<PAGE>




                                   EXHIBIT 13
 
                         ANNUAL REPORT TO STOCKHOLDERS







<PAGE>






                           PROGRESSIVE BANCORP, INC.
 
                                     1997
                                 ANNUAL REPORT
 





<PAGE>


                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                                -----
<S>                                                                                                          <C>
Message of President and Chief Executive Officer...........................................................           1
Selected Consolidated Financial and Other Data.............................................................           2
Management's Discussion and Analysis of 
  Financial Condition and Results of Operations...........................................................            5
Directors and Officers of Pekin Savings and the Company....................................................          13
Independent Auditor's Report...............................................................................          14
Consolidated Balance Sheets................................................................................          15
Consolidated Statements of Income..........................................................................          16
Consolidated Statements of Changes in Stockholders' Equity.................................................          18
Consolidated Statements of Cash Flows......................................................................          19
Notes to Consolidated Financial Statements.................................................................          21
Common Stock and Related Matters...........................................................................          42
Stockholder Information....................................................................................          42
</TABLE>

<PAGE>

December 19, 1997
 
Dear Stockholders:
 
On behalf of the Board of Directors, management and staff of our newly formed 
bank holding company, Progressive Bancorp, Inc., and its new wholly-owned 
subsidiary, Pekin Savings Bank, I am pleased to present our 1997 Annual 
Report.
 
This past year, Pekin Savings realized a 2.5% asset growth of $2.1 million. 
Savings deposits also increased 2.5% or $1.7 million over the previous year.
 
The fiscal year's profit before taxes was $1.1 million compared to $.5 
million last year. However, last year's profit reflected a $.4 million 
expense due to the one-time SAIF deposit premium assessment on September 30, 
1996, the last day of our fiscal year.

Our profit added $3.92 per share to our stockholders' equity. The book value 
per share at the close of fiscal 1997 increased to $43.52.
 
The market price of our stock as of September 30, 1997 was $42.00 per share 
compared to $28.50 per share a year ago.
 
Our Tier 1 Capital level as of September 30, 1997 was 8.4% of average 
assets. Our Risk-Based Capital on that date was 18.2% of risk-weighted 
assets. All capital levels exceed the regulatory minimums.
 
Pekin Travel Company, a division of our subsidiary Pekin Financial Services, 
reported sales for the past fiscal year of $2.8 million, a 30.3% increase 
over the previous fiscal year. Pekin Travel continues to increase its sales 
and profit.
 
Our mortgage loan originations were down 28.8% from the previous year. This 
is a direct reflection of the higher mortgage interest rates prevailing this 
fiscal year compared to fiscal 1996. There were 286 mortgage loans closed 
totalling $15.7 million in fiscal 1997. Our consumer loan department was very 
busy this past fiscal year, originating 719 loans in the amount of $7.8 
million. A net gain of $2.2 million was realized at fiscal year-end in 
consumer loans.
 
A special stockholders' meeting was held on October 10, 1997. At that meeting 
our stockholders voted to approve the bank holding company form of ownership, 
whereby Pekin Savings became a wholly-owned subsidiary of our newly formed 
bank holding company, Progressive Bancorp, Inc. This type of ownership 
structure will provide greater flexibility and diversification opportunities 
as we strategize our plans for growth. I want to thank all our stockholders 
who responded by sending in their executed proxies. We needed a two-thirds 
favorable voting response. Thanks to you, we received a 77.1% favorable vote 
out of 84.1% of the total eligible votes cast. In addition, our stockholders 
voted to approve a change in the Bank's name to "Pekin Savings Bank."
 
The Board of Directors authorized a cash dividend of $1.00 per share, which 
was paid in June 1997. This was an increase of $.75 per share over each of 
the previous two years. It's gratifying to be paying dividends to our 
stockholders...especially when we can pay them three years sooner than 
initially thought possible and at an increasing rate during the course of our 
short five year history as a stock institution.
 
Banking in America Today is Truly an Evolving Business.  Awaiting us is a 
"Technology Frontier" that holds many opportunities for delivering more and 
better services, with greater efficiency, to our customers...essential 
elements to continuing success and reward to you, our stockholders. The Board 
of Directors, along with management, look forward to these challenges in the 
coming year.
 
Happy New Year to you and yours!
 
                                         Arthur E. Krile, Jr. 
                                         President and Chief Executive Officer
 
<PAGE>

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE BANK
 
    Set forth below are selected financial and other data of Pekin Savings 
Bank ("Pekin Savings" or the "Bank"). This financial data is derived in part 
from, and should be read in conjunction with, the Consolidated Financial 
Statements of the Bank and notes thereto presented elsewhere in this Annual 
Report.

<TABLE>
<CAPTION>
                                                                               AT SEPTEMBER 30,
                                                             -----------------------------------------------------
                                                               1997       1996       1995       1994       1993
                                                             ---------  ---------  ---------  ---------  ---------
                                                                                (IN THOUSANDS)
<S>                                                          <C>        <C>        <C>        <C>        <C>
Total amount of:
  Assets...................................................  $  85,412  $  83,299  $  82,359  $  78,802  $  76,051
  Loans receivable, net....................................     57,937     55,777     48,419     43,683     32,749
  Mortgage-backed securities...............................      8,123     10,639     14,589     16,601     22,105
  Total investments:
    Interest-bearing deposits..............................      4,043      1,419      2,755      3,364      1,471
    Investment securities..................................     11,884     11,238     12,696     11,276      4,182
  Assets held for sale (1).................................         --         --         --         --     12,644
Deposits...................................................     69,059     67,323     66,913     66,537     68,327
  Borrowed funds...........................................      8,000      8,000      8,000      6,000      2,000
  Retained earnings, substantially 
    restricted.............................................      5,899      5,372      5,021      4,357      3,472
  Stockholders' equity.....................................      7,320      6,657      6,408      5,466      4,789
</TABLE>
 
------------------------
 
(1) Consists of certain U.S. Treasury securities, mortgage-backed securities 
    and fixed-rate first mortgage loans that may not be held to their 
    contractual maturity.
 
                                       2

<PAGE>
SELECTED FINANCIAL RATIOS AND OTHER DATA
 
<TABLE>
<CAPTION>
                                                                            AT OR FOR THE YEAR ENDED SEPTEMBER 30,
                                                                   -----------------------------------------------------
                                                                     1997       1996       1995       1994       1993
                                                                   ---------  ---------  ---------  ---------  ---------
<S>                                                                <C>        <C>        <C>        <C>        <C>
Return on average assets (net income 
  divided by average total assets)...............................       0.82%      0.46%      0.88%      1.15%      1.21%
Return on average equity (net income 
  divided by average equity).....................................       9.87       5.88      11.95      17.05      21.77
Average equity to average assets.................................       8.28       7.90       7.34       6.72       5.54
Average equity to average liabilities............................       9.06       8.58       7.92       7.21       5.86
Retained earnings to total assets 
  at end of period...............................................       6.91       6.45       6.10       5.53       4.56
Total stockholders' equity to total 
  assets at end of period........................................       8.57       7.99       7.78       6.94       6.30
Interest rate spread during period...............................       2.51       2.33       2.86       3.30       2.84
Net interest margin during period (1)............................       2.80       2.62       3.11       3.47       3.04
Interest expense to average 
  interest-earning assets........................................       4.77       4.79       4.48       4.12       4.91
Interest income to average assets................................       7.17       7.05       7.29       7.29       7.66
Interest expense to average assets...............................       4.52       4.56       4.30       3.96       4.73
Non-interest expense to average assets...........................       2.28       2.82       2.32       2.45       2.18
Nonperforming loans to total loans at 
  end of period..................................................       0.80       0.20       0.25       0.11       0.43
Nonperforming assets to total assets.............................       0.54       0.28       0.17       0.09       0.32
Allowance for loan losses to net loans 
  receivable at end of period....................................       0.38       0.39       0.44       0.46       0.64
Average interest-earning assets to 
  average interest-bearing liabilities...........................     106.29     106.12     105.48     104.44     104.08
Net interest income to other 
  operating expenses.............................................     116.47      88.33     128.58     136.22     134.68

Number of:
  Real estate loans outstanding..................................      1,385      1,482      1,483      1,454      1,514
  Deposit accounts...............................................      9,308      9,387      9,367      9,504      9,853
  Offices........................................................          2          2          2          2          2
</TABLE>
 
------------------------
 
(1) Net interest margin represents net interest income divided by average
    interest-earning assets.
 
                                       3

<PAGE>
SUMMARY OF OPERATING DATA
<TABLE>
<CAPTION>
                                                                          AT OR FOR THE YEAR ENDED SEPTEMBER 30,
                                                                   -----------------------------------------------------
                                                                     1997       1996       1995       1994       1993
                                                                   ---------  ---------  ---------  ---------  ---------
                                                                           (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                                <C>        <C>        <C>        <C>        <C>
Interest income (1)..............................................  $   6,105  $   5,963  $   5,861  $   5,638  $   6,001
Interest expense.................................................      3,846      3,855      3,460      3,059      3,703
                                                                   ---------  ---------  ---------  ---------  ---------
Net interest income..............................................      2,259      2,108      2,401      2,579      2,298
Provision for loan losses........................................         12         12         20         41         36
                                                                   ---------  ---------  ---------  ---------  ---------
    Net interest income after 
      provision for loan losses..................................      2,247      2,096      2,381      2,538      2,262
                                                                   ---------  ---------  ---------  ---------  ---------
Noninterest income:
  Service charges................................................        141        111        112        136        124
  Travel agency fees, net of 
    direct expenses..............................................        256        200        153        113         --
  Commissions from sale of annuities.............................          8         51         10          9         15
  Net gain on sale of investments, 
    mortgage-backed securities, assets 
    held for sale, and loans held 
    for sale.....................................................         73        122         72        112        514
  Other..........................................................        308        287        242        248        205
                                                                   ---------  ---------  ---------  ---------  ---------
    Total noninterest income.....................................        786        771        589        618        858
                                                                   ---------  ---------  ---------  ---------  ---------
Noninterest expense:
  General and administrative expense.............................      1,916      1,928      1,865      1,815      1,628
  Net (gain) loss on sale of real estate owned...................          5         (6)         1          8         42
  Real estate owned expense, net of 
    income.......................................................         19         24         (6)        38         34
  BIF/SAIF special assessment....................................         --        440         --         --         --
  Other..........................................................         --         --          7         32          2
                                                                   ---------  ---------  ---------  ---------  ---------
    Total noninterest expense....................................      1,940      2,386      1,867      1,893      1,706
                                                                   ---------  ---------  ---------  ---------  ---------
Income before income taxes and 
  cumulative effect of change in
  accounting principle...........................................      1,093        481      1,103      1,263      1,414
Income taxes.....................................................        398         88        398        447        469
                                                                   ---------  ---------  ---------  ---------  ---------
Income before cumulative effect of 
  change in accounting principle.................................        695        393        705        816        945
Cumulative effect of change in 
  accounting for income taxes....................................         --         --         --         70         --
                                                                   ---------  ---------  ---------  ---------  ---------
   Net income....................................................  $     695  $     393  $     705  $     886  $     945
                                                                   ---------  ---------  ---------  ---------  ---------
                                                                   ---------  ---------  ---------  ---------  ---------
Per common share data:
  Primary income per share before 
    cumulative effect of change in
    accounting principle.........................................  $    3.92  $    2.24  $    4.05  $    4.74  $    5.75
                                                                   ---------  ---------  ---------  ---------  ---------
                                                                   ---------  ---------  ---------  ---------  ---------
Primary income per share.........................................  $    3.92  $    2.24  $    4.05  $    5.14  $    5.75
                                                                   ---------  ---------  ---------  ---------  ---------
                                                                   ---------  ---------  ---------  ---------  ---------
</TABLE>
 
------------------------
 
(1) Includes fee income on the servicing of loans originated and sold by the
    Bank.
 
                                       4

<PAGE>

                           PROGRESSIVE BANCORP, INC.
                               PEKIN SAVINGS BANK
 
    Progressive Bancorp, Inc. (the "Company") is a Delaware corporation which 
is the holding company for Pekin Savings. The Company was organized by the 
Bank in the fourth quarter of 1997 for the purpose of acquiring all of the 
capital stock of the Bank in connection with the reorganization of the Bank 
into the bank holding company structure. The only significant asset of the 
Company is the capital stock of the Bank, and the business of the Company 
currently consists solely of the business of the Bank. Since the Company was 
formed in the last calendar quarter of 1997 (subsequent to the end of the 
1997 fiscal year), all financial information presented in this Annual Report 
is the financial data for the Bank and its subsidiary on a consolidated basis.
 
    Pekin Savings Bank is an Illinois-chartered stock savings bank 
headquartered in Pekin, Illinois. The Bank was founded in 1882 and has been a 
member of the Federal Home Loan Bank System since 1955. Its deposits are 
insured up to the regulatory maximum by the Savings Association Insurance 
Fund, which is administered by the Federal Deposit Insurance Corporation. On 
January 17, 1994, the Bank converted from an Illinois-chartered savings and 
loan association to an Illinois-chartered savings bank.
 
    The Bank is, and intends to continue to be, a community-oriented 
financial institution committed to offering a variety of financial services 
to meet the needs of its local community. The Bank is engaged primarily in 
the business of attracting deposits from the general public and using such 
funds to originate mortgage loans for the purchase of single-family homes in 
Tazewell and Mason counties, Illinois. The Bank also invests in 
mortgage-backed securities, all of which are secured by one- to four-family 
residential mortgage loans that are insured or guaranteed by the Federal Home 
Loan Mortgage Corporation, Federal National Mortgage Association or 
Government National Mortgage Association. The Bank also makes home equity 
loans secured by the borrower's principal residence and other types of 
consumer loans such as auto loans and home improvement loans. To a lesser 
extent, the Bank makes interim construction loans. Although the Bank has a 
small number of commercial real estate loans in its portfolio, such loans are 
not actively originated by the Bank. In addition to its lending activities 
and investments in mortgage-backed securities, the Bank invests in securities 
issued by the United States Government and its agencies.
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
GENERAL
 
    The Bank's net income is primarily dependent on its net interest income, 
which is the difference between interest income earned on its loan, 
mortgage-backed securities and investment portfolios, and its cost of funds 
consisting of interest paid on deposits and borrowings. Net interest income 
also is affected by the relative amounts of interest-earning assets and 
interest-bearing liabilities. The Bank's net income also is affected by its 
provision for loan losses, as well as the amount of non-interest income, 
including loan origination fees and service charges and gains on the sale of 
securities and loans held for sale, and non-interest expense, such as 
salaries and employee benefits, deposit insurance premiums, occupancy and 
equipment costs and income taxes. Earnings of the Bank also are affected 
significantly by general economic and competitive conditions in its market 
area, particularly changes in market interest rates, government policies and 
actions of regulatory authorities.
 
    The Bank's current business strategy is to continue to operate as a 
well-capitalized, profitable and independent community financial institution 
dedicated to home ownership and to providing quality service to its 
customers. The Bank intends to implement this strategy by: (1) providing 
quality customer service by closely monitoring the needs of its customers; 
(2) emphasizing the origination of residential mortgage loans and consumer 
loans and by offering other personal services; (3) reducing interest rate 
risk exposure by matching asset and liability maturities and rates; (4) 
controlling operating costs; (5) maintaining asset quality; and (6) 
maintaining capital in excess of regulatory requirements while controlling 
growth.

                                       5
 

<PAGE>

AVERAGE BALANCES, INTEREST AND AVERAGE YIELD/COST
 
    The following table sets forth certain information relating to the Bank's 
average balance sheet and reflects the average yield on assets and average 
cost of liabilities for the periods indicated and the average yields earned 
and rates paid. Such yields and costs are derived by dividing income or 
expense by the average balance of assets or liabilities, respectively, for 
the periods presented. Average balances are derived from month-end balances. 
Management does not believe that the use of month-end balances instead of 
daily average balances has caused any material difference in the information 
presented.

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED SEPTEMBER 30,
                                                            ---------------------------------------------------------------------
                                                                           1997                                 1996
                                                            -----------------------------------  --------------------------------
                                                             AVERAGE                AVERAGE       AVERAGE               AVERAGE
                                                             BALANCE   INTEREST    YIELD/COST     BALANCE    INTEREST  YIELD/COST
                                                            ---------  ---------  -------------  ---------  ---------- ----------
                                                                                   (DOLLARS IN THOUSANDS)
<S>                                                         <C>        <C>        <C>            <C>        <C>        <C>
Interest-earning assets:
  Loan portfolio (1)......................................  $  55,265  $   4,545         8.22%   $  51,379  $   4,162      8.10%
  Investment securities...................................     12,139        719         5.92       12,984        733      5.65
  Mortgage-backed securities..............................      9,380        622         6.63       13,273        894      6.74
  Interest-bearing deposits...............................      3,766        219         5.82        2,844        174      6.12
                                                            ---------  ---------                 ---------  ---------      
    Total interest-earning assets.........................  $  80,550  $   6,105         7.58    $  80,480  $   5,963      7.41
                                                            ---------  ---------                 ---------  ---------       
                                                            ---------  ---------                 ---------  ---------       
Interest-bearing liabilities:
  Deposits................................................  $  67,553  $   3,345         4.95%   $  67,837  $   3,369      4.97%
  Borrowed funds..........................................      8,231        501         6.09        8,000        486      6.08
                                                            ---------  ---------                 ---------  ---------       
    Total interest-bearing liabilities....................  $  75,784  $   3,846         5.07    $  75,837  $   3,855      5.08
                                                            ---------  ---------                 ---------  ---------       
                                                            ---------                            ---------         
Net interest income.......................................             $   2,259                            $   2,108
                                                                       ---------                            ---------       
                                                                       ---------                            ---------       
Interest rate spread (2)..................................                               2.51%                             2.33%
                                                                                         ----                              ----
                                                                                         ----                              ----
Net yield on interest-earning assets (3)..................                               2.80%                             2.62%
                                                                                         ----                              ----
                                                                                         ----                              ----
Ratio of average interest-earning 
  assets to average interest-bearing 
  liabilities.............................................                             106.29%                           106.12%
                                                                                       ------                            ------
                                                                                       ------                            ------
</TABLE>
 
------------------------
 
(1) Average balances include non-accrual loans.
(2) Interest rate spread represents the difference between the average yield on
    interest-earning assets and the average cost of interest-bearing
    liabilities.
(3) Net yield on interest-earning assets represents net interest income as a
    percentage of average interest-earning assets.

                                       6

<PAGE>

YIELDS EARNED AND RATES PAID
 
    The following table sets forth for the periods indicated, the weighted 
average yields earned on the Bank's assets, the weighted average interest 
rates paid on the Bank's liabilities, together with the net yield on average 
interest-earning assets.
 
<TABLE>
<CAPTION>
                                                              AT          YEAR ENDED SEPTEMBER 30,
                                                         SEPTEMBER 30,    -----------------------
                                                             1997             1997       1996
                                                       -----------------   ---------  ---------
<S>                                                        <C>             <C>        <C>
Weighted average yield 
  on loan portfolio................................           7.93%          8.22%      8.10%
Weighted average yield on 
  mortgage-backed securities.......................           6.53           6.63       6.74
Weighted average yield on investment 
  portfolio........................................           6.33           5.92       5.65
Weighted average yield on interest-
  bearing deposits.................................           5.99           5.82       6.12
Weighted average yield on all interest-earning 
  assets...........................................           7.47           7.58       7.41
Weighted average rate paid on deposit 
  accounts.........................................           5.95           4.95       4.97
Weighted average rate paid on borrowed 
  funds............................................           5.68           6.09       6.08
Weighted average rate paid on all 
  interest-bearing liabilities.....................           5.92           5.07       5.08
Interest rate spread (spread between 
  weighted average rate earned on 
  all interest-earning assets and 
  weighted average rate paid 
  on all interest-bearing liabilities).............           1.55           2.51       2.33
Net yield (net interest income as 
  a percentage of average interest-
  earning assets)..................................           1.89           2.80       2.62
</TABLE>

                                       7

<PAGE>
 
RATE/VOLUME ANALYSIS
 
    The following table describes the extent to which changes in interest 
rates and changes in the volume of interest-earning assets and 
interest-bearing liabilities have affected the Bank's interest income and 
interest expense during the periods indicated. For each category of 
interest-earning asset and interest-bearing liability, information is 
provided on changes attributable to: (i) changes in volume (changes in volume 
multiplied by prior rate); (ii) changes in rates (changes in average rate 
multiplied by prior average volume); (iii) changes in rate-volume (changes in 
rate multiplied by the change in volume); and (iv) the net change.

<TABLE>
<CAPTION>
                                                                   YEAR ENDED SEPTEMBER 30,
                                        ---------------------------------------------------------------------------------
                                                      1997 VS. 1996                         1996 VS. 1995
                                        -------------------------------------  ------------------------------------------
                                                INCREASE/ (DECREASE)                 INCREASE/(DECREASE)
                                                       DUE TO                              DUE TO
                                        -----------------------------    TOTAL    ---------------------------     TOTAL
                                                              RATE/    INCREASE                         RATE/    INCREASE
                                          VOLUME     RATE     VOLUME   (DECREASE)   VOLUME    RATE     VOLUME   (DECREASE)
                                         ---------  -------  --------  ----------- -------- -------- ---------- -----------
                                                                     (IN THOUSANDS)
<S>                                     <C>          <C>     <C>      <C>         <C>     <C>          <C>      <C>
Interest income:
  Loan portfolio........................   $  315    $  62    $  7     $   384     $  475   $  (137)    $ (17)   $  321
  Mortgage-backed securities............     (262)     (15)      5        (272)      (171)      (58)        9      (220)
  Interest-bearing deposits.............       55       (9)     (2)         44        (19)       (7)       --       (26)
  Investment securities.................      (48)      35      (1)        (14)        17        10        (1)       26
                                            -----     ----     ---      ------      -----    ------      ----     -----
    Total interest-earning assets.......   $   60    $  73    $  9     $   142     $  302   $  (192)    $  (9)   $  101
                                            -----     ----     ---      ------      -----    ------      ----     -----
                                            -----     ----     ---      ------      -----    ------      ----     -----
Interest expense:
  Deposits..............................   $  (14)   $ (14)   $  4     $   (24)    $   57   $   240     $  --    $  297
  Borrowed funds........................       14        1      --          15         81        13         3        97
                                            -----     ----     ---      ------      -----    ------      ----     -----
    Total interest-bearing 
      liabilities.......................   $   --    $ (13)   $  4     $    (9)    $  138   $   253     $   3    $  394
                                            -----     ----     ---      ------      -----    ------      ----     -----
                                            -----     ----     ---      ------      -----    ------      ----     -----

Net change in interest income...........   $   60    $  86    $  5     $   151     $  164   $  (445)    $ (12)   $ (293)
                                            -----     ----     ---      ------      -----    ------      ----     -----
                                            -----     ----     ---      ------      -----    ------      ----     -----
</TABLE>

                                       8

<PAGE>
RESULTS OF OPERATIONS
 
    GENERAL. The earnings of the Bank depend primarily on its level of net 
interest income, which is the difference between interest earned on the 
Bank's interest-earning assets and the interest paid on interest-bearing 
liabilities. Net interest income is a function of the Bank's interest rate 
spread, which is the difference between the average yield earned on 
interest-earning assets and the average rate paid on interest-bearing 
liabilities, as well as a function of the average balance of interest-earning 
assets as compared to interest-bearing liabilities.
 
    INTEREST INCOME.  Interest income, which includes fee income on the 
servicing of loans, increased by $142,000, or 2.4%, to $6.1 million for the 
fiscal year ended September 30, 1997 ("fiscal 1997") from $6.0 million for 
the fiscal year ended September 30, 1996 ("fiscal 1996"). The increase in 
interest income resulted from an increase in the average yield on 
interest-earning assets to 7.58% for fiscal 1997 from 7.41% for fiscal 1996. 
Interest income from the Bank's loan portfolio increased by $384,000, or 
9.2%, due to a $3.9 million, or 7.6%, increase in the average balance of such 
assets. The average yield on such assets increased from 8.10% for fiscal 1996 
to 8.22% for fiscal 1997.
 
    INTEREST EXPENSE.  Interest expense decreased by $9,000, or 0.2%, to $3.8 
million for fiscal 1997 from $3.9 million for fiscal 1996. The decrease in 
interest expense for fiscal 1997 was due to a slight decrease in the average 
rate paid on interest-bearing liabilities to 5.07% in fiscal 1997 from 5.08% 
in fiscal 1996, as well as a decrease of $53,000, or 0.1%, in the average 
balance of interest-bearing liabilities in fiscal 1997 as compared to fiscal 
1996. The decrease in the average rate paid on interest-bearing liabilities 
reflected the Bank's management efforts to preserve its interest rate spread 
while still maintaining competitive interest rates offered on savings 
deposits without paying premiums to retain savings. The Bank sought 
alternative funding sources such as advances from the Federal Home Loan Bank 
System. The overall decrease in interest expense was offset by an increase in 
the Bank's average balance of FHLB advances to $8.2 million in fiscal 1997 
from $8.0 million in fiscal 1996, as well as a slight increase in the average 
rate paid on such advances to 6.09% in fiscal 1997 from 6.08% in fiscal 1996.
 
    NET INTEREST INCOME.  Net interest income is a function of the Bank's 
interest rate spread, which is the difference between the average yield 
earned on interest-earning assets and the average rate paid on 
interest-bearing liabilities, as well as a function of the average balance of 
interest-earning assets as compared to interest-bearing liabilities. Net 
interest income, before provision for loan losses, was $2.3 million in fiscal 
1997, an increase of $151,000, or 7.2%, from fiscal 1996. The increase in net 
interest income was primarily due to an increase in the Bank's interest rate 
spread to 2.51% in fiscal 1997 from 2.33% in fiscal 1996. The increase in 
interest rate spread resulted primarily from an increase in the yield on 
interest-earning assets. The slight decrease in the cost of the Bank's 
interest-bearing liabilities also helped increase the Bank's interest rate 
spread.
 
    PROVISION FOR LOSSES ON LOANS.  The Bank maintains an allowance for loan 
losses based upon management's periodic evaluation of known and inherent 
risks in the Bank's loan portfolio, its past loan loss experience, adverse 
situations that may affect borrowers' ability to repay loans, the estimated 
value of underlying loan collateral, and current and expected future economic 
conditions. The Bank's provision for loan losses was $12,000 in fiscal 1997 
and $12,000 in fiscal 1996. Total allowance for loan losses was $223,000, or 
0.38% of net loans receivable, at September 30, 1997, compared to $218,000, 
or 0.39% of net loans receivable, at September 30, 1996. The provision for 
loan losses reflected management's current view of the risks in the Bank's 
loan portfolio based on an evaluation of specific loans in its portfolio, 
estimated collateral values, historical loss experience, current economic 
trends, and the existing level of the Bank's allowance for loan losses.
 
    NON-INTEREST INCOME. The Bank's principal sources of non-interest income
include service charges on transaction accounts, net gains on the sale of
mortgage-backed securities, investment securities and loans held for sale, and
miscellaneous fees and charges for services offered by the Bank, including
credit cards. During the past several years, gains recorded on the sale of
mortgage-backed securities, other investments and loans held for sale have had a
significant impact on non-interest income and the Bank's net income. However,
there can be no assurance that the Bank will continue to have gains on the sale
of investments, mortgage-backed securities or loans held for sale, at the levels
reflected in recent years. Non-interest income increased by $15,000, or 1.9%, to
$786,000 in fiscal 1997, as 

                                       9

<PAGE>

compared to $771,000 in fiscal 1996. The increase reflected a $30,000, or 
27.0%, increase in service charges. Also contributing to the increase were 
travel agency fees, net of direct expense, provided by the Bank's subsidiary, 
Pekin Finanical Services, which increased $56,000, or 28.2%, due to increased 
sales volume. However, commissions from sales of annuities through the Bank's 
service corporation decreased $44,000, or 84.9%. This reflected reduced 
demand for annuity products. Other non-interest income increased $33,000, or 
20.2%. The increase was offset by a $49,000, or 40.0%, decrease in net gain 
on the sale of investments, mortgage-backed securities, and loans held for 
sale. In addition, loan origination fees decreased $12,000, or 9.7%, in 
fiscal 1997 as compared to fiscal 1996, reflecting a decrease in loan 
originations in fiscal 1997.
 
    NON-INTEREST EXPENSE. Non-interest expense decreased by $447,000, or 
18.7%, to $1.9 million for fiscal 1997 as compared to $2.4 million for fiscal 
1996. The decrease was primarily due to a one-time BIF/ SAIF special 
assessment of $440,000 related to the thrift fund rescue and relief package 
that was paid in fiscal 1996, and the decrease in regular federal insurance 
premiums of $124,000, or 79.6%, for fiscal 1997 from fiscal 1996. Offsetting 
these decreases were increases in the Bank's compensation and benefits of 
$22,000, or 2.1%, a $45,000, or 19.7% increase in premises and equipment 
expenses, and a $33,000, or 9.8%, increase in other operating expenses.
 
    INCOME BEFORE INCOME TAXES.  Income before income taxes increased by 
$613,000, or 127.4%, in fiscal 1997 as compared to fiscal 1996, reflecting an 
increase in net interest income in fiscal 1997 as compared to fiscal 1996, as 
well as the decrease in total non-interest expense in fiscal 1997 resulting 
from the elimination of the one-time BIF/SAIF special assessment.

    NET INCOME.  Net income increased by $302,000, or 76.7%, to $695,000 in 
fiscal 1997 from $393,000 in fiscal 1996. The increase in net income was 
primarily the result of higher net interest income in fiscal 1997 as compared 
to fiscal 1996, and lower total non-interest expense in fiscal 1997 as 
compared to fiscal 1996, primarily due to the elimination of the one-time 
BIF/SAIF special assessment.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    The Bank is required to maintain minimum levels of liquid assets as 
defined by regulations of the Illinois Commissioner of Savings and 
Residential Fiancne (the "Commissioner") and the Federal Deposit Insurance 
Corporation (the "FDIC"). This requirement, which varies from time to time, 
depending upon economic conditions and deposit flows, is based upon a 
percentage of deposits and hsort-term borrowings. The required ratio 
currently is 5%. The Bank historically has maintained a level of liquid 
assets in excess of regulatory requirements, and the Bank's liquidity ratio 
averaged 18.1% during the month of September 1997. The Bank adjusts its 
liquidity levels in order to meet funding needs for deposit outflows, payment 
o real estate taxes on mortgage loans escrowed for, repayment of borrowings, 
when applicable, and loan commitments. The Bank also adjusts liquidity as 
appropriate to meet its asset/liability objectives.
 
    The Bank's primary sources of funds are deposits, amortization and 
prepayment of loans and mortgage-backed securities, maturities of investment 
securities and other short-term investments, proceeds from the sale of loans 
held for sale, investment securities and mortgage-backed securities and funds 
provided from operations. The Bank utilizes FHLB of Chicago advances as a 
source of funds. While scheduled loan and mortgage-backed securities 
repayments are a relatively predictable source of funds, deposit flows and 
loan prepayments are greatly influenced by general interest rates, economic 
conditions and competition. The Bank manages the pricing of its deposits to 
maintain a steady deposit balance. In addition, the Bank invests excess funds 
in short-term interest-earning assets which provide liquidity to meet lending 
requirements. Short-term assets outstanding at September 30, 1997 and 1996 
amounted to $7.4 million, and $3.3 million, respectively.
 
    Commissioner and FDIC regulations require that the Bank maintain minimum 
amounts of regulatory capital. The Bank's capital ratios exceeded the minimum 
regulatory capital ratios as of the date hereof.
 
    The Bank's liquidity, represented by cash and cash equivalents, is a 
product of its operating, investing and financing activities. The primary 
source of cash was net income and cash derived from financing activities.

                                      10

<PAGE>

<TABLE>
<CAPTION>
                                                                                                YEAR ENDED SEPTEMBER 30,
                                                                                                -----------------------
                                                                                                    1997        1996
                                                                                                -----------  ----------
                                                                                                     (IN THOUSANDS)
<S>                                                                                              <C>        <C>
Cash and cash equivalents 
 at beginning of year..........................................................................  $   2,691  $   4,069
                                                                                                 ---------  ---------
Operating activities:
Net income.....................................................................................        695        393
Adjustments to reconcile net 
 income to net cash provided by 
 operating activities..........................................................................         14        180
Other operating activities.....................................................................         68         85
                                                                                                 ---------  ---------
Net cash provided by 
 operating activities..........................................................................        777        658
Net cash (used in) investing activities........................................................        (39)    (2,404)
Net cash provided by 
 financing activities..........................................................................      1,540        368
                                                                                                 ---------  ---------
Net increase (decrease) in cash 
 and cash equivalents..........................................................................      2,278     (1,378)
                                                                                                 ---------  ---------
Cash and cash equivalents at end of year.......................................................  $   4,969  $   2,691
                                                                                                 ---------  ---------
                                                                                                 ---------  ---------
</TABLE>
 
    Liquidity management is both a daily and long-term function of business 
management. Excess liquidity is generally invested in short-term investments, 
such as interest-bearing deposits with the FHLB of Chicago. If the Bank 
requires funds beyond its ability to generate them internally, borrowing 
agreements exist with the FHLB of Chicago which provide an additional source 
of funds. At September 30, 1997, the Bank had $8.0 million of outstanding 
advances from the FHLB of Chicago.
 
    At September 30, 1997, the Bank had outstanding mortgage loan commitments 
of $746,000. Certificates of deposit scheduled to mature in one year or less 
at September 30, 1997 totalled $32.9 million. Management believes that a 
significant portion of such deposits will remain with the Bank.
 
IMPACT OF INFLATION AND CHANGING PRICES
 
    The consolidated financial statements and related data presented herein 
have been prepared in accordance with generally accepted accounting 
principles which require the measurement of financial position and operating 
results in terms of historical dollars, without considering changes in the 
relative purchasing power of money over time due to inflation. The impact of 
inflation is reflected in the increased cost of the Bank's operations. Unlike 
most industrial companies, virtually all of the assets and liabilities of the 
Bank are monetary. As a result, interest rates have a greater impact on the 
Bank's performance than do the effects of general levels of inflation. In the 
current interest rate environment, liquidity and the maturity structure of 
the Bank's assets and liabilities are critical to the maintenance of 
acceptable performance levels.
 
ASSET AND LIABILITY MANAGEMENT
 
    The matching of assets and liabilities may be analyzed by examining the 
extent to which such assets and liabilities are "interest rate sensitive" and 
by monitoring an institution's interest rate sensitivity "gap." An asset or 
liability is said to be interest rate sensitive within a specific time period 
if it will mature or reprice within that time period. The interest rate 
sensitivity gap is defined as the difference between the amount of 
interest-earning assets maturing or repricing within a specific time period 
and the amount of interest-bearing liabilities maturing or repricing within 
that time period. A gap is considered positive when the amount of interest 
rate sensitive assets exceeds the amount of interest rate sensitive 
liabilities. A gap is considered negative when the amount of interest rate 
sensitive liabilities exceeds the amount of interest rate sensitive assets. 
During a period of rising interest rates, a negative gap 

                                      11

<PAGE>

would tend to adversely affect net interest income while a positive gap would 
tend to result in an increase in net interest income. During a period of 
falling interest rates, a negative gap would tend to result in an increase in 
net interest income while a positive gap would tend to adversely affect net 
interest income.
 
    At September 30, 1997, total interest-bearing liabilities maturing or 
repricing within one year exceeded total interest-earning assets maturing or 
repricing in the same period by $41.1 million, representing a cumulative 
negative one-year gap ratio of 49.9%. Accordingly, based on the gap model 
below, in a rising interest rate environment, the Bank's net interest income 
would be adversely affected. The Bank has an Asset-Liability Management 
Committee which is responsible for reviewing the Bank's asset and liability 
policies. The Committee meets and reports quarterly to the Board of Directors 
on interest rate risks and trends, as well as liquidity and capital ratios 
and requirements.
 
    The following table sets forth the amounts of interest-earning assets and 
interest-bearing liabilities outstanding at September 30, 1997 which are 
anticipated by the Bank, based upon certain assumptions, to reprice or mature 
in each of the future time periods shown.

<TABLE>
<CAPTION>
                                                                           AT SEPTEMBER 30, 1997
                                            ----------------------------------------------------------------------------------
                                                                                                            OVER
                                             ONE YEAR        1 TO 2       2 TO 3     3 TO 5     5 TO 10      10
                                              OR LESS        YEARS         YEARS      YEARS      YEARS      YEARS      TOTAL
                                            -----------  --------------  ---------  ---------  ---------  ---------  ---------
                                                                          (DOLLARS IN THOUSANDS)
<S>                                         <C>          <C>             <C>        <C>        <C>        <C>        <C>
Interest-earning assets:
  Real estate mortgages (1)...............   $   1,319   $          143  $     821  $   4,731  $   9,521  $  31,731  $  48,266
  Mortgage-backed securities (2)..........         742            2,186      1,198      1,332        719      1,925      8,102
  Other loans.............................         998              601        920      1,633      4,683      1,352     10,187
  Interest-bearing deposits...............       4,043               --         --         --         --         --      4,043
  Investment securities (2)...............       2,359              999      1,497      1,999      4,373        599     11,826
                                            -----------  --------------  ---------  ---------  ---------  ---------  ---------
    Total interest-earning assets.........       9,461            3,929      4,436      9,695     19,296     35,607     82,424


Interest-bearing liabilities:
  Demand accounts.........................      15,696               --         --         --         --         --     15,696
  Certificate of deposits of $100,000 or
    more..................................       1,778              922        767        170         --         --      3,637
  Other certificates of deposit...........      31,131           10,579      4,192      3,824         --         --     49,726
  Borrowings..............................       2,000            2,000      1,000      1,000      2,000         --      8,000
                                            -----------  --------------  ---------  ---------  ---------  ---------  ---------
    Total interest-bearing liabilities....      50,605           13,501      5,959      4,994      2,000         --     77,059


Interest sensitivity gap..................     (41,144)          (9,572)    (1,523)     4,701     17,296     35,607
Cumulative gap............................     (41,144)         (50,716)   (52,239)   (47,538)   (30,242)     5,365

Ratio of gap during the period to total
  interest-earning assets.................       (49.9)%          (11.6)%     (1.8)%      5.7%      21.0%      43.2%
Ratio of cumulative gap to total
  interest-earning assets.................       (49.9)%          (61.5)%    (63.4)%    (57.7)%    (36.7)%      6.5%
</TABLE>

------------------------
(1) Includes real estate sold on contract where the borrower does not have 
    title to the property; rather, title remains with the institution.
(2) For available-for-sale securities, amortized cost (not estimated market
    value) is reported.
 
                                      12

<PAGE>
-----------------------------------------------------------------------------
            DIRECTORS AND OFFICERS OF PEKIN SAVINGS AND THE COMPANY
-----------------------------------------------------------------------------

    ORVILLE G. DEPPERT became Chairman of the Board of the Bank in 1967 and 
of the Company upon its formation. He is currently retired and was formerly 
the owner/operator of George Deppert & Sons Farm Implements.
 
    R. H. MORE became Vice Chairman of the Board of the Bank in 1981 and of 
the Company upon its formation. He is currently retired, and was the former 
publisher of THE PEKIN DAILY TIMES.
 
    ARTHUR E. KRILE, JR. has been a director and President and Chief 
Executive Officer of the Bank since 1985 and is also a director and President 
and Chief Executive Officer of the Company.
 
    E. GLEN RITTENHOUSE became a director of the Bank in 1987 and of the 
Company upon its formation. He is the Senior Vice President and Secretary of 
the Bank and of the Company, and has been employed by the Bank since 1973.
 
    JOHN L. STEGER became a director of the Bank in 1996 and of the Company 
upon its formation. He is a partner and vice president of Steger's, Ltd., a 
furniture retailer located in Pekin, Illinois.
 
    PATRICK E. OBERLE became a director of the Bank in 1994 and of the 
Company upon its formation. He has been a principal of the law firm of 
Elliff, Keyser, Oberle & Dancey, P.C., since 1976.
 
    JAMES S. WOLF became a director of the Bank in 1994 and of the Company 
upon its formation. He is a certified public accountant and has been 
President of Wolf, Tesar & Company, P.C., an accounting firm, since 1980.
 
    JAMES A. CRAFTON has been employed by the Bank since 1977 and is 
presently Vice President-Installment Loans of the Bank.
 
    LISA M. HARNESS has been employed by the Bank since 1976, and presently 
serves as Vice President-Mortgage Loans-Servicing of the Bank.
 
    DAVID EARL RILEY has been employed by the Bank since 1986, and presently 
serves as Vice President-- Mortgage Loan Originations of the Bank.
 
    EUGENE VAN VOOREN has been employed by the Bank since 1985 and presently 
serves as Vice President and Treasurer of the Bank and of the Company. He is 
the chief financial officer of the Bank and of the Company.
 
                                      13
<PAGE>

                         INDEPENDENT AUDITOR'S REPORT
 
Board of Directors 
Pekin Savings Bank 
Pekin, Illinois
 
   We have audited the accompanying consolidated balance sheets of Pekin 
Savings Bank and subsidiary (Bank) as of September 30, 1997 and 1996, and the 
related consolidated statements of income, changes in stockholders' equity, 
and cash flows for the years then ended. These consolidated financial 
statements are the responsibility of the Bank's management. Our 
responsibility is to express an opinion on these consolidated financial 
statements based on our audits.
 
   We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audits provide a 
reasonable basis for our opinion.
 
   In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of Pekin 
Savings Bank and subsidiary as of September 30, 1997 and 1996, and the 
results of their operations and their cash flows for the years then ended, in 
conformity with generally accepted accounting principles.
 




Peoria, Illinois 
November 3, 1997
 
                                       14
<PAGE>
                       PEKIN SAVINGS BANK AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS
 
                                     ASSETS
                                                    SEPTEMBER 30,
                                             ----------------------------
                                                  1997          1996
                                             -------------  -------------
Cash and amounts due from banks............   $   925,795    $ 1,271,013
Interest-bearing deposits..................     4,042,707      1,419,243
Money market investments and investment
  securities (note 2):
  Held-to-maturity, at amortized cost       
    (estimated market value of $6,101,695
    and $6,942,636, respectively)..........     6,095,717      7,057,503
  Available-for-sale, at market value......     5,788,174      4,180,952
Mortgage-backed securities (note 3):
  Held-to-maturity, at amortized cost        
    (estimated market value of $5,219,101
    and $6,367,601, respectively)..........     5,185,045      6,438,539
  Available-for-sale, at market value......     2,937,508      4,200,908
Loans receivable, net (note 5).............    57,937,437     55,777,190
Accrued interest receivable (note 6).......       502,868        485,355
Real estate owned, net of allowance for     
  losses of $0 and $7,500, respectively 
  (note 7).........................                  --          127,805
Premises and equipment (note 8)............     1,050,625      1,079,485
Other assets...............................       946,365      1,261,097
                                             -------------  -------------
                                              $85,412,241    $83,299,090
                                             -------------  -------------
                                             -------------  -------------

                   LIABILITIES AND STOCKHOLDERS EQUITY

Deposits (note 9)..........................   $69,058,706    $67,322,686
Borrowed funds (note 10)...................     8,000,000      8,000,000
Advances from borrowers for taxes and      
  insurance................................       188,439        231,499
Accrued expenses and other liabilities.....       845,356      1,088,114
                                             -------------  -------------
              Total liabilities............    78,092,501     76,642,299
                                             -------------  -------------
                                             -------------  -------------

Stockholders equity:
  Serial preferred stock with no par 
    value, 5,000,000 shares authorized, 
    no shares issued and outstanding.......          --             --
  Common stock, $1 par value, 10,000,000
    shares authorized, 168,172 and 167,439 
    shares issued and outstanding 
    September 30, 1997 and 1996, 
    respectively (note 16).................       168,172        167,439
Paid-in surplus............................     1,201,115      1,187,005
Retained earnings, substantially restricted
  (notes 12 and 15)........................     5,898,816      5,371,998
Net unrealized gain (loss) on
  available-for-sale securities, net of
  taxes (notes 2 and 3)....................        51,637        (69,651)
                                             -------------  -------------
              Total stockholders equity....     7,319,740      6,656,791
                                             -------------  -------------
                                              $85,412,241    $83,299,090
                                             -------------  -------------
                                             -------------  -------------
 
    The consolidated financial statements should be read only in connection 
       with the accompanying notes to consolidated financial statements.

                                       15
<PAGE>
 
                       PEKIN SAVINGS BANK AND SUBSIDIARY
                       CONSOLIDATED STATEMENTS OF INCOME
 
                                                     YEARS ENDED SEPTEMBER 30,
                                                     --------------------------
                                                         1997          1996
                                                     ------------  ------------
INTEREST INCOME
  Loans receivable:
    First mortgage loans...........................  $  3,512,370  $  3,243,678
    Other loans....................................     1,033,084       917,593
  Mortgage-backed securities:
    Held-to-maturity...............................       400,769       462,166
    Available-for-sale.............................       221,111       432,109
  Interest-bearing deposits........................       218,899       174,324
  Money market investments and investment 
   securities:
     Held-to-maturity..............................       415,268       415,346
     Available-for-sale............................       303,737       317,739
                                                     ------------  ------------
      Total interest income........................     6,105,238     5,962,955
                                                     ------------  ------------

INTEREST ON DEPOSITS (note 9)......................     3,344,911     3,368,827

INTEREST ON BORROWED FUNDS.........................       501,063       485,763
                                                     ------------  ------------
      Total interest expense.......................     3,845,974     3,854,590
                                                     ------------  ------------
      Net interest income..........................     2,259,264     2,108,365

PROVISION FOR LOAN LOSSES (note 5).................        12,000        12,000
                                                     ------------  ------------

      Net interest income after provision 
        for loan losses............................     2,247,264     2,096,365
                                                     ------------  ------------

NONINTEREST INCOME
  Service charges..................................       140,997       110,988
  Travel agency fees, net of direct expenses.......       256,414       200,061
  Commissions from sale of annuities...............         7,800        51,606
  Net gain (loss) on sale of:
    Investment securities (note 2).................       --            (19,850)
    Mortgage-backed securities (note 3)............         4,381        56,930
    Loans held for sale (Note 4)...................        68,619        84,679
  Loan origination fees............................       111,975       123,979
  Other............................................       195,870       162,937
                                                     ------------  ------------
      Total noninterest income.....................       786,056       771,330
                                                     ------------  ------------
 
                                       16
<PAGE>
                       PEKIN SAVINGS BANK AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
 
                                                     YEARS ENDED SEPTEMBER 30,
                                                     --------------------------
                                                         1997          1996
                                                     ------------  ------------
NONINTEREST EXPENSE
  Compensation and benefits........................  $  1,079,389  $  1,057,258
  Premises and equipment...........................       271,935       227,140
  Advertising and promotion........................        48,200        46,003
  Data processing..................................       114,890       105,647
  Federal insurance premiums.......................        31,789       155,781
  Other operating expenses.........................       369,181       336,307
  Net loss (gain) on sale of real estate owned.....         4,945        (5,783)
  Real estate owned expense, net of income.........        19,455        24,371
  BIF/SAIF special assessment (Note 17)............       --            440,046
                                                     ------------  ------------
      Total noninterest expense....................     1,939,784     2,386,770
                                                     ------------  ------------
      Income before income taxes...................     1,093,536       480,925

INCOME TAXES (note 11).............................       398,546        87,712
                                                     ------------  ------------

NET INCOME.........................................  $    694,990  $    393,213
                                                     ------------  ------------
                                                     ------------  ------------
PER COMMON SHARE DATA
  Primary income per share.........................  $       3.92  $       2.24
                                                     ------------  ------------
                                                     ------------  ------------
WEIGHTED AVERAGE NUMBER OF COMMON 
  SHARES AND EQUIVALENTS OUTSTANDING...............       177,411       175,290
                                                     ------------  ------------
                                                     ------------  ------------
 
These consolidated financial statements should be read only in connection with
       the accompanying notes to consolidated financial statements.

                                     17

<PAGE>

                       PEKIN SAVINGS BANK AND SUBSIDIARY
                           CONSOLIDATED STATEMENTS OF
                        CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                       NET
                                                                                                    UNREALIZED
                                                                                                   GAIN (LOSS)
                                                                                                  ON AVAILABLE-
                                                                                                     FOR-SALE
                                              SERIAL                                                SECURITIES       TOTAL
                                             PREFERRED      COMMON      PAID-IN       RETAINED     (NOTES 2 AND   STOCKHOLDERS'
                                               STOCK        STOCK       SURPLUS       EARNINGS          3)           EQUITY
                                           -------------  ----------  ------------  ------------  --------------  ------------
<S>                                        <C>            <C>         <C>           <C>           <C>             <C>
BALANCE AT SEPTEMBER 30, 1995............    $  --        $  166,798  $  1,181,236  $  5,020,645    $   38,909    $  6,407,588
  Net income.............................       --            --           --            393,213        --             393,213
  Exercised stock options................       --               641         5,769       --             --               6,410
  Dividends paid to shareholders.........       --            --           --            (41,860)       --             (41,860)
  Decrease in net unrealized gain on
    available-for-sale securities, net 
    of tax effect of $(55,911)...........       --            --           --            --           (108,560)       (108,560)
                                           -------------  ----------  ------------  ------------  --------------  ------------
BALANCE AT SEPTEMBER 30, 1996............       --           167,439     1,187,005     5,371,998       (69,651)      6,656,791
  Net income.............................       --            --           --            694,990        --             694,990
  Exercised stock options................       --               733        14,110       --             --              14,843
  Dividends paid to shareholders.........       --            --           --           (168,172)       --            (168,172)
  Increase in net unrealized gain on
    available-for-sale securities, net 
    of tax effect of $62,465.............       --            --           --            --            121,288         121,288
                                           -------------  ----------  ------------  ------------  --------------  ------------
BALANCE AT SEPTEMBER 30,1997.............    $  --        $  168,172  $  1,201,115  $  5,898,816    $   51,637    $  7,319,740
                                           -------------  ----------  ------------  ------------  --------------  ------------
                                           -------------  ----------  ------------  ------------  --------------  ------------
</TABLE>

 These consolidated financial statements should be read only in connection with
         the accompanying notes to consolidated financial statements.

                                      18

<PAGE>

                       PEKIN SAVINGS BANK AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                              
                                                                                         YEARS ENDED SEPTEMBER 30,
                                                                                         ------------------------
<S>                                                                                      <C>          <C>
                                                                                            1997         1996
                                                                                         -----------  -----------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income.........................................................................  $   694,990  $   393,213
                                                                                         -----------  -----------
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation.....................................................................      110,404       90,894
    Deferred income taxes............................................................      203,593     (154,745)
    Net (decrease) increase in deferred income.......................................      (25,526)       5,903
    Loss (gain) on sale of real estate owned.........................................        4,945       (5,783)
    Provision for losses on real estate owned........................................      --             7,500
    Provision for loan losses........................................................       12,000       12,000
    Net (gain) loss on sale of:
      Investment securities..........................................................      --            19,850
      Mortgage-backed securities.....................................................       (4,381)     (56,930)
      Loans held for sale............................................................      (68,619)     (84,679)
    (Increase) decrease in accrued interest receivable...............................      (17,513)     102,191
    Premium amortization, net of discount accretion on mortgage-backed and 
      investment securities..........................................................       (6,963)     (15,210)
    (Decrease) increase in accrued expenses and other liabilities....................     (242,758)     287,289
    Decrease (increase) in other assets..............................................       48,674      (28,623)
                                                                                         -----------  -----------
        Total adjustments............................................................       13,856      179,657
                                                                                         -----------  -----------
  Origination of loans held for sale.................................................   (5,775,432)  (6,619,558)
  Proceeds from sales of loans held for sale.........................................    5,844,051    6,704,237
                                                                                         -----------  -----------
        Net cash provided by operating activities....................................      777,465      657,549
                                                                                         -----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Principal received on mortgage-backed securities:
    held-to-maturity.................................................................    1,254,216    1,926,793
    available-for-sale...............................................................      493,523      781,523
  Proceeds from the sale of mortgage-backed securities 
    available-for-sale...............................................................      885,061    2,059,125
  Proceeds from the maturity of investment securities:
    Held-to-maturity.................................................................      983,092    1,016,908
    Available-for-sale...............................................................    1,000,000      --
  Proceeds from the sale of investment securities:
    held-to-maturity.................................................................      --           495,000
    available-for-sale...............................................................      --         3,004,390
  Purchase of mortgage-backed securities:
    available-for-sale...............................................................      --          (921,554)
  Purchase of investment securities:
    held-to-maturity.................................................................      (17,700)  (1,540,300)
    available-for-sale...............................................................   (2,531,622)  (1,526,890)
  Net increase in loans receivable...................................................   (2,171,379)  (7,560,440)
  Purchases of premises and equipment................................................      (81,544)    (215,474)
  Proceeds from sale of real estate owned............................................      183,900       80,500
  Capital expenditures on real estate owned..........................................      (36,397)      (3,990)
                                                                                         -----------  -----------
</TABLE>
 
                                      19

<PAGE>

<TABLE>
<CAPTION>

<S>                                                                                      <C>          <C>
        Net cash used in investing activities........................................        (38,850)  (2,404,409)
                                                                                         -----------  -----------
                                                                                         -----------  -----------
</TABLE>





                                      20

<PAGE>

                       PEKIN SAVINGS BANK AND SUBSIDIARY
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
<TABLE>
<CAPTION>
                                                                                        YEARS ENDED SEPTEMBER 30,
                                                                                        -------------------------
<S>                                                                                     <C>           <C>
                                                                                            1997         1996
                                                                                        ------------  -----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase in deposits............................................................  $  1,736,020  $   409,594
  Net decrease in advances from borrowers.............................................       (43,060)      (5,672)
  Proceeds from FHLB advances.........................................................     2,000,000      --
  Repayment of FHLB advances..........................................................    (2,000,000)     --
  Common stock options exercised......................................................        14,843        6,410
  Dividends paid......................................................................      (168,172)     (41,860)
                                                                                        ------------  -----------
      Net cash provided by financing activities.......................................     1,539,631      368,472
                                                                                        ------------  -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..................................     2,278,246   (1,378,388)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR........................................     2,690,256    4,068,644
                                                                                        ------------  -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR..............................................  $  4,968,502  $ 2,690,256
                                                                                        ------------  -----------
                                                                                        ------------  -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest on deposits and borrowed funds...........................................  $  3,847,956  $ 3,854,900
                                                                                        ------------  -----------
                                                                                        ------------  -----------
    Income taxes, net of refunds......................................................  $    170,273  $   393,510
                                                                                        ------------  -----------
                                                                                        ------------  -----------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
  Transfers from loans to real estate acquired through foreclosure....................  $     24,643  $   184,852
                                                                                        ------------  -----------
                                                                                        ------------  -----------
</TABLE>

 These consolidated financial statements should be read only in connection with
         the accompanying notes to consolidated financial statements.

                                      21

<PAGE>
                                       
                        PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Pekin Savings Bank (Bank) is an Illinois chartered savings bank located 
in central Illinois. On September 29, 1992, the Bank converted from a mutual 
to a stock form of ownership and completed its initial public offering. On 
January 27, 1994, the former Pekin Savings and Loan Association converted 
from an Illinois chartered stock savings and loan association to an Illinois 
chartered savings bank, Pekin Savings Bank. The Bank is engaged primarily in 
the business of attracting deposits from the general public and using such 
funds to originate mortgage loans for the purchase of single-family homes in 
Tazewell and Mason Counties, Illinois.

    The accounting and reporting policies of the Bank and its subsidiary 
conform to generally accepted accounting principles and to general practices 
within the banking industry.

    The following is a description of the more significant policies which the 
Bank follows in preparing and presenting its consolidated financial 
statements.

PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include the accounts of Pekin 
Savings Bank and Pekin Financial Service Corporation, a wholly-owned 
subsidiary of the Bank. All material intercompany transactions and balances 
have been eliminated in consolidation.

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

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

CASH EQUIVALENTS

    For purposes of the consolidated statements of cash flows, the Bank 
considers interest-bearing deposits and all highly liquid debt instruments 
purchased with a maturity of three months or less to be cash equivalents.

MONEY MARKET INVESTMENTS, INVESTMENT SECURITIES, AND MORTGAGE-BACKED SECURITIES

    Money market investments include short-term liquidity funds.

    Mortgage-backed securities represent participating interests in pools of 
long-term first mortgage loans originated and serviced by the issuers of the 
securities. Premiums and discounts on mortgage-backed securities are 
amortized using the level-yield method over the remaining period to 
contractual maturity, adjusted for anticipated prepayments.

                                       22

<PAGE>
                                       
                        PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

MONEY MARKET INVESTMENTS, INVESTMENT SECURITIES, AND MORTGAGE-BACKED 
SECURITIES (CONTINUED)

    The Bank classifies its debt and equity securities into one of three 
categories:

        HELD-TO-MATURITY--includes investments in debt securities which the
    Bank has the positive intent and ability to hold until maturity.

        TRADING SECURITIES--includes investments in debt and equity securities
    purchased and held principally for the purpose of selling them in the
    near-term.

        AVAILABLE-FOR-SALE--includes investments in debt and equity securities
    not classified as held-to-maturity or trading (i.e., investments which the
    Bank has no present plans to sell in the near-term but may be sold in the
    future under different circumstances).

    Debt securities classified as held-to-maturity are carried at amortized 
cost in which the amortization of premiums and accretion of discounts are 
recorded using the level-yield method. Unrealized holding gains and losses 
for trading securities (for which no securities were so designated at 
September 30, 1997 and 1996) are to be included in income, while such gains 
and losses for available-for-sale securities are to be excluded from income 
and reported as a net amount as a separate component of stockholders' equity 
until realized. Unrealized holding gains and losses for held-to-maturity 
securities are to be excluded from income and stockholders' equity. For 
available-for-sale securities, gains or losses are realized and included in 
noninterest income upon sale, based on the amortized cost of the individual 
security sold. All previous market value adjustments included in the separate 
component of stockholders' equity are reversed upon sale.

LOANS HELD FOR SALE

    Mortgage loans originated and intended for sale in the secondary market 
are carried at the lower of cost or estimated market value in the aggregate. 
Net unrealized losses are recognized through a valuation allowance by charges 
to income.

LOANS RECEIVABLE

    First mortgage loans and other loans that management has the intent and 
ability to hold for the foreseeable future or until maturity or payoff, are 
stated at unpaid principal balances, less unearned discounts and net deferred 
loan origination fees.

    Loan fees and certain direct loan origination costs are deferred, and the 
net fee or cost is recognized in income using the level-yield method over the 
contractual life of the loans. Calculation of level-yield is done on a 
loan-by-loan basis.

                                       23

<PAGE>
                                       
                        PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

LOANS RECEIVABLE (CONTINUED)

    The Bank grants primarily residential loans to customers in the immediate 
Pekin area. Thus, a substantial portion of its debtors' ability to honor 
their contracts is dependent upon the local agribusiness and manufacturing 
economic sectors.

    Discounts on other loans are recognized over the lives of the loans using 
the level-yield method.

    Accrual of interest on impaired loans, normally greater than 90 days past 
due, is excluded from income by an offsetting increase in a specific 
allowance for loss, when, in the opinion of management, such suspension is 
warranted.

    Provisions for losses on first mortgage loans and real estate sold on 
contract are charged to operations when the loss becomes probable and 
estimable, based upon the Bank's past loan loss experience, known and 
inherent risk in the portfolio, estimated values of the underlying 
collateral, and current and prospective economic conditions.

    In addition, various regulatory agencies, as an integral part of their 
examination process, periodically review the Bank's allowance for loan 
losses. Such agencies may require the Bank to recognize additions to the 
allowance for loan losses based on their judgment of information available to 
them at the time of their examination.

REAL ESTATE OWNED

    Real estate properties acquired through or in lieu of loan foreclosure 
are to be sold and are initially recorded at the lower of cost or fair value 
less estimated selling costs at the date of foreclosure (based upon appraisal 
or the Bank's estimate). Subsequent valuation adjustments are made if the 
fair value less estimated costs to sell the property falls below the carrying 
amount. Costs of developing and improving such properties are capitalized. 
Expenses related to holding such real estate, net of rental and other income, 
are charged against operations as incurred.

PREMISES AND EQUIPMENT

    Depreciation of premises and equipment is recorded using the 
straight-line and accelerated methods over the estimated useful lives of the 
related assets.

                                       24

<PAGE>
                                       
                        PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES
 
    Deferred tax assets and liabilities are recognized for the future tax 
consequences attributable to differences between the financial statement 
carrying amounts of existing assets and liabilities and their respective tax 
bases. Deferred tax assets and liabilities are measured using enacted tax 
rates expected to apply to taxable income in the years in which those 
temporary differences are expected to be recovered or settled. The effect on 
deferred tax assets and liabilities of a change in tax rates is recognized in 
income in the period that includes the enactment date. Deferred tax assets 
are reduced by a valuation allowance if it is deemed more likely than not 
that some or all of the deferred tax assets will not be realized.

PRIMARY INCOME PER SHARE

    Primary income per share is computed based upon the weighted average 
number of shares outstanding during the period plus the shares that would be 
outstanding assuming exercise of the dilutive stock options which are 
considered to be common stock equivalents. The number of shares that would be 
issued from the exercise of stock options has been reduced by the number of 
shares that could have been purchased from the proceeds at the average market 
price of the Bank's stock.

ACCOUNTING CHANGES

    In May 1995, the Financial Accounting Standards Board (FASB) issued SFAS 
No. 122, ACCOUNTING FOR MORTGAGE SERVICING RIGHTS. SFAS No. 122 requires a 
mortgage banking enterprise to recognize as separate assets rights to service 
mortgage loans for others, however those servicing rights are acquired. A 
mortgage banking enterprise should allocate the total cost of the mortgage 
loans to the mortgage servicing rights and the loans (without the mortgage 
servicing rights) based on their relative fair values if it is practicable to 
estimate those fair values. The adoption of SFAS No. 122 had no significant 
impact upon the Bank.

    In June 1996, the FASB released SFAS No. 125, ACCOUNTING FOR TRANSFERS 
AND EXTINGUISHMENTS OF LIABILITIES. SFAS No. 125 provides accounting and 
reporting standards for transfers and servicing of financial assets and 
extinguishments of liabilities. SFAS No. 125 requires a consistent 
application of a financial-components approach that focuses on control. Under 
that approach, after a transfer of financial assets, an entity recognizes the 
financial and servicing assets it controls and the liabilities it has 
incurred, and derecognizes liabilities when extinguished. SFAS No. 125 also 
supersedes SFAS No. 122 and requires that servicing assets and liabilities be 
subsequently measured by amortization in proportion to and over the period of 
estimated net servicing income or loss and requires assessment for asset 
impairment or increases obligation based on their fair values. SFAS No. 125 
applies to transfers and extinguishments occurring after December 31, 1996 
and early or retroactive application was not permitted. The adoption of SFAS 
No. 125 had no material impact on the financial position or results of 
operations of the Bank.

                                       25

<PAGE>
                                       
                        PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NEW ACCOUNTING STANDARDS

    In March 1997, the FASB issued SFAS No. 128, EARNINGS PER SHARE, which is 
effective for financial statements issued for periods ending after December 
15, 1997. SFAS No. 128 simplifies the calculation of earnings per share (EPS) 
by replacing primary EPS with basic EPS. It also requires dual presentation 
of basic EPS and diluted EPS for entities with complex capital structures. 
Basic EPS includes no dilution and is computed by dividing income available 
to common shareholders by the weighted-average common shares outstanding for 
the period. Diluted EPS reflects the potential dilution of securities that 
could share in earnings, such as stock options, warrants, or other common 
stock equivalents. The Bank expects SFAS No. 128 to have little impact on its 
earnings per share calculations in future years, other than changing 
terminology from primary EPS to basic EPS. All prior period EPS data will be 
restated to conform with the new presentation.

    In June 1997, the FASB issued SFAS 130, REPORTING COMPREHENSIVE INCOME. 
This statement establishes standards for the reporting and display of 
comprehensive income and its components in a full set of general-purpose 
financial statements. Comprehensive income is defined as "the change in 
equity of a business enterprise during a period from transactions and other 
events and circumstances from nonowner sources. It includes all changes in 
equity during a period except those resulting from investments by owners and 
distributions to owners." Presently, there are certain changes in assets and 
liabilities not reported in a statement that reports results of operations 
for the period in which they are recognized but instead are included in 
balances within a separate component of equity in a statement of financial 
position. SFAS 130 amends SFAS 87 and 115 to require that changes in the 
balances of items that under those statements are reported directly in a 
separate component of equity in a statement of financial position be reported 
in a financial statement that is displayed as prominently as other financial 
statements. Items required by accounting standards to be reported as direct 
adjustments to paid-in-capital, retained earnings, or other nonincome equity 
accounts are not to be included as components of comprehensive income. SFAS 
130 shall be effective for fiscal years beginning after December 15, 1997 
with earlier application permitted. All comparative financial statements 
provided for earlier periods shall be reclassified to reflect application of 
the provisions of this statement.

                                       26

<PAGE>
                        PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       
NOTE 2--MONEY MARKET INVESTMENTS AND INVESTMENT SECURITIES

    Money market investments and investment securities at September 30, 1997 
and 1996 are summarized as follows:

<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30, 1997
                                                               ---------------------------------------------------
<S>                                                            <C>           <C>          <C>           <C>
                                                                                GROSS        GROSS      ESTIMATED
                                                                AMORTIZED    UNREALIZED    UNREALIZED     MARKET
                                                                   COST         GAINS        LOSSES       VALUE
                                                               ------------  -----------  ------------  ----------
Held-to-maturity:
 Investment securities:
                                                                              
  U.S. government agencies...................................  $  4,486,492     $ 2,414   $   (24,191) $ 4,464,715
  Municipal obligations......................................       990,425      27,755        --        1,018,180
  Stock in Federal Home Loan
   Bank, at cost.............................................       618,800      --            --          618,800
                                                               ------------  -----------  -----------   ----------
                                                                              
                                                               $  6,095,717  $    30,169  $   (24,191)  $6,101,695
                                                               ------------  -----------  -----------   ----------
                                                               ------------  -----------  -----------   ----------
Available-for-sale:
 Money market investments:
  Short-term liquidity funds.................................  $    127,930   $  --       $    --       $  127,930
 Investment securities:
  U.S. Treasury securities...................................     2,490,091      40,886        (3,512)   2,527,465
  U.S. government agencies...................................     2,499,409      26,041        --        2,525,450
  Mutual funds...............................................       612,474      --            (5,145)     607,329
                                                               ------------  -----------  ------------  ----------
                                                                              
                                                               $  5,729,904  $   66,927   $    (8,657) $ 5,788,174
                                                               ------------  -----------  ------------  ----------
                                                               ------------  -----------  ------------  ----------
</TABLE>

<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30, 1996
                                                               ---------------------------------------------------
<S>                                                            <C>           <C>          <C>           <C>
                                                                                GROSS        GROSS      ESTIMATED
                                                                AMORTIZED    UNREALIZED    UNREALIZED     MARKET
                                                                   COST         GAINS        LOSSES       VALUE
                                                               ------------  -----------  ------------  ----------
Held-to-maturity:
 Investment securities:
                                                                              
  U.S. government agencies....................................  $  5,466,813  $   --      $(107,738)   $  5,359,075
  Municipal obligations.......................................       989,590       3,713    (10,842)        982,461
  Stock in Federal Home Loan
   Bank, at cost..............................................       601,100      --            --          601,100
                                                                ------------  -----------  ------------  ----------
                                                               $   7,057,503  $    3,713  $(118,580)   $ 6,942,636
                                                                ------------  -----------  ------------  ----------
                                                                ------------  -----------  ------------  ----------
Available-for-sale:
 Money market investments:
  Short-term liquidity funds.................................. $     124,256  $   --       $    --      $   124,256
 Investment securities:
  U.S. Treasury securities....................................     2,496,329      18,563        (16,538)  2,498,354
  U.S. government agencies....................................       999,386         325         (8,505)    991,206
  Mutual funds................................................       577,012      --             (9,876)    567,136
                                                                ------------  -----------  ------------  ----------
                                                                             
                                                               $  4,196,983  $    18,888    $   (34,919) $4,180,952
                                                               ------------  -----------    ------------ ----------
                                                               ------------  -----------    ------------ ----------
</TABLE>
                                       27

<PAGE>
                                       
                        PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       
NOTE 2--MONEY MARKET INVESTMENTS AND INVESTMENT SECURITIES (CONTINUED)


    The amortized cost and estimated market value of money market investments 
and investment securities at September 30, 1997, by contractual maturity, are 
shown below. Expected maturities will differ from contractual maturities 
because borrowers may have the right to call or prepay obligations with or 
without call or prepayment penalties.

<TABLE>
<CAPTION>
                                                                                            SEPTEMBER 30, 1997
                                                                                        --------------------------
<S>                                                                                     <C>           <C>
                                                                                         AMORTIZED     ESTIMATED
                                                                                            COST      MARKET VALUE
                                                                                        ------------  ------------
Held-to-maturity due:
 Within one year......................................................................  $    499,435   $  492,645
 After one year through five years....................................................     2,497,976    2,485,135
 After five years through ten years...................................................     2,379,906    2,397,758
 After ten years......................................................................        99,600      107,357
 Stock in Federal Home Loan Bank (no stated maturity).................................       618,800      618,800
                                                                                        ------------  -----------
                                                                                        $  6,095,717   $6,101,695
                                                                                        ------------  -----------
                                                                                        ------------  -----------
Available-for-sale due:
 Within one year......................................................................  $    500,000   $  499,410
 After one year through five years....................................................     1,997,302    2,020,850
 After five years through ten years...................................................     1,992,789    2,031,795
 After ten years......................................................................       499,409      500,860
 Money market investments/mutual funds
  (no stated maturity)................................................................       740,404      735,259
                                                                                        ------------  -----------
                                                                                        $  5,729,904   $5,788,174
                                                                                        ------------  -----------
                                                                                        ------------  -----------
</TABLE>

    The following is a schedule of proceeds from the sales of investment
securities and the gross gains and losses realized:
 
<TABLE>
<CAPTION>
                                                                                               YEARS ENDED SEPTEMBER 30,
                                                                                               -------------------------
<S>                                                                                            <C>          <C>
                                                                                                  1997          1996
                                                                                              ------------  ------------
Proceeds from sales..........................................................................   $  --       $  3,499,390
                                                                                              ------------  ------------
                                                                                              ------------  ------------
Gross gains..................................................................................   $  --       $      5,593
                                                                                              ------------  ------------
                                                                                              ------------  ------------
Gross losses.................................................................................   $  --       $     25,443
                                                                                              ------------  ------------
                                                                                              ------------  ------------
</TABLE>

                                       28

<PAGE>
                                       
                        PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       
NOTE 3--MORTGAGE-BACKED SECURITIES

    Mortgage-backed securities at September 30, 1997 and 1996 are summarized 
as follows:

<TABLE>
<CAPTION>
                                                                   SEPTEMBER 30, 1997
                              ---------------------------------------------------------------------------------------------
<S>                           <C>           <C>            <C>           <C>         <C>           <C>           <C>
                                                                                        GROSS         GROSS      ESTIMATED
                               PRINCIPAL     UNAMORTIZED     UNEARNED    AMORTIZED    UNREALIZED    UNREALIZED     MARKET
                                BALANCE       PREMIUMS      DISCOUNTS       COST        GAINS         LOSSES       VALUE
                              ------------  -------------  ------------  ----------  ------------  ------------  ----------
Held-to-maturity:

FNMA certificates...........  $  2,949,383    $   3,909    $    (24,297) $2,928,995  $     33,359  $    --       $2,962,354
FHLMC certificates..........     2,256,303        4,536          (4,789)  2,256,050         6,713        (6,016)  2,256,747
FNMA interest-only security,
  net of $62,363 allowance
  for loss..................       --            --             --           --           --            --           --
                              ------------       ------    ------------  ----------  ------------  ------------  ----------
    
                              $  5,205,686    $   8,445    $    (29,086) $5,185,045  $     40,072  $     (6,016) $5,219,101
                              ------------       ------    ------------  ----------  ------------  ------------  ----------
                              ------------       ------    ------------  ----------  ------------  ------------  ----------
Available-for-sale:
                                                                        
FNMA certificates...........  $    368,982    $   1,147    $     (1,881) $  368,248  $      8,465  $       (738) $  375,975
GNMA certificates...........     1,997,643       --              (5,600)  1,992,043        13,866        (8,354)  1,997,555
FHLMC certificates..........       561,050       --              (3,798)    557,252         6,726       --          563,978
                              ------------       ------    ------------  ----------  ------------  ------------  ----------
                                                         
                              $  2,927,675    $   1,147    $    (11,279) $2,917,543  $     29,057  $     (9,092) $2,937,508
                              ------------       ------    ------------  ----------  ------------  ------------  ----------
                              ------------       ------    ------------  ----------  ------------  ------------  ----------
</TABLE>
 
<TABLE>
<CAPTION>
                                                                    SEPTEMBER 30, 1996
                                -------------------------------------------------------------------------------------------
<S>                             <C>           <C>           <C>           <C>         <C>           <C>          <C>
                                                                                         GROSS         GROSS     ESTIMATED
                                 PRINCIPAL    UNAMORTIZED     UNEARNED    AMORTIZED    UNREALIZED   UNREALIZED     MARKET
                                  BALANCE       PREMIUMS     DISCOUNTS       COST        GAINS        LOSSES       VALUE
                                ------------  ------------  ------------  ----------  ------------  -----------  ----------
Held-to-maturity:
                                                          
FNMA certificates.............  $  3,528,534   $    5,027   $    (27,387) $3,506,174  $     28,486 $   (28,887)  $3,505,773
FHLMC certificates............     2,931,368        6,434         (5,437)  2,932,365           498     (71,035)   2,861,828
FNMA interest-only security,
  net of $72,165 allowance for
  loss........................       --            --            --           --           --           --           --
                                ------------  ------------  ------------  ----------  ------------  -----------  ----------
                                                           
                                $  6,459,902   $   11,461   $    (32,824) $6,438,539  $     28,984  $   (99,922) $6,367,601
                                ------------  ------------  ------------  ----------  ------------  -----------  ----------
                                ------------  ------------  ------------  ----------  ------------  -----------  ----------
Available-for-sale:
                                                          
FNMA certificates.............  $    511,134   $    1,621   $     (2,473) $  510,282  $      9,021  $  (10,687)  $  508,616
GNMA certificates.............     3,130,842        4,697         (6,458)  3,129,081         7,451     (85,308)   3,051,224
FHLMC certificates............       655,520       --             (4,488)    651,032         1,043     (11,007)     641,068
                                ------------  ------------  ------------  ----------  ------------  -----------  ----------
                                     
</TABLE>
 
                                       29
<PAGE>
 
<TABLE>
<S>                             <C>           <C>           <C>           <C>         <C>           <C>          <C>
                                $  4,297,496   $    6,318   $    (13,419) $4,290,395  $     17,515  $  (107,002) $4,200,908
                                ------------  ------------  ------------  ----------  ------------  -----------  ----------
                                ------------  ------------  ------------  ----------  ------------  -----------  ----------
</TABLE>
 
    The following is a schedule of proceeds from the sales of mortgage-backed
securities and the gross gains realized:
 
<TABLE>
<CAPTION>
                                                                                         YEARS ENDED SEPTEMBER 30,
                                                                                         -------------------------
<S>                                                                                       <C>         <C>
                                                                                             1997         1996
                                                                                         -----------  ------------
Proceeds from sales.....................................................................  $  885,061  $  2,059,125
                                                                                         -----------  ------------
                                                                                          ----------  ------------
Gross gains.............................................................................  $    4,381  $     56,930
                                                                                          ----------  ------------
                                                                                          ----------  ------------
</TABLE>
 
                                       30

<PAGE>

                        PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4--LOANS HELD FOR SALE
 
    The following is a schedule of proceeds from the sales of loans held for
sale and the gross gains and losses realized:
 
<TABLE>
<CAPTION>
                                                                                        YEARS ENDED SEPTEMBER 30,
                                                                                        --------------------------
<S>                                                                                     <C>           <C>
                                                                                            1997          1996
                                                                                        ------------  ------------
Proceeds from sales...................................................................  $  5,844,051  $  6,704,237
                                                                                        ------------  ------------
                                                                                        ------------  ------------
Gross gains...........................................................................  $     68,619  $     84,679
                                                                                        ------------  ------------
                                                                                        ------------  ------------
</TABLE>
 
NOTE 5--LOANS RECEIVABLE
 
    Loans receivable at September 30, 1997 and 1996 are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                                            SEPTEMBER 30,
                                                                                     ----------------------------
<S>                                                                                  <C>            <C>
                                                                                         1997           1996
                                                                                     -------------  -------------
First mortgage loans:
  One-to-four family residential...................................................  $  43,647,843  $  42,874,121
  Other conventional real estate...................................................      1,428,278      1,761,878
  Participation investment in loans purchased......................................        168,527        195,115
  Other loans......................................................................       --                7,868
                                                                                     -------------  -------------
                                                                                        45,244,648     44,838,982
  Less deferred loan fees..........................................................        144,650        170,176
                                                                                     -------------  -------------
    Total first mortgage loans.....................................................     45,099,998     44,668,806
                                                                                     -------------  -------------
Other loans:
  Real estate sold on contract.....................................................      3,021,886      3,475,965
  Loans on savings accounts........................................................        104,776        148,594
  Consumer loans...................................................................     10,082,218      7,937,752
                                                                                     -------------  -------------
                                                                                        13,208,880     11,562,311
Less unearned discounts............................................................        148,320        235,647
                                                                                     -------------  -------------
    Total other loans..............................................................     13,060,560     11,326,664
                                                                                     -------------  -------------
Less allowance for loan losses.....................................................        223,121        218,280
                                                                                     -------------  -------------
                                                                                     $  57,937,437  $  55,777,190
                                                                                     -------------  -------------
                                                                                     -------------  -------------
</TABLE>
 
                                       31


<PAGE>

                       PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 5--LOANS RECEIVABLE (CONTINUED)
 
    The weighted average yield on loans receivable was 7.93 and 7.91 percent 
at September 30, 1997 and 1996, respectively.
 
    Mortgage loans serviced for others are not included in the accompanying 
consolidated balance sheets. The unpaid principal balances of these loans 
were $20,642,141 and $18,732,302 at September 30, 1997 and 1996, respectively.
 
    The Bank had outstanding firm commitments to originate first mortgage 
loans as follows:
 
                                                     SEPTEMBER 30, 1997
                                                  -------------------------
                                                                 INTEREST
                                                   COMMITMENT   RATE RANGE
                                                  ------------  -----------
Fixed rate:                                     
   15 years .....................................  $ 619,600        7.50%
   30 years .....................................    126,850        7.875
                                                  ------------
TOTAL COMMITMENT ................................  $ 746,450
                                                  ------------
                                                  ------------
 
    These loans carry comparable credit and market risk as the Bank's 
portfolio of first mortgage loans.
 
    Activity in the allowance for loan losses is summarized as follows:
 

                                                  YEARS ENDED SEPTEMBER 30,
                                                  -------------------------
                                                      1997         1996
                                                  -----------  ------------
Balance at beginning of year....................  $   218,280  $    212,043
Provision charged to operations.................       12,000        12,000
Charge-offs.....................................       (9,325)       (5,763)
Recoveries......................................        2,166            --
                                                  -----------  ------------
BALANCE AT END OF YEAR..........................  $   223,121  $    218,280
                                                  -----------  ------------
                                                  -----------  ------------

 
    Impairment of loans having a recorded value of $463,742 and $108,915 at 
September 30, 1997 and 1996, respectively, has been recognized in conformity 
with SFAS No. 114 as amended by SFAS No. 118. The average investment in 
impaired loans during 1997 and 1996 was $204,800 and $142,100, respectively. 
Interest income foregone on impaired loans during 1997 and 1996 was $11,814 
and $6,894, respectively.

                                      32

<PAGE>


                       PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 5--LOANS RECEIVABLE (CONTINUED)

    The Bank, in the ordinary course of business, has granted residential 
mortgages and consumer loans to its directors and executive officers. A 
summary of activity in these loans is as follows:
 


                                                       YEARS ENDED
                                                      SEPTEMBER 30,
                                                  ----------------------
                                                     1997        1996
                                                  ----------  ----------
Balance at beginning of year....................  $  757,352  $  754,093
New loans granted...............................     421,000     217,590
Repayments......................................    (392,566)   (214,331)
                                                  ----------  ----------
BALANCE AT END OF YEAR..........................  $  785,786  $  757,352
                                                  ----------  ----------
                                                  ----------  ----------

 
NOTE 6--ACCRUED INTEREST RECEIVABLE
 
    Accrued interest receivable is summarized as follows:
 
<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30,
                                                                  ----------------------
                                                                     1997        1996
                                                                  ----------  ----------
<S>                                                               <C>         <C>
Money market investments and investment securities..............  $  167,218  $  144,432
Mortgage-backed securities......................................      44,438      58,655
Loans receivable................................................     291,212     282,268
                                                                  ----------  ----------
TOTAL...........................................................  $  502,868  $  485,355
                                                                  ----------  ----------
                                                                  ----------  ----------
</TABLE>
 
NOTE 7--REAL ESTATE OWNED
 
    Activity in the allowance for losses on real estate owned is summarized as
follows:
 

                                                      YEARS ENDED
                                                     SEPTEMBER 30,
                                                  --------------------
                                                    1997       1996
                                                  ---------  ---------
Balance at beginning of year....................  $   7,500  $  --
Provisions charged to income....................     --          7,500
Charge-offs.....................................     (7,500)    --
                                                  ---------  ---------
BALANCE AT END OF YEAR..........................  $  --      $   7,500
                                                  ---------  ---------
                                                  ---------  ---------

 
                                      33
<PAGE>


                       PEKIN SAVINGS BANK AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 
NOTE 8--PREMISES AND EQUIPMENT
 
    A summary of premises and equipment follows:
 

                                                        SEPTEMBER 30,
                                                  --------------------------
                                                      1997          1996
                                                  ------------  ------------
Land............................................  $    381,135  $    381,135
Office building.................................       874,871       701,875
Land improvements...............................       247,324       245,110
Furniture, fixtures, and equipment..............       602,575       585,044
Construction in progress........................       --            111,197
                                                  ------------  ------------
                                                     2,105,905     2,024,361
Less accumulated depreciation...................     1,055,280       944,876
                                                  ------------  ------------
NET.............................................  $  1,050,625  $  1,079,485
                                                  ------------  ------------
                                                  ------------  ------------

 
    Depreciation expense for premises and equipment amounted to $110,404 and 
$90,894 for the years ended September 30, 1997 and 1996, respectively.

 
NOTE 9--SAVINGS DEPOSITS
 
    Savings account balances at September 30, 1997 and 1996 are summarized as 
follows:
 
<TABLE>
<CAPTION>
                                         WEIGHTED           SEPTEMBER 30,          WEIGHTED          SEPTEMBER 30,
                                         AVERAGE                 1997              AVERAGE                1996
                                         INTEREST    ---------------------------   INTEREST   ---------------------------
                                           RATE         AMOUNT        PERCENT        RATE        AMOUNT        PERCENT   
                                        ----------   -------------  ------------  ----------  -------------  ------------
<S>                                     <C>          <C>            <C>           <C>         <C>            <C>         

Balance by type of account:
  Demand accounts:
    Passbook...........................    2.48%      $ 7,904,612       11.4%        2.48%     $ 8,474,267      12.6%
    Christmas Club.....................    2.48           102,878         .1         2.48          102,529        .2
    Demand deposits....................     .92         3,603,525        5.2         1.03        3,316,467       4.9
    Money market deposit
      accounts.........................    2.99         4,084,779        5.9         2.99        4,645,417       6.9
                                                     -------------  ------------              -------------  ------------
                                                       15,695,794       22.6                    16,538,680      24.6
                                                     -------------  ------------              -------------  ------------
  Certificates of deposit:
    6-12 month certificates............    2.51            22,314         .1         2.50           38,340        .1
    12 month certificates..............    5.73        13,920,629       20.1         5.37       11,575,489      17.2
    24 month certificates..............    5.70         7,134,826       10.3         5.91        6,630,138       9.8
    36 month certificates..............    6.13         3,298,795        4.8         5.85        3,043,561       4.5
    48 month certificates..............    6.32         2,182,103        3.2         6.15        1,739,409       2.6
    60 month certificates..............    6.17        20,712,187       30.0         6.14       21,544,006      32.0
    Various term certificates..........    2.53           114,387         .2         2.89          220,146        .3
    Individual retirement
      accounts.........................    5.83         5,977,671        8.7         5.96        5,992,917       8.9
                                                     -------------  ------------              -------------  ------------
                                                       53,362,912       77.4                    50,784,006      75.4
                                                     -------------  ------------              -------------  ------------

</TABLE>

                                      34

<PAGE>

<TABLE>

<S>                                     <C>          <C>            <C>           <C>         <C>            <C>         

    TOTAL DEPOSITS.....................    5.95%     $ 69,058,706      100.0%        5.88%    $ 67,322,686     100.0%
                                                     -------------  ------------              -------------  ------------
                                                     -------------  ------------              -------------  ------------


</TABLE>
 



                                      35
<PAGE>


                    PEKIN SAVINGS BANK AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9--SAVINGS DEPOSITS (CONTINUED)

INTEREST EXPENSE FOR DEPOSIT ACCOUNTS IS SUMMARIZED AS FOLLOWS:

                                                 YEARS ENDED SEPTEMBER 30,
                                                 --------------------------
                                                     1997          1996
                                                 ------------  ------------
Demand deposits................................   $    36,034   $    37,720
Money market deposit accounts..................       133,360       144,289
Passbook and Christmas Club accounts...........       206,593       234,175
Certificates of deposit:
   $100,000 and over...........................       206,623       198,186
   Less than $100,000..........................     2,762,301     2,754,457
                                                  -----------   -----------
                                                  $ 3,344,911   $ 3,368,827
                                                  -----------   -----------
                                                  -----------   -----------

    Time deposits issued in amounts of $100,000 or more totaled approximately
$3,637,400 and $3,604,000 at September 30, 1997 and 1996, respectively.
 
    Contractual maturities of certificates of deposit at September 30, 1997 were
as follows:
 
                                          AMOUNT          PERCENT
                                        -----------       -------
YEAR ENDING SEPTEMBER 30,
1998................................    $32,909,132        61.7%
1999................................     11,501,056        21.6
2000................................      4,958,982         9.3
2001................................      2,258,472         4.2
2002................................      1,735,270         3.2
                                        -----------       -----
                                        $53,362,912       100.0%
                                        -----------       -----
                                        -----------       -----
 
NOTE 10--BORROWED FUNDS
 
    Borrowed funds at September 30 are summarized as follows:
 
                                                    1997
                                                  INTEREST
                               MATURITY             RATE         AMOUNT
                            ----------------        ----       -----------
Federal Home Loan Bank:     August 31, 1998         5.10%      $ 2,000,000
                            October 20, 1998        5.06         2,000,000
                            July 24, 2000           6.28         1,000,000
                            August 8, 2002          5.40         1,000,000
                            June 14, 2005           6.71         2,000,000
                                                               -----------
                                                               $ 8,000,000
                                                               -----------
                                                               -----------
                                       36
<PAGE>


                     PEKIN SAVINGS BANK AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 10--BORROWED FUNDS (CONTINUED)


                                                       1996
                                  MATURITY         INTEREST RATE      AMOUNT
                            -------------------    -------------   ------------
Federal Home Loan Bank:     September 22, 1997          7.02%      $ 2,000,000
                            August 31, 1998             5.10         2,000,000
                            October 20, 1998            5.06         2,000,000
                            June 14, 2005               6.71         2,000,000
                                                                   -----------
                                                                   $ 8,000,000
                                                                   -----------
                                                                   -----------

 
    Funds borrowed from the Federal Home Loan Bank (FHLB) are secured by a
blanket lien on the first mortgage loans. FHLB requires collateral market value
to equal 170 percent of advances.
 
NOTE 11--INCOME TAXES
 
    The components of income tax expense (benefit) are summarized as follows:
 
<TABLE>
<CAPTION>
                                          1997                                 1996
                           ----------------------------------    ------------------------------
                            CURRENT     DEFERRED     TOTAL        CURRENT    DEFERRED     TOTAL
                           ----------  ----------  ----------    ----------  ---------   -------
<S>                        <C>         <C>         <C>           <C>         <C>         <C>
Federal..................  $  174,298  $  165,306  $  339,604    $  212,599  $(125,644)  $86,955
State....................      20,655      38,287      58,942        29,858    (29,101)      757
                           ----------  ----------  ----------    ----------  ---------  --------
INCOME TAX EXPENSE.......  $  194,953  $  203,593  $  398,546    $  242,457  $(154,745)  $87,712
                           ----------  ----------  ----------    ----------  ---------   -------
                           ----------  ----------  ----------    ----------  ---------   -------
</TABLE>
 
    The actual income tax expense differs from the 'expected' tax expense
(computed by applying the United States Federal corporate tax rate of 34 percent
to income before income taxes) as follows:

<TABLE>
<CAPTION>
                                                         YEARS ENDED
                                                        SEPTEMBER 30,
                                                    ----------------------
                                                       1997        1996
                                                    ----------  ----------
<S>                                                 <C>         <C>
Computed 'expected' tax expense...................  $  371,802  $  163,514
Prior years overaccrual...........................      --         (84,892)
State income taxes, net of federal 
   income tax benefit.............................      13,632      19,706
Tax-exempt income.................................     (13,956)    (20,816)
Nondeductible expenses............................       6,199       5,196
Other, net........................................      20,869       5,004
                                                    ----------  ----------
                                                    $  398,546  $   87,712
                                                    ----------  ----------
                                                    ----------  ----------
</TABLE>
 
                                       37
<PAGE>


                     PEKIN SAVINGS BANK AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 11--INCOME TAXES (CONTINUED)

    The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:
 
<TABLE>
<CAPTION>
                                                              SEPTEMBER 30,
                                                          ---------------------
                                                            1997        1996
                                                          ---------  ----------
<S>                                                       <C>        <C>
Deferred tax assets:
  Deferred loan fees....................................  $  56,036  $   65,924
  Uncollected interest..................................     24,159      27,956
  Allowance for loan losses.............................     24,862      38,991
  Loan discount.........................................     28,751      34,438
  Real estate owned.....................................     --           2,905
  BIF/SAIF special assessment...........................     --         170,469
  Security market value adjustments, net................     --          35,867
                                                          ---------  ----------
                                                            133,808     376,550
Valuation allowance for deferred tax assets.............     (1,993)     (3,826)
                                                          ---------  ----------
      Total deferred tax assets.........................    131,815     372,724
                                                          ---------  ----------
Deferred tax liabilities:
  Depreciation..........................................      4,545       5,994
  FHLB stock dividends..................................     21,190      21,190
  Securities market value adjustments, net..............     26,598      --
                                                          ---------  ----------
    Total deferred tax liabilities......................     52,333      27,184
                                                          ---------  ----------
NET DEFERRED TAX ASSET..................................  $  79,482  $  345,540
                                                          ---------  ----------
                                                          ---------  ----------
</TABLE>
 
    The net deferred tax asset is included in other assets in the accompanying
balance sheets.
 
NOTE 12--RETAINED EARNINGS--SUBSTANTIALLY RESTRICTED
 
    Retained earnings at September 30, 1997 and 1996 includes approximately
$793,000 and $832,000, respectively, for which no provision for Federal income
tax has been made. This amount represents allocations of income to bad debt
deductions for tax purposes only. Reduction of amounts so allocated for purposes
other than tax bad debt losses will create income for tax purposes only, which
will be subject to the then current corporate income tax rate.
 

                                      38
<PAGE>


                     PEKIN SAVINGS BANK AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 13--EMPLOYEE RETIREMENT PLANS
 
    All eligible employees are included in a noncontributory multi-employer 
trusteed pension plan. The Bank's policy is to fund pension costs accrued. 
The amount of pension expense in 1997 and 1996 was $3,400 and $45,000, 
respectively.
 
    The Bank has a multiple-employer thrift plan for all salaried employees 
meeting minimum age and service requirements. The plan allows employees to 
make a monthly contribution of 2 to 15 percent of their salary through 
payroll deduction. The Bank matches 50 percent of the employee's 
contribution up to 6 percent of the employee's salary. Thrift plan expense 
amounted to $17,839 and $15,410 for the years ended September 30, 1997 and 
1996, respectively.
 
NOTE 14--REGULATORY MATTERS
 
    The Bank is subject to various regulatory capital requirements 
administered by the federal banking agencies. Failure to meet minimum capital 
requirements can initiate certain mandatory--and possibly additional 
discretionary--actions by regulators that, if undertaken, could have a 
direct material effect on the Bank's financial statements. Under capital 
adequacy guidelines and the regulatory framework for prompt corrective 
action, the Bank must meet specific capital guidelines that involve 
quantitative measures of the Bank's assets, liabilities, and certain 
off-balance-sheet items as calculated under regulatory accounting practices. 
The Bank's capital amounts and classification are also subject to qualitative 
judgments by the regulators about components, risk weightings, and other 
factors.
 
    Quantitative measures established by regulation to ensure capital 
adequacy require the Bank to maintain minimum amounts and ratios (set forth 
in the following table) of total and Tier I capital (as defined in the 
regulations) to risk-weighted assets (as defined), and of Tier I capital (as 
defined) to average assets (as defined). Management believes, as of September 
30, 1997, that the Bank meets all capital adequacy requirements to which it 
is subject.
 
    As of September 30, 1997, the most recent notification from the Federal 
Deposit Insurance Corporation categorized the Bank as well capitalized under 
the regulatory framework for prompt corrective action. To be categorized as 
well capitalized the Bank must maintain minimum total risk-based, Tier I 
risk-based, and Tier I leverage ratios as set forth in the table. There are 
no conditions or events since that notification that management believes have 
changed the Bank's category.


                                     39
<PAGE>


                     PEKIN SAVINGS BANK AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14--REGULATORY MATTERS (CONTINUED)
 
    The Bank's actual capital amounts and ratios are also presented in the
table:
 
<TABLE>
<CAPTION>
                                                                                TO BE WELL
                                                                             CAPITALIZED UNDER
                                                                             PROMPT CORRECTIVE
                                                       ACTUAL                ACTION PROVISIONS
                                              -------------------------  -------------------------
<S>                                           <C>           <C>          <C>           <C>
                                                 AMOUNT        RATIO        AMOUNT        RATIO
                                              ------------     -----     ------------     -----
As of September 30, 1997:
  Total capital (to risk weighted assets)...  $  7,440,516     18.2%     $  4,090,410       10%
  Tier I capital (to risk weighted assets)..     7,217,395     17.6         2,454,246        6
  Tier I capital (to average assets)........     7,217,395      8.4         4,302,000        5
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                TO BE WELL
                                                                             CAPITALIZED UNDER
                                                                             PROMPT CORRECTIVE
                                                       ACTUAL                ACTION PROVISIONS
                                              -------------------------  -------------------------
<S>                                           <C>           <C>          <C>           <C>
                                                 AMOUNT        RATIO        AMOUNT        RATIO
                                              ------------     -----     ------------     -----
As of September 30, 1996:
  Total capital (to risk weighted assets)...  $  6,944,722     18.2%     $  3,825,910      10%
  Tier I capital (to risk weighted assets)..     6,726,442     17.6         2,295,546       6
  Tier I capital (to average assets)........     6,726,442      8.0         4,195,681       5
</TABLE>
 
NOTE 15--CONVERSION TO STOCK OWNERSHIP
 
    On September 29, 1992, the Bank converted from a mutual savings and loan to
a capital stock savings and loan. The Bank consummated a public offering of
164,487 shares of common stock which generated net proceeds, after expenses and
underwriters cost, of $1,317,411.
 
    For purposes of granting to eligible account holders, who continue to
maintain deposit accounts subsequent to the conversion, a priority in the event
of a complete liquidation of the Bank, the Bank has, at the time of conversion,
established a liquidation account in an amount equal to its appraised fair
market valuation. The value of the liquidation account at conversion was
approximately $2,526,000. The liquidation account is reduced by depositor
account withdrawals subsequent to the conversion date. The balance of the
liquidation account at September 30, 1997 was approximately $1,259,000. In the
unlikely event of a complete liquidation of the Bank, and only in such event,
each eligible account holder would be entitled to receive a liquidation
distribution on a pro rata basis from the liquidation account before any
liquidation distribution may be made with respect to capital stock. The Bank may
not declare or pay a cash dividend on, or repurchase any of, its capital stock
if the effect thereof would cause the retained earnings of the Bank to be
reduced below the amount required for the liquidation account. Except for such
restrictions, the existence of the liquidation account does not restrict the use
of or application of retained earnings.
 

                                    40
<PAGE>


                     PEKIN SAVINGS BANK AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16--STOCK OPTION PLAN
 
    In connection with the conversion to a capital stock form of ownership, the
Bank adopted a stock option plan. Pursuant to the plan, 12,763 shares of common
stock have been reserved for issuance at September 30, 1997 by the Bank upon
exercise of stock options to officers, directors and employees of the Bank from
time to time under the plan. The plan provides for a term of ten years, after
which no awards may be made.

    Officers, directors, and employees will be eligible to receive options under
the plan. The option price may not be less than 100 percent of the fair market
value of the shares on the date of the grant, and expire ten years from the date
of the grant. The Bank has granted options to certain officers, directors, and
employees at option prices of $10.00 and $21.00 per share.
 
    Transactions with respect to the Bank's stock option plan are as follows:
 
                                            WEIGHTED-AVERAGE     NUMBER OF
                                                EXERCISE       SHARES UNDER
                                             PRICE PER SHARE      OPTIONS
                                            -----------------  -------------
Outstanding at September 30, 1995.........      $   10.53           14,137
                                                   ------ 
                                                   ------ 
Exercised.................................      $   10.00             (641)
                                                   ------           ------
                                                   ------ 
Outstanding at September 30, 1996.........      $   10.56           13,496
                                                   ------   
                                                   ------   
Exercised.................................      $   20.25             (733)
                                                   ------           ------
                                                   ------  
Outstanding at September 30, 1997.........      $   10.00           12,763
                                                   ------           ------
                                                   ------           ------
Exercisable at September 30, 1997.........      $   10.00           10,853
                                                   ------           ------
                                                   ------           ------
 
    At September 30, 1997, the exercise price and weighted-average remaining
contractual life of outstanding options was $10.00 and 5 years, respectively.
 
    The Bank applies APB Opinion 25 and related interpretations in the
accounting for its plan. Accordingly, no compensation cost has been recognized
under APB Opinion 25 in 1997 and 1996 for its stock option plan. Since no stock
options were granted during 1996 and 1997, pro forma net income and income per
share amounts reflecting compensation costs determined under SFAS No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION is not presented.
 

                                       41

<PAGE>

                     PEKIN SAVINGS BANK AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 17--BIF/SAIF SPECIAL ASSESSMENT
 
    On September 30, 1996, President Clinton signed the thrift fund rescue 
and relief package as part of an omnibus spending measure. Under the plan, 
premium disparity between thrifts and banks is reduced and a framework is in 
place to merge charters and funds. Thrifts (including thrifts converted to 
savings banks) were required to make a one-time special assessment of 
approximately 66 basis points against an assessment base of March 31, 1995 
deposits to capitalize SAIF. On an on-going basis, SAIF members will pay 
$.0644 on every $100 in deposits, down from $.23, a 70 percent reduction. The 
Bank's special assessment amounted to $440,046 and is included in accrued 
expenses and other liabilities in the accompanying September 30, 1996 balance 
sheet.

NOTE 18--FAIR VALUES OF FINANCIAL INSTRUMENTS

    SFAS No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, 
requires disclosure of fair value information about financial instruments, 
whether or not recognized in the balance sheet, for which it is practicable 
to estimate that value. In cases where quoted market prices are not 
available, fair values are based on estimates using present value or other 
valuation techniques. Those techniques are significantly affected by the 
assumptions used, including the discount rate and estimates of future cash 
flows. In that regard, the derived fair value estimates cannot be 
substantiated by comparison to independent markets and, in many cases, could 
not be realized in immediate settlement of the instrument. SFAS No. 107 
excludes certain financial instruments and all nonfinancial instruments from 
its disclosure requirements. These fair value disclosures are not intended to 
represent the market value of the Bank. Income taxes and transaction costs 
have not been considered in estimating fair values.

    The following methods and assumptions were used by the Bank in estimating 
fair values of financial instruments:
 
CASH AND SHORT-TERM INSTRUMENTS
 
    The carrying amounts of cash and short-term instruments approximate their 
fair value.
 
AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES
 
    Fair values for securities, excluding restricted equity securities, are 
based on quoted market prices. The carrying values of restricted equity 
securities approximate fair values.
 
LOANS RECEIVABLE
 
    For adjustable-rate loans that reprice frequently and have no significant 
change in credit risk, fair values are based on carrying values. Fair values 
for fixed-rate loans are estimated using discounted cash flow analyses, using 
interest rates currently being offered for loans with similar terms to 
borrowers of similar credit quality. Fair values for impaired loans are 
estimated using discounted cash flow analyses or underlying collateral 
values, where applicable.

                                   42

<PAGE>

DEPOSITS

    The fair values disclosed for demand deposits are, by definition, equal 
to the amount payable on demand at the reporting date (that is, their 
carrying amounts). Fair values for fixed-rate certificates of deposit are 
estimated using a discounted cash flow calculation that applies interest 
rates currently being offered on certificates to a schedule of aggregated 
expected monthly maturities on time deposits.
 
BORROWED FUNDS
 
    The fair values of the Bank's long-term debt are estimated using 
discounted cash flow analyses based on the Bank's current incremental 
borrowing rates for similar types of borrowing arrangements.
 
ACCRUED INTEREST
 
    The carrying amounts of accrued interest approximate their fair values.
 
    The estimated fair values of the Bank's financial instruments were as
follows:

                     PEKIN SAVINGS BANK AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 18--FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)


 
<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30, 1997      SEPTEMBER 30, 1996
                                                                           ----------------------  ----------------------
                                                                            CARRYING      FAIR      CARRYING      FAIR
                                                                             AMOUNT       VALUE      AMOUNT       VALUE
                                                                           -----------  ---------  -----------  ---------
                                                                            (DOLLARS IN THOUSANDS)  (DOLLARS IN THOUSANDS)
<S>                                                                        <C>          <C>        <C>          <C>
Financial assets:
  Cash and amounts due from banks and interest-bearing deposits..........   $   4,968   $   4,968   $   2,690   $   2,690
  Money market investments and investment securities.....................      11,884      11,890      11,238      11,124
  Mortgage-backed securities.............................................       8,123       8,157      10,639      10,569
  Loans receivable.......................................................      57,937      58,295      55,777      55,002
  Accrued interest receivable............................................         503         503         485         485

Financial liabilities:
  Deposits...............................................................      69,059      69,128      67,323      67,759
  Borrowed funds.........................................................       8,000       7,934       8,000       7,862
  Accrued interest payable...............................................          39          39          41          41
</TABLE>

                                      43

<PAGE>

                     PEKIN SAVINGS BANK AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 19--SUBSEQUENT EVENTS
 
    On October 10, 1997, the stockholders approved the reorganization of the 
Bank into the holding company form of ownership to which the Bank became a 
wholly owned subsidiary of Progressive Bancorp, Inc., a newly formed Delaware 
corporation, and each outstanding share of common stock of the Bank will be 
converted into one share of common stock of Progressive Bancorp, Inc.
 
    The stockholders also approved an amendment to the Articles of 
Incorporation of the Bank to change the name of the Bank from Pekin Savings, 
s.b. to "Pekin Savings Bank."
 
                                      44

<PAGE>

                                                           PEKIN
                                                        SAVINGS BANK
                                                            AND
                                                         SUBSIDIARY
 
                                                        CONSOLIDATED
                                                          FINANCIAL
                                                         STATEMENTS
 
                                                     September 30, 1997
                                                          and 1996