
of  loans  and mortgage-backed securities and maturing investment
securities  and short-term investments are relatively predictable
sources  of funds, deposit flows and loan prepayments are greatly
influenced  by  general interest rates, economic  conditions  and
competition.   In  addition, the Bank  invests  excess  funds  in
overnight  deposits and other short-term interest-earning  assets
which  provide liquidity to meet lending requirements. As loan 
originations and  deposits remained  stable, the Bank used cash 
Federal Home Loan Bank borrowings and from maturing securities  in
its  investment  portfolio  to  fund  loan  originations.  As  of
September  30,  1998, the Bank had the ability to  borrow  up  to
$18.2 million from the FHLB.

     Liquidity management is both a daily and long-term  function
of  business management.  Excess liquidity is generally  invested
in  short-term  investments such as  overnight  deposits.   On  a
longer-term basis, the Bank maintains a strategy of investing  in
various  lending  products.  The Bank uses its sources  of  funds
primarily  to  meet  its  ongoing commitments,  to  pay  maturing
savings   certificates   and  savings  withdrawals,   fund   loan
commitments  and  maintain  a portfolio  of  mortgage-backed  and
investment securities.  At September 30, 1998 the total  approved
loan commitments outstanding amounted to $371,000.  At
the  same  date,  the Bank had commitments of  $22,000  under
unused  letters of credit.  Certificates scheduled to  mature  in
one  year  or  less  at  September 30, 1998  totaled  $14.9
million.   Management  believes that  a  significant  portion  of
maturing   deposits  will  remain  with  the  Bank.    The   Bank
anticipates  that even with interest rates at lower  levels  than
have  been  experienced  in  recent years,  which  has  caused  a
disintermediation of funds, it will continue to  have  sufficient
funds  together with borrowings, to meet its current commitments.
The mixture of deposit liabilities and borrowings will depend  on
the relative cost of each of these sources of funds.

     Federally-insured  state-chartered  banks  are  required  to
maintain  minimum  levels of regulatory capital.   Under  current
FDIC  regulations, insured state-chartered banks  generally  must
maintain  (i) a ratio of Tier 1 leverage capital to total  assets
of  at least 3.0% (4.0% to 5.0% for all but the most highly rated






                               (18)






banks) and (ii) a ratio of Tier 1 capital to risk weighted assets
of  at  least  4.0%  and a ratio of total capital  risk  weighted
assets of at least 8.0%.  At September 30, 1998, the Bank was in
compliance with applicable regulatory capital requirements.




Recent Accounting Pronouncements



      In  February 1997, the FASB issued SFAS No. 128,  "Earnings
Per Share."  SFAS No. 128 establishes standards for computing and
presenting earnings per share (EPS) and applies to entities  with
publicly  held common stock or potential common stock.  SFAS  No.
128  simplifies previous standards for computing EPS.   SFAS  No.
128  is  effective  for financial statements issued  for  periods
ending  after  December  15,  1997,  including  interim  periods;
earlier  application  is not permitted.  SFAS  No.  128  requires
restatement  of all prior period EPS data presented.   Accordingly,
the Company adopted Statement 128 during the fiscal quarter
ending December 31, 1997.   

      In February 1997, the FASB issued SFAS No. 129, "Disclosure
of  Information about Capital Structure." SFAS No. 129 summarizes
previously  issued  disclosure  guidance  contained  within   APB
Opinions No. 10 and 15 as well as SFAS No. 47.  There will be  no
changes to the Company's disclosures pursuant to the adoption  of
SFAS   No.  129.   This  statement  is  effective  for  financial
statements issued for periods ending after December 15, 1997.
Accordingly, the Company adopted Statement 129 during fiscal 1998.

      In  June  1997,  the FASB issued SFAS No.  130,  "Reporting
Comprehensive Income," which establishes standards for  reporting
and  display of comprehensive income and its components in a full
set   of  general-purpose  financial  statements.   Comprehensive
income  is  defined  as  "the change  in  equity  of  a  business
enterprise during a period from transactions and other events and
circumstances from nonowner sources.  It includes all changes  in
equity during a period except those resulting from investment  by
owners  and  distributions to owners."  The comprehensive  income
and  related  cumulative  equity impact of  comprehensive  income
items will be required to be disclosed prominently as part of the
notes to the financial statements.  Only the impact of unrealized
gains  or losses on securities available for sale is expected  to
be  disclosed as an additional component of the Company's  income
under  the  requirements  of SFAS No.  130.   This  statement  is
effective for fiscal years beginning after December 15, 1997.
The Company will adopt Statement 130 during fiscal year 1999.

     Disclosures About Segments of an Enterprise.  Also in 1997,
the FASB issued Statement No. 131, Disclosures about Segments of 
an Enterprise and Related Information, which supersedes SFAS 14,
"Financial Reporting for Segments of a Business Enterprise", 
establishes standards for the way that public enterprises report
information about operating segments in annual financial 
statements and requires reporting of selected information about
operating segments in annual financial statements issued to the
public.  It also establishes standards for disclosures regarding
products and services, geographic area and major customers.  SFAS
131 defines operating segments as components of an enterprise about
which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to 
allocate resources and in assessing performance.

This standard is effective for financial statments periods beginning
December 15, 1997 and requires comparative information for earlier






                              (19)






years to be restated.  Due to recent issuance of this standard, 
management has been unable to fully evaluate the impact, if any, 
they may have on the Company's future financial statement disclosures.


     In June, 1998, the SFSB issued SFAS No. 133, 'Accounting for Derivative
Instruments and Hedging Activities', which establishes accounting and reporting
standards for derivative instruments.  It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value.  This  statement is 
effective for all periods beginning after June 15, 1999. The Company eoll adopt
Standard 133 during fical year 2000 and does not anticipate any impact to
its financial statemnets.


Year 2000 Compliance

	The Year 2000 compliance issue exists because many computer systems and
applications currently use two digit fields to designate a year.  As the 
century date change occurs, date sensitive systems may either fail or not
operate properly unless the underlying programs are modified or replaced.
	The Bank's lending and deposit activities, like those of most financial
institutions, depend significantly upon computer systems to process and 
record transactions.  The Company is aware of the potential Year 2000 
problems that may affect the operating systems that control our computers as 
well as those of our third-party data service providers that maintain many of 
our records.  In 1997, the Bank began the process of identifying Year 2000
related problems that may affect the Bank's computer systems. A task force of 
Bank officers was established to address the isues related to these problems.
Outside consultants have and will be utilized when required to complete
this project.
	The task force analysed the Bank's operations and both identified those 
functions that would be affected by Year 2000 issues and determined which of 
these functions were mission critical (i.e. vital to the day-to-day operations
of the Bank).  A time table was established for completion of the various 
sections of the project.
	The Bank is working with the companies that supply or service the Bank's 
computer systems that rely on computers to identify and remedy any Year 2000
related systems.  The Board of Directors is monitoring the Bank's progress
in addressing Year 2000 issues.
	The Bank's contract with its data service provider ends in October, 1999.
The Bank has analyzed the various factors involved and has made the decision
to transfer to a new data processor.  This has delayed the Bank's ability
to test this area for Year 2000 compliance. Pending the completion of 
contract negotiation with the new data service provider, the Bank should begin 
testing on the new system by the end of March, 1999.
	Inventory and testing of the Bank's computer equipment is complete. No 
new equipment purchase are anticipated because of the Year 2000 issue.
	The direct expense to date (other than officer's salaries involved in
the project) have been less than $10,000.
	Although the Company believes it is taking the necessary steps to 
address the Year 2000 compliance issue, no assurances can be given that some
problems will not occur or that we will not incur significant additional 
expenses in future periods.  In the event that the Bank incurs substantial
expenses to make the Bank's current systems, programs and equipment Year 
2000 compliant, the Company's net income, and financial condition could be
adversely affected.
	Becuase the Bank's loan portfolio to individual borrowers is
diversified and its market area does not depend significantly upon one 






                              (20)





employer or industry, the Bank does not expect any Year 2000 related
difficulties to significantly affect the Company's net earnings or cash
flow.
	The Bank is deveoping a contingency plan to deal with Year 2000
related issues.  This program will provide for dealing with situations
that might occur that are both related to the Bank's operations (e.g.
computer systems or equipment, liquidity) and those beyound the Bank's
control (e,g. power failure, phone/communication line failure).  The 
plan will include methods to deal with these situations and continue
to service the Bank's customers despite Year 2000 problems arising.
The Bank has established June 30, 1999 as the deadline for completion 
of this plan.   
   



Impact of Inflation and Changing Prices

     The  Financial  Statements of the  Company  and  related  notes
presented herein have been prepared in accordance with GAAP which
require  the  measurement  of financial  position  and  operating
results  in  terms  of  historical dollars,  without  considering
changes  in the relative purchasing power of money over time  due
to inflation.

     Unlike most industrial companies, substantially all  of  the
assets and liabilities of a financial institution are monetary in
nature.   As  a  result, interest rates have a  more  significant
impact  on a financial institution's performance than the effects
of   general  levels  of  inflation.   Interest  rates   do   not
necessarily  move in the same direction or in the same  magnitude
as  the  prices  of  goods and services, since  such  prices  are
affected by inflation to a larger extent than interest rates.  In
the current interest rate environment, liquidity and the maturity
structure  of the Bank's assets and liabilities are  critical  to
the maintenance of acceptable performance levels.  Over the three
most recent fiscal years, interest rates have been relatively low
and  stable  and  such environment has generally had  a  positive
impact on the Company's revenues and income.




                             (21)


			Independent Auditor's Report



To the Stockholders and
Board of Directors
Vermilion Bancorp, Inc. and Subsidiary
Danville, Illinois


We have audited the consolidated balance sheet of Vermilion Bancorp, Inc.
and subsidiary as of September 30, 1998 and 1997, and the related consolidated
statements of income, changes in stockholders' equity, and cash flows for each
of the three years in the period ended September 30, 1998.  These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements described above 
presents fairly, in all material respects, the consolidated financial
position of Vermilion Bancorp, Inc. and subsidiary as of September 30,
1998 and 1997, and the results of their operations and their cash flows 
for each of the three years in the period ended September 30, 1998, in
conformity with generally accepted accounting principles.



/s/  Olive LLP



Champaign, Illinois
October 20, 1998






                                (22)



               			Vermilion Bancorp, Inc.
                     and Subsidiary 
                Consolidated Balance Sheet


September 30                                 1998          1997

Assets					          

Cash and due from banks                  $    54,430  $    55,354
Interest-bearing demand deposits           1,688,212    1,082,543
				
Cash and cash equivalents                  1,741,642    1,137,897
				
Interest-bearing time deposits                20,000       99,000
Investment securities			          
  Available for sale                       2,784,515    3,115,652
  Held to maturity                         2,312,447    3,000,155
				
Total investment securities                5,096,962    6,115,807

Loans                                     34,380,142   29,563,296
  Allowance for loan losses                 (154,199)    (151,868)
				
Net loans                                 34,225,943   29,411,428
				
Premises and equipment                     1,356,263      460,617
Federal Home Loan Bank stock                 350,000      283,200
Other assets                                 425,628      308,126
    
    Total assets                         $43,216,438  $37,816,075
				

Liabilities				          
Deposits					          
  Noninterest bearing                    $   669,725  $   285,753
  Interest bearing                        29,374,750   28,811,931
				
   Total deposits                         30,044,475   29,097,684

Federal Home Loan Bank borrowings          6,400,000    2,600,000
Other liabilities                            450,681      163,259

    Total liabilities                     36,895,156   31,860,943
				
Commitments and Contingent Liabilities		          
Stockholders' Equity				          
 Preferred stock, $.01 par value		          
  Authorized and unissued - 400,000 shares	          
 Common stock, $. 01 par value		          
  Authorized - 1,600,000 shares		          
  Issued and outstanding - 396,750 shares      3,968        3,968
 Paid-in-capital                           3,627,258    3,614,922
Retained earnings-substantially restricted 2,866,968    2,622,516
Net unrealized gain on 
 securities available for sale                24,826        6,437
Management retention plan payable             56,587    
Less:					          
Unearned employee stock ownership 
plan shares - 25,832 and 29,271 shares     (258,325)     (292,711)

    Total stockholders' equity            6,321,282     5,955,132

Total liabilities and 
 stockholders' equity                   $43,216,438   $37,816,075



See notes to consolidated financial statements.
		






                                (23)



                           Vermilion Bancorp, Inc.
                               and Subsidiary
                      Consolidated Statement of Income


Year Ended September 30                     1998        1997        1996

Interest Income
  Loans                                $ 2,623,857  $ 2,324,161  $ 2,118,137

Investment securities                      358,584      378,710      448,729
Deposits with financial institutions        87,282      100,052       67,274

    Total interest income                3,069,723    2,802,923    2,634,140
				
Interest Expense					          
 Deposits                                1,562,329    1,617,919    1,670,717
 Federal Home Loan Bank borrowings         255,390      122,927      107,113

   Total interest expense                1,817,719    1,740,846    1,777,830
				
      Net Interest Income                1,252,004    1,062,077      856,310
      Provision for loan losses             75,000       17,000       80,000

Net Interest Income After Provision for 
Loan Losses                              1,177,004    1,045,077      776,310

Noninterest Income				          
  Loan fees                                 11,029          216       11,551
  Net realized gains on sales of
   available-for-sale securities                            938
Other income                                43,476       40,387       33,343

       Total noninterest income             54,505       41,541       44,894


Noninterest Expenses								 
  Salaries and employee benefits           362,604      380,308      275,741
  Net occupancy and equipment expenses      89,424       83,216       96,895
  Data processing fees                      55,727       44,668       40,568
  Deposit insurance expense                 18,059       14,901      277,093
  Printing and office supplies              14,146       15,954       15,710
  Legal and professional fees               97,877       42,346       36,569
  Advertising and promotion                 14,812       12,370       28,525
  Director and committee fees               68,483       49,360       41,107
  Other expenses                           121,701      117,944       77,281

    Total noninterest expenses             842,833      761,067      889,489

Income (Loss) Before Income Tax            388,676      325,551      (68,285)
  Income tax expense                       144,224       73,539        2,883

Net Income (Loss)                      $   244,452  $   252,012  $   (71,168)

Earnings Per Share								 
  Basic									 
    Net income                         $      0.66         N/A          N/A
    Average number of shares               369,342
  Diluted 
    Net income                         $      0.66         N/A          N/A
Average number of shares                   370,575

			 
See notes to consolidated financial statements.






                                (24)





             					Vermilion Bancorp, Inc. and Subsidiary
        Consolidated Statement of Changes in Stockholders' Equity



                                      Common Stock
                                   Shares                Paid-in    Retained   
                                 Outstanding  Amount     Capital    Earnings 
				
Balance, October 1, 1995                                          $ 2,441,672 	
							
Net loss for 1996                                                     (71,168)
							
Net change in	unrealized gain   
(loss)	on securities
available for sale

Balance, September 30, 1996                                         2,370,504   

  Issuance of common stock         396,750   $3,968    $3,609,455
  Employee Stock Ownership Plan 
   shares acquired                 (31,740)
  Employee Stock Ownership Plan 
   shares allocated                  2,469                  5,467

Net income for 1997                                                   252,012

Net change in	unrealized gain 
(loss) on securities
available for sale


Balance, September 30, 1997        367,479    3,968     3,614,922   2,622,516

Employee stock	ownership plan 
 shares allocated                    3,439                 12,336

Management retention								         
plan compensation						
								
Net income for 1998                                                   244,452

Net change in	unrealized gain 
(loss) on securities
available for sale


Balance, September 30, 1998        370,918   $3,968    $3,627,258  $2,866,968




                                     Net
                                  Unrealized                Unearned
                                  Gain(Loss)    Management  Employee
                                 on Securities   Retention   Stock
                                   Avaiable        Plan    Ownership
                                   for Sale       Payable Plan Shares  Total

Balance, October 1, 1995         $       737                         $2,442,409

Net loss for 1996                                                       (71,168)

Net change in unrealized gain
(loss) on securities
available for sale                   (16,092)                           (16,092)

Balance, September 30, 1996          (15,355)                         2,355,149

Issuance of common stock                                              3,613,423
Employee Stock Ownership Plan
 shares acquired                                          $ (317,400)  (317,400)
Employee Stock Ownership Plan
 shares allocated                                             24,689     30,156

Net Income for 1997                                                     252,012

Net change in unrealized gain
(loss on securities
available for sale                    21,792                             21,792

Balance, September 30, 1997            6,437                (292,711) 5,955,132

Employee stock ownership plan
 shares allocated                                             34,386     46,722

Management retention plan
 compensation                                 $ 56,587                   56,587

Net income for 1998                                                     244,452

Net change in unrealized gain
(loss) on securities
available for sale                    18,389                             18,389

Balance, September 30, 1998         $ 24,826  $ 56,587     $(258,325)$6,321,282




See notes to consolidated financial statements.







                                (25)




                       		Vermilion Bancorp, Inc
			                          and Subsidiary
                  Consolidated Statement of Cash Flows


Year Ended September 30                         1998      1997        1996

Operating Activities					          
 Net income (loss)                             $244,452   $252,012   $(71,168)
Adjustments to reconcile net income(loss) to net
  cash provided by operating activities:
  Provision for loan losses                      75,000     17,000     80,000
  Investment securities gains                                 (938)
  Deferred income tax                           (26,623)    55,059    (41,577)
  Investment securities amortization, net         5,551     11,838     11,049
  Depreciation                                   36,514     26,139     33,594
  Compensation expense related to ESOP and MRP  103,309     30,156
  Change in
   Other assets                                (103,019)   (30,986)     7,250
   Other liabilities                            287,422   (216,751)   177,022
						
Net cash provided by operating	activities       622,606    143,529    196,170


Investing Activities				          
  Net change in interest bearing deposits        79,000
  Purchases of securities available for sale            (2,044,483)  (550,000)
  Proceeds from maturities of securities  
   available for sale                           333,647    900,000  1,394,257
  Proceeds from sales of securities
   available for sale                                      250,938
  Purchases of securities held to mturity                 (150,000)
  Proceeds from maturities of securities        
  held to maturity                              710,176  1,505,282    867,113 
  Net change in loans                        (4,889,515)(2,492,193)(3,062,278)
  Purchases of premises and equipment          (932,160)   (19,828)    (5,271)
  Purchase of Federal Home Loan Bank stock      (66,800)   (14,200)   (14,000)
  Net cash used by investing activities      (4,765,652)(2,064,484)(1,370,179)

Financing Activities				          
  Net change in deposits                        946,791 (1,626,369)  (607,385)
  Proceeds of Federal Home Loan Bank
   borrowings                                 3,800,000    600,000  2,000,000
  Issuance of common stock, net of	                     	
  offering costs                                         3,613,423
Purchase of common stock for ESOP                         (317,400)
Net cash provided by financing activities     4,746,791  2,269,654  1,392,615

Net Change in Cash and Cash Equivalents        	603,745    348,699    218,606
Cash and Cash Equivalents, Beginning of Year  1,137,897    789,198   	570,592

Cash and Cash Equivalents, End of Year       $1,741,642 $1,137,897 $  789,198

Additional Cash Flows Information		          
  Interest paid                              $1,800,515 $1,735,675 $1,770,178
  Income tax paid                                 9,601     27,000     17,205


See notes to consolidated financial statements.
		






                                  (26)




                      Vermilion Bancorp, Inc.
                         and Subsidiary
             Notes to Consolidated Financial Statements


Note 1   Nature of Operations and Summary of Significant Accounting Policies


The accounting and reporting policies of Vermilion Bancorp, Inc. 
(the "Company") and its wholly owned subsidiary, American Savings Bank of 
Danville (the  "Bank"), conform to generally accepted accounting principles 
and reporting practices followed by the thrift industry. The Bank has a 
wholly owned subsidiary, GBW Service Corporation, whose principal activity 
is servicing contract sales of real estate. The more significant of the 
policies are described below.

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

The Company is a bank holding company whose principal activity is the  
ownership and management of the Bank.  The Bank operates under a state  
thrift charter and provides full banking services.  As a state-chartered  
thrift, the Bank is subject to regulation by the State of Illinois Office  
of Banks and Real Estate and the Federal Deposit Insurance Corporation.

The Bank generates commercial, mortgage and consumer loans and receives 
deposits from customers located primarily in Danville and the immediately 
surrounding communities.  The Bank's loans are generally secured by specific 
items of collateral including real property and consumer assets.  Although 
the Bank has a diversified loan portfolio, a substantial portion of its 
debtors' ability to honor their contracts is dependent upon economic 
conditions in the Danville area.

Consolidation  -  The  consolidated financial statements include the accounts
of the Company and the Bank after elimination of all material intercompany 
transactions and accounts.

Investment  Securities  - Debt securities are classified as held to maturity 
when the Bank has the positive intent and ability to hold the securities to 
maturity.  Securities held to maturity are carried at amortized cost.  Debt 
securities not classified as held to maturity are classified as available for
sale.  Securities available for  sale are carried at fair value with 
unrealized gains and losses reported separately in stockholders' equity, net 
of tax.

Amortization of premiums and accretion of discounts are recorded as interest 
income from securities.  Realized gains and losses are recorded as net 
security gains (losses).  Gains and losses on sales of securities are 
determined on the specific-identification method.





                                   (27)


Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


Loans are carried at the principal amount outstanding. Interest income is 
accrued on the principal balances of loans.  The accrual of interest on 
impaired loans is discontinued when, in management's opinion, the borrower 
may be unable to meet payments as they become due. When interest accrual is 
discontinued, all unpaid accrued interest is reversed when considered 
uncollectible.  Interest income is subsequently recognized only to the extent
cash payments are received. Certain loan fees and direct cost are being 
deferred and amortized as an adjustment of yield on the loans.

Allowance for loan losses is maintained to absorb loan losses based on 
management's continuing review and evaluation of the portfolio and its 
judgment as to the impact of economic conditions on the portfolio. The  
evaluation by management includes consideration of past loss experience,  
changes in the composition of the portfolio, and the current condition and 
amount of loans outstanding, and the probability of collecting all amounts 
due.  Impaired loans are measured by the present value of expected future 
cash flows, or the fair value of the collateral of the loan, if collateral 
dependent.

The determination of the adequacy of the allowance for loan losses and the   
valuation of real estate is based on estimates that are particularly 
susceptible to significant changes in the economic environment and market 
conditions.  Management believes that as of September 30, 1998, the allowance 
for loan losses and the valuation of real estate are adequate based on 
information currently available.   A worsening or protracted economic decline 
in the area within which the Bank operates would increase the liklihood of 
additional losses due to credit and market risks and could create the need 
for additional loss reserves.

Premises and equipment are carried at cost net of accumulated depreciation. 
Depreciation is computed using both the straight-line and accelerated methods
based on the estimated useful lives of the assets. Maintenance and repairs are 
expensed as incurred while major additions and improvements are capitalized.   
Gains and losses on dispositions are included in current operations.

Federal Home Loan Bank stock is a required investment for institutions that  
are members of the Federal Home Loan Bank ("FHLB") system.	The required 
investment in the common stock is based on a predetermined formula.

Income tax in the consolidated statement of income includes deferred income 
tax provisions or benefits for all significant temporary differences in 
recognizing income and expenses for financial reporting and income tax purposes.
The Company files consolidated income tax returns with its subsidiary.

Earnings Per Share - Basic earnings per share have been computed based upon 
the weighted average common shares outstanding during each year. Diluted 
earnings per share reflects the potential dilution that could occur if 
securities or other contracts to issue common stock were exercised or converted 
into common stock or resulted in the issuance of common stock that then shared 
in the earnings of the Company.




                                  (28)



Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


Employee Stock Ownership Plan - The Company accounts for its employee stock 
ownership plan (ESOP) in accordance with American Institute of Certified Public 
Accountants (AICPA) Statement of Position 93-6.	The cost of shares issued to 
the ESOP but not yet allocated to participants are presented in the consolidated
balance sheet as a reduction of stockholders' equity. Compensation expense is 
recorded based on the market price of the shares as they are committed to be 
released for allocation to participant accounts. The difference between the 
market price and the cost of shares committed to be released is recorded as an 
adjustment to paid-in capital. Dividends on allocated ESOP shares will be 
recorded as a reduction of  retained earnings, dividends on unallocated ESOP 
shares will be reflected as a reduction of debt. Shares are considered 
outstanding for earnings per share calculations when they are committed to be 
released; unallocated shares are not considered outstanding.

Stock Option Plan - Stock options are granted for a fixed number of shares to 
employees with an exercise price equal to the fair value of the shares at the 
date of grant.  The Company accounts for and will continue to account for stock 
option grants in accordance with APB Opinion No. 25, Accounting for Stock Issued
to Employees, and, accordingly, recognizeno compensation expense for the stock
option grants.



Note 2    Subsequent Event

During November 1998, the Company opened a new branch located in Danville, 
Illinois providing full banking services.


Note 3    Conversion to Stock Ownership

On March 25, 1997, the Bank consummated its conversion from a state chartered 
mutual savings bank to a state chartered stock savings bank pursuant to the 
Bank's Plan of Conversion. Concurrent with the formation of the Company, the 
Company acquired 100% of the stock of the Bank and issued 396,750 shares of 
Company common stock, with $.01 par  value, at $10.00 per share.  Net proceeds 
of the Company's  stock issuance, after costs and Employee Stock Ownership Plan 
shares,  were approximately $3,296,000.

The acquisition of the Bank by the Company is being accounted for in a manner 
similar to "pooling-of-interests" under generally accepted accounting 
principles. The application of the pooling-of-interests method records the 
assets and liabilities of the merged companies on a historical cost basis with 
no goodwill or other  intangible  assets being recorded.




                            (29)



Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


Note 4    Investment Securities
                           
                                                    1998
                                              Gross       Gross   
                                Amortized   Unrealized  Unrealized     Fair 
September 30                      Cost        Gains       Losses       Value
						
Available for sale        
  U.S. Treasury                $1,744,669    $ 39,166                $1,783,835
  Federal agencies              1,000,000         680                 1,000,680
	
    Total available for sale    2,744,669      39,846                 2,784,515
	
Held to maturity						         
  State and municipal             363,128      11,134                   374,262
  Mortgage-backed securities    1,949,319      36,180    $(1,208)     1,984,291
	
    Total held to maturity      2,312,447      47,314     (1,208)     2,358,553
	
Total investment securities    $5,057,116    $ 87,160    $(1,208)    $5,143,068
	
	

                                                     1997
                                               Gross       Gross
                               	Amortized    Unrealized  Unrealized     Fair 
September 30                      Cost         Gains       Losses       Value
						
Available for sale						         
  U.S. Treasury                $1,741,182    $ 17,508                $1,758,690
  Federal agencies              1,364,750       1,529    $(9,317)    	1,356,962
	
    Total available for sale    3,105,932      19,037     (9,317)     3,115,652
	
Held to maturity				          
  State and municipal             362,153       6,390                   368,543
  Mortgage-backed securities    2,638,002      55,830     (5,271)     2,688,561
	
    Total held to maturity      3,000,155      62,220     (5,271)     3,057,104
	
Total investment securities    $6,106,087    $ 81,257  $ (14,588)    $6,172,756
	

The amortized cost and fair value of securities available for sale and held to 
maturity at September 30, 1998, by contractual maturity, are shown below. 
Expected maturities will differ from contractual maturities because issuers 
may have the right to call or prepay obligations with or without call or 
prepayment penalties.




                               (30)



Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


                                Available for Sale       Held to Maturity 
                                Amortized    Fair        Amortized    Fair
                                   Cost      Value         Cost       Value

Oneto five years               $2,744,669 $2,784,515
	
Five to ten years                                       $  363,128   $374,262
	
                                2,744,669  2,784,515       363,128    374,262
	
Mortgage-backed securities                               1,949,319  1,984,291
	
      Totals                   $2,744,669 $2,784,515    $2,312,447 $2,358,553


There were no pledged securities at September 30, 1998 or 1997.

Proceeds from the sale of securities available for sale during 1998, 1997 and 
1996 were $0, $250,938, and $0.  A gross gain of $938 was realized on the sale 
during 1997.  There were no sales of securities held to maturity.

There were no securities transferred between classifications during 1998 
or 1997.


Note 5    Loans and Allowance

September30                                        1998       	  1997
Real estate mortgage loans				          
  One-to-four family	                           $28,182,333   $24,870,871
  Multi-family                                      882,000     1,083,000
Commercial real estate loans                      1,581,000     1,090,000
Real estate sold on contract                        227,000       300,000
Real estate construction loans                      492,000       116,000
Commercial business loans                           997,000       480,000
Consumer loans                                    1,921,744     1,567,878
		
      Total loans                                34,283,077    29,472,007
		
Plus		          
  Deferred loan costs                                97,065        73,418
Less		          
  Undisbursed portion of loans 	                          0        17,871

                                                $34,380,142   $29,507,749





                                 (31)


Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements

Year Ended September 30           1998       	  1997        	  1996
Allowance for loan losses		          
  Balances, October 1          $ 151,868     $ 143,349      $ 	74,190
  Provision for losses            75,000        17,000         80,000
  Recoveries on loans              5,333         1,469          1,296
  Loans charged off              (78,002)       (9,950)       (12,137)

  Balances, September 30       $ 154,199     $ 151,868      $ 143,349


The Company adopted SFAS No. 114 and No. 118, Accounting by Creditors for 
Impairment of a Loan and Accounting by Creditors for Impairment of a Loan-Income
Recognition and Disclosures on October 1, 1995. The Company's loan portfolio 
consists primarily of smaller balance, homogeneous loans which are principally 
one-to-four family residential loans.   The Company did not have any loans it 
considered impaired  at September 30, 1998, 1997, and 1996 or during the years 
then ended.

The Bank has entered into transactions with certain directors, executive 
officers and their affiliates or associates ("related parties"). Such 
transactions were made in the ordinary course of business on substantially the 
same terms and conditions, including interest rates and collateral, as those 
prevailing at the same time for comparable transactions with other customers, 
and did not , in the opinion of management, involve more than normal credit 
risk or present other unfavorable features.  The aggregate amount of loans, as 
defined, to such related parties were as follows:


September 30                                  	  1998

Balances, October 1                           $ 148,012
			
New loans including renewals		          

Payments, including renewals                    (47,126)

Balances, September 30, 1998                  $ 100,886


Note 6    Loan Servicing

Mortgage loans serviced for others are not included in the accompanying 
consolidated balance sheet. The unpaid principal balances totaled approximately 
$181,000, $327,000 and $423,000 at September 30, 1998, 1997 and 1996.




                            (32)



Vermilion Bancorp, Inc
and Subsidiary
Notes to Consolidated Financial Statements


Note 7    Premises and Equipment

September 30                              1998               1997

Land                                  $  209,431         $  209,431
Office building                          689,604            574,192
Furniture and fixtures                	  338,900            306,357
Construction in progress                 784,205   
    
    Total cost                         2,022,140          1,089,980
	
Accumulated depreciation                (665,877)          (629,363)

    Net                               $1,356,263         $  460,617
	
Construction in progress consists of expenditures for the construction of a 
new branch building which opened in November 1998.


Note 8    Other Assets and Other Liabilities


September 30                                1998               1997

Other assets	          
  Interest receivable                   $  214,340         $  172,377
  Cash value of  life insurance annuity     49,194             51,037
  Deferred income tax asset                 48,989             37,045
  Other real estate                         86,553
  Prepaid expenses and other                26,552             47,667

    Total                               $  425,628         $  308,126

Other liabilities	          
  Interest payable on deposits          $   22,587         $   20,083
  Interest payable on borrowings            27,422             12,722
  Deferred compensation payable             75,866             84,831
  Federal income tax payable               152,955             21,709
  Accounts payable                         142,082   
  Other                                     29,769             23,914

    Total                               $  450,681         $  163,259




                                  (33)



Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


Note 9    Deposits


September30                                     1998           	  1997

Demand deposits                            $ 2,021,812       $ 1,680,835
Savings and retirement accounts              5,295,784         5,067,584
Certificates of deposit of $100,000 or more  3,334,764         2,863,566
Other certificates of deposit               19,392,115        19,485,699

Total deposits                             $30,044,475       $29,097,684



Certificates maturing in years ending September 30:         

1999                                                   $14,943,801
2000                                                     5,991,215
2001                                                     1,429,541
2002                                                        81,334
2003                                                       280,988

                                                       $22,726,879


The aggregate amount of deposits with certain directors, executive officers, 
and their affiliates or associates at September 30, 1998 and 1997 was 
$720,846 and $398,622.


Note 10   Federal Home Loan Bank Borrowings


September 30                                         1998           1997

Federal Home Loan Bank advances:	          

 At 6.02%; due October, 1997                                    $  500,000 
 At 5.98%; due October, 1997                                       500,000
 At 5.66%; due November, 1997                                    1,000,000
 At 6.01%; due August, 1998                                        600,000
 At 5.33%; due October, 2002                    $ 1,500,000
 At 5.20%; due December, 2002                     1,000,000
 At 5.07%; due February, 2008                     1,000,000
 At 5.09%; due February, 2008                       900,000
 At 5.03%; due May, 2008                          2,000,000

    Total FHLB borrowings                        $6,400,000     $2,600,000




                                  (34)



Vermilion Bancorp, Inc. 
and Subsidiary
Notes to Consolidated Financial Statements


The terms of security agreements with the FHLB require the Bank to pledge as 
collateral for the advances qualifying first mortgage loans in an amount equal 
to at least 167 percent of the advances and all stock in the FHLB. Advances are 
subject to restrictions or penalties in the event of repayment.


Note 11   Income Tax


Year Ended September 30                            1998      1997      1996

Income tax expense		          
 Current federal                                $ 165,458  $ 18,480  $ 44,460
 Current state                                      5,389
Deferred federal                                  (26,623)   55,059   (41,577)

    Total income tax expense                    $ 144,224  $ 73,539  $  2,883


Reconciliation of federal statutory to		          
actual tax expense

 Federal statutory income tax at 34%            $ 132,150 $ 110,687 $ (23,217)
 ESOP                                               2,938
 Graduated tax rates                                        (27,985)    7,467
 Effect of state income taxes                       3,557
 Change in tax rate applicable to deferred taxes   (5,177)             18,404
 Other                                             10,756    (9,163)      229

    Actual tax expense                          $ 144,224 $  73,539 $   2,883


A  cumulative net deferred tax asset is included in other assets.  The 
components are as follows:


September 30                                                 1998   	  1997

Assets		          

  Differences in depreciation methods                                $  1,295
  Differences in accounting for loan losses               $  54,367   	34,538
  Deferred compensation                                      51,259    21,208

    Total assets                                            105,626    57,041

Liabilities		          

  Differences in depreciation methods                         2,260     
  Unrealized gain on securities available for sale           15,420       741
  Deferred loan costs                                        37,564    18,355
  Other                                                       1,393       900

    Total liabilities                                        56,637    19,996

                                                          $  48,989  $ 37,045





                               (35)


Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


There was no state income tax expense for 1997 or 1996.

Retained earnings at September 30, 1998 and 1997, include approximately 
$995,000 for which no deferred income tax liability has been recognized.  This 
amount represents an allocation of income to bad debt deductions as of 
September 30, 1988, for tax purposes only. Reduction of amounts so allocated 
for purposes other than tax bad debt losses or adjustments arising from 
carryback of net operating losses would create income for tax purposes only, 
which income tax liability on the above amounts was approximately $338,000 at 
September 30, 1998 and 1997.


Note 12   Commitments and Contingent Liabilities

In the normal course of business there are outstanding commitments and 
contingent liabilities, such as commitments to extend credit and standby letters
of credit, which are not included in the accompanying financial statements. 
The Bank's exposure to credit loss in the event of nonperformance by the other 
party to the financial instruments for commitments to extend credit and standby 
letters of credit is represented by the contractual or notional amount of those
instruments.  The Bank uses the same credit policies in making such commitments 
as it does for instruments that  are included in the consolidated balance sheet.

Financial instruments whose contract amount represents credit risk as of 
September 30 were as follows:

                                                      1998       1997
Mortgage loan commitments at fixed rates            $371,000   $254,000
Construction, home improvement and other loan		        
 commitments at fixed rates                           29,000    324,000
Standby letters of credit                             22,000     23,000


At  September 30, 1998, mortgage loan commitments have terms up to 30 days and 
rates ranging from 6.75% to 7.75% while construction and home improvement loan 
commitments have terms up to six months and rates ranging from 10.5% to 16%.

At September 30, 1997, mortgage loan commitments have terms up to 30 days and 
rates ranging from 7.25% to 7.625%.  Construction and home improvement loan 
commitments have terms up to 6 months and rates ranging from 8.25% to 10.0%.

Commitments to extend credit are agreements to lend to a customer as long as 
there is no violation of any condition established in the contract.  Commitments
generally have fixed expiration dates or other termination clauses and may 
require payment of a fee.  Since many of the commitments are expected to expire 
without being drawn upon, the total commitment amounts do not necessarily 
represent future cash requirements.  The Bank evaluates each customer's credit 
worthiness on a  case-by-case basis. The amount of collateral obtained, if 
deemed necessary by the Bank upon extension of credit, is based on management's 
credit evaluation.  Collateral held varies, but may include residential real 
estate, income-producing commercial properties, or other assets of the borrower.




                                (36)



Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


Standby letters of credit are conditional commitments issued by the Bank to 
guarantee the performance of a customer to a third party.

On December 30, 1992, a former employee filed a lawsuit against the Bank which 
involves various accusations.  A summary judgement has been issued by the court 
in favor of the Bank on each count.  The employee has appealed several of the 
judgements and the Appellate Court reversed the entry of summary judgement. 
Based on the current status of the litigation, the Bank's attorneys 
have advised that they are unable to express an opinion as to the ultimate
disposition of the claim.
No accrual for loss from this action has been recognized in the 
accompanying financial statements.

In addition, the Company and Bank are also subject to other claims and lawsuits 
which arise primarily in the ordinary course of business. It is the opinion of 
management that the disposition or ultimate determination of such possible 
claims or lawsuits will not have a material adverse effect on the consolidated 
financial position of  the Company.


Note 13   Restriction on Dividends

The Company is regulated by the Federal Reserve Board which has enforcement 
powers over bank holding companies to prevent or remedy actions that represent 
unsafe or unsound practices or violations of applicable statutes and 
regulations.  Among these powers is the ability to prescribe the payments of 
dividends by bank holding companies.

In addition, Delaware general corporate law would allow the Company to pay 
dividends only out of its surplus or, if the Company has no such surplus, 
out of its net profits for the fiscal year in which the dividend is declared 
and/or the preceding fiscal year.

The bank is permitted to pay dividends to the Company in an amount equal to its 
net profits in any fiscal year: in the event that capital is less than 6% of 
total assets, the Bank can pay up to 50 % of its net profits for that year 
without prior approval of the State of Illinois law Office of Banks and Real 
Estate. In addition, the Bank is unable to pay dividends in an amount which 
would reduce its capital below the greater of (i) the amount required by the 
FDIC or (ii) the amount required by the Bank's liquidation account.  The FDIC 
and  the Commissioner  also have the authority to prohibit the payment of any 
dividends by the Bank if they determine that the distribution would constitute 
an unsafe or unsound practice.

At the time of conversion, a liquidation account was established in an amount 
equal to the Bank's net worth as reflected in the latest statement of condition 
used in its final conversion offering circular. The liquidation account is 
maintained for the benefit of eligible deposit account holders who maintain 
their deposit accounts in the Bank after conversion. In the event of a complete 
liquidation (and only  in  such  event), each eligible deposit account holder 
will be entitled to receive a liquidation distribution from the liquidation 
account in the amount of the then current adjusted subaccount balance for 
deposit accounts then held, before any liquidation distribution may be made to 
stockholders.  Except for the repurchase of stock and payment of dividends, the 
existence of the liquidation account  will not restrict the use or application 
of net worth.  The initial balance of the liquidation account was $2,439,000.




                              (37)



Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


Note 14   Regulatory Capital

The Company and Bank are subject to various regulatory capital requirements 
administered by the federal banking agencies and are assigned to a capital 
category.  The assigned capital category is largely determined by three ratios 
that are calculated  according  to the regulations: total risk adjusted capital,
Tier 1 capital, and Tier 1 leverage ratios. The ratios are intended to measure 
capital relative to assets and credit risk associated with those assets and 
off-balance  sheet exposures of the equity. The capital category assigned  
to an entity can also be affected by qualitative judgments made by regulatory 
agencies about the risk inherent to the entity's activities that are not part 
of the calculated ratios.

There are five capital categories defined in the regulations, ranging from well 
capitalized to critically undercapitalized. Classification of a bank in any of 
the undercapitalized categories can  result in actions by regulators that could 
have a material effect on a bank's operations.  At September 30, 1998 and 1997, 
the Company and its  Bank are categorized as well capitalized and met all 
subject capital adequacy requirements. There are no conditions or events since 
September 30, 1998 that management believes have changed the Company's and 
Bank's classification.

The Bank's actual and required capital amounts (in thousands) and ratios are as 
follows:

                                                           1998
                                                     Required for   To Be Well 
                                         Actual    Adequate Capital Capitalized

September 30                         Amount  Ratio Amount Ratio    Amount  Ratio

Total risk-based capital 1										         
 (to risk-weighted assets)           $5,379  23.0% $1,870 	8.0%    $2,340  10.0%
Tier 1 capital 1 (to risk-										         
 weighted assets)                     5,225  22.4%    936 	4.0%     1,404   6.0%
Tier 1 capital 1 (to										         
 adjusted total	assets)               5,225  12.4%  1,687  4.0%     2,108   5.0%

1 As defined by regulatory agencies
							
                                                             1997
                                                     Required for   To Be Well 
                                         Actual    Adequate Capital Capitalized

September 30	                         Amount	Ratio Amount Ratio     Amount	Ratio

Total risk-based capital 1										         
 (to risk-weighted assets)            $5,198 27.3% $1,522  8.0%     $1,903 10.0%
Tier 1 capital 1 (to risk-										         
 weighted assets)                      5,046 26.5%    761  4.0%      1,142  6.0%
Tier 1 capital 1 (to										         
 adjusted total assets)                5,046 13.5%  1,497  4.0%      1,871  5.0%

1 As defined by regulatory	agencies

  


                                      (38)



Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


Note 15   Benefit Plans

The Bank has a retirement savings Section 401(k) plan in which substantially 
all employees may participate.  Prior to its conversion in March 1997, the Bank 
contributed three percent of base salary for each participant. In addition, the 
Bank matched 100 percent of the first four percent of employees' base salary 
contributions and 50 percent of the next 4 percent of base salary contributed 
by the participants. Upon formation of the Bank's ESOP, it suspended payments 
to the Bank's 401(k) plan. Yhe Bank's expense for the  plan was approximately 
$8,900 for 1997 and $19,000 for 1996.

The Bank also has a deferred compensation plan for directors whereby 
participating directors can elect to defer directors' fees in return for 
inclusion in a deferred compensation plan which pays benefits to such 
participating directors upon retirement or death. The Bank purchased a deferred 
annuity, which is included in other assets, to fund the deferred compensation 
plan benefits; however, this annuity is not restricted for that purpose.  A 
deferred compensation liability has been calculated and recorded in other 
liabilities, which represents the present value of future benefits to be  
paid at retirement for each participating director.  Deferred compensation 
plan expense included in the financial statements was $4,000 for 1998 and 
$13,000 for 1997 and 1996.

In connection with the conversion, the Bank established an employee stock 
ownership plan ("ESOP") for the benefit of substantially all employees.  The 
ESOP borrowed $317,400 from the Company and used those funds to acquire 31,740 
shares of the Company's stock at $10 per share.

Shares issued to the ESOP are allocated to ESOP participants based on principal 
repayments made by the ESOP on the loan from the Company. The loan is secured by
shares purchased with the loan proceeds and will be repaid by the ESOP with 
funds from the Bank's discretionary contributions to the ESOP and earning on 
ESOP assets.   Dividends on unallocated ESOP shares will be applied to reduce 
the loan.  Principal payments are scheduled to occur in even annual amounts 
over a seven year period.  However, in the event Bank contributions  exceed the 
minimum debt service requirements, additional principal payments will be made.

Stock totaling 3,439 and 2,469 shares for 1998 and 1997 with an average fair 
value of $13.59 and $12.21 per share, respectively, were committed to be 
released, resulting in ESOP compensation expense of $46,722 and $30,156. 
Shares held by the ESOP at September 30 are as follows:
	

                                                1998        1997

Allocated shares                                5,908       2,469

Unallocated shares                             25,832      29,271

    Total ESOP shares                          31,740      31,740

Fair value of unallocated shares 
 at September 30                             $309,984    $436,425




                                 (39)



Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


During May 1998, the Company adopted a management retention plan ("MRP") as a 
method of providing directors, employees and officers of the Bank with a 
proprietary interest in the Company and to encourage such persons to remain with
the Bank.

The MRP covers key employees and directors and is authorized to acquire and 
grant 15,870 shares of the Company's common stock or 4% of the shares issued 
in the Company's initial public offering.  The funds used to acquire these 
shares will be contributed by the Bank. Participants in the incentive plan 
vest over three years,  commencing on the date of grant. As of September 30, 
1998, 7,110 shares authorized under the plan had been granted.  As of 
September 30, 1998, the Company had not acquired any shares of the Company's 
common stock. There were no shares distributed or forfeited during	 1998. As 
of September 30, 1998, 3,353 shares have been earned and will be distributed 
when the Company acquires or issues the Company stock for the MRP. For the year 
ended September 30, 1998, $56,600 was recorded as compensation expense under 
the plan.


Note 16   Stock Option Plan

Under the Company's stock option plan, which is accounted for in accordance with
APB No. 25, Accounting for Stock Issued to Employees, and related 
interpretations, the Company grants selected executives and other key employees 
stock option awards which vest and become fully exercisable at the end of five 
years of continued employment. During May 1998, the Company authorized the grant
of options for up to 39,675 shares of the Company's common stock or 10% of the 
shares issued in the Company's initial public offering, that expire ten years 
from the date of grant. During 1998, the Company granted all 29,420 options 
at an exercise price of $16.875 per share which vest over three years. The 
exercise price of each option was equal to the market price of the Company's 
stock on the date of grant; therefore, no compensation expense was recognized.

Although the Company has elected to follow APB No. 25, SFAS No. 123 requires 
pro forma disclosures of net income and earnings per share as if the Company 
had accounted for its employee stock options under that Statement.  The fair 
value of each option grant was estimated on the grant date using an 
option-pricing model with the following assumptions:

                                                              1998 

Risk-free interest rate                                       5.25%
Dividend yield                                                0.00%
Volatility factor of expected market price of common stock   28.00% 
Weighted-average expected life of the options                 9.6  years




                               (40)



Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


Under SFAS No. 123, compensation cost is recognized in the amount of the 
estimated fair value of the options and amortized to expense over the options' 
vesting period.  The pro forma effect on net income and earnings per share of 
this statement are as follows:

                                                              1998

Net income                                    As reported  $ 244,452 
                                              Pro forma      240,245

Basic earnings per share                      As reported  $    0.66
                                              Pro forma         0.65

Diluted earnings per share                    As reported       0.66
                                              Pro forma         0.65

The following is a summary of the status of the Company's stock option plan  
and changes in that plan as of and for the years ended December 31, 1997 
and 1996.


Year Ended December 31                                   1998
                                                             Weighted-
                                                              Average
                                                              Exercise 
                                Options            Shares      Price
Outstanding,beginning of year      

Granted                                            29,420     	$16.88

Outstanding, end of year                           29,420      $16.88

Options exercisable at year end                    13,892

Weighted-average fair value of options granted	            				
during the year                                                $16.88



As of September 30, 1998, all 29,420 options outstanding		have an exercise 
price of $16.88 and a weighted-average remaining contractual life of 9.6 years. 
No options were exercised, forfeited or expired during 1998.




                                  (41)



Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


Note 17   Basic Earnings Per Share

Earnings per share (EPS) were computed as follows:

                                                   Year Ended September 30, 1998
                                                            Weighted   Per-share
                                                Income  Average Shares   Amount

BasicEarnings Per Share

Income available to common stockholders        $244,452    	369,342      $0.66

Effect of Dilutive Securities 

MRP                                                           1,233     

Diluted Earnings Per Share

Income available to common stockholders       
 and assumed conversions                       $244,452    	370,575      $0.66


Options to purchase 29,420 shares of common stock at $16.88 were outstanding 
at September 30, 1998, but were not included in the computation of the diluted 
EPS because the options' exercise price was greater than the average market 
price of the common shares.


Note 18   Fair Values of Financial Instruments


The following methods and assumptions were used to estimate the fair value of 
each class of financial instrument:

Cash and Cash Equivalents - The fair value of cash and cash equivalents 
approximates carrying value.

Interest-Bearing Time Deposits - The fair value of interest-bearing time 
deposits approximates carrying value.

Investment Securities - Fair values are based on quoted market prices.

Loans - For both short-term loans and variable-rate loans that reprice 
frequently and with no significant change in credit risk, fair values are based 
on carrying values.  The fair values for other loans are estimated using 
discounted cash flows analyses using interest rates currently being offered for 
loans with similar terms to borrowers of similar credit quality.

Interest Receivable/Payable - The fair values of interest receivable/payable 
approximate carrying values.

Federal Home Loan Bank Stock - Fair value of FHLB stock is based on the price 
at which it may be resold to the FHLB.

Cash Surrender Value of Life Insurance - Fair value of life insurance is based 
on cash values quoted by the insurance underwriter.





                               (42)


Vermilion Bancorp, Inc.
and Subsidiary
Notes to Consolidated Financial Statements


Deposits - The fair values of noninterest-bearing, interest-bearing demand and 
savings accounts are equal to the amount payable on demand at the balance sheet 
date.  Fair values for fixed-rate certificates of deposit are estimated using a 
discounted cash flow calculation that applies interest rates currently being 
offered on certificates to a schedule of aggregated expected monthly maturities 
on such time deposits.

Federal Home Loan Bank Borrowings - The fair value of these borrowings are 
estimated using a discounted cash flow calculation, based on current rates for 
similar debt.

Off-Balance Sheet Commitments - Commitments include commitments to originate 
mortgage loans and standby letters of credit and are generally of a short-term 
nature.  The fair value of such commitments are based on fees currently charged 
to enter into similar agreements, taking into account the remaining terms of the
agreements and the counterparties' credit standing. The Bank currently does not 
charge a commitment fee; accordingly, no value has been assigned to the Bank's 
commitments to extend credit.
 
The estimated fair values of the Company's financial instruments are as follows:


                                           1998                    1997
September 30                       Carrying    Fair       Carrying       Fair
                                    Amount     Value     	 Amount        Value

Assets				          

Cash and cash equivalents       $ 1,741,642 $ 1,741,642 $ 1,137,897 $ 1,137,897

Interest-bearing time deposits       20,000      20,000      99,000      99,000

Investment securities:
	
  Available for sale               2,748,515   2,748,515   3,115,652   3,115,652

  Held to maturity                 2,312,447   2,358,553   3,000,155   3,057,104

Loans, net                        34,225,943  35,224,447  29,411,428  31,965,000

Interest receivable                  214,340     214,340     172,377     172,377

Federal Home Loan Bank stock         350,000     350,000     283,200     283,200

Cash surrender value of 
 life insurance                       49,194      49,194      51,037      51,037

Liabilities

Deposits                          30,044,475  30,054,000  29,097,684  29,037,000

FHLB borrowings                    6,400,000   6,223,000   2,600,000   2,599,000

Interest payable                      50,008      50,008      32,805      32,805

Off-Balance Sheet Assets(liabilities)

Commitments to extend credit               0          	0           0           0

Standby letters of credit                  0       	   0           0           0


                 


                                  (43)



                           DIRECTORS

Thomas B. Meyer                   Merrill G. Norton
Chairman of the Board of          President and Chief Executive
  the Company, Attorney in        Officer
Private Practice                    of the Company, Director
                                  
Carl W. Busby                     Dr. Robert L. Ewbank.
Director, President of Busby      Director, Medical consultant,
Farms, Inc. and Busby Land and    retired oral and maxillofacial
Auction Co., Inc.                 surgeon
                                  
William T. Ingram                 
Secretary   and Director of the 
Company,    Area    Businessman,
operator      of      Automobile
Diagnostics, Quick Air  Freight,
Ingram's  Quicklube and Ingram's
Apartments.




                       EXECUTIVE OFFICER


Merrill G. Norton                 
President and Chief Executive
Officer of the Company





                                   (44)





BANKING LOCATION

714 North Vermilion Street, Danville, Illinois 61832






                     STOCKHOLDER INFORMATION


      Vermilion  Bancorp,  Inc.  is a Delaware-incorporated  bank
holding  company  conducting business  through  its  wholly-owned
subsidiary, American Savings Bank (the "Bank").  The Bank  is  an
Illinois-chartered,  SAIF-insured stock  savings  bank  operating
through its office located in Danville, Illinois.

TRANSFER AGENT/REGISTRAR:

American Securities Transfer and Trust
938 Quail Street
Lakewood, Colorado 80215
(800) 962-4284


STOCKHOLDER REQUESTS:

      Requests for annual reports, quarterly reports and  related
stockholder literature should be directed to Merrill  G.  Norton,
President  and Chief Executive Officer, Vermilion Bancorp,  Inc.,
714 North Vermilion Street, Danville, Illinois 61832.

       Stockholders needing assistance with stock records, transfers  
or lost certificates, please contact the Company's transfer agent.







                               (45)





MARKET PRICES AND DIVIDENDS:

     The Company's shares are listed on the National Daily Quotation  
Service "pink sheets" published by the National Quotation Bureau, Inc. 
At December 12, 1997, the Company had 128 stockholders of record. The 
number of shares of common stock outstanding as of December 12, 1997 was
396,750 The table below sets forth the range of high and low bid information 
for the common stock for each quarter as well as dividends paid since 
March 25, 1997 the date of the Bank's conversion from the mutual form of
ownership to the stock form of ownership.

                            Quotations               
                       
                                             Dividend Amount
  Quarter Ended         High Bid   Low Bid      Per Share
                                           
                                           
March 31, 1997          $12.50     $12.375        --                           
June 30, 1997            12.25      11.75         --                  
September 30, 1997       13.75      12.00         --
December 31, 1997        14.50      13.25         --
March 31, 1998           16.25      14.50         --
June 30, 1998            16.00      16.875        --
September 30, 1998       16.125     11.25         --