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

                                    FORM 10-Q

                 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                     For the Quarter ended September 30, 1998

                       Commission file number  0-23134

                          INTERCOUNTY BANCSHARES, INC.         
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              OHIO                                    31-1004998              
-------------------------------          -------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification 
 incorporation or organization)           Number)


           48 North South Street, Wilmington, Ohio          45177
           ----------------------------------------      ---------- 
           (Address of principal executive offices)      (Zip Code)

                                (937) 382-1441                        
              ---------------------------------------------------- 
              (Registrant's telephone number, including area code)

      Indicate by check mark whether the Registrant (1) has filed all
      reports required to be filed by Section 13 or 15(d) of the
      Securities Exchange Act of 1934 during the preceding 12 months
      (or for such shorter period that the registrant was required to
      file such reports), and (2) has been subject to such filing
      requirements for the past 90 days.

                             Yes   X     No      

The number of shares outstanding of the issuer's common stock, without par
value, as of November 1, 1998, was 3,154,254 shares.

<PAGE>

                         INTERCOUNTY BANCSHARES, INC.

                                     INDEX


                                                                      Page
PART I.  FINANCIAL INFORMATION

      Item 1.  Financial Statements                                     
            Consolidated Balance Sheets -
             September 30, 1998, December 31, 1997
             and September 30, 1997 . . . . . . . . . . . . . . . . . .1

            Consolidated Statements of Income -
             Three and nine Months Ended September 30, 1998
             and 1997 . . . . . . . . . . . . . . . . . . . . . . . . .2

            Consolidated Statements of Changes in
             Shareholders' Equity -
             Nine Months Ended September 30, 1998 and 1997 . . . . . .3-4

            Consolidated Statements of Cash Flows -
             Nine Months Ended September 30, 1998 and 1997  . . . . . .5

            Notes to Consolidated Financial Statements . . . . . . . .6-8


      Item 2.  Management's Discussion and Analysis of
                Financial Condition and Results of Operations. . . . .9-15


      Item 3.  Quantitative and Qualitative Disclosures
                about Market Risks. . . . . . . . . . . . . . . . . . .16


Part II.  Other Information

      Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . 17

      Item 2.  Changes in Securities and Use of Proceeds . . . . . . . 17

      Item 3.  Defaults Upon Senior Securities . . . . . . . . . . . . 17

      Item 4.  Submission of Matters to a Vote of Security Holders . . 17

      Item 5.  Other Information . . . . . . . . . . . . . . . . . . . 17

      Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . . 17-18

<PAGE>


                           Part I - Financial Information
Item 1.  Financial Statements
<TABLE>
                          INTERCOUNTY BANCSHARES, INC. and
                          THE NATIONAL BANK & TRUST COMPANY
                             CONSOLIDATED BALANCE SHEETS
            At September 30, 1998, December 31, 1997 and September 30, 1997
                                     (thousands)
<CAPTION>
                                   September 30,  December 31,  September 30,
                                       1998          1997           1997
                                    (unaudited)      (a)         (unaudited)
 <S>                                  <C>             <C>           <C>
ASSETS:
 Cash and due from banks              $14,435       $ 17,787      $ 17,925
 Federal funds sold                       412          4,176         7,657
 Other short-term investments              27          1,538            25
                                       ------        -------       -------
   Total cash and cash equivalents     14,874         23,501        25,607

Securities available for sale, at
  market value                        145,298        111,975        86,589
 Securities held to maturity (market 
  value-$32,718, $11,624, and $7,398)  32,265         11,164         7,051
                                      -------        -------       -------
   Total securities                   177,563        123,139        93,640

 Loans                                298,999        277,711       278,238
   Less-allowance for loan losses       2,564          2,761         2,652
                                      -------        -------       -------
   Net loans                          296,435        274,950       275,586

 Premises and equipment                10,507         10,503        10,162
 Earned income receivable               4,362          3,691         3,745
 Other assets                             714            660           768
                                      -------        -------       -------
       TOTAL ASSETS                  $504,455       $436,444      $409,508
                                      =======        =======       =======
LIABILITIES:
 Demand deposits                     $ 38,739       $ 38,662      $ 35,920
 Savings, NOW, and money market
  deposits                            127,089        117,552       119,322
 Certificates $100,000 and over        49,007         26,899        27,780
 Other time deposits                  146,151        146,219       145,397
                                      -------        -------       -------
   Total deposits                     360,986        329,332       328,419

 Short-term borrowings                 95,219         62,734        37,966
 Long-term debt                           647            716           847
 Other liabilities                      3,553          2,756         2,603
                                      -------        -------       -------
   TOTAL LIABILITIES                  460,405        395,538       369,835
                                      -------        -------       -------

SHAREHOLDERS' EQUITY:
 Preferred stock-no par value, 
  authorized 100,000 shares; none 
  issued
 Common stock-no par value, authorized
  3,000,000 shares; issued 1,909,475 
  shares                                 1,000         1,000         1,000
 Surplus                                 7,621         7,462         7,393
 Unearned ESOP shares, at cost            (619)         (620)         (729)
 Retained earnings                      38,365        35,674        34,706
 Accumulated other comprehensive
  income                                   910           515           433
 Treasury shares, at cost, 359,151
  shares at September 30, 1998; 363,137
  at December 31, 1997; 363,737 shares
  at September 30, 1997                 (3,227)       (3,125)       (3,130)
                                       -------       -------       -------
   TOTAL SHAREHOLDERS' EQUITY           44,050        40,906        39,673
                                       -------       -------       -------
       TOTAL LIABILITIES AND
        SHAREHOLDERS' EQUITY          $504,455      $436,444      $409,508
                                       =======       =======       =======
<FN>
(a)  Financial information as of December 31, 1997, has been derived from the
audited, consolidated financial statements of the Registrant.
</FN>
The accompanying notes to financial statements are an integral part of these
statements.
</TABLE>
                                    -1-
<PAGE>

                           Part I - Financial Information
                                     (Continued)
Item 1.  Financial Statements
<TABLE>
                          INTERCOUNTY BANCSHARES, INC. and
                          THE NATIONAL BANK & TRUST COMPANY
                          CONSOLIDATED STATEMENTS OF INCOME
                                     (thousands)
                                     (unaudited)
<CAPTION>
                                      Three Months Ended   Nine Months Ended
                                         September 30        September 30
                                      ------------------   -----------------
                                      1998        1997      1998       1997
<S>                                 <C>          <C>       <C>       <C>
INTEREST INCOME:
 Interest and fees on loans          $6,336     $6,188     $18,466   $17,974
 Interest on securities 
  available for sale:
  Taxable                             2,197      1,629       5,915     4,817
  Non-taxable                           125          -         205         -
 Interest on securities held 
  to maturity - non-taxable             381        158         888       457
 Interest on deposits in banks            3          -          21         3
 Interest on federal funds sold          79         35         465        70
                                      -----      -----      ------    ------
     TOTAL INTEREST INCOME            9,121      8,010      25,960    23,321
                                      -----      -----      ------    ------
INTEREST EXPENSE:
 Interest on savings, NOW and 
  money market deposits                 915        840       2,611     2,444
 Interest on time certificates 
  $100,000 and over                     649        392       1,525       990
 Interest on other deposits           2,027      2,103       6,068     6,204
 Interest on short-term borrowings    1,297        560       3,292     1,628
 Interest on long-term debt              15         16          43        56
                                      -----      -----      ------    ------
     TOTAL INTEREST EXPENSE           4,903      3,911      13,539    11,322
                                      -----      -----      ------    ------
     NET INTEREST INCOME              4,218      4,099      12,421    11,999
PROVISION FOR LOAN LOSSES               225        200         675       600
                                      -----      -----      ------    ------
     NET INTEREST INCOME AFTER
      PROVISION FOR LOAN LOSSES       3,993      3,899      11,746    11,399
                                      -----      -----      ------    ------
NON-INTEREST INCOME:
 Trust services                         298        248         806       662
 Service charges on deposits            348        331       1,011       943
 Other service charges and fees          95         79         250       218
 Securities gains                         -        292           -       292
 Other                                  208        119         698       440
                                      -----      -----      ------    ------
     TOTAL NON-INTEREST INCOME          949      1,069       2,765     2,555
                                      -----      -----      ------    ------
NON-INTEREST EXPENSES:
 Salaries                             1,355      1,253       3,957     3,610
 Employee benefits                      214        284         674       776
 Equipment                              316        302         908       884
 Occupancy                              188        168         547       503
 State franchise tax                    152        141         460       422
 Marketing                               63         66         213       201
 Other                                  828        770       2,393     2,169
                                      -----      -----      ------    ------
     TOTAL NON-INTEREST EXPENSE       3,116      2,984       9,152     8,565
                                      -----      -----      ------    ------

     INCOME BEFORE INCOME TAX         1,826      1,984       5,359     5,389
      INCOME TAX                        515        620       1,513     1,677
                                      -----      -----      ------    ------
     NET INCOME                      $1,311     $1,364     $ 3,846   $ 3,712
                                      =====      =====      ======    ======

Basic earnings per common share     $  0.86     $ 0.89     $  2.50   $  2.42
Diluted earnings per common share      0.83       0.86        2.43      2.35
Dividends declared per common share    0.25       0.19        0.75      0.57

AVERAGE SHARES OUTSTANDING:

 To compute basic earnings
  per common share                1,541,094  1,534,122   1,540,775  1,532,384
 To computed diluted earnings
  per common share                1,583,075  1,581,526   1,581,799  1,581,960


The accompanying notes to financial statements are an integral part of these
statements.
</TABLE>
                                    -2-

<PAGE>

                           Part I - Financial Information
                                     (Continued)
                           Item 1.  Financial Statements
<TABLE>
           
                          INTERCOUNTY BANCSHARES, INC. and
                         THE NATIONAL BANK AND TRUST COMPANY
            CONSOLIDATED STATMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                    (thousands)
                                    (unaudited)
<CAPTION> 
                                                        Retained
                                           Unearned     Earnings      Accumulated
                                             ESOP       Less Cost        Other
                         Common             Shares     of Treasury    Comprehensive     Comprehensive     Shareholders'
                         Shares   Surplus   at Cost      Shares          Income             Income           Equity
<S>                       <C>      <C>       <C>        <C>             <C>               <C>              <C>

Balance January 1, 1997   $1,000   $7,246   $(732)      $28,810         $424                               $36,748
Comphrensive
 Income:

   Net Income                                             3,712                           $3,712             3,712

   Net unrealized
    gain on available-
    for-sale securities,
    net of tax                                                             9                   9                 9
                                                                                           -----
Total comprehensive income                                                                $3,721
                                                                                           =====
Dividends declared
 ($.57 per share)                                          (875)                                              (875)

Treasury shares purchased                                  (172)                                              (172)

Stock options exercised               129                   101                                                230

ESOP shares earned                     18       3                                                               21
                           -----    -----     ---        ------          ---                                 ------
Balance September 30,
 1997                     $1,000   $7,393   $(729)      $31,576         $433                                $39,673
                           =====    =====     ===        ======          ===                                 ======
</TABLE>
                                                  -3-
<PAGE>

                           Part I - Financial Information
                                     (Continued)
                           Item 1.  Financial Statements
<TABLE>
                          INTERCOUNTY BANCSHARES, INC. and
                         THE NATIONAL BANK AND TRUST COMPANY
             CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                      (thousands)
                                      (unaudited)
<CAPTION>
                                                        Retained
                                           Unearned     Earnings       Accumulated
                                             ESOP       Less Cost         Other                            Total
                          Common            Shares     of Treasury    Comprehensive    Comprehensive    Shareholders'
                          Shares   Surplus  at Cost      Shares           Income           Income          Equity
<S>                       <C>      <C>      <C>         <C>             <C>             <C>              <C>

Balance January 1, 1998   $1,000   $7,462   $(620)      $32,549         $515                             $40,906
Comprehensive
 Income:

   Net income                                             3,846                          $3,846            3,846

   Net unrealized
    loss on available-
    for-sale securities,
    net of tax                                                           395                395              395
                                                                                          -----
Total comprehensive income                                                               $4,241
                                                                                          =====
Dividends declared
 ($.75 per share)                                        (1,155)                                          (1,155)

Treasury shares purchased                                  (173)                                            (173)

Stock options exercised               123                    71                                              194

ESOP shares earned                     36       1                                                           37
                           -----    -----     ---        ------          ---                              ------
Balance September 30,
 1998                     $1,000   $7,621   $(619)      $35,138         $910                             $44,050
                           =====    =====     ===        ======          ===                              ======
</TABLE>
                                                    -4-
<PAGE>

                           Part I - Financial Information
                                     (Continued)
Item 1.  Financial Statements
<TABLE>
                          INTERCOUNTY BANCSHARES, INC. and
                          THE NATIONAL BANK & TRUST COMPANY
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (thousands)
                                     (unaudited)
<CAPTION>
                                                         Nine Months Ended
                                                           September 30
                                                        ------------------
                                                            1998      1997
  <S>                                                    <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                             $  3,846   $ 3,712
  Adjustments for non-cash items -
   Depreciation and amortization                              924       791
   Provision for loan losses                                  675       600
   Net premium amortization (discount accretion)
    of securities held for sale                                90      (101)
   Net discount accretion of securities held to maturity     (109)     (113)
   Net realized gains from sale of securities
    available for sale                                          -      (292)
   Increase in income receivable                             (671)     (437)
   Increase in other assets                                  (308)       (8)
   Increase (decrease) in interest payable                    416      (154)
   Increase in income taxes payable                           435        85
   Decrease in other accrued expenses                         (32)     (148)
   FHLB stock dividends                                      (221)     (170)
                                                            -----    ------
        NET CASH PROVIDED BY OPERATING ACTIVITIES           5,045     3,765
                                                           ------    ------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Net decrease in interest-bearing deposits
  in banks                                                      -       100
 Proceeds from maturities of securities available 
  for sale                                                 51,723    28,620
 Proceeds from sale of securities available for sale            -     6,763
 Purchases of securities available for sale               (84,316)  (40,028)
 Proceeds from maturities of securities held to 
  maturity                                                  3,890       525
 Purchases of securities held to maturity                  (24,882)       -
 Net increase in loans                                    (22,160)   (9,590)
 Purchases of premises and equipment                         (871)   (1,934)
                                                           ------    ------
     NET CASH USED IN INVESTING ACTIVITIES                (76,616)  (15,544)
                                                           ------    ------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Net increase in deposits                                  31,654    19,292
 Repayment of capital lease obligation                        (69)      (67)
 Net increase in short-term borrowings                     32,485     6,853
 Cash dividends paid                                       (1,071)     (797)
 Proceeds from stock options exercised                        118       230
 Purchase of treasury shares                                 (173)     (172)
                                                           ------     ------
     NET CASH PROVIDED BY FINANCING ACTIVITIES             62,944    25,339
                                                           ------    ------
     NET CHANGE IN CASH AND CASH EQUIVALENTS               (8,627)   13,560

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD           23,501    12,047
                                                           ------    ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                $14,874   $25,607
                                                           ======    ======

SUPPLEMENTAL CASH FLOW INFORMATION:
 Interest paid                                            $13,123   $11,476
 Income taxes paid                                          1,077     1,654

The accompanying notes to financial statements are an integral part of these
statements.
</TABLE>


                                    -5-
<PAGE>

                        PART I.  FINANCIAL INFORMATION
                                  (Continued)

Item 1.  Notes to Consolidated Financial Statements

                       INTERCOUNTY BANCSHARES, INC. and
                       THE NATIONAL BANK & TRUST COMPANY

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q.  Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.  In the
opinion of management, the unaudited consolidated financial statements include
all adjustments (consisting of normal, recurring accruals) considered
necessary for a fair presentation of financial position, results of operations
and cash flows for the interim periods. 

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 revenues and expenses during the reporting period.  
Actual results could differ from those estimates.

Results of operations for the three and nine month periods ended September
30, 1998, and cash flows for the nine month period ended September 30, 1998,
are not necessarily indicative of the results to be expected for the full year
to end December 31, 1998.  These unaudited consolidated financial statements
should be read in conjunction with the consolidated financial statements,
accounting policies and financial notes thereto included in the Company's
Annual Report and Form 10-K for the year ended December 31, 1997 filed with
the Commission.

Certain amounts in prior periods have been reclassified to conform to the
current presentation.

RECENTLY ISSUED ACCOUNTING STANDARDS

Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income."  The new rules establish standards for reporting
comprehensive income and its components in financial statements.
Comprehensive income consists of net income and other gains and losses
affecting shareholders' equity that, under generally accepted accounting
principles, are excluded from net income.  For the Company, such items
consist solely of unrealized gains and losses on investment securities
available for sale.  The adoption of SFAS No. 130 did not have an impact
on the Company's consolidated financial position or results of operations,
but did affect the presentation of the Company's consolidated statement of
changes in shareholders' equity and consolidated balance sheet.

                                     -6-
<PAGE>

                       PART I.  FINANCIAL INFORMATION
                                 (Continued)

Item 1.  Notes to Consolidated Financial Statements (Continued)

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" requires financial and descriptive information about
operating segments of a business.  The statement also requires companies
to report revenues for each major product and service.  It is effective
for fiscal years beginning after December 15, 1997.  SFAS No. 131 will
result in additional financial statement disclosures, with no effect on
the Company's reported consolidated financial position or net income. SFAS
No. 131 is not required for interim financial reporting purposes during 1998.
The Company is in the process of assessing the additional disclosures, if
any, required by SFAS No. 131.

In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities".
SFAS No. 133 establishes standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for
hedging activities.  It requires an entity to recognize all derivatives
as either assets or liabilities in the statement of financial position
and measure those instruments at fair value.  SFAS No.133 is effective
for all fiscal years beginning after June 15, 1999.  Earlier application
is encouraged but should not be applied retroactively to financial
statements of prior periods.  Currently, the Company does not hold any
derivatives or conduct hedging activities as defined by the standard.
In most instances the standard, once adopted, precludes any held-to-
maturity security from being designated as a hedged item.  If the
Company had adopted SFAS No. 133 as of July 1, 1998, the impact would
have been limited to transfers, if any, of securities from the held-to-
maturity classification to available for sale.  The Company is evaluating
when to adopt SFAS No. 133 and the desirability of potential investment
security reclassifications.


EMPLOYEE STOCK OPTIONS

SFAS No. 123, "Accounting for Stock-Based Compensation," effective
January 1, 1996, encouraged, but did not require, adoption of a fair-
value based accounting method for employee stock options.  Management
elected to continue to recognize compensation cost using the intrinsic-
value-based method of accounting in Accounting Principles Board (APB)
Opinion No. 25, "Accounting for Stock Issued to Employees."  The nature
of the Company's agreements with optionees prior to 1997 was such that
the accounting treatment was the same under both pronouncements.  Prior
to 1997, compensation cost was recorded because the Company had a



                                     -7-
<PAGE>

                        PART I.  FINANCIAL INFORMATION
                                  (Continued)

Item 1.  Notes to Consolidated Financial Statements (Continued)

contingent obligation to repurchase the shares.  During 1997, all
outstanding option agreements were revised, eliminating the Company's
contingent obligation.  Had compensation expense for the Company's stock
options granted after 1996 been recognized under the methodology
prescribed in SFAS No. 123, the Company's net income and earnings per
share would have been impacted as follows: (in thousands, except per
share data)

<TABLE>
<CAPTION>
                                   Three Months Ended   Nine Months Ended
                                     September 30         September 30
                                    1998      1997       1998      1997
                                   ------------------ ------------------ 
          <S>                       <C>      <C>        <C>       <C>
   Reported net income              $1,311   $1,364     $3,846    $3,712
   Proforma net income               1,307    1,360      3,834     3,700
   Reported earnings per share-
    assuming dilution                 0.83     0.89       2.43      2.42
   Proforma earnings per share-
    assuming dilution                 0.83     0.86       2.42      2.34
</TABLE>





                                   -8-
<PAGE>


                        PART I.  FINANCIAL INFORMATION
                                  (Continued)

                       INTERCOUNTY BANCSHARES, INC. and
                       THE NATIONAL BANK & TRUST COMPANY

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

FORWARD-LOOKING STATEMENTS
Certain matters disclosed herein may be deemed to be forward-looking
statements that involve risks and uncertainties, including regulatory policy
changes, interest rate fluctuations, loan demand, loan delinquencies and
losses, and other risks.  Actual strategies and results in future time periods
may differ materially from those currently expected.  Such forward-looking
statements represent the Company's judgment as of the current date.  The
Company disclaims, however, any intent or obligation to update such forward-
looking statements.  See Exhibit 99 attached hereto, which is incorporated
herein by reference.

RESULTS OF OPERATION     
Net income for the third quarter of 1998 was $1.31 million, a decrease of 3.9%
from the $1.36 million earned in the third quarter of 1997.  Net income per
share-basic decreased 3.4% to $.86 from $.89 for the third quarter of 1997.
The third quarter of 1997 included $193,000 in after-tax gains on the sale of
securities compared to none in 1998.  The third quarter of 1998 showed an
increase in net interest income of 2.9% compared to the same quarter last
year.  Non-interest income, excluding securities gains, was 22.1% above the
third quarter of 1997 primarily due to increases in trust income, deposit
service charges, and loan related insurance and processing fees. This quarter
also showed a 12.5% increase in provision for loan losses and a 4.4% increase
in non-interest expense. 

Net income for the first nine months of 1998 was $3.85 million, an increase of
3.6% from the $3.71 million earned in the first nine months of 1997.  Net
income per share-basic increased 3.1% to $2.50 from $2.42.

Net interest income was $4.22 million in the third quarter of 1998, 2.9% above
the third quarter of 1997.  Average interest-earning assets in the third
quarter of 1998 increased $86.85 million (22.7%) to $469.07 million from
$382.22 million.  The volume increase consisted primarily of $11.21 million in
loans, $72.29 million in securities, and an increase of $3.14 million in
federal funds sold.  The average tax equivalent (TE) yield on interest-earning
assets decreased from 8.38% in 1997 to 7.87% in 1998. 

Average interest-bearing liabilities increased 23.8% to $411.00 million in the
third quarter of 1998 and their cost increased to 4.73% from 4.67% in the
third quarter of 1997.  Most of the volume growth in interest-bearing



                                    -9-
<PAGE>

                        PART I.  FINANCIAL INFORMATION
                                  (Continued)

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations (Continued)

liabilities was in additional borrowing from the Federal Home Loan Bank (FHLB)
to fund purchases of U.S. Agency mortgage-backed securities and tax-exempt
municipal bonds.  Also, more aggressive bidding on certificates over $100,000
resulted in an increase of $18.53 million in the average balance, and their
cost decreased from 5.58% to 5.55%. As a result, TE net interest margin
decreased from 4.32% in the third quarter of 1997 to 3.72% in third quarter
of 1998.  

Net interest income for the first nine months of 1998 increased 3.5% from the
same period last year.  Average interest-earning assets increased 17.4% from
last year, and the TE yield on these decreased from 8.38% to 8.01%.  Interest-
bearing liabilities increased 18.1%, while the cost increased from 4.66% to
4.72%.  TE net interest margin has averaged 3.89% in 1998 versus 4.34% in
1997. 

The provision for loan losses increased to $225,000 for the third quarter of
1998, compared to $200,000 for the same period in 1997.  Net charge-offs for
the third quarter of 1998 were .11% of average loans, compared to .08% for
the prior year.

Installment loans are generally charged off if four payments have been missed.
Generally, all other loans are placed on non-accrual status if they are 90
days or more delinquent.  A loan may remain on accrual status after it is 90
days delinquent if it is reasonably certain the account will be settled in
its entirety or brought current within a 30-day period.  The current year's
accrued interest on loans placed on non-accrual status is charged against
earnings.  The previous year's accrued interest is charged against the
allowance for loan losses.  Cash payments received on non-accrual loans are
applied against principal until the balance is repaid.  Any remaining payments
are credited to earnings.  Non-performing loans include non-accrual loans,
renegotiated loans and ninety days or more past due loans.  Loans that are ten 
days delinquent, excluding one-to-four family real estate loans, are sent to
the Collections Department for collection.  One-to-four family real estate
loans are sent when they are fifteen days delinquent.

The following table sets forth certain information regarding the past-due,
non-accrual and renegotiated loans of the Bank at the dates indicated (in
thousands):







                                 -10-
<PAGE>

                       PART I.  FINANCIAL INFORMATION
                                 (Continued)

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (Continued)

<TABLE>
<CAPTION>
                                   September 30  December 31  September 30
                                       1998          1997         1997
                                     -------     -----------    --------
<S>                                   <C>           <C>          <C>
Loans accounted for on
 non-accrual basis                    $399          $509         $568
Accruing loans which are
 past due 90 days or more              309           241          207
Renegotiated loans                       -             -            -
                                       ---           ---          ---
     Total                            $708          $750         $775
                                       ===           ===          ===
</TABLE>

Non-accrual loans totaled $399,000 at September 30, 1998, a decrease of
$286,000 from the June 30 amount of $685,000.  The decrease was attributed
in large part to liquidation of collateral and subsequent charge-off of
unpaid balances.  The September 30 amount of $399,000 consists of seven
collateralized commercial loans.  One loan included in this total has a
remaining balance of $222,000 and is currently considered a probable loss.
This loan has been charged down from a balance of $446,000; it could possibly
be resolved by year-end through a settlement agreement that would result in
a long-term work-out with the borrower.  If this loan is not resolved and
becomes an actual loss before year end, an extra provision to the allowance
for loan losses would be likely.  The remaining balance of $177,000 has a
potential loss of $14,000.  As of September 30, 1998, management knew of no
significant loans not disclosed herein that would cause management to have
serious doubts as to the ability of the borrowers to comply with present loan
repayment terms.

At September 30, 1998, the Bank's allowance for loan losses was $2.56 million
and was allocated primarily to the consumer segment of the loan portfolio.  A
similar allocation existed for all other dates presented.  The following table
sets forth an analysis of the Bank's allowance for losses on loans for the
periods indicated (in thousands):






                                   -11-
<PAGE>



                        PART I.  FINANCIAL INFORMATION
                                  (Continued)

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (Continued)

<TABLE>
<CAPTION>
                                     Three Months Ended    Nine Months Ended
                                       September 30          September 30
                                       1998     1997         1998     1997
                                       ----     ----         ----     ---- 
<S>                                   <C>      <C>          <C>      <C>
Balance, beginning of period          $2,666   $2,667       $2,761   $2,686
Charge-offs:
 Commercial                              212       98          502      178
 Residential real estate                   -        -            -        -
 Installment                             141      154          481      506
 Credit Card                               -        -            -       64
 Other                                     -        -            5        5
                                       -----    -----        -----    -----
     Total                               353      252          988      753
                                       -----    -----        -----    -----
Recoveries:
 Commercial                                -        7            2        9
 Residential real estate                   -        -            -        -
 Installment                              23       26          104       99
 Credit Card                               2        4            9       11
 Other                                     1        -            1        -
                                       -----    -----        -----    -----
     Total                                26       37          116      119
                                       -----    -----        -----    -----
Net Charge-offs                         (327)    (215)        (872)    (634)
Provision for loan losses                225      200          675      600
                                       -----    -----        -----    -----
Balance, end of period                $2,564   $2,652       $2,564   $2,652
                                       =====    =====        =====    =====
</TABLE>

Non-interest income was $949,000 for the third quarter of 1998, an increase of
22.1% from the $777,000 earned, excluding securities gains, in the third
quarter of 1997.  Most categories in this section have shown increases from
the same quarter last year.  Trust income increased 20.0% due to an increase
in the dollar amount of assets managed.  Deposit-related and other service
charges were up 8.0%.  Loan related insurance and processing fees were up
43.1%.  For the first nine months of 1998, non-interest income, excluding
securities gains, was up 22.2% from the same period in 1997.



                                     -12-
<PAGE>

                        PART I.  FINANCIAL INFORMATION
                                  (Continued)

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (Continued)

Non-interest expense increased 4.4% for the third quarter 1998 over the same
period in 1997.  Salaries and benefits increased 2.1% for the quarter due
mostly to an increase of 15 full-time equivalent employees from the third
quarter last year.  The increase was the result of opening new branch offices
in Hillsboro and Owensville, Ohio, and additional support staff in various
areas of the Bank.  Equipment expense increased 4.5% and occupancy expense
increased 11.8% for the quarter compared to the same quarter last year.  State
franchise tax has increased 8.1% due to the increase in Bank capital on which
it is based.  Other expense has increased 7.6% from the third quarter of last
year. For the first nine months of the year total non-interest expense was up
6.9% from the same period last year.

Performance ratios for the third quarter of 1998 included a return on assets
of 1.05%, and a return on equity of 12.08%, compared to 1.33% and 13.88%,
respectively, for the third quarter of 1997.  Performance ratios for the first
nine months of 1998 included a return on assets of 1.11%, and a return on
equity of 12.19%, compared to 1.25% and 13.10%, respectively for the first
nine months of 1997.

FINANCIAL CONDITION
The changes that have occurred in InterCounty's financial condition during
1998 are as follows (in thousands):
<TABLE>
<CAPTION>
                        September 30   December 31     
                            1998          1997         Amount    Percent
                         ----------    -----------     ------    -------
<S>                        <C>          <C>            <C>         <C> 
Total assets              $504,455     $436,444       $ 68,011      16
Loans                      298,999      277,711         21,288       8
Securities                 177,563      123,139         54,424      44
Federal funds sold             412        4,176         (3,764)    (90)
Savings, NOW, MMDA
 deposits                  127,089      117,552          9,537       8
CD's $100,000 and over      49,007       26,899         22,108      82
Other time deposits        146,151      146,219            (68)      -
FHLB borrowings             72,000       44,200         27,800      63
</TABLE>

The loan portfolio has increased almost eight percent since year end, although
the structure has changed very little.  The growth has been primarily in
commercial loans and during the third quarter in one-to-four family residential
real estate.  The Bank has begun retaining fixed-rate real estate loans that
meet certain yield criteria, instead of selling these loans in the secondary
market.
These loans may be sold if doing so becomes advantageous to the Bank.

                                    -13-
<PAGE>

                        PART I.  FINANCIAL INFORMATION
                                  (Continued)

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (Continued)

The securities portfolio has increased $54 million since year end due primarily
to the purchase of $20 million of U.S. Agency mortgage-backed securities and $10
million tax-exempt municipal securities that have been funded through a similar
amount of borrowing from the Federal Home Loan Bank at an anticipated tax
equivalent spread of 130 basis points.  The rest of the increase was in
purchases of long-term municipal securities, U.S. Agency callable bonds and
fixed-rate CMO's.

Deposit growth has occurred in interest-bearing transaction accounts and large
certificates of deposit.  Large certificates are typically less than one year in
maturity and very rate sensitive.

Book value per share was $28.41, compared to $26.45 at December 31, 1997.
Equity to assets was 8.73%, compared to 9.37% at the end of last year.

Total assets grew 23.2% from September 30, 1997, to a total of $504.4 million.
Total loans increased to $299.0 million, an increase of 7.5%. Average
commercial loans grew $8.3 million (7.9%), and commercial loans continue to
provide the majority of increase in the portfolio.  The securities portfolio
average has grown $47.0 million (47.5%) from the third quarter of last year
through purchases funded with borrowing from the FHLB and excess federal
funds.  Total deposits increased 9.9% to $361.0 million.  Average non-interest
bearing deposits increased 13.0% from last year.  Average interest-bearing
liabilities grew $58.6 million (18.1%), of which $35.8 million was increased
FHLB borrowing.  Average interest-bearing transaction accounts increased $6.5
million (8.1%), and average retail certificates decreased $.6 million (-.4%). 
Total equity capital increased 11.0% to $44.1 million at September 30, 1998. 


LIQUIDITY AND CAPITAL RESOURCES
The maintenance of an adequate level of liquidity will ensure that the cash flow
requirements of depositors and borrowers, as well as Company cash needs, are
met.  InterCounty manages liquidity on both the asset and liability sides of the
balance sheet.  The loan-to-total-funds ratio at September 30, 1998 was 66%,
compared to 76% for the same date in 1997.  Management strives to keep this
ratio below 80%.  The securities portfolio is primarily "available for sale"
securities that are readily marketable.  Approximately 71% of the portfolio
is pledged to secure public deposits and for other purposes as required by
law.  The balance of the "available for sale" portfolio could be sold if
necessary for liquidity purposes.  Also, a stable deposit base, consisting
of 86% core deposits, makes the Bank less susceptible to large fluctuations
in funding needs.




                                    -14-
<PAGE>

                        PART I.  FINANCIAL INFORMATION
                                  (Continued)

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (Continued)

The Federal Reserve Board has adopted risk-based capital guidelines which
assign risk weightings to assets and off-balance sheet items and also define
and set minimum capital requirements (risk-based capital ratios).  Bank
holding companies must maintain total risk-based, Tier 1 risk-based and Tier 1
leverage ratios of 8%, 4% and 3%, respectively.  At September 30, 1998,
InterCounty had a total risk-based capital ratio of 14.44%, a Tier 1 risk-
based capital ratio of 13.63%, and a Tier 1 leverage ratio of 8.55%.


YEAR 2000 CONSIDERATIONS
As with all financial institutions, the Bank's operations rely extensively on
computer systems.  The Bank is addressing problems associated with the
possibility that computer systems will not recognize the year 2000 (Y2K)
correctly. A project team of Bank employees was assembled, with specific
goals and target dates, to ensure the Bank has an effective plan for
identifying, testing and implementing solutions for Y2K.  This will be
accomplished either through internal evaluation and testing, or verifiable
documentation from the vendors of specific software and hardware.  Senior
management oversees the project and regularly reports to the Board of
Directors.  The Bank expects to be substantially complete with all Y2K
testing by December 31, 1998.  Because compliance work is largely being
completed by internal staff, the Bank does not expect to incur any significant
costs with outside contractors relative to completion of this portion of the
project.  It is estimated at this time that the Bank will spend approximately
$500,000 to $750,000 upgrading hardware and software to be Y2K compliant.
These costs will be amortized over the expected life of each item, usually
three to five years.  Most of this hardware and software would have been
upgraded anyway within the next two years, and therefore the year 2000
advanced the timing of these expenditures.  These projections are only
estimates and may differ materially from the actual results through the end of
1999.

In addition, financial institutions may experience increases in problem loans
and credit losses in the event that borrowers fail to properly respond to the
issue, and higher funding costs may come about if consumers react to publicity
about the issue by withdrawing deposits.  The Bank has identified individually
significant customers covering both funds providers and funds takers, to
assess the Y2K financial risk originating from them.  The Bank also could be
impacted if third parties it deals with in conducting its business, such as
governmental agencies, clearing houses, telephone companies, utilities
companies, and other service providers, fail to properly address this issue.
Accordingly, the Bank is developing contingency plans to assess these areas
and minimize their effect.


                                    -15-
<PAGE>


                        PART I.  FINANCIAL INFORMATION
                                  (Continued)


Item 3.  Quantitative and Qualitative Disclosures about Market Risks

Since December 31, 1997, there have been no material changes in the Company's
market risks, which for the Company is primarily interest rate risk.



                                    -16-
<PAGE>


                         PART II.  OTHER INFORMATION

                       INTERCOUNTY BANCSHARES, INC. and
                       THE NATIONAL BANK & TRUST COMPANY

Item 1. Legal Proceedings - Not Applicable

Item 2. Changes in Securities and Use of Proceeds - Not Applicable

Item 3. Defaults Upon Senior Securities - Not Applicable

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

        On September 22, 1998, a Special Meeting of the shareholders of
        the Company was held.  Amendment of the Company's Articles of
        Incorporation to increase the number of authorized common shares
        from 3,000,000 to 6,000,000 was approved by the votes indicated:

                  FOR                AGAINST                  WITHHELD
               1,254,556              12,448                    2,199

Item 5. Other Information

        Stock Dividend - On October 1, 1998, the Board of Directors of
        the Company declared a two-for-one stock split in the form of a
        dividend payable on October 26, 1998, to Shareholders of record
        on October 11, 1998.

        Acquisition - On October 8, 1998, the National Bank & Trust Company
        acquired all of the outstanding shares of Phillips Insurance Agency
        Group, Inc., an Ohio corporation (the "Agency").  In exchange for
        the shares of the Agency, InterCounty Bancshares, Inc. issued 26,803
        common shares (before adjustment for the two-for-one stock split) to
        the Agency's shareholders.  The acquisition was accounted for as a
        pooling of interests.  The Agency's gross revenues in 1997 were
        approximately $600,000.  Total assets of the Agency is not material
        to the Consolidated Financial Statements.

Item 6. Exhibits and Reports on Form 8-K

     a. Exhibits
<TABLE>
<CAPTION>
         Exhibit                   
           No.                         Description                  
           <C>                         <S>                          
           11                          Computation of Consolidated
                                       Earnings Per Common Share
                                       For the Three and Nine Months 
                                       Ended September 30, 1998 and 1997


                                      -17-
<PAGE>

                        PART II.  OTHER INFORMATION

                       INTERCOUNTY BANCSHARES, INC. and
                       THE NATIONAL BANK & TRUST COMPANY

Item 6. Exhibits and Reports on Form 8-K (Continued)

         Exhibit                   
           No.                         Description                  

           27                          Financial Data Schedule for
                                       the Nine Months Ended
                                       September 30, 1998.             
 
           99                          Safe Harbor Under the Private 
                                       Securities Litigation Reform Act
                                       of 1995.
</TABLE>

b. One report on Form 8-K was filed during the third quarter (Date
   of Report - August 13, 1998) reporting on Item 5, Other Events.
   The Company announced a special meeting of shareholders to be held
   to adopt an amendment to the Company's Articles of Incorporation to
   authorize additional shares.  The Company announced that the Board
   of Directors expected to declare a two-for-one stock split in the
   form of a stock dividend if the shareholders adopt the amendment
   to the Articles.



                              -18-
<PAGE>


                        PART II.  OTHER INFORMATION

                       INTERCOUNTY BANCSHARES, INC. and
                       THE NATIONAL BANK & TRUST COMPANY


                                     SIGNATURES

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

                                     INTERCOUNTY BANCSHARES, INC.
                                     Registrant

Date: November 13, 1998              /s/ Charles L. Dehner
                                     -----------------------------------
                                     Charles L. Dehner
                                     Treasurer, Executive Vice President
                                     and Principal Accounting Officer


<PAGE>