PROGRESSIVE BANCORP, INC.


                                      1999


                                  ANNUAL REPORT




<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS


                                                                                           Page

<S>                                                                                         <C>
Message of President and Chief Executive Officer..........................................   1

Selected Consolidated Financial and Other Data............................................   2

Selected Financial Ratios and Other Data..................................................   3

Summary of Operating Data.................................................................   4

Progressive Bancorp, Inc. and Pekin Savings Bank..........................................   5

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

Directors and Officers of the Bank and the Company........................................  14

Independent Auditor's Report..............................................................  16

Consolidated Balance Sheets...............................................................  17

Consolidated Statement of Income..........................................................  18

Consolidated Statements of Changes in Stockholders'Equity.................................  20

Consolidated Statements of Cash Flows.....................................................  22

Notes to Consolidated Financial Statements................................................  23

Common Stock and Related Matters..........................................................  45

Stockholder Information...................................................................  45

</TABLE>
<PAGE>
December 10, 1999

Dear Stockholders:

This past year is one that will be remembered as that of Y2K preparedness. Under
the direction of our Board, management and staff of Pekin Savings Bank devoted a
great amount of time and resources making sure that we would be ready on January
1, 2000. Along the way we kept our customers informed by holding three community
meetings.  We used these meetings to answer any Y2K questions and also to update
our customers on the procedures we were  implementing to assure a smooth passage
into the year 2000. The most  significant Y2K step taken by Pekin Savings during
the  fiscal  year was the  conversion  of our  on-line  service  along  with the
purchase of new computer  hardware.  The cost of the  conversion  of our on-line
service  along  with the  purchase  of new  computer  hardware.  The cost of the
conversion,  new equipment and other  one-time  expenses  totaled  approximately
$350,000.

Progressive Bancorp, Inc. realized asset growth of $7.0 million or 8.0% over the
previous  fiscal year. As a result of the costs of conversion  and Y2K expenses,
fiscal year net income  decreased  $283,000 from the previous year. Basic income
per share before cumulative  effect of accounting change was $3.03,  compared to
$4.39  last  fiscal  year.  The book  value per share was $42.51 at the close of
fiscal 1999.

The Board of Directors of Progressive  Bancorp,  Inc.  authorized payment of its
third consecutive cash dividend of $1.00 per share, which was paid in June 1999.
This marked the fifth consecutive year that a cash dividend was paid.

We continue  to be well  capitalized  in both our Tier 1 Capital and  Risk-Based
Capital levels. All capital levels exceed the regulatory requirements.

Total  sales of Pekin  Travel  Company,  a  division  of our  subsidiary,  Pekin
Financial  Services,  were $3.2  million.  This  compares to total sales of $3.5
million the previous year.

Mortgage loan  originations  decreased over the previous  fiscal year.  Mortgage
loans  originated were 316 totaling $17.9 million in fiscal year 1999,  compared
to 340  loans  originated  in  fiscal  year  1998 for a total of $20.1  million.
Consumer  loans  were also  down from the  previous  year.  There  were 735 loan
originations  totaling  $8.6  million  for  fiscal  year 1999,  compared  to 744
originations totaling $9.4 million in fiscal year 1998.

At the beginning of our 1999 fiscal year,  the Board of Directors and management
of the company initiated a five-year  strategic  business plan. The plan adopted
will result in the offering of new services to our customers. One feature of our
strategic  plan is to  develop a  commercial  loan  department.  We are happy to
announce  that Pekin  Savings  recently  enlisted the services of Mr.  Andrew J.
Sparks,  Sr.  Vice  President  Loans to develop  the bank's  commercial  lending
services and integrating this with all existing  lending  functions of the bank.
Mr. Sparks has 24 years in banking experience. The past 12 years he has been the
commercial loan officer for a local financial institution.

The Board of Directors and management of Progressive  Bancorp,  Inc. continue to
plan for the future.  We will  continue to explore all  opportunities  that will
lead to mutual benefit of our customers and shareholders.

Happy New Year and have a great 2000!

                                                         /s/Arthur E. Krile, Jr.
                                                         -----------------------
                                                            Arthur E. Krile, Jr.
                                                            President

<PAGE>
Selected Consolidated Financial and Other Data

         Set forth below are selected  consolidated  financial and other data of
Progressive  Bancorp,  Inc. (the  "Company")  and its  wholly-owned  subsidiary,
Peking  Savings Bank (the "Bank").  This financial data is derived in part from,
and should be read in conjunction with, the Consolidated Financial Statements of
the Company and notes thereto presented elsewhere in this Annual Report.
<TABLE>
<CAPTION>

                                                                           At September 30,
                                                  --------------------------------------------------------------
                                                    1999          1998           1997         1996         1995
                                                  --------      --------      ---------     --------      ------
                                                                            (In Thousands)
<S>                                              <C>           <C>          <C>           <C>          <C>
Total amount of:
  Assets....................................     $  94,211     $  87,252    $    85,412   $   83,299   $  82,359
  Loans receivable, net.....................        63,054        61,999         57,937       55,777      48,419
  Mortgage-backed securities................        10,042         7,667          8,123       10,639      14,589
  Total investments:
    Interest-bearing deposits...............         2,655         2,307          4,043        1,419       2,755
    Investment securities...................        14,008        11,062         11,884       11,238      12,696
  Deposits..................................        75,311        69,791         69,059       67,323      66,913
  Borrowed funds............................        11,500         9,500          8,000        8,000       8,000
  Retained earnings, substantially
    restricted..............................         6,722         6,452          5,899        5,372       5,021
  Stockholders' equity......................         6,354         6,653          7,320        6,657       6,408

</TABLE>

                                       2

<PAGE>
Selected Financial Ratios and Other Data
<TABLE>
<CAPTION>
                                                               At or For the Year Ended September 30,
                                                    ------------------------------------------------------------
                                                    1999           1998         1997          1996          1995
                                                    ----           ----         ----          ----          ----
<S>                                                  <C>            <C>          <C>          <C>          <C>
Return on average assets (net income
  divided by average total assets)..........         0.46%          0.81%        0.82%        0.46%         0.88%
Return on average equity (net income
  divided by average equity)................         6.42           9.91         9.87         5.88         11.95
Average equity to average assets............         7.12           8.19         8.28         7.90          7.34
Average equity to average liabilities.......         7.67           8.92         9.06         8.58          7.92
Retained earnings to total assets
  at end of period..........................         7.13           7.39         6.91         6.45          6.10
Total stockholders' equity to total
  assets at end of period...................         6.74           7.62         8.57         7.99          7.78
Interest rate spread during period..........         2.43           2.52         2.51         2.33          2.86
Net interest margin during period (1).......         2.62           2.77         2.80         2.62          3.11
Interest expense to average
  interest-earning assets...................         4.67           4.79         4.77         4.79          4.48
Interest income to average assets...........         6.95           7.22         7.17         7.05          7.29
Interest expense to average assets..........         4.45           4.82         4.52         4.56          4.30
Non-interest expense to average assets......         5.69           6.04         5.28         5.14          4.30
Nonperforming loans to total loans at
  end of period.............................         0.77           0.37         0.80         0.20          0.25
Nonperforming assets to total assets........         0.52           0.26         0.54         0.28          0.17
Allowance for loan losses to net loans
  receivable at end of period...............         0.38           0.37         0.38         0.39          0.44
Average interest-earning assets to
  average interest-bearing liabilities......       104.24         105.22       106.29       106.12        105.48
Net interest income to other
  operating expenses........................        43.99          43.60        50.26        48.53         69.45

Number of:
  Real estate loans outstanding.............         1,256         1,315        1,385        1,482         1,483
  Deposit accounts..........................         9,508         9,448        9,308        9,387         9,367
  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,
                                                     -------------------------------------------------------
                                                      1999         1998       1997       1996         1995
                                                     -------      ------     ------     -------      -------
                                                                (In Thousands, Except Per Share Data)
<S>                                                  <C>          <C>        <C>        <C>          <C>
Interest income (1) ............................     $ 6,375      $6,247     $6,105     $ 5,963      $ 5,861
Interest expense ...............................       4,082       3,967      3,846       3,855        3,460
                                                     -------      ------     ------     -------      -------
Net interest income ............................       2,293       2,280      2,259       2,108        2,401
Provision for loan losses ......................          19          14         12          12           20
                                                     -------      ------     ------     -------      -------
        Net interest income after
            provision for loan losses ..........       2,274       2,266      2,247       2,096        2,381
                                                     -------      ------     ------     -------      -------
Noninterest income:
    Travel agency fees .........................       3,171       3,506      2,811       2,158        1,743
    Service charges ............................         135         143        141         111          112
    Commissions from sale of annuities .........           2        --            8          51           10
    Net gain on sale of investments,
        mortgage-backed securities
        and loans held for sale ................          23         143         73         122           72
    Other ......................................         316         311        308         287          242
                                                     -------      ------     ------     -------      -------
        Total noninterest income ...............       3,647       4,103      3,341       2,729        2,179
                                                     -------      ------     ------     -------      -------

Noninterest expense:
    Travel agency cost of sales ................       3,061       3,356      2,688       2,061        1,658
    General and administrative expense .........       2,152       1,857      1,783       1,825        1,797
    Net (gain) loss on sale of real estate owned          (3)          2          5          (6)           1
    Real estate owned expense, net of
        income .................................           3          15         19          24           (6)
    BIF/SAIF special assessment ................        --          --         --           440         --
    Other ......................................        --          --         --          --              7
                                                     -------      ------     ------     -------      -------
        Total noninterest expense ..............       5,213       5,230      4,495       4,344        3,457
                                                     -------      ------     ------     -------      -------
Income before income taxes and
  cumulative effect of change in
  accounting principle .........................         708       1,139      1,093         481        1,103
Income taxes ...................................         256         437        398          88          398
                                                     -------      ------     ------     -------      -------
Income before cumulative effect of
  change in accounting principle ...............         452         702        695         393          705
Cumulative effect of change in
  accounting for organizational costs ..........          33        --         --          --           --
                                                     -------      ------     ------     -------      -------
    Net income .................................     $   419      $  702     $  695     $   393      $   705
                                                     =======      ======     ======     =======      =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                  <C>          <C>        <C>        <C>          <C>
Income per share:
 Basic before cumulative effect of change in
    accounting principle .......................     $  3.03      $ 4.39     $ 4.14     $  2.35      $  4.24
                                                     =======      ======     ======     =======      =======
 Basic .........................................     $  2.81      $ 4.39     $ 4.14     $  2.35      $  4.24
                                                     =======      ======     ======     =======      =======
 Diluted before cumulative effect of change
    in accounting principle ....................     $  2.93      $ 4.17     $ 3.96     $  2.24      $  4.05
                                                     =======      ======     ======     =======      =======
 Diluted .......................................     $  2.72      $ 4.17     $ 3.96     $  2.24      $  4.05
                                                     =======      ======     ======     =======      =======
</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 and
the holding  company for Pekin  Savings  Bank.  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. All financial information presented
in this Annual Report is the financial data for the Company and 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  Company'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 Company'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 Company 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.


                                       5
<PAGE>
         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.

Average Balances, Interest and Average Yield/Cost

         The  following  table sets forth  certain  information  relating to the
Company'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.
<PAGE>
<TABLE>
<CAPTION>

                                                                        Year Ended September 30,
                                              -------------------------------------------------------------------------
                                                            1999                                    1998
                                              ---------------------------------    ------------------------------------
                                              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)................          $62,104       $4,908       7.90%       $59,837        $4,790       8.00%
  Investment securities.............           12,410          768       6.19         12,529           814       6.50
  Mortgage-backed securities........            8,820          501       5.68          7,590           488       6.43
  Interest-bearing deposits.........            4,141          198       4.78          2,261           155       6.86
                                              -------       ------                   -------        ------
    Total interest-earning assets...          $87,475       $6,375       7.29        $82,217        $6,247       7.60
                                              =======       ------                   =======        ------

Interest-bearing liabilities:
  Deposits..........................          $73,920       $3,535       4.78%       $68,761        $3,442       5.01%
  Borrowed funds....................           10,000          547       5.47          9,375           525       5.60
                                              -------       ------                   -------        ------
    Total interest-bearing liabilities        $83,920       $4,082       4.86        $78,136       $ 3,967       5.08
                                              =======       ------                   =======       -------

Net interest income.................                        $2,293                                 $2,280
                                                            ======                                 ======

Interest rate spread (2)............                                     2.43%                                   2.52%
                                                                         ====                                    ====

Net yield on interest-earning assets (3)                                 2.62%                                   2.77%
                                                                         ====                                    ====

Ratio of average interest-earning
  assets to average interest-bearing
  liabilities.......................                                   104.24%                                 105.22%
                                                                       ======                                  ======
</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 Company's  assets,  the weighted  average  interest
rates paid on the Company's liabilities,  together with the net yield on average
interest-earning assets.
<TABLE>
<CAPTION>
                                                                    At               Year Ended September 30,
                                                               September 30,         ------------------------
                                                                   1999               1999              1998
                                                                   ----               ----              ----
<S>                                                                 <C>                <C>               <C>
Weighted average yield
  on loan portfolio..................................               7.70%              7.90%             8.00%
Weighted average yield on
  mortgage-backed securities.........................               6.31               5.68              6.43
Weighted average yield on investment
  portfolio..........................................               5.58               6.19              6.50
Weighted average yield on interest-
  bearing deposits...................................               5.12               4.78              6.86
Weighted average yield on all interest-earning
  assets.............................................               7.14               7.29              7.60
Weighted average rate paid on deposit
  accounts...........................................               4.82               4.78              5.01
Weighted average rate paid on borrowed
  funds..............................................               5.58               5.47              5.60
Weighted average rate paid on all
  interest-bearing liabilities.......................               4.92               4.86              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)...............               2.22               2.43              2.52
Net yield (net interest income as
  a percentage of average interest-
  earning assets)....................................               2.39               2.62              2.77

</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 Company'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,
                                                                         ------------------------
                                                         1999 vs. 1998                           1998 vs. 1997
                                         -----------------------------------------  -----------------------------------------
                                                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 ....................     $ 181      $ (60)     $ (3)     $ 118      $ 376      $(122)     $ (9)     $ 245
  Mortgage-backed securities ........        79        (57)       (9)        13       (119)       (19)        4       (134)
  Interest-bearing deposits .........       129        (47)      (39)        43        (88)        39       (15)       (64)
  Investment securities .............        (8)       (39)        1        (46)        23         70         2         95
                                          -----      -----      ----      -----      -----      -----      ----      -----
                                                                                                                         1
        Total interest-earning assets     $ 381      $(203)     $(50)     $ 128      $ 192      $ (32)     $(18)     $ 142
                                          =====      =====      ====      =====      =====      =====      ====      =====

Interest expense:
  Deposits ..........................     $ 258      $(158)     $ (7)     $  93      $  60      $  34      $  3      $  97
  Borrowed funds ....................        35        (12)       (1)        22         70        (40)       (6)        24
                                          -----      -----      ----      -----      -----      -----      ----      -----
        Total interest-bearing
            liabilities .............     $ 293      $(170)     $ (8)     $ 115      $ 130      $  (6)     $ (3)     $ 121
                                          =====      =====      ====      =====      =====      =====      ====      =====

Net change in interest income .......     $  88      $ (33)     $(42)     $  13      $  62      $ (26)     $(15)     $  21
                                          =====      =====      ====      =====      =====      =====      ====      =====

</TABLE>


                                       8

<PAGE>
Results of Operations

         General.  The earnings of the Company depend  primarily on its level of
net interest  income,  which is the difference  between  interest  earned on the
Company's  interest-earning  assets and the  interest  paid on  interest-bearing
liabilities.  Net interest  income is a function of the Company's  interest rate
spread,   which  is  the   difference   between  the  average  yield  earned  on
interest-earnings   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 the average balance of interest-bearing liabilities.

         Interest  Income.  Interest  income,  which  includes fee income on the
servicing  of loans,  increased  $128,000 or 2.0% to $6.4 million for the fiscal
year ended  September 30, 1999 ("fiscal  1999") from $6.2 million for the fiscal
year ended September 30, 1998 ("fiscal  1998").  The increase in interest income
resulted from an increase in the average balance of  interest-earning  assets to
$87.5  million for fiscal 1999 from $82.2  million for fiscal 1998.  The average
yield on such assets, however, decreased from 7.60% for fiscal 1998 to 7.29% for
fiscal  1999.  Interest  income  from the  Company's  loan  portfolio  increased
$118,000 or 2.5%, due to a $2.3 million, or 3.8% increase in the average balance
of such assets.  This reflected  continued loan demand in the Company's  primary
lending area as well as management's  strategy of controlled growth. The average
yields on such assets,  however,  decreased  from 8.00% for fiscal 1998 to 7.90%
for fiscal 1999, reflecting lower market interest rates for most of fiscal 1999.
Interest  income  earned  on  the  Company's  investment   securities  portfolio
decreased  $46,000 or 5.6%  reflecting  a decrease  of  $119,000  or 0.9% in the
average balance of such securities as well as a decrease in the average yield of
such  securities  to 6.19% for fiscal 1999  compared  to 6.50% for fiscal  1998.
Interest  income  from  the  Company's   mortgage-backed   securities  portfolio
increased $13,000 or 2.7%, reflecting an increase in the average balance of such
securities  to $8.8 million for fiscal 1999  compared to $7.6 million for fiscal
1998, as management  disbursed proceeds of callable and maturing securities into
adjustable  mortgage-backed  securities.  Interest  income  from  the  Company's
interest-bearing  deposits  increased  $43,000 or 27.7% due to a $1.9 million or
83.1% increase in the average balance of such assets. The average yield on these
assets, however,  decreased to 4.78% for fiscal 1999 from 6.86% for fiscal 1998.
With overall market  interest rates being lower for most of fiscal 1999 compared
to fiscal 1998 and to guard  against  higher  demands  for cash from  depositors
given the approach of the Y2K scenario, it was management's decision to maintain
increased liquid cash funds.

         Interest Expense.  Interest expense increased  $115,000 or 2.9% to $4.1
million  for fiscal  1999 from $3.9  million for fiscal  1998.  The  increase in
interest  expense for fiscal 1999 was due to an increase of $5.8 million or 7.4%
in the average balance of  interest-bearing  liabilities in fiscal 1999 compared
to fiscal 1998.  Partially  offsetting  this increase,  the average rate paid on
interest-bearing  liabilities  decreased to 4.86% for fiscal 1999 from 5.08% for
fiscal 1998. The Company's management continues to employ a strategy of offering
premium rates on selective  term  certificates  of deposits,  offering  periodic
"Specials" on deposit  products,  and not raising interest rates on all its term
certificates  in order to retain its core savings base.  Interest  rates paid on
other types of savings continue to be offered at competitive  rates. The Company
has also used alternative  funding sources  available from the Federal Home Loan
Banking System.  Interest expense on FHLB advances increased  $22,000,  or 4.2%,
for fiscal  1999  compared  to fiscal  1998,  as the  balance  of FHLB  advances
increased  to $11.5  million at September  30, 1999  compared to $9.5 million at
September 30, 1998.
<PAGE>
         Net Interest Income. Net interest income is a function of the Company'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 for fiscal 1999 and $2.3 million for
fiscal 1998. The Company's weighted average yield on all interest-earning assets
decreased  to 7.29% for  fiscal  1999  compared  to 7.60% for fiscal  1998.  The
weighted  average  rate paid on all  interest-bearing  liabilities  decreased to
4.86% for fiscal 1999  compared to 5.08% for fiscal 1998.  Interest  spreads and
net  margins  were  compressed  in fiscal  1999 as  interest  rates on loans and
investment  securities reached near record lows before rising in the latter part
of fiscal  1999.  The Company was not able to follow  this lower  interest  rate




                                       9
<PAGE>
trend  in  its  savings  deposit  and  certificates  because  of  the  increased
competition from other financial products being offered through the stock market
and mutual and stock fund offerings.

         Provisions for Losses on Loans. The Company  maintains an allowance for
loan losses based upon  management's  periodic  evaluation of known and inherent
risks  in the  Company's  portfolio,  its past  loan  loss  experience,  adverse
situations that may affect borrowers' ability to repay loans, estimated value of
underlying loan collateral, and current and expected future economic conditions.
The Company  increased  its provision for loan losses to $19,000 in fiscal 1999,
compared to $14,500 in fiscal 1998. Total allowance for loan losses was $239,000
or 0.38% of net loans  receivable  at September 30, 1999 compared to $228,000 or
0.37% of net loans receivable at September 30, 1998.

         Non-Interest  Income.  The Company's  principal sources of non-interest
income include travel agency fees, service charges on transaction accounts,  net
gains on the sale of  investment  securities  and  loans  held  for  sale,  loan
origination fees and charges for services  offered by the Company.  Non-interest
income decreased by $456,000 or 11.1% to $3.6 million in fiscal 1999 as compared
to $4.1 million in fiscal 1998.  Travel agency fees generated by Pekin Financial
Services, a Company subsidiary, decreased $335,000 or 9.5%, due to a decrease in
sales  volume  and  commissions  received.  The  Company's  gains  from sales of
investment  securities  and loans  held for sale  decreased  $120,000  or 84.0%.
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
positive  impact on non-interest  income and the Company's net income.  However,
the  Company  does not expect to  continue  to  experience  gains on the sale of
investments,  mortgage-backed  securities or loans  held-for-sale  at the levels
reflected  in  previous  years.  In fiscal 1999  market  prices  declined in the
available-for-sale  investment  portfolio and loans  held-for-sale  portfolio as
interest  rates rose during the latter part of fiscal  1999,  compared to fiscal
1998. This caused the decrease in gains on sales of these investment  securities
and loan  held-for-sale.  Loan  origination  fees decreased  $14,000 or 10.2% in
fiscal 1999 compared to fiscal 1998,  reflecting a decrease in loan originations
in fiscal 1999  compared  to fiscal  1998 due to an  increase  in mortgage  loan
rates.

         Non-Interest  Expense.  Non-interest  expense decreased $17,000 or 0.3%
for fiscal 1999 compared to fiscal 1998. The Company's  subsidiary travel agency
cost of sales decreased  $295,000 or 8.8%. After accounting for the gross income
(described  above),  the net income  attributable to the Company's travel agency
decreased  $39,000,   or  26.1%,  for  fiscal  1999  compared  to  fiscal  1998.
Compensation and benefits  increased $94,000 or 9.7% for fiscal 1999 compared to
fiscal 1998.  This was  primarily  due to salary merit  increases of $10,600 for
fiscal 1999.  Also,  cost of insurance on key employees  increased  $85,000,  or
119.2%,  for fiscal 1999  compared to fiscal  1998,  due  primarily to surrender
charges and set up fees associated with a change of insurance carrier.  One time
only costs due to the Company's on-line conversion and Y2K readiness preparation
totaled  $162,000  for fiscal  1999.  Disposal  of  obsolete  on-line  equipment
resulted in a $34,000 write off for fiscal 1999.

         Income Taxes. Income taxes decreased $181,000, or 41.4% for fiscal 1999
compared  to fiscal  1998.  The  decrease  was due to a decrease  of $431,000 in
income  before  income  taxes and  cumulative  effect  of  change in  accounting
principle for fiscal 1999 compared to fiscal 1998.
<PAGE>
         Net Income.  Net income decreased  $283,000,  or 40.3%, for fiscal 1999
compared to fiscal 1998.  The decrease was due to lower  non-interest  income in
fiscal 1999  attributable to lower fees generated by the Company's travel agency
subsidiary,  as well as lower net gains on sales of  investment  securities  and
loans  held-for-sale  in fiscal 1999 as compared to fiscal  1998.  The lower net
income  was also due to the  effect  of  expensing  organizational  costs of the
Company in fiscal 1999.

Liquidity and Capital Resources

         The Company is required to maintain  minimum levels of liquid assets as
defined by regulations of the Illinois  Commissioner  of Savings and Residential
Finance (the "Commissioner") and the Federal Deposit Insurance  Corporation (the
"FDIC").  This  requirement,  which  varies  from time to time,  depending  upon


                                       10
<PAGE>
economic  conditions and deposit  flows,  is based upon a percentage of deposits
and  short-term  borrowings.  The  required  ratio  currently is 5%. The Company
historically  has  maintained a level of liquid  assets in excess of  regulatory
requirements,  and the Bank's liquidity ratio averaged 16.6% during the month of
September  1999.  The  Company  adjusts  its  liquidity  levels in order to meet
funding  needs for deposit  outflows,  payment of real estate  taxes on mortgage
loans  escrowed  for,  repayment  of  borrowings,   when  applicable,  and  loan
commitments.  The Company also  adjusts  liquidity  as  appropriate  to meet its
asset/liability objectives.

         The Company'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 Company  utilizes FHLB of Chicago  advances as a
source of funds. While scheduled loan and mortgage-backed  securities  repayment
is a relatively  predictable source of funds, deposit flows and loan prepayments
are greatly  influenced  by general  interest  rates,  economic  conditions  and
competition.  The  Company  manages  the  pricing of its  deposits to maintain a
steady  deposit  balance.  In  addition,  the Company  invests  excess  funds in
short-term  interest-earning  assets,  which  provide  liquidity to meet lending
requirements.  Short-term  assets  outstanding  at September 30, 1999, and 1998,
amounted to $4.4 million, and $3.9 million, respectively.
<TABLE>
<CAPTION>
                                                         Year Ended September 30,
                                                         ------------------------
                                                          1999            1998
                                                         -------        -------
                                                               (In Thousands)

<S>                                                      <C>            <C>
Cash and cash equivalents
 at beginning of year ............................       $ 3,947        $ 4,949
                                                         -------        -------
Operating activities:
Net income .......................................           419            702
Adjustments to reconcile net
 income to net cash provided by
 operating activities ............................            32             82
Other operating activities .......................            20             93
                                                         -------        -------
Net cash provided by
 operating activities ............................           471            877
Net cash (used in) investing activities ..........        (7,401)        (2,724)
Net cash provided by
 financing activities ............................         7,352            825
                                                         -------        -------
Net increase (decrease) in cash
 and cash equivalents ............................           422         (1,022)
                                                         -------        -------
Cash and cash equivalents at end of year .........       $ 4,369        $ 3,947
                                                         =======        =======
</TABLE>
<PAGE>
         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, 1999, the Bank had $11.5 million of outstanding  advances from the
FHLB of Chicago.

         At  September  30,  1999,  the  Bank  had  outstanding   mortgage  loan
commitments of $474,000. Certificates of deposit scheduled to mature in one year
or less at September 30, 1999, totaled $30.7 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


                                       11
<PAGE>
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 Company's operations. Unlike
most  industrial  companies,  virtually all of the assets and liabilities of the
Company are monetary.  As a result,  interest rates have a greater impact on the
Company's performance than do the effects of general levels of inflation. In the
current interest rate environment,  liquidity and the maturity  structure of the
Company'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 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, 1999, total  interest-bearing  liabilities maturing or
repricing  within one year exceeded total  interest-earning  assets  maturing or
repricing  in the  same  period  by $47.6  million,  representing  a  cumulative
negative one-year gap ratio of 52.4%. Accordingly, based on the gap model below,
in a rising interest rate environment,  the Company's  net-interest income would
be adversely  affected.  The Bank has an Asset-Liability  Management  Committee,
which is responsible for reviewing the Bank's assets 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.


                                       12
<PAGE>
         The following  table sets forth the amount of interest  -earning assets
and  interest-bearing  liabilities  outstanding at September 30, 1999, which are
anticipated by the Company, based upon certain assumptions, to reprice or mature
in each of the future time periods shown.
<TABLE>
<CAPTION>
                                                                                    At September 30, 1999
                                                ------------------------------------------------------------------------------------
                                                                                                                   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) .................   $    829     $    824     $  1,907     $  9,202     $  8,991     $29,540    $51,293
  Mortgage-backed securities (2) ............        389          382           66        1,278        1,569       6,537     10,221
  Other loans ...............................      1,243          463          634        2,596        3,684       3,535     12,155
  Interest-bearing deposits .................      2,655         --           --           --           --          --        2,655
  Investment securities (2) .................      1,488          110         --            698        8,790       3,501     14,587
                                                --------     --------     --------     --------     --------     -------    -------
        Total interest-earning assets .......      6,604        1,779        2,607       13,774       23,034      43,113     90,911
                                                                                                                            .......
Interest-bearing liabilities:
  Demand accounts ...........................     19,498         --           --           --           --          --       19,498
  Certificate of deposits of $100,000 or more      2,551        1,348         --            642         --          --        4,541
  Other certificates of deposit .............     28,163       13,417        2,714        6,978         --          --       51,272
  Borrowings ................................      4,000         --          1,000        1,000        5,500        --       11,500
                                                --------     --------     --------     --------     --------     -------    -------
        Total interest-bearing liabilities ..     54,212       14,765        3,714        8,620        5,500        --       86,811

Interest sensitivity gap ....................    (47,608)     (12,986)      (1,107)       5,154       17,534      43,113
Cumulative gap ..............................    (47,608)     (60,594)     (61,701)     (56,547)     (39,013)      4,100

Ratio of gap during the period to
 total interest-earning assets ..............      (52.4)%      (14.3)%       (1.2)%        5.7%       19.3%      47.4%

Ratio of cumulative gap to total
 interest-earning assets ....................      (52.4)%      (66.7)%      (67.9)%      (62.2)%     (42.9)%      4.5%

</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.


Year 2000 Considerations

         As the year 2000 approaches,  a significant  business issue has emerged
regarding how existing  software  programs and operating systems can accommodate
the date value for the year 2000.  Many existing  software  products,  including
products used by the Company and its suppliers and  customers,  were designed to
accommodate  only a two-digit  value,  which  represents  the year. For example,
information  relating  to the year 1996 is  stored  in the  system as "96." As a
result,  the year 1999 (i.e.,  "99") could be the maximum  date value that these
<PAGE>
systems will be able to process  accurately.  In response to concerns about this
issue,  regulatory  agencies have begun to monitor holding companies' and banks'
readiness  for the year 2000 as part of the  regular  examination  process.  The
Company  presently  believes that with  modifications  to existing  software and
conversion  to new  software,  the year  2000  issue  will not pose  significant
operational problems for the Company's business operations.  To date, management
believes the systems  conversion  finalized  in November  1998 brought its major
operating  system into year 2000  compliance  status.  In addition,  the Company
outsources its computer systems to a third party supplier,  who has informed the
Company that it is year 2000 compliant.  Implementation



                                       13
<PAGE>
of the  Company's  plan to test  in-house  and  out-sourced  software  has  been
underway  since the first  quarter of 1998.  Total  compliance  for all systems,
including  the  Company's  outsourced  computer  systems,  has  been  completed.
Management estimates that such compliance cost $162,000. The plan implementation
team is responsible for progress and will continue to provide a status report to
the board of directors on a monthly basis through December 31, 1999. However, if
such  modifications  and conversions are not made, or are not completed  timely,
the year 2000 issue could have a material  adverse  impact on the  operations of
the  Company.  The  Company  has in place a  contingency  plan in the  event its
outsourced  computer  systems are not year 2000 compliant on a timely basis.  In
addition,  there can be no assurance that  unforeseen  problems in the Company's
outsourced  computer  systems will not have an adverse  effect on the  Company's
systems  or  operations.  The  Company  does  not  have  sufficient  information
accumulated  from  customers to enable the Company to assess the degree to which
customers' operations are susceptible to potential problems relating to the year
2000 issue.


               DIRECTORS AND OFFICERS OF THE BANK AND THE COMPANY


         R. H.  More  has been a  director  of the  Bank  since  1953 and of the
Company  since  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.  He has been  employed by the Bank
since 1961.

         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 President of  Steger's,  Ltd., a furniture  retailer
located in Pekin, Illinois.

         Patrick  E.  Oberle  became  a  director  of the  Bank in 1994  and was
appointed  Vice  Chairman in 1998.  He became a director of the Company upon its
formation  and was  appointed  Vice Chairman in 1998. 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  Chairman  in
1998.  He became a director of the Company upon its  formation and was appointed
Chairman in 1998. He is a certified public  accountant and has been President of
Wolf, Tesar & Company, P.C., an accounting firm, since 1980.

         William J. Leman was  appointed  as director  of the Company  effective
August 1, 1998.  Mr. Leman is  President  and Chief  Executive  Officer of Monge
Property Management Company in Pekin, Illinois.

         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.


                                       14
<PAGE>
         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.



                                       15
<PAGE>

                         Independent Auditor's Report

Board of Directors
Progressive Bancorp, Inc.
Pekin, Illinois

We have audited the  accompanying  consolidated  balance  sheets of  Progressive
Bancorp, Inc. and subsidiaries  (Company) as of September 30, 1999 and 1998, 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 Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
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 Progressive Bancorp,
Inc.  and  subsidiaries  as of September  30, 1999 and 1998,  and the results of
their  operations  and their cash flows for the years then ended,  in conformity
with generally accepted accounting principles.

As discussed in Note 1 to the  consolidated  financial  statements,  the Company
changed its method of accounting  for  organization  costs during the year ended
September 30, 1999.


/s/CLIFTON GUNDERSON L.L.C.
---------------------------
CLIFTON GUNDERSON L.L.C.



Peoria, Illinois
November 1, 1999


<PAGE>
<TABLE>
<CAPTION>
                              PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                                      CONSOLIDATED BALANCE SHEETS


                                     Assets
                                                                                 September 30,
                                                                       ------------------------------
                                                                            1999              1998
                                                                       ------------      ------------
<S>                                                                    <C>               <C>
Cash and cash equivalents:
     Cash and amounts due from banks                                   $  1,713,726      $  1,639,175
     Interest-bearing deposits                                            2,654,775         2,307,499
                                                                       ------------      ------------
                                                                          4,368,501         3,946,674
Money market investments and investment securities (note 2):
     Held-to-maturity, at amortized cost (estimated market value
         of $2,244,090 and $4,298,541, respectively)                      2,270,164         4,234,966
     Available-for-sale, at market value                                 11,738,270         6,827,144
Mortgage-backed securities (note 3):
     Held-to-maturity, at amortized cost (estimated market value
         of $841,598 and $3,214,906, respectively)                          834,531         3,183,399
     Available-for-sale, at market value                                  9,207,338         4,483,514
Loans receivable, net (note 5)                                           63,053,818        61,999,200
Accrued interest receivable (note 6)                                        631,237           543,793
Premises and equipment (note 8)                                             987,548           978,604
Other assets                                                              1,118,881         1,054,664
                                                                       ------------      ------------


                                                                       $ 94,210,288      $ 87,251,958
                                                                       ============      ============


                      Liabilities and Stockholders' Equity

Deposits (note 9) $                                                      75,310,941      $ 69,790,953
Borrowed funds (note 10)                                                 11,500,000         9,500,000
Advances from borrowers for taxes and insurance                             149,610           167,644
Accrued expenses and other liabilities                                      895,590         1,140,480
                                                                       ------------      ------------

                  Total liabilities                                      87,856,141        80,599,077
                                                                       ------------      ------------

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                    <C>               <C>
Stockholders' equity:
     Serial preferred stock, $.10 par value, 50,000 shares
         authorized, no shares issued and outstanding                          --                --
     Common stock, $.01 par value, 250,000 shares authorized,
         174,473 shares issued September 30, 1999 and 1998
         (note 16)                                                            1,745             1,745
     Paid-in surplus                                                      1,430,552         1,430,552
     Retained earnings, substantially restricted (notes 12 and 15)        6,721,789         6,451,899
     Accumulated other comprehensive income (loss),
         net of taxes                                                      (499,939)           68,685
                                                                       ------------      ------------

                                                                          7,654,147         7,952,881

     Treasury stock, 25,000 shares at cost                               (1,300,000)       (1,300,000)
                                                                       ------------      ------------

                  Total stockholders' equity                              6,354,147         6,652,881
                                                                       ------------      ------------


                                                                       $ 94,210,288      $ 87,251,958
                                                                       ============      ============
</TABLE>


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

                                       17

<PAGE>
<TABLE>
<CAPTION>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME


                                                        Years ended September 30,
                                                          1999            1998
                                                      ----------     ----------
<S>                                                    <C>            <C>
Interest income
     Loans receivable:
         First mortgage loans                          $3,758,956     $3,635,904
         Other loans                                    1,148,833      1,153,771
     Mortgage-backed securities:
         Held-to-maturity                                  37,826        263,243
         Available-for-sale                               463,546        224,612
     Interest-bearing deposits                            198,249        154,847
     Money market investments and investment
         securities:
              Held-to-maturity                            115,805        416,108
              Available-for-sale                          652,192        398,490
                                                       ----------     ----------

                  Total interest income                 6,375,407      6,246,975
                                                       ----------     ----------


Interest on deposits (note 9)                           3,535,346      3,441,254


Interest on borrowed funds                                547,343        525,248
                                                       ----------     ----------

                  Total interest expense                4,082,689      3,966,502
                                                       ----------     ----------

                  Net interest income                   2,292,718      2,280,473


Provision for loan losses (note 5)                         19,000         14,500
                                                       ----------     ----------

                  Net interest income after
                      provision for loan losses         2,273,718      2,265,973
                                                       ----------     ----------

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                    <C>            <C>
Noninterest income
     Travel agency fees                                 3,170,829      3,505,504
     Service charges                                      135,288        142,889
     Commissions from sale of annuities                     1,873            269
     Net gain on sale of:
         Investment securities (Note 2)                     3,125         50,621
         Loans held for sale (Note 4)                      19,409         92,898
     Loan origination fees                                123,285        136,724
     Other                                                193,361        174,556
                                                       ----------     ----------

                  Total noninterest income              3,647,170      4,103,461
                                                       ----------     ----------

</TABLE>
                                       18
<PAGE>
<TABLE>
<CAPTION>
                           PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF INCOME


                                                                     Years ended September 30,
                                                                       1999             1998
                                                                   -----------      -----------
<S>                                                                <C>              <C>
Noninterest expense
     Travel agency cost of sales                                   $ 3,060,556      $ 3,356,287
     Compensation and benefits                                       1,067,096          972,866
     Premises and equipment                                            281,703          278,506
     Data processing                                                   122,951          114,356
     Online conversion costs                                           161,722             --
     Federal insurance premiums                                         41,660           42,549
     Advertising and promotion                                          19,754           34,091
     Real estate owned expense, net of income                            3,433           14,577
     Net (gain) loss on sale of real estate owned                       (2,529)           2,020
     Writedown of equipment                                             34,047             --
     Other expenses                                                    422,090          415,086
                                                                   -----------      -----------
                  Total noninterest expense                          5,212,483        5,230,338
                                                                   -----------      -----------

                  Income before income taxes and cumulative
                      effect of change in accounting principle         708,405        1,139,096


Income taxes (note 11)                                                 256,078          436,644
                                                                   -----------      -----------

                  Income before cumulative effect of
                      change in accounting principle                   452,327          702,452


CUMULATIVE EFFECT ON PRIOR YEARS
     (to September 30, 1998) of expensing organizational
     costs as incurred, net of income taxes of $20,844                  32,964             --
                                                                   -----------      -----------

Net income                                                         $   419,363      $   702,452
                                                                   ===========      ===========

BASIC INCOME Per Share (Note 17)
     Before cumulative effect of accounting change                 $      3.03      $      4.39
     Accounting change                                                     .22             --
                                                                   -----------      -----------
     Basic income per share                                        $      2.81      $      4.39
                                                                   ===========      ===========

DILUTED INCOME PER SHARE (Note 17)
     Before cumulative effect of accounting change                 $      2.93      $      4.17
     Accounting change                                                     .21             --
                                                                   -----------      -----------

     Diluted income per share                                      $      2.72      $      4.17
                                                                   ===========      ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                <C>              <C>
WEIGHTED AVERAGE NUMBER OF COMMON
     SHARES OUTSTANDING (Note 17)
     Basic                                                             149,473          159,996
                                                                   ===========      ===========
     Diluted                                                           154,280          168,617
                                                                   ===========      ===========

</TABLE>

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

                                       19

 <PAGE>
<TABLE>
<CAPTION>
                                             PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                                                     CONSOLIDATED STATEMENTS OF
                                                   CHANGES IN STOCKHOLDERS' EQUITY



                                                                          Serial
                                                                        Preferred         Common          Paid-in         Retained
                                                                          Stock            Stock          Surplus         Earnings

                                                                       -----------      -----------     -----------     -----------
<S>                                                                    <C>              <C>             <C>             <C>
BALANCE AT SEPTEMBER 30, 1997                                          $      --        $     1,682     $ 1,367,605     $ 5,898,816

     Comprehensive income:
         Net income                                                           --               --              --           702,452
         Other comprehensive income:
              Unrealized gain on available-for-sale securities,
                  net of tax of $25,966                                       --               --              --              --
              Reclassification adjustment for gains included in net
                  income, net of tax of $17,211                               --               --              --              --

                  Total comprehensive income

     Exercised stock options for 6,301 shares                                 --                 63          62,947            --
     Dividends paid to shareholders                                           --               --              --          (149,369)
     Payments to acquire 25,000 shares of treasury stock                      --               --              --              --
                                                                       -----------      -----------     -----------     -----------


BALANCE AT SEPTEMBER 30, 1998                                                 --              1,745       1,430,552       6,451,899

     Comprehensive income:                                                    --               --           419,363            --
         Net income                                                           --
         Other comprehensive income:
              Unrealized loss on available-for-sale securities,               --               --              --          (566,561)
                  net of tax benefit of $292,609                              --
              Reclassification adjustment for gains included in net           --               --              --            (2,063)
                  income, net of tax of $1,062                                --               --

                  Total comprehensive income (loss)                       (149,261)

     dIVIDENDS PAID TO SHAREHOLDERS                                           --               --              --          (149,473)
                                                                                        -----------     -----------     -----------

BALANCE AT SEPTEMBER 30, 1999                                          $      --        $     1,745     $ 1,430,552     $ 6,721,789
                                                                       ===========      ===========     ===========     ===========

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                         Accumulated
                                                                           Other                             Total
                                                                       Comprehensive    Treasury        Stockholders'
                                                                       Income (Loss)       Stock            Equity
                                                                       -----------      -----------      -----------
<S>                                                                    <C>              <C>              <C>
BALANCE AT SEPTEMBER 30, 1997                                          $    51,637      $      --        $ 7,319,740

                                                                                                         -----------
     Comprehensive income:
         Net income                                                           --               --            702,452
         Other comprehensive income:
              Unrealized gain on available-for-sale securities,
                  net of tax of $25,966                                     50,458             --             50,458
              Reclassification adjustment for gains included in net
                  income, net of tax of $17,211                            (33,410)            --            (33,410)

                                                                                                         -----------
                  Total comprehensive income

                                                                                                            719,500
     Exercised stock options for 6,301 shares                                 --               --             63,010
     Dividends paid to shareholders                                           --               --           (149,369)
     Payments to acquire 25,000 shares of treasury stock                      --         (1,300,000)      (1,300,000)
                                                                       -----------      -----------      -----------


BALANCE AT SEPTEMBER 30, 1998                                               68,685       (1,300,000)       6,652,881

                                                                                                         -----------
     Comprehensive income:                                                    --            419,363
         Net income
         Other comprehensive income:
              Unrealized loss on available-for-sale securities,               --           (566,561)
                  net of tax benefit of $292,609
              Reclassification adjustment for gains included in net           --             (2,063)
                  income, net of tax of $1,062

                  Total comprehensive income (loss)

     dIVIDENDS PAID TO SHAREHOLDERS                                           --               --           (149,473)
                                                                       -----------      -----------      -----------

BALANCE AT SEPTEMBER 30, 1999                                          $  (499,939)     $(1,300,000)     $ 6,354,147
                                                                       ===========      ===========      ===========

</TABLE>

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

                                       21

<PAGE>
<TABLE>
<CAPTION>
                                     PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                        Years ended September 30,
                                                                                          1999             1998
                                                                                     ------------      -----------
<S>                                                                                  <C>               <C>
Cash flows from operating activities
     Net income                                                                      $    419,363      $   702,452
                                                                                     ------------      -----------
     Adjustments to reconcile net income to net cash
         provided by operating activities:
         Depreciation                                                                     126,152          115,412
         Net decrease in deferred loan fees                                               (16,449)         (31,307)
         Net (gain) loss on sale of real estate owned                                      (2,529)           2,020
         Writedown of equipment                                                            34,047             --
         Provision for loan losses                                                         19,000           14,501
         Net (gain) loss on sale of:
              Investment securities                                                        (3,125)         (50,621)
              Loans held for sale                                                         (19,409)         (92,898)
         Increase in accrued interest receivable                                          (87,444)         (40,925)
         Discount accretion, net of premium amortization
              on mortgage-backed and investment securities                                 (3,283)         (12,187)
         (Decrease) increase in accrued expenses and
              other liabilities                                                          (244,890)         295,124
         Decrease (increase) in other assets                                              229,454         (117,054)
                                                                                     ------------      -----------

                  Total adjustments                                                        31,524           82,065
                                                                                     ------------      -----------

     Origination of loans held for sale                                                (2,188,439)      (6,437,199)
     Proceeds from sales of loans held for sale                                         2,207,848        6,530,097
                                                                                     ------------      -----------

                  Net cash provided by operating activities                               470,296          877,415
                                                                                     ------------      -----------

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                  <C>               <C>
Cash flows from investing activities
     Principal received on mortgage-backed securities:
         Held-to-maturity                                                               2,356,052        2,006,560
         Available-for-sale                                                             1,668,458          551,227
     Proceeds from the maturity and calls of investment securities:
         Held-to-maturity                                                               1,000,000        1,500,000
         Available-for-sale                                                             7,000,000        2,500,000
     Proceeds from the sale of investment securities:
         available-for-sale                                                               503,121        1,531,875
     Purchase of mortgage-backed securities:
         available-for-sale                                                            (6,642,190)      (2,028,082)
     Purchase of investment securities:
         held-to-maturity                                                                (532,168)        (125,775)
         available-for-sale                                                           (11,530,440)      (4,569,773)
     Net increase in loans receivable                                                  (1,114,414)      (4,264,689)
     Purchases of premises and equipment                                                 (169,143)         (43,391)
     Proceeds from sale of real estate owned                                               65,450          235,400
     Capital expenditures on real estate owned                                             (5,676)         (17,688)
                                                                                     ------------      -----------

                  Net cash used in investing activities                                (7,400,950)      (2,724,336)
                                                                                     ------------      -----------

</TABLE>

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


                                       22

<PAGE>
<TABLE>
<CAPTION>
                          PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                  Years ended September 30,
                                                                    1999             1998
                                                                -----------      -----------
<S>                                                             <C>              <C>
Cash flows from financing activities
     Net increase in deposits                                   $ 5,519,988      $   732,247
     Net decrease in advances from borrowers                        (18,034)         (20,795)
     Proceeds from FHLB advances                                  4,000,000        3,500,000
     Repayment of FHLB advances                                  (2,000,000)      (2,000,000)
     Purchase of  treasury stock                                       --         (1,300,000)
     Proceeds from exercise of common stock options                    --             63,010
     Dividends paid                                                (149,473)        (149,369)
                                                                -----------      -----------

                  Net cash provided by financing activities       7,352,481          825,093
                                                                -----------      -----------


NET INCREASE (DECREASE) IN CASH AND
     CASH EQUIVALENTS                                               421,827       (1,021,828)


Cash and cash equivalents at beginning
     of year                                                      3,946,674        4,968,502
                                                                -----------      -----------


Cash and cash equivalents at end of year                        $ 4,368,501      $ 3,946,674
                                                                ===========      ===========


Supplemental disclosures of cash flow information:
     Cash paid during the year for:
         Interest on deposits and borrowed funds                $ 4,076,861      $ 3,959,663
                                                                ===========      ===========

         Income taxes, net of refunds                           $   417,574      $   187,416
                                                                ===========      ===========


Supplemental schedule of noncash
     investing activities:
     Transfers from loans to real estate acquired
         through foreclosure                                    $    57,245      $   219,732
                                                                ===========      ===========
</TABLE>


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


                                       23
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - Summary of Significant Accounting Policies

On October 10,  1997,  the  stockholders  approved the  reorganization  of Pekin
Savings,  s.b. (Bank) into a holding company form of ownership to which the Bank
became a wholly owned subsidiary of Progressive Bancorp, Inc. (Company), a newly
formed Delaware  corporation,  and each outstanding share of common stock of the
Bank was exchanged for one share of common stock of Progressive Bancorp, Inc. On
November  6,  1997,  the  reorganization  was  completed.  The  transaction  was
accounted  for  in  a  manner  similar  to  the  pooling-of-interest  method  of
accounting.

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."

The 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  Company  and its  subsidiaries
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
Company  follows  in  preparing  and  presenting  its   consolidated   financial
statements.

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its wholly-owned  subsidiaries,  Pekin Savings Bank and Pekin Financial  Service
Corporation.  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.



                                       24
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - Summary of Significant Accounting Policies (CONTINUED)

Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company 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.

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

     Held-to-Maturity  -  includes  investments  in debt  securities  which  the
     Company 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
     Company 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, 1999 and
1998)  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.


                                       25
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - Summary of Significant Accounting Policies (CONTINUED)

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.

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.



                                       26
<PAGE>
                  PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   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.

Income Per Share

Basic  income per share is computed  based upon the weighted  average  number of
common  shares  outstanding  during  the  period.  Diluted  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  the exercise of the
dilutive stock options.

Accounting Change

Costs incurred in the organization of the Company totaled  $63,304.  These costs
were being amortized on a  straight-line  basis over a period of five years from
the date of the commencement of operations of the Company.  Amortization expense
recorded  in 1998  totaled  $9,496.  On  October  1, 1998,  in  accordance  with
Statement of Position 98-5, Reporting on the Costs of Start-Up  Activities,  the
Company  elected to expense  the  remaining  unamortized  balance of $53,808 for
organization  costs  incurred  in the  formation  of the bank  holding  company,
Progressive Bancorp, Inc.

Comprehensive Income

The  Financial   Accounting   Standards  Board  issued  Statement  of  Financial
Accounting  Standards No. 130,  Reporting  Comprehensive  Income,  in June 1997.
Statement 130 establishes  standards for reporting and display of  comprehensive
income  (as  defined)  in a full set of  general-purpose  financial  statements.
Statement 130 requires  classification of items of other comprehensive income by
their nature in a financial  statement and display of the accumulated balance of
other comprehensive  income separately from retained earnings and surplus in the
equity  section of the  balance  sheet.  The  Company has only one item of other
comprehensive  income  and has  elected  to report  comprehensive  income in the
consolidated    statements   of   changes   in   stockholders'    equity,   with
reclassification of 1998 amounts.




                                       27
<PAGE>
                  PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - Money Market Investments and Investment Securities

Money market  investments  and  investment  securities at September 30, 1999 and
1998 are summarized as follows:
<TABLE>
<CAPTION>

                                                                         September 30, 1999
                                                 -----------------------------------------------------------------
                                                                       Gross           Gross           Estimated
                                                    Amortized       unrealized      unrealized          market
                                                      cost             gains          losses             value
                                                 ---------------   ----------     -------------   ----------------
<S>                                              <C>               <C>            <C>             <C>
Held-to-maturity:
     Investment securities:
         Municipal obligations                   $     1,606,264   $   14,758     $     (40,832)  $      1,580,190
         Stock in Federal Home Loan
              Bank, at cost                              663,900           -                 -             663,900
                                                 ---------------   ----------     -------------   ----------------

                                                 $     2,270,164   $   14,758     $     (40,832)  $      2,244,090
                                                 ===============   ==========     =============   ================

Available-for-sale:
     Money market investments:
         Short-term liquidity funds              $       141,202   $       -      $          -    $        141,202
     Investment securities:
         U.S. government agencies                     11,492,927           -           (558,412)        10,934,515
         Mutual funds                                    682,968           -            (20,415)           662,553
                                                 ---------------   ----------     -------------   ----------------

                                                 $    12,317,097   $       -      $    (578,827)  $     11,738,270
                                                 ===============   ==========     =============   ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                          September 30, 1998
                                                 -----------------------------------------------------------------
                                                                        Gross           Gross          Estimated
                                                      Amortized      unrealized      unrealized         market
                                                        cost            gains          losses            value
                                                 ---------------   ----------     -------------   ----------------
<S>                                              <C>               <C>            <C>             <C>
Held-to-maturity:
     Investment securities:
         U.S. government agencies                 $    2,498,999     $     8,551    $         -    $     2,507,550
         Municipal obligations                         1,101,667          55,024              -          1,156,691
         Stock in Federal Home Loan
              Bank, at cost                              634,300              -               -            634,300
                                                  --------------     -----------    ------------   ---------------

                                                  $    4,234,966     $    63,575    $         -    $     4,298,541
                                                  ==============     ===========    ============   ===============

Available-for-sale:
     Money market investments:
         Short-term liquidity funds               $      135,124     $        -     $         -    $       135,124
     Investment securities:
         U.S. Treasury securities                        499,725          15,620              -            515,345
         U.S. government agencies                      5,499,622          39,588              -          5,539,210
         Mutual funds                                    647,720              -          (10,255)          637,465
                                                  --------------     -----------    ------------   ---------------

                                                  $    6,782,191     $    55,208    $    (10,255)  $     6,827,144
                                                  ==============     ===========    ============   ===============


</TABLE>
                                       28
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   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, 1999, 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, 1999
                                                                              ----------------------------------
                                                                                  Amortized          Estimated
                                                                                    cost           market value
                                                                              ----------------   ---------------
<S>                                                                           <C>                <C>
Held-to-maturity due:
     After one year through five years                                        $        506,869   $       511,319
     After five years through ten years                                                596,062           605,073
     After ten years                                                                   503,333           463,798
     Stock in Federal Home Loan Bank (no stated maturity)                              663,900           663,900
                                                                              ----------------   ---------------

                                                                              $      2,270,164   $     2,244,090
                                                                              ================   ===============

Available-for-sale due:
     After one year through five years                                        $        999,103   $       962,670
     After five years through ten years                                              7,496,206         7,169,730
     After ten years                                                                 2,997,618         2,802,115
     Money market investments/mutual funds
         (no stated maturity)                                                          824,170           803,755
                                                                              ----------------   ---------------

                                                                              $     12,317,097   $    11,738,270
                                                                              ================   ===============
</TABLE>

The following is a schedule of proceeds from the sales of investment  securities
and the gross gains and losses realized:
<PAGE>
<TABLE>
<CAPTION>
                                                          Years ended
                                                          September 30,
                                            ------------------------------------
                                                   1999                  1998
                                            --------------          ------------
<S>                                         <C>                     <C>
Proceeds from sales                         $      503,121          $ 1,531,875
                                            ==============          ===========

Gross gains                                 $        3,125          $    52,183
                                            ==============          ===========

Gross losses                                $         --            $    (1,562)
                                            ==============          ===========


</TABLE>
                                       29
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - Mortgage-Backed Securities

Mortgage-backed  securities  at September  30, 1999 and 1998 are  summarized  as
follows:
<TABLE>
<CAPTION>
                                                                 September 30, 1999
                          ------------------------------------------------------------------------------------------------
                                                                                      Gross          Gross       Estimated
                            Principal     Unamortized    Unearned      Amortized   unrealized     unrealized      market
                             balance       premiums      discounts       cost         gains         losses         value
                             -------       --------      ---------       ----         -----         ------         -----
<S>                       <C>             <C>          <C>           <C>            <C>         <C>           <C>
Held-to-maturity:
   FNMA certificates      $    572,429    $      -     $   (8,200)   $    564,229   $  6,760    $        -    $    570,989
   FHLMC certificates          270,645          671        (1,014)        270,302        978           (671)       270,609
   FNMA interest-only
     security, net of
     $29,181 allowance
     for loss                       -            -             -               -          -              -              -
                          ------------    ---------    ----------    ------------   --------    -----------   ------------

                          $    843,074    $     671    $   (9,214)   $    834,531   $  7,738    $      (671)  $    841,598
                          ============    =========    ==========    ============   ========    ===========   ============

Available-for-sale:
   FNMA certificates      $  1,709,063    $     895    $   (8,333)   $  1,701,625   $  3,507    $   (39,872)  $  1,665,260
   FHLMC certificates        1,161,003        1,767        (2,101)      1,160,669        298        (29,103)     1,131,864
   GNMA certificates         6,490,974       52,611       (19,111)      6,524,474      2,975       (117,235)     6,410,214
                          ------------    ---------    ----------    ------------   --------    -----------   ------------

                          $  9,361,040    $  55,273    $  (29,545)   $  9,386,768   $  6,780    $  (186,210)  $  9,207,338
                          ============    =========    ==========    ============   ========    ===========   ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>



                                                                 September 30, 1998
                          ------------------------------------------------------------------------------------------------
                                                                                      Gross          Gross       Estimated
                            Principal     Unamortized    Unearned      Amortized   unrealized     unrealized      market
                             balance       premiums      discounts       cost         gains         losses         value
                             -------       --------      ---------       ----         -----         ------         -----
<S>                       <C>             <C>          <C>           <C>            <C>         <C>           <C>
Held-to-maturity:
   FNMA certificates      $  1,881,622    $   2,157    $  (17,977)   $  1,865,802   $  27,411    $    (355)   $  1,892,858
   FHLMC certificates        1,317,504        3,279        (3,186)      1,317,597       6,005       (1,554)      1,322,048
   FNMA interest-only
     security, net of
     $45,862 allowance
     for loss                       -            -             -               -           -            -               -
                          ------------    ---------    ----------    ------------   ---------    ---------    ------------

                          $  3,199,126    $   5,436    $  (21,163)   $  3,183,399   $  33,416    $  (1,909)   $  3,214,906
                          ============    =========    ==========    ============   =========    =========    ============

Available-for-sale:
   FNMA certificates      $    278,381    $     840    $   (1,522)   $    277,699   $   9,360    $      -     $    287,059
   FHLMC certificates          923,477        2,370        (2,983)        922,864      21,096           -          943,960
   GNMA certificates         3,202,672       25,780        (4,586)      3,223,866      38,357       (9,728)      3,252,495
                          ------------    ---------    ----------    ------------   ---------    ---------    ------------

                          $  4,404,530    $  28,990    $   (9,091)   $  4,424,429   $  68,813    $  (9,728)   $  4,483,514
                          ============    =========    ==========    ============   =========    =========    ============

</TABLE>


There were no sales of mortgage-backed securities during 1999 and 1998.


                                       30
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   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,
                                           --------------------------------
                                                1999              1998
                                                ----              ----

<S>                                        <C>              <C>
Proceeds from sales                        $    2,207,848   $     6,530,097
                                           ==============   ===============

Gross gains                                $       19,409   $        92,898
                                           ==============   ===============

</TABLE>

NOTE 5 - Loans Receivable

Loans receivable at September 30, 1999 and 1998 are summarized as follows:
<TABLE>
<CAPTION>

                                                             September 30,
                                                     ---------------------------
                                                         1999             1998
                                                         ----             ----
<S>                                                  <C>             <C>
First mortgage loans:
     One-to-four family residential                  $48,302,846     $46,305,500
     Other conventional real estate                    1,401,181       1,485,797
     Participation investment in loans purchased            --           135,772
                                                     -----------     -----------

                                                      49,704,027      47,927,069

     Less deferred loan fees                              96,894         113,343
                                                     -----------     -----------

                  Total first mortgage loans          49,607,133      47,813,726
                                                     -----------     -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                  <C>             <C>
Other loans:
     Real estate sold on contract                      1,589,112       2,163,050
     Loans on savings accounts                            60,934          65,116
     Consumer loans                                   12,094,289      12,287,963
                                                     -----------     -----------

                                                      13,744,335      14,516,129

     Less unearned discounts                              58,484         102,330
                                                     -----------     -----------

                  Total other loans                   13,685,851      14,413,799
                                                     -----------     -----------

Less allowance for loan losses                           239,166         228,325
                                                     -----------     -----------

                                                     $63,053,818     $61,999,200
                                                     ===========     ===========

</TABLE>
                                       31

<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 - Loans Receivable (continued)

The  weighted  average  yield on loans  receivable  was 7.70 and 7.76 percent at
September 30, 1999 and 1998, respectively.

Mortgage  loans  serviced  for  others  are  not  included  in the  accompanying
consolidated  balance sheets.  The unpaid principal balances of these loans were
$17,442,145 and $21,019,303 at September 30, 1999 and 1998, respectively.

The Bank had outstanding  firm  commitments to originate first mortgage loans as
follows:
<TABLE>
<CAPTION>


                                                 September 30, 1999
                                            -----------------------------
                                                                Interest
                                             Commitment        rate range
                                             ----------        ----------
<S>                                         <C>                <C>
Fixed rate:
     5 year balloon                         $    115,950       8.75-9.25%
     10 years                                    210,000          7.50%
     15 years                                    148,000       7.50-8.50%
                                            ------------

Total commitment                            $    473,950
                                            ============
</TABLE>

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:
<TABLE>
<CAPTION>

                                                         Years ended
                                                        September 30,
                                                ----------------------------
                                                     1999           1998
                                                     ----           ----

<S>                                             <C>            <C>
Balance at beginning of year                    $    228,325   $     223,121
Provision charged to operations                       19,000          14,500
Charge-offs                                           (9,957)         (9,428)
Recoveries                                             1,798             132
                                                ------------   -------------

Balance at end of year                          $    239,166   $     228,325
                                                ============   =============
</TABLE>

Impairment  of loans  having  a  recorded  value of  $488,156  and  $230,586  at
September  30, 1999 and 1998,  respectively,  has been  recognized in conformity
with SFAS No. 114 as amended by SFAS No. 118. The average investment in impaired
loans  during 1999 and 1998 was $343,044 and  $236,353,  respectively.  Interest
income on impaired  loans  recognized  for cash payments  received  during these
years was not significant.


                                       32
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   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 officers. A summary of activity in these
loans is as follows:
<TABLE>
<CAPTION>
                                                                          Years ended
                                                                         September 30,
                                                               --------------------------------
                                                                    1999              1998
                                                                    ----              ----

<S>                                                            <C>              <C>
Balance at beginning of year                                   $    1,096,892   $       785,786
New loans granted                                                     272,808           501,924
Repayments                                                           (255,307)         (190,818)
                                                               --------------   ---------------

Balance at end of year                                         $    1,114,393   $     1,096,892
                                                               ==============   ===============

</TABLE>

NOTE 6 - Accrued Interest Receivable

Accrued interest receivable is summarized as follows:
<TABLE>
<CAPTION>
                                                                           September 30,
                                                                   ----------------------------
                                                                        1999           1998
                                                                        ----           ----
<S>                                                                <C>            <C>
Money market investments and investment securities                 $    283,006   $     229,788
Mortgage-backed securities                                               53,722          40,561
Loans receivable                                                        294,509         273,444
                                                                   ------------   -------------

Total                                                              $    631,237   $     543,793
                                                                   ============   =============

</TABLE>
<PAGE>

NOTE 7 - Real Estate Owned

Activity in the  allowance  for losses on real  estate  owned is  summarized  as
follows:
<TABLE>
<CAPTION>

                                                                          Years ended
                                                                         September 30,
                                                                 ------------------------
                                                                     1999          1998
                                                                     ----          ----
<S>                                                              <C>            <C>
Balance at beginning of year                                     $       -      $       -
Provisions charged to income                                             -           4,600
Charge-offs                                                              -          (4,600)
                                                                 ----------     ----------

Balance at end of year                                           $       -      $       -
                                                                 ==========     ==========




                                       33
</TABLE>

<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8 - Premises and Equipment

A summary of premises and equipment follows:
<TABLE>
<CAPTION>
                                                         September 30,
                                               --------------------------------
                                                    1999              1998
                                                    ----              ----
<S>                                            <C>              <C>
Land                                           $      381,135   $       381,135
Office building                                       874,871           874,871
Land improvements                                     247,324           247,324
Furniture, fixtures, and equipment                    689,627           645,966
                                               --------------   ---------------
                                                    2,192,957         2,149,296
Less accumulated depreciation                       1,205,409         1,170,692
                                               --------------   ---------------

Net                                            $      987,548   $       978,604
                                               ==============   ===============
</TABLE>


Depreciation  expense for  premises  and  equipment  amounted  to  $126,152  and
$115,412 for the years ended September 30, 1999 and 1998, respectively.

<PAGE>

NOTE 9 - Savings Deposits

Savings  account  balances  at  September  30, 1999 and 1998 are  summarized  as
follows:
<TABLE>
<CAPTION>

                                      Weighted                                 Weighted
                                       average            September 30,        average            September 30,
                                      interest                1999              interest              1998
                                        Rate           Amount      Percent      Rate          Amount      Percent
                                        ----           ------      -------      ----          ------      -------
<S>                                     <C>       <C>                <C>        <C>      <C>                <C>
Balance by type of account:
     Demand accounts:
        Passbook                        2.25%     $    7,799,620     10.3%      2.48%    $     7,916,368    11.3%
        Christmas Club                  2.25             115,885       .2       2.48             114,999      .2
        Demand deposits                  .89           4,058,356      5.4        .93           4,031,931     5.8
        Money market deposit
           accounts                     2.74           3,176,651      4.2       2.98           3,229,204     4.6
        Money maximizer                 4.80           4,347,187      5.8       4.53           2,531,328     3.6
                                                  --------------  -------                ---------------  ------
                                                      19,497,699     25.9                     17,823,830    25.5
                                                  --------------  -------                ---------------  ------
     Certificates of deposit:
        6 month certificates            3.07               3,137       .1       2.51               7,677      .1
        9 month certificates            6.19             976,084      1.3       -                     -      -
        12 month certificates           4.74           7,576,570     10.0       5.41           9,803,074    14.0
        13 month certificates           5.40             635,220       .8       -                     -      -
        15 month certificates           5.14           6,246,930      8.3       5.87           7,257,602    10.4
        17 month certificates           5.52             878,897      1.2       -                     -      -
        21 month certificates           5.86           5,877,264      7.8       5.87           2,557,490     3.7
        23 month certificates           6.23           2,873,507      3.8       -                     -      -
        24 month certificates           5.25           3,837,613      5.1       5.70           5,606,873     8.0
        25 month certificates           5.44           3,008,196      4.0       -                     -      -
        36 month certificates           5.76           2,182,975      2.9       5.91           2,849,209     4.1
        48 month certificates           6.12           1,874,815      2.5       6.36           2,403,174     3.4
        60 month certificates           6.36          13,131,289     17.4       6.26          15,141,253    21.7
        Various term certificates       2.51             115,050       .2       2.51             112,003      .2
        Individual retirement
           accounts                     5.18           6,595,695      8.7       5.83           6,228,768     8.9
                                                  --------------  -------                ---------------  ------
                                                      55,813,242     74.1                     51,967,123    74.5
                                                  --------------  -------                ---------------  ------

Total deposits                          4.82%     $   75,310,941    100.0%      5.02%    $    69,790,953   100.0%
                                                  ==============  =======                ===============  ======

</TABLE>
                                       34

<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 - Savings Deposits (CONTINUED)

Interest expense for deposit accounts is summarized as follows:

<TABLE>
<CAPTION>
                                                                  Years ended
                                                                 September 30,
                                                       --------------------------------
                                                            1999              1998
                                                            ----              ----

<S>                                                    <C>              <C>
Demand deposits                                        $      188,536   $        56,098
Money market deposit accounts                                  98,153           122,625
Passbook and Christmas Club accounts                          194,567           209,833
Certificates of deposit:
     $100,000 and over                                        220,082           185,407
     Less than $100,000                                     2,834,008         2,867,291
                                                       --------------   ---------------

                                                       $    3,535,346   $     3,441,254
                                                       ==============   ===============
</TABLE>


Time  deposits  issued in  amounts of  $100,000  or more  totaled  approximately
$4,540,900 and $3,148,700 at September 30, 1999 and 1998, respectively.

Contractual  maturities of certificates of deposit at September 30, 1999 were as
follows:
<TABLE>
<CAPTION>

                                                        Amount         Percent
                                                        ------         -------
Year ending September 30:
<S>                                                <C>                   <C>
     2000                                          $    30,713,946       55.0%
     2001                                               14,764,609       26.5
     2002                                                2,713,287        4.9
     2003                                                5,095,473        9.1
     2004                                                2,525,927        4.5
                                                   ---------------    -------

                                                   $    55,813,242      100.0%
                                                   ===============    =======

</TABLE>
<PAGE>
NOTE 10 - Borrowed Funds

Borrowed funds at September 30 are summarized as follows:
<TABLE>
<CAPTION>

                                                             1999
                                 -----------------------------------------------------------
                                    Maturity            Interest rate              Amount
                                    --------            -------------              ------

<S>                              <C>                            <C>         <C>
Federal Home Loan Bank:          December 31, 1999              5.89%       $      2,000,000
                                 May 29, 2000                   5.82               1,000,000
                                 July 24, 2000                  6.28               1,000,000
                                 August 8, 2002                 5.40               1,000,000
                                 September 3, 2003              5.55               1,000,000
                                 June 14, 2005                  6.71               2,000,000
                                 February 10, 2008              4.80               1,500,000
                                 October 6, 2008                4.35               2,000,000
                                                                            ----------------

                                                                            $     11,500,000
                                                                            ================

</TABLE>
                                       35

<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - Borrowed Funds (continued)
<TABLE>
<CAPTION>
                                                                  1998
                                    -----------------------------------------------------------
                                           Maturity            Interest rate         Amount
                                           --------            -------------         ------
<S>                                 <C>                            <C>          <C>
Federal Home Loan Bank:             October 20, 1998               5.06%        $     2,000,000
                                    May 29, 2000                   5.82               1,000,000
                                    July 24, 2000                  6.28               1,000,000
                                    August 8, 2002                 5.40               1,000,000
                                    September 3, 2003              5.55               1,000,000
                                    June 14, 2005                  6.71               2,000,000
                                    February 10, 2008              4.80               1,500,000
                                                                                ---------------

                                                                                $     9,500,000
                                                                                ===============
</TABLE>
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
approximately 170 percent of advances.


NOTE 11 - Income Taxes

The components of income tax expense (benefit) are summarized as follows:
<TABLE>
<CAPTION>

                                                 1999                                       1998
                               ----------------------------------------   ----------------------------------------
                                   Current     Deferred        Total          Current     Deferred        Total
                                   -------     --------        -----          -------     --------        -----

<S>                            <C>           <C>           <C>            <C>           <C>          <C>
Federal                        $    217,646  $    12,393   $    230,039   $    361,821  $    14,362  $     376,183
State                                23,220        2,819         26,039         57,193        3,268         60,461
                               ------------  -----------   ------------   ------------  -----------  -------------

Income tax expense             $    240,866  $    15,212   $    256,078   $    419,014  $    17,630  $     436,644
                               ============  ===========   ============   ============  ===========  =============
</TABLE>
<PAGE>
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 and cumulative effect of change in accounting  principle) as
follows:
<TABLE>
<CAPTION>

                                                                  Years ended
                                                                 September 30,
                                                         ----------------------------
                                                              1999           1998
                                                              ----           ----
<S>                                                      <C>            <C>
Computed "expected" tax expense                          $    240,858   $     387,293
State income taxes, net of federal income
     tax benefit                                               17,186          39,904
Tax-exempt income                                             (19,062)        (15,163)
Nondeductible expenses                                         13,806           4,695
Other, net                                                      3,290          19,915
                                                         ------------   -------------

                                                         $    256,078   $     436,644
                                                         ============   =============


</TABLE>
                                       36
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   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,
                                                       ------------------------
                                                          1999           1998
                                                       ---------      ---------
<S>                                                    <C>            <C>
Deferred tax assets:
     Deferred loan fees                                $  37,536      $  43,908
     Uncollected interest                                 11,304         17,767
     Allowance for loan losses                            59,797         42,348
     Loan discount                                        13,760         23,239
     Securities market value adjustments, net            258,318           --
                                                       ---------      ---------

                                                         380,715        127,262

     Valuation allowance for deferred tax assets          (7,908)        (3,973)
                                                       ---------      ---------

                  Total deferred tax assets              372,807        123,289
                                                       ---------      ---------

Deferred tax liabilities:
     Depreciation                                         20,061         13,649
     FHLB stock dividends                                 21,190         21,190
     Securities market value adjustments, net               --           35,353
                                                       ---------      ---------

                  Total deferred tax liabilities          41,251         70,192
                                                       ---------      ---------

Net deferred tax asset                                 $ 331,556      $  53,097
                                                       =========      =========
</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, 1999 and 1998 includes approximately $719,000
and $753,000,  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.


                                       37
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   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.  No pension
contributions  were required during 1999 and 1998. The amount of  administrative
pension expense in 1999 and 1998 was $-0- and $2,198, 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 $21,519 and
$17,958 for the years ended September 30, 1999 and 1998, respectively.


NOTE 14 - REGULATORY MATTERS

The  Company  and Bank are subject to various  regulatory  capital  requirements
administered by the federal and state 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 Company's  financial  statements.  Under capital adequacy
guidelines  and the  regulatory  framework  for prompt  corrective  action,  the
Company and Bank must meet specific capital guidelines that involve quantitative
measures of the assets,  liabilities,  and  certain  off-balance-sheet  items as
calculated  under  regulatory  accounting  practices.  The  Company's and 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 Company and 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, 1999,  that the Company and Bank meet all capital  adequacy  requirements to
which they are subject.

As of  September  30,  1999 and 1998,  the most  recent  notifications  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 Company and 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 Company's or Bank's category.


                                       38
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - regulatory matters (CONTINUED)

The Company's and Bank's actual capital amounts and ratios are also presented in
the table:
<TABLE>
<CAPTION>
                                                                               Minimum Amounts in Thousands
                                                                                    and Ratios Required
                                                                          --------------------------------------
                                                                                                  To Be Well
                                                                           For Capital         Capitalized Under
                                                                            Adequacy           Prompt Corrective
                                                             Actual         Purposes           Action Provisions
                                                             ------         --------           -----------------
<S>                                                        <C>            <C>                   <C>
As of September 30, 1999

Progressive Bancorp, Inc.
     Total Capital (to risk-weighted assets):
         Amount                                            $     7,106    $     3,192                     N/A
         Ratio                                                   17.8%          8.00%
     Tier I Capital (to risk-weighted assets):
         Amount                                            $     6,834    $     1,596                     N/A
         Ratio                                                   17.1%          4.00%
     Tier I Capital (to average assets):
         Amount                                            $     6,834    $     3,699                     N/A
         Ratio                                                    7.4%          4.00%

Pekin Savings Bank
     Total Capital (to risk-weighted assets):
         Amount                                            $     7,031    $     3,191            $      3,989
         Ratio                                                   17.6%        =>8.00%                =>10.00%
     Tier I Capital (to risk-weighted assets):
         Amount                                            $     6,799    $     1,596            $      2,393
         Ratio                                                   17.1%        =>4.00%                 =>6.00%
     Tier I Capital (to average assets):
         Amount                                            $     6,799    $     3,698            $      4,623
         Ratio                                                    7.3%        =>4.00%                 =>5.00%

As of September 30, 1998

Progressive Bancorp, Inc.
     Total Capital (to risk-weighted assets):
         Amount                                            $     6,782    $     3,463                     N/A
         Ratio                                                   15.7%          8.00%
     Tier I Capital (to risk-weighted assets):
         Amount                                            $     6,521    $     1,732                     N/A
         Ratio                                                   15.1%          4.00%
     Tier I Capital (to average assets):
         Amount                                            $     6,521    $     3,469                     N/A
         Ratio                                                    7.5%          4.00%

</TABLE>
                                       39

<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - regulatory matters (CONTINUED)
<TABLE>
<CAPTION>

                                                                               Minimum Amounts in Thousands
                                                                                    and Ratios Required
                                                                                                  To Be Well
                                                                           For Capital         Capitalized Under
                                                                            Adequacy           Prompt Corrective
                                                             Actual         Purposes           Action Provisions
                                                             ------         --------           -----------------
As of September 30, 1998

<S>                                                        <C>            <C>                    <C>
Pekin Savings Bank
     Total Capital (to risk-weighted assets):
         Amount                                            $     6,700    $     3,463            $      4,329
         Ratio                                                   15.5%         >8.00%                 >10.00%
                                                                               -                      -
     Tier I Capital (to risk-weighted assets):
         Amount                                            $     6,439    $     1,732            $      2,597
         Ratio                                                   14.9%         >4.00%                  >6.00%
                                                                               -                       -
     Tier I Capital (to average assets):
         Amount                                            $     6,439    $     3,469            $      4,336
         Ratio                                                    7.4%         >4.00%                  >5.00%
                                                                               -                       -
</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, 1999 was  approximately  $682,000.  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>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   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, 6,462 shares of common stock
have been  reserved  for  issuance at  September  30,  1999 by the Company  upon
exercise of stock  options to officers,  directors  and employees of the Company
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 Company 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 Company's stock option plan are as follows:
<TABLE>
<CAPTION>

                                                           Weighted-Average           Number of
                                                               Exercise             shares under
                                                            Price per share            options
                                                            ---------------            -------
<S>                                                           <C>                      <C>
Outstanding at September 30, 1997                             $   10.00                12,763
                                                              =========

Exercised                                                     $   10.00                (6,301)
                                                              =========             ---------

Outstanding at September 30, 1998                             $   10.00                 6,462
                                                              =========             =========

Outstanding and exercisable at September 30, 1999             $   10.00                 6,462
                                                              =========             =========
</TABLE>

During the year  ended  September  30,  1999,  there  were no  options  granted,
exercised, or cancelled.

At  September  30,  1999,  the  exercise  price and  weighted-average  remaining
contractual life of outstanding options was $10.00 and 3 years, respectively.

The Company 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 1999 and 1998 for its stock  option plan.  Since no stock  options
were  granted  during  1999 and 1998,  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>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 17 - INCOME PER SHARE - DILUTED

The  following  table  reflects  the   reconciliation   of  the  numerators  and
denominators  of the  income  per share - basic and  income  per share - diluted
computations for net income.
<TABLE>
<CAPTION>
                                                                         Year Ended September 30, 1999
                                                             ---------------------------------------------------
                                                                Income               Shares            Per Share
                                                              (Numerator)         (Denominator)         Amount
                                                              -----------         -------------         ------
<S>                                                          <C>                       <C>             <C>
Net income                                                   $    419,363              149,473         $  3.03
                                                                                                       =======
Effect of dilutive securities - stock options                          -                 4,807
                                                             ------------          -----------

Income available to common stockholders
     and assumed conversion                                  $    419,363              154,280         $  2.72
                                                             ============          ===========         =======

<CAPTION>
                                                                         Year Ended September 30, 1998
                                                            ---------------------------------------------------
                                                                Income               Shares            Per Share
                                                              (Numerator)         (Denominator)         Amount
                                                              -----------         -------------         ------
<S>                                                          <C>                       <C>             <C>
Net income                                                   $    702,452              159,996         $  4.39
                                                                                                       =======
Effect of dilutive securities - stock options                          -                 8,621
                                                             ------------          -----------

Income available to common stockholders
     and assumed conversion                                  $    702,452              168,617         $  4.17
                                                             ============          ===========         =======
</TABLE>
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  Company.
Income taxes and  transaction  costs have not been considered in estimating fair
values.

The  following  methods and  assumptions  were used by the Company in estimating
fair values of financial instruments:


                                       42
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 18 - FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

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.

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 Company's  long-term debt are estimated using  discounted
cash flow analyses based on the Company's  current  incremental  borrowing rates
for similar types of borrowing arrangements.

Accrued Interest

The carrying amounts of accrued interest approximate their fair values.


                                       43
<PAGE>
                   PROGRESSIVE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 18 - FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

The  estimated  fair  values  of the  Company's  financial  instruments  were as
follows:
<TABLE>
<CAPTION>
                                                             September 30, 1999            September 30, 1998
                                                             ------------------            ------------------
                                                          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                  $     4,369    $     4,369     $     3,947   $     3,947
     Money market investments and
         investment securities                               14,008         13,982          11,062        11,126
     Mortgage-backed securities                              10,042         10,049           7,667         7,698
     Loans receivable                                        63,054         62,470          61,999        61,868
     Accrued interest receivable                                631            631             544           544

Financial liabilities:
     Deposits                                                75,311         76,054          69,791        70,306
     Borrowed funds                                          11,500         10,737           9,500         9,737
     Accrued interest payable                                    52             52              46            46

</TABLE>

NOTE 19 - YEAR 2000 COMPLIANCE

The Company presently  believes that with modifications to existing software and
conversion  to new  software,  the Year  2000  issue  will not pose  significant
operational problems for the Company's business operations.  To date, management
believes the system's  conversion  finalized in November  1998 brought its major
operating  system into Year 2000  compliance  status.  In addition,  the Company
outsources its computer systems to a third party supplier,  who has informed the
Company  that  it is  Year  2000  compliant.  The  plan  implementation  team is
responsible  for  progress and will  continue to provide a status  report to the
Board of Directors on a monthly basis  through  December 31, 1999.  However,  if
such  modifications  and conversions are not made, or are not completed  timely,
the Year 2000 issue could have a material  adverse  impact on the  operations of
the  Company.  The  Company  has in place a  contingency  plan in the  event its
outsourced  computer  systems are not Year 2000 compliant on a timely basis.  In
addition,  there can be no assurance that  unforeseen  problems in the Company's
outsourced  computer  systems will not have an adverse  effect on the  Company's
systems or operations.





            This information is an integral part of the accompanying
                       consolidated financial statements.

                                       44
<PAGE>
                        COMMON STOCK AND RELATED MATTERS


         Effective  September 29, 1992,  the Bank converted from mutual to stock
form. The Bank's initial public offering of common stock closed on September 29,
1992. Shares of common stock were issued and sold in that offering at $10.00 per
share.  In November  1997,  the Company was formed as a holding  company for the
Bank,  and the shares of common stock of the Bank were  exchanged  for shares of
the Company on a one-for-one basis.

         As of December 10, 1999, the Company had 301 stockholders of record and
149,473  outstanding shares of common stock. This does not reflect the number of
persons whose stock is in nominee or "street" name accounts through brokers.

--------------------------------------------------------------------------------
                             STOCKHOLDER INFORMATION
--------------------------------------------------------------------------------

         The Annual Meeting of  Stockholders of the Company will be held at 2:00
p.m.  Illinois time, on Tuesday,  January 18, 2000 at the Company's main office,
601 Court Street, Pekin, Illinois.

Stock Listing

         The  Company's  common  stock is traded  over-the-counter  through  the
National  Daily  Quotation  System  "pink  sheets"  published  by  the  National
Quotation Bureau, Inc. under the symbol "PEKS."

Price Range of Common Stock

         There are no uniformly  quoted prices for the  Company's  common stock.
Stockbrokers can provide recent price ranges, using information contained in the
National Daily Quotation System "pink sheets."

General Counsel

Kuhfuss, Kuhfuss & Kepple
342 Elizabeth Street
Pekin, Illinois 61554

Special Counsel

Luse Lehman Gorman Pomerenk & Schick
5335 Wisconsin Avenue, N.W.
Suite 400
Washington, D.C. 20015

Independent Auditor

Clifton Gunderson L.L.C.
301 S.W. Adams, Suite 900
Peoria, Illinois 61656

Transfer Agent

Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
800-456-0596
<PAGE>
Annual Report on Form 10-KSB

         A copy of the Company's Form 10-KSB for the fiscal year ended September
30, 1999 will be furnished  without  charge to  stockholders  as of December 10,
1999 upon written request to E. Glen  Rittenhouse,  Corporate  Secretary,  Pekin
Savings Bank, 601-617 Court Street, Pekin, Illinois 61554.



                                       45