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Securities And Exchange CommissionWASHINGTON, D.C. 20549

FORM 10-K

ANNUAL
REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal
year ended December 31, 2008
Commission File Number: 0-28846

|                                                      
|------------------------------------------------------
|Centrue Financial Corporation                         
|(Exact name of Registrant as specified in its charter)

|                                |  |                                
|------------------------------- |  | -------------------------------
|Delaware                        |  | 36-3145350                     
|(State or other jurisdiction of |  | (I.R.S. Employer Identification
|incorporation or organization)  |  | Number)                        

7700 Bonhomme Avenue, St. Louis, Missouri
63105 (Address of principal executive offices, including zip
code)

(314) 505-5500 
(Registrants telephone number, including area code)

Securities registered pursuant to Section
12(b) of the Act:

|                                 |  |                        
|-------------------------------- |  | -----------------------
|                                 |  | Name of Each
Exchange  
|Title of
Exchange Class          |  | which
Registered       
|                                 |  |                        
|Common Stock ($1.00 par
  value) |  | The NASDAQ Stock Market

Securities registered pursuant to Section
12(g) of the Act: None

Indicate by
check mark if the registrant is a well-known seasoned issuer as defined in Rule
403 of the Securities Act. Yes o No þ

Indicate by
check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15 (d) of the Exchange Act. Yes o No þ

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 þ No o

---

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Indicate by
check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o.

Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act.

|                          |   |                             |  
|------------------------- | - | --------------------------- | -
|Large
  accelerated filer | o | Accelerated
  filer         | þ
|Non-accelerated
  filer   | o | Smaller
  reporting company | o

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b of
the Exchange Act).Yes o No þ.

As of February
23, 2009, the Registrant had issued and outstanding 6,028,491 shares of the
Registrants Common Stock. The aggregate market value of the voting stock held
by non-affiliates of the Registrant as of June 30, 2008, the last business day
of the Registrants most recently completed second quarter, was $56,676,633.*

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Based on the
  last reported price of $11.04 of an actual transaction in the Registrants
  Common Stock on June 30, 2008, and reports of beneficial ownership filed by
  directors and executive officers of the Registrant. Shares of Common Stock
  held by any executive officer or director of the Registrant have been
  excluded from the foregoing computation because such persons may be deemed to
  be affiliates; provided, however, such determination of shares owned by
  affiliates does not constitute an admission of affiliate status or beneficial
  interest in shares of the Registrants Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Certain
portions of the Proxy Statement for the 2009 Annual Meeting of Stockholders
(the 2009 Proxy Statement) are incorporated by reference into Part III of
this Form 10-K.

As used in
this report, the terms we, us, our, Centrue and the Company mean
Centrue Financial Corporation and its subsidiary, unless the context indicates
another meaning, and the term Common Stock means our common stock, par value
$1.00 per share.

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CENTRUE FINANCIAL CORPORATIONForm 10-K Index

|         |                                                                                                                |     
|-------- | -------------------------------------------------------------------------------------------------------------- | ----
|         |                                                                                                                | Page
|         |                                                                                                                |     
|PART I   |                                                                                                               
|         |                                                                                                                |     
|Item 1.  | Business                                                                                                       | 1   
|Item 1A. | Risk Factors                                                                                                   | 14  
|Item 1B. | Unresolved Staff Comments                                                                                      | 18  
|Item 2.  | Properties                                                                                                     | 19  
|Item 3.  | Legal Proceedings                                                                                              | 19  
|Item 4.  | Submission of Matters to a Vote of Security
  Holders                                                          | 19  
|         |                                                                                                                |     
|PART II  |                                                                                                               
|         |                                                                                                                |     
|Item 5.  | Market for Registrants Common Equity,
  Related Stockholder Matters and Issuer Purchases of Equity Securities | 20  
|Item 6.  | Selected Consolidated Financial Data                                                                           | 23  
|Item 7.  | Managements Discussion and Analysis of
  Financial Condition and Results of Operations                        | 24  
|Item 7A. | Quantitative and Qualitative Disclosures
  about Market Risk                                                   | 54  
|Item 8.  | Financial Statements and Supplementary
Data                                                                    | 54  
|Item 9.  | Changes in and Disagreements with
  Accountants on Accounting and Financial Disclosure                         | 102 
|Item 9A. | Controls and Procedures                                                                                        | 102 
|Item 9B. | Other Information                                                                                              | 102 
|         |                                                                                                                |     
|PART III |                                                                                                               
|         |                                                                                                                |     
|Item 10. | Directors, Executive Officers and Corporate
  Governance                                                       | 103 
|Item 11. | Executive Compensation                                                                                         | 103 
|Item 12. | Security Ownership of Certain Beneficial
  Owners and Management and Related Stockholder Matters               | 103 
|Item 13. | Certain Relationships and Related
  Transactions, and Director Independence                                    | 104 
|Item 14. | Principal Accountant Fees and Services                                                                         | 104 
|Item 15. | Exhibits and Financial Statement
Schedules                                                                     | 104 

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

PART I

|        |         
|------- | --------
|Item 1. | Business

THE COMPANY

Centrue Financial Corporation

Centrue
Financial Corporation (the Company) is a bank holding company incorporated in
Delaware in 1982 for the purpose of becoming a holding company registered under
the Bank Holding Company Act of 1956, as amended (the Act). The Company is a
publicly traded banking company with assets of $1.4 billion at year-end 2008
and is headquartered in St. Louis, Missouri. On November 13, 2006, the Company
(formerly known as UnionBancorp, Inc. now known as Centrue Financial
Corporation) merged with Centrue Financial Corporation (former Centrue), parent
of Centrue Bank with the Company being the surviving entity in the merger.
Operating results of former Centrue are included in the consolidated financial
statements since the date of the acquisition. As a result of this merger, the
Company solidified its market share in the northern and central Illinois
markets, expanded its customer base to enhance deposit fee income, marketed
additional products and services to new customers and reduced operating costs
through economies of scale.

The Company
operates one wholly owned subsidiary: Centrue Bank (the Bank), employing 302
full-time equivalent employees at December 31, 2008. The Company has
responsibility for the overall conduct, direction, and performance of its
subsidiary. The Company provides various services, establishes Company-wide
policies and procedures, and provides other resources as needed, including
capital.

Subsidiary

At December
31, 2008, the Bank had $1.4 billion in total assets, $1.0 billion in total
deposits, and thirty offices (twenty-eight full-service bank branches and two
back-room sales support non-banking facilities) located in markets extending
from the far western and southern suburbs of the Chicago metropolitan area
across Central Illinois down to the metropolitan St. Louis area.

The Bank is
engaged in commercial and retail banking and offers a broad range of lending,
depository, and related financial services, including accepting deposits;
commercial and industrial, consumer, and real estate lending; trust and asset
management services; and other banking services tailored for consumer,
commercial and industrial, and public or governmental customers.

Competition

The Companys
market area is highly competitive with numerous commercial banks, savings and
loan associations and credit unions. In addition, financial institutions, based
in surrounding communities and in the southern and western metro area of
Chicago and the suburban metro area of St. Louis, actively compete for
customers within the Companys market area. The Company also faces competition
from finance companies, insurance companies, mortgage companies, securities
brokerage firms, money market funds, loan production offices and other
providers of financial services.

The Company
competes for loans principally through the range and quality of the services it
provides and through competitive interest rates and loan fees. The Company
believes that its long-standing presence in the communities it serves and
personal service philosophy enhance its ability to compete favorably in
attracting and retaining individual and business customers. The Company
actively solicits deposit-related customers and competes for deposits by
offering customers personal attention, professional service and competitive
interest rates.

1.

---



|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

Under the
Gramm-Leach-Bliley Act of 1999, effective March 2000, securities firms and
insurance companies that elect to become financial holding companies may
acquire banks and other financial institutions. The Gramm-Leach-Bliley Act, and
future action stemming from the Act, is expected to continue to significantly
change the competitive environment in which the Company and Centrue Bank
conduct business. The financial services industry is also likely to become more
competitive as further technological advances enable more companies to provide
financial services. These technological advances may diminish the importance of
depository institutions and other financial intermediaries in the transfer of
funds between parties.

SUPERVISION AND REGULATION

General

Financial
institutions and their holding companies are extensively regulated under
federal and state law. As a result, the growth and earnings performance of the
Company can be affected not only by management decisions and general economic
conditions, but also by the requirements of applicable state and federal
statutes and regulations and the policies of various governmental regulatory
authorities, including the Illinois Department of Financial and Professional Regulation
(the IDFPR), the Board of Governors of the Federal Reserve System (the
Federal Reserve), the Federal Deposit Insurance Corporation (the FDIC), the
Internal Revenue Service and state taxing authorities and the Securities and
Exchange Commission (the SEC). The effect of applicable statutes, regulations
and regulatory policies can be significant, and cannot be predicted with a high
degree of certainty.

Federal and
state laws and regulations generally applicable to financial institutions, such
as the Company and its subsidiary, regulate, among other things, the scope of
business, investments, reserves against deposits, capital levels relative to
operations, the nature and amount of collateral for loans, the establishment of
branches, mergers, consolidations and dividends. The system of supervision and
regulation applicable to the Company and its subsidiary establishes a
comprehensive framework for their respective operations and is intended
primarily for the protection of the FDICs deposit insurance funds and the
depositors, rather than the shareholders, of financial institutions.

The following
is a summary of the material elements of the regulatory framework that applies
to the Company and its subsidiaries. It does not describe all of the statutes,
regulations and regulatory policies that apply to the Company and its
subsidiaries, nor does it restate all of the requirements of the statutes,
regulations and regulatory policies that are described. As such, the following
is qualified in its entirety by reference to the applicable statutes,
regulations and regulatory policies. Any change in applicable law, regulations
or regulatory policies may have a material effect on the business of the
Company and its subsidiaries. See also Recent Developments under Managements
Discussion and Analysis.

The Company

General.
The Company, as the sole stockholder of Centrue Bank, is a bank holding
company. As a bank holding company, the Company is registered with, and is
subject to regulation by, the Federal Reserve under the Bank Holding Company
Act, as amended (the BHCA). In accordance with Federal Reserve policy, the
Company is expected to act as a source of financial strength to Centrue Bank
and to commit resources to support Centrue Bank in circumstances where the
Company might not do so absent such policy. Under the BHCA, the Company is
subject to periodic examination by the Federal Reserve and is required to file
with the Federal Reserve periodic reports of operations and such additional
information as the Federal Reserve may require. The Company is also subject to
regulation by the IDFPR under the Illinois Bank Holding Company Act, as
amended.

2.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

Investments and
Activities.  Under the BHCA, a bank holding company
must obtain Federal Reserve approval before: (i) acquiring, directly or
indirectly, ownership or control of any voting shares of another bank or bank
holding company if, after the acquisition, it would own or control more than 5%
of the shares of the other bank or bank holding company (unless it already owns
or controls the majority of such shares); (ii) acquiring all or
substantially all of the assets of another bank; or (iii) merging or
consolidating with another bank holding company. Subject to certain conditions
(including certain deposit concentration limits established by the BHCA), the
Federal Reserve may allow a bank holding company to acquire banks located in
any state of the United States without regard to whether the acquisition is
prohibited by the law of the state in which the target bank is located. In
approving interstate acquisitions, however, the Federal Reserve is required to
give effect to applicable state law limitations on the aggregate amount of
deposits that may be held by the acquiring bank holding company and its insured
depository institution affiliates in the state in which the target bank is
located (provided that those limits do not discriminate against out-of-state
depository institutions or their holding companies) and state laws which
require that the target bank have been in existence for a minimum period of
time (not to exceed five years) before being acquired by an out-of-state bank
holding company.

The BHCA also
generally prohibits the Company from acquiring direct or indirect ownership or
control of more than 5% of the voting shares of any company which is not a bank
and from engaging in any business other than that of banking, managing and
controlling banks or furnishing services to banks and their subsidiaries. This
general prohibition is subject to a number of exceptions. The principal
exception allows bank holding companies to engage in, and to own shares of
companies engaged in, certain businesses found by the Federal Reserve to be so
closely related to banking ... as to be a proper incident thereto. Under
current regulations of the Federal Reserve, the Company is permitted to engage
in a variety of banking-related businesses, including the operation of a
thrift, consumer finance or equipment leasing business, the operation of a
computer service bureau (including software development), and the operation of
mortgage banking and brokerage businesses. The BHCA generally does not place
territorial restrictions on the domestic activities of non-bank subsidiaries of
bank holding companies.

In November,
1999, the Gramm-Leach-Bliley Act (GLB Act) was signed into law. Under the GLB
Act, bank holding companies that meet certain standards and elect to become
financial holding companies are permitted to engage in a wider range of
activities than those permitted for bank holding companies, including
securities and insurance activities. Specifically, a bank holding company that
elects to become a financial holding company may engage in any activity that
the Federal Reserve Board, in consultation with the Secretary of the Treasury,
determines is (i) financial in nature or incidental thereto, or (ii)
complementary to any such financial-in-nature activity, provided that such
complementary activity does not pose a substantial risk to the safety and
soundness of depository institutions or the financial system generally. A bank
holding company may elect to become a financial holding company only if each of
its depository institution subsidiaries is well-capitalized, well-managed, and
has a Community Reinvestment Act rating of satisfactory or better at their
most recent examination.

3.

---



|                                   | 
|---------------------------------- | 
|Centrue
Financial Corporation      | 
|Securities
And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

The GLB Act
specifies many activities that are financial in nature, including lending,
exchanging, transferring, investing for others, or safeguarding money or
securities; underwriting and selling insurance; providing financial, investment
or economic advisory services; underwriting, dealing in, or making a market in
securities; and those activities currently permitted for bank holding companies
that are so closely related to banking or managing or controlling banks, as to
be a proper incident thereto.

The GLB Act
changed federal laws to facilitate affiliation between banks and entities
engaged in securities and insurance activities. The law also established a
system of functional regulation under which banking activities, securities
activities, and insurance activities conducted by financial holding companies
and their subsidiaries and affiliates will be separately regulated by banking,
securities, and insurance regulators, respectively. The Company has no current
plans to register as a financial holding company.

Federal law
also prohibits any person or company from acquiring control of a bank or bank
holding company without prior notice to the appropriate federal bank regulator.
Control is defined in certain cases as the acquisition of 10% or more of the
outstanding shares of a bank or bank holding company.

Capital
Requirements.  Bank holding companies are required
to maintain minimum levels of capital in accordance with Federal Reserve
capital adequacy guidelines. If capital falls below minimum guideline levels, a
bank holding company, among other things, may be denied approval to acquire or
establish additional banks or non-bank businesses.

The Federal
Reserves capital guidelines establish the following minimum regulatory capital
requirements for bank holding companies: a risk-based requirement expressed as
a percentage of total risk-weighted assets, and a leverage requirement
expressed as a percentage of total assets. The risk-based requirement consists
of a minimum ratio of total capital to total risk-weighted assets of 8%, at
least one-half of which must be Tier 1 capital. The leverage requirement
consists of a minimum ratio of Tier 1 capital to total assets of 3% for the
most highly rated companies, with a minimum requirement of 4% for all others.
For purposes of these capital standards, Tier 1 capital consists primarily of
permanent stockholders equity less intangible assets (other than certain
mortgage servicing rights and purchased credit card relationships). Total
capital consists primarily of Tier 1 capital plus certain other debt and equity
instruments which do not qualify as Tier 1 capital and a portion of the
companys allowance for loan and lease losses.

The risk-based
and leverage standards described above are minimum requirements. Higher capital
levels will be required if warranted by the particular circumstances or by the
risk profiles of individual banking organizations. For example, the Federal
Reserves capital guidelines contemplate that additional capital may be
required to take adequate account of, among other things, interest rate risk,
or the risks posed by concentrations of credit, nontraditional activities or
securities trading activities. Further, any banking organization experiencing
or anticipating significant growth would be expected to maintain capital
ratios, including tangible capital positions (i.e., Tier 1 capital less all
intangible assets), well above the minimum levels.

4.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

As of December
31, 2008, the Company had regulatory capital as follows:

|        |  |                            |       |                          |  |      | 
|------- |  | -------------------------- | ----- | ------------------------ |  | ---- | 
|        |  | Risk-Based
  Capital Ratio |       | Leverage
  Capital Ratio | 
|        |  |                            |       |                          | 
|Company |  |                            | 12.2% |                          |  | 8.1% | 

The risk-based
capital ratio and the leverage capital ratio were 4.2% and 4.1% respectively,
in excess of the Federal Reserves minimum requirements. See Note 17 in the
Notes in Consolidated Financial Statements for further information.

Dividends.
The Company is organized under the Delaware General Corporation Law (the
DGCL). The DGCL allows the Company to pay dividends only out of its surplus
(as defined and computed in accordance with the provisions of the DGCL) 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.

Additionally,
the Federal Reserve has issued a policy statement with regard to the payment of
cash dividends by bank holding companies. The policy statement provides that a
bank holding company should not pay cash dividends which exceed its net income
or which can only be funded in ways that weaken the bank holding companys
financial health, such as by borrowing. The Federal Reserve also possesses
enforcement powers over bank holding companies and their non-bank subsidiaries
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 proscribe the payment of dividends by banks and bank holding
companies.

As a result of
the Companys issuance of Fixed Rate Cumulative Perpetual Preferred Stock,
Series C (the Preferred Shares) to the U. S. Department of Treasury (the
Treasury) pursuant to the Troubled Asset Relief Programs (TARP) Capital
Purchase Plan (CPP), the Company is restricted in the payment of dividends
and, without the Treasurys consent, may not declare or pay any dividend on
the Companys common stock other than its current quarterly cash dividend of $0.14
per share, as adjusted for any stock dividend or stock split. This restriction
no longer applies on the earlier to occur of January 9, 2012 (the third
anniversary of the issuance of the Preferred Shares to the Treasury) or the
date on which the Company has redeemed all of the Preferred Shares issued or
the date on which the Treasury has transferred all of the Preferred Shares to
third parties not affiliated with the Treasury. In addition, as long as the
Preferred Shares are outstanding, dividend payments are prohibited until all
accrued and unpaid dividends are paid on such Preferred Shares, subject to
certain limited exceptions.

Federal Securities
Regulation.  The Companys common stock is
registered with the SEC under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended (the Exchange Act). Consequently,
the Company is subject to the information, proxy solicitation, insider trading
and other restrictions and requirements of the SEC under the Exchange Act.

5.

---



|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

The SEC and
the NASDAQ have adopted regulations and policies under the Sarbanes-Oxley Act
of 2002 that will apply to the Company as a registered company under the
Exchange Act and as a NASDAQ-traded company. The Sarbanes-Oxley Act of 2002 was
enacted in response to public concerns regarding corporate accountability in
connection with accounting scandals. The stated goals of the Sarbanes-Oxley Act
are to increase corporate responsibility, to provide for enhanced penalties for
accounting and auditing improprieties at publicly traded companies, and to
protect investors by improving the accuracy and reliability of corporate
disclosures pursuant to the securities laws. The Sarbanes-Oxley Act generally
applies to all companies that file or are required to file periodic reports with
the SEC, under the Exchange Act.

The
Sarbanes-Oxley Act includes very specific additional disclosure requirements
and new corporate governance rules requiring the SEC and securities exchanges
to adopt extensive additional disclosure, corporate governance and other
related rules, and mandates further studies of certain issues by the SEC. The
Sarbanes-Oxley Act represents significant federal involvement in matters
traditionally left to state regulatory systems, such as the regulation of the
accounting profession, and to state corporate law, such as the relationship
between a board of directors and management and between a board of directors
and its committees. Sarbanes-Oxley section 404 requires significant oversight
of a public companys internal control over the financial statements. For
accelerated filers, the rules require them to provide managements report on
internal control over financial reporting by December 31, 2008. The rule
further requires an accelerated filer to have an external auditors attestation
report on internal control over financial reporting as of December 31, 2008.
During 2008, the Company incurred approximately $178,500 in additional expenses
to comply with the provisions of the Sarbanes-Oxley Act.

Recent Developments

The Emergency
Economic Stabilization Act of 2008 (EESA) was enacted on October 3,
2008. Pursuant to EESA, the Treasury has the authority to among other things,
purchase up to $700 billion of mortgages, mortgage-backed securities and
certain other financial instruments from financial institutions for the purpose
of stabilizing and providing liquidity to the U.S. financial markets. Pursuant
to its authority under EESA, the Treasury created the TARP CPP under which the
Treasury was authorized to invest in non-voting, senior preferred stock of U.S.
banks and savings associations or their holding companies.

The Company
elected to participate in the CPP and on January 9, 2009, completed the
sale of $32.7 million in preferred shares to the Treasury. The Company issued
32,668 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series C (the
Preferred Shares), with a $1,000 per share liquidation preference, and a
warrant to purchase up to 508,320 shares of the Companys common stock at an
exercise price of $9.64 per share (the Warrant).

The Preferred
Shares issued by the Company pay cumulative dividends of 5% a year for the
first five years and 9% a year thereafter. After three years, the Company may,
at its option, redeem the Preferred Shares at their liquidation preference plus
accrued and unpaid dividends. Both the Preferred Shares and the Warrant will be
accounted for as components of regulatory Tier 1 capital. Among other
restrictions, the securities purchase agreement between the Company and the
Treasury limits the Companys ability to repurchase its stock and subjects the
Company to certain executive compensation limitations. The restrictions on
stock repurchases are in effect until the earlier to occur of January 9, 2012
(the third anniversary of the issuance of the Preferred Shares to Treasury) or
the date on which the Company has redeemed all of the Preferred Shares issued
or the date on which the Treasury has transferred all of the Preferred Shares
to third parties not affiliated with the Treasury.

6.

---



|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

The American
Recovery and Reinvestment Act of 2009 (ARRA) was enacted on February 17,
2009. Among other things, ARRA sets forth additional limits on executive
compensation at all financial institutions receiving federal funds under any
program, including the CPP, both retroactively and prospectively. The executive
compensation restrictions in ARRA, which will be further described in rules and
regulations to be established, include among others: limits on compensation
incentives, prohibitions on Golden Parachute Payments, the establishment by
publicly registered CPP recipients of a board compensation committee comprised
entirely of independent directors for the purpose of reviewing employee
compensation plans, and the requirement of a non-binding vote on executive pay
packages at each annual shareholder meeting until the government funds are
repaid. The full impact of the ARRA is not yet certain because additional
regulatory action is required.

Centrue Bank

Centrue Bank
is an Illinois-chartered bank, the deposit accounts of which are insured by the
FDIC. Centrue Bank is also a member of the Federal Reserve System (member
bank). As an Illinois-chartered, FDIC-insured member bank, Centrue Bank is
subject to the examination, supervision, reporting and enforcement requirements
of the IDFPR, as the chartering authority for Illinois banks, the Federal
Reserve, as the primary federal regulator of member banks, and the FDIC, as administrator
of deposit insurance.

Deposit Insurance.
As an FDIC-insured institution, Centrue Bank is required to pay deposit
insurance premium assessments to the FDIC.

Pursuant to
the Federal Deposit Insurance Reform Act of 2005 (the FDIRA) in 2006, the previously
separate deposit insurance funds for banks and savings associations were merged
into a single deposit insurance fund administered by the FDIC. Centrue Banks
deposits are insured up to applicable limitations by that deposit insurance
fund.

Following the
adoption of the FDIRA, the FDIC has the opportunity, through its rulemaking
authority, to better price deposit insurance for risk than was previously
authorized. The FDIC adopted regulations that create a system of risk-based
assessments. Under the regulations, there are four risk categories, and each
insured institution is assigned to a risk category based on capital levels and
supervisory ratings. Well-capitalized institutions with CAMELS composite
ratings of 1 or 2 are placed in Risk Category I while other institutions are
placed in Risk Categories II, III or IV depending on their capital levels and
CAMELS composite ratings. The assessment rates may be changed by the FDIC as
necessary to maintain the insurance fund at the reserve ratio designated by the
FDIC, which currently is 1.25% of insured deposits. The FDIC may set the
reserve ratio annually at between 1.15% and 1.50% of insured deposits. Deposit
insurance assessments will be collected for a quarter, at the end of the next
quarter. Assessments are based on deposit balances at the end of the quarter,
except for institutions with $1 billion or more in assets, such as Centrue
Bank, and any institution that becomes insured on or after January 1, 2007
which will have their assessment base determined using average daily balances
of insured deposits.

7.

---



|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

As of
September 30, 2008, the reserve ratio of the deposit insurance fund fell
to 0.76%. On October 7, 2008, the FDIC established a restoration plan to
restore the reserve ratio to at least 1.15% within five years (effective
February 27, 2009 the FDIC extended this time to seven years) and proposed
rules increasing the assessment rate for deposit insurance and making
adjustments to the assessment system. On December 16, 2008, the FDIC
adopted and issued a final rule increasing the rates banks pay for deposit
insurance uniformly by 7 basis points (annualized) effective January 1,
2009. Under the final rule, risk-based rates for the first quarter 2009
assessment will range between 12 and 50 basis points (annualized). The 2009
first quarter assessment rates established by the FDIC provide that the highest
rated institutions, those in Risk Category I, will pay premiums of between 12
and 14 basis points and the lowest rated institutions, those in Risk Category
IV, will pay premiums of 50 basis points. On February 27, 2009, the FDIC
adopted a final rule amending the way that the assessment system differentiates
for risk and setting new assessment rates beginning with the second quarter of
2009. Beginning April 1, 2009, for the highest rated institutions, those in
Risk Category I, the initial base assessment rate will be between 12 and 16
basis points and for the lowest rated institutions, those in Risk Category IV,
the initial base assessment rate will be 45 basis points. The final rule
modifies the means to determine a Risk Category I institutions initial base
assessment rate. It also provides for the following adjustments to an
institutions assessment rate: (1) a decrease for long-term unsecured debt,
including most senior and subordinated debt and, for small institutions, a
portion of Tier 1 capital; (2) an increase for secured liabilities above a
threshold amount; and (3) for institutions in risk categories other than Risk
Category I, an increase for brokered deposits above a threshold amount. After
applying these adjustments, for the highest rated institutions, those in Risk
Category I, the total base assessment rate will be between 7 and 24 basis
points and for the lowest rated institutions, those in Risk Category IV, the
total base assessment rate will be between 40 and 77.5 basis points.

On February
27, 2009, the FDIC also adopted an interim rule, with a request for comments,
that imposes an emergency special assessment of up to 20 basis points of an
institutions assessment base as of June 30, 2009, which will be collected on
September 30, 2009. This interim rule also provides for possible additional
special assessments of up to 10 basis points at the end of any calendar quarter
whenever the FDIC estimates that the deposit insurance fund reserve ratio will
fall to a level that the FDIC believes would adversely affect public confidence
or to a level close to zero or negative.

On
November 21, 2008, the FDIC adopted final regulations implementing the
Temporary Liquidity Guarantee Program (TLGP) pursuant to which depository
institutions could elect to participate. Pursuant to the TLGP, the FDIC will
(i) guarantee, through the earlier of maturity or June 30, 2012, certain newly
issued senior unsecured debt issued by participating institutions on or after
October 14, 2008 and before June 30, 2009 (the Debt Guarantee), and (ii)
provide full FDIC deposit insurance coverage for non-interest bearing deposit
transaction accounts regardless of dollar amount for an additional fee
assessment by the FDIC (the Transaction Account Guarantee). These accounts
are mainly payment-processing accounts, such as business payroll accounts. The
Transaction Account Guarantee will expire on December 31, 2009.
Participating institutions will be assessed a 10 basis point surcharge on the
portion of eligible accounts that exceeds the general limit on deposit
insurance coverage.

Coverage under
the TLGP was available to any eligible institution that did not elect to opt
out of the TLGP on or before December 5, 2008. Centrue Bank did not opt
out of the Transaction Account Guarantee portion of the TLGP. The Company and
Centrue Bank opted out of the Debt Guarantee program.

8.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

In 2006, the
FDIC adopted a final rule allocating a one-time assessment credit among insured
financial institutions. This credit may be used to offset deposit insurance
assessments (not to include FICO assessments) beginning in 2007. The Company
began taking advantage of this credit in 2007 and expects to realize benefit
from this credit thru the second quarter of 2009.

The FDIC may
terminate the deposit insurance of any insured depository institution if the
FDIC determines, after a hearing, that the institution (i) has engaged or is
engaging in unsafe or unsound practices, (ii) is in an unsafe or unsound
condition to continue operations or (iii) has violated any applicable law,
regulation, order, or any condition imposed in writing by, or written agreement
with, the FDIC. The FDIC may also suspend deposit insurance temporarily during
the hearing process for a permanent termination of insurance, if the
institution has no tangible capital. Management of the Company is not aware of
any activity or condition that could result in termination of the deposit
insurance of Centrue Bank.

FICO Assessments.
FDIC insured institutions are also subject to assessments to cover interest
payments due on the outstanding obligations of the Financing Corporation
(FICO). FICO was created in 1987 to finance the recapitalization of the
Federal Savings and Loan Insurance Corporation. These FICO assessments are in
addition to amounts assessed by the FDIC for deposit insurance until the final
maturity of the outstanding FICO obligations in 2019. FDIC insured institutions
will share the cost of the interest on the FICO bonds on a pro rata basis.
During the year ended December 31, 2008, the FICO assessment rate for DIF
members ranged between approximately 0.0110% of deposits and approximately
0.0114% of deposits. During the year ended December 31, 2008, Centrue Bank
paid FICO assessments totaling $115,866. For the first quarter of 2009, the
rate established by the FDIC for the FICO assessment is 0.0114% of deposits.

Supervisory
Assessments.  All Illinois banks are required to
pay supervisory assessments to the IDFPR to fund the operations of the IDFPR.
The amount of the assessment is calculated based on the institutions total
assets, including consolidated subsidiaries, as reported to the IDFPR. During
the year ended December 31, 2008, Centrue Bank paid supervisory assessments to
the IDFPR totaling $195,845.

Capital Requirements. The Federal Reserve has established the following
minimum capital standards for state-chartered Federal Reserve System member
banks, such as Centrue Bank: a leverage requirement consisting of a minimum
ratio of Tier 1 capital to total assets of 3% for the most highly-rated banks
with a minimum requirement of at least 4% for all others, and a risk-based
capital requirement consisting of a minimum ratio of total capital to total
risk-weighted assets of 8%, at least one-half of which must be Tier 1 capital.
For purposes of these capital standards, Tier 1 capital and total capital
consist of substantially the same components as Tier 1 capital and total
capital under the Federal Reserves capital guidelines for bank holding
companies (see --The Company--Capital Requirements).

The capital
requirements described above are minimum requirements. Higher capital levels
will be required if warranted by the particular circumstances or risk profiles
of individual institutions. For example, the regulations of the Federal Reserve
provide that additional capital may be required to take adequate account of,
among other things, interest rate risk or the risks posed by concentrations of
credit, nontraditional activities or securities trading activities.

9.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

During the
year ended December 31, 2008, Centrue Bank was not required by the Federal
Reserve to increase its capital to an amount in excess of the minimum
regulatory requirement. As of December 31, 2008, Centrue Bank had regulatory
capital as follows:

|             |  |                            |       |                          |  |      | 
|------------ |  | -------------------------- | ----- | ------------------------ |  | ---- | 
|             |  | Risk-Based
  Capital Ratio |       | Leverage
  Capital Ratio | 
|             |  |                            |       |                          | 
|Centrue Bank |  |                            | 12.8% |                          |  | 9.4% | 

The risk-based
capital ratio and the leverage capital ratio are 4.8% and 5.4% in excess of the
Federal Reserves minimum requirements. See Note 17 in the Notes in
Consolidated Financial Statements for further information.

Federal law
provides the federal banking regulators with broad power to take prompt
corrective action to resolve the problems of undercapitalized institutions. The
extent of the regulators powers depends on whether the institution in question
is well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized or critically undercapitalized, in each case
as defined by regulation. Depending upon the capital category to which an
institution is assigned, the regulators corrective powers include: requiring
the institution to submit a capital restoration plan; limiting the
institutions asset growth and restricting its activities; requiring the
institution to issue additional capital stock (including additional voting
stock) or to be acquired; restricting transactions between the institution and
its affiliates; restricting the interest rate the institution may pay on
deposits; ordering a new election of directors of the institution; requiring
that senior executive officers or directors be dismissed; prohibiting the
institution from accepting deposits from correspondent banks; requiring the institution
to divest certain subsidiaries; prohibiting the payment of principal or
interest on subordinated debt; and ultimately, appointing a receiver for the
institution. As of December 31, 2008, Centrue Bank was considered well
capitalized.

Additionally,
institutions insured by the FDIC may be liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC in connection with the default
of commonly controlled FDIC insured depository institutions or any assistance
provided by the FDIC to commonly controlled FDIC insured depository
institutions in danger of default.

Dividends. Under
the Illinois Banking Act, Illinois-chartered banks may not pay dividends in
excess of their net profits then on hand, after deducting losses and bad debts.
The Federal Reserve Act also imposes limitations on the amount of dividends
that may be paid by state member banks, such as Centrue Bank. Generally, a
member bank may pay dividends out of its undivided profits, in such amounts and
at such times as the banks board of directors deems prudent. Without prior
Federal Reserve approval, however, a state member bank may not pay dividends in
any calendar year which, in the aggregate, exceed such banks calendar
year-to-date net income plus such banks retained net income for the two
preceding calendar years.

The payment of
dividends by any financial institution or its holding company is affected by
the requirement to maintain adequate capital pursuant to applicable capital
adequacy guidelines and regulations, and a financial institution generally is
prohibited from paying any dividends if, following payment thereof, the
institution would be undercapitalized. As described above, Centrue Bank
exceeded its minimum capital requirements under applicable guidelines and had approximately
$3.49 million available to be paid as dividends to the Company as of December
31, 2008. Notwithstanding the availability of funds for dividends, however, the
Federal Reserve may prohibit the payment of any dividends by Centrue Bank if
the Federal Reserve determines such payment would constitute an unsafe or
unsound practice.

10.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

Insider
Transactions. Centrue Bank is subject to certain
restrictions imposed by federal law on extensions of credit to the Company, on
investments in the stock or other securities of the Company and the acceptance
of the stock or other securities of the Company as collateral for loans.
Certain limitations and reporting requirements are also placed on extensions of
credit by Centrue Bank to its directors and officers, to directors and officers
of the Company, to principal stockholders of the Company, and to related
interests of such directors, officers and principal stockholders. In addition,
federal law and regulations may affect the terms upon which any person becoming
a director or officer of the Company or a principal stockholder of the Company
may obtain credit from the banks with which Centrue Bank maintains a
correspondent relationship.

Safety and Soundness
Standards.  The federal banking agencies have
adopted guidelines which establish operational and managerial standards to
promote the safety and soundness of federally insured depository institutions.
The guidelines set forth standards for internal controls, information systems,
internal audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth, compensation, fees and benefits, asset quality and
earnings.

In general,
the safety and soundness guidelines prescribe the goals to be achieved in each
area, and each institution is responsible for establishing its own procedures
to achieve those goals. If an institution fails to comply with any of the
standards set forth in the guidelines, the institutions primary federal
regulator may require the institution to submit a plan for achieving and
maintaining compliance. If an institution fails to submit an acceptable
compliance plan, or fails in any material respect to implement a compliance
plan that has been accepted by its primary federal regulator, the regulator is
required to issue an order directing the institution to cure the deficiency.
Until the deficiency cited in the regulators order is cured, the regulator may
restrict the institutions rate of growth, require the institution to increase
its capital, restrict the rates the institution pays on deposits or require the
institution to take any action the regulator deems appropriate under the
circumstances. Noncompliance with the standards established by the safety and
soundness guidelines may also constitute grounds for other enforcement action
by the federal banking regulators, including cease and desist orders and civil
money penalty assessments.

Branching Authority. Illinois banks, such as Centrue Bank, have the
authority under Illinois law to establish branches anywhere in the State of
Illinois, subject to receipt of all required regulatory approvals.
Additionally, Centrue Bank has authority under Missouri law to establish
branches anywhere in the State of Missouri, subject to receipt of all required
regulatory approvals.

Under the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
Riegle-Neal Act), both state and national banks are allowed to establish
interstate branch networks through acquisitions of other banks, subject to
certain conditions, including certain limitations on the aggregate amount of
deposits that may be held by the surviving bank and all of its insured
depository institution affiliates. Illinois law permits interstate mergers,
subject to certain conditions, including a prohibition against interstate
mergers involving an Illinois bank that has been in existence and continuous
operation for fewer than five years.

11.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

The
establishment of new interstate branches or the acquisition of individual
branches of a bank in another state (rather than the acquisition of an
out-of-state bank in its entirety) is allowed by the Riegle-Neal Act only if
specifically authorized by state law. Certain states permit out-of-state banks
to establish de novo branches or acquire branches from another bank although
the laws of some of these states require a reciprocal provision under the law
of the state where the bank establishing or acquiring the branch is chartered.
Illinois law permits out-of-state banks to establish branches in Illinois in
this manner, and Illinois-chartered banks may branch into other states in this
manner if the law of the state in which the branch will be established or
acquired so authorizes even if the law of such state requires a reciprocal
provision under Illinois law.

State Bank
Activities.  Under federal law and FDIC
regulations, FDIC insured state banks are prohibited, subject to certain
exceptions, from making or retaining equity investments of a type, or in an
amount, that are not permissible for a national bank. Federal law and FDIC
regulations also prohibit FDIC insured state banks and their subsidiaries, subject
to certain exceptions, from engaging as principal in any activity that is not
permitted for a national bank or its subsidiary, respectively, unless the bank
meets, and continues to meet, its minimum regulatory capital requirements and
the FDIC determines the activity would not pose a significant risk to the
deposit insurance fund of which the bank is a member.

The GLB Act
also authorizes insured state banks to engage in financial activities, through
subsidiaries, similar to the activities permitted for financial holding
companies. If a state bank wants to establish a subsidiary engaged in financial
activities, it must meet certain criteria, including that it and all of its
affiliated insured depository institutions are well-capitalized and have a Community
Reinvestment Act rating of at least satisfactory and that it is well-managed.
There are capital deduction and financial statement requirements and financial
and operational safeguards that apply to subsidiaries engaged in financial
activities. Such a subsidiary is considered to be an affiliate of the bank and
there are limitations on certain transactions between a bank and a subsidiary
engaged in financial activities of the same type that apply to transactions
with a banks holding company and its subsidiaries.

Reserve Requirement.
Federal Reserve regulations, as presently in effect, require depository
institutions including Centrue Bank to maintain cash reserves against their net
transaction accounts (primarily NOW and regular checking accounts). Effective
October 9, 2008, the Federal Reserve Banks are now authorized to pay interest
on such reserves.

EXECUTIVE OFFICERS

The term of
office for the executive officers of the Company is from the date of election
until the next annual organizational meeting of the Board of Directors. In
addition to the information provided in the 2009 Proxy Statement, the names and
ages of the executive officers of the Company, as well as the offices of the
Company and the Subsidiary held by these officers on that date, and principal
occupations for the past five years are set forth below.

Thomas A. Daiber, 51,
is the President & Chief Executive Officer of Centrue Financial Corporation
and Centrue Bank. Mr. Daiber joined the former Centrue Financial in October of
2002 as its President and Chief Executive Officer.

Kurt R. Stevenson, 42, is
the Senior Executive Vice President & Chief Financial Officer of Centrue
Financial Corporation and Centrue Bank and has held that role since 2003.

Donald M. Davis, 48, is
the Market President for the Companys  St. Louis market
area, a position held since he joined the former Centrue Bank in 2006. He had
previously worked for National City Bank as its Senior Vice President of
Commercial Real Estate since 2005. Mr. Davis worked for Allegiant Bancorp, Inc.
from 1997 to 2005 as its Senior Vice President/Commercial Business Development
Officer.

12.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

Steven E. Flahaven, 53, is
the Companys Executive Vice President & Head of Commercial Banking, a
position held since 2006. Beginning in 2004, he acted as the Senior Vice
President and Senior Commercial Loan Officer. Mr. Flahaven joined UnionBank in
2002 as its Vice President and Senior Lender.

Everett J. Solon, 56, is
the Market President for the Companys Streator, Dwight,
Ottawa and Peru locations, a position held since 2003. In 2007, he also acted
as the Companys Head of Mortgage Banking.

Robert L. Davidson, 63,
is the Companys Executive Vice President, Chief Investment Officer and ALCO
Manager, a position held since January of 2006. He had previously served as the
Companys Senior Vice President, Chief Investment Officer and ALCO Manager
since 2001.

Roger D. Dotson, 61, is
the Companys Executive Vice President, a position held since late 2007. In
this capacity, he is responsible for oversight in the operations, IT, deposit
operations, and loan operations areas. He had previously served as the
Companys Head of Retail Banking. Mr. Dotson joined the former Centrue Bank as
their Regional President in 2005. Prior to joining the Company, Mr. Dotson
served as the President & CEO of Illinois Community Bank located in
Effingham, Illinois.

Heather M. Hammitt, 34, is
the Companys Executive Vice President & Head of Human Resources &
Corporate Communications. Ms. Hammitt joined UnionBancorp in March of 1998 and
has served in various positions of management in the human resources department
during that time.

Kenneth A. Jones, 45, is
the Companys Executive Vice President & Chief Credit Officer. Mr. Jones
joined UnionBank in October 2000 and, prior to his current position, he served
in the role of Commercial Collector.

Diane F. Leto, 47, is
the Companys Executive Vice President & Head of Operations. As of January
1, 2009, she was appointed as Chief Risk Officer. She has been with the Company
since June of 2004. Prior to joining the Company, Ms. Leto was the Senior Vice
President of Operations for Castle Bank located in DeKalb, Illinois.

Ricky R. Parks, 43, is
the Market President for the Companys Fairview Heights, Aviston, Belleville,
Effingham and St. Rose locations. Mr. Parks joined the former Centrue Bank in
January of 2004 as a Senior Vice President and Senior Lender and in October of
2004 was named its Regional Bank President. Prior to joining Centrue, Mr. Parks
worked for Union Planters Bank from September of 1991 until January of 2004 in
the Metro-East St. Louis market and held the position of Senior Vice President &
Commercial Team Leader prior to his departure.

Mary Jane Raymond, 52, is
the Companys Executive Vice President & Head of Retail Banking. Ms.
Raymond joined the former Centrue in March of 2005 as a Vice President/Regional
Sales Manager. Prior to joining Centrue, Ms. Raymond worked as a Vice President
for Regions Bank from May of 1997 to March of 2005.

13.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

Available Information

Our Internet
address is www.centrue.com. There we make available, free of charge, our annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and any amendments to those reports, as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the SEC. Our
SEC reports can be accessed through the investor relations section of our Web
site. The information found on our Web site is not part of this or any other
report we file with or furnish to the SEC.

|         |             
|-------- | ------------
|Item 1A. | Risk Factors

An investment
in the Companys common stock is subject to risks inherent to the Companys
business. The material risk and uncertainties that management believes affect
the Company are described below. Before making an investment decision, you
should carefully consider the risks and uncertainties described below, together
with all of the other information included or incorporated by reference in this
report. The risks and uncertainties described below are not the only ones
facing the Company. Additional risks and uncertainties that management is not
aware of or focused on or that management currently deems immaterial may also
impair the Companys business operations. This report is qualified in its
entirety by these risk factors. See also, Special Note Regarding
Forward-Looking Statements and Recent Developments.

If any of the
following risks actually occur, the Companys financial condition and results
of operations could be materially and adversely affected. If this were to
happen, the value of the Companys common stock could decline significantly,
and you could lose all or part of your investment.

References to
we, us, and our in this section refer to the Company and its subsidiary,
unless otherwise specified or unless the context otherwise requires.

Risks Related to the Companys Business

We are subject to current financial market
risk.

In 2008 and
continuing in 2009, governments, regulators and central banks in the United
States and worldwide have taken numerous steps to increase liquidity and to restore
investor confidence, but asset values have continued to decline and access to
liquidity continues to be very limited.

The EESA
authorizes the U. S. Treasury to, among other things, purchase up to $700
billion of mortgages, mortgage-backed securities and certain other financial
instruments from financial institutions and their holding companies, under
TARP. The purpose of TARP is to restore confidence and stability to the United
States banking system and to encourage financial institutions to increase their
lending to customers and to each other. Under the Capital Purchase Program,
which we participated in, the U. S. Treasury is purchasing equity securities
from participating institutions. For more information regarding our
participation in the Capital Purchase Program, see the discussion under the
caption Recent Developments in Item 1  Business of Part I of this Annual
Report on Form 10-K. The EESA also increased federal deposit insurance on most
deposit accounts from $100,000 to $250,000. This increase is in place until the
end of 2009 and is not covered by deposit insurance premiums paid by the
banking industry. The ARRA, which was signed into law on February 17, 2009,
includes a wide array of programs intended to stimulate the economy and provide
for extensive infrastructure, energy, health and education needs. The failure
of these significant legislative measures to help stabilize the financial
markets and a continuation or worsening of current financial market conditions
could materially and adversely affect our business, financial condition,
results of operations, access to credit or the trading price of our Common
Shares.

14.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

The EESA and
the ARRA followed, and have been followed by, numerous actions by the Federal
Reserve Board, the United States Congress, the U. S. Treasury, the FDIC, the
SEC and others to address the current liquidity and credit crisis that has
followed the sub-prime mortgage meltdown that began in 2007. These measures
include homeowner relief that encourages loan restructuring and modification;
the establishment of significant liquidity and credit facilities for financial
institutions and investment banks; the lowering of the federal funds rate;
emergency action against short selling practices; a temporary guaranty program
for money market funds; the establishment of a commercial paper funding
facility to provide back-stop liquidity to commercial paper issuers; and
coordinated international efforts to address illiquidity and other weaknesses
in the banking sector. The purpose of these legislative and regulatory actions
is to stabilize the United States banking system. The EESA, the ARRA and the
other regulatory initiatives described above may not have their desired
effects. If the volatility in the markets continues and economic conditions
fail to improve or worsen, our business, financial condition and results of
operations could be materially and adversely affected.

We are subject to interest rate risk.

The Companys
earnings and cash flows are largely dependent upon its net interest income.
Interest rates are highly sensitive to many factors that are beyond the
Companys control, including general economic conditions and policies of
various governmental and regulatory agencies and, in particular, the Federal
Reserve. Changes in monetary policy, including changes in interest rates, could
influence not only the interest the Company receives on loans and securities
and the amount of interest it pays on deposits and borrowings, but such changes
could also affect (i) the Companys ability to originate loans and obtain
deposits, (ii) the fair value of the Companys financial assets and
liabilities, and (iii) the average duration of the Companys mortgage-backed
securities portfolio and other interest-earning assets. If the interest rates
paid on deposits and other borrowings increase at a faster rate than the
interest rates received on loans and other investments, the Companys net
interest income, and therefore earnings, could be adversely affected. Earnings
could also be adversely affected if the interest rates received on loans and
other investments fall more quickly than the interest rates paid on deposits
and other borrowings.

Although management
believes it has implemented effective asset and liability management strategies
to reduce the potential effects of changes in interest rates on the Companys
results of operations, any substantial, unexpected, prolonged change in market
interest rates could have a material adverse effect on the Companys financial
condition and results of operations. Also, the Companys interest rate risk
modeling techniques and assumptions likely may not fully predict or capture the
impact of actual interest rate changes on the Companys balance sheet. See Part
II sections Net Interest Income and Interest Rate Risk in Managements
Discussion and Analysis of Financial Condition and Results of Operations, for
further discussion related to the Companys management of interest rate risk.

We are subject to lending risk.

As of December
31, 2008 approximately 81.0% of the Companys loan portfolio consisted of
commercial, financial, and agricultural, real estate construction, and
commercial real estate loans (collectively, commercial loans). Commercial
loans are generally viewed as having more inherent risk of default than
residential mortgage loans or retail loans. Also, the commercial loan balance
per borrower is typically larger than that for residential mortgage loans and
retail loans, inferring higher potential losses on an individual loan basis.
Because the Companys loan portfolio contains a number of commercial loans with
large balances, the deterioration of one or a few of these loans could cause a
significant increase in nonperforming loans. An increase in nonperforming loans
could result in a net loss of earnings from these loans, an increase in the
provision for loan losses, and an increase in loan charge offs, all of which
could have a material adverse effect on the Companys financial condition and
results of operations. See Part II Loans in Managements Discussion and
Analysis of Financial Condition and Results of Operations, for further
discussion of credit risks related to different loan types.

15.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

We are subject to economic conditions of our
geographic market.

The Companys
success depends to a large degree on the general economic conditions of the
geographic markets served by the Bank in the States of Illinois and Missouri
and, to a lesser extent, contiguous states. The local economic conditions on
these areas have a significant impact on the generation of the Banks
commercial, real estate commercial, and real estate construction loans; the
ability of borrowers to repay these loans; and the value of the collateral
securing these loans. Adverse changes in the economic conditions of the
counties in which we operate could also negatively impact the financial results
of the Companys operations and have a negative effect on its profitability.
For example, these factors could lead to reduced interest income and an
increase in the provision for loan losses.

A portion of
the loans in the Companys portfolio is secured by real estate. Most of these
loans are secured by properties located in the north central, east central,
south central and St. Louiss suburban east counties of Illinois, as well as,
the St. Louis metro area of Missouri. Negative conditions in the real estate
markets where collateral for a mortgage loan is located could adversely affect
the borrowers ability to repay the loan and the value of the collateral
securing the loan. Real estate values are affected by various factors,
including changes in general or regional economic conditions, supply and demand
for properties and governmental rules or policies.

We are subject to current levels of
unprecedented market volatility.

The capital
and credit markets have been experiencing volatility and disruption for more
than a year. In recent months, the volatility and disruption have reached
unprecedented levels. In some cases, the markets have produced downward
pressure on stock prices and credit availability for certain issuers without
regard to those issuers underlying financial strength. If current levels of
market disruption and volatility continue or worsen, there can be no assurance
that we will not experience an adverse effect, which may be material, on our
ability to access capital and on our business, financial condition and results
of operations.

Our allowance for loan losses may be
insufficient.

Managing the
Companys allowance for loan losses is based upon, among other things, (1)
historical experience, (2) an evaluation of local and national economic
conditions, (3) regular reviews of delinquencies and loan portfolio quality,
(4) current trends regarding the volume and severity of past due and problem
loans, (5) the existence and effect of concentrations of credit, and (6)
results of regulatory examinations. Based upon such factors, management makes
various assumptions and judgments about the ultimate collectability of the
respective loan portfolios. Although the Company believes that the allowance
for loan losses is adequate, there can be no assurance that such allowance will
prove sufficient to cover future losses. Future adjustments may be necessary if
economic conditions change or adverse developments arise with respect to
nonperforming or performing loans or if regulatory supervision changes. Material
additions to the allowance for loan losses would result in a material decrease
in the Companys net income, and possibly its capital, and could result in the
inability to pay dividends, among other adverse consequences.

16.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

Mergers and Acquisitions may disrupt our
business and dilute stockholder value.

The Company
regularly evaluates mergers and acquisition opportunities and conducts due
diligence activities related to possible transactions with other financial
institutions and financial services companies. As a result, negotiations may
take place and future mergers or acquisitions involving cash, debt, or equity
securities may occur at any time. The Company seeks merger or acquisition
partners that are culturally similar, have experienced management, and possess
either significant market presence or have potential for improved profitability
through financial management, economies of scale, or expanded services.

Acquiring or
merging with other banks, businesses, and acquiring branches involves potential
adverse impact to the Companys financial results and various other risks
commonly associated with mergers and acquisitions, including, among other
things:

|  |                                                                                                                                                         
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | Difficulty
  in estimating the value of the target company                                                                                              
|  |                                                                                                                                                         
| | Payment of a
  premium over book and market values that may dilute the Companys tangible
  book value and earnings per share in the short and long term
|  |                                                                                                                                                         
| | Potential
  exposure to unknown or contingent liabilities of the target company                                                                         
|  |                                                                                                                                                         
| | Exposure to
  potential asset quality issues of the target company                                                                                      
|  |                                                                                                                                                         
| | There may be
  volatility in reported income as goodwill impairment losses could occur
  irregularly and in varying amounts                             
|  |                                                                                                                                                         
| | Difficulty
  and expense of integrating the operations and personnel of the target company                                                              
|  |                                                                                                                                                         
| | Inability to
  realize the expected revenue increases, cost savings, increases in geographic
  or product presence, and/or other projected benefits     
|  |                                                                                                                                                         
| | Potential
  disruption to the Companys business                                                                                                        
|  |                                                                                                                                                         
| | Potential
  diversion of the Companys managements time and attention                                                                                  
|  |                                                                                                                                                         
| | The possible
  loss of key employees and customers of the target company                                                                                
|  |                                                                                                                                                         
| | Potential
  changes in banking or tax laws or regulations that may affect the target
  company                                                          

Details of the
Companys recent acquisition activity are presented in Note 2, Business
Acquisitions and Divestitures, of the notes to consolidated financial
statements within Part II, Item 8.

Our information systems may experience an
interruption or breach in security.

The Company
relies heavily on communications and information systems to conduct its
business. Any failure, interruption, or breach in security of these systems
could result in failures or disruptions in the Companys customer relationship
management, general ledger, deposit, loan, and other systems. While the Company
has policies and procedures designed to prevent or limit the effect of the
failure, interruption, or security breach of its information systems, we cannot
assure you that any such failures, interruptions, or security breaches will not
occur or, if they do occur, that they will be adequately addressed. The
occurrence of any failures, interruptions, or security breaches of the
Companys information systems could damage the Companys reputation, result in
a loss of customer business, subject the Company to additional regulatory
scrutiny, or expose the Company to civil litigation and possible financial
liability, any of which could have a material adverse effect on the Companys
financial condition and results of operations.

17.

---



|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

Risks Associated with the Companys Industry

We operate in a
highly regulated industry.

The banking
industry is heavily regulated. The banking business of the Company and the Bank
are subject, in certain respects, to regulation by the Federal Reserve, the
FDIC, the IDFPR and the SEC. The Companys success depends not only on
competitive factors but also on state and federal regulations affecting banks
and bank holding companies. The regulations are primarily intended to protect
depositors, not stockholders or other security holders. The ultimate effect of
recent and proposed changes to the regulation of the financial institution
industry cannot be predicted. Regulations now affecting the Company may be
modified at any time, and there is no assurance that such modifications, if
any, will not adversely affect the Companys business.

We operate in an
industry that is interrelated such that defaults by other larger institutions
could adversely affect financial markets generally.

The commercial
soundness of many financial institutions may be closely interrelated as a
result of relationships between the institutions. As a result, concerns about,
or a default or threatened default by, one institution could lead to
significant market-wide liquidity and credit problems, losses or defaults by
other institutions. This is sometimes referred to as systemic risk and may adversely
affect our business.

We operate in an
industry that is significantly affected by general business and economic
conditions.

The Companys
operations and profitability are impacted by general business and economic
conditions in the United States and abroad. These conditions include short-term
and long-term interest rates, inflation, money supply, political issues,
legislative and regulatory changes, fluctuations in both debt and equity
capital markets, broad trends in industry and finance, and the strength of the
U. S. economy and the local economies in which the Company operates, all of
which are beyond the Companys control. Deterioration in economic conditions
could result in an increase in loan delinquencies and nonperforming assets,
decreases in loan collateral values, and a decrease in demand for the Companys
products and services among other things, any of which could have a material
adverse impact on the Companys financial condition and results of operations.

|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments

None.

18.

---



|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

|        |           
|------- | ----------
|Item 2. | Properties

At December
31, 2008, the Company operated thirty offices (twenty-seven full-service bank
branches and two back-room sales support nonbanking facilities in Illinois and
one full-service bank branch in Missouri). The principal offices of the Company
are located in St. Louis, Missouri. All of the Companys offices are owned by
Centrue Bank and are not subject to any mortgage or material encumbrance, with
the exception of four offices that are leased: one is located in LaSalle County
in Illinois, one in Will County in Illinois, one in St. Clair County in
Illinois and one in St. Louis County in Missouri. The Company believes that its
current facilities are adequate for its existing business.

|             |                                                                                                                                            |                                                                                                                     
|------------ | ------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------
|AFFILIATE    | MARKETS SERVED                                                                                                                             | PROPERTY/TYPE LOCATION                                                                                              
|             |                                                                                                                                            |                                                                                                                     
|The Company  |                                                                                                                                            | Administrative
  Office: St. Louis, MO                                                                              
|             |                                                                                                                                            |                                                                                                                     
|Centrue Bank | Bureau,
  Champaign, Clinton, DeKalb, Effingham, Grundy, Kankakee, Kendall, LaSalle,
  Livingston, St. Clair and Will Counties in Illinois | Main Office:
  Streator, IL 
  Twenty-seven banking offices and two non-banking offices located in markets
  served.
|             |                                                                                                                                            |                                                                                                                     
|             | St. Louis
  County in Missouri                                                                                                             | One banking
  office                                                                                                

In addition to
the banking locations listed above, Centrue Bank owns thirty automated teller
machines, some of which are housed within banking offices and some of which are
independently located.

At December
31, 2008, the properties and equipment of the Company had an aggregate net book
value of approximately $32.4 million.

|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

Neither the
Company nor its subsidiary are involved in any pending legal proceedings other
than routine legal proceedings occurring in the normal course of business,
which, in the opinion of management, in the aggregate, are not material to the
Companys consolidated financial condition.

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

None.

19.

---



|                                   | 
|---------------------------------- | 
|Centrue
Financial Corporation      | 
|Securities
And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

PART II

|        |                                                                                                               
|------- | --------------------------------------------------------------------------------------------------------------
|Item 5. | Market For Registrants Common Equity, Related Stockholder Matters
  and Issuer Purchases of Equity Securities

The Companys
Common Stock was held by approximately 911 stockholders of record as of
February 23, 2009, and is traded on The NASDAQ Stock Market under the symbol
TRUE. The table below indicates the high and low sales prices of the Common
Stock as reported by NASDAQ for transactions of which the Company is aware, and
the dividends declared per share for the Common Stock during the periods
indicated. Because the Company is not aware of the price at which certain
private transactions in the Common Stock have occurred, the prices shown may
not necessarily represent the complete range of prices at which transactions in
the Common Stock have occurred during such periods.

|               |  |             |       |                  |   |       |  |   |      | 
|-------------- |  | ----------- | ----- | ---------------- | - | ----- |  | - | ---- | 
|               |  | Stock Sales |       | Cash
  Dividends |  
|               |  |             |       |                 
|               |  | High        |       | Low              |   |      
|               |  |             |       |                  |   |       | 
|2008           |  |             |       |                  |   |       |  |   |      | 
|First Quarter  |  | $           | 22.94 |                  | $ | 17.26 |  | $ | 0.13 | 
|Second Quarter |  |             | 19.90 |                  |   | 11.03 |  |   | 0.14 | 
|Third Quarter  |  |             | 16.00 |                  |   | 9.12  |  |   | 0.14 | 
|Fourth Quarter |  |             | 14.57 |                  |   | 5.70  |  |   | 0.14 | 
|               |  |             |       |                  |   |       |  |   |      | 
|2007           |  |             |       |                  |   |       |  |   |      | 
|First Quarter  |  | $           | 19.93 |                  | $ | 18.99 |  | $ | 0.12 | 
|Second Quarter |  |             | 20.55 |                  |   | 18.50 |  |   | 0.13 | 
|Third Quarter  |  |             | 20.31 |                  |   | 18.95 |  |   | 0.13 | 
|Fourth Quarter |  |             | 24.90 |                  |   | 19.19 |  |   | 0.13 | 

The holders of
the Common Stock are entitled to receive dividends as declared by the board of
directors of the Company, which considers payment of dividends quarterly. Upon
the consummation of an acquisition in 1996, preferential dividends were
required to be paid or accrued quarterly, with respect to the outstanding
shares of Preferred Stock. In preparation for participation in the U. S.
Department of the Treasurys Capital Purchase Program, the Company has added a
Fixed Rate Cumulative Preferred Stock, Series C. This preferred securities
series to be issued by the Company will pay cumulative dividends of 5% a year
for the first five years and 9% thereafter.

The ability of
the Company to pay dividends in the future will be primarily dependent upon its
receipt of dividends from Centrue Bank. In determining cash dividends, the
Board of Directors considers the earnings, capital requirements, debt and
dividend servicing requirements, financial ratio guidelines it has established,
financial condition of the Company and other relevant factors. Centrue Banks
ability to pay dividends to the Company and the Companys ability to pay
dividends to its stockholders are also subject to certain regulatory
restrictions.

20.

---



|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

The Company
has paid regular cash dividends on the Common Stock since it commenced
operations in 1982. There can be no assurance, however, that any such dividends
will be paid by the Company or that such dividends will not be reduced or
eliminated in the future. The timing and amount of dividends will depend upon
the earnings, capital requirements and financial condition of the Company and
Centrue Bank, as well as the general economic conditions and other relevant
factors affecting the Company and its subsidiaries. In 2008, the Company
entered into a new loan agreement with Bank of America replacing the Companys
prior loan agreement. The loan agreement contains a dividend restriction
specifying that the Company cannot declare or pay dividends in excess of 40% of
the then current years earnings without prior consent. In addition, the terms
of the Series A Preferred Stock, and the Series B Preferred Stock issued to
certain of Prairies preferred stockholders prohibit the payment of dividends
by the Company on the Common Stock during any period for which dividends on the
respective series of Preferred Stock are in arrears. Additionally, the
securities purchase agreement, between the Company and the Treasury limits the
payment of dividends on the Common Stock to the current quarterly cash dividend
of $0.14 per share.

The following
graph shows a comparison of cumulative total returns for Centrue Financial
Corporation, the NASDAQ Stock Market (US Companies) and an index of SNL Midwest
Bank Stocks for the five-year period beginning January 1, 2004 and ending on
December 31, 2008. The graph was prepared at our request by SNL Financial LC,
Charlottesville, Virginia.

COMPARISON OF CUMULATIVE TOTAL RETURN
(ASSUMES $100 INVESTED ON JANUARY 1, 2004)

(GRAPH)

|                                |  |               |        |          |  |          |  |          |        |          |  |          |  |  |        |  |  |       | 
|------------------------------- |  | ------------- | ------ | -------- |  | -------- |  | -------- | ------ | -------- |  | -------- |  |  | ------ |  |  | ----- | 
|                                |  | Period Ending |       
|Index                           |  | 12/31/03      |        | 12/31/04 |  | 12/31/05 |  | 12/31/06 |        | 12/31/07 |  | 12/31/08 | 
|                                |  |               |        |          |  |          |  |          |        |          |  |          | 
|Centrue
  Financial Corporation |  |               | 100.00 |          |  | 99.11    |  |          | 101.37 |          |  | 94.86    |  |  | 112.50 |  |  | 32.07 | 
|NASDAQ
  Composite              |  |               | 100.00 |          |  | 108.59   |  |          | 110.08 |          |  | 120.56   |  |  | 132.39 |  |  | 78.72 | 
|SNL Midwest
  Bank              |  |               | 100.00 |          |  | 112.84   |  |          | 108.73 |          |  | 125.68   |  |  | 97.96  |  |  | 64.44 | 

21.

---



|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

The following
table provides information about purchases of the Companys common stock by the
Company during the fourth quarter 2008:

|                   |  |  |                                  |  |  |                              |  |  |                                                                                    |  |  |                                                                                  | 
|------------------ |  |  | -------------------------------- |  |  | ---------------------------- |  |  | ---------------------------------------------------------------------------------- |  |  | -------------------------------------------------------------------------------- | 
|Period             |  |  | Total Number of Shares Purchased |  |  | Average Price Paid per Share |  |  | Total Number of Shares Purchased as Part of
  Publicly Announced Plans or Programs |  |  | Maximum Number of Shares that May Yet Be
  Purchased Under the Plans or Programs | 
|10/01/08 10/31/08 |  |  |                                 |  |  |                             |  |  |                                                                                   |  |  | 395,078                                                                          | 
|11/01/08 11/30/08 |  |  |                                 |  |  |                             |  |  |                                                                                   |  |  | 395,078                                                                          | 
|12/01/08 12/31/08 |  |  |                                 |  |  |                             |  |  |                                                                                   |  |  | 395,078                                                                          | 
|Total (1)          |  |  |                                 |  |  |                             |  |  |                                                                                   |  |  | 395,078                                                                          | 

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The Company
  repurchased no shares of stock during the quarter ended December 31, 2008.
  The 2007 repurchase program approved on July 24, 2007 authorized the Company
  to repurchase an additional 500,000 shares, or approximately 8% of the
  Companys currently issued and outstanding shares, in the open market or
  privately negotiated transactions over an 18 month period commencing
  immediately following the completion of the 2006 stock repurchase program.
  This program expired on January 24, 2009.

22.

---



|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

The following
table presents selected consolidated financial data for the five years ended
December 31, 2008:

|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|-------------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | - | ---- | --------- | ---- | - | --------- | - | - | --------- | -
|                                                               |  | 2008 |           | 2007 |   | 2006      |   | 2005 |           | 2004 |  
|                                                               |  |      |           |      |   |           |   |      |           |      |  
|Statement of Income Data                                       |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Interest income                                                |  | $    | 73,518    |      | $ | 83,576    |   | $    | 43,858    |      | $ | 34,697    |   | $ | 34,898    |  
|Interest expense                                               |  |      | 33,944    |      |   | 44,735    |   |      | 21,351    |      |   | 13,704    |   |   | 13,231    |  
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Net interest income                                            |  |      | 39,574    |      |   | 38,841    |   |      | 22,507    |      |   | 20,993    |   |   | 21,667    |  
|Provision for loan losses                                      |  |      | 8,082     |      |   | 675       |   |      | (1,275    | )    |   | 250       |   |   | 1,924     |  
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Net interest income after provision for
  loan losses          |  |      | 31,492    |      |   | 38,166    |   |      | 23,782    |      |   | 20,743    |   |   | 19,743    |  
|Noninterest income                                             |  |      | 13,409    |      |   | 15,665    |   |      | 6,688     |      |   | 6,298     |   |   | 12,378    |  
|Noninterest expense                                            |  |      | 35,745    |      |   | 37,333    |   |      | 22,723    |      |   | 21,343    |   |   | 24,860    |  
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Income before income taxes                                     |  |      | 9,156     |      |   | 16,498    |   |      | 7,747     |      |   | 5,698     |   |   | 7,261     |  
|Income taxes                                                   |  |      | 2,766     |      |   | 5,175     |   |      | 2,145     |      |   | 1,319     |   |   | 2,173     |  
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Income from continuing operations (after
  taxes)              |  |      | 6,390     |      |   | 11,323    |   |      | 5,602     |      |   | 4,379     |   |   | 5,088     |  
|Loss on discontinued operations                                |  |      |          |      |   |          |   |      | (415      | )    |   | (206      | ) |   | (285      | )
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Net income                                                     |  | $    | 6,390     |      | $ | 11,323    |   | $    | 5,187     |      | $ | 4,173     |   | $ | 4,803     |  
|Preferred stock dividends                                      |  |      | 207       |      |   | 207       |   |      | 207       |      |   | 207       |   |   | 207       |  
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Net income for common stockholders                             |  | $    | 6,183     |      | $ | 11,116    |   | $    | 4,980     |      | $ | 3,966     |   | $ | 4,596     |  
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Per Share Data                                                 |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Basic earnings per common shares from
  continuing operations  |  | $    | 1.02      |      | $ | 1.75      |   | $    | 1.31      |      | $ | 1.06      |   | $ | 1.21      |  
|Basic earnings per common share                                |  |      | 1.02      |      |   | 1.75      |   |      | 1.21      |      |   | 1.01      |   |   | 1.14      |  
|Diluted earnings per common share from
  continuing operations |  |      | 1.02      |      |   | 1.74      |   |      | 1.30      |      |   | 1.04      |   |   | 1.19      |  
|Diluted earnings per common share                              |  |      | 1.02      |      |   | 1.74      |   |      | 1.20      |      |   | 0.99      |   |   | 1.12      |  
|Dividends per common stock                                     |  |      | 0.55      |      |   | 0.51      |   |      | 0.48      |      |   | 0.44      |   |   | 0.40      |  
|Dividend payout ratio for common stock                         |  |      | 53.71     | %    |   | 29.17     | % |      | 27.05     | %    |   | 43.39     | % |   | 35.10     | %
|Book value per common stock                                    |  | $    | 19.14     |      | $ | 19.50     |   | $    | 18.23     |      | $ | 17.23     |   | $ | 17.30     |  
|Basic weighted average common shares
  outstanding             |  |      | 6,033,896 |      |   | 6,341,693 |   |      | 4,119,235 |      |   | 3,943,741 |   |   | 4,033,608 |  
|Diluted weighted average common shares
  outstanding           |  |      | 6,042,296 |      |   | 6,380,659 |   |      | 4,163,836 |      |   | 4,002,908 |   |   | 4,109,999 |  
|Period-end common shares outstanding                           |  |      | 6,028,491 |      |   | 6,071,546 |   |      | 6,455,068 |      |   | 3,806,876 |   |   | 4,032,144 |  
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Balance Sheet Data                                             |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Securities                                                     |  | $    | 252,562   |      | $ | 249,331   |   | $    | 298,692   |      | $ | 196,440   |   | $ | 191,661   |  
|Loans                                                          |  |      | 1,004,390 |      |   | 957,285   |   |      | 836,944   |      |   | 417,525   |   |   | 419,275   |  
|Allowance for loan losses                                      |  |      | 15,018    |      |   | 10,755    |   |      | 10,835    |      |   | 8,362     |   |   | 9,732     |  
|Total assets                                                   |  |      | 1,401,881 |      |   | 1,364,999 |   |      | 1,283,025 |      |   | 676,222   |   |   | 669,546   |  
|Total deposits                                                 |  |      | 1,049,220 |      |   | 1,033,022 |   |      | 1,026,610 |      |   | 543,841   |   |   | 512,477   |  
|Stockholders equity                                           |  |      | 115,908   |      |   | 118,876   |   |      | 118,191   |      |   | 66,075    |   |   | 70,247    |  
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Earnings Performance Data                                      |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Return on average total assets                                 |  |      | 0.47      | %    |   | 0.85      | % |      | 0.69      | %    |   | 0.63      | % |   | 0.65      | %
|Return on average stockholders
equity                         |  |      | 5.43      |      |   | 9.53      |   |      | 6.69      |      |   | 6.06      |   |   | 7.06      |  
|Net interest margin ratio                                      |  |      | 3.32      |      |   | 3.35      |   |      | 3.41      |      |   | 3.56      |   |   | 3.34      |  
|Efficiency ratio (1)                                           |  |      | 64.32     |      |   | 66.67     |   |      | 76.81     |      |   | 77.78     |   |   | 82.90     |  
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Asset Quality Ratios                                           |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Nonperforming assets to total end of period
  assets           |  |      | 1.64      | %    |   | 0.51      | % |      | 1.08      | %    |   | 0.62      | % |   | 0.69      | %
|Nonperforming loans to total end of period
  loans             |  |      | 1.03      |      |   | 0.43      |   |      | 1.40      |      |   | 0.96      |   |   | 1.00      |  
|Net loan charge-offs to total average
loans                    |  |      | 0.38      |      |   | 0.08      |   |      | 0.22      |      |   | 0.39      |   |   | 0.23      |  
|Allowance for loan losses to total loans                       |  |      | 1.50      |      |   | 1.12      |   |      | 1.29      |      |   | 2.00      |   |   | 2.32      |  
|Allowance for loan losses to nonperforming
  loans             |  |      | 145.55    |      |   | 262.96    |   |      | 92.14     |      |   | 208.84    |   |   | 231.60    |  
|                                                               |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Capital Ratios                                                 |  |      |           |      |   |           |   |      |           |      |   |           |   |   |           |  
|Average equity to average assets                               |  |      | 8.69      | %    |   | 8.90      | % |      | 10.35     | %    |   | 10.39     | % |   | 9.27      | %
|Total capital to risk adjusted assets                          |  |      | 12.18     |      |   | 10.23     |   |      | 11.94     |      |   | 13.33     |   |   | 14.30     |  
|Tier 1 leverage ratio                                          |  |      | 8.10      |      |   | 7.69      |   |      | 7.90      |      |   | 9.03      |   |   | 9.54      |  

|    |                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Calculated
  as noninterest expense less amortization of intangibles and expenses related
  to other real estate owned divided by the sum of net interest income before
  provisions for loan losses and total noninterest income excluding securities
  gains and losses and gains on sale of assets.

23.

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|                                   | 
|---------------------------------- | 
|Centrue Financial Corporation      | 
|Securities And Exchange Commission | 
|Form 10-K                          | 
|                                   | 

|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial Condition and
  Results of Operations

The following
discussion provides an analysis of the Companys results of operations and
financial condition of Centrue Financial Corporation for the three years ended
December 31, 2008. Managements discussion and analysis (MD&A) should be
read in conjunction with Selected Consolidated Financial Data, the
consolidated financial statements of the Company, and the accompanying notes
thereto. Unless otherwise stated, all earnings per share data included in this
section and throughout the remainder of this discussion are presented on a
fully diluted basis. All financial information is in thousands (000s), except
per share data.

24.

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|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995

This report
contains certain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Act of 1934 as amended. The Company intends such forward-looking statements to
be covered by the safe harbor provisions for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995 and is
including this statement for purposes of these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
future plans, strategies, and expectations of the Company, are generally
identified by the use of words such as believe, expect, intend,
anticipate, estimate, project, planned or potential or similar
expressions.

The Companys
ability to predict results, or the actual effect of future plans or strategies,
is inherently uncertain. Factors which could have a material adverse effect on
the operations and future prospects of the Company and the subsidiaries
include, but are not limited to, changes in: interest rates; general economic
conditions; legislative/regulatory changes; monetary and fiscal policies of the
U.S. government, including policies of the U.S. Treasury and the Federal
Reserve Board; the quality and composition of the loan or securities
portfolios; demand for loan products; deposit flows; competition; demand for
financial services in the Companys market areas; the Companys implementation
of new technologies; the Companys ability to develop and maintain secure and
reliable electronic systems; and accounting principles, policies, and
guidelines. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such statements.

Critical Accounting Policies and Estimates

Note 1 to our
Consolidated Financial Statements for the year ended December 31, 2008 contains
a summary of our significant accounting policies. Various elements of our
accounting policies, by their nature, are inherently subject to estimation
techniques, valuation assumptions and other subjective assessments. Our policy
with respect to the methodologies used to determine the allowance for loan
losses is our most critical accounting policy. The policy is important to the
presentation of our financial condition and results of operations, and it
involves a higher degree of complexity and requires management to make
difficult and subjective judgments, which often require assumptions or
estimates about highly uncertain matters. The use of different judgments,
assumptions and estimates could result in material differences in our results
of operations or financial condition.

The following
is a description of our critical accounting policy and an explanation of the
methods and assumptions underlying its application.

Allowance for Loan
Losses: The allowance for loan losses represents
managements estimate of probable credit losses inherent in the loan portfolio.
Estimating the amount of the allowance for loan losses requires significant
judgment and the use of estimates related to the amount and timing of expected
future cash flows on impaired loans, estimated losses on pools of homogeneous
loans based on historical loss experience, and consideration of current
economic trends and conditions, all of which may be susceptible to significant
change. The loan portfolio also represents the largest asset type on the
consolidated balance sheet. Loan losses are charged off against the allowance,
while recoveries of amounts previously charged off are credited to the
allowance. A provision for loan losses is charged to operations based on
managements periodic evaluation of the factors previously mentioned, as well
as other pertinent factors.

25.

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|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

The allowance
for loan losses is based on an estimation computed pursuant to the requirements
of Financial Accounting Standards Board (FASB) Statement No. 5, Accounting
for Contingencies and FASB Statements Nos. 114 and 118, Accounting by
Creditors for Impairment of a Loan, the analysis of the allowance for loan
losses consists of three components: (i) specific credit allocation established
for expected losses resulting from analysis developed through specific credit
allocations on individual loans for which the recorded investment in the loan
exceeds its fair value; (ii) general portfolio allocation based on historical
loan loss experience for each loan category; and (iii) subjective reserves
based on general economic conditions as well as specific economic factors in
markets in which the Company operates.

The specific
credit allocation component of the allowances for loan losses is based on an
analysis of individual loans and historical loss experience for each loan
category. The specific credit allocations are based on regular analysis of all
loans over a fixed-dollar amount where the internal credit rating is at or
below a predetermined classification. These analyses involve a high degree of
judgment in estimating the amount of loss associated with specific loans,
including estimating the amount and timing of future cash flows and collateral
values.

The general
portfolio allocation component of the allowance for loan losses is determined
statistically using a loss analysis that examines historical loan loss
experience. The loss analysis is performed quarterly and loss factors are
updated regularly based on actual experience. The general portfolio allocation
element of the allowance for loan losses also includes consideration of the
amounts necessary for concentrations and changes in portfolio mix and volume.

There are many
factors affecting the allowance for loan losses; some are quantitative while
others require qualitative judgment. The process for determining the allowance
(which management believes adequately considers all of the potential factors
which might possibly result in credit losses) includes subjective elements and,
therefore, may be susceptible to significant change. To the extent actual
outcomes differs from management estimates, additional provision for credit
losses could be required that could adversely affect the Companys earnings or
financial position in future periods.

Securities:
Available-for-sale securities are those that the Company intends to hold for an
indefinite period of time, but not necessarily to maturity. Any decision to
sell a security classified as available-for-sale would be based on various factors,
including significant movements in interest rates, changes in the maturity mix
of the Companys assets and liabilities, liquidity needs, regulatory capital
considerations, and other similar factors. Securities available-for-sale are
carried at fair value with unrealized gains or losses, net of the related
income tax effect, reported in other comprehensive income. Declines in the fair
value of securities below their cost that are other than temporary are
reflected as realized losses. The fair values of securities available for sale
is determined by obtaining quoted prices on nationally recognized securities
exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique
widely used in the industry to value debt securities without relying
exclusively on quoted prices for the specific securities but rather by relying
on the securities relationship to other benchmark quoted securities (Level 2
inputs). If the securities could not be priced using quoted market prices,
observable market activity or comparable trades, the financial market was
considered not active and the assets were classified as Level 3. The assets
included in Level 3 are trust preferred CDOs. These securities were
historically priced using Level 2 inputs. In 2008, the decline in the level of
observable inputs and market activity for trust preferred CDOs by the
measurement date was significant and resulted in unreliable external pricing.
As such, these investments are now considered Level 3 inputs and are priced
using an internal model. The following information is incorporated into the
pricing model utilized in determining individual security valuations:

26.

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|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

|  |                                                                                                                   
|- | ------------------------------------------------------------------------------------------------------------------
| | historical
  and current performance of the underlying collateral                                                 
|  |                                                                                                                   
| | deferral/default
  rates                                                                                          
|  |                                                                                                                   
| | collateral
  coverage ratios                                                                                      
|  |                                                                                                                   
| | break in
  yield calculations                                                                                     
|  |                                                                                                                   
| | cash flow
  projections                                                                                           
|  |                                                                                                                   
| | required liquidity
  and credit premiums                                                                          
|  |                                                                                                                   
| | financial
  trend analysis with respect to the individual issuing financial institutions
  and insurance companies

Due to market
conditions as well as the limited trading activity of these securities, the
market value of the securities is highly sensitive to assumption changes and
market volatility.

The Company
evaluates securities for other-than-temporary impairment at least on a
quarterly basis, and more frequently when economic and market concerns warrant
such evaluation. Consideration is given to the length of time and the extent to
which the fair value has been less than cost, the financial condition and
near-term prospects of the issuer, and the intent and ability of the Company to
retain its investment in the issuer for a period of time sufficient to allow
for any anticipated recovery in fair value. In analyzing an issuers financial
condition, the Company may consider whether the securities are issued by the
federal government or its agencies, whether downgrades by bond rating agencies
have occurred, and the results of reviews of the issuers financial condition.

For additional
discussion on securities, see Notes 3 and 5 of Notes to Consolidated Financial
Statements in Item 8 of this Form 10-K.

Goodwill:
Costs in excess of the estimated fair value of identified assets acquired
through purchase transactions are recorded as an asset of the Company. As per
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets, an annual impairment analysis is required to be performed
to determine if the asset is impaired and needs to be written down to its fair
value. This assessment is conducted as of December 31 of each year or more
frequently if conditions warrant. Per the December 31, 2008 analysis, no
impairment was identified as a result of these tests. In making these
impairment analyses, management must make subjective assumptions regarding the
fair value of the Companys assets and liabilities. It is possible that these
judgments may change over time as market conditions or Company strategies
change, and these changes may cause the Company to record impairment changes to
adjust the goodwill to its estimated fair value.

Deferred Income
Taxes:  Deferred income tax assets and liabilities
are computed for differences between the financial statement and tax basis of
assets and liabilities that will result in taxable or deductible amounts in the
future based on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income. Deferred tax assets are
also recognized for operating loss and tax credit carryforwards. Valuation
allowances are established when necessary to reduce deferred tax assets to an
amount expected to be realized. Income tax expense is the tax payable or
refundable for the period plus or minus the change during the period in
deferred tax assets and liabilities.

General

Centrue
Financial Corporation (the Company) is a bank holding company organized under
the laws of the State of Delaware. On November 13, 2006, the Company (formerly
known as UnionBancorp, Inc. now known as Centrue Financial Corporation) merged
with Centrue Financial Corporation (former Centrue), parent of Centrue Bank
with the Company being the surviving entity in the merger. Operating results of
former Centrue are included in the consolidated financial statements since the
date of the acquisition. The Company provides a full range of products and
services to individual and corporate

27.

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|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

customers
located in the north central, east central, south central, suburban west area
of Chicago, suburban metro east area of St. Louis, and northwest Illinois
areas. These products and services include demand, time, and savings deposits;
lending; and mortgage banking. Additionally, brokerage, asset management, and
trust services will be provided to our customers after the sale of these
product lines on a referral basis to third party providers that acquired the
business. The Company is subject to competition from other financial
institutions, including banks, thrifts and credit unions, as well as
nonfinancial institutions providing financial services. Additionally, the
Company and its subsidiary Centrue Bank (the Bank) are subject to regulations
of certain regulatory agencies and undergo periodic examinations by those
regulatory agencies.

Merger, Acquisition and Divestiture Activity

Completed Transactions

On March 28,
2008 the Company completed the sale of its Hanover and Elizabeth branches to
Apple River State Bank headquartered in Apple River, Illinois. Apple River
assumed approximately $22,700 in deposits and acquired $14,700 in loans, and
$401 in premises and equipment. The net gain on the sale was $482.

On June 6,
2008 the Company completed the sale of its Manlius and Tampico branches to
Peoples National Bank headquartered in Kewanee, Illinois. Peoples National
assumed approximately $29,500 in deposits and acquired $17,600 in loans, and
$214 in premises and equipment. The net gain on the sale was $629.

On August 29,
2008 the Company completed the sale of its Asset Management product line to
Vezzetti Capital Management. There was no gain or loss recorded on this
transaction.

On September
18, 2008 the Company completed the sale of its brokerage product line. The net
loss on sale was $29.

Announced Transactions

On September
15, 2008, the Company entered into an agreement to sell its Trust unit of their
Wealth Management division to Hometown National Bank headquartered in LaSalle,
Illinois. The Definitive Purchase and Assumption Agreement entered into calls
for Hometown to purchase the customers associated with this product line. The
transaction was executed on January 23, 2009. There was no gain or loss
recorded on this transaction.

Results of Operations

Net Income

2008 compared to 2007.
Net income equaled $6,390 or $1.02 per diluted share for the year ended
December 31, 2008 as compared to net income of $11,323 or $1.74 per diluted
share for the year ended December 31, 2007. This represents a 43.6% decrease in
net income and a 41.4% decrease in diluted per share earnings in the current
fiscal year over fiscal 2007.

28.

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|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

The Companys
annual results declined in 2008 versus 2007 primarily due to a $7,407 increase
in the provision for loan losses and a $2,735 non-cash impairment charge
related to trust preferred securities. These two factors are largely reflective
of continued deterioration of general economic conditions and the extraordinary
volatility in the securities markets experienced in fourth quarter 2008. These
items were offset by decreases in noninterest expenses due to the impact of
selling four branches in the first and second quarter of 2008 and management
initiatives to reduce costs. Thus, the Company had a fewer number of full-time
equivalents that led to lower payroll and benefit costs. Additionally,
occupancy, telephones and data line expense levels were lower. Also positively
contributing to results were gains on sales of callable securities and branches
recorded in the first and second quarters of 2008.

Return on
average assets was 0.47% for the year ended December 31, 2008 compared to 0.85%
for the same period in 2007. Return on average stockholders equity was 5.43%
for the year ended December 31, 2008 compared to 9.53% for the same period in
2007.

2007 compared to 2006.
Net income equaled $11,323 or $1.74 per diluted share for the year ended
December 31, 2007 as compared to net income of $5,187 or $1.20 per diluted
share for the year ended December 31, 2006. Net income for continuing
operations equaled $11,323 or $1.74 per diluted share as compared to net income
of $5,602 or $1.30 per diluted share. This represents a 118.3% increase in net
income and a 45.0% increase in diluted per share earnings in the current fiscal
year over fiscal 2006.

The Companys
annual results for continuing operations improved in 2007 versus 2006 due to
volume related increases in net interest income and other fee based revenue
largely related to a full years operating results from the Centrue merger and
organic loan growth generated in the St. Louis market. These improvements were
partially offset by increases in noninterest expenses associated with operating
twenty-one additional branches resulting from the merger and an increased
provision for loan losses.

Return on
average assets was 0.85% for the year ended December 31, 2007 compared to 0.69%
for the same period in 2006. Return on average stockholders equity was 9.53%
for the year ended December 31, 2007 compared to 6.69% for the same period in
2006.

Net Interest Income/ Margin

Net interest
income is the difference between income earned on interest-earning assets and
the interest expense incurred for the funding sources used to finance these
assets. Changes in net interest income generally occur due to fluctuations in
the volume of earning assets and paying liabilities and rates earned and paid,
respectively, on those assets and liabilities. The net yield on total
interest-earning assets, also referred to as net interest margin, represents
net interest income divided by average interest-earning assets. Net interest
margin measures how efficiently the Company uses its earning assets and
underlying capital. The Companys long-term objective is to manage those assets
and liabilities to provide the largest possible amount of income while
balancing interest rate, credit, liquidity and capital risks. For purposes of
this discussion, both net interest income and margin have been adjusted to a
fully tax equivalent basis for certain tax-exempt securities and loans.

2008 compared to 2007.
Net interest income, on a tax equivalent basis, was $40,554 for the year ended
December 31, 2008, compared with $39,958 earned during the same period in 2007.
This represented an increase of $596 or 1.5%. Tax-equivalent interest income
declined $10,195 as compared to 2007. The increase in interest-earning assets
increased interest income by $1,945, while a 99 basis point decline in the
average rate earned on interest-earning assets reduced interest income by
$12,140. Interest expense declined $10,791 as compared to 2007. The increase in
interest-bearing liabilities increased interest expense by $1,079, but the
shift to less expensive wholesale borrowing, coupled with an overall 107 basis
point decrease in the average rate paid on interest-bearing liabilities reduced
interest expense by $11,870.

29.

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|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

The net
interest margin decreased 3 basis points to 3.32% for the year ended December
31, 2008 from 3.35% during the same period in 2007. The Companys margin has
been pressured by falling short-term interest rates, as approximately 40% of
the Companys loan portfolio is tied to prime or LIBOR and immediately reprices
downward upon a rate change; whereas, pricing on deposits have remained at
relatively high competitive levels. Due largely to continued competition in
pricing loans and deposits, the protracted economic downturn, and the Companys
interest rate sensitivity, the margin will likely remain under pressure
throughout 2009.

2007 compared to 2006.
Net interest income, on a tax equivalent basis, was $39,958 for the year ended
December 31, 2007, compared with $23,099 earned during the same period in 2006.
This represented an increase of $16,859 or 72.9%. The improvement in net
interest income was largely related to an increase in earning assets due to the
addition of the former Centrues loan and investment portfolios for a full year
in 2007 and organic loan growth generated primarily in the St. Louis market.
This was offset by increases in deposit balances and a shift in the mix of
funding liabilities from lower costing non-interest bearing deposits to higher
costing time deposits.

The $40,238
increase in interest income resulted from improvements of $37,453 related to
volume and $2,785 due to rates. The majority of the change in interest income
was related to a $437,690 improvement in average loans largely related to the
2006 merger and organic loan growth generated from the St. Louis market. Also,
contributing were yield increases of 42 basis points in the loan portfolio and
29 basis points in the security portfolio.

The $23,379
increase in interest expense resulted from increases of $20,381 due to volume
and $2,998 associated with rate. The majority of the change was attributable to
a $487,557 increase in average interest-bearing liabilities related to the 2006
merger and 69 basis point increases in rates paid on total time deposits.

The net
interest margin decreased 6 basis points to 3.35% for the year ended December
31, 2007 from 3.41% during the same period in 2006. Adversely impacting margin
levels was a funding shift into higher costing time and wholesale deposits away
from lower costing non-maturing deposits. The changes in deposit composition,
as well as a generally higher cost of funds during the year, put pressure on
the margin.

30.

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|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

AVERAGE BALANCE SHEET
AND ANALYSIS OF NET INTEREST INCOME

|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|------------------------------------------------------------ |  | --------------------------------------- | --------- | ----------------------------------- | - | -------------- |  | ----------------- | ---- | ----------------------------------- | - | -------------- | - | ----------------- | ------ | ---------------------------- |  | -------------- | - | - | ------- | - | - | ------ |  |  | ----- | -
|                                                             |  | For
  the Years Ended December 31, 2008 |          
|                                                             |  |                                         |          
|                                                             |  | Average
  Balance                       |           | 2007
  Interest
  Income/
  Expense |   | Average
  Rate |  | Average
  Balance |      | 2006
  Interest
  Income/
  Expense |   | Average
  Rate |   | Average
  Balance |        | Interest
  Income/
  Expense |  | Average
  Rate |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |  
|ASSETS                                                       |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Interest-earning assets                                      |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Interest-earning deposits                                    |  | $                                       | 2,891     |                                     | $ | 13             |  |                   | 0.45 | %                                   | $ | 2,362          |   | $                 | 33     |                              |  | 1.40           | % | $ | 736     |   | $ | 16     |  |  | 2.18  | %
|Securities                                                   |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Taxable                                                      |  |                                         | 185,507   |                                     |   | 8,992          |  |                   | 4.85 |                                     |   | 237,078        |   |                   | 12,473 |                              |  | 5.26           |   |   | 183,443 |   |   | 8,785  |  |  | 4.79  |  
|Non-taxable                                                  |  |                                         | 38,843    |                                     |   | 2,208          |  |                   | 5.68 |                                     |   | 40,950         |   |                   | 2,248  |                              |  | 5.49           |   |   | 21,711  |   |   | 1,478  |  |  | 6.81  |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Total securities (tax equivalent)                            |  |                                         | 224,350   |                                     |   | 11,200         |  |                   | 4.99 |                                     |   | 278,028        |   |                   | 14,721 |                              |  | 5.29           |   |   | 205,154 |   |   | 10,263 |  |  | 5.00  |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Federal funds sold                                           |  |                                         | 2,567     |                                     |   | 54             |  |                   | 2.10 |                                     |   | 10,811         |   |                   | 545    |                              |  | 5.04           |   |   | 6,846   |   |   | 364    |  |  | 5.31  |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Loans                                                        |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Commercial                                                   |  |                                         | 191,578   |                                     |   | 11,965         |  |                   | 6.25 |                                     |   | 180,714        |   |                   | 14,962 |                              |  | 8.28           |   |   | 121,435 |   |   | 8,957  |  |  | 7.38  |  
|Real estate                                                  |  |                                         | 791,033   |                                     |   | 50,630         |  |                   | 6.40 |                                     |   | 708,734        |   |                   | 53,480 |                              |  | 7.55           |   |   | 334,119 |   |   | 23,529 |  |  | 7.03  |  
|Installment and other                                        |  |                                         | 9,413     |                                     |   | 636            |  |                   | 6.76 |                                     |   | 13,210         |   |                   | 952    |                              |  | 7.21           |   |   | 9,414   |   |   | 1,326  |  |  | 14.08 |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Gross
  loans (tax equivalent)                               |  |                                         | 992,024   |                                     |   | 63,231         |  |                   | 6.37 |                                     |   | 902,658        |   |                   | 69,394 |                              |  | 7.69           |   |   | 464,968 |   |   | 33,812 |  |  | 7.27  |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Total interest-earnings assets                               |  |                                         | 1,221,832 |                                     |   | 74,498         |  |                   | 6.10 |                                     |   | 1,193,859      |   |                   | 84,693 |                              |  | 7.09           |   |   | 677,704 |   |   | 44,455 |  |  | 6.56  |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Noninterest-earning assets                                   |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Cash and cash equivalents                                    |  |                                         | 28,415    |                                     |   |                |  |                   |      |                                     |   | 31,692         |   |                   |        |                              |  |                |   |   | 18,818  |   |   |        |  |  |       |  
|Premises and equipment, net                                  |  |                                         | 33,992    |                                     |   |                |  |                   |      |                                     |   | 35,747         |   |                   |        |                              |  |                |   |   | 16,618  |   |   |        |  |  |       |  
|Other assets                                                 |  |                                         | 69,919    |                                     |   |                |  |                   |      |                                     |   | 73,579         |   |                   |        |                              |  |                |   |   | 36,074  |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Total non-interest-earning assets                            |  |                                         | 132,326   |                                     |   |                |  |                   |      |                                     |   | 141,018        |   |                   |        |                              |  |                |   |   | 71,510  |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Total assets                                                 |  | $                                       | 1,354,158 |                                     |   |                |  |                   |      |                                     | $ | 1,334,877      |   |                   |        |                              |  |                |   | $ | 749,214 |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|LIABILITIES AND STOCKHOLDERS EQUITY                         |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Interest-bearing liabilities                                 |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|NOW accounts                                                 |  |                                         | 105,800   |                                     |   | 1,211          |  |                   | 1.14 | %                                   |   | 105,417        |   |                   | 1,740  |                              |  | 1.65           | % | $ | 74,328  |   |   | 1,313  |  |  | 1.77  | %
|Money market accounts                                        |  |                                         | 155,001   |                                     |   | 4,083          |  |                   | 2.63 |                                     |   | 126,614        |   |                   | 4,861  |                              |  | 3.84           |   |   | 62,778  |   |   | 1,876  |  |  | 2.99  |  
|Savings deposits                                             |  |                                         | 87,615    |                                     |   | 319            |  |                   | 0.36 |                                     |   | 96,838         |   |                   | 655    |                              |  | 0.68           |   |   | 45,343  |   |   | 315    |  |  | 0.69  |  
|Time $100,000 and over                                       |  |                                         | 216,112   |                                     |   | 7,945          |  |                   | 3.68 |                                     |   | 226,605        |   |                   | 12,010 |                              |  | 5.30           |   |   | 209,030 |   |   | 9,093  |  |  | 4.35  |  
|Other time deposits                                          |  |                                         | 343,456   |                                     |   | 13,997         |  |                   | 4.08 |                                     |   | 387,530        |   |                   | 18,294 |                              |  | 4.72           |   |   | 137,470 |   |   | 5,608  |  |  | 4.14  |  
|Federal funds purchased and repurchase
agreements            |  |                                         | 42,148    |                                     |   | 760            |  |                   | 1.80 |                                     |   | 43,859         |   |                   | 1,881  |                              |  | 4.29           |   |   | 9,947   |   |   | 407    |  |  | 4.09  |  
|Advances from FHLB                                           |  |                                         | 119,800   |                                     |   | 3,279          |  |                   | 2.74 |                                     |   | 64,964         |   |                   | 2,834  |                              |  | 4.36           |   |   | 46,499  |   |   | 1,823  |  |  | 3.92  |  
|Notes payable                                                |  |                                         | 41,077    |                                     |   | 2,350          |  |                   | 5.72 |                                     |   | 32,428         |   |                   | 2,460  |                              |  | 7.59           |   |   | 11,303  |   |   | 921    |  |  | 8.15  |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Total interest-bearing liabilities                           |  |                                         | 1,111,009 |                                     |   | 33,944         |  |                   | 3.06 |                                     |   | 1,084,255      |   |                   | 44,735 |                              |  | 4.13           |   |   | 596,698 |   |   | 21,356 |  |  | 3.58  |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Noninterest-bearing liabilities                              |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Noninterest-bearing deposits                                 |  |                                         | 114,994   |                                     |   |                |  |                   |      |                                     |   | 120,355        |   |                   |        |                              |  |                |   |   | 68,650  |   |   |        |  |  |       |  
|Other liabilities                                            |  |                                         | 10,545    |                                     |   |                |  |                   |      |                                     |   | 11,459         |   |                   |        |                              |  |                |   |   | 6,355   |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Total noninterest-bearing liabilities                        |  |                                         | 125,539   |                                     |   |                |  |                   |      |                                     |   | 131,814        |   |                   |        |                              |  |                |   |   | 75,005  |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Stockholders equity                                         |  |                                         | 117,610   |                                     |   |                |  |                   |      |                                     |   | 118,808        |   |                   |        |                              |  |                |   |   | 77,511  |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Total liabilities and stockholders
equity                   |  | $                                       | 1,354,158 |                                     |   |                |  |                   |      |                                     | $ | 1,334,877      |   |                   |        |                              |  |                |   | $ | 749,214 |   |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Net interest income (tax equivalent)                         |  |                                         |           |                                     | $ | 40,554         |  |                   |      |                                     |   |                |   | $                 | 39,958 |                              |  |                |   |   |         |   | $ | 23,099 |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Net interest income (tax equivalent) to total
earning assets |  |                                         |           |                                     |   |                |  |                   | 3.32 | %                                   |   |                |   |                   |        |                              |  | 3.35           | % |   |         |   |   |        |  |  | 3.41  | %
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  
|Interest-bearing liabilities to earning
assets               |  |                                         | 90.93     | %                                   |   |                |  |                   |      |                                     |   | 90.82          | % |                   |        |                              |  |                |   |   | 88.05   | % |   |        |  |  |       |  
|                                                             |  |                                         |           |                                     |   |                |  |                   |      |                                     |   |                |   |                   |        |                              |  |                |   |   |         |   |   |        |  |  |       |  

|    |                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Average
  balance and average rate on securities classified as available-for-sale are
  based on historical amortized cost balances.                         
|    |                                                                                                                                                              
|(2) | Interest
  income and average rate on non-taxable securities are reflected on a tax
  equivalent basis based upon a statutory federal income tax rate of 34%.
|    |                                                                                                                                                              
|(3) | Nonaccrual
  loans are included in the average balances.                                                                                                     
|    |                                                                                                                                                              
|(4) | Overdraft
  loans are excluded in the average balances.                                                                                                      

31.

---



|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

The Companys
net interest income is affected by changes in the amount and mix of
interest-earning assets and interest-bearing liabilities, referred to as
volume change. It is also affected by changes in yields earned on
interest-earning assets and rates paid on interest-bearing deposits and other
borrowed funds referred to as rate change. The following table reflects the
changes in net interest income stemming from changes in interest rates and from
asset and liability volume, including mix. Any variance attributable jointly to
volume and rate changes is allocated to the volume and rate variances in
proportion to the relationship of the absolute dollar amount of the change in
each.

RATE/VOLUME ANALYSIS OF
NET INTEREST INCOME

|                                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|--------------------------------------------------- |  | -------------------------------- | ------ | --------------------- | - | ------- | - | ------ | ------- | ---- | - | ------ |  | - | ----- | - | - | ------ | 
|                                                    |  | For the Years Ended December 31, |       
|                                                    |  |                                  |       
|                                                    |  | 2008 Compared to 2007            |        | 2007 Compared to 2006 |  
|                                                    |  |                                  |        |                       |  
|                                                    |  | Change Due to                    |        | Change Due to         |  
|                                                    |  |                                  |        |                       |  
|                                                    |  | Volume                           |        | Rate                  |   | Net     |   | Volume |         | Rate |   | Net    | 
|                                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        | 
|Interest-income:                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|Interest-earning deposits                           |  | $                                | 3      |                       | $ | (23     | ) | $      | (20     | )    | $ | 23     |  | $ | (6    | ) | $ | 17     | 
|Investment securities:                              |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|Taxable                                             |  |                                  | (2,640 | )                     |   | (841    | ) |        | (3,481  | )    |   | 2,822  |  |   | 866   |   |   | 3,688  | 
|Non-taxable                                         |  |                                  | (128   | )                     |   | 88      |   |        | (40     | )    |   | 1,056  |  |   | (286  | ) |   | 770    | 
|Federal funds sold                                  |  |                                  | (300   | )                     |   | (191    | ) |        | (491    | )    |   | 200    |  |   | (19   | ) |   | 181    | 
|Loans                                               |  |                                  | 5,010  |                       |   | (11,173 | ) |        | (6,163  | )    |   | 33,352 |  |   | 2,230 |   |   | 35,582 | 
|                                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|                                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|Total interest income                               |  |                                  | 1,945  |                       |   | (12,140 | ) |        | (10,195 | )    |   | 37,453 |  |   | 2,785 |   |   | 40,238 | 
|                                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|                                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|Interest expense:                                   |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|NOW accounts                                        |  |                                  | 45     |                       |   | (574    | ) |        | (529    | )    |   | 513    |  |   | (86   | ) |   | 427    | 
|Money market accounts                               |  |                                  | 1,098  |                       |   | (1,876  | ) |        | (778    | )    |   | 2,451  |  |   | 534   |   |   | 2,985  | 
|Savings deposits                                    |  |                                  | (35    | )                     |   | (301    | ) |        | (336    | )    |   | 348    |  |   | (8    | ) |   | 340    | 
|Time, $100,000 and over                             |  |                                  | (255   | )                     |   | (3,810  | ) |        | (4,065  | )    |   | 8,554  |  |   | 1,553 |   |   | 10,107 | 
|Other time deposits                                 |  |                                  | (1,744 | )                     |   | (2,553  | ) |        | (4,297  | )    |   | 4,652  |  |   | 844   |   |   | 5,496  | 
|Federal funds purchased and repurchase
  agreements |  |                                  | (507   | )                     |   | (614    | ) |        | (1,121  | )    |   | 1,454  |  |   | 20    |   |   | 1,474  | 
|Advances from FHLB                                  |  |                                  | 1,899  |                       |   | (1,454  | ) |        | 445     |      |   | 806    |  |   | 205   |   |   | 1,011  | 
|Notes payable                                       |  |                                  | 578    |                       |   | (688    | ) |        | (110    | )    |   | 1,603  |  |   | (64   | ) |   | 1,539  | 
|                                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|                                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|Total interest expense                              |  |                                  | 1,079  |                       |   | (11,870 | ) |        | (10,791 | )    |   | 20,381 |  |   | 2,998 |   |   | 23,379 | 
|                                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|                                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 
|Net interest income                                 |  | $                                | 866    |                       | $ | (270    | ) | $      | 596     |      | $ | 17,072 |  | $ | (213  | ) | $ | 16,859 | 
|                                                    |  |                                  |        |                       |   |         |   |        |         |      |   |        |  |   |       |   |   |        | 

Provision for
Loan Losses. The amount of the provision for loan losses is based on
managements evaluations of the loan portfolio, with particular attention
directed toward nonperforming, impaired and other potential problem loans. During
these evaluations, consideration is also given to such factors as managements
evaluation of specific loans, the level and composition of impaired loans,
other nonperforming loans, other identified potential problem loans, historical
loss experience, results of examinations by regulatory agencies, results of the
independent asset quality review process, the market value of collateral, the
estimate of discounted cash flows, the strength and availability of guarantees,
concentrations of credits, and various other factors, including concentration
of credit risk in various industries and current economic conditions.

32.

---



|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

2008 compared to 2007.
The 2008 provision for loan losses charged to operating expense totaled $8,082,
an increase of $7,407 in comparison to $675 recorded in the 2007 period. The
increase in the provision was the result of identifying and addressing problem
credits and the continued deterioration of economic conditions. Specifically,
nine relationships were identified during 2008 where large specific provisions
were recorded. As part of an ongoing review of the commercial loan portfolio,
seven additional large credits with a deterioration in their financial
condition were identified. Action plans were implemented, resulting in $28,300
being classified as impaired. Of this total, $3,500 is for three relationships
that are nonperforming and classified as nonaccrual. There were four
relationships totaling $24,800 that were still performing assets at December
31, 2008. Two of the relationships totaling $6,100 were making monthly payments
and were less than 30 days past due on December 31, 2008. The two other
relationships totaling $18,700 are residential development projects and were
down graded to impaired due to slow sales driven by the current economic
climate. In each of these instances, the borrower has developed an action plan
to improve sales. If sales do not improve, the performing status of these
credits will be re-evaluated.

For the two
previously identified relationships disclosed in the Companys quarterly report
on Form 10 Q for the first quarter 2008 filed on May 9, 2008, we continue to
carry $8,300 as other real estate owned for one of these relationships. The
Company is actively marketing the remaining parcel and no additional
write-downs related to this credit have been taken other than the $1,200
charge-off taken during the third quarter. On the second relationship
identified earlier in the year, the $7,300 loan was restructured in the fourth
quarter with no additional provision or loss being taken. This restructuring
was not considered to be a troubled debt restructuring. The remaining parcel
with a balance of $3,700 remains in other assets but is under contract with a
closing anticipated by mid-2009.

The Company
proactively reviews loans for potential impairment regardless of the payment or
performance status. This approach results in some relationships being
classified as impaired but still performing.

The following
factors also impacted 2008 provision levels:

| |   |                                                                  
| | - | -----------------------------------------------------------------
| |  | increase in
  nonperforming and action list loans since year-end;
| |   |                                                                  
| |  | increase in
  the level of past due loans.                       

Net
charge-offs for the year ended December 31, 2008 were $3,819 compared with $755
in the same period of 2007. Annualized net charge-offs increased to 0.38% of
average loans for 2008 compared to 0.09% in the same period in 2007.

Management
continues to diligently monitor the loan portfolio, paying particular attention
to borrowers with residential real estate exposure. While virtually all of
these relationships are performing, the economic outlook for this industry will
likely remain extremely challenging well into 2009. Should the economic climate
deteriorate from current levels, borrowers may experience repayment difficulty,
and the level of nonperforming loans, charge-offs and delinquencies could rise
requiring further increases in the provision for loan losses.

2007 compared to 2006.  The 2007 provision
for loan losses charged to operating expense totaled $675, an increase of
$1,950 in comparison to recording a negative provision of ($1,275) in the 2006
period. The increase in the provision was the result of identifying and
addressing problem credits and the recent deteriorating economic conditions in
a timely fashion. Results for 2006 included negative provisions largely due to
the pay-off of one $4,400 loan relationship that was classified as impaired in
late 2005 with a specific reserve allocation of $1,500. The following factors
also impacted 2007 provision levels:

33.

---



|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

|  |                                                                                                   
|- | --------------------------------------------------------------------------------------------------
| | decrease in
  nonperforming and action list loans since year-end;                                 
|  |                                                                                                   
| | decrease in
  the level of past due loans;                                                        
|  |                                                                                                   
| | higher than
  anticipated recoveries; and                                                         
|  |                                                                                                   
| | many loans
  that were charged off during 2007 had previously been allocated a specific
  reserve.

Net
charge-offs for the year ended December 31, 2007 were $755 compared with $1,019
in the same period of 2006. Annualized net charge-offs decreased to 0.09% of
average loans for 2007 compared to 0.22% in the same period in 2006.

Noninterest Income.
Noninterest income consists of a wide variety of fee-based revenues from
bank-related service charges on deposits and mortgage revenues. Also included
in this category are revenues generated by the Companys brokerage, trust and
asset management services as well as increases in cash surrender value on
bank-owned life insurance. The following table summarizes the Companys
noninterest income:

NONINTEREST INCOME
(Dollars in Thousands)

|                                                |  |                            |        |      |   |        |   |   |       |  
|----------------------------------------------- |  | -------------------------- | ------ | ---- | - | ------ | - | - | ----- | -
|                                                |  | Years Ended
  December 31, |       
|                                                |  | 2008                       |        | 2007 |   | 2006   |  
|                                                |  |                            |        |      |   |        |  
|Service charges                                 |  | $                          | 7,303  |      | $ | 6,789  |   | $ | 2,473 |  
|Trust income                                    |  |                            | 750    |      |   | 942    |   |   | 858   |  
|Mortgage banking income                         |  |                            | 1,525  |      |   | 1,743  |   |   | 1,113 |  
|Brokerage commissions and fees                  |  |                            | 254    |      |   | 795    |   |   | 326   |  
|Bank owned life insurance                       |  |                            | 1,022  |      |   | 991    |   |   | 628   |  
|Securities gains (losses)                       |  |                            | 848    |      |   | (29    | ) |   | (104  | )
|Other than temporary impairment on
  securities |  |                            | (2,735 | )    |   |       |   |   |      |  
|Gain on sale of Oreo                            |  |                            | 379    |      |   | 1,107  |   |   |      |  
|Gain on sale of other assets                    |  |                            | 1,309  |      |   |       |   |   |      |  
|Other income                                    |  |                            | 2,754  |      |   | 3,327  |   |   | 1,394 |  
|                                                |  |                            |        |      |   |        |   |   |       |  
|                                                |  |                            |        |      |   |        |   |   |       |  
|Total noninterest income                        |  | $                          | 13,409 |      | $ | 15,665 |   | $ | 6,688 |  
|                                                |  |                            |        |      |   |        |   |   |       |  

2008 compared to 2007. Noninterest income
totaled $13,409 for the year ended December 31, 2008, as compared to $15,665
for the same period in 2007. This represented a decrease of $2,256 or 14.4% in
2008 over the prior period. Excluding $199 in 2008 nonrecurring activity (other
than temporary impairment losses on trust preferred securities and gains on
sale of four branches and other assets, securities gains, and OREO gains) and
$1,078 of nonrecurring activity recorded in 2007, noninterest income showed a
year-over-year decrease of $979 or 6.7%.

Excluding all
nonrecurring activity from both periods, the decline was primarily the result
of volume related reductions in the mortgage banking division and the sale of
the asset management and brokerage business lines which were finalized in the
third and fourth quarters. These decreases were partially offset by growth in
service charges and NSF fees on deposit accounts.

2007 compared to 2006. Noninterest income
from continuing operations totaled $15,665 for the year ended December 31,
2007, as compared to $6,688 for the same period in 2006. This represented an
increase of $8,977 or 134.2% in 2007 over the prior period. Excluding net
securities losses and the gains on sale of other assets, noninterest income
shows a year-over-year increase of $7,795 or 114.8%.

34.

---



|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

The growth was
primarily the result of improvements in service charges and NSF fees on deposit
accounts, electronic banking services (included in other income), and revenue
generated from the mortgage banking division as a result of a full years
activity from the November 2006 merger. Also contributing to the increase were
gains on sale of properties held in other real estate (included in the category
gain on sale of OREO), increased revenue generated from the brokerage product
line, and income earned on accrued interest related to a federal tax refund.

Noninterest Expense.
Noninterest expense for continuing operations is comprised primarily of
compensation and employee benefits, occupancy and other operating expense. The
following table summarizes the Companys noninterest expense:

NONINTEREST EXPENSE
(Dollars in Thousands)

|                                  |  |                            |        |      |   |        |  |   |        | 
|--------------------------------- |  | -------------------------- | ------ | ---- | - | ------ |  | - | ------ | 
|                                  |  | Years Ended
  December 31, |       
|                                  |  | 2008                       |        | 2007 |   | 2006   | 
|                                  |  |                            |        |      |   |        | 
|Salaries and employee benefits    |  | $                          | 16,283 |      | $ | 17,635 |  | $ | 12,181 | 
|Occupancy expense, net            |  |                            | 3,598  |      |   | 4,043  |  |   | 1,714  | 
|Furniture and equipment expenses  |  |                            | 2,673  |      |   | 2,621  |  |   | 2,276  | 
|Marketing                         |  |                            | 1,228  |      |   | 1,035  |  |   | 697    | 
|Supplies and printing             |  |                            | 470    |      |   | 653    |  |   | 421    | 
|Telephone                         |  |                            | 772    |      |   | 834    |  |   | 490    | 
|Data processing                   |  |                            | 1,309  |      |   | 1,650  |  |   | 788    | 
|Amortization of intangible assets |  |                            | 2,607  |      |   | 2,307  |  |   | 416    | 
|Other expense                     |  |                            | 6,805  |      |   | 6,555  |  |   | 3,740  | 
|                                  |  |                            |        |      |   |        |  |   |        | 
|                                  |  |                            |        |      |   |        |  |   |        | 
|Total noninterest expense         |  | $                          | 35,745 |      | $ | 37,333 |  | $ | 22,723 | 
|                                  |  |                            |        |      |   |        |  |   |        | 

2008 compared to 2007.
Noninterest expense totaled $35,745 for the year ended December 31, 2008, as
compared to $37,333 for the same period in 2007. This represented a decrease of
$1,588 or 4.3% in 2008 from 2007.

The decrease
was reported across many categories due to managements initiatives to reduce
costs. Furthermore, four branches were sold in 2008 which led to further
reductions in the number of full-time equivalent employees which decreased
payroll & benefit costs as well as lowered occupancy, telephone and data
line expense levels. Also contributing were decreases in wealth management
operating expenses and data processing costs. Offsetting these decreases were
increases related to marketing, loan related expense due to growth in the
portfolio, and goodwill valuation adjustments taken related to the sale of the
wealth management business (included in amortization of intangible assets).

2007 compared to 2006.
Noninterest expense for continuing operations totaled $37,333 for the year
ended December 31, 2007, as compared to $22,723 for the same period in 2006.
This represented an increase of $14,610 or 64.3% in 2007 from 2006.

The increase
was experienced in all categories and primarily due to higher costs associated
with operating twenty-one additional branches for a full years activity from
the November 2006 merger. Also contributing were increases in professional fees
related to Sarbanes-Oxley compliance, core deposit amortization, accelerated
depreciation expense for assets being phased out, and valuation adjustments
taken on properties held in other real estate taken in light of recent economic
downturns. Offsetting these increases were cost savings related to the
completion of integration activities which reduced operating costs and
fifty-four full-time equivalent employees.

35.

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|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

Applicable Income Taxes.
Income tax expense for the periods included benefits for tax-exempt income,
tax-advantaged investments and general business tax credits offset by the
effect of nondeductible expenses. The following table shows the Companys
income before income taxes, as well as applicable income taxes and the
effective tax rate for each of the past three years:

|                                                        |  |                            |       |      |   |        |   |   |       |  
|------------------------------------------------------- |  | -------------------------- | ----- | ---- | - | ------ | - | - | ----- | -
|                                                        |  | Years Ended
  December 31, |      
|                                                        |  | 2008                       |       | 2007 |   | 2006   |  
|                                                        |  |                            |       |      |   |        |  
|Income from continuing operations before
  income taxes |  | $                          | 9,156 |      | $ | 16,498 |   | $ | 7,747 |  
|Applicable income taxes                                 |  |                            | 2,766 |      |   | 5,175  |   |   | 2,145 |  
|Effective tax rates                                     |  |                            | 30.2  | %    |   | 31.4   | % |   | 27.7  | %

The Company
recorded income tax expense of $2,766 and $5,175 for 2008 and 2007,
respectively. Effective tax rates equaled 30.2% and 31.4% respectively, for such
periods. The Companys effective tax rate was lower than statutory rates due to
several factors. First, the Company derives interest income from municipal
securities and loans, which are exempt from federal tax and certain U. S.
government agency securities, which are exempt from state tax. Second, the
Company derives income from bank owned life insurance policies, which is exempt
from federal and state tax. Finally, state income taxes are recorded net of the
federal tax benefit, which lowers the combined effective tax rate.

Preferred Stock Dividends. The Company paid
$207 of preferred stock dividends in 2008, 2007 and 2006. With the issuance of
the new Fixed Rate Cumulative Perpetual Preferred Stock, Series C, for the
Companys participation in the U. S. Department of Treasurys Capital Purchase
Program, the Company expects to pay approximately $1,633 of additional
dividends in 2009.

Earnings Review by Business Segment

The Companys
internal reporting and planning process focuses on four primary lines of
business (Segment(s)): Retail, Commercial, Treasury and Wealth Management. See
Note 21 of the Notes to Consolidated Financial Statements for the presentation
of the condensed income statement and total assets for each Segment.

The financial
information presented was derived from the Companys internal profitability
reporting system that is used by management to monitor and manage the financial
performance of the Company. This information is based on internal management
accounting policies which have been developed to reflect the underlying
economics of the Segments and, to the extent practicable, to portray the
Segment as if it operated on a standalone basis. Thus, each Segment, in
addition to its direct revenues and expenses, assets and liabilities, includes
an allocation of shared support function expenses. The Retail, Commercial,
Treasury, and Wealth Management Segments also include funds transfer
adjustments to appropriately reflect the cost of funds on loans made and
funding credits on deposits generated. Apart from these adjustments, the
accounting policies used are similar to those described in Note 1 of the Notes
to Consolidated Financial Statements.

Since there
are no comprehensive authorities for management accounting equivalent to U.S. generally
accepted accounting principles, the information presented is not necessarily
comparable with similar information from other financial institutions. In
addition, methodologies used to measure, assign and allocate certain items may
change from time-to-time to reflect, among other things, accounting estimate
refinements, changes in risk profiles, changes in customers or product lines
and changes in management structure.

36.

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|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

Retail Segment.  The
Retail Segment (Retail) provides retail banking services to individual
customers through the Companys branch locations in Illinois and Missouri. The
services provided by this Segment include consumer lending, checking, savings,
money market and CD accounts, safe deposit rental, ATMs and other traditional
and electronic banking services.

2008 compared to 2007.
 Retail generated $5,196 or 81.3% of total segment net income in 2008 as
compared to $2,492 or 22.0% in 2007. Retail assets were $255,028 at December
31, 2008 and represented 18.2% of total consolidated assets. This compared to
$306,156 or 22.4% at December 31, 2007.

For 2008, net
income increased due to stronger revenues on electronic banking services and
gain on sale of other assets for the branch sales which occurred in 2008.
Additionally, noninterest expenses were lower across most categories as well as
allocated expenses were lower in 2008 than in 2007. These positive variances
were slightly offset by higher IT costs, debit card expenses, and other deposit
account expenses. The decline in the retail assets was primarily related to the
decline in the held residential mortgages portfolio.

2007 compared to 2006.  Retail
represented 22.0% of total segment
net income in 2007 and 26.3% in 2006. Retail assets were $306,156 at December
31, 2007 and represented 22.4% of total consolidated assets. This compared to
$240,872 at December 31, 2006.

The growth
from 2006 to 2007 was primarily the result of operating twenty-one additional
branches for a full years activity from the November 2006 merger. This
increased the net interest income, other revenue and other expense categories.

Commercial Segment.
 The Commercial Segment (Commercial) provides commercial banking services to
business customers served through the Companys full service branch channels
located in Illinois and Missouri. The services provided by this Segment include
lending, business checking and deposits, cash management, and other traditional
as well as electronic commercial banking services.

2008 compared to 2007.  Commercial generated $3,807 or 59.6% of total segment net income in 2008 as
compared to $8,855 or 78.2% in 2007. Commercial assets were $803,069 at
December 31, 2008 and represented 57.3% of total consolidated assets. This
compared to $741,861 or 54.4% at December 31, 2007.

Net
income for the 2008 decreased to $3,807 as compared to $8,855 for the same
period in 2007. The decrease is attributable to the $8,082 provision for loan
loss recorded in 2008 as compared to the $632 provision in 2007. The increase
in the provision was the result of identifying additional problem credits and
the continued deterioration of the economic conditions. Additionally, there was
a large gain on sale of OREO recorded and service revenue was higher during
2007 leading to a decrease in noninterest income between these periods.
Offsetting these negative variances is lower noninterest expenses and lower
income tax related due to decreased pre-tax earnings in 2008. The growth in the
assets was due primarily to organic loan growth generated primarily in the St.
Louis market.

2007 compared to 2006.  Commercial represented 78.2% of total segment net income in 2007 and 86.9% in
2006. Commercial assets were $741,861 at December 31, 2007 and represented
54.4% of total consolidated assets. This compared to $686,495 at December 31,
2006.

37.

---



|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

The
growth from 2006 to 2007 was primarily the result of the increase in earning
asset portfolio due to the addition of the former Centrues loan portfolio for
a full year and organic growth generated primarily in the St. Louis market. The
increase in the provision was the result of identifying and addressing problem
credits and the recent deteriorating economic conditions in a timely fashion.
Results for 2006 included negative provisions largely due to the pay-off of one
$4,400 loan relationship that was classified as impaired in late 2005 with a
specific reserve allocation of $1,500.

Treasury Segment.  The
Treasury Segment (Treasury) is the area of the bank responsible for managing
the investment portfolio and acquiring wholesale funding for loan activity.
Additionally, this area is responsible for assisting in the management of
liquidity and interest rate risk.

2008 compared to 2007. The Treasury Segment net loss was $(421) or (6.6%) of total segment net
income in 2008 as compared to a net loss of $(298) or (2.6%) for the same
period in 2007. Treasury assets were $277,597 at December 31, 2008, or 19.8% of
consolidated assets. This compares to $268,484 or 19.7% at December 31, 2007.

Treasurys
net income for 2008 was impacted by a $2,735 non-cash other than temporary
impairment charge recorded for certain trust preferred securities which is
partially offset by the gains on sales from called securities earlier in 2008.
This negative variance is also slightly offset by lower noninterest expenses,
lower allocated expenses and lower income taxes in 2008. In comparison to 2007 results,
there was also a slight improvement in the margin attributable to lower funding
costs on wholesale funds.

In
2008, the assets were increased in the latter part of the year to better
position the portfolio and leverage the current rate environment.

2007 compared to 2006.
In 2007, the reduction in the investment portfolio was caused by the selling of
investments and using the proceeds to fund the loan growth experienced in the
Commercial Segment. Net interest income grew as a result of having the combined
investment portfolio for a full year after the merge in November 2006.

Treasury
represented (2.6%) of total segment net income in 2007 as compared to (10.5%)
in 2006. Treasury assets were $268,484 at December 31, 2007 representing 19.7%
of total consolidated assets. This compared to $328,841 or 25.6% at December
31, 2006.

Wealth Management Segment.
The Wealth Management Segment (Wealth) provides trust services, estate
administration, financial planning, employee benefit plan administration, asset
management, and brokerage transaction services. With the sale of these product
lines in 2008 and the first quarter of 2009, this segment will not exist going
forward.

2008 compared to 2007.
The Wealth net loss increased during 2008 to $(1,039) or (16.3%) of total
segment net income in 2008 as compared to $(365) or (3.2%) for the same period
in 2007. This is primarily due to the write-down of goodwill related to the
sale of asset management, brokerage and trust product lines that occurred
throughout 2008. With the disposition of asset management and brokerage during
the year, noninterest income declined as well as noninterest expenses. To
partially offset these negative variances, allocations decreased in 2008 and
the tax benefit was also larger in 2008. Wealth assets were $162 at December
31, 2008 as compared to $1,289 at December 31, 2007. This decline was the
result of selling asset management and brokerage product lines.

38.

---



|                                                                                          
|------------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                             
|Managements Discussion And
  Analysis Of Financial Condition And 
  Results Of Operations
|(In Thousands, Except Share Data)                                                         
|                                                                                          

2007 compared to 2006.
Wealth represented (3.2%) of total segment net income in 2007 and (5.6%) in
2006. Wealth assets were $1,289 at December 31, 2007 and represented 0.1% of
total consolidated assets. This compared to $1,330 or 0.1% at December 31,
2006.

The
improvement in earnings from 2006 to 2007 was the result of the sale of the
Insurance business unit in late 2006. See Note 22 in the Notes to Consolidated
Financial Statements for additional details on this transaction. Additionally
in 2007, the revenue increased due to increased revenue from the brokerage
product line.

Interest Rate Sensitivity Management

The business
of the Company and the composition of its balance sheet consist of investments
in interest-earning assets (primarily loans and securities) which are primarily
funded by interest-bearing liabilities (deposits and borrowings). All of the
financial instruments of the Company are for other than trading purposes. Such
financial instruments have varying levels of sensitivity to changes in market
rates of interest. The operating income and net income of Centrue Bank depends,
to a substantial extent, on rate differentials, i.e., the differences between
the income Centrue Bank receives from loans, securities, and other earning
assets and the interest expense they pay to obtain deposits and other
liabilities. These rates are highly sensitive to many factors that are beyond
the control of Centrue Bank, including general economic conditions and the
policies of various governmental and regulatory authorities.

The Company
measures its overall interest rate sensitivity through a net interest income
analysis. The net interest income analysis measures the change in net interest
income in the event of hypothetical changes in interest rates. This analysis
assesses the risk of changes in net interest income in the event of a sudden
and sustained 100 to 200 basis point increase in market interest rates or a 100
to 200 basis point decrease in market rates. Due to the current rate
environment, this analysis was done in 2008 using a 50 basis point decrease in
rates verses the normal 100 to 200 basis point decrease. The interest rates
scenarios are used for analytical purposes and do not necessarily represent
managements view of future market movements.

The tables
below present the Companys projected changes in net interest income for 2008
and 2007 for the various rate shock levels.

|        |  |                                                     |      |                   |  |       |   |   |      |   |  |       |  
|------- |  | --------------------------------------------------- | ---- | ----------------- |  | ----- | - | - | ---- | - |  | ----- | -
|        |  | Change in Net Interest Income Over One Year Horizon |     
|       
|        |  | December 31, 2008                                   |      | December 31, 2007 | 
|        |  |                                                     |      |                   | 
|        |  | Change                                              |      | Change            | 
|        |  |                                                     |      |                   | 
|        |  | $                                                   |      | %                 |  | $     |   | % |     
|        |  |                                                     |      |                   |  |       |   |   |     
|+200 bp |  | $                                                   | 728  |                   |  | 2.08  | % | $ | 305  |   |  | 0.74  | %
|+100 bp |  |                                                     | 295  |                   |  | 0.84  |   |   | 509  |   |  | 1.23  |  
|+ 50 bp |  |                                                     | 166  |                   |  | 0.47  |   |   | 502  |   |  | 1.21  |  
|Base    |  |                                                     |     |                   |  |      |   |   |     |   |  |      |  
|- 50 bp |  |                                                     | (179 | )                 |  | (0.51 | ) |   | (654 | ) |  | (1.58 | )

Based on the
Companys model at December 31, 2008, the effect of an immediate 200 basis
point increase in interest rates would increase the Companys net interest
income by 2.08% or approximately $728. The effect of an immediate 50 basis
point decrease in rates would decrease the Companys net interest income by
$179 or 0.51%.

39.

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|                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Managements Discussion And Analysis Of Financial Condition And 
  Results Of Operations
  (In Thousands, Except Share Data)
|                                                                                                                                                            

Based on the
Companys model at December 31, 2007, the effect of an immediate 200 basis
point increase in interest rates would increase the Companys net interest
income by 0.74% or approximately $305. The effect of an immediate 50 basis
point decrease in rates would decrease the Companys net interest income by
$654 or 1.58%.

Throughout 2008, management
continued to position our balance sheet to maximize the net interest margin.
Throughout the year, steps were taken to lower our funding costs in reaction to
FOMC rate reductions. The mix of our funding portion of the balance sheet has
been adjusted to align it with our asset sensitive portion of the balance sheet
to create better spreads in various sectors. With these changes, we have been
able to reposition our funding and align it better with the shorter end of the
yield curve which minimizes our exposure to the volatility found at the longer
end of the yield curve. In the latter part of the year the Company began
extending the duration of some of its borrowings to lock in lower rates.

Computations of the
prospective effects of hypothetical interest rate changes are based on numerous
assumptions, including relative levels of market interest rates, loan
prepayments and deposit run-off rates and should not be relied upon as
indicative of actual results. Actual values may differ from those projections
set forth above, should market conditions vary from the assumptions used in
preparing the analysis. Further, the computations do not contemplate actions
the Company may undertake in response to changes in interest rates.

Financial Condition

Loans and Asset Quality.Outstanding
loans totaled $1,004,390 at
December 31, 2008 compared to $957,285 at December 31, 2007, representing an
increase of $47,105 or 4.9%. The loan growth was largely generated in the St.
Louis market and was concentrated in commercial real estate lending activity.
Excluding $30,100 in loans related to branch sales recorded in the first and
second quarters of 2008, loans grew $77,200 or 8.1% since year-end 2007. The
Company has no direct exposure to sub prime mortgages.

The
Company offers a broad range of products, including agribusiness, commercial,
residential, and installment loans, designed to meet the credit needs of its
borrowers. The Companys loans are diversified by borrower and industry group.

The following
table describes the composition of loans by major categories outstanding:

LOAN PORTFOLIO

|                          |  |                                             |           |      |   |         |   |      |         |      |   |         |   |   |         |  
|------------------------- |  | ------------------------------------------- | --------- | ---- | - | ------- | - | ---- | ------- | ---- | - | ------- | - | - | ------- | -
|                          |  | Aggregate
  Principal Amount
  December 31, |          
|                          |  |                                             |          
|                          |  | 2008                                        |           | 2007 |   | 2006    |   | 2005 |         | 2004 |  
|                          |  |                                             |           |      |   |         |   |      |         |      |  
|Commercial                |  | $                                           | 152,807   |      | $ | 181,210 |   | $    | 154,829 |      | $ | 91,537  |   | $ | 91,941  |  
|Agricultural              |  |                                             | 16,914    |      |   | 21,861  |   |      | 23,118  |      |   | 26,694  |   |   | 28,718  |  
|Real estate:              |  |                                             |           |      |   |         |   |      |         |      |   |         |   |   |         |  
|Commercial mortgages      |  |                                             | 460,920   |      |   | 362,920 |   |      | 274,909 |      |   | 126,503 |   |   | 129,597 |  
|Construction              |  |                                             | 164,820   |      |   | 159,274 |   |      | 116,608 |      |   | 68,508  |   |   | 38,882  |  
|Agricultural              |  |                                             | 17,339    |      |   | 23,560  |   |      | 27,624  |      |   | 33,033  |   |   | 30,601  |  
|1-4 family mortgages      |  |                                             | 185,666   |      |   | 198,208 |   |      | 226,884 |      |   | 57,920  |   |   | 77,566  |  
|Installment               |  |                                             | 5,267     |      |   | 8,611   |   |      | 11,998  |      |   | 12,747  |   |   | 21,502  |  
|Other                     |  |                                             | 657       |      |   | 1,641   |   |      | 974     |      |   | 583     |   |   | 468     |  
|                          |  |                                             |           |      |   |         |   |      |         |      |   |         |   |   |         |  
|Total loans               |  | $                                           | 1,004,390 |      | $ | 957,285 |   | $    | 836,944 |      | $ | 417,525 |   | $ | 419,275 |  
|Allowance for loan losses |  |                                             | (15,018   | )    |   | (10,755 | ) |      | (10,835 | )    |   | (8,362  | ) |   | (9,732  | )
|                          |  |                                             |           |      |   |         |   |      |         |      |   |         |   |   |         |  
|Loans, net                |  | $                                           | 989,372   |      | $ | 946,530 |   | $    | 826,109 |      | $ | 409,163 |   | $ | 409,543 |  
|                          |  |                                             |           |      |   |         |   |      |         |      |   |         |   |   |         |  

40.

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|                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Managements Discussion And Analysis Of Financial Condition And 
  Results Of Operations
  (In Thousands, Except Share Data)
|                                                                                                                                                            

LOAN PORTFOLIO

|                     |  |                                                                                  |        |      |  |        |   |      |        |      |  |        |   |  |        |  
|-------------------- |  | -------------------------------------------------------------------------------- | ------ | ---- |  | ------ | - | ---- | ------ | ---- |  | ------ | - |  | ------ | -
|                     |  | Aggregate
  Principal Amount
  Percentage of Total Loan Portfolio
  December 31, |       
|                     |  |                                                                                  |       
|                     |  | 2008                                                                             |        | 2007 |  | 2006   |   | 2005 |        | 2004 | 
|                     |  |                                                                                  |        |      |  |        |   |      |        |      | 
|Commercial           |  |                                                                                  | 15.21  | %    |  | 18.93  | % |      | 18.50  | %    |  | 21.92  | % |  | 21.93  | %
|Agricultural         |  |                                                                                  | 1.68   |      |  | 2.28   |   |      | 2.76   |      |  | 6.39   |   |  | 6.85   |  
|Real estate:         |  |                                                                                  |        |      |  |        |   |      |        |      |  |        |   |  |        |  
|Commercial mortgages |  |                                                                                  | 45.89  |      |  | 37.91  |   |      | 32.85  |      |  | 30.31  |   |  | 30.91  |  
|Construction         |  |                                                                                  | 16.41  |      |  | 16.64  |   |      | 13.93  |      |  | 16.41  |   |  | 9.27   |  
|Agricultural         |  |                                                                                  | 1.73   |      |  | 2.46   |   |      | 3.30   |      |  | 7.91   |   |  | 7.30   |  
|1-4 family mortgages |  |                                                                                  | 18.49  |      |  | 20.71  |   |      | 27.11  |      |  | 13.87  |   |  | 18.50  |  
|Installment          |  |                                                                                  | 0.52   |      |  | 0.90   |   |      | 1.43   |      |  | 3.05   |   |  | 5.13   |  
|Other loans          |  |                                                                                  | 0.07   |      |  | 0.17   |   |      | 0.12   |      |  | 0.14   |   |  | 0.11   |  
|                     |  |                                                                                  |        |      |  |        |   |      |        |      |  |        |   |  |        |  
|Gross loans          |  |                                                                                  | 100.00 | %    |  | 100.00 | % |      | 100.00 | %    |  | 100.00 | % |  | 100.00 | %
|                     |  |                                                                                  |        |      |  |        |   |      |        |      |  |        |   |  |        |  

As of December
31, 2008 and 2007, commitments of Centrue Bank under standby letters of credit
and unused lines of credit totaled approximately $258,471 and $271,856,
respectively.

Stated loan
maturities (including rate loans reset to market interest rates) of the total
loan portfolio, net of unearned income, at December 31, 2008 were as follows:

STATED LOAN MATURITIES (1)

|             |  |                 |         |                  |   |                   |  |       |         |  |   |           | 
|------------ |  | --------------- | ------- | ---------------- | - | ----------------- |  | ----- | ------- |  | - | --------- | 
|             |  | Within
  1 Year |         | 1
  to 5
  Years |   | After
  5
  Years |  | Total |        
|             |  |                 |         |                  |   |                   |  |       |        
|Commercial   |  |                 | 90,726  |                  |   | 49,459            |  |       | 12,622  |  |   | 152,807   | 
|Agricultural |  |                 | 13,633  |                  |   | 2,358             |  |       | 923     |  |   | 16,914    | 
|Real estate  |  |                 | 283,526 |                  |   | 306,203           |  |       | 239,016 |  |   | 828,745   | 
|Installment  |  |                 | 1,406   |                  |   | 3,049             |  |       | 1,469   |  |   | 5,924     | 
|             |  |                 |         |                  |   |                   |  |       |         |  |   |           | 
|             |  |                 |         |                  |   |                   |  |       |         |  |   |           | 
|Total        |  | $               | 389,291 |                  | $ | 361,069           |  | $     | 254,030 |  | $ | 1,004,390 | 
|             |  |                 |         |                  |   |                   |  |       |         |  |   |           | 

(1) Maturities based upon contractual
maturity dates

The maturities
presented above are based upon contractual maturities. Many of these loans are
made on a short-term basis with the possibility of renewal at time of maturity.
All loans, however, are reviewed on a continuous basis for creditworthiness.

Rate
sensitivities of the total loan portfolio, net of unearned income, at December
31, 2008 were as follows:

LOAN REPRICING

|              |  |                 |         |                  |   |                   |  |       |         |  |   |           | 
|------------- |  | --------------- | ------- | ---------------- | - | ----------------- |  | ----- | ------- |  | - | --------- | 
|              |  | Within
  1 Year |         | 1
  to 5
  Years |   | After
  5
  Years |  | Total |        
|              |  |                 |         |                  |   |                   |  |       |        
|Fixed rate    |  |                 | 73,988  |                  |   | 223,781           |  |       | 100,944 |  |   | 398,713   | 
|Variable rate |  |                 | 514,411 |                  |   | 77,189            |  |       | 3,759   |  |   | 595,359   | 
|Nonaccrual    |  |                 | 6,956   |                  |   | 1,415             |  |       | 1,947   |  |   | 10,318    | 
|              |  |                 |         |                  |   |                   |  |       |         |  |   |           | 
|Total         |  | $               | 595,355 |                  | $ | 302,385           |  | $     | 106,650 |  | $ | 1,004,390 | 
|              |  |                 |         |                  |   |                   |  |       |         |  |   |           | 

41.

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|                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Managements Discussion And Analysis Of Financial Condition And 
  Results Of Operations
  (In Thousands, Except Share Data)
|                                                                                                                                                            

Nonperforming Assets.The Companys
financial statements are
prepared on the accrual basis of accounting, including the recognition of
interest income on its loan portfolio, unless a loan is placed on nonaccrual
status. Loans are placed on nonaccrual status when there are serious doubts
regarding the collectibility of all principal and interest due under the terms
of the loans. If a loan is placed on nonaccrual status, the loan does not generate
current period income for the Company and any amounts received are generally
applied first to principal and then to interest. It is the policy of the
Company not to renegotiate the terms of a loan because of a delinquent status.
Rather, a loan is generally transferred to nonaccrual status if it is not in
the process of collection and is delinquent in payment of either principal or
interest beyond 90 days.

The classification of a loan
as nonaccrual does not necessarily indicate that the principal is uncollectible,
in whole or in part. The Bank makes a determination as to collectibility on a
case-by-case basis and considers both the adequacy of the collateral and the
other resources of the borrower in determining the steps to be taken to collect
nonaccrual loans. The final determination as to the steps taken is made based
upon the specific facts of each situation. Alternatives that are typically
considered to collect nonaccrual loans are foreclosure, collection under
guarantees, loan restructuring, or judicial collection actions.

Other nonperforming assets
consist of real estate acquired through loan foreclosures or other workout
situations and other assets acquired through repossessions.

Each of the Companys loans
is assigned a rating based upon an internally developed grading system. A
separate credit administration department also reviews grade assignments on a
quarterly basis. Management continuously monitors nonperforming, impaired, and
past due loans to prevent further deterioration of these loans. The Company has
an independent loan review function which is separate from the lending function
and is responsible for the review of new and existing loans.

The following
table sets forth a summary of nonperforming assets:

NONPERFORMING ASSETS

|                                                   |  |                |        |      |   |       |   |      |        |      |   |       |   |   |       |  
|-------------------------------------------------- |  | -------------- | ------ | ---- | - | ----- | - | ---- | ------ | ---- | - | ----- | - | - | ----- | -
|                                                   |  | December
  31, |       
|                                                   |  |                |       
|                                                   |  |                |        |      |   |       |   |      |        |      |   |       |   |   |       |  
|                                                   |  | 2008           |        | 2007 |   | 2006  |   | 2005 |        | 2004 |  
|                                                   |  |                |        |      |   |       |   |      |        |      |  
|Nonaccrual loans                                   |  | $              | 10,318 |      | $ | 4,090 |   | $    | 11,759 |      | $ | 3,082 |   | $ | 3,649 |  
|Loans 90 days past due and still accruing interest |  |                |       |      |   |      |   |      |       |      |   | 922   |   |   | 553   |  
|                                                   |  |                |        |      |   |       |   |      |        |      |   |       |   |   |       |  
|Total nonperforming loans                          |  |                | 10,318 |      |   | 4,090 |   |      | 11,759 |      |   | 4,004 |   |   | 4,202 |  
|                                                   |  |                |        |      |   |       |   |      |        |      |   |       |   |   |       |  
|Other real estate owned                            |  |                | 12,723 |      |   | 2,937 |   |      | 2,136  |      |   | 203   |   |   | 420   |  
|                                                   |  |                |        |      |   |       |   |      |        |      |   |       |   |   |       |  
|                                                   |  |                |        |      |   |       |   |      |        |      |   |       |   |   |       |  
|Total nonperforming assets                         |  | $              | 23,041 |      | $ | 7,027 |   | $    | 13,895 |      | $ | 4,207 |   | $ | 4,622 |  
|                                                   |  |                |        |      |   |       |   |      |        |      |   |       |   |   |       |  
|                                                   |  |                |        |      |   |       |   |      |        |      |   |       |   |   |       |  
|Nonperforming loans to total end of period loans   |  |                | 1.03   | %    |   | 0.43  | % |      | 1.40   | %    |   | 0.96  | % |   | 1.00  | %
|Nonperforming assets to total end of period loans  |  |                | 2.29   |      |   | 0.73  |   |      | 1.66   |      |   | 1.01  |   |   | 1.10  |  
|Nonperforming assets to total end of period assets |  |                | 1.64   |      |   | 0.51  |   |      | 1.08   |      |   | 0.62  |   |   | 0.69  |  

The level of nonperforming
loans at December 31, 2008 increased 152.3% to $10,318 versus the $4,090 that
existed as of December 31, 2007. The increase of $6,228 was largely related to
the deterioration of several large loan relationships during 2008. The level of
nonperforming loans to total end of period loans was 1.03% at December 31,
2008, as compared to 0.43% at December 31, 2007. The reserve coverage ratio
(allowance to nonperforming loans) was reported at 145.55% as of December 31,
2008 as compared to 262.96% as of December 31, 2007.

42.

---



|                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Managements Discussion And Analysis Of Financial Condition And 
  Results Of Operations
  (In Thousands, Except Share Data)
|                                                                                                                                                            

Other Potential Problem Loans.The
Company has other potential problem
loans that are currently performing, but where some concerns exist regarding
the nature of the borrowers projects in our current economic environment. During
the fourth quarter, management identified $24,800 of loans that are currently
performing but due to the economic environment facing these borrowers were
classified by management as impaired. Excluding nonperforming loans and
loans that management has classified as impaired, there are other potential
problem loans that totaled $9,181 at December 31, 2008 as compared to $1,485 at
December 31, 2007. Included in this amount is a purchased participation for
$7,053. Early in 2009, it came to our attention that the lead bank was
reevaluating the relationships credit quality rating and status. At December
31, 2008 this loan was performing. The classification of these loans, however,
does not imply that management expects losses on each of these loans, but
believes that a higher level of scrutiny and closer monitoring is prudent under
the circumstances. Such classifications relate to specific concerns for each
individual borrower and do not relate to any concentration risk common to all
loans in this group.

The Company
proactively reviews loans for potential impairment regardless of the payment or
performance status. This approach results in some relationships being
classified as impaired but still performing.

The following
table sets forth a summary of other real estate owned and other collateral
acquired at December 31, 2008:

OTHER REAL ESTATE OWNED

|                              |  |                       |    |                               |   |        | 
|----------------------------- |  | --------------------- | -- | ----------------------------- | - | ------ | 
|                              |  | Number
  of
  Parcels |    | Net
  Book
  Carrying
  Value |  
|                              |  |                       |    |                               |  
|Developed property            |  |                       | 10 |                               | $ | 4,296  | 
|Vacant land or unsold lots    |  |                       | 3  |                               |   | 8,427  | 
|                              |  |                       |    |                               |   |        | 
|Total other real estate owned |  |                       | 13 |                               | $ | 12,723 | 
|                              |  |                       |    |                               |   |        | 

Allowance for Loan Losses.At
December 31, 2008, the allowance for loan losses was $15,018 or 1.50% of total
loans as compared to $10,755 or 1.12% at December 31, 2007. The Company recorded
a provision of $8,082 to the allowance for loan losses in 2008 due largely to
the deterioration of the overall economic conditions, workout activities on
previously identified relationships and the identification of several
additional relationships requiring workouts.

The methodology utilized by
management to calculate the FAS 5 portion of the ALLL adequacy analysis is
based upon historical losses over the last twenty quarters or 5 year average.
The actual historical loss factors decreased since the earliest year rolling
off had higher losses than the 2008 quarters being added. Increases to the SFAS
5 factors were needed to reflect increasing economic risk. This combines with
the transfer of $24,800 of higher risk loans from the SFAS 5 pool to the SFAS 114
impaired component of the Companys allowance calculation, resulted in a net
decrease in the SFAS 5 portion of the allowance.

In conjunction
with the Centrue merger, the Company acquired $436,459 in gross loans.
Centrues allowance for loan losses at the acquisition date, not allocated to
impaired loans, was $4,767. The Company applied the guidance required under the
American Institute of Certified Public Accountants Statement of Position 03-3,
Accounting for Certain Loans or Debt Securities Acquired in a Transfer (SOP
03-3) and determined that certain loans acquired in the merger had evidence of
deterioration of credit quality since origination and were probable that all
contractual required payments would not be collected on these loans. The Company
determined that 54 loans with a book value totaling approximately $11,796 and a
fair value of $9,379 were within the guidelines set forth under SOP 03-3. The
Company recorded these at their fair value and reduced the allowance for loan
losses by $2,416. Accordingly, the Company recorded $4,767 of allowance for
loan losses on loans not subject to SOP 03-3.

43.

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|                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Managements Discussion And Analysis Of Financial Condition And 
  Results Of Operations
  (In Thousands, Except Share Data)
|                                                                                                                                                            

In originating loans, the
Company recognizes that credit losses will be experienced and the risk of loss
will vary with, among other things, the following:

| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | general economic
  conditions;                                                        
| |   |                                                                                       
| |  | the type of loan being
  made;                                                        
| |   |                                                                                       
| |  | the creditworthiness of
  the borrower over the term of the loan; and                 
| |   |                                                                                       
| |  | in the case of a
  collateralized loan, the quality of the collateral for such a loan.

The allowance for loan
losses represents the Companys estimate of the allowance necessary to provide
for probable incurred losses in the loan portfolio by analyzing the following:

| |   |                                                                         
| | - | ------------------------------------------------------------------------
| |  | ultimate collectibility of
  the loans in its portfolio;                
| |   |                                                                         
| |  | incorporating feedback
  provided by internal loan staff;               
| |   |                                                                         
| |  | the independent loan
  review function; and                             
| |   |                                                                         
| |  | information provided by
  examinations performed by regulatory agencies.

The Company regularly
evaluates the adequacy of the allowance for loan losses. Commercial credits are
graded using a system that is in compliance with regulatory classifications by
the loan officers and the loan review function validates the officers grades.
In the event that the loan review function downgrades the loan, it is included
in the allowance analysis at the lower grade. To establish the appropriate
level of the allowance, a sample of loans (including impaired and nonperforming
loans) are reviewed and classified as to potential loss exposure.

Based on an estimation
computed pursuant to the requirements of Financial Accounting Standards Board
(FASB) Statement No. 5, Accounting for Contingencies, and FASB Statements
Nos. 114 and 118, Accounting by Creditors for Impairment of a Loan, the
analysis of the allowance for loan losses consists of three components:

| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | specific credit allocation
  established for expected losses resulting from analysis developed through
  specific credit allocations on individual loans for which the recorded
  investment in the loan exceeds its fair value;
| |   |                                                                                                                                                                                                                                 
| |  | general portfolio
  allocation based on historical loan loss experience for each loan category;
  and                                                                                                                           
| |   |                                                                                                                                                                                                                                 
| |  | subjective reserves based
  on general economic conditions as well as specific economic factors in the
  markets in which the Company operates.                                                                                 

The specific credit
allocation component of the allowance for loan losses is based on a regular
analysis of loans over a fixed-dollar amount where the internal credit rating
is at or below a predetermined classification. The fair value of the loan is
determined based on either the present value of expected future cash flows
discounted at the loans effective interest rate, the market price of the loan,
or, if the loan is collateral dependent, the fair value of the underlying
collateral less cost of sale.

The general portfolio
allocation component of the allowance for loan losses is determined
statistically using a loss migration analysis that examines historical loan
loss experience. The loss migration analysis is performed quarterly and loss
factors are updated regularly based on actual experience. The general portfolio
allocation element of the allowance for loan losses also includes consideration
of the amounts necessary for concentrations and changes in portfolio mix and
volume.

44.

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|                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Managements Discussion And Analysis Of Financial Condition And 
  Results Of Operations
  (In Thousands, Except Share Data)
|                                                                                                                                                            

The allowance for loan
losses is based on estimates, and ultimate losses will vary from current
estimates. These estimates are reviewed monthly, and as adjustments, either
positive or negative, become necessary, a corresponding increase or decrease is
made in the provision for loan losses. The methodology used to determine the
adequacy of the allowance for loan losses is consistent with prior years.

A strategy to reduce
exposure to construction lending that began earlier in 2008 continued in the
fourth quarter with construction and land development loans declining by
$12,000 or 6.8% from first quarter 2008 and $3,000 or 1.8% from third quarter
2008. Construction and land development loans now represent 16.4% of the total
loan portfolio, down from 17.4% recorded in the first quarter 2008. In
comparison to December 31, 2007, this category grew $21,496 to 18.0% of the
total portfolio as of June 30, 2008. Since June 30, 2008, it declined $15,848
to 16.4% of the total portfolio. The Company has no direct exposure to
sub-prime mortgages.

Management continues to
diligently monitor the loan portfolio, paying particular attention to borrowers
with residential real estate exposure. While virtually all of these relationships
are performing, the economic outlook for this industry will likely remain
extremely challenging well into 2009. Should the economic climate deteriorate
from current levels, borrowers may experience repayment difficulty, and the
level of nonperforming loans, charge-offs and delinquencies could rise
requiring further increases in the provision for loan losses.

The following
table presents a detailed analysis of the Companys allowance for loan losses:

ALLOWANCE FOR LOAN LOSSES

|                               |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 
|------------------------------ |  | -------------- | --------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | ------- | 
|                               |  | December
  31, |          
|                               |  |                |          
|                               |  | 2008           |           | 2007 |   | 2006    |  | 2005 |         | 2004 |  
|                               |  |                |           |      |   |         |  |      |         |      |  
|Beginning balance              |  | $              | 10,755    |      | $ | 10,835  |  | $    | 8,362   |      | $ | 9,732   |  | $ | 9,011   | 
|Charge-offs:                   |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 
|Commercial                     |  |                | 479       |      |   | 797     |  |      | 552     |      |   | 342     |  |   | 1,497   | 
|Real estate mortgages          |  |                | 3,545     |      |   | 651     |  |      | 1,044   |      |   | 1,611   |  |   | 389     | 
|Installment and other loans    |  |                | 82        |      |   | 119     |  |      | 88      |      |   | 367     |  |   | 578     | 
|                               |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 
|Total charge-offs              |  |                | 4,106     |      |   | 1,567   |  |      | 1,684   |      |   | 2,320   |  |   | 2,464   | 
|                               |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 
|Recoveries:                    |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 
|Commercial                     |  | $              | 208       |      | $ | 442     |  |      | 223     |      |   | 394     |  |   | 1,021   | 
|Real estate mortgages          |  |                | 27        |      |   | 263     |  |      | 357     |      |   | 208     |  |   | 230     | 
|Installment and other loans    |  |                | 52        |      |   | 107     |  |      | 85      |      |   | 98      |  |   | 184     | 
|                               |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 
|Total recoveries               |  | $              | 287       |      | $ | 812     |  |      | 665     |      |   | 700     |  |   | 1,435   | 
|                               |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 
|Net charge-offs                |  |                | 3,819     |      |   | 755     |  |      | 1,019   |      |   | 1,620   |  |   | 1,029   | 
|                               |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 
|Provision for loan losses      |  | $              | 8,082     |      | $ | 675     |  |      | (1,275  | )    |   | 250     |  |   | 1,924   | 
|Reduction due to sale of loans |  |                |          |      |   |        |  |      |        |      |   |        |  |   | 174     | 
|Increase due to merger         |  |                |          |      |   |        |  |      | 4,767   |      |   |        |  |   |        | 
|                               |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 
|Ending balance                 |  | $              | 15,018    |      | $ | 10,755  |  | $    | 10,835  |      | $ | 8,362   |  | $ | 9,732   | 
|                               |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 
|Period end total loans         |  | $              | 1,004,390 |      | $ | 957,285 |  | $    | 836,944 |      | $ | 417,525 |  | $ | 419,275 | 
|                               |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 
|Average loans                  |  | $              | 992,024   |      | $ | 902,658 |  | $    | 464,968 |      | $ | 411,783 |  | $ | 447,605 | 
|                               |  |                |           |      |   |         |  |      |         |      |   |         |  |   |         | 

45.

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|                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Managements Discussion And Analysis Of Financial Condition And 
  Results Of Operations
  (In Thousands, Except Share Data)
|                                                                                                                                                            

ALLOWANCE FOR LOAN LOSS RATIOS

|                                                                |  |                |        |      |  |        |   |      |       |      |  |        |   |  |        |  
|--------------------------------------------------------------- |  | -------------- | ------ | ---- |  | ------ | - | ---- | ----- | ---- |  | ------ | - |  | ------ | -
|                                                                |  | December
  31, |       
|                                                                |  |                |       
|                                                                |  | 2008           |        | 2007 |  | 2006   |   | 2005 |       | 2004 | 
|                                                                |  |                |        |      |  |        |   |      |       |      | 
|Ratio of net charge-offs to average loans                       |  |                | 0.38   | %    |  | 0.08   | % |      | 0.22  | %    |  | 0.39   | % |  | 0.23   | %
|Ratio of provision for loan losses to average loans             |  |                | 0.81   |      |  | 0.07   |   |      | (0.27 | )    |  | 0.06   |   |  | 0.43   |  
|Ratio of allowance for loan losses to ending total loans        |  |                | 1.50   |      |  | 1.12   |   |      | 1.29  |      |  | 2.00   |   |  | 2.32   |  
|Ratio of allowance for loan losses to total nonperforming
loans |  |                | 145.55 |      |  | 262.96 |   |      | 92.14 |      |  | 208.84 |   |  | 231.60 |  

The following
table sets forth an allocation of the allowance for loan losses among the
various loan categories:

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
(Dollars in Thousands)

|                            |  |                |        |                                    |  |        |   |                                    |        |        |  |                                    |   |        |        |                                    |  |        |   |                                    |       |  |  |        |   |   |       |  |  |        |  
|--------------------------- |  | -------------- | ------ | ---------------------------------- |  | ------ | - | ---------------------------------- | ------ | ------ |  | ---------------------------------- | - | ------ | ------ | ---------------------------------- |  | ------ | - | ---------------------------------- | ----- |  |  | ------ | - | - | ----- |  |  | ------ | -
|                            |  | December
  31, |       
|                            |  |                |       
|                            |  | 2008           |        | 2007                               |  | 2006   |   | 2005                               |        | 2004   | 
|                            |  |                |        |                                    |  |        |   |                                    |        |        | 
|                            |  | Amount         |        | Loan
  Category
  to Gross
  Loans |  | Amount |   | Loan
  Category
  to Gross
  Loans |        | Amount |  | Loan
  Category
  to Gross
  Loans |   | Amount |        | Loan
  Category
  to Gross
  Loans |  | Amount |   | Loan
  Category
  to Gross
  Loans |      
|                            |  |                |        |                                    |  |        |   |                                    |        |        |  |                                    |   |        |        |                                    |  |        |   |                                    |      
|Commercial                  |  |                | 2,717  |                                    |  | 16.89  | % |                                    | 4,013  |        |  | 21.21                              | % | $      | 4,888  |                                    |  | 21.26  | % | $                                  | 7,386 |  |  | 28.32  | % | $ | 6,035 |  |  | 28.78  | %
|Real estate                 |  |                | 12,201 |                                    |  | 82.52  |   |                                    | 6,553  |        |  | 77.72                              |   |        | 5,668  |                                    |  | 77.19  |   |                                    | 773   |  |  | 68.49  |   |   | 3,311 |  |  | 65.98  |  
|Installment and other loans |  |                | 100    |                                    |  | 0.59   |   |                                    | 189    |        |  | 1.07                               |   |        | 279    |                                    |  | 1.55   |   |                                    | 203   |  |  | 3.19   |   |   | 386   |  |  | 5.24   |  
|                            |  |                |        |                                    |  |        |   |                                    |        |        |  |                                    |   |        |        |                                    |  |        |   |                                    |       |  |  |        |   |   |       |  |  |        |  
|                            |  |                |        |                                    |  |        |   |                                    |        |        |  |                                    |   |        |        |                                    |  |        |   |                                    |       |  |  |        |   |   |       |  |  |        |  
|Total                       |  | $              | 15,018 |                                    |  | 100.00 | % | $                                  | 10,755 |        |  | 100.00                             | % | $      | 10,835 |                                    |  | 100.00 | % | $                                  | 8,362 |  |  | 100.00 | % | $ | 9,732 |  |  | 100.00 | %
|                            |  |                |        |                                    |  |        |   |                                    |        |        |  |                                    |   |        |        |                                    |  |        |   |                                    |       |  |  |        |   |   |       |  |  |        |  

Securities Activities. The primary
objective of the Companys
$252,562 securities portfolio, which represented 18.7% of the Companys average
earning asset base as of December 31, 2008, as compared to 23.3% as of December
31, 2007, is to minimize interest rate risk, maintain sufficient liquidity, and
maximize return. In managing the securities portfolio, the Company minimizes
any credit risk and avoids investments in sophisticated and complex investment
products. The portfolio includes several callable agency debentures, adjustable
rate mortgage pass-throughs, and collateralized mortgage obligations. Corporate
bonds consist of investment grade obligations of public corporations. Equity
securities consist primarily of trust preferred stock as well as CRA, FAMC and
IBBI stock. The Company does not hold any securities containing Fannie Mae or
Freddie Mac equities.

The
Companys financial planning anticipates income streams generated by the
securities portfolio based on normal maturity and reinvestment. Securities
classified as available-for-sale, carried at fair value, were $241,851 at
December 31, 2008 compared to $238,661 at December 31, 2007. The Company does
not have any securities classified as trading or held-to-maturity. The Company
also holds $10,711 and $10,670 of Federal Reserve and Federal Home Loan Bank
stock which are classified as restricted securities as of December 31, 2008 and
December 31, 2007, respectively.

As
of December 31, 2008, the Company held nine pooled trust preferred securities
involving three hundred issuers with a total book value of $25,200. The
investments in trust-preferred securities receive principal and interest
payments from several pools of subordinated capital debentures with each pool
containing issuance by a minimum of twenty two banks or, in a few instances,
capital notes from insurance companies. During the fourth quarter, the Company recorded
a pre-tax non-cash impairment charge totaling $2,735 based upon managements
determination that certain trust preferred securities with an aggregate cost of
$5,800 were other than temporarily impaired. This charge largely reflects
deteriorating cash flows within one of these pools and illiquidity and credit
concerns within the financial markets.

46.

---



|                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Managements Discussion And Analysis Of Financial Condition And 
  Results Of Operations
  (In Thousands, Except Share Data)
|                                                                                                                                                            

Management
has determined that the remaining $22,100 of trust-preferred securities is
deemed to be only temporarily impaired at this time. An unrealized loss of
approximately $3,300 associated with these securities has been recorded, on an
after-tax basis, through stockholders equity as a component of other
comprehensive income.

Should
the economic climate deteriorate from current levels, the underlying credits
may experience repayment difficulty, and the level of deferrals and defaults
could increase requiring additional impairment charges in future quarters.
Centrue does not hold any securities containing sub-prime mortgages or Fannie
Mae or Freddie Mac equities.

The following
table describes the composition of securities by major category and maturity:

SECURITIES PORTFOLIO
(Dollars in Thousands)

|                                                  |  |                |         |                     |  |        |   |                    |         |        |  |                    |   |   |         |  |  |        |  
|------------------------------------------------- |  | -------------- | ------- | ------------------- |  | ------ | - | ------------------ | ------- | ------ |  | ------------------ | - | - | ------- |  |  | ------ | -
|                                                  |  | December
  31, |        
|                                                  |  |                |        
|                                                  |  | 2008           |         | 2007                |  | 2006   |  
|                                                  |  |                |         |                     |  |        |  
|                                                  |  | Amount         |         | %
  of 
  Portfolio |  | Amount |   | %
  of
  Portfolio |         | Amount |  | %
  of
  Portfolio |  
|                                                  |  |                |         |                     |  |        |   |                    |         |        |  |                    |  
|Available-for-Sale                                |  |                |         |                     |  |        |   |                    |         |        |  |                    |   |   |         |  |  |        |  
|U.S. government agencies                          |  |                | 16,995  |                     |  | 7.03   |   |                    | 103,624 |        |  | 43.42              |   |   | 126,039 |  |  | 43.43  |  
|U.S. government agency mortgage backed
securities |  |                | 143,378 |                     |  | 59.28  |   |                    | 47,784  |        |  | 20.02              |   |   | 69,579  |  |  | 23.97  |  
|States and political subdivisions                 |  |                | 38,202  |                     |  | 15.80  |   |                    | 41,561  |        |  | 17.41              |   |   | 41,471  |  |  | 14.29  |  
|Collateralized mortgage obligations               |  |                | 20,004  |                     |  | 8.27   |   |                    | 24,077  |        |  | 10.09              |   |   | 27,237  |  |  | 9.39   |  
|Corporate bonds                                   |  |                | 1,928   |                     |  | 0.80   |   |                    | 2,741   |        |  | 1.15               |   |   | 8,764   |  |  | 3.02   |  
|Other securities                                  |  |                | 21,344  |                     |  | 8.82   |   |                    | 18,874  |        |  | 7.91               |   |   | 17,134  |  |  | 5.90   |  
|                                                  |  |                |         |                     |  |        |   |                    |         |        |  |                    |   |   |         |  |  |        |  
|                                                  |  |                |         |                     |  |        |   |                    |         |        |  |                    |   |   |         |  |  |        |  
|Total                                             |  | $              | 241,851 |                     |  | 100.00 | % | $                  | 238,661 |        |  | 100.00             | % | $ | 290,224 |  |  | 100.00 | %
|                                                  |  |                |         |                     |  |        |   |                    |         |        |  |                    |   |   |         |  |  |        |  

The following
table sets forth the contractual, callable or estimated maturities and yields
of the debt securities portfolio as of December 31, 2008. Mortgage backed and
collateralized mortgage obligation securities are included at estimated
maturity.

MATURITY SCHEDULE
(Dollars in Thousands)

|                                                    |        |               |       |                              |        |                               |       |                |        |       |       |       |        |   |        |  |        |       |   |   |         |  |  |       |   |   |         | 
|--------------------------------------------------- | ------ | ------------- | ----- | ---------------------------- | ------ | ----------------------------- | ----- | -------------- | ------ | ----- | ----- | ----- | ------ | - | ------ |  | ------ | ----- | - | - | ------- |  |  | ----- | - | - | ------- | 
|                                                    |        | Maturing      |      
|                                                    |        |               |      
|                                                    |        | Within 1 Year |       | After 1 but
  Within 5 Years |        | After 5 but
  Within 10 Years |       | After 10 Years |        | Total |      
|                                                    |        |               |       |                              |        |                               |       |                |        |       |      
|                                                    | Amount |               | Yield |                              | Amount |                               | Yield |                | Amount |       | Yield |       | Amount |   | Yield  |  | Amount |      
|                                                    |        |               |       |                              |        |                               |       |                |        |       |       |       |        |   |        |  |        |      
|                                                    |        |               |       |                              |        |                               |       |                |        |       |       |       |        |   |        |  |        |       |  
|Available-for-Sale                                  |        |               |       |                              |        |                               |       |                |        |       |       |       |        |   |        |  |        |       |   |   |         |  |  |       |   |   |         | 
|U.S. government
  agencies and corporations         |        |               | 560   |                              |        | 4.881                         | %     |                | 13,188 |       |       | 5.331 | %      |   | 3,247  |  |        | 6.000 | % |   |        |  |  |      | % |   | 16,995  | 
|U.S. government
  agency mortgage backed securities |        |               |      |                              |        |                              |       |                | 4,324  |       |       | 4.697 |        |   | 11,987 |  |        | 4.804 |   |   | 127,067 |  |  | 4.846 |   |   | 143,378 | 
|States and
  political subdivisions (1)             |        |               | 3,284 |                              |        | 5.918                         |       |                | 26,175 |       |       | 5.602 |        |   | 3,983  |  |        | 6.072 |   |   | 4,760   |  |  | 5.693 |   |   | 38,202  | 
|Collateralized
  mortgage obligations               |        |               |      |                              |        |                              |       |                |       |       |       |      |        |   | 394    |  |        | 5.432 |   |   | 19,610  |  |  | 5.551 |   |   | 20,004  | 
|Collateralized
  debt obligations                   |        |               |      |                              |        |                              |       |                |       |       |       |      |        |   |       |  |        |      |   |   | 19,848  |  |  | 5.380 |   |   | 19,848  | 
|Other securities                                    |        |               | 1,496 |                              |        | 4.172                         |       |                |       |       |       |      |        |   |       |  |        |      |   |   |        |  |  |      |   |   | 1,496   | 
|Corporate bonds                                     |        |               | 1,928 |                              |        | 5.138                         |       |                |       |       |       |      |        |   |       |  |        |      |   |   |        |  |  |      |   |   | 1,928   | 
|                                                    |        |               |       |                              |        |                               |       |                |        |       |       |       |        |   |        |  |        |       |   |   |         |  |  |       |   |   |         | 
|Total                                               |        | $             | 7,268 |                              |        |                               |       | $              | 43,687 |       |       |       |        | $ | 19,611 |  |        |       |   | $ | 171,285 |  |  |       |   | $ | 241,851 | 
|                                                    |        |               |       |                              |        |                               |       |                |        |       |       |       |        |   |        |  |        |       |   |   |         |  |  |       |   |   |         | 

|    |                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Rates on
  obligations of states and political subdivisions have been adjusted to tax
  equivalent yields using a 34% income tax rate

47.

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|                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Managements Discussion And Analysis Of Financial Condition And 
  Results Of Operations
  (In Thousands, Except Share Data)
|                                                                                                                                                            

Deposit Activities. Deposits are
attracted through the
offering of a broad variety of deposit instruments, including checking
accounts, money market accounts, regular savings accounts, term certificate
accounts (including jumbo certificates in denominations of $100,000 or more),
and retirement savings plans. The Companys average balance of total deposits
was $1,022,978 for 2008, representing a decrease of $40,381 or 3.8% compared
with the average balance of total deposits for 2007 of $1,063,359.

The following
table sets forth certain information regarding Centrue Banks average deposits:

AVERAGE DEPOSITS
(Dollars in Thousands)

|                                       |  |                                    |           |                |  |                       |   |                  |      |                |      |                       |  |                  |        |                |  |                       |   |   |         |  |  |        |   |  |      |  
|-------------------------------------- |  | ---------------------------------- | --------- | -------------- |  | --------------------- | - | ---------------- | ---- | -------------- | ---- | --------------------- |  | ---------------- | ------ | -------------- |  | --------------------- | - | - | ------- |  |  | ------ | - |  | ---- | -
|                                       |  | For the Years Ended
  December 31, |          
|                                       |  |                                    |          
|                                       |  |                                    | 2008      |                |  | 2007                  |   |                  |      |                | 2006 |                       |  |                  |       
|                                       |  |                                    |           |                |  |                       |   |                  |      |                |      |                       |  |                  |       
|                                       |  | Average
  Amount                   |           | %
  of
  Total |  | Average
  Rate
  Paid |   | Average
  Amount |      | %
  of
  Total |      | Average
  Rate
  Paid |  | Average
  Amount |        | %
  of
  Total |  | Average
  Rate
  Paid |  
|                                       |  |                                    |           |                |  |                       |   |                  |      |                |      |                       |  |                  |        |                |  |                       |  
|Non-interest-bearing
  demand deposits |  | $                                  | 114,994   |                |  | 11.24                 | % |                  |     | %              | $    | 120,355               |  |                  | 11.32  | %              |  |                      | % | $ | 68,650  |  |  | 11.49  | % |  |     | %
|Savings accounts                       |  |                                    | 87,615    |                |  | 8.56                  |   |                  | 0.36 |                |      | 96,838                |  |                  | 9.11   |                |  | 0.68                  |   |   | 45,343  |  |  | 7.59   |   |  | 0.69 |  
|Interest-bearing
  demand deposits     |  |                                    | 260,801   |                |  | 25.50                 |   |                  | 2.03 |                |      | 232,031               |  |                  | 21.82  |                |  | 2.84                  |   |   | 137,106 |  |  | 22.94  |   |  | 2.33 |  
|Time, less than
  $100,000             |  |                                    | 343,456   |                |  | 33.57                 |   |                  | 4.08 |                |      | 387,530               |  |                  | 36.44  |                |  | 4.72                  |   |   | 137,470 |  |  | 23.00  |   |  | 4.14 |  
|Time, $100,000 or
  more               |  |                                    | 216,112   |                |  | 21.13                 |   |                  | 3.68 |                |      | 226,605               |  |                  | 21.31  |                |  | 5.30                  |   |   | 209,030 |  |  | 34.98  |   |  | 4.35 |  
|                                       |  |                                    |           |                |  |                       |   |                  |      |                |      |                       |  |                  |        |                |  |                       |   |   |         |  |  |        |   |  |      |  
|                                       |  |                                    |           |                |  |                       |   |                  |      |                |      |                       |  |                  |        |                |  |                       |   |   |         |  |  |        |   |  |      |  
|Total deposits                         |  | $                                  | 1,022,978 |                |  | 100.00                | % |                  | 2.69 | %              | $    | 1,063,359             |  |                  | 100.00 | %              |  | 3.53                  | % | $ | 597,599 |  |  | 100.00 | % |  | 3.05 | %
|                                       |  |                                    |           |                |  |                       |   |                  |      |                |      |                       |  |                  |        |                |  |                       |   |   |         |  |  |        |   |  |      |  

As of December
31, 2008, average time deposits over $100,000 represented 21.13% of total
average deposits, compared with 21.31% of total average deposits as of December
31, 2007. The Companys large denomination time deposits are generally from
customers within the local market areas of its subsidiary bank and provide a
greater degree of stability than is typically associated with brokered deposit
customers with limited business relationships.

The following
table sets forth the remaining maturities for time deposits of $100,000 or more
at December 31, 2008:

TIME DEPOSITS OF $100,000 OR MORE
(Dollars in Thousands)

|                                      |  |   |         | 
|------------------------------------- |  | - | ------- | 
|Maturity Range                        |  |   |         | 
|Three months or less                  |  | $ | 150,091 | 
|Over three months through six months  |  |   | 31,078  | 
|Over six months through twelve months |  |   | 26,202  | 
|Over twelve months                    |  |   | 53,821  | 
|                                      |  |   |         | 
|                                      |  |   |         | 
|Total                                 |  | $ | 261,192 | 
|                                      |  |   |         | 

48.

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|                                                                                                                                                      
|------------------------------------------------------------------------------------------------------------------------------------------------------
|Centrue
Financial Corporation
Managements Discussion And Analysis Of Financial Condition And 
Results Of Operations
(In Thousands, Except Share Data)
|                                                                                                                                                      

Return on Equity and Assets.The
following table presents various
ratios for the Company:

RETURN ON EQUITY AND ASSETS

|                                       |  |                                    |       |      |  |       |   |  |       |  
|-------------------------------------- |  | ---------------------------------- | ----- | ---- |  | ----- | - |  | ----- | -
|                                       |  | For the Years Ended
  December 31, |      
|                                       |  |                                    |      
|                                       |  | 2008                               |       | 2007 |  | 2006  |  
|                                       |  |                                    |       |      |  |       |  
|Return on average assets               |  |                                    | 0.47  | %    |  | 0.85  | % |  | 0.69  | %
|Return on average equity               |  |                                    | 5.43  |      |  | 9.53  |   |  | 6.69  |  
|Average equity to average assets       |  |                                    | 8.69  |      |  | 8.90  |   |  | 10.35 |  
|Dividend payout ratio for common stock |  |                                    | 53.71 |      |  | 29.17 |   |  | 27.05 |  

Liquidity

The Company manages its
liquidity position with the objective of maintaining sufficient funds to
respond to the needs of depositors and borrowers and to take advantage of
earnings enhancement opportunities. In addition to the normal inflow of funds
from core-deposit growth together with repayments and maturities of loans and
investments, the Company utilizes other short-term funding sources such as
brokered time deposits, securities sold under agreements to repurchase,
overnight federal funds purchased from correspondent banks and the acceptance
of short-term deposits from public entities, and Federal Home Loan Bank
advances.

The Company monitors and
manages its liquidity position on several bases, which vary depending upon the
time period. As the time period is expanded, other data is factored in,
including estimated loan funding requirements, estimated loan payoffs,
investment portfolio maturities or calls, and anticipated depository buildups
or runoffs.

The Company classifies all
of its securities as available-for-sale, thereby maintaining significant
liquidity. The Companys liquidity position is further enhanced by structuring
its loan portfolio interest payments as monthly and by the significant
representation of retail credit and residential mortgage loans in the Companys
loan portfolio, resulting in a steady stream of loan repayments. In managing
its investment portfolio, the Company provides for staggered maturities so that
cash flows are provided as such investments mature.

The Companys cash flows are comprised of three classifications: cash
flows from operating activities, cash flows from investing activities, and cash
flows from financing activities. Cash flows provided by operating activities
and investing activities offset by cash flows used in financing activities
resulted in a net decrease in cash and cash equivalents of $16,614 from
December 31, 2007 to December 31, 2008.

During 2008, the Company experienced net cash outflows of $125,410 in
investing activities primarily due to large increases in loans. In contrast,
net cash inflows of $90,574 were provided by financing activities due to
increases in deposits and advances from the Federal Home Loan Bank and $18,222
from operating activities largely due to increases to provision and net income.

Centrue Banks
securities portfolio, federal funds sold, and cash and due from bank deposit
balances serve as the primary sources of liquidity for the Company. At December
31, 2008, 28.1% of Centrue Banks interest-bearing liabilities were in the form
of time deposits of $100,000 and over. Management believes these deposits to be
a stable source of funds. However, if a large number of these time deposits
matured at approximately the same time and were not renewed, Centrue Banks
liquidity could be adversely affected.

49.

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|                                                                                       
|---------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                          
|Managements Discussion And
  Analysis Of Financial Condition And Results Of Operations
|(In Thousands, Except Share Data)                                                      
|                                                                                       

Currently, the
maturities of Centrue Banks large time deposits are spread throughout the
year, with 57.5% maturing in the first quarter of 2009, 11.9% maturing in the
second quarter of 2009, 10.0% maturing in the third and fourth quarters of
2009, and the remaining 20.6% maturing thereafter. Centrue Bank monitors those
maturities in an effort to minimize any adverse effect on liquidity.

At December
31, 2008, the Companys borrowings included $10,000 each for Centrue Statutory
Trust II and Centrue Statutory Trust III, $19,115 payable to the Companys
principal correspondent bank, $140,285 in FHLB advances, $46,306 in securities
sold under agreements to repurchase and a shareholder note for $711. The note
to the Companys principal correspondent bank is renewable annually, requires
quarterly interest payments, and is collateralized by the Companys stock in
the Bank. The shareholder note requires bi-annual payments of $100 at an
imputed interest rate.

The Companys
principal source of funds for repayment of the indebtedness is dividends from
Centrue Bank. At December 31, 2008, approximately $3,490 was available for
dividends without regulatory approval.

Contractual Obligations

The Company
has entered into contractual obligations and commitments and off-balance sheet
financial instruments. The following tables summarize the Companys contractual
cash obligations and other commitments and off-balance sheet instruments as of
December 31, 2008:

|                                                |  |                          |         |             |  |             |  |                 |        |       |  |        |  |  |         | 
|----------------------------------------------- |  | ------------------------ | ------- | ----------- |  | ----------- |  | --------------- | ------ | ----- |  | ------ |  |  | ------- | 
|                                                |  | Payments
  Due by Period |        
|                                                |  |                          |        
|Contractual
  Obligations                       |  | Within
  1
  Year        |         | 1-3
  Years |  | 4-5
  Years |  | After
  5 Years |        | Total | 
|                                                |  |                          |         |             |  |             |  |                 |        |       | 
|                                                |  |                          |         |             |  |             |  |                 |        |       | 
|Short-term debt                                 |  |                          | 8,865   |             |  |            |  |                 |       |       |  | 250    |  |  | 9,115   | 
|Long-term debt                                  |  |                          | 165     |             |  | 2,356       |  |                 | 2,190  |       |  | 6,000  |  |  | 10,711  | 
|Certificates of deposit                         |  |                          | 434,731 |             |  | 150,811     |  |                 | 8,322  |       |  | 145    |  |  | 594,009 | 
|Operating leases                                |  |                          | 289     |             |  | 608         |  |                 | 612    |       |  | 306    |  |  | 1,815   | 
|Severance payments                              |  |                          | 45      |             |  |            |  |                 |       |       |  |       |  |  | 45      | 
|Series B Mandatory
  redeemable preferred stock |  |                          |        |             |  | 268         |  |                 |       |       |  |       |  |  | 268     | 
|Subordinated Debentures                         |  |                          |        |             |  |            |  |                 |       |       |  | 20,620 |  |  | 20,620  | 
|FHLB Advances                                   |  |                          | 82,023  |             |  | 53,200      |  |                 | 62     |       |  | 5,000  |  |  | 140,285 | 
|                                                |  |                          |         |             |  |             |  |                 |        |       |  |        |  |  |         | 
|                                                |  |                          |         |             |  |             |  |                 |        |       |  |        |  |  |         | 
|Total contractual cash obligations              |  |                          | 526,118 |             |  | 207,243     |  |                 | 11,186 |       |  | 32,321 |  |  | 776,868 | 
|                                                |  |                          |         |             |  |             |  |                 |        |       |  |        |  |  |         | 

Commitments,
Contingencies, and Off-Balance Sheet Financial Instruments

Some financial instruments, such as loan commitments, credit lines,
letters of credit, and overdraft protection, are issued to meet customer
financing needs. These are agreements to provide credit or to support the
credit of others, as long as conditions established in the contract are met,
and usually have expiration dates. Commitments may expire without being used.
Off-balance sheet risk to credit loss exists up to the face amount of these
instruments, although material losses are not anticipated. The same credit
policies are used to make such commitments as are used for loans, often including
obtaining collateral at exercise of the commitment. At December 31, 2008, the
Company had $245,778 in outstanding loan commitments including outstanding
commitments for various lines of credit. The Company also has $12,693 of
standby letters of credit as of December 31, 2008. See Note 18 of the Notes to
the Consolidated Financial Statements for additional information on loan
commitments and standby letters of credit.

50.

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|                                                                                       
|---------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                          
|Managements Discussion And
  Analysis Of Financial Condition And Results Of Operations
|(In Thousands, Except Share Data)                                                      
|                                                                                       

Capital
Resources

Stockholders
Equity

The Company is committed to managing capital
for maximum shareholder benefit and maintaining strong protection for
depositors and creditors. Stockholders equity at December 31, 2008 was
$115,908, a decrease of $2,968 or 2.5%, from December 31, 2007. The change in
stockholders equity was largely the result of a $4,529 decrease in accumulated
other comprehensive income related to the unrealized loss on the securities
portfolio. Average equity as a percentage of average assets was 8.69% at
December 31, 2008, compared to 8.90% at December 31, 2007. Book value per
common share equaled $19.14 at December 31, 2008, a decrease from $19.50
reported at the end of 2007.

Stock
Repurchase Programs

The 2006 repurchase program
was completed on July 23, 2007. The 2007 repurchase program approved on July
24, 2007 authorized the company to repurchase an additional 500,000 shares, or
approximately 8% of the Companys currently issued and outstanding shares, in
the open market or privately negotiated transactions over an 18 month period.
This program expired on January 24, 2009.

Capital
Measurements

The Company and Centrue Bank are expected to
meet a minimum risk-based capital to risk-weighted assets ratio of 8%, of which
at least one-half (or 4%) must be in the form of Tier 1 (core) capital. The
remaining one-half (or 4%) may be in the form of Tier 1 (core) or Tier 2
(supplementary) capital. The amount of loan loss allowance that may be included
in capital is limited to 1.25% of risk-weighted assets. The ratio of Tier 1
(core) and the combined amount of Tier 1 (core) and Tier 2 (supplementary)
capital to risk-weighted assets for the Company was 10.0% and 12.2%,
respectively, at December 31, 2008. The increase in the respective capital
ratios was primarily due to the Company decreasing its Goodwill that reduces
Tier 1 (core) capital and increasing its allowance for loan losses that can be
used to increase Tier 2 (supplementary) capital. The Company is currently, and
expects to continue to be, in compliance with these guidelines.

As of December 31, 2008, the Tier 2
risk-based capital was comprised of $13,237 in allowance for loan losses
(limited to 1.25% of risk-weighted assets) and $10,000 of subordinated debt.
The Series A Preferred Stock is convertible into common stock, subject to
certain adjustments intended to offset the amount of losses
incurred by the Company upon the post-closing sale of certain securities
acquired in conjunction with a previous acquisition.

51.

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|                                                                                       
|---------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                          
|Managements Discussion And
  Analysis Of Financial Condition And Results Of Operations
|(In Thousands, Except Share Data)                                                      
|                                                                                       

The following
table sets forth an analysis of the Companys capital ratios:

RISK-BASED CAPITAL RATIOS

(Dollars in Thousands)

|                          |  |                |           |                            |   |                             |   |   |         |   |  |     |   |  |     | 
|------------------------- |  | -------------- | --------- | -------------------------- | - | --------------------------- | - | - | ------- | - |  | --- | - |  | --- | 
|                          |  | December
  31, |           | Minimum
  Capital
  Ratios |   | Well
  Capitalized
  Ratios |  
|                          |  |                |           |                            |  
|                          |  | 2008           |           | 2007                       |   | 2006                        |   |   |        
|                          |  |                |           |                            |   |                             |   |   |         |   | 
|                          |  |                |           |                            |   |                             |   |   |         |   | 
|Tier 1 risk-based capital |  | $              | 105,581   |                            | $ | 101,831                     |   | $ | 99,869  |   |  |     |   |  |     | 
|Tier 2 risk-based capital |  |                | 23,237    |                            |   | 10,755                      |   |   | 10,835  |   |  |     |   |  |     | 
|                          |  |                |           |                            |   |                             |   |   |         |   |  |     |   |  |     | 
|Total capital             |  | $              | 128,818   |                            | $ | 112,586                     |   | $ | 110,704 |   |  |     |   |  |     | 
|Risk-weighted assets      |  | $              | 1,058,969 |                            | $ | 1,102,602                   |   | $ | 926,874 |   |  |     |   |  |     | 
|Capital ratios:           |  |                |           |                            |   |                             |   |   |         |   |  |     |   |  |     | 
|Tier 1 risk-based capital |  |                | 10.0      | %                          |   | 9.2                         | % |   | 10.8    | % |  | 4.0 | % |  | N/A | 
|Total risk-based capital  |  |                | 12.2      |                            |   | 10.2                        |   |   | 11.9    |   |  | 8.0 |   |  | N/A | 
|Leverage ratio            |  |                | 8.1       |                            |   | 7.7                         |   |   | 7.9     |   |  | 4.0 |   |  | N/A | 

Impact of Inflation, Changing Prices, and
Monetary Policies

The financial
statements and related financial data concerning the Company have been prepared
in accordance with accounting principles generally accepted in the United
States of America 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. The primary
effect of inflation on the operations of the Company is reflected in increased
operating costs. Unlike most industrial companies, virtually all of the assets
and liabilities of a financial institution are monetary in nature. As a result,
changes in interest rates have a more significant effect on the performance of
a financial institution than do the effects of changes in the general rate of
inflation and changes in prices. Interest rates do not necessarily move in the
same direction or in the same magnitude as the prices of goods and services.
Interest rates are highly sensitive to many factors which are beyond the
control of the Company, including the influence of domestic and foreign
economic conditions and the monetary and fiscal policies of the United States
government and federal agencies, particularly the FRB.

Recent Developments

On January 9,
2009, the Company completed the sale of $32,668 of preferred stock and a
warrant to purchase common stock to the United States Department of Treasury
(the U. S. Treasury) under the U. S. Treasurys Capital Purchase Program
under the Emergency Economic Stabilization Act of 2008 (EESA).

The Company
issued and sold (1) 32,668 shares of Fixed Rate Cumulative Perpetual Preferred
Stock Series C, liquidation preference of $1,000 per share (the Series C
Preferred Shares), and (2) a ten-year warrant (the Warrant) to purchase up
to 508,320 shares of the Companys common stock (Common Stock) at an exercise
price of $9.64 per share or an aggregate purchase price of $4,900 in cash.
Cumulative dividends on the Series C Preferred Shares will accrue on the
liquidation preference at a rate of 5% per annum for the first five years and
at a rate of 9% per annum thereafter. The Company also amended the
Certification of Designation for its Series B Preferred Stock to suspend,
absent receipt of the U. S. Treasurys consent, the redemption rights of the
Series B Preferred Stock holders until such time as the U. S. Treasury (or its
assignees) ceases to own any of the Companys Series C Preferred Stock.

The securities
purchase agreement, dated January 9, 2009 (the Purchase Agreement), between
the Company and the U. S. Treasury, pursuant to which the Series C Preferred
Shares and the Warrant were sold, limits the payment of dividends on the Common
Stock to the current quarterly cash dividend of $0.14 per share, limits the
Companys ability to repurchase its Common Stock, and subjects the Company to
certain of the executive compensation limitations included in the EESA.

52.

---



|                                                                                       
|---------------------------------------------------------------------------------------
|Centrue Financial Corporation                                                          
|Managements Discussion And
  Analysis Of Financial Condition And Results Of Operations
|(In Thousands, Except Share Data)                                                      
|                                                                                       

As a condition
to the closing of the transaction, each of the Companys Senior Executive
Officers (as defined in the Purchase Agreement) executed a waiver voluntarily
waiving any claim against the Treasury or the Company for any changes to their
compensation or benefits, as required to comply with the regulation issued by
the U. S. Treasury under the TARP Capital Purchase Program. The Senior
Executive Officers also acknowledged that the regulation may require
modification of the compensation, bonus, incentive and other benefit plans,
arrangements and policies and agreements (including so-called golden
parachute agreements) as they relate to the period the U. S. Treasury holds any
equity or debt securities of the Company acquired through the Capital Purchase
Program.

In addition to
EESA, on February 13, 2009, the American Recovery and Reinvestment Act of 2009
(ARRA) was enacted. The ARRA contains numerous provisions which modify EESA
and which require additional rule making by various regulatory bodies. The
precise impact of ARRA and the rules promulgated under it will become known in
the coming months.

53.

---



|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk

The discussion
under the caption Interest Rate Sensitivity Management contained in Item 7 of
this Form 10-K is incorporated herein by this reference.

|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

Index to Financial Statements

|                                                                                                         |   
|-------------------------------------------------------------------------------------------------------- | --
|Report of Independent Registered Public Accounting Firm                                                  | 55
|                                                                                                         |   
|Consolidated Balance Sheets (December 31, 2008 and 2007)                                                 | 57
|                                                                                                         |   
|Consolidated Statements of Income (For the years ended December 31,
  2008, 2007 and 2006)               | 58
|                                                                                                         |   
|Consolidated Statements of Stockholders Equity (For the years ended
  December 31, 2008, 2007 and 2006) | 60
|                                                                                                         |   
|Consolidated Statements of Cash Flows (For the years ended December
  31, 2008, 2007 and 2006)           | 62
|                                                                                                         |   
|Notes                                                                                                    | 64

Supplementary
Data

The Supplementary Financial
Information required to be included in this Item 8 is hereby incorporated by
reference by Note 24 to the Notes to Consolidated Financial Statements
contained herein.

54.

---



Report of Independent Registered Public Accounting
Firm

Audit Committee
Board of Directors and Stockholders
Centrue Financial Corporation
St. Louis, Missouri

We have audited the
accompanying consolidated balance sheets of Centrue Financial Corporation (the
Company) as of December 31, 2008 and 2007, and the related consolidated
statements of income, stockholders equity and cash flows for each of the years
in the three-year period ended December 31, 2008. We also have audited Centrue
Financial Corporations internal control over financial reporting as of
December 31, 2008, based on criteria established in Internal ControlIntegrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Companys management is responsible for these financial
statements, for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Managements Report On
Internal Control Over Financial Reporting as disclosed in Item 9A of Form 10-K.
Our responsibility is to express an opinion on these financial statements and
an opinion on the companys internal control over financial reporting based on
our audits.

We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial
reporting was maintained in all material respects. Our audits of the financial
statements included examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our audit of internal control
over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.

A companys internal control
over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal control over financial
reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the companys assets that could have a material effect on the financial
statements.

Because of its inherent
limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

55.

---



In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Centrue Financial Corporation as of
December 31, 2008 and 2007, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 2008 in
conformity with accounting principles generally accepted in the United States
of America. Also in our opinion, Centrue Financial Corporation maintained, in
all material respects, effective internal control over financial reporting as
of December 31, 2008, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).

|                    |                      
|------------------- | ---------------------
|                    | /s/ Crowe Horwath LLP
|Oak Brook, Illinois |                      
|March 12, 2009      |                      

56.

---



Centrue
Financial CorporationConsolidated Balance Sheets
December 31, 2008 and 2007 (In Thousands, Except Share and Per Share Data)

|                                                                                    |  |      |           |      |   |           |  
|----------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | -
|                                                                                    |  | 2008 |           | 2007 |  
|                                                                                    |  |      |           |      |  
|ASSETS                                                                              |  |      |           |      |   |           |  
|Cash and cash equivalents                                                           |  | $    | 35,014    |      | $ | 51,628    |  
|Securities available-for-sale                                                       |  |      | 241,851   |      |   | 238,661   |  
|Restricted securities                                                               |  |      | 10,711    |      |   | 10,670    |  
|Loans                                                                               |  |      | 1,004,390 |      |   | 957,285   |  
|Allowance for loan losses                                                           |  |      | (15,018   | )    |   | (10,755   | )
|                                                                                    |  |      |           |      |   |           |  
|Net loans                                                                           |  |      | 989,372   |      |   | 946,530   |  
|Cash value of life insurance                                                        |  |      | 27,917    |      |   | 26,895    |  
|Mortgage servicing rights                                                           |  |      | 2,890     |      |   | 3,161     |  
|Premises and equipment, net                                                         |  |      | 32,376    |      |   | 35,615    |  
|Goodwill                                                                            |  |      | 24,494    |      |   | 25,498    |  
|Intangible assets, net                                                              |  |      | 9,088     |      |   | 11,007    |  
|Other real estate                                                                   |  |      | 12,723    |      |   | 2,937     |  
|Other assets                                                                        |  |      | 15,445    |      |   | 12,397    |  
|                                                                                    |  |      |           |      |   |           |  
|                                                                                    |  |      |           |      |   |           |  
|Total assets                                                                        |  | $    | 1,401,881 |      | $ | 1,364,999 |  
|                                                                                    |  |      |           |      |   |           |  
|                                                                                    |  |      |           |      |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                |  |      |           |      |   |           |  
|Liabilities                                                                         |  |      |           |      |   |           |  
|Deposits                                                                            |  |      |           |      |   |           |  
|Non-interest-bearing                                                                |  | $    | 118,745   |      | $ | 114,360   |  
|Interest-bearing                                                                    |  |      | 930,475   |      |   | 918,662   |  
|                                                                                    |  |      |           |      |   |           |  
|Total deposits                                                                      |  |      | 1,049,220 |      |   | 1,033,022 |  
|Federal funds purchased and securities sold under
agreements to
  repurchase        |  |      | 46,306    |      |   | 44,937    |  
|Federal Home Loan Bank advances                                                     |  |      | 140,285   |      |   | 121,615   |  
|Notes payable                                                                       |  |      | 19,826    |      |   | 13,802    |  
|Series B mandatory redeemable preferred
stock                                       |  |      | 268       |      |   | 831       |  
|Subordinated debentures                                                             |  |      | 20,620    |      |   | 20,620    |  
|Other liabilities                                                                   |  |      | 9,448     |      |   | 11,296    |  
|                                                                                    |  |      |           |      |   |           |  
|Total liabilities                                                                   |  |      | 1,285,973 |      |   | 1,246,123 |  
|                                                                                    |  |      |           |      |   |           |  
|Commitments and contingent liabilities                                              |  |      |          |      |   |          |  
|                                                                                    |  |      |           |      |   |           |  
|Stockholders equity                                                                |  |      |           |      |   |           |  
|Series A Convertible Preferred Stock (aggregate
liquidation
  preference of $2,762) |  |      | 500       |      |   | 500       |  
|Common stock, $1 par value, 15,000,000 shares
authorized;                           |  |      |           |      |   |           |  
|7,453,555 and 7,438,110 shares issued in 2008 and
2007                              |  |      | 7,454     |      |   | 7,438     |  
|Surplus                                                                             |  |      | 71,488    |      |   | 70,901    |  
|Retained earnings                                                                   |  |      | 62,476    |      |   | 60,344    |  
|Accumulated other comprehensive income
(loss)                                       |  |      | (3,590    | )    |   | 939       |  
|                                                                                    |  |      |           |      |   |           |  
|                                                                                    |  |      | 138,328   |      |   | 140,122   |  
|Treasury stock, at cost, 1,425,064 shares - 2008
and 1,366,564  2007               |  |      | (22,420   | )    |   | (21,246   | )
|                                                                                    |  |      |           |      |   |           |  
|Total stockholders equity                                                          |  |      | 115,908   |      |   | 118,876   |  
|                                                                                    |  |      |           |      |   |           |  
|                                                                                    |  |      |           |      |   |           |  
|Total liabilities and stockholders
equity                                          |  | $    | 1,401,881 |      | $ | 1,364,999 |  
|                                                                                    |  |      |           |      |   |           |  

See Accompanying Notes to
Consolidated Financial Statements.

57.

---



Centrue
Financial CorporationConsolidated Statements Of IncomeYears Ended December 31, 2008, 2007, And 2006 (In Thousands, Except Per Share
Data)

|                                                                             |  |      |        |      |   |        |   |   |        |  
|---------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                                             |  | 2008 |        | 2007 |   | 2006   |  
|                                                                             |  |      |        |      |   |        |  
|Interest income                                                              |  |      |        |      |   |        |   |   |        |  
|Loans                                                                        |  | $    | 62,975 |      | $ | 69,060 |   | $ | 33,717 |  
|Securities                                                                   |  |      |        |      |   |        |   |   |        |  
|Taxable                                                                      |  |      | 9,032  |      |   | 12,419 |   |   | 8,785  |  
|Exempt from federal income taxes                                             |  |      | 1,405  |      |   | 1,520  |   |   | 976    |  
|Federal funds sold and other                                                 |  |      | 106    |      |   | 577    |   |   | 380    |  
|                                                                             |  |      |        |      |   |        |   |   |        |  
|Total interest income                                                        |  |      | 73,518 |      |   | 83,576 |   |   | 43,858 |  
|                                                                             |  |      |        |      |   |        |   |   |        |  
|Interest expense                                                             |  |      |        |      |   |        |   |   |        |  
|Deposits                                                                     |  |      | 27,555 |      |   | 37,560 |   |   | 18,204 |  
|Federal funds purchased and securities sold under
agreements to
  repurchase |  |      | 760    |      |   | 1,881  |   |   | 407    |  
|Advances from the Federal Home Loan Bank                                     |  |      | 3,279  |      |   | 2,834  |   |   | 1,824  |  
|Series B Mandatory Redeemable                                                |  |      | 50     |      |   | 50     |   |   | 50     |  
|Subordinated debentures                                                      |  |      | 1,272  |      |   | 1,688  |   |   | 242    |  
|Notes payable                                                                |  |      | 1,028  |      |   | 722    |   |   | 624    |  
|                                                                             |  |      |        |      |   |        |   |   |        |  
|Total interest expense                                                       |  |      | 33,944 |      |   | 44,735 |   |   | 21,351 |  
|                                                                             |  |      |        |      |   |        |   |   |        |  
|Net interest income                                                          |  |      | 39,574 |      |   | 38,841 |   |   | 22,507 |  
|Provision (credit) for loan losses                                           |  |      | 8,082  |      |   | 675    |   |   | (1,275 | )
|                                                                             |  |      |        |      |   |        |   |   |        |  
|Net interest income after provision for loan losses                          |  |      | 31,492 |      |   | 38,166 |   |   | 23,782 |  
|                                                                             |  |      |        |      |   |        |   |   |        |  
|Noninterest income                                                           |  |      |        |      |   |        |   |   |        |  
|Service charges                                                              |  |      | 7,303  |      |   | 6,789  |   |   | 2,473  |  
|Trust income                                                                 |  |      | 750    |      |   | 942    |   |   | 858    |  
|Mortgage banking income                                                      |  |      | 1,525  |      |   | 1,743  |   |   | 1,113  |  
|Brokerage commissions and fees                                               |  |      | 254    |      |   | 795    |   |   | 326    |  
|Bank owned life insurance                                                    |  |      | 1,022  |      |   | 991    |   |   | 628    |  
|Gains (losses) on sales of securities                                        |  |      | 848    |      |   | (29    | ) |   | (104   | )
|Other than temporary impairment on
securities                                |  |      | (2,735 | )    |   |       |   |   |       |  
|Gain on sale of OREO                                                         |  |      | 379    |      |   | 1,107  |   |   |       |  
|Gain on sale of other assets                                                 |  |      | 1,309  |      |   |       |   |   |       |  
|Other income                                                                 |  |      | 2,754  |      |   | 3,327  |   |   | 1,394  |  
|                                                                             |  |      |        |      |   |        |   |   |        |  
|                                                                             |  |      | 13,409 |      |   | 15,665 |   |   | 6,688  |  
|Noninterest expenses                                                         |  |      |        |      |   |        |   |   |        |  
|Salaries and employee benefits                                               |  |      | 16,283 |      |   | 17,635 |   |   | 12,181 |  
|Occupancy, net                                                               |  |      | 3,598  |      |   | 4,043  |   |   | 1,714  |  
|Furniture and equipment                                                      |  |      | 2,673  |      |   | 2,621  |   |   | 2,276  |  
|Marketing                                                                    |  |      | 1,228  |      |   | 1,035  |   |   | 697    |  
|Supplies and printing                                                        |  |      | 470    |      |   | 653    |   |   | 421    |  
|Telephone                                                                    |  |      | 772    |      |   | 834    |   |   | 490    |  
|Data processing                                                              |  |      | 1,309  |      |   | 1,650  |   |   | 788    |  
|Amortization of intangible assets                                            |  |      | 2,607  |      |   | 2,307  |   |   | 416    |  
|Other expenses                                                               |  |      | 6,805  |      |   | 6,555  |   |   | 3,740  |  
|                                                                             |  |      |        |      |   |        |   |   |        |  
|                                                                             |  |      | 35,745 |      |   | 37,333 |   |   | 22,723 |  
|                                                                             |  |      |        |      |   |        |   |   |        |  
|Income from continuing operations before income
  taxes                      |  |      | 9,156  |      |   | 16,498 |   |   | 7,747  |  
|Income taxes                                                                 |  |      | 2,766  |      |   | 5,175  |   |   | 2,145  |  
|                                                                             |  |      |        |      |   |        |   |   |        |  
|Income from continuing operations                                            |  | $    | 6,390  |      | $ | 11,323 |   | $ | 5,602  |  

(Continued)

58.

---



Centrue
Financial CorporationConsolidated Statements Of Income (Continued)
Years Ended December 31, 2008, 2007, And 2006 (In Thousands, Except Per Share
Data)

|                                                                                                   |  |      |       |      |   |        |  |   |       |  
|-------------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- | - | ------ |  | - | ----- | -
|                                                                                                   |  | 2008 |       | 2007 |   | 2006   | 
|                                                                                                   |  |      |       |      |   |        | 
|                                                                                                   |  |      |       |      |   |        |  |   |       |  
|Discontinued operations:                                                                           |  |      |       |      |   |        |  |   |       |  
|Loss from operations of discontinued insurance unit
(including loss
  on disposal of $452 in 2006) |  |      |      |      |   |       |  |   | (677  | )
|Income tax benefit                                                                                 |  |      |      |      |   |       |  |   | (262  | )
|                                                                                                   |  |      |       |      |   |        |  |   |       |  
|Loss on discontinued operations                                                                    |  |      |      |      |   |       |  |   | (415  | )
|                                                                                                   |  |      |       |      |   |        |  |   |       |  
|Net income                                                                                         |  |      | 6,390 |      |   | 11,323 |  |   | 5,187 |  
|Preferred stock dividends                                                                          |  |      | 207   |      |   | 207    |  |   | 207   |  
|                                                                                                   |  |      |       |      |   |        |  |   |       |  
|                                                                                                   |  |      |       |      |   |        |  |   |       |  
|Net income for common stockholders                                                                 |  | $    | 6,183 |      | $ | 11,116 |  | $ | 4,980 |  
|                                                                                                   |  |      |       |      |   |        |  |   |       |  
|Basic earnings per common share from continuing
operations for common
  stockholders               |  | $    | 1.02  |      | $ | 1.75   |  | $ | 1.31  |  
|Basic earnings per common share from discontinued
operations for
  common stockholders             |  |      |      |      |   |       |  |   | (0.10 | )
|                                                                                                   |  |      |       |      |   |        |  |   |       |  
|Basic earnings per common share for common
stockholders                                            |  | $    | 1.02  |      | $ | 1.75   |  | $ | 1.21  |  
|                                                                                                   |  |      |       |      |   |        |  |   |       |  
|Diluted earnings per common share from continuing
operations for
  common stockholders             |  | $    | 1.02  |      | $ | 1.74   |  | $ | 1.30  |  
|Diluted earnings per common share from discontinued
operations for
  common stockholders           |  |      |      |      |   |       |  |   | (0.10 | )
|                                                                                                   |  |      |       |      |   |        |  |   |       |  
|Diluted earnings per common share for common
stockholders                                          |  | $    | 1.02  |      | $ | 1.74   |  | $ | 1.20  |  
|                                                                                                   |  |      |       |      |   |        |  |   |       |  
|Dividends per common share for common
stockholders                                                 |  | $    | 0.55  |      | $ | 0.51   |  | $ | 0.48  |  
|                                                                                                   |  |      |       |      |   |        |  |   |       |  

See Accompanying Notes to
Consolidated Financial Statements.

59.

---



|                                                                                 
|---------------------------------------------------------------------------------
|Centrue Financial Corporation                                                    
|Consolidated
  Statements Of Stockholders Equity                                
|Years
  Ended December 31, 2008, 2007, And 2006 (In Thousands, Except Share Data)
|                                                                                 

|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | --- | --------------- | - | ------- |  | -------------------- | ------ | ----------------------------------------------- | - | ----------------- | - | ----- | --- |  | - | ------- | - | - | ------- | -
|                                                                                                                                  |  | Series A 
  Convertible 
  Preferred 
  Stock |     | Common 
  Stock |   | Surplus |  | Retained 
  Earnings |        | Accumulated 
  Other 
  Comprehensive 
  Income |   | Treasury 
  Stock |   | Total |    
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |    
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |    
|Balance,                                                                                                                          |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|January 1, 2006                                                                                                                   |  | $                                             | 500 |                 | $ | 4,684   |  | $                    | 23,167 |                                                 | $ | 48,837            |   | $     | 95  |  | $ | (11,208 | ) | $ | 66,075  |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|Common stock
  dividends                                                                                                          |  |                                               |    |                 |   |        |  |                      |       |                                                 |   | (1,348            | ) |       |    |  |   |        |   |   | (1,348  | )
|Preferred stock
  dividends                                                                                                       |  |                                               |    |                 |   |        |  |                      |       |                                                 |   | (207              | ) |       |    |  |   |        |   |   | (207    | )
|Exercise of stock
  options (27,300 shares)                                                                                       |  |                                               |    |                 |   | 27      |  |                      | 329    |                                                 |   |                  |   |       |    |  |   |        |   |   | 356     |  
|Issuance of
  2,700,517 shares of common stock related to merger                                                                  |  |                                               |    |                 |   | 2,701   |  |                      | 46,611 |                                                 |   |                  |   |       |    |  |   |        |   |   | 49,312  |  
|Stock-based
  compensation                                                                                                        |  |                                               |    |                 |   |        |  |                      | 353    |                                                 |   |                  |   |       |    |  |   |        |   |   | 353     |  
|Purchase of
  79,625 shares of treasury stock                                                                                     |  |                                               |    |                 |   |        |  |                      |       |                                                 |   |                  |   |       |    |  |   | (1,677  | ) |   | (1,677  | )
|Comprehensive income                                                                                                              |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|Net income                                                                                                                        |  |                                               |    |                 |   |        |  |                      |       |                                                 |   | 5,187             |   |       |    |  |   |        |   |   | 5,187   |  
|Net change in
  fair value of securities classified as available-for-sale, net of income
  taxes and reclassification adjustments |  |                                               |    |                 |   |        |  |                      |       |                                                 |   |                  |   |       | 140 |  |   |        |   |   | 140     |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|Total
  comprehensive income                                                                                                      |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   | 5,327   |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|Balance,                                                                                                                          |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|December 31, 2006                                                                                                                 |  | $                                             | 500 |                 | $ | 7,412   |  | $                    | 70,460 |                                                 | $ | 52,469            |   | $     | 235 |  | $ | (12,885 | ) | $ | 118,191 |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|Common stock
  dividends                                                                                                          |  |                                               |    |                 |   |        |  |                      |       |                                                 |   | (3,241            | ) |       |    |  |   |        |   |   | (3,241  | )
|Preferred stock
  dividends                                                                                                       |  |                                               |    |                 |   |        |  |                      |       |                                                 |   | (207              | ) |       |    |  |   |        |   |   | (207    | )
|Exercise of stock
  options (25,900 shares)                                                                                       |  |                                               |    |                 |   | 26      |  |                      | 360    |                                                 |   |                  |   |       |    |  |   |        |   |   | 386     |  
|Restricted stock
  awards granted                                                                                                 |  |                                               |    |                 |   |        |  |                      | (90    | )                                               |   |                  |   |       |    |  |   | 90      |   |   |        |  
|Share-based
  compensation                                                                                                        |  |                                               |    |                 |   |        |  |                      | 171    |                                                 |   |                  |   |       |    |  |   |        |   |   | 171     |  
|Purchase of
  409,422 shares of treasury stock                                                                                    |  |                                               |    |                 |   |        |  |                      |       |                                                 |   |                  |   |       |    |  |   | (8,451  | ) |   | (8,451  | )
|Comprehensive
  income                                                                                                            |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|Net income                                                                                                                        |  |                                               |    |                 |   |        |  |                      |       |                                                 |   | 11,323            |   |       |    |  |   |        |   |   | 11,323  |  
|Net change in
  fair value of securities classified as available-for-sale, net of income
  taxes and reclassification adjustments |  |                                               |    |                 |   |        |  |                      |       |                                                 |   |                  |   |       | 704 |  |   |        |   |   | 704     |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|Total
  comprehensive income                                                                                                      |  |                                               |    |                 |   |        |  |                      |       |                                                 |   |                  |   |       |    |  |   |        |   |   | 12,027  |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|Balance,                                                                                                                          |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  
|December 31, 2007                                                                                                                 |  | $                                             | 500 |                 | $ | 7,438   |  | $                    | 70,901 |                                                 | $ | 60,344            |   | $     | 939 |  | $ | (21,246 | ) | $ | 118,876 |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |     |  |   |         |   |   |         |  

(Continued)

60.

---



|                                                                                 
|---------------------------------------------------------------------------------
|Centrue Financial Corporation                                                    
|Consolidated
  Statements Of Stockholders Equity (Continued)                    
|Years
  Ended December 31, 2008, 2007, And 2006 (In Thousands, Except Share Data)
|                                                                                 

|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |        |   |   |         |   |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | --- | --------------- | - | ------- |  | -------------------- | ------ | ----------------------------------------------- | - | ----------------- | - | ----- | ------ | - | - | ------- | - | - | ------- | -
|                                                                                                                                  |  | Series A 
  Convertible 
  Preferred 
  Stock |     | Common 
  Stock |   | Surplus |  | Retained 
  Earnings |        | Accumulated 
  Other 
  Comprehensive 
  Income |   | Treasury 
  Stock |   | Total |       
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |       
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |       
|Balance,                                                                                                                          |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |        |   |   |         |   |   |         |  
|December 31, 2007                                                                                                                 |  | $                                             | 500 |                 | $ | 7,438   |  | $                    | 70,901 |                                                 | $ | 60,344            |   | $     | 939    |   | $ | (21,246 | ) | $ | 118,876 |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |        |   |   |         |   |   |         |  
|Common stock
  dividends                                                                                                          |  |                                               |    |                 |   |        |  |                      |       |                                                 |   | (3,321            | ) |       |       |   |   |        |   |   | (3,321  | )
|Preferred stock
  dividends                                                                                                       |  |                                               |    |                 |   |        |  |                      |       |                                                 |   | (207              | ) |       |       |   |   |        |   |   | (207    | )
|Exercise of stock
  options (15,445 shares)                                                                                       |  |                                               |    |                 |   | 16      |  |                      | 217    |                                                 |   |                  |   |       |       |   |   |        |   |   | 233     |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |        |   |   |         |   |   |         |  
|Share-based
  compensation                                                                                                        |  |                                               |    |                 |   |        |  |                      | 370    |                                                 |   |                  |   |       |       |   |   |        |   |   | 370     |  
|Purchase of
  58,500 shares of treasury stock                                                                                     |  |                                               |    |                 |   |        |  |                      |       |                                                 |   |                  |   |       |       |   |   | (1,174  | ) |   | (1,174  | )
|Cumulative effect
  of BOLI post-retirement liability                                                                             |  |                                               |    |                 |   |        |  |                      |       |                                                 |   | (730              | ) |       |       |   |   |        |   |   | (730    | )
|Comprehensive
  income                                                                                                            |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |        |   |   |         |   |   |         |  
|Net income                                                                                                                        |  |                                               |    |                 |   |        |  |                      |       |                                                 |   | 6,390             |   |       |       |   |   |        |   |   | 6,390   |  
|Net change in
  fair value of securities classified as available-for-sale, net of income
  taxes and reclassification adjustments |  |                                               |    |                 |   |        |  |                      |       |                                                 |   |                  |   |       | (4,529 | ) |   |        |   |   | (4,529  | )
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |        |   |   |         |   |   |         |  
|Total
  comprehensive income                                                                                                      |  |                                               |    |                 |   |        |  |                      |       |                                                 |   |                  |   |       |       |   |   |        |   |   | 1,861   |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |        |   |   |         |   |   |         |  
|Balance,                                                                                                                          |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |        |   |   |         |   |   |         |  
|December 31, 2008                                                                                                                 |  | $                                             | 500 |                 | $ | 7,454   |  | $                    | 71,488 |                                                 | $ | 62,476            |   | $     | (3,590 | ) | $ | (22,420 | ) | $ | 115,908 |  
|                                                                                                                                  |  |                                               |     |                 |   |         |  |                      |        |                                                 |   |                   |   |       |        |   |   |         |   |   |         |  

See Accompanying Notes to
Consolidated Financial Statements.

61.

---



Centrue
Financial CorporationConsolidated Statements Of Cash Flows
Years Ended December 31, 2008, 2007, And 2006 (In Thousands)

|                                                                                   |  |      |          |      |   |          |   |   |         |  
|---------------------------------------------------------------------------------- |  | ---- | -------- | ---- | - | -------- | - | - | ------- | -
|                                                                                   |  | 2008 |          | 2007 |   | 2006     |  
|                                                                                   |  |      |          |      |   |          |  
|Cash flows from operating activities                                               |  |      |          |      |   |          |   |   |         |  
|Net Income                                                                         |  | $    | 6,390    |      | $ | 11,323   |   | $ | 5,187   |  
|Adjustments to reconcile net income to net cash
provided by operating
  activities |  |      |          |      |   |          |   |   |         |  
|Depreciation                                                                       |  |      | 2,841    |      |   | 2,366    |   |   | 2,149   |  
|Amortization of intangible assets                                                  |  |      | 2,607    |      |   | 2,307    |   |   | 457     |  
|Amortization of mortgage servicing rights,
net                                     |  |      | 482      |      |   | 525      |   |   | 473     |  
|Amortization of bond premiums, net                                                 |  |      | 534      |      |   | 178      |   |   | 165     |  
|Share based compensation                                                           |  |      | 370      |      |   | 171      |   |   | 353     |  
|Gain on sale of branches                                                           |  |      | (1,107   | )    |   |         |   |   |        |  
|Loss related to sale of Wealth Management                                          |  |      | 340      |      |   |         |   |   |        |  
|Provision for loan losses                                                          |  |      | 8,082    |      |   | 675      |   |   | (1,275  | )
|Provision for deferred income taxes                                                |  |      | 1,776    |      |   | 533      |   |   | 2,460   |  
|Earnings on bank-owned life insurance                                              |  |      | (1,022   | )    |   | (991     | ) |   | (628    | )
|Other than temporary impairment,
securities                                        |  |      | 2,735    |      |   |         |   |   |        |  
|Securities losses/(gains), net                                                     |  |      | (848     | )    |   | 29       |   |   | 104     |  
|Gain on sale of assets, net                                                        |  |      |         |      |   |         |   |   | (14     | )
|Gain on sale of real estate acquired in settlement
of loans                        |  |      | (379     | )    |   | (1,107   | ) |   |        |  
|Gain on sale of loans                                                              |  |      | (1,116   | )    |   | (1,262   | ) |   | (762    | )
|Proceeds from sale of loans held for sale                                          |  |      | 72,101   |      |   | 82,810   |   |   | 49,039  |  
|Origination of loans held for sale                                                 |  |      | (70,947  | )    |   | (78,296  | ) |   | (47,855 | )
|Change in assets and liabilities                                                   |  |      |          |      |   |          |   |   |         |  
|(Increase) decrease in other assets                                                |  |      | (4,457   | )    |   | 1,371    |   |   | (5,442  | )
|Increase (decrease) in other liabilities                                           |  |      | (160     | )    |   | 384      |   |   | 2,963   |  
|                                                                                   |  |      |          |      |   |          |   |   |         |  
|Net cash provided by operating
activities                                          |  |      | 18,222   |      |   | 21,016   |   |   | 7,374   |  
|                                                                                   |  |      |          |      |   |          |   |   |         |  
|Cash flows from investing activities                                               |  |      |          |      |   |          |   |   |         |  
|Proceeds from maturities and paydowns of securities
available for sale             |  |      | 34,018   |      |   | 60,616   |   |   | 39,380  |  
|Proceeds from calls of securities available for
sale                               |  |      | 86,930   |      |   |         |   |   |        |  
|Proceeds from sales of securities available for
sale                               |  |      |         |      |   | 2,548    |   |   | 19,377  |  
|Purchases of securities available for
sale                                         |  |      | (133,684 | )    |   | (9,838   | ) |   | (38,908 | )
|Purchase (redemption) of restricted
securities                                     |  |      |         |      |   | (2,202   | ) |   | 1,730   |  
|Purchase of loans                                                                  |  |      |         |      |   |         |   |   | (19,513 | )
|Net decrease (increase) in loans                                                   |  |      | (103,287 | )    |   | (133,124 | ) |   | 32,371  |  
|Purchase of premises and equipment                                                 |  |      | (375     | )    |   | (2,578   | ) |   | (2,761  | )
|Proceeds from sale of OREO                                                         |  |      | 10,486   |      |   | 8,804    |   |   | 979     |  
|Cash acquired, net of cash (paid) for
acquisitions                                 |  |      |         |      |   |         |   |   | 26,506  |  
|Purchase of Missouri Bank Charter                                                  |  |      |         |      |   | (581     | ) |   |        |  
|Sale of insurance unit                                                             |  |      |         |      |   |         |   |   | 856     |  
|Sale of branches, net of premium received                                          |  |      | (19,498  | )    |   |         |   |   | (6,054  | )
|                                                                                   |  |      |          |      |   |          |   |   |         |  
|Net cash provided by (used in) investing
activities                                |  |      | (125,410 | )    |   | (76,355  | ) |   | 53,963  |  

(Continued)

62.

---



Centrue Financial CorporationConsolidated Statements Of Cash Flows (Continued)Years Ended December 31,
2008, 2007, And 2006 (In Thousands)

|                                                                                                        |  |      |          |      |   |         |   |   |         |  
|------------------------------------------------------------------------------------------------------- |  | ---- | -------- | ---- | - | ------- | - | - | ------- | -
|                                                                                                        |  | 2008 |          | 2007 |   | 2006    |  
|                                                                                                        |  |      |          |      |   |         |  
|                                                                                                        |  |      |          |      |   |         |   |   |         |  
|Cash flows from financing activities                                                                    |  |      |          |      |   |         |   |   |         |  
|Net increase (decrease) in deposits                                                                     |  | $    | 68,419   |      | $ | 6,412   |   | $ | (34,853 | )
|Net increase (decrease) in federal funds purchased
and securities sold
  under agreements to repurchase |  |      | 1,369    |      |   | 8,618   |   |   | 7,202   |  
|Repayment of advances from the Federal Home Loan
Bank                                                   |  |      | (719,332 | )    |   | (58,656 | ) |   | (13,514 | )
|Proceeds from advances from the Federal Home Loan
Bank                                                  |  |      | 738,000  |      |   | 117,124 |   |   | 10      |  
|Payments on notes payable                                                                               |  |      | (4,226   | )    |   | (463    | ) |   | (2,869  | )
|Proceeds from notes payable                                                                             |  |      | 10,250   |      |   | 5,250   |   |   | 1,400   |  
|Redemption of subordinated debentures                                                                   |  |      |         |      |   | (10,310 | ) |   |        |  
|Issuance of subordinated debentures                                                                     |  |      |         |      |   | 10,310  |   |   |        |  
|Dividends on common stock                                                                               |  |      | (3,321   | )    |   | (3,241  | ) |   | (1,348  | )
|Dividends on preferred stock                                                                            |  |      | (207     | )    |   | (207    | ) |   | (207    | )
|Redemption of preferred stock                                                                           |  |      | 563      |      |   |        |   |   |        |  
|Proceeds from exercise of stock options                                                                 |  |      | 233      |      |   | 386     |   |   | 356     |  
|Purchase of treasury stock                                                                              |  |      | (1,174   | )    |   | (8,451  | ) |   | (1,677  | )
|                                                                                                        |  |      |          |      |   |         |   |   |         |  
|Net cash provided by (used in) financing
activities                                                     |  |      | 90,574   |      |   | 66,772  |   |   | (45,500 | )
|                                                                                                        |  |      |          |      |   |         |   |   |         |  
|                                                                                                        |  |      |          |      |   |         |   |   |         |  
|Net increase (decrease) in cash and cash
equivalents                                                    |  |      | (16,614  | )    |   | 11,433  |   |   | 15,837  |  
|                                                                                                        |  |      |          |      |   |         |   |   |         |  
|Cash and cash equivalents                                                                               |  |      |          |      |   |         |   |   |         |  
|Beginning of year                                                                                       |  |      | 51,628   |      |   | 40,195  |   |   | 24,358  |  
|                                                                                                        |  |      |          |      |   |         |   |   |         |  
|                                                                                                        |  |      |          |      |   |         |   |   |         |  
|End of year                                                                                             |  | $    | 35,014   |      | $ | 51,628  |   | $ | 40,195  |  
|                                                                                                        |  |      |          |      |   |         |   |   |         |  
|                                                                                                        |  |      |          |      |   |         |   |   |         |  
|Supplemental disclosures of cash flow information                                                       |  |      |          |      |   |         |   |   |         |  
|Cash payments for                                                                                       |  |      |          |      |   |         |   |   |         |  
|Interest                                                                                                |  | $    | 35,927   |      | $ | 44,417  |   | $ | 21,932  |  
|Income taxes                                                                                            |  |      | 5,629    |      |   | 3,292   |   |   | 1,386   |  
|Transfers from loans to other real estate
owned                                                         |  |      | 20,075   |      |   | 8,776   |   |   | 2,743   |  
|Business Combination in 2006 (see Note
23)                                                              |  |      |          |      |   |         |   |   |         |  

See Accompanying Notes to
Consolidated Financial Statements.

63.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 1. Nature of Operations and Summary of Significant
Accounting Policies

Centrue Financial
Corporation (the Company) is a bank holding company organized under the laws
of the State of Delaware. On November 13, 2006, the Company (formerly known as
UnionBancorp, Inc. and now known as Centrue Financial Corporation) merged with
Centrue Financial Corporation (former Centrue), parent of Centrue Bank with the
Company being the surviving entity in the merger. Operating results of former
Centrue are included in the consolidated financial statements since the date of
the acquisition. The Company provides a full range of banking services to
individual and corporate customers located
in markets extending from the far western and southern suburbs
of the Chicago metropolitan area across Central Illinois down to the
metropolitan St. Louis area. These services include demand, time, and savings
deposits; business and consumer lending; and mortgage banking. Additionally,
brokerage; asset management; and trust services will be provided to our
customers after the sale of these product lines on a referral basis to the
third party providers. The Company is subject to competition from other
financial institutions and nonfinancial institutions providing financial
services. Additionally, the Company and its subsidiary Centrue Bank (the
Bank) are subject to regulations of certain regulatory agencies and undergo
periodic examinations by those regulatory agencies.

Basis
of presentation

The consolidated financial
statements include the accounts of the Company and Centrue Bank. Intercompany
balances and transactions have been eliminated in consolidation.

The accompanying financial
statements have been prepared in conformity with U. S. generally accepted accounting
principles and with general practice in the banking industry. In preparing the
financial statements, management makes estimates and assumptions based on
available information 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 income and expenses during
the reporting period, and actual results could differ. The allowance for loan
losses, carrying value of goodwill, value of mortgage servicing rights,
deferred taxes, and fair values of financial instruments are particularly
subject to change.

Assets held in an agency or
fiduciary capacity, other than trust cash on deposit with Centrue Bank, are not
assets of the Company and, accordingly, are not included in the accompanying
consolidated financial statements.

Cash
flows

Cash and cash equivalents
includes cash, deposits with other financial institutions with maturities under
90 days, and federal funds sold. Net cash flows are reported for customer loan
and deposit transactions, repurchase agreements, and federal funds purchased.

64.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 1. Nature of Operations and Summary of Significant
Accounting Policies (Continued)

Securities

Available-for-sale. Securities
classified as available-for-sale are those securities that the Company intends
to hold for an indefinite period of time, but not necessarily to maturity. Any
decision to sell a security classified as available-for-sale would be based on
various factors, including significant movements in interest rates, changes in
the maturity mix of the Companys assets and liabilities, liquidity needs,
regulatory capital considerations, and other similar factors. Securities
available-for-sale are carried at fair value with unrealized gains or losses,
net of the related income tax effect, reported in other comprehensive income.
Declines in the fair value of securities below their cost that are other than
temporary are reflected as realized losses. In estimating other-than-temporary
losses, management considers: the length of time and extent that fair
value has been less than cost; the financial condition and near term prospects
of the issuer; and the Companys ability and intent to hold the security for a
period sufficient to allow for any anticipated recovery in fair value.
Securities are written down to fair value when a decline in fair value is not
temporary.

For
collateralized debt obligations, the issuers financial condition, payment
history, and ability to pay interest and repay principal according to the terms
of the financial instrument, are analyzed. For multi-issuer securities, the
analysis is conducted for each issuer. In analyzing an issuers financial
condition, the Company reviews relevant balance sheet, income statement and
ratio information. Industry and market information are also considered. The
Company considers whether the securities were issued by or have prinicipal and
interest payments guaranteed by the federal government or its agencies. The
Company conducts regular reviews of the bond agency ratings of securities.

Interest income is reported
net of amortization of premiums and accretion of discounts. Amortization of
purchase premium or discount is included in interest income. Premiums and
discounts on securities are amortized over the level-field method without
anticipating prepayments except for mortgage backed securities where
prepayments are anticipated. Gains or losses from the sale of securities are
determined using the specific identification method.

Restricted Securities. The
Company owns investments in the stock of the Federal Reserve Bank, the Federal
Home Loan Banks of Chicago and Des Moines (FHLB). No ready market exists for
these stocks and they have no quoted market values. Federal Reserve Bank stock
is redeemable at par. The Bank, as a member of the FHLB, is required to
maintain an investment in the capital stock of the FHLB. The stock is redeemable
at par by the FHLB and periodically evaluated for impairment. The Companys
ability to redeem the shares owned is dependent on the redemption practices of
the FHLB.

Loan
commitments and related financial instruments

Financial instruments
include off-balance-sheet credit instruments, such as commitments to make loans
and commercial letters of credit, issued to meet customer financing needs. The
face amount for these items represents the exposure to loss, before considering
customer collateral or ability to repay. Such financial instruments are
recorded when they are funded.

65.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 1. Nature of Operations and Summary of Significant
Accounting Policies (Continued)

Loans

Loans that management has
the intent and ability to hold for the foreseeable future or until maturity or
payoff are reported at the principal balance outstanding, net of purchase
premiums and discounts, deferred loan fees and costs, and an allowance for loan
losses. Interest income is accrued on the unpaid principal balance.

Interest income on mortgage
and commercial loans is discontinued at the time the loan is 90 days delinquent
unless the loan is well-secured and in the process of collection. Consumer
loans are typically charged off no later than 120 days past due. Past due
status is based on the contractual terms of the loan. In all cases, loans are
placed on nonaccrual or charged-off at an earlier date if collection of principal
or interest is considered doubtful.

All interest accrued but not
received for loans placed on nonaccrual are reversed against interest income.
Interest received on such loans is accounted for on the cash-basis or
cost-recovery method, until qualifying for return to accrual. Loans are
returned to accrual status when all the principal and interest amounts
contractually due are brought current and future payments are reasonably
assured.

Mortgage loans originated
and intended for sale in the secondary market are carried at the lower of
aggregate cost or market, as determined by outstanding commitments from
investors. Net unrealized losses, if any, are recorded as a valuation allowance
and charged to earnings.

Mortgage loans held for sale
are sold with either servicing rights retained or servicing rights released.
When retaining the servicing rights, the carrying value of mortgage loans sold
is reduced by the cost allocated to the servicing right. Gains and losses on
sales of mortgage loans are based on the difference between the selling price
and the carrying value of the related loan sold. When selling service released,
the gain or loss is determined by comparing the selling price to the value of
the mortgage sold.

The allowance for loan
losses is a valuation allowance for probable incurred credit losses. Loan
losses are charged against the allowance when management believes and confirms
the loan balance to be uncollectible. Subsequent recoveries, if any, are
credited to the allowance. Management estimates the allowance balance required
using past loan loss experience, the nature and volume of the portfolio,
information about specific borrower situations and estimated collateral values,
economic conditions, and other factors. Allocations of the allowance may be
made for specific loans, but the entire allowance is available for any loan
that, in managements judgment, should be charged-off.

The allowance consists of
specific and general components. The specific component relates to loans that
are individually classified as impaired or loans otherwise classified as
substandard or doubtful. The general component covers non-classified loans and
is based on historical loss experience adjusted for current factors.

A loan is considered
impaired when, based on current information and events, it is probable that the
Company will be unable to collect the scheduled payments of principal or
interest when due according to the contractual terms of the loan agreement.
Factors considered by management in determining impairment include payment
status, collateral value, and the probability of collecting scheduled principal
and interest payments when due. Loans that experience insignificant payment
delays and payment shortfalls generally are not classified as impaired. Management
determines the significance of payment delays and payment shortfalls on a
case-by-case basis, taking into consideration all of the circumstances
surrounding the loan and the borrower, including the length of delay, the
reasons for the delay, the

66.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 1. Nature of Operations and Summary of Significant
Accounting Policies (Continued)

borrowers prior payment
record, and the amount of the shortfall in relation to the principal and
interest owed. Impairment is measured on a loan by loan basis for commercial
and commercial real estate loans by either the present value of expected future
cash flows discounted at the loans effective interest rate, the loans
obtainable market price, or the fair value of the collateral if the loan is
collateral dependent. Large groups of smaller balance homogeneous loans are
collectively evaluated for impairment. Accordingly, the Company does not
separately identify individual consumer and residential loans for impairment
disclosures.

Concentration
of Credit Risk

Most of the Companys growth
and business activity with large dollar credit facilities is with customers
located in St. Louis County, Missouri. Therefore, the Companys exposure to
credit risk is significantly affected by changes in the economy in the St.
Louis County area. Additionally, the Company has a high concentration of real
estate development loans.

Mortgage
servicing rights

Servicing rights are
recognized separately when they are acquired through sales of loans. For sales
of mortgage loans prior to January 1, 2007, a portion of the cost of the loan
was allocated to the servicing right based on relative fair values. The Company
adopted SFAS No. 156 on January 1, 2007, and for sales of mortgage loans
beginning in 2007, servicing rights are initially recorded at fair value with
the income statement effect recorded in gains on sales of loans. Fair value is
based on market prices for comparable mortgage servicing contracts, when
available, or alternatively, is based on a valuation model that calculates the
present value of estimated future net servicing income. The valuation model
incorporates assumptions that market participants would use in estimating
future net servicing income, such as the cost to service, the discount rate,
the custodial earnings rate, an inflation rate, ancillary income, prepayment
speeds and default rates and losses. The Company compares the valuation model
inputs and results to published industry data in order to validate the model
results and assumptions.

All classes of servicing
assets are subsequently measured using the amortization method which requires
servicing rights to be amortized into non-interest income in proportion to, and
over the period of, the estimated future net servicing income of the underlying
loans.

Servicing assets are
evaluated for impairment based upon the fair value of the rights as compared to
carrying amount. Impairment is determined by stratifying rights into groupings
based on predominant risk characteristics, such as interest rate, loan type and
investor type. Impairment is recognized through a valuation allowance for an
individual grouping, to the extent that fair value is less than the carrying amount.
If the Company later determines that all or a portion of the impairment no
longer exists for a particular grouping, a reduction of the allowance may be
recorded as an increase to income. Changes in valuation allowances are reported
with noninterest expense in the other expense line on the income statement. The
fair values of servicing rights are subject to significant fluctuations as a
result of changes in estimated and actual prepayment speeds and default rates
and losses.

Servicing fee income which
is reported on the income statement as mortgage banking income is recorded for
fees earned for servicing loans. The fees are based on a contractual percentage
of the outstanding principal; or a fixed amount per loan and are recorded as
income when earned. The amortization of mortgage servicing rights is netted
against loan servicing fee income. Servicing fees totaled $442, $478 and $743
for the years ended December 31, 2008, 2007 and 2006. Late fees and ancillary
fees related to loan servicing are not material.

67.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 1. Nature of Operations and Summary of Significant
Accounting Policies (Continued)

Premises
and equipment

Land is carried at cost.
Premises and equipment are stated at cost less accumulated depreciation.
Building and related components are depreciated using the straight-line method
with useful lives ranging from 15 to 39 years. Furniture, fixtures, and
equipment are depreciated using the straight-line (or accelerated) method with
useful lives ranging from 3 to 10 years. The cost of maintenance and repairs is
charged to income as incurred; significant improvements are capitalized.

Other Real Estate Owned

Assets
acquired through or instead of loan foreclosure are initially recorded at fair
value less costs to sell when acquired, establishing a new cost basis. If fair
value declines, a valuation allowance is recorded through expense. Costs after
acquisition are expensed.

Bank-owned
life insurance

The Company has invested in
bank-owned life insurance policies on key executives, for which the Company is
also the beneficiary. Bank-owned life insurance is recorded at its cash
surrender value or the amount that can be realized. These policies have an
approximate cash surrender value of $27,917 and $26,895 at December 31,
2008 and 2007, respectively.

In accordance with EITF
06-5, Bank owned life insurance is recorded at the amount that can be realized
under the insurance contract at the balance sheet date, which is the cash
surrender value adjusted for other charges or other amounts due that are
probable at settlement. Management performs a monthly analysis to determine the
current cash surrender value and adjusts the value accordingly.

In September 2006, the FASB
Emerging Issues Task Force finalized Issue No. 06-4, Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar
Life Insurance Arrangements. This issue requires that a liability be recorded
during the service period when a split-dollar life insurance agreement
continues after participants employment or retirement. The required accrued
liability will be based on either the post-employment benefit cost for the
continuing life insurance or based on the future death benefit depending on
contractual terms of the underlying agreement. This issue was effective for
fiscal years beginning after December 15, 2007. Due to the adoption of this
item, the Company recorded an entry of $730 to reduce the beginning balance for
retained earnings as of January 1, 2008.

Goodwill
and other intangible assets

Goodwill results from
business acquisitions and represents the excess of the purchase price over the
fair value of acquired tangible assets and liabilities and identifiable
intangible assets. Goodwill is assessed at least annually for impairment and
any such impairment will be recognized in the period identified. During 2008,
impairment charges of $724 were taken in regards to the sale of the wealth
management segment. See Note 2. for further details.

Other intangible assets
consist of core deposit and acquired customer relationship intangible assets
arising from whole bank, and branch company acquisitions. They are initially
measured at fair value and then are amortized over their estimated useful
lives, which is ten years.

68.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 1. Nature of Operations and Summary of Significant
Accounting Policies (Continued)

Long-term
assets

Premises and equipment, core
deposit, and other intangible assets, and other long-term assets are reviewed
for impairment when events indicate their carrying amount may not be
recoverable from future undiscounted cash flows. If impaired, the assets are
recorded at fair value.

Repurchase
agreements

Substantially
all repurchase agreement liabilities represent amounts advanced by various
customers. Securities are pledged to cover these liabilities, which are not
covered by federal deposit insurance.

Income
taxes

Income tax expense is the
total of the current year income tax due or refundable and the change in
deferred taxes and liabilities. Deferred tax assets and liabilities are
recognized for temporary differences between the financial reporting basis and
the tax basis of the Companys assets and liabilities. Deferred taxes are
recognized for the estimated taxes ultimately payable or recoverable based on
enacted tax laws. Changes in enacted tax rates and laws are reflected in the
financial statements in the periods they occur.

The Company adopted FASB
Interpretation 48, Accounting for Uncertainty in Income Taxes
(FIN 48), as of January 1, 2007. A tax position is recognized as a benefit
only if it is more likely than not that the tax position would be sustained
in a tax examination, with a tax examination being presumed to occur. The
amount recognized is the largest amount of tax benefit that is greater than 50%
likely of being realized on examination. For tax positions not meeting the
more likely than not test, no tax benefit is recorded. The adoption had no
effect on the Companys financial statements.

The Company recognizes
interest related to income tax matters as interest expense and penalties
related to income tax matters as other expense. The Company is no longer
subject to examination by federal taxing authorities for the tax year 2004 and
the years prior.

Earnings
per share

Basic earnings per common
share is net income for common stockholders divided by the weighted-average
common shares outstanding during the period. Diluted earnings per common share
includes the dilutive effect of additional potential common shares issuable
under stock options and Series A convertible preferred shares using the
treasury stock method.

Stock-Based
Compensation

Compensation cost is
recognized for stock options and restricted stock awards issued to employees,
based on the fair value of these awards at the date of grant. A Black-Scholes
model is utilized to estimate the fair value of the stock options, while the
market price of the Corporations common stock at the date of grant is used for
restricted stock awards. Compensation cost is recognized over the required
service period, generally defined as the vesting period. For awards with graded
vesting, compensation cost is recognized on a straight-line basis over the
requisite service period for the entire award.

69.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 1. Nature of Operations and Summary of Significant
Accounting Policies (Continued)

Stockholders
Equity:

Preferred stock

The Companys Certificate of
Incorporation authorizes its Board of Directors to fix or alter the rights,
preferences, privileges, and restrictions of 200,000 shares of preferred stock.

The Company has the
following classes of preferred stock issued or authorized:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Series A Convertible Preferred Stock: The Company has authorized 2,765 shares
  of Series A Convertible Preferred Stock. There were 2,762.24 shares of
  Series A Convertible Preferred Stock issued at December 31, 2008 and
  2007. Preferential cumulative cash dividends are payable quarterly at an
  annual rate of $75.00 per share. Dividends accrue on each share of Series A
  Preferred Stock from the date of issuance and from day to day thereafter,
  whether or not earned or declared. The shares of Series A Preferred
  Stock are convertible into 172,042 common shares. Series A Preferred
  Stock is not redeemable for cash. Upon dissolution, winding up, or
  liquidation of the Company, voluntary or otherwise, holders of Series A
  Preferred Stock will be entitled to receive, out of the assets of the Company
  available for distribution to stockholders, the amount of $1,000 per share,
  plus any accrued but unpaid dividends, before any payment or distribution may
  be made on shares of common stock or any other securities issued by the
  Company that rank junior to the Series A Preferred Stock.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Series B Mandatory Redeemable Preferred Stock: The Company has authorized 1,092 shares
  of Series B Mandatory Redeemable Preferred Stock. There were 268 and 831
  shares of Series B Mandatory Redeemable Preferred Stock issued at
  December 31, 2008 and 2007 respectively, which are shown in other liabilities
  in accordance with FASB 150. In December, 2008, 563 shares were redeemed at
  the shareholders request. Preferential cumulative cash dividends are payable
  quarterly at an annual rate of $60.00 per share. Dividends accrue on each
  share of Series B Preferred Stock from the date of issuance and from day
  to day, thereafter, whether or not earned or declared.                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Each original holder of
  Series B Preferred Stock (or upon such holders death, their executor or
  personal representatives) will have the option, exercisable at their sole
  discretion, to sell, and the Company became obligated to redeem such holders
  shares of Series B Preferred Stock upon the earlier to occur of the
  death of the respective original holder of Series B Preferred Stock or
  August 6, 2006. The per share price payable by the Company for such shares of
  Series B Preferred Stock will be equal to $1,000 per share, plus any
  accrued but unpaid dividends. Upon dissolution, wind up, or liquidation of
  the Company, voluntary or otherwise, holders of Series B Preferred Stock
  will be entitled to receive, out of the assets of the Company available for
  distribution to stockholders, the amount of $1,000 per share, plus any
  accrued but unpaid dividends, before any payment or distribution may be made
  on shares of common stock or any other securities issued by the Company that
  rank junior to the Series B Preferred Stock.                                                  

Dividend
restriction

Banking regulations require
the maintenance of certain capital levels and may limit the amount of dividends
that may be paid by the subsidiary bank to the holding company or by the
holding company to stockholders.

70.

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|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 1. Nature of Operations and Summary of Significant
Accounting Policies (Continued)

Fair
value of financial instruments

Fair values of financial
instruments are estimated using relevant market information and other
assumptions, as more fully disclosed in a separate note. Fair value estimates
involve uncertainties and matters of significant judgment regarding interest
rates, credit risk, prepayments, and other factors, especially in the absence
of broad markets for particular items. Changes in assumptions or in market
conditions could significantly affect the estimates.

Loss
contingencies

Loss contingencies,
including claims and legal actions arising in the ordinary course of business,
are recorded as liabilities when the likelihood of loss is probable and an
amount or range of loss can be reasonably estimated. Management does not
believe there now are such matters that will have a material effect on the
financial statements.

Comprehensive
income

Comprehensive income
consists of net income and other comprehensive income elements, including the
change in unrealized gains and losses on securities available-for-sale, net of
tax.

Operating
segments

Internal financial
information is primarily reported and aggregated in the following lines of
business: retail, commercial, treasury and other.

Reclassifications

Some items in the prior year
financial statements were reclassified to conform to the current presentation.

Adoption
of new accounting standards

In September 2006, the FASB
issued Statement No. 157, Fair Value Measurements (FAS 157). This
Statement defines fair value, establishes a framework for measuring fair value
and expands disclosures about fair value measurements. This Statement
establishes a fair value hierarchy about the assumptions used to measure fair
value and clarifies assumptions about risk and the effect of a restriction on
the sale or use of an asset. The standard was effective for fiscal years
beginning after November 15, 2007. In February 2008, the FASB issued Staff
Position (FSP) 157-2, Effective Date of FASB Statement No. 157.
This FSP delays the effective date of FAS 157 for all nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed at fair
value on a recurring basis (at least annually) to fiscal years beginning after
November 15, 2008, and interim periods within those fiscal years. The impact of
adoption was not material. In October 2008, the FASB issued Staff Position
(FSP) 157-3, Determining the Fair Value of a Financial Asset when the Market for
That Asset Is Not Active. This FSP clarifies the application of FAS
157 in a market that is not active. The impact of adoption was not material.

In February 2007, the FASB
issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities (SFAS 159). SFAS 159 permits entities to
choose to measure many financial instruments and certain other items at fair
value. The objective of SFAS 159 is to improve financial reporting by providing
entities with the opportunity to mitigate volatility in reported earnings
caused by measuring related assets and liabilities differently without having
to apply complex hedge accounting principles. The new standard
was effective for the Company on January 1, 2008. The Company did not elect the
fair value option for any financial assets or financial liabilities as of
January 1, 2008.

71.

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|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 1. Nature of Operations and Summary of Significant
Accounting Policies (Continued)

In January 2009, the FASB
Emerging Issues Task Force finalized Issue No. 99-20-1, Amendments to the
Impairment Guidance of EITF Issue No. 99-20. This issue amends the impairment
guidance in EITF Issue No. 99-20, Recognition of Interest Income and Impairment
on Purchased Beneficial Interests that Continue to be Held by a Transferor in
Securitized Financial Assets, to achieve more consistent determination of
whether an other-than-temporary impairment assessment and the related
disclosure requirements in FASB Statement No. 115, Accounting for Certain
Investments in Debt and Equity Securities, and other related guidance. If the
fair value of an available-for-sale or held-to-maturity debt security is less
than its cost basis at the measurement date, generally accepted accounting principles
require that the reporting entity assess the impaired security to determine
whether the impairment is other than temporary. Other-than-temporary
impairments are recognized through earnings. This amendment allows for changes
which include using reasonable judgment of the probability that the holder be
unable to collect amounts due rather than using the EITF 99-20s previous
requirement to estimate a market participants view of cash flows. At
December 31, 2008, the Company has applied this FSP in determining whether
there is any other-than-temporary impairment in the securities portfolio.

Effect
of newly issued but not yet effective accounting standards

In December 2007, the FASB
issued FAS No. 141 (revised 2007), Business Combinations (FAS 141 (R)), which
establishes principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in an acquire, including
the recognition and measurement of goodwill acquired in a business combination.
FAS No. 141 (R) is effective for fiscal years beginning on or after December
15, 2008. Earlier adoption is prohibited. The adoption of this standard is not
expected to have a material effect on the Corporations results of operations
or financial position.

Note 2. Business Acquisitions and Divestitures

Acquisition

On November 13, 2006, the
Company merged with the Centrue Financial Corporation. UnionBancorp, Inc. was
the acquirer and adopted the Centrue Financial Corporation name. See Note 23
for further information.

Divestitures

On March 31, 2006, the
Company completed its sale of the Mendota sales and service center to First
State Bank in Mendota. At the date of the sale, the branch had approximately
$6,066 in deposits.

On September 30, 2006, the
Company completed its sale of its Insurance Product line to the Phoenix Group.
The sale price was $1,100. The Company recorded a net loss of $452. See Note 22
for further information.

On March 28, 2008 the
Company completed the sale of its Hanover and Elizabeth branches to Apple River
State Bank headquartered in Apple River, Illinois. Apple River assumed
approximately $22,700 in deposits and acquired $14,700 in loans, and $401 in
premises and equipment. The net gain on the sale was $482.

72.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 2. Business Acquisitions and Divestitures (Continued)

On June 6, 2008 the Company
completed the sale of its Manlius and Tampico branches to Peoples National Bank
headquartered in Kewanee, Illinois. Peoples National assumed approximately
$29,500 in deposits and acquired $17,600 in loans and $214 in premises and
equipment. The net gain on the sale was $629.

On August 29, 2008 the
Company completed the sale of its Asset Management product line to Vezzetti
Capital Management. There was no gain or loss recorded on this transaction.

On September 18, 2008 the
Company completed the sale of its brokerage product line. The net loss on sale
was $29.

On September 15, 2008 the
Company entered into an agreement to sell its Trust unit of their Wealth
Management division to Hometown National Bank headquartered in LaSalle,
Illinois. The Definitive Purchase and Assumption Agreement entered into calls
for Hometown to purchase the customers associated with this product line. The
transaction was completed on January 23, 2009. There was no gain or loss
recorded related with this sale.

Management has analyzed on a
overall basis the impact of the above divestitures on an individual and
aggregate basis and determined that per FAS 144, Accounting for the Impairment
or Disposal of Long-lived Assets, that the results for the asset divestitures
is immaterial to the Company as a whole and does not require them to be
reported as discontinued operations on the financial statements.

Note 3. Securities

The fair value of securities
and the related gross unrealized gains and losses recognized in accumulated
other comprehensive income were as follows:

|                                                  |  |                   |         |                            |   |                             |  |   |        |  
|------------------------------------------------- |  | ----------------- | ------- | -------------------------- | - | --------------------------- |  | - | ------ | -
|                                                  |  | December 31, 2008 |        
|                                                  |  |                   |        
|                                                  |  | Fair
  Value      |         | Gross
  Unrealized
  Gains |   | Gross
  Unrealized
  Losses | 
|                                                  |  |                   |         |                            |   |                             | 
|                                                  |  |                   |         |                            |   |                             | 
|                                                  |  |                   |         |                            |   |                             | 
|U.S. government agencies                          |  | $                 | 16,995  |                            | $ | 482                         |  | $ |       |  
|States and political subdivisions                 |  |                   | 38,202  |                            |   | 530                         |  |   | (194   | )
|U.S. government agency mortgage-back
  securities |  |                   | 143,378 |                            |   | 1,148                       |  |   | (887   | )
|Collateralized mortgage obligations               |  |                   | 20,004  |                            |   | 53                          |  |   | (1,453 | )
|Equity securities                                 |  |                   | 1,496   |                            |   |                            |  |   | (75    | )
|Collateralized debt obligations                   |  |                   | 19,848  |                            |   |                            |  |   | (5,400 | )
|Corporate                                         |  |                   | 1,928   |                            |   | 7                           |  |   | (70    | )
|                                                  |  |                   |         |                            |   |                             |  |   |        |  
|                                                  |  | $                 | 241,851 |                            | $ | 2,220                       |  | $ | (8,079 | )
|                                                  |  |                   |         |                            |   |                             |  |   |        |  

73.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 3. Securities (Continued)

|                                                  |  |                   |         |                            |   |                             |  |   |      |  
|------------------------------------------------- |  | ----------------- | ------- | -------------------------- | - | --------------------------- |  | - | ---- | -
|                                                  |  | December 31, 2007 |        
|                                                  |  |                   |        
|                                                  |  | Fair
  Value      |         | Gross
  Unrealized
  Gains |   | Gross
  Unrealized
  Losses | 
|                                                  |  |                   |         |                            |   |                             | 
|                                                  |  |                   |         |                            |   |                             | 
|U.S. government agencies                          |  | $                 | 103,624 |                            | $ | 1,415                       |  | $ | (14  | )
|States and political subdivisions                 |  |                   | 41,561  |                            |   | 501                         |  |   | (13  | )
|U.S. government agency mortgage-back
  securities |  |                   | 47,784  |                            |   | 287                         |  |   | (106 | )
|Collateralized mortgage obligations               |  |                   | 24,077  |                            |   | 68                          |  |   | (100 | )
|Equity securities                                 |  |                   | 1,601   |                            |   | 105                         |  |   |     |  
|Collateralized debt obligations                   |  |                   | 17,273  |                            |   |                            |  |   | (609 | )
|Corporate                                         |  |                   | 2,741   |                            |   | 9                           |  |   | (10  | )
|                                                  |  |                   |         |                            |   |                             |  |   |      |  
|                                                  |  | $                 | 238,661 |                            | $ | 2,385                       |  | $ | (852 | )
|                                                  |  |                   |         |                            |   |                             |  |   |      |  

Sales and calls of
securities available-for-sale were as follows:

| |                     |  |                          |        |      |   |       |   |   |        |  
| | ------------------- |  | ------------------------ | ------ | ---- | - | ----- | - | - | ------ | -
| |                     |  | Years Ended December 31, |       
| |                     |  |                          |       
| |                     |  | 2008                     |        | 2007 |   | 2006  |  
| |                     |  |                          |        |      |   |       |  
| |                     |  |                          |        |      |   |       |  
| | Proceeds from calls |  | $                        | 86,930 |      | $ |      |   | $ |       |  
| | Proceeds from sales |  |                          |       |      |   | 2,548 |   |   | 19,377 |  
| | Realized gains      |  |                          | 848    |      |   | 11    |   |   | 19     |  
| | Realized losses     |  |                          |       |      |   | (40   | ) |   | (123   | )
| | OTTI impairment     |  |                          | (2,735 | )    |   |      |   |   |       |  

The tax benefit (provision)
related to these net realized gains and losses were $329, $(11), and $40,
respectively.

The fair values of securities
classified as available-for-sale at December 31, 2008, by contractual
maturity, are shown below. Securities not due at a single maturity date,
including mortgage-backed securities, collateralized mortgage obligations, and
equity securities are shown separately.

Fair Value

| |                                                     |  |   |         | 
| | --------------------------------------------------- |  | - | ------- | 
| | Due in one year or less                             |  | $ | 3,845   | 
| | Due after one year through five years               |  |   | 39,362  | 
| | Due after five years through ten years              |  |   | 7,230   | 
| | Due after ten years                                 |  |   | 24,608  | 
| | U.S. government agency mortgage-backed
  securities |  |   | 143,378 | 
| | Collateralized mortgage obligations                 |  |   | 20,004  | 
| | Equity and corporate securities                     |  |   | 3,424   | 
| |                                                     |  |   |         | 
| |                                                     |  | $ | 241,851 | 
| |                                                     |  |   |         | 

The Company held callable
securities with carrying value of $43,839 and an amortized cost basis of
$55,179 as of December 31, 2008 and with a carrying value of $129,870 and
an amortized cost basis of $128,803 at December 31, 2007.

Securities with carrying
values of approximately $193,038 and $182,415 at December 31, 2008 and
2007, respectively, were pledged to secure public deposits and securities sold
under agreements to repurchase and for other purposes as required or permitted
by law. At year end 2008 and 2007, there were no holdings of securities of any
one issuer, other than the U.S. Government agencies in an amount greater than
10% of stockholders equity.

74.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 3. Securities (Continued)

The Company does not have
any securities classified as trading or held-to-maturity.

Securities with unrealized
losses not recognized in income are as follows presented by length of time
individual securities have been in a continuous unrealized loss position:

|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |   |   |         |  |   |        |  
|------------------------------------------------- |  | --------------------- | ------ | ------------------- | - | ------------ | - | ----------------- | ------ | ------------ | - | ----------------- | - | - | ------- |  | - | ------ | -
|December
  31, 2008                               |  | Less
  than 12 Months |        | 12
  Months or More |   | Total        |  
|                                                  |  |                       |        |                     |   |              |  
|Description of Securities                         |  | Fair
  Value          |        | Unrealized
  Loss   |   | Fair
  Value |   | Unrealized
  Loss |        | Fair
  Value |   | Unrealized
  Loss |  
|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |  
|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |  
|U.S. government agencies                          |  | $                     |       |                     | $ |             |   | $                 |       |              | $ |                  |   | $ |        |  | $ |       |  
|State and political subdivisions                  |  |                       | 7,284  |                     |   | (194         | ) |                   |       |              |   |                  |   |   | 7,284   |  |   | (194   | )
|U.S. government agency mortgage-backed securities |  |                       | 59,742 |                     |   | (796         | ) |                   | 3,245  |              |   | (91               | ) |   | 62,987  |  |   | (887   | )
|Collateralized mortgage obligations               |  |                       | 16,385 |                     |   | (1,453       | ) |                   |       |              |   |                  |   |   | 16,385  |  |   | (1,453 | )
|Equities                                          |  |                       |       |                     |   |             |   |                   | 1,496  |              |   | (75               | ) |   | 1,496   |  |   | (75    | )
|Collateralized debt obligations                   |  |                       | 7,579  |                     |   | (2,524       | ) |                   | 12,269 |              |   | (2,876            | ) |   | 19,848  |  |   | (5,400 | )
|Corporate                                         |  |                       | 1,423  |                     |   | (70          | ) |                   |       |              |   |                  |   |   | 1,423   |  |   | (70    | )
|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |   |   |         |  |   |        |  
|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |   |   |         |  |   |        |  
|Total temporarily impaired                        |  | $                     | 92,413 |                     | $ | (5,037       | ) | $                 | 17,010 |              | $ | (3,042            | ) | $ | 109,423 |  | $ | (8,079 | )
|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |   |   |         |  |   |        |  

|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |   |   |        |  |   |      |  
|------------------------------------------------- |  | --------------------- | ------ | ------------------- | - | ------------ | - | ----------------- | ------ | ------------ | - | ----------------- | - | - | ------ |  | - | ---- | -
|December
  31, 2007                               |  | Less
  than 12 Months |        | 12
  Months or More |   | Total        |  
|                                                  |  |                       |        |                     |   |              |  
|Description of Securities                         |  | Fair
  Value          |        | Unrealized
  Loss   |   | Fair
  Value |   | Unrealized
  Loss |        | Fair
  Value |   | Unrealized
  Loss |  
|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |  
|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |  
|U.S. government agencies                          |  | $                     |       |                     | $ |             |   | $                 | 8,015  |              | $ | (14               | ) | $ | 8,015  |  | $ | (14  | )
|State and political subdivisions                  |  |                       | 1,385  |                     |   | (9           | ) |                   | 549    |              |   | (4                | ) |   | 1,934  |  |   | (13  | )
|U.S. government agency mortgage-backed securities |  |                       | 15,096 |                     |   | (72          | ) |                   | 5,890  |              |   | (34               | ) |   | 20,986 |  |   | (106 | )
|Collateralized mortgage obligations               |  |                       | 4,657  |                     |   | (100         | ) |                   |       |              |   |                  |   |   | 4,657  |  |   | (100 | )
|Equities                                          |  |                       |       |                     |   |             |   |                   |       |              |   |                  |   |   |       |  |   |     |  
|Collateralized debt obligations                   |  |                       | 17,273 |                     |   | (609         | ) |                   |       |              |   |                  |   |   | 17,273 |  |   | (609 | )
|Corporate                                         |  |                       | 976    |                     |   | (9           | ) |                   | 765    |              |   | (1                | ) |   | 1,741  |  |   | (10  | )
|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |   |   |        |  |   |      |  
|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |   |   |        |  |   |      |  
|Total temporarily impaired                        |  | $                     | 39,387 |                     | $ | (799         | ) | $                 | 15,219 |              | $ | (53               | ) | $ | 54,606 |  | $ | (852 | )
|                                                  |  |                       |        |                     |   |              |   |                   |        |              |   |                   |   |   |        |  |   |      |  

The Company evaluates
securities for other-than-temporary impairment at least on a quarterly basis,
and more frequently when economic and market concerns warrant such evaluation.
Consideration is given to the length of time and the extent to which the fair
value has been less than cost, the financial condition and near-term prospects
of the issuer, and the intent and ability of the Company to retain its
investment in the issuer for a period of time sufficient to allow for any
anticipated recovery in fair value. In analyzing an issuers financial
condition, the Company may consider whether the securities are issued by the
federal government or its agencies, whether downgrades by bond rating agencies
have occurred, and the results of reviews of the issuers financial condition.

75.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 4. Loans

The major classifications of
loans follow:

|                                                                                  |  |                |           |      |   |         | 
|--------------------------------------------------------------------------------- |  | -------------- | --------- | ---- | - | ------- | 
|                                                                                  |  | December
  31, |          
|                                                                                  |  |                |          
|                                                                                  |  | 2008           |           | 2007 |  
|                                                                                  |  |                |           |      |  
|                                                                                  |  |                |           |      |  
|Commercial                                                                        |  | $              | 169,721   |      | $ | 191,748 | 
|Commercial real estate                                                            |  |                | 633,773   |      |   | 509,162 | 
|Real estate                                                                       |  |                | 192,829   |      |   | 205,940 | 
|Real estate loans held for
  sale related to secondary mortgage market activities |  |                | 2,143     |      |   | 2,181   | 
|Loans held for sale related
  to pending branch sales                             |  |                |          |      |   | 38,600  | 
|Installment                                                                       |  |                | 5,267     |      |   | 8,106   | 
|Other                                                                             |  |                | 657       |      |   | 1,548   | 
|                                                                                  |  |                |           |      |   |         | 
|                                                                                  |  | $              | 1,004,390 |      | $ | 957,285 | 
|                                                                                  |  |                |           |      |   |         | 

As discussed in Note 2, the
Company sold four branches during 2008. For 2007, a total of $38,600 of loans,
as indicated in the above table, were included in the sale.

An analysis of activity in
the allowance for loan losses follows:

|                                   |  |                          |        |      |   |        |   |   |        |  
|---------------------------------- |  | ------------------------ | ------ | ---- | - | ------ | - | - | ------ | -
|                                   |  | Years Ended December 31, |       
|                                   |  |                          |       
|                                   |  | 2008                     |        | 2007 |   | 2006   |  
|                                   |  |                          |        |      |   |        |  
|                                   |  |                          |        |      |   |        |  
|Balance at
  beginning of year     |  | $                        | 10,755 |      | $ | 10,835 |   | $ | 8,362  |  
|Acquired in merger                 |  |                          |       |      |   |       |   |   | 4,767  |  
|Provision (credit) for loan losses |  |                          | 8,082  |      |   | 675    |   |   | (1,275 | )
|Recoveries                         |  |                          | 287    |      |   | 812    |   |   | 665    |  
|Loans charged off                  |  |                          | (4,106 | )    |   | (1,567 | ) |   | (1,684 | )
|                                   |  |                          |        |      |   |        |   |   |        |  
|Balance at
  end of year           |  | $                        | 15,018 |      | $ | 10,755 |   | $ | 10,835 |  
|                                   |  |                          |        |      |   |        |   |   |        |  
|                                   |  |                          |        |      |   |        |   |   |        |  

The following table presents
data on impaired loans:

|                                                                   |  |              |        |      |   |        |  |   |        | 
|------------------------------------------------------------------ |  | ------------ | ------ | ---- | - | ------ |  | - | ------ | 
|                                                                   |  | December 31, |       
|                                                                   |  |              |       
|                                                                   |  | 2008         |        | 2007 |   | 2006   | 
|                                                                   |  |              |        |      |   |        | 
|                                                                   |  |              |        |      |   |        | 
|Year-end
  impaired loans for which an allowance has been provided |  | $            | 36,754 |      | $ | 5,502  |  | $ | 4,915  | 
|Year-end
  impaired loans for which no allowance has been provided |  |              | 1,880  |      |   | 5,923  |  |   | 16,450 | 
|                                                                   |  |              |        |      |   |        |  |   |        | 
|                                                                   |  |              |        |      |   |        |  |   |        | 
|Total
  impaired loans                                             |  | $            | 38,634 |      | $ | 11,425 |  | $ | 21,365 | 
|                                                                   |  |              |        |      |   |        |  |   |        | 
|                                                                   |  |              |        |      |   |        |  |   |        | 
|Allowance
  for loan loss allocated to impaired loans              |  | $            | 8,357  |      | $ | 2,350  |  | $ | 1,562  | 
|Average
  recorded investment in impaired loans                    |  |              | 19,156 |      |   | 14,246 |  |   | 14,514 | 
|Interest
  income recognized from impaired loans                   |  |              | 1,760  |      |   | 1,047  |  |   | 620    | 
|Cash basis
  interest income recognized from impaired loans        |  |              | 1,803  |      |   | 1,052  |  |   | 730    | 

Due to the economic
conditions facing many of its customers, the Company determined that there were
$24,800 of loans that were classified as impaired but were considered to be
performing loans at December 31, 2008. This resulted in the increase in impaired
loans as of December 31, 2008.

In November 2006, the
Company completed its merger with the former Centrue Financial Corporation. As
part of this merger, the Companys loan portfolio increased by $436,460 and the
allowance for loan losses increased $4,767. Within the loans acquired were
nonaccrual loans of $10,230. The increase in impaired loans with no allocated
allowance in the prior year is a direct result of the loans acquired in the
merger being recorded upon acquisition at their fair value.

76.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 4. Loans (Continued)

Nonperforming loans were as
follows:

|                                               |  |                |        |      |   |       | 
|---------------------------------------------- |  | -------------- | ------ | ---- | - | ----- | 
|                                               |  | December
  31, |       
|                                               |  |                |       
|                                               |  | 2008           |        | 2007 |  
|                                               |  |                |        |      |  
|                                               |  |                |        |      |  
|Loans past due over 90 days
  still on accrual |  | $              |       |      | $ |      | 
|Nonaccrual loans                               |  |                | 10,318 |      |   | 4,090 | 

Nonperforming loans include
both smaller balance homogeneous loans that are collectively evaluated for
impairment and individually classified impaired loans.

Loans made to executive
officers, directors, and their affiliates during 2008 were as follows:

| |                                                       |  |   |         |  
| | ----------------------------------------------------- |  | - | ------- | -
| | Balance at
  December 31, 2007                        |  | $ | 15,979  |  
| | New loans, extensions, and modification               |  |   | 10,250  |  
| | Repayments                                            |  |   | (15,080 | )
| | Effect of changes in composition of related
  parties |  |   | 92      |  
| |                                                       |  |   |         |  
| | Balance at
  December 31, 2008                        |  | $ | 11,241  |  
| |                                                       |  |   |         |  

Note 5. Fair Value

Statement 157 establishes a
fair value hierarchy which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value.
The standard describes three levels of inputs that may be used to measure fair
value:

| |                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Level 1: Quoted prices
  (unadjusted) or identical assets or liabilities in active markets that the
  entity has the ability to access as of the measurement date.                                                                                                       
| |                                                                                                                                                                                                                                                                          
| | Level 2: Significant other
  observable inputs other than Level 1 prices such as quoted prices for similar
  assets or liabilities; quoted prices in markets that are not active; or other
  inputs that are observable or can be corroborated by observable market data.
| |                                                                                                                                                                                                                                                                          
| | Level 3: Significant
  unobservable inputs to reflect a reporting entitys own assumptions about the
  assumptions that market participants would use to price and asset or
  liability.                                                                                 

The fair values of
securities available for sale is determined by obtaining quoted prices on
nationally recognized securities exchanges (Level 1 inputs) or matrix pricing,
which is a mathematical technique widely used in the industry to value debt
securities without relying exclusively on quoted prices for the specific
securities but rather by relying on the securities relationship to other
benchmark quoted securities (Level 2 inputs). If the securities could not be
priced using quoted market prices, observable market activity or comparable
trades, the financial market was considered not active and the assets were
classified as Level 3. The assets included in Level 3 are trust preferred
CDOs. These securities were historically priced using Level 2 inputs. In 2008,
the decline in the level of observable inputs and market activity for trust
preferred CDOs by the measurement date was significant and resulted in
unreliable external pricing. As such, these investments are now considered
Level 3 inputs and are priced using an internal model. Information such as historical
and current performance of the underlying collateral, deferral/default rates,
collateral coverage ratios, break in yield calculations, cash flow projections,
liquidity and credit premiums required, and financial trend analysis with
respect to the individual issuing financial institutions and insurance
companies are utilized in determining individual security valuations. Due to
market conditions as well as the limited trading activity of these securities,
the market value of the securities is highly sensitive to assumption changes
and market volatility.

77.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 5. Fair Value (continued)

At year-end 2008, seven
collateralized debt obligations have unrealized losses with aggregate
depreciation of 29% from the Companys cost basis. These unrealized losses have
existed for less than three months and relate principally to the banking
sector. Although three of the instruments have shown stress as a result of the
weakened economy, the rating agencies still have them rated at investment
grade. However for four of the instruments, the rating agencies have downgraded
them below investment grade. In analyzing the issuers financial condition, management
considers industry analysts reports, financial performance and projected
target prices of investment analysts within a specified time frame. Based on
the Companys FAS115 analysis at December 31, 2008, the Company determined that
one instrument had a break in yield such that not all of the contractual
principal and interest payments would be received. Thus, the Company recognized
a pre-tax impairment charge of $2,735 for the other-than-temporary decline in
value.

Assets and liabilities
measured at fair value are summarized below:

|                                            |  |                     |         |                                                                        |   |                                                       |  |                                                 |         |  |   |        | 
|------------------------------------------- |  | ------------------- | ------- | ---------------------------------------------------------------------- | - | ----------------------------------------------------- |  | ----------------------------------------------- | ------- |  | - | ------ | 
|                                            |  |                     |         | Fair Value measurements at December 31 Using                           |  
|                                            |  |                     |         |                                                                        |  
|                                            |  | December 31,
  2008 |         | Quoted Prices in
  Active Markets
  For Identical
  Assets
  (Level 1) |   | Significant
  Other
  Observable
  Inputs
  (Level 2) |  | Significant
  Unobservable
  Inputs
  (Level 3) |        
|                                            |  |                     |         |                                                                        |   |                                                       |  |                                                 |        
|Assets and Liabilities on a recurring
basis |  |                     |         |                                                                        |   |                                                       |  |                                                 |         |  |   |        | 
|Assets:                                     |  |                     |         |                                                                        |   |                                                       |  |                                                 |         |  |   |        | 
|Available-for-sale securities               |  | $                   | 241,851 |                                                                        | $ |                                                      |  | $                                               | 222,003 |  | $ | 19,848 | 

The table below presents a
reconciliation of income statement classification of gains and losses for all
assets measured at fair value on a recurring basis using significant
unobservable inputs (Level 3) for year ended December 31, 2008.

|                                                                   |  |                                   |        |  
|------------------------------------------------------------------ |  | --------------------------------- | ------ | -
|                                                                   |  | Securities
  Available for
  Sale |       
|                                                                   |  |                                   |       
|Beginning balance, January 1, 2008                                 |  | $                                 |       |  
|                                                                   |  |                                   |        |  
|Transfers into Level 3 as of September 30,
  2008                  |  |                                   | 21,910 |  
|Total gains or losses (realized/unrealized)
  included in earnings |  |                                   |        |  
|Interest income on securities                                      |  |                                   |       |  
|Security impairment                                                |  |                                   | (2,735 | )
|Other changes in fair value                                        |  |                                   |        |  
|Gains (losses) on sales of securities                              |  |                                   |       |  
|Included in other comprehensive income                             |  |                                   | 673    |  
|                                                                   |  |                                   |       
|Ending Balance, December 31, 2008                                  |  | $                                 | 19,848 |  
|                                                                   |  |                                   |       

78.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 5. Fair Value (continued)

|                                               |  |                     |        |                                                                        |   |                                                       |  |                                                 |        |  |   |   | 
|---------------------------------------------- |  | ------------------- | ------ | ---------------------------------------------------------------------- | - | ----------------------------------------------------- |  | ----------------------------------------------- | ------ |  | - | - | 
|                                               |  |                     |        | Fair Value 
  measurements at 
  December 31 
  Using                  |   |                                                       |  |                                                 |       
|                                               |  |                     |        |                                                                        |   |                                                       |  |                                                 |       
|                                               |  | December 31,
  2008 |        | Quoted Prices in
  Active Markets
  For Identical
  Assets
  (Level 1) |   | Significant
  Other
  Observable
  Inputs
  (Level 2) |  | Significant
  Unobservable
  Inputs
  (Level 3) |       
|                                               |  |                     |        |                                                                        |   |                                                       |  |                                                 |       
|Assets and Liabilities on a nonrecurring
basis |  |                     |        |                                                                        |   |                                                       |  |                                                 |        |  |   |   | 
|Assets:                                        |  |                     |        |                                                                        |   |                                                       |  |                                                 |        |  |   |   | 
|Impaired loans                                 |  | $                   | 28,397 |                                                                        | $ |                                                      |  | $                                               | 28,397 |  | $ |  | 

Impaired loans, which are
measured for impairment using the fair value of the collateral for collateral
dependent loans, had a carrying amount of $36,754 with a valuation allowance of
$8,357, resulting in an additional provision for loan losses of $5,351 for the
period.

The majority of our impaired
loans are collateralized by real estate. The carrying values for these real
estate secured impaired loans was based upon information in independent
appraisals obtained on the underlying collateral.

The methods and assumptions
used to estimate fair value are described as follows:

The carrying
amount is the estimated fair value for cash and due from banks, federal funds
sold, short-term borrowings, accrued interest receivable and payable, demand
deposits, short-term debt, and variable rate loans or deposits that reprice
frequently and fully. Security fair values are based on the methods described
above. The carrying value and fair value of the subordinated debentures issued
to capital trusts are estimated using market data for similarly risk weighted
items to value them. For fixed rate loans or deposits and for variable rate
loans or deposits with infrequent repricing or repricing limits, the fair value
is based on discounted cash flows using current market rates applied to the
estimated life and credit risk. Fair values for impaired loans are estimated
using discounted cash flow analysis or underlying collateral values. The fair
value of loans held for sale is based on market quotes. The fair value of debt
and redeemable stock is based on current rates for similar financing. It was
not practicable to determine the fair value of the restricted securities due to
restrictions placed on its transferability. The fair value of off-balance-sheet
items is based on the current fees or cost that would be charged to enter into
or terminate such arrangements.

79.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 5. Fair Value (continued)

The estimated fair values of
the Companys financial instruments were as follows:

| |                                                                              |                   |   |              |  |                   |           |              |   |           |  |   |           | 
| | ---------------------------------------------------------------------------- | ----------------- | - | ------------ |  | ----------------- | --------- | ------------ | - | --------- |  | - | --------- | 
| |                                                                              | December
  31,    |  
| |                                                                              |                   |  
| |                                                                              | 2008              |   | 2007         | 
| |                                                                              |                   |   |              | 
| |                                                                              | Carrying
  Amount |   | Fair
  Value |  | Carrying
  Amount |           | Fair
  Value |  
| |                                                                              |                   |   |              |  |                   |           |              |  
| | Financial assets                                                             |                   |   |              |  |                   |           |              |   |           |  |   |           | 
| | Cash and cash equivalents                                                    |                   | $ | 35,014       |  | $                 | 35,014    |              | $ | 51,628    |  | $ | 51,628    | 
| | Securities                                                                   |                   |   | 241,851      |  |                   | 241,851   |              |   | 238,661   |  |   | 238,661   | 
| | Restricted Securities                                                        |                   |   | 10,711       |  |                   | N/A       |              |   | 10,670    |  |   | N/A       | 
| | Net Loans                                                                    |                   |   | 989,372      |  |                   | 994,010   |              |   | 946,530   |  |   | 952,096   | 
| | Accrued interest receivable                                                  |                   |   | 5,547        |  |                   | 5,547     |              |   | 7,517     |  |   | 7,517     | 
| | Financial liabilities                                                        |                   |   |              |  |                   |           |              |   |           |  |   |           | 
| | Deposits                                                                     |                   |   | 1,049,220    |  |                   | 1,050,795 |              |   | 1,033,022 |  |   | 1,037,151 | 
| | Federal funds purchased and securities sold under
agreements to
  repurchase |                   |   | 46,306       |  |                   | 46,306    |              |   | 44,937    |  |   | 44,937    | 
| | Federal Home Loan Bank Advances                                              |                   |   | 140,285      |  |                   | 141,430   |              |   | 121,615   |  |   | 121,667   | 
| | Notes payable                                                                |                   |   | 19,826       |  |                   | 18,921    |              |   | 13,802    |  |   | 13,802    | 
| | Subordinated debentures                                                      |                   |   | 20,620       |  |                   | 18,031    |              |   | 20,620    |  |   | 20,468    | 
| | Series B mandatory redeemable preferred
stock                                |                   |   | 268          |  |                   | 268       |              |   | 831       |  |   | 831       | 
| | Accrued interest payable                                                     |                   |   | 4,230        |  |                   | 4,230     |              |   | 6,213     |  |   | 6,213     | 

In addition, other assets
and liabilities of the Company that are not defined as financial instruments
are not included in the above disclosures, such as property and equipment.
Also, nonfinancial instruments typically not recognized in financial statements
nevertheless may have value but are not included in the above disclosures.
These include, among other items, the estimated earnings power of core deposit
accounts, the earnings potential of loan servicing rights, the earnings
potential of the trust operations, the trained work force, customer goodwill, and
similar items.

Note 6. Loan Sales and Servicing

Loans held for sale at year
end related to our secondary mortgage market activities are as follows:

|                                                       |  |              |       |      |   |       | 
|------------------------------------------------------ |  | ------------ | ----- | ---- | - | ----- | 
|                                                       |  | December 31, |      
|                                                       |  |              |      
|                                                       |  | 2008         |       | 2007 |  
|                                                       |  |              |       |      |  
|Loans held
  for sale                                  |  | $            | 2,143 |      | $ | 2,181 | 
|Less: Allowance
  to adjust to lower of cost or market |  |              |      |      |   |      | 
|                                                       |  |              |       |      |   |       | 
|Loans held
  for sale, net                             |  | $            | 2,143 |      | $ | 2,181 | 
|                                                       |  |              |       |      |   |       | 

The following summarizes the
secondary mortgage market activities:

|                                        |  |                          |        |      |   |        |  |   |        | 
|--------------------------------------- |  | ------------------------ | ------ | ---- | - | ------ |  | - | ------ | 
|                                        |  | Years Ended December 31, |       
|                                        |  |                          |       
|                                        |  | 2008                     |        | 2007 |   | 2006   | 
|                                        |  |                          |        |      |   |        | 
|Proceeds
  from sales of mortgage loans |  | $                        | 72,101 |      | $ | 82,810 |  | $ | 49,039 | 
|                                        |  |                          |        |      |   |        |  |   |        | 
|                                        |  |                          |        |      |   |        |  |   |        | 
|Gain on
  sales of mortgage loans       |  | $                        | 1,116  |      | $ | 1,262  |  | $ | 762    | 
|                                        |  |                          |        |      |   |        |  |   |        | 

80.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 6. Loan Sales and Servicing (continued)

Mortgage loans serviced for
others are not included in the accompanying consolidated balance sheet. The
unpaid principal balances of these loans are summarized as follows:

|                                         |  |              |         |      |   |         | 
|---------------------------------------- |  | ------------ | ------- | ---- | - | ------- | 
|                                         |  | December 31, |        
|                                         |  |              |        
|                                         |  | 2008         |         | 2007 |  
|                                         |  |              |         |      |  
|Federal Home
  Loan Mortgage Corporation |  | $            | 104,115 |      | $ | 120,359 | 
|Federal
  National Mortgage Association  |  |              | 226,193 |      |   | 239,031 | 
|IHDA                                     |  |              | 1,738   |      |   | 1,731   | 
|                                         |  |              |         |      |   |         | 
|                                         |  | $            | 332,046 |      | $ | 361,121 | 
|                                         |  |              |         |      |   |         | 

Custodial escrow balances
maintained in connection with the foregoing loan servicing were approximately
$2,240 and $2,397 at December 31, 2008 and 2007, respectively.

Following is an analysis of
the changes in originated mortgage servicing rights:

|                                       |  |                          |       |      |   |       |   |   |       |  
|-------------------------------------- |  | ------------------------ | ----- | ---- | - | ----- | - | - | ----- | -
|                                       |  | Years Ended December 31, |      
|                                       |  |                          |      
|                                       |  | 2008                     |       | 2007 |   | 2006  |  
|                                       |  |                          |       |      |   |       |  
|Balance at
  beginning of year         |  | $                        | 3,161 |      | $ | 3,510 |   | $ | 2,533 |  
|Acquired in
  merger                   |  |                          |      |      |   |      |   |   | 1,300 |  
|Originated
  mortgage servicing rights |  |                          | 211   |      |   | 176   |   |   | 150   |  
|Amortization                           |  |                          | (482  | )    |   | (525  | ) |   | (473  | )
|                                       |  |                          |       |      |   |       |   |   |       |  
|Balance at
  end of year               |  | $                        | 2,890 |      | $ | 3,161 |   | $ | 3,510 |  
|                                       |  |                          |       |      |   |       |   |   |       |  

In November, 2006, the
Company merged with the former Centrue Financial Corporation. As part of this
merger, the Company recorded $1,300 of mortgage servicing rights at the fair
market value on the date of the merger and added $139,167 of loan balances to
its servicing portfolio.

Management periodically
evaluates assets for impairment. For purposes of measuring impairment,
servicing assets are stratified by loan type. Impairment is recognized if the
carrying value of servicing assets exceeds the fair value of the stratum. The
fair value of capitalized mortgage servicing rights was $3,000 and $3,400 at
December 31, 2008 and 2007, respectively. Fair value was determined using
discount rates ranging from 9.5% to 17.0% and prepayment speeds ranging from
14.7% to 17.1% depending on the stratification of the specific right.

Estimated amortization
expense for each of the next five years is as follows:

|     |  |   |     | 
|---- |  | - | --- | 
|2009 |  | $ | 505 | 
|2010 |  |   | 485 | 
|2011 |  |   | 465 | 
|2012 |  |   | 450 | 
|2013 |  |   | 425 | 

81.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 7. Premises and Equipment

Premises and equipment
consisted of:

|                              |  |              |        |      |   |        | 
|----------------------------- |  | ------------ | ------ | ---- | - | ------ | 
|                              |  | December 31, |       
|                              |  |              |       
|                              |  | 2008         |        | 2007 |  
|                              |  |              |        |      |  
|                              |  |              |        |      |  
|Land                          |  | $            | 9,878  |      | $ | 10,261 | 
|Buildings                     |  |              | 23,183 |      |   | 24,573 | 
|Furniture and equipment       |  |              | 22,113 |      |   | 24,049 | 
|Construction in process       |  |              | 193    |      |   | 114    | 
|                              |  |              |        |      |   |        | 
|                              |  |              | 55,367 |      |   | 58,997 | 
|Less accumulated depreciation |  |              | 22,991 |      |   | 23,382 | 
|                              |  |              |        |      |   |        | 
|                              |  | $            | 32,376 |      | $ | 35,615 | 
|                              |  |              |        |      |   |        | 

As
discussed in Note 2, the Company completed the sale of four branches during
2008. A total of $615 of Premises and Equipment was included with those sales.

During
2008, the Company disposed of three buildings and abandoned leasehold
improvements related to an exited lease contract. These actions resulted in a
$492 decrease of Premises and Equipment during the period.

Note 8. Goodwill and Intangible
Assets

Goodwill

Goodwill initially recorded
is subject to the completion of the valuation of assets acquired and
liabilities assumed. Purchase accounting adjustments are the adjustments to the
initial goodwill recorded at the time an acquisition is completed. Such
adjustments generally consist of adjustments to the assigned fair value of
assets acquired and liabilities assumed resulting from the completion of
appraisals or other valuations and adjustments to initial estimates recorded
for transaction costs or exit liabilities. Goodwill is not amortized but is
subject to impairment tests on at least an annual basis. The Companys annual
goodwill impairment test showed no impairment existed at December 31, 2008.
However, if the economy remains stressed and bank stocks remain out of favor,
goodwill impairment might occur in the future.

The change in balance of
goodwill during the year is as follows:

| |                                                           |  |              |        |      |   |        | 
| | --------------------------------------------------------- |  | ------------ | ------ | ---- | - | ------ | 
| |                                                           |  | December 31, |       
| |                                                           |  |              |       
| |                                                           |  | 2008         |        | 2007 |  
| |                                                           |  |              |        |      |  
| |                                                           |  |              |        |      |  
| | Beginning of
  year                                       |  | $            | 25,498 |      | $ | 25,396 | 
| | Goodwill
  impairment due to sale of Wealth Management    |  |              | (724   | )    |   |       | 
| | Goodwill
  allocated to Brokerage & Asset Management sale |  |              | (280   | )    |   |       | 
| | Merger
  related adjustments                              |  |              |       |      |   | 102    | 
| |                                                           |  |              |        |      |   |        | 
| |                                                           |  |              |        |      |   |        | 
| | End of year                                               |  | $            | 24,494 |      | $ | 25,498 | 
| |                                                           |  |              |        |      |   |        | 

82.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 8. Goodwill and Intangible
Assets (Continued)

Acquired Intangible Assets

Acquired intangible assets
were as follows as of year end:

| |                                         |  |                           |        |                            |   |                           |  |                            |        |  |   |       | 
| | --------------------------------------- |  | ------------------------- | ------ | -------------------------- | - | ------------------------- |  | -------------------------- | ------ |  | - | ----- | 
| |                                         |  | 2008                      |        | 2007                       |  
| |                                         |  |                           |        |                            |  
| |                                         |  | Gross
  Carrying
  Amount |        | Accumulated
  Amortization |   | Gross
  Carrying
  Amount |  | Accumulated
  Amortization |       
| |                                         |  |                           |        |                            |   |                           |  |                            |       
| |                                         |  |                           |        |                            |   |                           |  |                            |       
| | Amortized intangible assets:            |  |                           |        |                            |   |                           |  |                            |        |  |   |       | 
| | Core deposit intangibles                |  | $                         | 14,124 |                            | $ | 5,617                     |  | $                          | 14,124 |  | $ | 3,735 | 
| | Other customer relationship intangibles |  |                           |       |                            |   |                          |  |                            | 60     |  |   | 23    | 
| | Missouri charter                        |  |                           | 581    |                            |   |                          |  |                            | 581    |  |   |      | 
| |                                         |  |                           |        |                            |   |                           |  |                            |        |  |   |       | 
| |                                         |  |                           |        |                            |   |                           |  |                            |        |  |   |       | 
| | Total                                   |  | $                         | 14,705 |                            | $ | 5,617                     |  | $                          | 14,765 |  | $ | 3,758 | 
| |                                         |  |                           |        |                            |   |                           |  |                            |        |  |   |       | 

The core deposit intangible
asset recorded in the 2006 merger with Centrue Financial Corporation was
$13,035. Aggregate amortization expense was $1,883, $2,307, and $457 for 2008,
2007, and 2006.

Estimated amortization
expense for subsequent years is as follows:

|           |  |   |       | 
|---------- |  | - | ----- | 
|2009       |  | $ | 1,538 | 
|2010       |  |   | 1,257 | 
|2011       |  |   | 1,029 | 
|2012       |  |   | 951   | 
|2013       |  |   | 951   | 
|Thereafter |  |   | 2,781 | 

Note 9. Deposits

Deposit account balances by
type are summarized as follows:

| |                                           |  |              |           |      |   |           | 
| | ----------------------------------------- |  | ------------ | --------- | ---- | - | --------- | 
| |                                           |  | December 31, |          
| |                                           |  |              |          
| |                                           |  | 2008         |           | 2007 |  
| |                                           |  |              |           |      |  
| | Non-interest-bearing
  demand deposit     |  | $            | 118,745   |      | $ | 114,360   | 
| | Savings,
  NOW, and money market accounts |  |              | 336,466   |      |   | 350,023   | 
| | Time
  deposits of $100 or more           |  |              | 261,192   |      |   | 201,318   | 
| | Other time
  deposits                     |  |              | 332,817   |      |   | 367,321   | 
| |                                           |  |              |           |      |   |           | 
| |                                           |  | $            | 1,049,220 |      | $ | 1,033,022 | 
| |                                           |  |              |           |      |   |           | 

As discussed in Note 2, the
Company sold four branches during 2008. A total of $52,200 of deposits were
sold in conjunction with these sales.

At December 31, 2008, the
scheduled maturities of time deposits are as follows:

|           |  |        |         | 
|---------- |  | ------ | ------- | 
|Year       |  | Amount |        
|           |  |        |        
|2009       |  | $      | 434,730 | 
|2010       |  |        | 141,685 | 
|2011       |  |        | 9,127   | 
|2012       |  |        | 3,819   | 
|2013       |  |        | 4,503   | 
|Thereafter |  |        | 145     | 
|           |  |        |         | 
|           |  | $      | 594,009 | 
|           |  |        |         | 

83.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 9. Deposits (Continued)

Time certificates of deposit
in denominations of $100 or more mature as follows:

| |                                 |  |              |         |      |   |         | 
| | ------------------------------- |  | ------------ | ------- | ---- | - | ------- | 
| |                                 |  | December 31, |        
| |                                 |  |              |        
| |                                 |  | 2008         |         | 2007 |  
| |                                 |  |              |         |      |  
| | 3 months or less                |  | $            | 150,091 |      | $ | 90,329  | 
| | Over 3 months through 6 months  |  |              | 31,078  |      |   | 33,475  | 
| | Over 6 months through 12 months |  |              | 26,202  |      |   | 50,022  | 
| | Over 12 months                  |  |              | 53,821  |      |   | 27,492  | 
| |                                 |  |              |         |      |   |         | 
| |                                 |  | $            | 261,192 |      | $ | 201,318 | 
| |                                 |  |              |         |      |   |         | 

Deposits from principal
officers, directors and their affiliates at year end 2008 and 2007 were $1,587
and $1,412.

Note 10. Securities Sold Under Agreements to Repurchase

Securities sold
under agreements to repurchase are financing arrangements that mature within
two years. At maturity, the securities underlying the agreements are returned
to the Company. Securities sold under agreements to repurchase are secured by
mortgage-backed securities with a carrying value of $27,106 and $44,937 at
year-end 2008 and 2007. Information concerning securities sold under agreements
to repurchase is summarized as follows:

| |                                              |  |      |        |      |   |        |  
| | -------------------------------------------- |  | ---- | ------ | ---- | - | ------ | -
| |                                              |  | 2008 |        | 2007 |  
| |                                              |  |      |        |      |  
| |                                              |  |      |        |      |  
| | Average
  daily balance during the year      |  | $    | 33,157 |      | $ | 39,447 |  
| | Average
  interest rate during the year      |  |      | 1.60   | %    |   | 4.21   | %
| | Maximum
  month-end balance during the year  |  |      | 42,581 |      |   | 46,958 |  
| | Weighted
  average interest rate at year-end |  |      | 0.51   | %    |   | 3.52   | %

Note 11. Subordinated Debentures

The Company has two $10,000
trust preferred issuances that were issued in April 2004 and April 2007 in
cumulative trust preferred securities through special-purpose trusts Centrue
Statutory Trust II (Trust II) and Centrue Statutory Trust III (Trust III). The
proceeds of the offerings were invested by the trusts in junior subordinated
deferrable interest debentures of Trust II and Trust III totaling $20,620.
Trust II and Trust III are wholly-owned subsidiaries of the Company, and their
sole assets are the junior subordinated deferrable interest debentures.

Distributions are cumulative
and are payable quarterly at a variable rate of 2.65% over the LIBOR rate of
1.87% for Trust II and a 6.67% fixed rate for Trust III, respectively, (at a
rate of 4.52% and 6.67% at December 31, 2008) per annum of the stated
liquidation amount of $1,000 per preferred security. The interest rate for the
Trust III debentures is fixed for five years and then transitions to a variable
rate that is 1.65% over the LIBOR rate. Interest expense on the trust preferred
securities was $1,272 and $1,688 for the years ended December 31, 2008 and
2007. The interest can be deferred at the option of the Company. The
obligations of the trust are fully and unconditionally guaranteed, on a
subordinated basis, by the Company.

The trust preferred
securities for the Trust II are redeemable upon the maturity of the debentures
on April 22, 2034, or to the extent of any earlier redemption of any debentures
by the Company, and are callable beginning April 22, 2009. The trust preferred
securities for Trust III are redeemable upon the maturity of the debentures on
April 19, 2037, or to the extent of any earlier redemption of any debentures by
the Company,

84.

---



|                                          
|------------------------------------------
|Centrue Financial Corporation             
|Notes To Consolidated Financial Statements
|(In Thousands, Except Share Data)         
|                                          

Note 11. Subordinated Debentures
(Continued)

and are callable beginning
April 19, 2012. Holders of the capital securities have no voting rights, are
unsecured, and rank junior in priority of payment to all of the Companys
indebtedness and senior to the Companys capital stock. For regulatory
purposes, the trust preferred securities qualify as Tier 1 capital subject to
certain provisions.

In accordance with FASB
interpretation 46R, the trusts are not consolidated with the Companys
consolidated financial statements, but rather the subordinated debentures are
shown as a liability and the Companys investment in the common stock for the
trusts of $620 is included in other assets.

Note 12. Borrowed Funds

At December 31, 2008 and
2007, $75,000 and $8,000 of Federal Home Loan Bank advances have various call
provisions. The Company maintains a collateral pledge agreement covering
secured advances whereby the Company had specifically pledged $165,077 of first
mortgage loans on improved residential and mixed use farm property free of all
other pledges, liens, and encumbrances (not more than 90 days delinquent). The
Company has four variable rate advances, two at 0.45% and two at 0.55% at
year-end 2008 and no advances at year-end 2007. The remaining advances are at
fixed rates ranging from 0.50% to 4.90%. The scheduled maturities of advances
from the Federal Home Loan Bank at December 31, 2008 and 2007 are as
follows:

|           |  |                           |      |        |   |                           |  |        |      |   |   |         | 
|---------- |  | ------------------------- | ---- | ------ | - | ------------------------- |  | ------ | ---- | - | - | ------- | 
|           |  | 2008                      |      | 2007   |  
|           |  |                           |      |        |  
|Year       |  | Average
  Interest
  Rate |      | Amount |   | Average
  Interest
  Rate |  | Amount |     
|           |  |                           |      |        |   |                           |  |        |     
|2008       |  |                           |     | %      |   |                          |  |        | 4.30 |   |   | 103,344 | 
|2009       |  |                           | 0.61 |        |   | 82,023                    |  |        | 3.78 |   |   | 5,002   | 
|2010       |  |                           | 4.50 |        |   | 5,200                     |  |        | 4.50 |   |   | 5,202   | 
|2011       |  |                           | 2.78 |        |   | 48,000                    |  |        | 4.90 |   |   | 3,001   | 
|2012       |  |                           |     |        |   |                          |  |        |     |   |   |        | 
|2013       |  |                           | 4.61 |        |   | 62                        |  |        |     |   |   |        | 
|Thereafter |  |                           | 4.37 |        |   | 5,000                     |  |        | 4.37 |   |   | 5,066   | 
|           |  |                           |      |        |   |                           |  |        |      |   |   |         | 
|           |  |                           | 1.63 | %      | $ | 140,285                   |  |        | 4.30 | % | $ | 121,615 | 
|           |  |                           |      |        |   |                           |  |        |      |   |   |         | 

85.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 12. Borrowed Funds (Continued)

Notes payable consisted of
the following at December 31, 2008 and 2007:

|                                                                                                                                                                                                                                                                                                                                          |  |      |        |      |   |        | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------ | 
|                                                                                                                                                                                                                                                                                                                                          |  | 2008 |        | 2007 |  
|                                                                                                                                                                                                                                                                                                                                          |  |      |        |      |  
|Revolving
  credit loan ($25,000) from Bank of America; interest due quarterly at the
  higher of 90-day LIBOR plus 2.50% or a floor of 5.00%. The balance is due on
  March 31, 2009; secured by 100% of the stock of Centrue Bank.                                                                                                      |  | $    | 8,865  |      | $ | 12,864 | 
|                                                                                                                                                                                                                                                                                                                                          |  |      |        |      |   |        | 
|Term note
  ($250) from Bank of America; interest due quarterly at the 90-day LIBOR plus
  2.95%. The balance is due at maturity of March 31, 2015; secured by 100% of
  the stock of Centrue Bank.                                                                                                                                       |  |      | 250    |      |   |       | 
|                                                                                                                                                                                                                                                                                                                                          |  |      |        |      |   |        | 
|Subordinated
  debt note ($10,000) from Bank of America; interest due quarterly at the
  90-day LIBOR plus 2.95%. The balance is due at maturity of March 31, 2015;
  the debt is unsecured and intended to qualify as tier II capital for
  regulatory purposes.                                                                         |  |      | 10,000 |      |   |       | 
|                                                                                                                                                                                                                                                                                                                                          |  |      |        |      |   |        | 
|A promissory
  note to an individual related to the purchase of the Howard Marshall Agency.
  The original amount of the note was $376. The note was entered into on
  November 1, 2003 and carries an interest rate of 5%. The note requires
  monthly installment payments of principal and interest and matured on
  November 1, 2008. |  |      |       |      |   | 70     | 
|                                                                                                                                                                                                                                                                                                                                          |  |      |        |      |   |        | 
|A note to an
  individual related to a prior acquisition. The original amount was $2,000.
  The note was entered into on October 23, 2002 and carries as imputed interest
  of 5.25%. The note matures on October 24, 2012.                                                                                                               |  |      | 711    |      |   | 868    | 
|                                                                                                                                                                                                                                                                                                                                          |  |      |        |      |   |        | 
|                                                                                                                                                                                                                                                                                                                                          |  | $    | 19,826 |      | $ | 13,802 | 
|                                                                                                                                                                                                                                                                                                                                          |  |      |        |      |   |        | 

On March 31, 2008, the
Company entered into a new loan agreement with Bank of America which provides
for up to an aggregate principal amount of $35,250 in borrowings. The loan
agreement consists of three credit facilities. The first credit facility
consists of a $25,000 secured revolving line of credit which matures on March
31, 2009. The second credit facility consists of a $250 secured term facility,
which will mature in March 31, 2015. The third credit facility consists of
$10,000 in subordinated debt, which also matures in March 31, 2015. The
interest rate on the term and subordinated debt credit facilities is three
month LIBOR plus 295 basis points. The interest rate on the revolving credit
facility is three month LIBOR plus 250 basis points. Repayment of each of the
three credit facilities is interest only on a quarterly basis, with the
principal amount of the loan due at maturity. The revolving and term credit
facilities are secured by a pledge of the stock of Centrue Bank. The
subordinated debt credit facility is unsecured and is intended to qualify as
Tier II capital for regulatory purposes. The loan agreement contains customary
covenants, including but not limited to, Centrue Banks maintenance of its
status as well-capitalized, Centrue Banks minimum return on average assets on
an annual basis of 0.50%, Centrue Banks maximum nonperforming assets to
primary capital below 20%, and Centrue Banks minimum loan loss reserves to total
loans of 1.00%. The Company is using these credit facilities for general
working capital purposes. The loan agreement contains no penalty for early
repayment of either the revolving credit facility or the subordinated debt
credit facility. As of December 31, 2008, the outstanding balance on these
lines is $19,115 and the Company was in compliance with all covenants.

86.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 12. Borrowed Funds (Continued)

Information concerning
borrowed funds is as follows:

|                                            |  |                            |         |      |   |         |   |   |        |  
|------------------------------------------- |  | -------------------------- | ------- | ---- | - | ------- | - | - | ------ | -
|                                            |  | Years
  Ended December 31, |        
|                                            |  |                            |        
|                                            |  | 2008                       |         | 2007 |   | 2006    |  
|                                            |  |                            |         |      |   |         |  
|Federal Funds Purchased                     |  |                            |         |      |   |         |   |   |        |  
|Year-end balance                            |  | $                          | 19,200  |      | $ |        |   | $ |       |  
|Maximum month-end balance during the year   |  |                            | 35,700  |      |   | 15,100  |   |   | 12,000 |  
|Average balance during the year             |  |                            | 8,991   |      |   | 1,282   |   |   | 1,884  |  
|Weighted average interest rate for the
year |  |                            | 2.54    | %    |   | 5.83    | % |   | 5.25   | %
|Weighted average interest rate at year
end  |  |                            | 0.45    | %    |   | N/A     |   |   | N/A    |  
|Advances
  from the Federal Home Loan Bank  |  |                            |         |      |   |         |   |   |        |  
|Maximum month-end balance during the year   |  | $                          | 140,285 |      | $ | 121,615 |   | $ | 63,165 |  
|Average balance during the year             |  |                            | 119,800 |      |   | 69,202  |   |   | 46,487 |  
|Weighted average interest rate for the
year |  |                            | 2.74    | %    |   | 4.41    | % |   | 3.92   | %
|Weighted average interest rate at year
end  |  |                            | 1.69    | %    |   | 4.30    | % |   | 4.25   | %
|Notes
  Payable                             |  |                            |         |      |   |         |   |   |        |  
|Maximum month-end balance during the year   |  | $                          | 24,016  |      | $ | 13,802  |   | $ | 10,846 |  
|Average balance during the year             |  |                            | 19,628  |      |   | 11,107  |   |   | 9,081  |  
|Weighted average interest rate for the
year |  |                            | 5.24    | %    |   | 6.68    | % |   | 6.93   | %
|Weighted average interest rate at year
end  |  |                            | 5.77    | %    |   | 6.65    | % |   | 6.36   | %

Note 13. Income Taxes

Income taxes consisted of:

|         |  |                          |        |      |   |       |  |   |       |  
|-------- |  | ------------------------ | ------ | ---- | - | ----- |  | - | ----- | -
|         |  | Years Ended December 31, |       
|         |  |                          |       
|         |  | 2008                     |        | 2007 |   | 2006  | 
|         |  |                          |        |      |   |       | 
|Federal  |  |                          |        |      |   |       |  |   |       |  
|Current  |  | $                        | 4,182  |      | $ | 4,264 |  | $ | (690  | )
|Deferred |  |                          | (1,911 | )    |   | 225   |  |   | 2,322 |  
|         |  |                          |        |      |   |       |  |   |       |  
|         |  |                          | 2,271  |      |   | 4,489 |  |   | 1,632 |  
|State    |  |                          |        |      |   |       |  |   |       |  
|Current  |  |                          | 661    |      |   | 378   |  |   | 113   |  
|Deferred |  |                          | (166   | )    |   | 308   |  |   | 138   |  
|         |  |                          |        |      |   |       |  |   |       |  
|         |  |                          | 495    |      |   | 686   |  |   | 251   |  
|         |  |                          |        |      |   |       |  |   |       |  
|         |  | $                        | 2,766  |      | $ | 5,175 |  | $ | 1,883 |  
|         |  |                          |        |      |   |       |  |   |       |  

The Companys income tax
expense differed from the statutory federal rate of 34% as follows:

|                                                                                  |  |                          |       |      |   |       |   |   |       |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ----- | ---- | - | ----- | - | - | ----- | -
|                                                                                  |  | Years Ended December 31, |      
|                                                                                  |  |                          |      
|                                                                                  |  | 2008                     |       | 2007 |   | 2006  |  
|                                                                                  |  |                          |       |      |   |       |  
|Expected income taxes                                                             |  | $                        | 3,113 |      | $ | 5,609 |   | $ | 2,404 |  
|Income tax effect of                                                              |  |                          |       |      |   |       |   |   |       |  
|Interest earned on tax-free investments and
  loans                               |  |                          | (646  | )    |   | (736  | ) |   | (394  | )
|Nondeductible interest expense incurred to
  carry tax-free investments and loans |  |                          | 82    |      |   | 112   |   |   | 50    |  
|Nondeductible amortization                                                        |  |                          | 40    |      |   |      |   |   |      |  
|State income taxes, net of federal tax
  benefit                                  |  |                          | 327   |      |   | 453   |   |   | 166   |  
|State income tax refund                                                           |  |                          |      |      |   |      |   |   | (18   | )
|Earnings on Bank owned life insurance                                             |  |                          | (329  | )    |   | (337  | ) |   | (214  | )
|Deductible merger expenses                                                        |  |                          |      |      |   |      |   |   | (98   | )
|Stock option expense                                                              |  |                          | 53    |      |   | 29    |   |   | 105   |  
|Nondeductible meals and health club dues                                          |  |                          | 45    |      |   |      |   |   |      |  
|Other                                                                             |  |                          | 81    |      |   | 45    |   |   | (118  | )
|                                                                                  |  |                          |       |      |   |       |   |   |       |  
|                                                                                  |  | $                        | 2,766 |      | $ | 5,175 |   | $ | 1,883 |  
|                                                                                  |  |                          |       |      |   |       |   |   |       |  

87.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 13. Income Taxes (Continued)

The significant components
of deferred income tax assets and liabilities consisted of:

|                                                    |  |              |        |      |   |        |  
|--------------------------------------------------- |  | ------------ | ------ | ---- | - | ------ | -
|                                                    |  | December 31, |       
|                                                    |  |              |       
|                                                    |  | 2008         |        | 2007 |  
|                                                    |  |              |        |      |  
|Deferred tax assets                                 |  |              |        |      |   |        |  
|Allowance for loan losses                           |  | $            | 5,830  |      | $ | 4,175  |  
|Other than temporary impairment on
  securities     |  |              | 1,061  |      |   |       |  
|Deferred compensation, other                        |  |              | 459    |      |   | 208    |  
|Stock based expense                                 |  |              | 154    |      |   | 91     |  
|Net operating loss carryforwards                    |  |              | 1,233  |      |   | 1,456  |  
|Securities available for sale                       |  |              | 2,269  |      |   |       |  
|Deferred tax asset arising from merger              |  |              |       |      |   | 87     |  
|                                                    |  |              |        |      |   |        |  
|Total deferred tax assets                           |  |              | 11,006 |      |   | 6,017  |  
|Deferred tax liabilities                            |  |              |        |      |   |        |  
|Depreciation                                        |  | $            | (662   | )    | $ | (545   | )
|Adjustments arising from acquisitions               |  |              | (1,701 | )    |   | (1,110 | )
|Mortgage servicing rights                           |  |              | (1,122 | )    |   | (1,227 | )
|Securities available-for-sale                       |  |              |       |      |   | (594   | )
|Federal Home Loan Bank dividend received in
  stock |  |              | (787   | )    |   | (787   | )
|Deferred loan fees & costs                          |  |              | (573   | )    |   | (642   | )
|Other                                               |  |              | (373   | )    |   | (265   | )
|                                                    |  |              |        |      |   |        |  
|Total deferred tax liabilities                      |  |              | (5,218 | )    |   | (5,170 | )
|                                                    |  |              |        |      |   |        |  
|Valuation allowance on NOL carryforwards            |  |              | (370   | )    |   | (370   | )
|                                                    |  |              |        |      |   |        |  
|Net deferred tax assets                             |  | $            | 5,418  |      | $ | 477    |  
|                                                    |  |              |        |      |   |        |  

The Federal net operating
loss is related to the acquisition of the Illinois Community Bancorp, Inc.
transaction. The NOL expires in 2021 thru 2024. The NOL can be used at a rate
of $159 per year. Due to Section 382 limitations, any unused amounts that
cannot be used will expire. Thus, the valuation allowance was established. See
Note 23 for further information related to the merger.

Note 14. Benefit Plans

The Companys Employee Stock
Ownership Plan (the Plan) covered all full-time employees who had completed
six months of service and have attained the minimum age of twenty and one-half
years. As of October 1, 2006, the Company terminated this plan and began the
process of distributing the assets of the plan to participants. All of the Plan
assets had been distributed to the participants as of March 31, 2007. The Plan
no longer owns shares of the Companys common stock. The Company expensed all
cash contributions made to the Plan. Contributions were $1 and $165, for the
years ended December 31, 2007 and 2006.

The Company has a 401(k)
salary reduction plan (the 401(k) plan) covering substantially all employees.
Eligible employees may elect to make tax deferred contributions up to annual
IRS contribution limits under the company safe harbor plan status. In 2008, the
Company contributed 3% of employee wages to all eligible participants
regardless of whether and to what extent the employee elected a salary
deferral.

Contributions to the 401(k)
plan are expensed currently and approximated $439, $456 and $427 for the years
ended December 31, 2008, 2007, and 2006.

88.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 14. Benefit Plans (Continued)

During 2008, the Company has
entered into certain non-qualified deferred compensation agreements with
members of the senior management team and other select individuals deemed to
meet the criteria of top hat plan participants. The Company may make
discretionary matching contributions with a respect to a portion of the
participants deferral. Additionally, the Company continues its non-qualified
deferred compensation plan for the directors. These agreements, which are
subject to the rules of 409(a), relate to the voluntary deferral of
compensation received. The accrued liability as of December 31, 2008 and 2007
is $703 and $90. For 2008, the company match for the employees deferred compensation
plan was $89. A portion of the benefit is subject to forfeiture if the employee
willfully leaves employment or employment is terminated for cause as defined in
these agreements.

Note 15. Share Based Compensation

In 1999, the Company adopted
the 1999 Option Plan. Under the 1999 Option Plan, nonqualified options may be
granted to employees and eligible directors of the Company and its subsidiaries
to common stock at 100% of the fair market value on the date the option is
granted. The Company has authorized 50,000 shares for issuance under the 1999
Option Plan. During 1999, 40,750 of these shares were granted and are 100%
fully vested. The options have an
exercise period of ten years from the date of grant.There are 9,250 shares available to grant under this
plan.

In April 2003, the Company
adopted the 2003 Option Plan. Under the 2003 Option Plan, as amended on April
24, 2007, nonqualified options, incentive stock options, and/or stock
appreciation rights may be granted to employees and outside directors of the
Company and its subsidiaries to purchase the Companys common stock at an
exercise price to be determined by the executive and compensation committee.
Pursuant to the 2003 Option Plan, 570,000 shares of the Companys unissued
common stock have been reserved and are available for issuance upon the
exercise of options and rights granted under the 2003 Option Plan. The options
have an exercise period of ten years from the date of grant. There are 209,000
shares available to grant under this plan.

In addition to the Company
plans described above, in conjunction with the merger with Centrue Financial
Corporation, all outstanding options at Centrue Financial were converted into
options to acquire Company common stock, as adjusted for the exchange ratio. Following
the merger, no additional options are issuable under any of the former Centrue
plans.

The Company awarded 5,000
restricted common stock awards in November, 2006 that were available under the
restricted stock portion of the plan. The restricted shares were issued out of
treasury shares with an aggregate grant date fair value of $90. The awards were
granted using the fair value as the last sale price as quoted on the NASDAQ
Stock Market on the date of grant of $18.03. The awarded shares vest at a rate
of 20% of the initially awarded amount per year, beginning on the first
anniversary date of the award, and are contingent upon continuous service by
the recipient through the vesting date.

The compensation cost that
has been charged against income for the stock options portion of the Equity
Incentive Plan was $352, $151 and $353 for 2008, 2007 and 2006. The
compensation cost that has been charged against income for the restricted stock
portion of the Equity Incentive Plan was $18 and $20 for 2008 and 2007.

89.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 15. Share Based Compensation (Continued)

The fair value of each
option award is estimated on the date of grant using a closed form option
valuation (Black-Scholes) model that uses the assumptions noted in the table
below. Expected volatilities are based on historical volatilities of the
Companys common stock. The Company uses historical data to estimate option
exercise and post-vesting termination behavior. (Employee and management
options are tracked separately.) The expected term of options granted is based
on historical data and represents the period of time that options granted are
expected to be outstanding, which takes into account that the options are not
transferable. The risk-free interest rate for the expected term of the option
is based on the U.S. Treasury yield curve in effect at the time of the grant.
The fair value of options granted was determined using the following weighted-average
assumptions as of grant date:

|                                |  |      |               |      |   |               |   |   |       |  
|------------------------------- |  | ---- | ------------- | ---- | - | ------------- | - | - | ----- | -
|                                |  | 2008 |               | 2007 |   | 2006          |  
|                                |  |      |               |      |   |               |  
|                                |  |      |               |      |   |               |   |   |       |  
|Fair value                      |  | $    | 3.36 - 3.69   |      | $ | 4.41 - 4.65   |   | $ | 4.89  |  
|Risk-free interest rate         |  |      | 2.75 - 2.95   | %    |   | 4.06 - 4.95   | % |   | 5.14  | %
|Expected option life (years)    |  |      | 6             |      |   | 6             |   |   | 6     |  
|Expected stock price volatility |  |      | 23.91 - 24.07 | %    |   | 23.33 - 23.67 | % |   | 23.45 | %
|Dividend yield                  |  |      | 2.79 - 2.95   | %    |   | 2.57 - 2.64   | % |   | 2.47  | %

During
2008, options were granted on two separate dates (February 7 and April 23). Therefore a range of values have been shown. During 2007,
options were granted at three separate dates (January 31, April 24,
and October 30). Therefore a range of values have been shown in the
table above.

A
summary of the status of the option plan for 2008 is presented below:

|                                 |  |         |         |                                       |   |                                                     |  |                               |             |  |   |   | 
|-------------------------------- |  | ------- | ------- | ------------------------------------- | - | --------------------------------------------------- |  | ----------------------------- | ----------- |  | - | - | 
|                                 |  | Options |         | Weighted
  Average
  Exercise
  Price |   | Weighted
  Average
  Remaining
  Contractual
  Life |  | Aggregate
  Intrinsic
  Value |            
|                                 |  |         |         |                                       |   |                                                     |  |                               |            
|                                 |  |         |         |                                       |   |                                                     |  |                               |             |  |   |   | 
|Outstanding at beginning of year |  |         | 574,024 |                                       | $ | 18.71                                               |  |                               |             |  |   |   | 
|Granted                          |  |         | 138,000 |                                       |   | 17.96                                               |  |                               |             |  |   |   | 
|Exercised                        |  |         | (15,445 | )                                     |   | 16.17                                               |  |                               |             |  |   |   | 
|Forfeited                        |  |         | (61,060 | )                                     |   | 20.25                                               |  |                               |             |  |   |   | 
|                                 |  |         |         |                                       |   |                                                     |  |                               |             |  |   |   | 
|                                 |  |         |         |                                       |   |                                                     |  |                               |             |  |   |   | 
|Outstanding at end of year       |  |         | 635,519 |                                       | $ | 18.68                                               |  |                               | 4.6
  years |  | $ |  | 
|                                 |  |         |         |                                       |   |                                                     |  |                               |             |  |   |   | 
|                                 |  |         |         |                                       |   |                                                     |  |                               |             |  |   |   | 
|Vested or expected to vest       |  |         | 627,419 |                                       |   | 18.69                                               |  |                               | 4.5
  years |  | $ |  | 
|                                 |  |         |         |                                       |   |                                                     |  |                               |             |  |   |   | 
|Exercisable at year end          |  |         | 455,519 |                                       | $ | 18.72                                               |  |                               | 4.2
  years |  | $ |  | 
|                                 |  |         |         |                                       |   |                                                     |  |                               |             |  |   |   | 

Options outstanding at
year-end 2008 were as follows:

|                             |               |             |  |                                                     |  |        |             |                                       |  |         |  |   |       | 
|---------------------------- | ------------- | ----------- |  | --------------------------------------------------- |  | ------ | ----------- | ------------------------------------- |  | ------- |  | - | ----- | 
|                             |               | Outstanding |  | Exercisable                                         | 
|Range
  of
  Exercise Prices |               | Number      |  | Weighted
  Average
  Remaining
  Contractual
  Life |  | Number |             | Weighted
  Average
  Exercise
  Price | 
|                             |               |             |  |                                                     |  |        |             |                                       | 
|$                            | 11.25 - 11.75 |             |  | 46,381                                              |  |        | 1.6
  years |                                       |  | 46,381  |  | $ | 11.60 | 
|                             | 14.25 - 18.63 |             |  | 249,338                                             |  |        | 4.6
  years |                                       |  | 161,338 |  |   | 16.43 | 
|                             | 19.03 - 23.31 |             |  | 339,800                                             |  |        | 5.1
  years |                                       |  | 247,800 |  |   | 21.55 | 
|                             |               |             |  |                                                     |  |        |             |                                       |  |         |  |   |       | 
|                             |               |             |  |                                                     |  |        |             |                                       |  |         |  |   |       | 
|                             |               |             |  | 635,519                                             |  |        | 4.6
  years |                                       |  | 455,519 |  | $ | 18.72 | 
|                             |               |             |  |                                                     |  |        |             |                                       |  |         |  |   |       | 

90.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 15. Share Based Compensation (Continued)

Information related to the
stock option plan during each year follows:

|                                                    |  |      |      |      |   |      |  |   |      | 
|--------------------------------------------------- |  | ---- | ---- | ---- | - | ---- |  | - | ---- | 
|                                                    |  | 2008 |      | 2007 |   | 2006 | 
|                                                    |  |      |      |      |   |      | 
|                                                    |  |      |      |      |   |      |  |   |      | 
|Intrinsic value of options exercised                |  | $    |     |      | $ | 184  |  | $ | 250  | 
|Cash received from option exercises                 |  |      | 233  |      |   | 337  |  |   | 281  | 
|Tax benefit realized from option exercises          |  |      |     |      |   | 49   |  |   | 75   | 
|Weighted average of fair value of options
  granted |  |      | 3.47 |      |   | 4.53 |  |   | 4.89 | 

As of December 31, 2008,
there was $613 of total unrecognized compensation cost related to non-vested
stock options granted under the Plan. The cost is expected to be recognized
over a weighted-average period of 3.56 years. As of December 31, 2008, there
was $52 of total unrecognized compensation cost related to non-vested shares
awarded under the restricted stock plan. The cost is expected to be recognized
over a weighted-average period of 2.89 years.

Note 16. Earnings Per Share

A reconciliation of the
numerators and denominators for earnings per common share computations for the
years ended December 31 is presented below (shares in thousands). The
Convertible Preferred Stock is antidilutive for all years presented and has not
been included in the diluted earnings per share calculation. In addition,
options to purchase 555,877 shares, 294,200 shares and 244,200 shares of common
stock were outstanding for 2008, 2007 and 2006, respectively, but were not
included in the computation of diluted earnings per share because the exercise
price was greater than the average market price and, therefore, were
antidilutive.

|                                                                         |  |      |       |      |   |        |  |   |       |  
|------------------------------------------------------------------------ |  | ---- | ----- | ---- | - | ------ |  | - | ----- | -
|                                                                         |  | 2008 |       | 2007 |   | 2006   | 
|                                                                         |  |      |       |      |   |        | 
|Basic earnings per share                                                 |  |      |       |      |   |        |  |   |       |  
|Income from continuing operations available
  to common stockholders     |  | $    | 6,183 |      | $ | 11,116 |  | $ | 5,395 |  
|Net loss from discontinued operations
  available to common stockholders |  |      |      |      |   |       |  |   | (415  | )
|                                                                         |  |      |       |      |   |        |  |   |       |  
|Net income available to common
stockholders                              |  | $    | 6,183 |      | $ | 11,116 |  | $ | 4,980 |  
|                                                                         |  |      |       |      |   |        |  |   |       |  
|Weighted average common shares
outstanding                               |  |      | 6,034 |      |   | 6,342  |  |   | 4,119 |  
|                                                                         |  |      |       |      |   |        |  |   |       |  
|Basic earnings per common share from continuing
operations               |  | $    | 1.02  |      | $ | 1.75   |  | $ | 1.31  |  
|Basic earnings per common share from discontinued
operations             |  |      |      |      |   |       |  |   | (0.10 | )
|                                                                         |  |      |       |      |   |        |  |   |       |  
|Basic earnings per common share                                          |  | $    | 1.02  |      | $ | 1.75   |  | $ | 1.21  |  

91.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 16. Earnings Per Share
(Continued)

|                                                                    |  |      |       |      |   |       |  |   |       |  
|------------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- | -
|                                                                    |  | 2008 |       | 2007 |   | 2006  | 
|                                                                    |  |      |       |      |   |       | 
|Diluted earnings per share                                          |  |      |       |      |   |       |  |   |       |  
|Weighted average common shares
outstanding                          |  |      | 6,034 |      |   | 6,342 |  |   | 4,119 |  
|Add dilutive effect of assumed exercised
  stock options            |  |      | 8     |      |   | 38    |  |   | 45    |  
|                                                                    |  |      |       |      |   |       |  |   |       |  
|                                                                    |  |      |       |      |   |       |  |   |       |  
|Weighted average common and dilutive
  potential shares outstanding |  |      | 6,042 |      |   | 6,380 |  |   | 4,164 |  
|                                                                    |  |      |       |      |   |       |  |   |       |  
|Diluted earnings per common share from continuing
operations        |  | $    | 1.02  |      | $ | 1.74  |  | $ | 1.30  |  
|Diluted earnings per common share from
discontinued operations      |  |      |      |      |   |      |  |   | (0.10 | )
|                                                                    |  |      |       |      |   |       |  |   |       |  
|Diluted earnings per common share                                   |  | $    | 1.02  |      | $ | 1.74  |  | $ | 1.20  |  

Note 17. Regulatory Matters

The Company and Centrue Bank
are subject to regulatory capital requirements administered by the federal
banking agencies. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company and Centrue Bank must meet
specific capital guidelines that involve quantitative measures of assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices.

Quantitative
measures established by regulation to ensure capital adequacy require the
Company and Centrue Bank to maintain minimum amounts and ratios of total and
Tier I capital to risk-weighted assets and of Tier I capital to average assets.
Management believes, as of December 31, 2008 and 2007, that the Company and Centrue Bank meet all of the
capital adequacy requirements to which they were subject.

As of December 31, 2008, the
most recent notification from the corresponding regulatory agency categorized
Centrue Bank as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, Centrue Bank must
maintain minimum total risk-based, Tier I risk-based, and Tier I leverage
ratios as set forth in the following table. There are no conditions or events
since that notification that management believes have changed Centrue Banks
categories.

92.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 17. Regulatory Matters
(Continued)

|                                          |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|----------------------------------------- |  | ------ | ------- | ------------------------------ |  | ---------------------------------------------------------------------- | - | ----- | ------ | ------ |  | ----- | - |  | ------- |  |  | ---- | 
|                                          |  | Actual |         | To Be Adequately
  Capitalized |  | To Be Well
  Capitalized Under
  Prompt Corrective
  Action Provisions |  
|                                          |  |        |         |                                |  |                                                                        |  
|                                          |  | Amount |         | Ratio                          |  | Amount                                                                 |   | Ratio |        | Amount |  | Ratio |  
|                                          |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |  
|As of December 31, 2008                   |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Total capital (to risk-weighted assets)   |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Centrue Financial                         |  | $      | 128,818 |                                |  | 12.2                                                                   | % | $     | 84,575 |        |  | 8.0   | % |  | N/A     |  |  | N/A  | 
|Centrue Bank                              |  |        | 135,297 |                                |  | 12.8                                                                   |   |       | 84,880 |        |  | 8.0   |   |  | 106,100 |  |  | 10.0 | 
|                                          |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Tier I capital (to risk-weighted assets)  |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Centrue Financial                         |  | $      | 105,581 |                                |  | 10.0                                                                   |   |       | 42,288 |        |  | 4.0   |   |  | N/A     |  |  | N/A  | 
|Centrue Bank                              |  |        | 122,013 |                                |  | 11.5                                                                   |   |       | 42,440 |        |  | 4.0   |   |  | 63,660  |  |  | 6.0  | 
|                                          |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Tier I leverage ratio (to average assets) |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Centrue Financial                         |  | $      | 105,581 |                                |  | 8.1                                                                    |   |       | 52,120 |        |  | 4.0   |   |  | N/A     |  |  | N/A  | 
|Centrue Bank                              |  |        | 122,013 |                                |  | 9.4                                                                    |   |       | 51,998 |        |  | 4.0   |   |  | 64,997  |  |  | 5.0  | 
|                                          |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|As of December 31, 2007                   |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Total capital (to risk-weighted assets)   |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Centrue Financial                         |  | $      | 112,586 |                                |  | 10.2                                                                   | % | $     | 88,208 |        |  | 8.0   | % |  | N/A     |  |  | N/A  | 
|Centrue Bank                              |  |        | 120,489 |                                |  | 11.0                                                                   |   |       | 87,633 |        |  | 8.0   |   |  | 109,541 |  |  | 10.0 | 
|                                          |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Tier I capital (to risk-weighted assets)  |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Centrue Financial                         |  | $      | 101,831 |                                |  | 9.2                                                                    |   |       | 44,104 |        |  | 4.0   |   |  | N/A     |  |  | N/A  | 
|Centrue Bank                              |  |        | 109,734 |                                |  | 10.0                                                                   |   |       | 43,816 |        |  | 4.0   |   |  | 65,725  |  |  | 6.0  | 
|                                          |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Tier I leverage ratio (to average assets) |  |        |         |                                |  |                                                                        |   |       |        |        |  |       |   |  |         |  |  |      | 
|Centrue Financial                         |  | $      | 101,831 |                                |  | 7.7                                                                    |   |       | 52,983 |        |  | 4.0   |   |  | N/A     |  |  | N/A  | 
|Centrue Bank                              |  |        | 109,734 |                                |  | 8.3                                                                    |   |       | 52,983 |        |  | 4.0   |   |  | 66,229  |  |  | 5.0  | 

The
Companys ability to pay dividends is dependent on the subsidiary bank, which
is restricted by various laws and regulations. Under these regulations, the
amount of dividends that may be paid in any calendar year is
limited to the current years net profits, combined with the retained net
profits of the preceding two years subject to the capital requirements
described above. During
2009, the Bank could, without prior approval, declare dividends of
approximately $3,490 plus any 2009 net profits retained to the date of the
dividend declaration.

Note 18. Commitments,
Contingencies, and Credit Risk

In the normal course of
business, there are various contingent liabilities outstanding, such as claims
and legal actions, which are not reflected in the consolidated financial
statements. In the opinion of management, no material losses are anticipated as
a result of these actions or claim.

93.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 18. Commitments,
Contingencies, and Credit Risk (Continued)

Centrue Bank is party to
financial instruments with off-balance-sheet risk in the normal course of
business to meet the financing needs of its customers. These financial
instruments include commitments to extend credit and standby letters of credit.
These instruments involve, to varying degrees, elements of credit risk in
excess of the amount recognized in the balance sheet.

The contractual amounts of
these instruments reflect the extent of involvement in particular classes of
financial instruments.

Centrue Banks exposure to
credit loss in the event of nonperformance by the other party to the financial
instrument for commitments to extend credit and standby letters of credit
written is represented by the contractual amount of those instruments. Centrue
Bank uses the same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments. Financial instruments
whose contract amounts represent credit risk are as follows:

|                  |  |                               |        |                               |   |                            |  |                     |        |                                                |   |         |  |  |                  | 
|----------------- |  | ----------------------------- | ------ | ----------------------------- | - | -------------------------- |  | ------------------- | ------ | ---------------------------------------------- | - | ------- |  |  | ---------------- | 
|                  |  | Standby
  Letters
  of Credit |        | Variable
  Rate
  Commitments |   | Fixed
  Rate
  Commitments |  | Total
  Commitments |        | Range
  of Rates
  On Fixed Rate
  Commitments |  
|                  |  |                               |        |                               |   |                            |  |                     |        |                                                |  
|Commitments       |  |                               |        |                               |   |                            |  |                     |        |                                                |   |         |  |  |                  | 
|December 31, 2008 |  | $                             | 12,693 |                               | $ | 197,104                    |  | $                   | 48,674 |                                                | $ | 258,471 |  |  | 3.25%
  - 18.00% | 
|December 31, 2007 |  | $                             | 9,568  |                               | $ | 236,215                    |  | $                   | 26,073 |                                                | $ | 271,856 |  |  | 2.25%
  - 18.00% | 

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. For commitments to extend credit, Centrue Bank evaluates each
customers creditworthiness on a case-by-case basis. The amount of collateral
obtained is based on managements credit evaluation of the customer. Collateral
held varies, but may include accounts receivable; inventory; property, plant,
and equipment; and income producing commercial properties.

Standby letters of credit
are conditional commitments issued by Centrue Bank to guarantee the performance
of a customer to a third party. The credit risk involved in issuing standby
letters of credit is essentially the same as that involved in extending loan
commitments to customers. The standby letters of credit are unsecured.

The Company has employment
agreements with certain executive officers and certain other management
personnel. These agreements generally continue until terminated by the
executive or the Company and provide for continued salary and benefits to the
executive under certain circumstances. The agreements provide the employees
with additional rights if there is a change of control of the Company.

The Company leases certain
branch properties under operating leases. Rent expense was $326, $333, and $148
for 2008, 2007 and 2006. Rent commitments, before considering renewal options
that generally are present, were as follows:

|           |  |   |       | 
|---------- |  | - | ----- | 
|2009       |  | $ | 289   | 
|2010       |  |   | 302   | 
|2011       |  |   | 306   | 
|2012       |  |   | 306   | 
|2013       |  |   | 306   | 
|Thereafter |  |   | 306   | 
|           |  |   |       | 
|Total      |  | $ | 1,815 | 
|           |  |   |       | 

94.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 19. Condensed Financial
Information - Parent Company Only

Condensed financial
information for Centrue Financial Corporation follows:

Balance Sheets (Parent Company Only)

|                              |  |              |         |      |   |         | 
|----------------------------- |  | ------------ | ------- | ---- | - | ------- | 
|                              |  | December 31, |        
|                              |  |              |        
|ASSETS                        |  | 2008         |         | 2007 |  
|                              |  |              |         |      |  
|Cash and cash equivalents     |  | $            | 991     |      | $ | 1,779   | 
|Securities available for sale |  |              | 2,332   |      |   | 2,711   | 
|Investment in subsidiary      |  |              | 153,362 |      |   | 148,182 | 
|Other assets                  |  |              | 841     |      |   | 2,214   | 
|                              |  |              |         |      |   |         | 
|                              |  |              |         |      |   |         | 
|                              |  | $            | 157,526 |      | $ | 154,886 | 
|                              |  |              |         |      |   |         | 

LIABILITIES AND STOCKHOLDERS EQUITY

|                                     |  |              |         |      |   |         | 
|------------------------------------ |  | ------------ | ------- | ---- | - | ------- | 
|                                     |  | December 31, |        
|                                     |  |              |        
|LIABILITIES                          |  | 2008         |         | 2007 |  
|                                     |  |              |         |      |  
|Notes payable                        |  | $            | 19,826  |      | $ | 13,732  | 
|Mandatory redeemable preferred stock |  |              | 268     |      |   | 831     | 
|Subordinated debentures              |  |              | 20,620  |      |   | 20,620  | 
|Other liabilities                    |  |              | 904     |      |   | 827     | 
|                                     |  |              |         |      |   |         | 
|                                     |  |              | 41,618  |      |   | 36,010  | 
|                                     |  |              |         |      |   |         | 
|Stockholders equity                 |  |              | 115,908 |      |   | 118,876 | 
|                                     |  |              |         |      |   |         | 
|                                     |  |              |         |      |   |         | 
|                                     |  | $            | 157,526 |      | $ | 154,886 | 
|                                     |  |              |         |      |   |         | 

Income Statements
(Parent Company Only)

|                                                                                   |  |                          |        |      |   |        |   |   |       |  
|---------------------------------------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ------ | - | - | ----- | -
|                                                                                   |  | Years Ended December 31, |       
|                                                                                   |  |                          |       
|                                                                                   |  | 2008                     |        | 2007 |   | 2006   |  
|                                                                                   |  |                          |        |      |   |        |  
|Dividends from subsidiary                                                          |  | $                        | 8,528  |      | $ | 7,661  |   | $ | 6,813 |  
|Interest income                                                                    |  |                          | 202    |      |   | 334    |   |   | 44    |  
|Other income                                                                       |  |                          | 10     |      |   | (122   | ) |   | 8     |  
|Interest expense                                                                   |  |                          | 2,348  |      |   | 2,454  |   |   | 910   |  
|Other expense                                                                      |  |                          | 1,567  |      |   | 912    |   |   | 1,066 |  
|Income tax benefit                                                                 |  |                          | (1,365 | )    |   | (1,189 | ) |   | (900  | )
|Equity in undistributed earnings of
  subsidiary (dividends in excess of earnings) |  |                          | 200    |      |   | 5,627  |   |   | (602  | )
|                                                                                   |  |                          |        |      |   |        |   |   |       |  
|                                                                                   |  |                          |        |      |   |        |   |   |       |  
|Net income                                                                         |  |                          | 6,390  |      |   | 11,323 |   |   | 5,187 |  
|Less dividends on preferred stock                                                  |  |                          | 207    |      |   | 207    |   |   | 207   |  
|                                                                                   |  |                          |        |      |   |        |   |   |       |  
|                                                                                   |  |                          |        |      |   |        |   |   |       |  
|Net income on common stock                                                         |  | $                        | 6,183  |      | $ | 11,116 |   | $ | 4,980 |  
|                                                                                   |  |                          |        |      |   |        |   |   |       |  

95.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 19. Condensed Financial
Information - Parent Company Only (Continued)

Statements of Cash Flows (Parent Company
Only)

|                                                                                   |  |                          |         |      |   |        |   |   |        |  
|---------------------------------------------------------------------------------- |  | ------------------------ | ------- | ---- | - | ------ | - | - | ------ | -
|                                                                                   |  | Years Ended December 31, |        
|                                                                                   |  |                          |        
|                                                                                   |  | 2008                     |         | 2007 |   | 2006   |  
|                                                                                   |  |                          |         |      |   |        |  
|Cash flows from operating activities                                               |  |                          |         |      |   |        |   |   |        |  
|Net income                                                                         |  | $                        | 6,390   |      | $ | 11,323 |   | $ | 5,187  |  
|Adjustments to reconcile net income to net
  cash provided by operating activities |  |                          |         |      |   |        |   |   |        |  
|Undistributed earnings of subsidiary                                               |  |                          | (200    | )    |   | (5,627 | ) |   | 602    |  
|Decrease (increase) in other assets                                                |  |                          | (468    | )    |   | 159    |   |   | (309   | )
|Increase (decrease) in other liabilities                                           |  |                          | 2,076   |      |   | 12     |   |   | 692    |  
|                                                                                   |  |                          |         |      |   |        |   |   |        |  
|Net cash provided by operating
activities                                          |  |                          | 7,798   |      |   | 5,867  |   |   | 6,172  |  
|Cash flows from investing activities                                               |  |                          |         |      |   |        |   |   |        |  
|Purchases of premises and equipment                                                |  |                          |        |      |   |       |   |   |       |  
|Capital infusion to subsidiary                                                     |  |                          | (10,000 | )    |   |       |   |   |       |  
|Sales and maturities                                                               |  |                          |        |      |   | 1,018  |   |   |       |  
|Investment in subsidiary                                                           |  |                          |        |      |   |       |   |   |       |  
|                                                                                   |  |                          |         |      |   |        |   |   |        |  
|Net cash provided by (used in) investing
  activities                              |  |                          | (10,000 | )    |   | 1,018  |   |   |       |  
|                                                                                   |  |                          |         |      |   |        |   |   |        |  
|Cash flows from financing activities                                               |  |                          |         |      |   |        |   |   |        |  
|Net increase (decrease) in notes payable                                           |  | $                        | (3,906  | )    | $ | 4,866  |   | $ | (1,550 | )
|Issuance of subordinated debt                                                      |  |                          | 10,000  |      |   |        |   |   |        |  
|Dividend paid on common stock                                                      |  |                          | (3,321  | )    |   | (3,241 | ) |   | (1,347 | )
|Dividend paid on preferred stock                                                   |  |                          | (207    | )    |   | (207   | ) |   | (207   | )
|Proceeds from exercise of stock options                                            |  |                          | 233     |      |   | 386    |   |   | 357    |  
|Stock option expense                                                               |  |                          | 352     |      |   | (61    | ) |   | (352   | )
|Purchase of preferred stock                                                        |  |                          | (563    | )    |   |       |   |   |       |  
|Purchase of treasury stock                                                         |  |                          | (1,174  | )    |   | (8,361 | ) |   | (1,677 | )
|                                                                                   |  |                          |         |      |   |        |   |   |        |  
|Net cash provided by (used in) financing
  activities                              |  |                          | 1,414   |      |   | (6,618 | ) |   | (4,776 | )
|                                                                                   |  |                          |         |      |   |        |   |   |        |  
|Net increase (decrease) in cash and cash
equivalents                               |  |                          | (788    | )    |   | 267    |   |   | 1,396  |  
|Cash and cash equivalents                                                          |  |                          |         |      |   |        |   |   |        |  
|Beginning of year                                                                  |  |                          | 1,779   |      |   | 1,512  |   |   | 116    |  
|                                                                                   |  |                          |         |      |   |        |   |   |        |  
|                                                                                   |  |                          |         |      |   |        |   |   |        |  
|End of year                                                                        |  | $                        | 991     |      | $ | 1,779  |   | $ | 1,512  |  
|                                                                                   |  |                          |         |      |   |        |   |   |        |  

Note 20. Other Comprehensive Income

Changes in other comprehensive
income components and related taxes are as follows:

|                                                                      |  |                          |        |      |   |       |  |   |     | 
|--------------------------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ----- |  | - | --- | 
|                                                                      |  | Years Ended December 31, |       
|                                                                      |  |                          |       
|                                                                      |  | 2008                     |        | 2007 |   | 2006  | 
|                                                                      |  |                          |        |      |   |       | 
|Change in unrealized gains on securities
  available-for-sale         |  | $                        | (9,279 | )    | $ | 1,120 |  | $ | 125 | 
|Other than temporary impairment on
  securities                       |  |                          | 2,735  |      |   |      |  |   |    | 
|Reclassification adjustment for losses
  (gains) recognized in income |  |                          | (848   | )    |   | 29    |  |   | 104 | 
|                                                                      |  |                          |        |      |   |       |  |   |     | 
|Net unrealized gains                                                  |  |                          | (7,392 | )    |   | 1,149 |  |   | 229 | 
|Tax expense                                                           |  |                          | (2,863 | )    |   | 445   |  |   | 89  | 
|                                                                      |  |                          |        |      |   |       |  |   |     | 
|Other comprehensive income (loss)                                     |  | $                        | (4,529 | )    | $ | 704   |  | $ | 140 | 
|                                                                      |  |                          |        |      |   |       |  |   |     | 

96.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 21. Segment Information

The Company utilizes an
internal reporting and planning process that focuses on lines of business
(LOB). The reportable segments were determined by the products and services
offered, primarily distinguished between retail, commercial, treasury, wealth
management, and other operations. Loans and deposits generate the revenues in
the commercial segments; deposits, loans, secondary mortgage sales and
servicing generates the revenue in the retail segment; investment income
generates the revenue in the treasury segment; brokerage and trust services
generate the revenue in the wealth management segment; and holding company
services and discontinued operations associated with the sale of the insurance
segment generate the revenue in the operations & other segment. The net
allocations line represents the allocation of the costs that are overhead
being spread to the specific segments. With the sale of the Insurance unit, the
results for Insurance were reclassified into the Operations & Other segment
from the Wealth Management segment.

The accounting policies used
with respect to segment reporting are the same as those described in the
summary of significant accounting policies set forth in Note 1. Segment
performance is evaluated using net income.

Information reported
internally for performance assessment follows:

|                           |  |         |         |            |   |          |  |            |         |            |   |            |   |   |         |   |   |           | 
|-------------------------- |  | ------- | ------- | ---------- | - | -------- |  | ---------- | ------- | ---------- | - | ---------- | - | - | ------- | - | - | --------- | 
|                           |  | Retail  |         | Commercial |   | Treasury |  | Wealth     |         | Other      |   | Continuing |  
|                           |  | Segment |         | Segment    |   | Segment  |  | Management |         | Operations |   | Operations |  
|                           |  |         |         |            |   |          |  |            |         |            |   |            |  
|2008                       |  |         |         |            |   |          |  |            |         |            |   |            |   |   |         |   |   |           | 
|Net interest income (loss) |  | $       | 13,232  |            | $ | 26,679   |  | $          | 2,985   |            | $ | (35        | ) | $ | (3,287  | ) | $ | 39,574    | 
|Other revenue              |  |         | 11,796  |            |   | 1,316    |  |            | (1,886  | )          |   | 999        |   |   | 1,184   |   |   | 13,409    | 
|Other expense              |  |         | 11,911  |            |   | 2,746    |  |            | 195     |            |   | 991        |   |   | 14,303  |   |   | 30,146    | 
|Noncash items              |  |         |         |            |   |          |  |            |         |            |   |            |   |   |         |   |   |           | 
|Depreciation               |  |         | 1,749   |            |   | 7        |  |            |        |            |   | 21         |   |   | 1,215   |   |   | 2,992     | 
|Provision for loan losses  |  |         |        |            |   | 8,082    |  |            |        |            |   |           |   |   |        |   |   | 8,082     | 
|Other intangibles          |  |         | 1,882   |            |   |         |  |            |        |            |   | 725        |   |   |        |   |   | 2,607     | 
|Net allocations            |  |         | 1,731   |            |   | 11,478   |  |            | 1,533   |            |   | 777        |   |   | (15,519 | ) |   |          | 
|Income tax expense         |  |         | 2,559   |            |   | 1,875    |  |            | (208    | )          |   | (511       | ) |   | (949    | ) |   | 2,766     | 
|Segment profit (loss)      |  |         | 5,196   |            |   | 3,807    |  |            | (421    | )          |   | (1,039     | ) |   | (1,153  | ) |   | 6,390     | 
|Goodwill                   |  |         | 11,927  |            |   | 12,404   |  |            |        |            |   | 163        |   |   |        |   |   | 24,494    | 
|Segment assets             |  |         | 255,028 |            |   | 803,069  |  |            | 277,597 |            |   | 162        |   |   | 66,025  |   |   | 1,401,881 | 

|                           |  |         |         |            |   |          |  |            |         |            |   |            |   |   |         |   |   |           | 
|-------------------------- |  | ------- | ------- | ---------- | - | -------- |  | ---------- | ------- | ---------- | - | ---------- | - | - | ------- | - | - | --------- | 
|                           |  | Retail  |         | Commercial |   | Treasury |  | Wealth     |         | Other      |   | Continuing |  
|                           |  | Segment |         | Segment    |   | Segment  |  | Management |         | Operations |   | Operations |  
|                           |  |         |         |            |   |          |  |            |         |            |   |            |  
|2007                       |  |         |         |            |   |          |  |            |         |            |   |            |   |   |         |   |   |           | 
|Net interest income (loss) |  | $       | 12,971  |            | $ | 26,826   |  | $          | 1,446   |            | $ | 72         |   | $ | (2,474  | ) | $ | 38,841    | 
|Other revenue              |  |         | 8,938   |            |   | 1,832    |  |            | (22     | )          |   | 1,892      |   |   | 3,025   |   |   | 15,665    | 
|Other expense              |  |         | 11,429  |            |   | 3,214    |  |            | 218     |            |   | 1,654      |   |   | 15,321  |   |   | 31,836    | 
|Noncash items              |  |         |         |            |   |          |  |            |         |            |   |            |   |   |         |   |   |           | 
|Depreciation               |  |         | 1,769   |            |   | 16       |  |            |        |            |   | 16         |   |   | 1,389   |   |   | 3,190     | 
|Provision for loan losses  |  |         | 43      |            |   | 632      |  |            |        |            |   |           |   |   |        |   |   | 675       | 
|Other intangibles          |  |         | 2,303   |            |   |         |  |            |        |            |   | 4          |   |   |        |   |   | 2,307     | 
|Net allocations            |  |         | 2,645   |            |   | 11,579   |  |            | 1,651   |            |   | 835        |   |   | (16,710 | ) |   |          | 
|Income tax expense         |  |         | 1,228   |            |   | 4,362    |  |            | (147    | )          |   | (180       | ) |   | (88     | ) |   | 5,175     | 
|Segment profit (loss)      |  |         | 2,492   |            |   | 8,855    |  |            | (298    | )          |   | (365       | ) |   | 639     |   |   | 11,323    | 
|Goodwill                   |  |         | 11,910  |            |   | 12,421   |  |            |        |            |   | 1,167      |   |   |        |   |   | 25,498    | 
|Segment assets             |  |         | 306,156 |            |   | 741,861  |  |            | 268,484 |            |   | 1,289      |   |   | 47,209  |   |   | 1,364,999 | 

97.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 21. Segment Information (Continued)

|                           |  |         |         |            |   |          |   |            |         |            |   |            |   |   |         |   |   |           |  
|-------------------------- |  | ------- | ------- | ---------- | - | -------- | - | ---------- | ------- | ---------- | - | ---------- | - | - | ------- | - | - | --------- | -
|                           |  | Retail  |         | Commercial |   | Treasury |   | Wealth     |         | Other      |   | Continuing |  
|                           |  | Segment |         | Segment    |   | Segment  |   | Management |         | Operations |   | Operations |  
|                           |  |         |         |            |   |          |   |            |         |            |   |            |  
|2006                       |  |         |         |            |   |          |   |            |         |            |   |            |   |   |         |   |   |           |  
|Net interest income (loss) |  | $       | 8,464   |            | $ | 14,476   |   | $          | 537     |            | $ | 260        |   | $ | (1,230  | ) | $ | 22,507    |  
|Other revenue              |  |         | 3,999   |            |   | 571      |   |            | (105    | )          |   | 1,295      |   |   | 928     |   |   | 6,688     |  
|Other expense              |  |         | 6,349   |            |   | 2,550    |   |            | 267     |            |   | 1,483      |   |   | 9,118   |   |   | 19,767    |  
|Noncash items              |  |         |         |            |   |          |   |            |         |            |   |            |   |   |         |   |   |           |  
|Depreciation               |  |         | 1,049   |            |   | 12       |   |            |        |            |   | 8          |   |   | 1,476   |   |   | 2,545     |  
|Provision for loan losses  |  |         | 325     |            |   | (1,600   | ) |            |        |            |   |           |   |   |        |   |   | (1,275    | )
|Other intangibles          |  |         | 343     |            |   |         |   |            |        |            |   | 1          |   |   | 67      |   |   | 411       |  
|Net allocations            |  |         | 2,198   |            |   | 6,819    |   |            | 1,047   |            |   | 530        |   |   | (10,594 | ) |   |          |  
|Income tax expense         |  |         | 726     |            |   | 2,398    |   |            | (291    | )          |   | (154       | ) |   | (534    | ) |   | 2,145     |  
|Segment profit (loss)      |  |         | 1,473   |            |   | 4,868    |   |            | (591    | )          |   | (313       | ) |   | 165     |   |   | 5,602     |  
|Goodwill                   |  |         | 11,834  |            |   | 12,395   |   |            |        |            |   | 1,167      |   |   |        |   |   | 25,396    |  
|Segment assets             |  |         | 240,872 |            |   | 686,495  |   |            | 328,481 |            |   | 1,330      |   |   | 25,847  |   |   | 1,283,025 |  

Note 22. Discontinued Operations

On
September 30, 2006, the Company sold its Insurance business unit of its Wealth
Management segment to the Phoenix Group for $1,200. In accordance with FASB
Statement No. 144, Accounting for Impairment or Disposal of Long-Lived Assets
(FAS 144) the results of operations of the insurance division are reflected
in the Companys statements of income for 2006 as discontinued operations.
The loss on sale of the insurance unit of $452 and related tax benefit of $175
are included in discontinued operations as of December 31, 2006. Additionally,
approximately $1,030 of goodwill and intangibles attributed to the Insurance
unit on the Companys balance sheet were written off as a result of this
transaction and factored into the loss on the sale of the discontinued
operations.

|                                                        |  |              |       |  
|------------------------------------------------------- |  | ------------ | ----- | -
|                                                        |  | (Unaudited)  |      
|                                                        |  |              |      
|                                                        |  | December 31, |      
|                                                        |  |              |      
|                                                        |  | 2006         |      
|                                                        |  |              |      
|Net interest
  income                                   |  | $            | (5    | )
|                                                        |  |              |       |  
|Noninterest
  income                                    |  |              | 976   |  
|Noninterest
  expense                                   |  |              | 1,196 |  
|                                                        |  |              |       |  
|Loss from
  discontinued operations before income taxes |  |              | (225  | )
|Loss on
  disposal                                      |  |              | (452  | )
|Benefit for
  taxes                                     |  |              | (262  | )
|                                                        |  |              |       |  
|                                                        |  |              |       |  
|Net income
  (loss) from discontinued operations        |  | $            | (415  | )
|                                                        |  |              |       |  

Note 23. Business Combination

On
November 13, 2006, the Company (formerly known as UnionBancorp, Inc. now known
as Centrue Financial Corporation) merged with Centrue Financial Corporation
(former Centrue), parent of Centrue Bank with the Company being the surviving
entity in the merger. Operating results of former Centrue are included in the
consolidated financial statements since the date of the acquisition. As a
result of this merger, the Company increased its market share in the northern
and central Illinois markets, expanded its customer base to enhance deposit fee
income, marketed additional products and services to new customers and reduced
operating costs through economies of scale.

98.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 23. Business Combination (Continued)

The
aggregate purchase price was $49,316, $4 in cash and $49,312 in common stock.
The value of the 2,701 common shares issued was determined using the market
price multiplied by the exchange rate of 1.2. The purchase price resulted in
approximately $19,086 of goodwill, and $13,035 in core deposit and customer
relationship intangible. The intangible asset(s) will be amortized over 10
years, using an accelerated method. Goodwill will not be amortized but instead
it will be evaluated periodically each year for impairment.

The
following table summarizes the estimated fair value of assets acquired and
liabilities assumed at the date of acquisition:

|                                   |  |   |          |  
|---------------------------------- |  | - | -------- | -
|Cash and cash equivalents          |  | $ | 26,506   |  
|Securities available-for-sale      |  |   | 125,756  |  
|Loans                              |  |   | 431,692  |  
|Goodwill                           |  |   | 19,086   |  
|Premises and equipment, net        |  |   | 20,701   |  
|Core deposit and other intangibles |  |   | 13,035   |  
|Other assets                       |  |   | 14,795   |  
|                                   |  |   |          |  
|Total assets acquired              |  |   | 651,571  |  
|Deposits                           |  |   | (523,630 | )
|Other liabilities                  |  |   | (78,625  | )
|                                   |  |   |          |  
|Total liabilities assumed          |  |   | (602,255 | )
|                                   |  |   |          |  
|Net assets acquired                |  | $ | 49,316   |  
|                                   |  |   |          |  

The
following table presents pro forma information as if the acquisition had
occurred at the beginning of 2006. The pro forma information includes
adjustments for interest income on loans and securities acquired, amortization
of intangibles arising from the transaction, depreciation expense on property
acquired, interest expense on deposits acquired, and the related tax effects.
The pro forma financial information is not necessarily indicative of the
results of operations as they would have been had the transaction been effected
on the assumed dates.

|                           |  |              |        | 
|-------------------------- |  | ------------ | ------ | 
|                           |  | (Unaudited)  |       
|                           |  | December 31, |       
|                           |  |              |       
|                           |  | 2006         |       
|                           |  |              |       
|                           |  |              |        | 
|Net interest income        |  | $            | 39,127 | 
|Net income                 |  | $            | 4,228  | 
|Basic earnings per share   |  | $            | 0.98   | 
|Diluted earnings per share |  | $            | 0.97   | 

99.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 24. Quarterly Results of Operations (Unaudited)

|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 
|----------------------------------------- |  | --------------------------------------------------- | ------ | --------------------------------------------------- | - | --------- |  | ---------- | ------ | ------- | - | --------- |  | --------- | ------ | ---------- | - | ------ |  | - | ------ |  | - | ------ | 
|                                          |  | Year
  Ended December 31, 2008
  Three Months Ended |        | Year
  Ended December 31, 2007
  Three Months Ended |  
|                                          |  |                                                     |        |                                                     |  
|                                          |  | Dec.
  31                                           |        | Sep.
  30                                           |   | June
  30 |  | March
  31 |        | Dec. 31 |   | Sep.
  30 |  | June
  30 |        | March
  31 |  
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |  
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 
|Total interest income                     |  | $                                                   | 17,045 |                                                     | $ | 17,831    |  | $          | 18,460 |         | $ | 20,182    |  | $         | 21,549 |            | $ | 21,561 |  | $ | 20,653 |  | $ | 19,813 | 
|Total interest expense                    |  |                                                     | 7,160  |                                                     |   | 7,849     |  |            | 8,456  |         |   | 10,479    |  |           | 11,606 |            |   | 11,477 |  |   | 11,162 |  |   | 10,490 | 
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 
|Net interest income                       |  |                                                     | 9,885  |                                                     |   | 9,982     |  |            | 10,004 |         |   | 9,703     |  |           | 9,943  |            |   | 10,084 |  |   | 9,491  |  |   | 9,323  | 
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 
|Provision for loan losses                 |  |                                                     | 5,225  | *                                                   |   | 1,225     |  |            | 866    |         |   | 766       |  |           | 449    |            |   |       |  |   | 226    |  |   |       | 
|Noninterest income                        |  |                                                     | 585    |                                                     |   | 3,594     |  |            | 4,292  |         |   | 4,938     |  |           | 3,850  |            |   | 4,367  |  |   | 4,194  |  |   | 3,254  | 
|Noninterest expense                       |  |                                                     | 8,086  |                                                     |   | 8,122     |  |            | 9,221  |         |   | 10,316    |  |           | 8,908  |            |   | 8,631  |  |   | 9,846  |  |   | 9,948  | 
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 
|Income (loss) before income taxes         |  |                                                     | (2,841 | )                                                   |   | 4,229     |  |            | 4,209  |         |   | 3,559     |  |           | 4,436  |            |   | 5,820  |  |   | 3,613  |  |   | 2,629  | 
|Income tax expense (benefit)              |  |                                                     | (1,282 | )                                                   |   | 1,430     |  |            | 1,504  |         |   | 1,114     |  |           | 1,356  |            |   | 1,982  |  |   | 1,107  |  |   | 730    | 
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 
|Net income                                |  |                                                     | (1,559 | )                                                   |   | 2,799     |  |            | 2,705  |         |   | 2,445     |  |           | 3,080  |            |   | 3,838  |  |   | 2,506  |  |   | 1,899  | 
|Preferred stock dividend                  |  |                                                     | 51     |                                                     |   | 52        |  |            | 52     |         |   | 52        |  |           | 51     |            |   | 52     |  |   | 52     |  |   | 52     | 
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 
|Net income (loss) for common stockholders |  | $                                                   | (1,610 | ) *                                                 | $ | 2,747     |  | $          | 2,653  |         | $ | 2,393     |  | $         | 3,029  |            | $ | 3,786  |  | $ | 2,454  |  | $ | 1,847  | 
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 
|Basic earnings (loss) per share           |  | $                                                   | (0.27  | )                                                   | $ | 0.46      |  | $          | 0.44   |         | $ | 0.40      |  | $         | 0.49   |            | $ | 0.60   |  | $ | 0.38   |  | $ | 0.29   | 
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 
|Diluted earnings (loss) per share         |  | $                                                   | (0.27  | )                                                   | $ | 0.46      |  | $          | 0.44   |         | $ | 0.39      |  | $         | 0.49   |            | $ | 0.60   |  | $ | 0.38   |  | $ | 0.28   | 
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 
|                                          |  |                                                     |        |                                                     |   |           |  |            |        |         |   |           |  |           |        |            |   |        |  |   |        |  |   |        | 

(*) For the fourth quarter 2008, the Company reported a net loss of $1,600
or $0.27 per diluted share compared to net income of $3,100 or $0.49 per
diluted share earned in the fourth quarter 2007. The Companys fourth quarter
performance reflects significantly higher provision for loan losses and
non-cash impairment charges related to trust preferred securities. These
results are largely reflective of continued deterioration of general economic
conditions and the extraordinary volatility in the securities markets
experienced in the fourth quarter 2008.

Note 25. Subsequent Event (Unaudited)

In response to the financial
crises affecting the financial markets and the banking system, on
October 3, 2008, the President signed into law the Emergency Economic
Stabilization Act of 2008 (EESA). Among other things, the EESA establishes a
$700 billion Troubled Asset Relief Program (TARP). Under the TARP, the United
States Department of the Treasury (Treasury) has authority, among other
things, to purchase mortgages, mortgage-backed securities, capital stock, and
other financial instruments from financial institutions for the purpose of
stabilizing and providing liquidity to the U.S. financial markets.

On October 14, 2008,
the Treasury announced several initiatives under the TARP intended to help
stabilize the banking industry, including a voluntary Capital Purchase Program
(CPP) designed to encourage qualifying financial institutions to build
capital. Under the CPP, the Treasury may purchase up to $250 billion of senior
preferred shares from eligible financial institutions on standardized terms
with attached warrants to purchase common stock.

On December 4, 2008, the
Treasury notified the Company that it had received preliminary approval to
participate in the CPP. Pursuant to the receipt of preliminary approval and
execution of the related agreements, on January 9, 2009, the Company received
$32,668 from the sale of preferred shares to the Treasury as part of the CPP.

100.

---



|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|Centrue Financial Corporation
  Notes To Consolidated Financial Statements
  (In Thousands, Except Share Data)
|                                                                                                              

Note 25. Subsequent Event (Unaudited) (Continued)

In exchange for the $32,668, the Company issued to the Treasury a total of 32,668 shares of Fixed
Rate Cumulative Perpetual Preferred Stock, Series C, at an initial fixed
dividend rate of 5% with a $1,000 per share liquidation preference and a
warrant to purchase up to 508,320 shares of the Companys common stock at an
exercise price of $9.64 per share. Both the preferred shares and the warrants
are accounted for as components of the Companys regulatory Tier 1 capital.

The net proceeds were
temporarily invested in government sponsored mortgage-backed securities pending
future deployment.

Responsive to the
environment at the time, on February 24, 2009, the Companys Board of Directors
announced a reduction in its quarterly common stock dividend from $0.14 per
share to $0.7 per share. Since the Company elected to participate in the CPP,
its ability to increase quarterly common stock dividends above $0.14 per share
will be subject to the applicable restrictions of this program for three years
following the sale of the preferred stock.

101.

---



|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with
  Accountants on Accounting and Financial Disclosure

None.

|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Disclosure Controls and Procedures.An
evaluation of our disclosure controls and procedures (as defined in Rule
13a-15(e) under the Securities Exchange Act of 1934 (the Act)) was carried
out as of December 31, 2008, under the supervision and with the participation
of our Chief Executive Officer, Chief Financial Officer and several other
members of our senior management. Our Chief Executive Officer and Chief
Financial Officer concluded that, as of December 31, 2008, our disclosure
controls and procedures were effective in ensuring that the information we are
required to disclose in the reports we file or submit under the Act is (i)
accumulated and communicated to our management (including the Chief Executive
Officer and Chief Financial Officer) in a timely manner, and (ii) recorded,
processed, summarized and reported within the time periods specified in the
SECs rules and forms.

Internal Control Over Financial Reporting.Management
of Centrue Financial Corporation (the Company) is responsible for
establishing and maintaining an effective system of internal control over
financial reporting. The Companys system of internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. There are
inherent limitations in the effectiveness of any system of internal control
over financial reporting, including the possibility of human error and
circumvention or overriding of controls. Accordingly, even an effective system
of internal control over financial reporting can provide only reasonable
assurance with respect to financial statement preparation. Projections of any
evaluation of effectiveness to future periods are subject to the risks that
controls may become inadequate because of changes in conditions or that the
degree of compliance with the policies or procedures may deteriorate.

Management
assessed the Companys systems of internal control over financial reporting as
of December 31, 2008. This assessment was based on criteria for effective
internal control over financial reporting described in Internal Control 
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this assessment, management believes that, as of
December 31, 2008, the Company maintained effective internal control over
financial reporting based on those criteria.

The Companys
independent registered public accounting firm that audited the financial
statements that included in this annual report on Form 10-K, has issued an
audit report on the Companys internal control over financial reporting. The
attestation report of Crowe Horwath, LLP appears on page 55.

Changes in Internal Control Over Financial
Reporting.During the quarter ended December 31, 2008,
no change occurred in our internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

|         |                  
|-------- | -----------------
|Item 9B. | Other Information

None.

102.

---



PART III

|         |                                                         
|-------- | --------------------------------------------------------
|Item 10. | Directors, Executive Officers and Corporate
  Governance

The
information beginning on page 2 of the Companys 2009 Proxy Statement under the
caption Election of Directors, on page 10 of the 2009 Proxy Statement under
the caption Section 16(a) Beneficial Ownership Compliance, on page 27 under
the caption Audit Committee Financial Expert and on page 6 under the caption
Code of Ethics is incorporated herein by reference. The Companys executive
officers are identified under the caption Executive Officers contained in
Part I of this report.

The Audit
Committee of the Companys Board of Directors is an audit committee for
purposes of section 3(a)(58)(A) of the Securities Exchange Act of 1934. The
members of the Audit Committee are Messrs. Mark L. Smith, Chair, Walter E.
Breipohl, Randall E. Ganim and Scott C. Sullivan.

|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

The
information beginning on page 6 under the caption Compensation of Directors,
pages 11 through 25 of the 2009 Proxy Statement under the caption Compensation
Discussion and Analysis, page 11 under the caption Executive &
Compensation Committee Interlocks, and Report of Executive & Compensation
Committee is incorporated herein by reference.

|         |                                                                 
|-------- | ----------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
  Owners and Management

The
information on pages 8 through 10 of the 2009 Proxy Statement under the caption
Security Ownership of Certain Beneficial Owners and Management.

The following table
summarizes information about our equity compensations plans by type as of
December 31, 2008.

Equity
Compensation Plan Information

|                                                            |  |                                                                                               |  |  |                                                                               |   |                                                                                                                                       |  |  |         |  | 
|----------------------------------------------------------- |  | --------------------------------------------------------------------------------------------- |  |  | ----------------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------- |  | 
|                                                            |  | Number of securities to be issued upon exercise of
  outstanding options, warrants and rights |  |  | Weighted-average exercise price of outstanding
  options, warrants and rights |   | Number of securities remaining available for
  future issuance under equity compensation plans (excluding securities in
  column (a)) | 
|Plan category                                               |  | (a)                                                                                           |  |  | (b)                                                                           |   | (c)                                                                                                                                   | 
|                                                            |  |                                                                                               |  |  |                                                                               |   |                                                                                                                                       | 
|Equity
  compensation plans approved by stockholders (1)    |  | 630,369                                                                                       |  |  |                                                                               | $ | 18.7060                                                                                                                               |  |  | 209,000 |  | 
|Equity
  compensation plan not approved by stockholders (2) |  | 5,150                                                                                         |  |  |                                                                               | $ | 16.0625                                                                                                                               |  |  |        |  | 
|Total                                                       |  | 635,519                                                                                       |  |  |                                                                               | $ | 18.6845                                                                                                                               |  |  | 209,000 |  | 

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Includes shares issuable
  under the 1993 Stock Option Plan and shares issuable under the 2003 Stock
  Option Plan. The 1993 Stock Option Plan terminated April 12, 2003; therefore,
  no further stock options will be issued under this Plan. Also includes shares
  issuable under the pre-merger Centrue Equity Compensation plans. These plans
  were terminated as a result of the merger; therefore, no further stock
  options will be issued under these plans.

103.

---



| |     |                                                                                                                                                                                                                                                                                                                  
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Includes shares issued
  under the 1999 Non-qualified Stock Option Plan, The Company authorized 50,000
  shares for issuance under the 1999 Option Plan. During 1999, 40,750 of these
  shares were granted and vested in three years. The options have an exercise
  period of ten years from the date of grant.

|         |                                                                            
|-------- | ---------------------------------------------------------------------------
|Item 13. | Certain Relationships and Related
  Transactions, and Director Independence

The
information on page 25 of the 2009 Proxy Statement under the caption
Transactions with Management and on page 2 under the caption Election of
Directors is incorporated herein by reference.

|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services

The
information on page 25 of the 2009 Proxy Statement under the caption
Accountant Fees is incorporated herein by reference.

|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

|       |                                                                                                                                                                                 
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)(1) | Index to
  Financial Statements                                                                                                                                                 
|       |                                                                                                                                                                                 
|       | The index to
  Financial Statements is contained in Item 8, appearing on page 49 of this
  Form 10-K.                                                                           
|       |                                                                                                                                                                                 
|(a)(2) | Financial
  Statement Schedules                                                                                                                                                 
|       |                                                                                                                                                                                 
|       | All
  schedules are omitted because they are not required or applicable, or the
  required information is shown in the Consolidated Financial Statements or the
  notes thereto.
|       |                                                                                                                                                                                 
|(a)(3) | Schedule of
  Exhibits                                                                                                                                                          
|       |                                                                                                                                                                                 
|       | The Exhibit
  Index which immediately follows the signature pages to this Form 10-K is
  incorporated herein by reference.                                                      
|       |                                                                                                                                                                                 
|(b)    | Exhibits                                                                                                                                                                        
|       |                                                                                                                                                                                 
|       | The exhibits
  required to be filed with this Form 10-K are included with this Form 10-K and
  are located immediately following the Exhibit Index to this Form 10-K.           
|       |                                                                                                                                                                                 
|(c)    | Financial
  Statement Schedules                                                                                                                                                 
|       |                                                                                                                                                                                 
|       | The response
  to this portion of Item 15 is submitted as a separate section of this report.                                                                                    

104.

---



SIGNATURES

Pursuant to the
requirements of Section 13 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 on March 13, 2009.

| |                                 |                                                                                    
| | ------------------------------- | -----------------------------------------------------------------------------------
| | CENTRUE
  FINANCIAL CORPORATION
| |                                 |                                                                                    
| | By:                             | /s/ Thomas A. Daiber                                                               
| |                                 |                                                                                    
| |                                 | Thomas A. Daiber                                                                   
| |                                 | President and Principal Executive Officer                                          
| |                                 |                                                                                    
| | By:                             | /s/ Kurt R. Stevenson                                                              
| |                                 |                                                                                    
| |                                 | Kurt R. Stevenson                                                                  
| |                                 | Senior Executive Vice President and
  Principal 
  Financial and Accounting Officer

Pursuant to
the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities indicated on March 13, 2009

|                          |  |                          
|------------------------- |  | -------------------------
|/s/ Richard
  J. Berry    |  | /s/ Michael
  J. Hejna   
|                          |  |                          
|Richard J.
  Berry        |  | Michael J.
  Hejna       
|Director                  |  | Director                 
|                          |  |                          
|/s/ Walter
  E. Breipohl  |  | /s/ Dennis
  J. McDonnell
|                          |  |                          
|Walter E.
  Breipohl      |  | Dennis J.
  McDonnell    
|Director                  |  | Director                 
|                          |  |                          
|/s/ Thomas
  A. Daiber    |  | /s/ John A.
  Shinkle    
|                          |  |                          
|Thomas A.
  Daiber        |  | John A.
  Shinkle        
|Director                  |  | Director                 
|                          |  |                          
|/s/ Randall
  E. Ganim    |  | /s/ Mark L.
  Smith      
|                          |  |                          
|Randall E.
  Ganim        |  | Mark L.
  Smith          
|Director                  |  | Director                 
|                          |  |                          
|/s/ Michael
  A. Griffith |  | /s/ Scott C.
  Sullivan  
|                          |  |                          
|Michael A.
  Griffith     |  | Scott C.
  Sullivan      
|Director                  |  | Director                 

---



Centrue
Financial Corporation

EXHIBIT
INDEX
TO
ANNUAL REPORT ON FORM 10-K

Exhibits

|        |                                                                                                                                                                                                                                                                                  
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1(i)  | Restated
  Certificate of Incorporation of the Company [incorporated by reference from
  Exhibit 3.1 to Current Report on Form 8-K filed on November 17, 2006].                                                                                                                  
|        |                                                                                                                                                                                                                                                                                  
|3.1 (2) | Certificate
  of Amendment to Amended and Restated Certificate of Incorporation
  [incorporated by reference from Exhibit 3.1 to Current Report on Form 8-K
  filed on January 14, 2009].                                                                                        
|        |                                                                                                                                                                                                                                                                                  
|3.2     | Bylaws of
  the Company [incorporated by reference from Exhibit 3.1 to Quarterly Report
  on Form 10-Q for the quarter ended September 30, 2007].                                                                                                                                
|        |                                                                                                                                                                                                                                                                                  
|4.1     | Certificate
  of Designation, Preferences and Rights of Series A Convertible Preferred
  Stock of the Company [incorporated by reference from Exhibit 3.1 to Current
  Report on Form 8-K filed on November 17, 2006].                                                           
|        |                                                                                                                                                                                                                                                                                  
|4.2     | Certificate
  of Designation, Preferences and Rights of Series B Preferred Stock of the
  Company [incorporated by reference from Exhibit 3.1 to Current Report on Form
  8-K filed on November 17, 2006].                                                                       
|        |                                                                                                                                                                                                                                                                                  
|4.3     | Certificate
  of Designation, Preferences and Rights of Series C Preferred Stock of the
  Company [incorporated by reference from Exhibit 3.2 to Current Report on Form
  8-K filed on January 14, 2009].                                                                        
|        |                                                                                                                                                                                                                                                                                  
|4.4     | Specimen
  Common Stock Certificate [incorporated by reference from Exhibit 4.3 to
  Annual Report on Form 10-K for this year ended December 31, 2006].                                                                                                                          
|        |                                                                                                                                                                                                                                                                                  
|4.5     | Warrant for
  508,320 shares of Common Stock issued to U. S. Treasury [incorporated by
  reference from Exhibit 4.1 to Current Report on Form 8-K filed on January 14,
  2009].                                                                                                  
|        |                                                                                                                                                                                                                                                                                  
|10.1    | Registration
  Agreement dated August 6, 1996, between the Company and each of Wayne W.
  Whalen and Dennis J. McDonnell [incorporated by reference from Exhibit 10.10
  to the Registration Statement on Form S-1 filed by the Company on August 19,
  1996 (File No. 33-9891)].
|        |                                                                                                                                                                                                                                                                                  
|10.2    | Loan
  Agreement between the Company and Bank of America dated March 31, 2008
  [incorporated by reference from Exhibit 10.1 to the Current Report on Form
  8-K filed on April 3, 2008].                                                                                        
|        |                                                                                                                                                                                                                                                                                  
|10. 3   | Centrue
  Financial Corporation 1999 Nonqualified Stock Option Plan [incorporated by
  reference from Exhibit 10.1 to the registration statement on Form S-8 filed
  by the Company on December 10, 1999 (File No. 333-92549)].                                                  
|        |                                                                                                                                                                                                                                                                                  
|10.4    | Centrue
  Financial Corporation 2000 Incentive Compensation Plan [incorporated by
  reference from Exhibit 10.1 to Centrues Quarterly Report on Form 10-Q for
  the quarter ended September 30, 2001 as filed with the SEC on November 13,
  2001].                             
|        |                                                                                                                                                                                                                                                                                  
|10.5    | Centrue
  Financial Corporation Amended and Restated 2003 Stock Option Plan
  [incorporated by reference from Centrues 2007 Proxy Statement].                                                                                                                                   

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|      |                                                                                                                                                                                                                                                   
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.6  | Form of
  Stock Option Agreements [incorporated by reference from Exhibit 10.2 and 10.3
  to Form 10-Q for the Quarter Ended March 31, 2007]                                                                                                      
|      |                                                                                                                                                                                                                                                   
|10.7  | Thomas A.
  Daiber Employment Agreement [incorporated by reference from Current Report on
  Form 8-K filed on July 7, 2006 (appears as Exhibit F-1 to Exhibit 2.1)].                                                                              
|      |                                                                                                                                                                                                                                                   
|10.8  | Kurt R.
  Stevenson Employment Agreement [incorporated by reference from Current Report
  on Form 8-K filed on July 7, 2006 (appears as Exhibit F-3 to Exhibit 2.1)]                                                                              
|      |                                                                                                                                                                                                                                                   
|10.9  | Amendment to
  Kurt R. Stevenson Employment Agreement [incorporated by reference from
  Exhibit 2.2 to Current Report on Form 8-K filed on November 17, 2006].                                                                                    
|      |                                                                                                                                                                                                                                                   
|10.10 | Donald M.
  Davis Employment Agreement [incorporated by reference from Exhibit 10.1 to
  Quarterly Report on Form 10-Q for the quarter ended September 30, 2007].                                                                                 
|      |                                                                                                                                                                                                                                                   
|10.11 | Roger D.
  Dotson Employment Agreement [incorporated by reference from Exhibit 10.11 to
  Annual Report on Form 10-K for the year ended December 31, 2007].                                                                                       
|      |                                                                                                                                                                                                                                                   
|10.12 | Steven E.
  Flahaven Employment Agreement [incorporated by reference from Exhibit 10.12
  to Annual Report on Form 10-K for the year ended December 31, 2007].                                                                                    
|      |                                                                                                                                                                                                                                                   
|10.13 | Heather M.
  Hammitt Employment Agreement [incorporated by reference from Exhibit 10.13 to
  Annual Report on Form 10-K for the year ended December 31, 2007].                                                                                    
|      |                                                                                                                                                                                                                                                   
|10.14 | Kenneth A. Jones
  Employment Agreement [incorporated by reference from Exhibit 10.14 to Annual
  Report on Form 10-K for the year ended December 31, 2007].                                                                                      
|      |                                                                                                                                                                                                                                                   
|10.15 | Diane F.
  Leto Employment Agreement [incorporated by reference from Exhibit 10.15 to
  Annual Report on Form 10-K for the year ended December 31, 2007].                                                                                         
|      |                                                                                                                                                                                                                                                   
|10.16 | Michael A.
  OGorman Employment Agreement [incorporated by reference from Exhibit 10.16
  to Annual Report on Form 10-K for the year ended December 31, 2007].                                                                                   
|      |                                                                                                                                                                                                                                                   
|10.17 | Ricky R.
  Parks Employment Agreement [incorporated by reference from Exhibit 10.17 to
  Annual Report on Form 10-K for the year ended December 31, 2007].                                                                                        
|      |                                                                                                                                                                                                                                                   
|10.18 | Everett J.
  Solon Employment Agreement [incorporated by reference from Exhibit 10.18 to
  Annual Report on Form 10-K for the year ended December 31, 2007].                                                                                      
|      |                                                                                                                                                                                                                                                   
|10.19 | Non-employee
  Directors Deferred Compensation Plan [filed herewith].                                                                                                                                                                            
|      |                                                                                                                                                                                                                                                   
|10.20 | Kankakee
  Bancorp, Inc. 1992 Stock Option Plan [incorporated by reference from Schedule
  14A for the 1993 Annual Meeting of Stockholders of former Centrue Financial
  Corporation (Filer No. 001-15025)].                                      
|      |                                                                                                                                                                                                                                                   
|10.21 | Kankakee
  Bancorp, Inc. 2003 Director Short Term Incentive Plan [incorporated by
  reference from Exhibit 10.1 to Form S-8 (Registration No. 333-104913) of
  former Centrue Financial Corporation (Filer No. 001-15025) filed on May 1,
  2003].
|      |                                                                                                                                                                                                                                                   
|10.22 | Kankakee
  Bancorp, Inc. 2003 Stock Incentive Plan [incorporated by reference from
  Appendix B to Schedule 14A filed on March 14, 2003 of former Centrue
  Financial Corporation (Filer No. 001-15025)].                                         

---



|      |                                                                                                                                                                                                                                           
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.23 | Indenture
  dated April 22, 2004 between the Company and U.S. Bank, N.A. [incorporated by
  reference from Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 2004
  of former Centrue Financial Corporation (Filer No. 001-150250].
|      |                                                                                                                                                                                                                                           
|10.24 | Indenture dated
  April 19, 2007 between the Company and Wilmington Trust Company [filed
  herewith].                                                                                                                                     
|      |                                                                                                                                                                                                                                           
|10.25 | Executive
  Deferred Compensation Plan [filed herewith].                                                                                                                                                                                  
|      |                                                                                                                                                                                                                                           
|10.26 | Amendment #1
  to Thomas A. Daiber Employment Agreement [incorporated by reference from
  Exhibit 10.1 to Current Report on 8-K filed on January 5, 2009].                                                                                
|      |                                                                                                                                                                                                                                           
|10.27 | Amendment #1
  to Kurt R. Stevenson Employment Agreement [incorporated by reference from
  Exhibit 10.2 to Current Report on 8-K filed on January 5, 2009].                                                                               
|      |                                                                                                                                                                                                                                           
|10.28 | Amendment #1
  to Donald M. Davis Employment Agreement [incorporated by reference from
  Exhibit 10.3 to Current Report on 8-K filed on January 5, 2009].                                                                                 
|      |                                                                                                                                                                                                                                           
|10.29 | 2008
  Amendment to Employment Agreement (Steven E. Flahaven) [incorporated by
  reference from Exhibit 10.4 to Current Report on 8-K filed on January 5,
  2009].                                                                        
|      |                                                                                                                                                                                                                                           
|10.30 | 2008
  Amendment to Employment Agreement (Heather H. Hammitt) [incorporated by
  reference from Exhibit 10.5 to Current Report on 8-K filed on January 5,
  2009].                                                                        
|      |                                                                                                                                                                                                                                           
|10.31 | 2008
  Amendment to Employment Agreement (Kenneth A. Jones) [incorporated by
  reference from Exhibit 10.6 to Current Report on 8-K filed on January 5,
  2009].                                                                          
|      |                                                                                                                                                                                                                                           
|10.32 | 2008
  Amendment to Employment Agreement (Diane F. Leto) [incorporated by reference
  from Exhibit 10.7 to Current Report on 8-K filed on January 5, 2009].                                                                               
|      |                                                                                                                                                                                                                                           
|10.33 | 2008
  Amendment to Employment Agreement (Roger D. Dotson) [incorporated by
  reference from Exhibit 10.8 to Current Report on 8-K filed on January 5,
  2009].                                                                           
|      |                                                                                                                                                                                                                                           
|10.34 | 2008
  Amendment to Employment Agreement (Everett J. Solon) [incorporated by
  reference from Exhibit 10.9 to Current Report on 8-K filed on January 5,
  2009].                                                                          
|      |                                                                                                                                                                                                                                           
|10.35 | 2008
  Amendment to Employment Agreement (Ricky R. Parks) [incorporated by reference
  from Exhibit 10.10 to Current Report on 8-K filed on January 5, 2009].                                                                             
|      |                                                                                                                                                                                                                                           
|14.1  | Code of
  Ethics [filed herewith].                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                           
|21.1  | Subsidiaries
  of Centrue Financial Corporation.                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                           
|23.1  | Consent of
  Independent Registered Public Accounting Firm.                                                                                                                                                                               
|      |                                                                                                                                                                                                                                           
|31.1. | Certification
  of Thomas A. Daiber, the Companys Principal Executive Officer, pursuant to
  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                              

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|      |                                                                                                                                                                                                                                                                
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.2  | Certification
  of Kurt R. Stevenson, the Companys Principal Financial Officer, pursuant to
  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                  
|      |                                                                                                                                                                                                                                                                
|32.1* | Certification
  Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002, from the Companys President and Principal
  Executive Officer.                                                                    
|      |                                                                                                                                                                                                                                                                
|32.2* | Certification
  Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002, from the Companys Senior Executive Vice
  President and Principal Financial and Accounting Officer.                               
|      |                                                                                                                                                                                                                                                                
|*     | This certification is not filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
incorporated by reference into any filing under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended.

---