SECURITIES AND EXCHANGE COMMISSION
                        Washington D. C.  20549

                               FORM 10-K
(Mark One)

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1998

                                 OR
[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

                   Commission File No. 000-20739

                         EAGLE BANCGROUP, INC.
             (Exact Name of Registrant as Specified in its Charter)

            DELAWARE                              37-1353957
     (State or Other Jurisdiction       (IRS Employer Identification No.)
   of Incorporation or Organization)            
                                                       
   301 FAIRWAY DRIVE, BLOOMINGTON, IL                61701  
    (Address of Principal Executive Offices)       (Zip Code)

                           (309) 663-6345   
          (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: NONE

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

                    Common Stock, $.01 Par Value
                          (Title of Class)

   Indicate by check mark whether the Registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  YES  XX    NO  __

   Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K (Section 229.405) of this chapter) is not contained 
herein, and will not be contained, to the best of the Registrant's knowledge,
in definitive proxy or information statements incorporated by reference in 
Part III of this Form 10-K or any amendment to this Form 10-K.  XX

   As of March 18, 1999, the aggregate market value of the voting stock held 
by non-affiliates of the Registrant was approximately $18,570,000 (825,320 
shares at $22.50 per share).  The per share price of $22.50 is based on the 
last sale price of the common stock at March 17, 1999, as reported by The 
Nasdaq Stock Market.

   As of March 18, 1999, there were 1,067,456 shares of the Registrant's 
Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
   Portions of the following documents are incorporated by reference:

   Annual Report to Stockholders for the Fiscal Year Ended December 31, 
1998--Part I and II.

   1999 Notice and Proxy Statement for the Annual Meeting of Stockholders to 
be held on April 21, 1999--Part III
                                 -Page 1-
                         TABLE OF CONTENTS
                                                           PAGE
     PART I

Item 1.   Business                                            3
Item 2.   Properties                                         41
Item 3.   Legal Proceedings                                  41
Item 4.   Submission of Matters to a Vote of
            Security Holders                                 41

     PART II

Item 5.   Market for the Registrant's Common Stock and
            Related Security Matters                         42
Item 6.   Selected Financial Data                            42
Item 7.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations    42
Item 7a.  Quantitative and Qualitative Disclosures About
            Market Risk                                      42
Item 8.   Financial Statements and Supplementary Data        42
Item 9.   Changes in and Disagreements with Accountants      
            on Accounting and Financial Disclosure           43                

     PART III

Item 10.  Directors and Executive Officers of Registrant     43
Item 11.  Executive Compensation                             43
Item 12.  Security Ownership of Certain Beneficial Owners
            and Management                                   43
Item 13.  Certain Relationships and Related Transactions     43

     PART IV

Item 14.  Exhibits, Financial Statement Schedules and
            Reports on Form 8-K                              43
          Signatures                                         44 
          Exhibit Index                                      45
                                  -Page 2-
                                  PART I

Item 1. BUSINESS

     Eagle BancGroup, Inc. ('Eagle'), a non-diversified unitary savings and 
loan holding company as defined in the Home Owners' Loan Act, as amended, was 
incorporated as a Delaware corporation on January 24, 1996.  Eagle owns all of 
the common stock of First Federal Savings and Loan Association, Bloomington, 
Illinois ('First Federal').  In June, 1996, First Federal converted from a 
mutual savings association to a capital stock savings association at which 
time Eagle acquired all of the common stock of First Federal.  Eagle conducted 
a subscription stock offering simultaneous to the charter conversion which 
resulted in the issuance of 1,302,705 shares of Eagle's common stock.  At 
present, Eagle is engaged only in the business of managing its investments and 
directing, planning and coordinating the business activities of First Federal.

     In the future, Eagle may expand its current operations or acquire or 
organize other first-tier subsidiaries, including other financial 
institutions.  At present, however, there are no agreements, plans or 
understandings for such expansion.  For the foreseeable future, Eagle expects 
that First Federal will continue to be the major source of Eagle's assets, 
revenues and net income.  Eagle does not maintain separate offices from First 
Federal and does not separately employ or compensate its officers.

     At December 31, 1998, Eagle had consolidated total assets of $180,101,000 
and stockholders' equity of $19,697,000.  At December 31, 1998, Eagle was the 
third largest financial institution holding company headquartered in McLean 
county, Illinois, based on its consolidated assets as of that date.

First Federal

     First Federal is a federally-chartered capital stock savings association 
regulated by the Office of Thrift Supervision (the 'OTS') and its deposits are 
insured by the Federal Deposit Insurance Corporation (the 'FDIC') through the 
Savings Association Insurance Fund (the 'SAIF').  First Federal was originally 
chartered in 1919.  At December 31, 1998, First Federal had total assets of 
$178,616,000, deposit accounts of $134,722,000 and stockholders' equity of 
$17,031,000.

     First Federal conducts business from its main office in Bloomington, 
Illinois and three full service branch offices located in Bloomington, LeRoy 
and Lexington, Illinois.  All three cities are located in central Illinois in 
McLean County, the largest county geographically in Illinois.  From 
Bloomington, LeRoy is approximately 20 miles southeast and Lexington is 
approximately 20 miles northeast.  Both Lexington and LeRoy are adjacent to 
interstate highways that circle around Bloomington.  The Lexington branch 
opened in December, 1998, in an office building that the branch rents from and 
shares with a local insurance agency.  The branch is managed by one of the 
insurance agents, who splits time between the two entities.  There are no 
other common employees between the branch and the insurance agency and the two 
entities are not affiliated in any other way.

     First Federal's primary market area is McLean and DeWitt Counties.  
DeWitt County is directly southeast of McLean County.  Bloomington and its 
adjacent sister city, Normal, have a combined population of 100,000.  Outside 
of Bloomington-Normal, McLean and Dewitt Counties feature a mix of small
                                  -Page 3-
communities and rural areas with a population of approximately 60,000.  LeRoy 
has the largest population of the twenty other communities in McLean County 
while Lexington is the fourth largest.  The local population is projected to 
grow 4.5% in the next five years which is more than double the 2% projected 
population increase in the state of Illinois.  No other major downstate 
Illinois metropolitan area population is projected to grow more than 2.4%.  

     The economy of the region is diversified in four major sectors- 
agriculture, education, manufacturing and insurance.  Bloomington-Normal is 
home to two large insurance companies, two four-year universities and numerous 
national manufacturers.  McLean County annually ranks at or near the top 
nationally in corn and soybean production per county.  This diversification 
has resulted in a strong, growing local economy that is expected to continue 
to grow in the future.

     The principal business of First Federal has been and continues to be 
attracting retail deposits in its primary market area from the general public 
and investing those deposits, along with funds generated from operations and 
borrowings, in one-to-four family residential mortgage loans, commercial real 
estate loans, commercial business loans, automobile and other consumer loans 
and mortgage-backed and other investment securities.  Residential mortgage 
loans are originated primarily for sale in the secondary market, with 
servicing rights retained by First Federal on approximately twenty percent of 
the loans sold.  Revenues are derived principally from interest on residential 
mortgage, consumer loans, commercial loans, interest and dividends on 
mortgage-backed and other investment securities and, to a lesser extent, loan 
fees, loan servicing income and gains on sale of loans.  Primary sources of 
funds are deposits, principal and interest payments on loans, mortgage-backed 
and other investment securities, FHLB advances and proceeds from the sale of 
residential mortgage loans. 

     In August, 1997, David R. Wampler joined First Federal as President and 
Director.  Having worked at two local commercial banks for 15 years, the last 
four years as President and Chief Executive Officer of his former employer, 
Mr. Wampler brought extensive experience in the local commercial banking 
market.  First Federal had increased its activity in commercial real estate 
and commercial business loans in 1997 prior to Mr. Wampler's addition.  Since 
then, First Federal has continued to diversify its lending portfolio by 
selling at origination most residential mortgage loans and by actively 
pursuing commercial loans, commercial real estate loans and direct consumer 
loans more aggressively than in prior years.  Mr. Wampler was also appointed 
Director of Eagle.  Donald L. Fernandes remains as Chief Executive Officer and 
Chairman of First Federal.
  
     In November, 1998, Donald L. Lambert joined First Federal as Vice-
President-Retail Banking Services.  Mr. Lambert previously worked for another 
local bank in a similar capacity. 
                                                                     
     First Federal competes with fourteen other savings institutions and banks 
as well as numerous credit unions, finance companies and other financial 
intermediaries in its primary market area.  Competition has been and will 
continue to be intense with respect to attracting deposits and making loans.  
Interest rates and customer service are the primary factors affecting 
competition for deposits and loans.  In 1999, First Federal will celebrate its 
80th year of serving the financial needs of Bloomington-Normal and McLean 
                                  -Page 4-
County.  First Federal's history and a tradition of customer service are 
advantages current and future customers have in addition to locally 
competitive interest rates on deposits and loans.  First Federal offers a 
variety of demand, savings and time deposit products.
 
     First Federal has one wholly-owned service corporation, FFS Investment 
Services ('FFS'), which was incorporated in Illinois on March 25, 1994.  FFS 
sold investment products, including annuities, offered by PrimeVest Financial 
Services, Inc., a specialty brokerage firm, through December 31, 1998.  The 
agreement between FFS and PrimeVest expired on December 31, 1998 and was not 
renewed.  As of January 1, 1999, FFS will sell investment products through 
Mutual Service Corporation, under an agreement between FFS and Secord Asset 
Management.  Customers seeking alternatives to the deposit products at First 
Federal have access to other financial products through the FFS staff.

     Collectively, Eagle, First Federal and FFS are referred to herein as 'the 
Company'.
                                  -Page 5-
<TABLE>
Average Balance Sheets

     The following table sets forth information with respect to average 
balances of assets and liabilities, dollar amounts of interest income or 
expense from average interest-earning assets and interest-bearing liabilities, 
respectively, resultant yields and costs, interest rate spreads, net interest 
margins and the ratio of interest-earning assets to interest-bearing 
liabilities for the periods indicated.  Average balances for each period have 
been calculated using the average of month-end balances during such period, 
the use of which management of the Company believes are not materially 
different from averages calculated using the daily balances (amounts in 
thousands):
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998
                                             Average  Interest &   Yield/   
                                             Balance   Dividends    Cost
<S>                                       <C>         <C>         <C>
Interest-earning assets <F1>:
  Mortgage loans <F2>                       $ 83,398    $ 6,252     7.50%      
  Indirect auto loans                         18,266      1,598     8.75
  Other consumer loans                        11,432      1,075     9.40
  Other loans                                  7,150        592     8.28
    Total loans                              120,246      9,517     7.91
  Mortgage-backed securities:
    Collateralized mortgage obligations        8,765        468     5.34
    Other mortgage-backed securities          19,189      1,115     5.81
  Investment securities                       14,857        873     5.88
  Overnight and short-term investments         7,729        403     5.21
  Federal Home Loan Bank stock                 1,305         86     6.59
    Total interest-earning assets            172,091     12,462     7.24
Non-interest-earning assets:
  Premises and equipment, net                  2,789
  Real estate, net                               688
  Other non-interest-earning assets            2,257
    Total assets                             177,825

Interest-bearing liabilities:
  Passbook accounts                           15,599        549     3.52
  NOW accounts                                11,129        272     2.44
  Money market accounts                        2,081         58     2.79
  Certificates of deposit                    104,045      6,103     5.87
    Total deposits                           132,854      6,982     5.26
  FHLB advances and other borrowed funds      22,838      1,226     5.37
    Total interest-bearing liabilities       155,692      8,208     5.27
Non-interest bearing liabilities:
  Non-interest bearing deposits                  552
  Other liabilities                            1,164
    Total liabilities                        157,408
Stockholders' equity                          20,417
    Total liabilities and
      stockholders' equity                  $177,825

Net interest income                                      $4,254
Interest rate spread                                                1.97
Net interest margin                                                 2.47%
Average interest-earning assets to
  average interest-bearing liabilities          1.11x
                                  -Page 6-
FOR THE YEAR ENDED DECEMBER 31, 1997
                                             Average  Interest &   Yield/   
                                             Balance   Dividends    Cost
Interest-earning assets <F1>:
  Mortgage loans <F2>                       $ 86,619    $ 6,633     7.66%      
  Indirect auto loans                         21,355      1,834     8.59
  Other consumer loans                         8,238        848    10.29
  Other loans                                  1,828        157     8.59
    Total loans                              118,040      9,472     8.02
  Mortgage-backed securities:
    Collateralized mortgage obligations       15,448        881     5.70
    Other mortgage-backed securities          14,045        857     6.10
  Investment securities                       14,667        897     6.12
  Overnight and short-term investments         2,649        143     5.40
  Federal Home Loan Bank stock                 1,126         76     6.75
    Total interest-earning assets            165,975     12,326     7.43
Non-interest-earning assets:
  Premises and equipment, net                  2,876
  Real estate, net                               651
  Other non-interest-earning assets            2,451
    Total assets                             171,953

Interest-bearing liabilities:
  Passbook accounts                           15,832        579     3.66
  NOW accounts                                 6,751        132     1.96
  Money market accounts                        2,438         70     2.87
  Certificates of deposit                    106,491      6,285     5.90
    Total deposits                           131,512      7,066     5.37
  FHLB advances and other borrowed funds      17,905      1,055     5.89
    Total interest-bearing liabilities       149,417      8,121     5.44
Non-interest bearing liabilities:
  Non-interest bearing deposits                  786
  Other liabilities                            1,045
    Total liabilities                        151,248
Stockholders' equity                          20,705
    Total liabilities and
      stockholders' equity                  $171,953

Net interest income                                      $4,205
Interest rate spread                                                1.99
Net interest margin                                                 2.53%
Average interest-earning assets to
  average interest-bearing liabilities          1.11x
                                   -Page 7-
FOR THE YEAR ENDED DECEMBER 31, 1996
                                             Average  Interest &   Yield/   
                                             Balance   Dividends    Cost
Interest-earning assets <F1>:
  Mortgage loans <F2>                        $65,224     $4,862     7.45%      
  Indirect auto loans                         22,962      1,985     8.64
  Other consumer loans                         8,346        754     9.03
  Other loans                                    848         80     9.43
    Total loans                               97,380      7,681     7.89
  Mortgage-backed securities:
    Collateralized mortgage obligations       19,583      1,153     5.89
    Other mortgage-backed securities          19,499      1,205     6.18
  Investment securities                       13,916        832     5.98
  Overnight and short-term investments         3,106        172     5.54
  Federal Home Loan Bank stock                   760         51     6.71
    Total interest-earning assets            154,244     11,094     7.19
Non-interest-earning assets:
  Premises and equipment, net                  2,997
  Real estate, net                               649
  Other non-interest-earning assets            1,506
    Total assets                             159,396

Interest-bearing liabilities:
  Passbook accounts                           15,462        577     3.73
  NOW accounts                                 5,338         96     1.80
  Money market accounts                        2,964         85     2.87
  Certificates of deposit                    111,859      6,673     5.97
    Total deposits                           135,623      7,431     5.48
  FHLB advances and other borrowed funds       4,386        272     6.20
    Total interest-bearing liabilities       140,009      7,703     5.50
Non-interest bearing liabilities:
  Non-interest bearing deposits                  549
  Other liabilities                            1,682
    Total liabilities                        142,240
Stockholders' equity                          17,156
    Total liabilities and                           
      stockholders' equity                  $159,396

Net interest income                                      $3,391
Interest rate spread                                                1.69
Net interest margin                                                 2.20%
Average interest-earning assets to
  average interest-bearing liabilities          1.10x
<FN>
<F1>
 Does not include interest on loans 90 days or more past due.
<F2>
 Includes one-to-four family, construction, multi-family and commercial 
real estate loans and loans held for sale.
</FN> 
</TABLE>
                                   -Page 8-
<TABLE>
      The following table sets forth the effects of changing interest rates 
and volumes of interest-earning assets and interest-bearing liabilities on net 
interest income.  Information is provided with respect to (i) effects on 
interest income attributable to changes in rate (changes in rate multiplied by 
prior volume), (ii) effects on interest income attributable to changes in 
volume (changes in volume multiplied by prior rate) and (iii) changes in 
rate/volume (change in rate multiplied by change in volume) (amounts in 
thousands):
<CAPTION>
1998 COMPARED TO 1997
                                                              Rate/
                                            Rate    Volume   Volume    Net
<S>                                     <C>       <C>      <C>     <C>
Interest earning-assets <F1>:
  Mortgage loans <F2>                     $(139)    $(247)   $  5    $(381)
  Indirect auto loans                        34      (265)     (5)    (236)
  Other consumer loans                      (73)      329     (29)     227
  Other loans                                (6)      457     (16)     435
    Total loans                            (184)      274     (45)      45
  Mortgage-backed securities:
    Collateralized mortgage obligations     (56)     (381)     24     (413)
    Other mortgage-backed securities        (41)      314     (15)     258
  Investment securities                     (35)       12      (1)     (24)
  Overnight and short-term investments       (5)      274      (9)     260
  Federal Home Loan Bank Stock               (2)       12       -       10
    Total net change in income on
      interest-earning assets              (323)      505     (46)     136

Interest-bearing liabilities:
  Passbook accounts                         (22)       (8)      -      (30)
  NOW accounts                               33        85      22      140
  Money market accounts                      (2)      (10)      -      (12)
  Certificates of deposit                   (38)     (145)      1     (182)
    Total deposits                          (29)      (78)     23      (84)
  FHLB advances and other borrowed funds    (94)      291     (26)     171 
    Total net change in expense on          
      interest-bearing liabilities         (123)      213      (3)      87

Net change in net interest income         $(200)     $292    $(43)    $ 49
                                  -Page 9-
1997 COMPARED TO 1996
                                              Increase (Decrease) Due To
                                                             Rate/
                                            Rate    Volume   Volume    Net
Interest earning-assets <F1>:
  Mortgage loans <F2>                      $133    $1,595     $43   $1,771
  Indirect auto loans                       (13)     (139)      1     (151)
  Other consumer loans                      105       (10)     (1)      94
  Other loans                                (7)       92      (8)      77
    Total loans                             218     1,538      35    1,791
  Mortgage-backed securities:
    Collateralized mortgage obligations     (36)     (244)      8     (272)
    Other mortgage-backed securities        (15)     (337)      4     (348)
  Investment securities                      19        45       1       65
  Overnight and short-term investments       (4)      (25)      -      (29)
  Federal Home Loan Bank Stock                -        25       -       25
    Total net change in income on
      interest-earning assets               182     1,002      48    1,232

Interest-bearing liabilities:
  Passbook accounts                         (12)       14       -        2
  NOW accounts                                9        25       2       36
  Money market accounts                       -       (15)      -      (15)
  Certificates of deposit                   (71)     (320)      3     (388)
    Total deposits                          (74)     (296)      5     (365)
  FHLB advances and other borrowed funds    (13)      838     (42)     783 
    Total net change in expense on          
      interest-bearing liabilities          (87)      542     (37)     418

Net change in net interest income          $269     $ 460     $85     $814
<FN>
<F1>
 Does not include interest on loans 90 days or more past due
<F2>
 Includes one-to-four family, construction, multi-family and commercial 
real estate loans and loans held for sale.
</FN>
</TABLE>
                                  -Page 10-
Lending Activities

     In 1998, First Federal continued to follow the lending strategy adopted 
in mid-1997 of selling at origination most residential mortgage loans, 
emphasizing origination of commercial business, commercial real estate and 
direct consumer loans and placing less emphasis on origination of indirect 
automobile loans.  This strategy was adopted to further diversify, increase 
the average yield and improve the interest sensitivity of the loan portfolio 
by replacing longer-term residential mortgage loans with shorter-term, higher-
yielding commercial and consumer loans.  In addition, this strategy is 
intended to increase non-interest income due to gains on sales of residential 
mortgage loans and increased servicing income.  

     Prior to 1992, the loan portfolio consisted primarily of residential 
mortgage loans that had been originated by First Federal.  In 1992, for the 
first time, First Federal sold selected residential mortgage loans, primarily 
long-term, fixed-rate loans, in the secondary market.  Fixed rate residential 
mortgage loans with maturities of less than 15 years and adjustable rate 
residential mortgage loans were generally retained in the portfolio.  In 1993, 
First Federal began originating indirect automobile loans through a network of 
local automobile dealerships.  This effort helped diversify and reduce the 
interest sensitivity of the portfolio since indirect auto loans generally are 
shorter term than residential mortgage loans.  The balance of indirect 
automobile loans increased each year through 1996.

     The effects of the change in strategy in 1997 are evident in the 
composition of the loan portfolio.  One-to-four family residential mortgage 
loans decreased over $20,800,000 while multi-family mortgage and commercial 
real estate loans increased over $10,300,000, commercial business loans 
increased over $6,200,000, other consumer loans increased over $2,400,000 and 
indirect automobile loans decreased over $2,800,000 during 1998.  At December 
31, 1998, one-to-four family residential mortgage loans comprised 48% of gross 
loans compared to 63% the previous two year-ends.  Indirect auto loans 
decreased to 14% of gross loans at December 31, 1998 from 16% at December 31, 
1997 and 22% at December 31, 1996.  Multi-family mortgage, commercial real 
estate and commercial business loans comprised 25% of gross loans at December 
31, 1998 compared to 11% at December 31, 1997.
                                  -Page 11-
<TABLE>
      The following table sets forth the composition of the loan portfolio as 
of the dates indicated:
<CAPTION>
                                             December 31,
                                   1998            1997            1996
                              Amount   Pct    Amount   Pct    Amount   Pct
                                         (Amounts in thousands)   
<S>                         <C>      <C>    <C>      <C>    <C>      <C>
Mortgage loans:
  One-to-four family <F1>    $57,162  48.2%  $77,994  62.7%  $67,855  62.7%   
  Construction                 1,947   1.6     3,009   2.4     1,183   1.1
  Multi-family                11,514   9.7     5,080   4.1     1,562   1.4
  Commercial real estate      10,729   9.1     6,791   5.5     3,827   3.5
    Total mortgage            81,352  68.6    92,874  74.7    74,427  68.7
Indirect auto loans           16,755  14.1    19,593  15.7    23,640  21.8
Other consumer loans:
  Direct auto                  2,586   2.2     2,190   1.8     2,136   2.0
  Home equity                  8,313   7.0     5,810   4.7     4,904   4.5
  Other consumer               1,170   1.0     1,643   1.3     1,479   1.4
    Total other consumer      12,069  10.2     9,643   7.8     8,519   7.9   
Commercial business loans      7,792   6.6     1,588   1.3     1,145   1.1
Accrued interest               
  receivable-all loans           638    .5       631    .5       523    .5
Gross loans                  118,606   100   124,329   100   108,254   100

Less:
  Due to borrowers on
    construction loans          (931)           (871)           (610)
  Deferred loan fees            (109)           (114)            (80)
  Allowance for loan losses   (1,015)           (935)           (923)

Net loans                   $116,551        $122,409        $106,641
<FN>
<F1>
 Includes loans held for sale and construction loans converted to permanent 
loans.
</FN>
</TABLE>
Other than the categories listed above, no other concentrations or categories 
of loans exceeding 10% of total loans are known to exist.
                                  
     One-to-Four Family Residential Lending.  The primary lending activity of 
First Federal has been the origination of first mortgage loans to enable
borrowers to purchase new or existing homes or to construct one-to-four family 
homes located in First Federal's primary market area.  Such lending includes 
loans secured by detached single-family residences or condominiums and 
individually owned residences in attached housing containing not more than 
four separate dwelling units.  Prior to 1998, one-to-four family residential 
mortgage loans represented well over half of the loan portfolio and still 
comprise 48% of the portfolio at December 31, 1998.  Of the $162,709,000 in 
loans originated in 1998, $102,583,000, or 63%, were one-to-four family 
residential mortgage loans.  The volume of loan originations in 1998 was due 
to the declining rate environment during the year.  The decrease in the amount 
of residential mortgage loans in the portfolio was due primarily to customers 
who refinanced portfolio loans that were then sold in the secondary market.  

     One-to-four family residential mortgage loans have contributed 
significantly to interest income and have low delinquency and loss rates.  The 
                                 -Page 12-
volume of residential mortgage loans sold in 1998 resulted in a substantial 
increase in non-interest income in 1998 due to the gains on the loan sales.  
To remain competitive, a variety of mortgage products are offered including 
fixed or adjustable rate and term or balloon loans.

     Fixed-rate, fixed-term residential mortgage loans are competitively 
priced based primarily on the daily rate quotes received from the various 
secondary market investors to whom loans are sold.  Terms of 10, 15, 20 and 30 
years are available.  Prior to 1997, First Federal maintained a practice of 
selling in the secondary market all new fixed-rate, fixed-term residential 
mortgage loans with terms of over 15 years and some such loans with terms of 
15 years or less depending on market conditions.  The emphasis was changed in 
the last six months of 1997 and now most new fixed-rate, fixed-term loans that 
meet underwriting standards are sold in the secondary market.  Loans are 
primarily sold to either Federal National Mortgage Association ('FNMA'), a 
government sponsored agency, or to other private corporate investors.  At 
December 31, 1998, fixed-rate, fixed-term loans represented about 45% of the 
one-to-four family mortgage loans outstanding.

     Adjustable-rate ('ARM') residential mortgage loans having initial 
adjustment periods of one, three, five or seven years, with annual adjustments 
thereafter and maturities of up to 30 years, are offered by First Federal.  
ARM loans are adjusted at the beginning of each adjustment period based on a 
fixed spread above the average yield on US Treasury securities as published by 
the Federal Reserve Board.  Generally, ARM loan rate adjustments are limited 
to 2% per adjustment period and to 6% aggregate over the life of the loan.  At 
December 31, 1998, ARM loans represented about 40% of the one-to-four family 
mortgage loans outstanding.

     Prior to 1997, ARM loans were retained in First Federal's portfolio due 
to the lower level of interest rate risk compared to fixed-rate, fixed-term 
loans.  Beginning in the last half of 1997, most new ARM loans that met 
underwriting standards were sold in the secondary market.  ARM loans do have 
higher credit risk compared to fixed-rate loans due to the possibility of 
borrower default when interest rates reset higher and monthly payment amounts 
increase.  ARM borrowers are normally qualified at the highest possible rate 
to reduce credit risk.

     Balloon loans are also offered by First Federal.  These loans have fixed-
rates and fixed monthly payments (normally based on a 30 year amortization 
schedule) but have a five or seven year term at which time the entire unpaid 
principal balance is due.  Borrowers have the option of renewing the loan at 
then current rates.  Balloon loans generally have lower interest rate risk 
than fixed-rate, fixed-term loans but higher interest rate risk relative to 
ARM loans since balloon loans usually are repriceable later than ARM loans but 
sooner than fixed-term loans.  As with new fixed-rate and ARM loans, new 
balloon loans that meet underwriting standards are now sold in the secondary 
market. About 15% of the one-to-four family mortgage loans outstanding at 
December 31, 1998 were balloon loans.

     Factors such as the general level of interest rates, competition, funds 
availability and borrower preference all affect the amount and type of loans 
originated.  Generally, borrowers prefer ARM loans in periods of higher 
interest rates and fixed-rate loans in periods of lower interest rates.  
                                 -Page 13-
     One-to-four family mortgage loans are underwritten to FNMA guidelines to 
allow for sale in the secondary market.  If the loan to value ratio exceeds 
80%, private mortgage insurance is required to cover the excess 
above 80%.  With private mortgage insurance, loan to value ratios cannot 
exceed 95%.  Title insurance or attorney's opinion to title is required as is 
hazard insurance for any property securing mortgage loans.
                                 
     Construction Loans.  First Federal originates construction loans at the 
request of borrowers but does not actively solicit such loans.  Generally, 
such loans are for construction of owner-occupied, single-family dwellings and 
are usually converted to permanent mortgage financing upon completion.  The 
increase in construction loans in 1997 was due to one loan originated to a 
group of qualified local developers to finance construction of a hotel in 
McLean County.  This project was completed in early 1998 and the loan was 
converted to permanent financing and is included with commercial real estate 
loans in the portfolio composition breakdown.  Residential construction loans 
usually have variable rates and have maturities of up to twelve months in 
which time construction must be completed.  Loan amounts usually do not exceed 
80% of the estimated value of the completed property.  Credit risk associated 
with construction loans is higher than permanent loans due to uncertainty as 
to the final value of the property, possible construction delays or 
underestimation of construction costs.  At December 31, 1998, construction 
loans totaled $1,947,000, or 1.6% of gross loans.  Other than the loan noted 
above, no other commercial construction loans were outstanding during or at 
the end of 1998.

     Multi-Family Residential Lending.  First Federal offers mortgage loans 
secured by multi-family residential properties.  Most such loan originations 
feature balloon payments due in five years with amortization terms up to 20 
years and loan to value ratios that usually do not exceed 80%. Interest rates 
may be fixed or adjustable.  Increased emphasis on these types of loans in 
1998 resulted in a substantial increase in such loans to $11,514,000, or 9.7% 
of gross loans, at December 31, 1998.  The increase related primarily to the 
financing of existing, multiple-building apartment complexes.  

     Commercial Real Estate Lending.  Commercial real estate loans also 
increased significantly in 1998 to $10,729,000, or 9.1% of gross loans, at 
December 31, 1998 due to increased emphasis on such loans.  The increase was 
primarly due to the financing of an existing local hotel complex and the 
conversion of the hotel construction loan to permanent financing.  These loans 
usually have variable rates, normally floating at prime or a fixed spread 
above prime, and balloon payments due in five years with amortization terms up 
to 20 years.  Loans are underwritten based on analysis of the cash flow 
generated by the business in which the real estate is used and the ability of 
the borrower to meet payment obligations.  In addition to securing the loan 
with a first mortgage on the real estate, personal guarantees from the 
business owners are usually sought.  Loans are usually limited to 75% of the 
value of the property.  

     Multi-family residential and commercial real estate loans have 
significantly more risk than one-to-four family mortgage loans due to the 
usually higher loan amounts and the credit risk, which arises from 
concentration of principal in a smaller number of loans, the effects of 
general economic conditions on income producing property and the difficulty of 
evaluating and monitoring the loans.  Events that affect the operations and 
cash flow of the business which is on the secured property must be monitored 
                                  -Page 14-
to ensure the borrower has the ability to repay the loan.  

     Indirect Auto Loans.  In 1993, First Federal began originating indirect 
auto loans through a network that includes most local auto dealerships and 
loan totals increased each year through 1996.  The shift in lending strategy 
in 1997 resulted in total indirect auto loans of $16,755,000, or 14.1% of 
gross loans, at December 31, 1998, a decrease of almost $3,000,000 from year-
end, 1997 and almost $7,000,000 from year-end, 1996.  The decrease is due to 
less emphasis on indirect auto loan originations and to increased competition 
from both national and local lenders.  First Federal continues to originate 
indirect auto loans but has tightened its guidelines preferring to originate 
loans to buyers who qualify as higher grade credits.  Current policy allows 
for underwriting of loans on new or used automobiles with maturities between 
three and five years.  All indirect auto loans are secured by the new or used 
automobile purchased with loan proceeds.  Loan amounts on new automobiles are 
limited to the manufacturer's suggested price while used automobile loan 
amounts are limited to the retail price as listed in the National Automobile 
Dealers Association used car guide.

     Following a credit review of the dealer, First Federal enters into a 
contractual relationship with the dealer.  Short response times for credit 
decisions, consistent application of underwriting standards and immediate 
funding of indirect loans upon delivery of required documents allowed First 
Federal to successfully compete for these loans in the past.  The amount of 
indirect loan originations is dependent on the volume of new and used 
automobile sales and the financing choices of purchasers, factors over which 
First Federal has no control.  At December 31, 1998, loans originated from 29 
local dealerships were outstanding with the highest amount from any one dealer 
totaling 13% of the total indirect auto loans.

     Underwriting standards are maintained to assess an applicant's ability to 
repay amounts due and to verify the adequacy of the automobile financed as 
collateral.  Even with the underwriting standards, the risks inherent in 
indirect auto lending indicate that some loans will default.  Loans secured by 
assets that depreciate rapidly, such as automobiles, are generally considered 
to entail greater risks than residential mortgage loans.  Through the efforts 
of a full-time collections officer, loan delinquencies have been kept at or 
below industry averages.  At December 31, 1998, four loans totaling $31,000 
were delinquent 90 days or more.  No recourse is available from dealerships on 
loan defaults.  Net charge-offs related to indirect auto loans decreased to 
$134,000 in 1998 from $187,000 in 1997.
     
     Other Consumer Loans.  First Federal also originates a variety of other 
consumer loans including direct auto loans and home equity loans and lines of 
credit.  These types of direct loans totaled $12,069,000, or 10.2% of gross 
loans, at December 31, 1998, an increase of over $2,400,000 during the year. 
Originations of these types of loans have increased following the change in 
lending strategy.  

     Direct auto loans are originated using the same underwriting standards as 
indirect auto loans but are made directly with the borrower rather than 
through a dealer.  Direct auto loans have the same amount and term limits as 
indirect auto loans and also require as collateral the vehicle purchased with 
the loan.  At December 31, 1998, direct auto loans outstanding totaled 
$2,586,000 or 2.2% of gross loans outstanding.  Direct auto loans are usually 
made to customers with previous borrowings and or deposit accounts with First 
Federal. 
                                  -Page 15-
     Home equity loans and lines of credit are secured by second liens on 
residential real estate.  Home equity loans generally have fixed rates, fixed 
monthly payments and maturities up to 15 years.  Home equity lines of credit 
have adjustable rates and flexible payment plans depending on the amount 
actually borrowed.  Loan amounts are made up to a maximum 90% loan to value 
ratio taking into account all other liens on the property.  Underwriting 
standards are virtually the same as for first mortgage loans and originations 
are not limited to borrowers for whom First Federal holds the first mortgage.  
At December 31, 1998, home equity loans and lines of credit totaled $8,313,000 
or 7.0% of gross loans.  The amount of such loans has increased in each of the 
last three years and First Federal intends to continue to actively solicit 
such loans, especially home equity lines of credit, in the future.

     First Federal makes a variety of other consumer loans that totaled 
$1,170,000, or 1.0% of gross loans outstanding as of December 31, 1998.  
Included in this total are loans to purchase consumer goods, loans secured by 
deposit accounts and unsecured personal loans.  Underwriting standards for 
these loans vary based on the loan type but all consider the creditworthiness 
of the borrower and the value of underlying collateral, with secured loans 
limited to 90% of the value of the underlying collateral.  Interest rates and 
maturities vary depending on the loan type as well.  As with direct auto loans 
these types of loans are generally granted to customers with previous 
borrowings and or existing deposit accounts with First Federal.
                                  
     Commercial Business Lending.  As previously noted, commercial business 
loans are emphasized under the current lending strategy though originations of 
these loans will be subject to strict guidelines.  As of December 31, 1998, 
commercial business loans equaled $7,792,000, or 6.6% of gross loans, an 
increase of over $6,200,000 from year-end, 1997.  The increase relates to a 
number of business projects not concentrated in any industry, business type or 
location to lessen the risk.  Commercial business loans are secured by 
accounts receivable, inventory, capital stock or real estate of the business 
and are usually personally guaranteed by the business owners.  Risks involved 
are similar to commercial real estate loans with loan repayment often 
dependent upon the business generating sufficient cash flow, but commercial 
business loans carry even more credit risk than commercial real estate loans 
due to the nature of the collateral underlying the loan.  Commercial business 
loans usually have variable interest rates and maturities of five years or 
less. 

     Loan Originations, Purchases and Sales.  Since 1997, First Federal has 
originated most residential mortgage loans for sale in the secondary market.  
Previously, long-term, fixed-rate residential mortgages were usually sold at 
origination while fixed-rate, fixed-term residential mortgage loans with 
maturities of 15 years or less, adjustable rate and balloon loans were usually 
retained in the portfolio.  Servicing rights are retained on loans sold to 
FNMA, which was about 21% of loans sold in 1998, and are not retained on loans 
sold to other investors.  All loans are sold without recourse.  In 1998, 
proceeds from sales of residential mortgage loans totaled $93,164,000.  All 
sales in 1998 were on a loan-by-loan basis.  In 1999, changes in underwriting 
methods may allow for sales of groups of loans at more beneficial pricing.  No 
other changes in the origination and sale of residential mortgage loans are 
anticipated. 
                                  -Page 16-
    In recent years, First Federal has not made a practice of purchasing whole 
loans or participations in loans originated by other financial institutions 
and has not sold participations in loans it originated.  In 1997 one 
participation loan was purchased as First Federal joined with three other 
Central Illinois thrifts to underwrite a multi-building apartment complex 
mortgage loan.  First Federal's original share of the loan was $2,800,000.  
Due to monthly principal payments and repurchase of approximately 30% of the 
original participation amount by the lead lending institution, the outstanding 
balance at December 31, 1998 was $1,800,000.  Similar purchases of 
participations in loans originated by other financial institutions will be 
considered in the future as one way to increase the amount of commercial real 
estate and commercial business loans.  First Federal will also look to 
participate out portions of commercial real estate and commercial business 
loans originated in house when the loan amount exceeds the lending limit.
<TABLE>
     Contractual Principal Repayments.  The following table sets forth 
information with respect to scheduled contractual maturity of loans receivable 
at December 31, 1998 (in thousands):
<CAPTION>
                                          Due after 
                               Due in      One Year     Due After
                              One Year      Through       Five
                              or Less     Five Years      Years      Total
<S>                         <C>           <C>         <C>        <C>
Mortgage Loans:
  One-to-four family          $10,454       $26,151     $20,557    $57,162
  Construction                  1,927            -           -       1,947
  Multi-family                    419         6,976       4,119     11,514
  Commercial real estate        1,772         8,241         716     10,729
    Total mortgage             14,592        41,368      25,392     81,352
Indirect auto loans             5,679        10,550         526     16,755
Other consumer loans 
  Direct auto                     843         1,653          90      2,586
  Home equity                   4,634         3,077         602      8,313
  Other consumer                  933           232           5      1,170
    Total other consumer        6,410         4,962         697     12,069
Commercial business loans       3,368         4,348          76      7,792
Total loans                   $30,049       $61,228     $26,691   $117,968
</TABLE>
Demand loans, loans having no stated schedule of repayment and no stated 
maturity and overdraft loans are reported as due in one year or less.  
Scheduled repayments are reported in the maturity category in which the 
payment is due.
<TABLE>
     The amount of loans due after one year having predetermined interest 
rates and floating or adjustable interest rates is as follows (in thousands):
         <S>           <C>
          Fixed         $70,166
          Adjustable     17,753
</TABLE>
     Loan Commitments.  At December 31, 1998, outstanding loan commitments 
totaled $479,000.  Commitments are normally provided to prospective borrowers 
following approval of a residential mortgage loan application and indicate 
that at any time within a 30 day period from the date of approval, subject to 
satisfaction of certain specified conditions, the approved loan will be 
funded.  Unused lines of credit totaled $8,826,000 at December 31, 1998.  Of 
                                  -Page 17-
this amount, $4,249,000 relates to home equity lines of credit and the 
remainder relates to various commercial business and commercial real estate 
lines of credit.  In management's opinion, these commitments represent no more 
than normal lending risk and can be funded from normal sources.

     Loan Origination, Servicing and Other Fees.  Origination fees are not 
collected on most loans but when such fees are collected, the amount is offset 
against certain direct loan origination costs, then deferred and recognized as 
an adjustment to interest income over the expected life of the loan.  At 
December 31, 1998, deferred loan fees equaled $109,000.  Certain costs paid by 
First Federal necessary for loan processing and closing, including credit 
reports, an independent appraisal and title insurance, are reimbursed by 
borrowers.  Loans totaling $41,979,000 were serviced for others as of December 
31, 1998.  Servicing income of $157,000 was recorded in 1998.  Fees may also 
be collected in connection with loan modifications, late payments, prepayments 
and for other miscellaneous loan related services.  Such payments are 
recognized as non-interest income upon receipt.

     Loans to One Borrower.  Under OTS regulations, First Federal is generally
subject to the same loans-to-one borrower limits that apply to national banks.
Generally, loans and extensions of credit at one time to one borrower (and 
certain related entities of the borrower) may not exceed 15% of First 
Federal's unimpaired capital and surplus, plus an additional 10% of unimpaired 
capital and surplus for loans fully secured by certain readily marketable 
collateral.  First Federal's lending limit for loans to one borrower as of 
December 31, 1998 was approximately $2,667,000.  As of the same date, First 
Federal had no single borrower with loans exceeding $2,487,000.

     Delinquencies.  Borrowers with loans 30 days past due are initially 
notified by letter and then contacted by telephone by the collections officer 
or other loan personnel.  These reminders cure most delinquencies with no 
legal action necessary.  With respect to residential mortgage loans and 
consumer loans other than indirect auto loans, if the delinquency exceeds 90 
days, measures to enforce remedies resulting from the default, including 
mailing a 30 day notice of the commencement of a foreclosure action or the 
repossession of collateral, are instituted.  With respect to indirect auto 
loans, repossession of collateral is initiated if the loan is 60 days past 
due.  Delinquencies on multi-family and commercial real estate and business 
loans are addressed on a case by case basis.  
                                 -Page 18-
<TABLE>                       
      The following table sets forth information with respect to loans 
past due 60-89 days and over 90 days at the dates indicated (in thousands):
<CAPTION>    
                                            December 31,
                               1998             1997             1996
                           60-89  Over 90   60-89  Over 90   60-89  Over 90
                            Days    Days     Days    Days     Days    Days 
<S>                       <C>     <C>      <C>     <C>      <C>     <C>
Mortgage loans: 
  One-to-four family        $299    $223     $215    $103     $288    $310
  Construction                85      -       100     112       -       -
  Multi-family                -       -        -       -        -       -
  Commercial real estate      -      129       -       -        -      333
    Total mortgage           384     352      315     215      288     643
Indirect auto loans           44      31       28      -        49      44
Other consumer loans                  
  Direct auto                  7      -        -       -        22       7
  Home equity                 -       14       -       11       13      -
  Other consumer              21      -        36      -         6      11
    Total other consumer      28      14       36      11       41      18
Commercial business loans     -       -        -       69       81      -   
  Total                     $456    $397     $379    $295     $459    $705

  Percent of Gross Loans    0.38%   0.33%    0.31%   0.24%    0.42%   0.65%
</TABLE>
     Non-Performing Assets.  All loans 90 days or more past due are placed on 
non-accrual status unless such loans are adequately collateralized and in the 
process of collection.  At December 31, 1998, 1997 and 1996, all loans 90 days 
or more past due were on non-accrual status.  Interest income on such loans is 
recognized only upon cash receipt and such loans are returned to accrual 
status only after all contractually past due payments are brought current and 
management believes collection of outstanding principal and interest is not in 
doubt.  Additional interest income that would have been recognized on non-
accrual loans, had each been current, totaled $12,000, $9,000, and $40,000, 
respectively, in 1998, 1997 and 1996.  In addition to non-accrual loans, other 
assets classified as non-performing include troubled debt restructuring, 
repossessed automobiles and certain real estate owned.  Real estate owned
includes property acquired through foreclosure, property upon which a judgment 
of foreclosure has been entered but for which no foreclosure sale has yet 
taken place, property which is in substance foreclosed and property acquired 
for investment purposes.

     As of December 31, 1998 and 1997, real estate owned consisted entirely of 
property acquired for investment purposes.   At December 31, 1998, the largest 
parcel of real estate owned was 30 acres of industrial property valued at 
$580,000 acquired in 1992.  In 1998, First Federal transferred the land to 
Eagle via dividend.  Eagle then entered into a joint venture agreement with a 
local developer in which Eagle agreed to contribute the land to the 
partnership and the developer will provide expertise in developing such 
projects.  Under terms of the agreement, as parcels are developed and sold, 
Eagle will be repaid first until it has received 100% of the basis of the land 
contributed and then the remaining proceeds will be split between the 
partners.  If any amounts are borrowed in the development process, such loans 
will be repaid before the remaining proceeds are split after Eagle is repaid 
for the land.  
                                  -Page 19-
     Eagle also paid $25,000 in 1998 for a lot in LeRoy next to another lot 
already owned by First Federal.  The previously owned lot was adjacent to 
First Federal's LeRoy office and was held for possible expansion of the 
facility.  Since no plans for expansion were being considered, First Federal 
transferred the lot via dividend to Eagle, who combined the parcels and 
contributed the land as part of a joint venture agreement with another local 
developer.  The developer constructed a three unit retail center on the 
property and has leased two of the three units.  Eagle and the developer will 
share in the proceeds of the development.
<TABLE>
     The following table sets forth information with respect to non-performing 
assets (in thousands):
<CAPTION>
                                                  December 31, 
                                          1998        1997        1996
<S>                                     <C>         <C>         <C>
Mortgage loans: 
  One-to-four family                      $223        $103        $310
  Construction                              -          112          -
  Multi-family                              -           -           -
  Commercial real estate                   129          -          333
    Total mortgage                         352         215         643
Indirect auto loans                         31          -           44
Other consumer loans                  
  Direct auto                               -           -            7
  Home equity                               14          11          -
  Other consumer                            -           -           11 
    Total other consumer                    14          11          18
Commercial business loans                   -           69          -     
  Total Non-Accrual Loans                  397         295         705

Real estate owned                          711         633         653
Troubled debt restructuring                 -           -           -
Repossessed automobiles                     27          49          76
  Total Non-Performing Assets           $1,135        $977      $1,434

  Percent of Total Assets                 0.63%       0.57%       0.83%
</TABLE>
     Classified Assets.  OTS regulations and First Federal policy require the 
review and classification of assets on a regular basis.  First Federal 
performs such a review quarterly.  Regulatory examiners also have the 
authority to review and, if appropriate, classify assets as part of their 
regular examination procedures.  Problem assets can be classified as either 
substandard, doubtful or loss.  Substandard assets have one or more defined 
weaknesses and the distinct possibility exists that a loss will be sustained 
if the weaknesses are not corrected.  Doubtful assets have the weaknesses of 
substandard assets and, based on current information, the weaknesses make 
collection or liquidation in full questionable resulting in the high 
probability of loss.  Loss assets are considered uncollectable and of such 
little value that continued treatment of the asset as an asset is not 
warranted.  Insured institutions such as First Federal are required to 
establish a prudent general allowance for loan losses with respect to assets 
classified as substandard or doubtful.  Assets classified as loss are required 
to either be charged-off or to be offset 100% with a specific allowance.
                                 -Page 20-
<TABLE>
     The following table sets forth information with respect to the 
classification of assets as of December 31, 1998 (in thousands):         
<CAPTION>
         <S>                                      <C>
          Substandard assets                       $186
          Doubtful assets                             9
          Loss                                        - 
            Total Classified Assets                $195

            Percent of Total Assets                0.11%
</TABLE>
     Allowance for Loan Losses.  The allowance for loan losses was established 
to recognize the risks inherent with lending activities and may consist of a 
general allowance and a specific allowance.  A specific allowance reserves 
against specific assets with respect to which a loss may be realized.  A 
general allowance reserves against the entire loan portfolio.  Allowances for 
loan loss are determined through analysis of factors such as past loan loss 
experience, current loan volume, growth and composition of the loan portfolio, 
local and national economic conditions and other factors deemed appropriate by 
management.

     Evaluation of the allowance for loan losses is undertaken at least 
quarterly.  This evaluation includes a review of all loans for which full 
collectability is not reasonably assured and includes an estimation of the 
market value of collateral underlying problem loans, prior loss experience, 
economic conditions, overall portfolio quality and other factors.  The 
allowance for loan losses, including general and specific reserves, are 
subject to review by the OTS, which can require First Federal to establish 
additional general or specific reserves.  Provisions for loan losses are 
charged against earnings in the year established.  Loan losses are charged 
against the allowance and recoveries of loans previously charged against the 
allowance are added back to the allowance.

     The provision for loan losses in 1998 was $240,000.  This provision was 
deemed appropriate due to the change in composition of the loan portfolio even 
though the total loans outstanding and net charge-offs both decreased in 1998.
The increase in multi-family, commercial real estate and commercial loans, 
which generally carry more risk than residential mortgage loans, to 25% of 
gross loans outstanding at December 31, 1998 from 11% at December 31, 1997 was 
the primary reason the provision for loan losses increased in 1998.  Net 
charge-offs decreased to $160,000 in 1998 from $228,000 in 1997 due primarily 
to reduced charge-offs of indirect auto loans.  Net charge-offs related to 
indirect auto loans should continue to decrease as the amount of such loans 
decreases.  Management believes that the allowance for loan losses at December 
31, 1998 is adequate though there can be no assurance as to the adequacy of 
the allowance or the need for additional provisions for loan losses that may 
adversely impact earnings of the Company.  
                                  -Page 21-
<TABLE>
     The following table sets forth information with respect to activity in 
the allowance for loan losses for the years indicated (in thousands):
<CAPTION> 
                                        For the Year Ended December 31,
                                          1998        1997        1996
<S>                                     <C>         <C>         <C>
Allowance for loan loss at
  beginning of period                     $935        $923        $907

Provision for loan losses                  240         240         183

Charge-offs:
  Mortgage loans: 
    One to four family                      -            7           1
    Construction                            -           -            -
    Multi-family                            -           -            -
    Commercial real estate                  -           -            -  
      Total mortgage                        -            7           7  
  Indirect auto loans                      144         197         145
  Other consumer loans                  
    Direct auto                              5          30          21 
    Home equity                             -           -            -  
    Other consumer                          21           5          11
      Total other consumer                  26          35          32
  Commercial business loans                 -           -            -
    Total charge-offs                      170         239         178

Recoveries:
  Mortgage loans: 
    One to four family                      -           -            -
    Construction                            -           -            -
    Multi-family                            -           -            -
    Commercial real estate                  -           -            -
      Total mortgage                        -           -            -          
  Indirect auto loans                       10          10          11
  Other consumer loans                  
    Direct auto                             -            1           - 
    Home equity                             -           -            -
    Other consumer                          -           -            -
      Total other consumer                  -            1           -
  Commercial business loans                 -           -            -
    Total recoveries                        10          11          11

Net charge-offs                           (160)       (228)       (167)

Allowance for loan loss at
  end of period                         $1,015        $935        $923

Allowance for loan losses to gross
  loans outstanding at end of period      0.86%       0.76%        .85%

Net charge-offs to average loans
  outstanding during the period           0.13%       0.19%       0.17%
</TABLE>
                                  -Page 22-
<TABLE>
     The following table sets forth information with respect to the breakdown 
of the allowance for loan losses by loan category at the dates indicated 
(amounts in thousands):
<CAPTION>
                                             December 31,
                                  1998            1997            1996
                               Loan  Percent  Loan  Percent  Loan  Percent 
                               Loss    of     Loss    of     Loss    of
                              Amount  Loans  Amount  Loans  Amount  Loans
<S>                          <C>      <C>     <C>    <C>     <C>    <C>
Mortgage loans: 
  One to four family          $  292   0.51%   $382   0.49%   $352   0.52%
  Construction                    19   1.00      21   0.70       6   0.51
  Multi-family                   115   1.00      51   1.00      16   1.02
  Commercial real estate          89   0.83     123   1.81     127   3.32
    Total mortgage               515   0.63     577   0.62     501   0.67       
Indirect auto loans              177   1.06     201   1.03     244   1.03
Other consumer loans                    
  Direct auto                     26   1.00      23   1.05      23   1.08
  Home equity                     64   0.77      29   0.50      36   0.73
  Other consumer                  12   1.03      29   1.77      15   1.01
    Total other consumer         102   0.85      81   0.84      74   0.87
Commercial business loans         31   0.40       8   0.50       6   0.52
Unallocated                      190     -       68     -       98     -   
Total Allowance for Loan Loss $1,015   0.86%   $935   0.76%   $923   0.85% 
</TABLE>
Loan Loss Amount represents the portion of the allowance for loan loss 
allocated to each loan category.  Percent of Loans represents the ratio of the 
allowance for loan loss for each category to the total amount of loans in the 
same category.

Investment Activities

     General.  The Company is permitted under federal law to make investments 
in securities issued by the U.S. government, various federal agencies and 
state and municipal governments, in deposits at the Federal Home Loan Bank, in 
certificates of deposit and federal funds at federally insured institutions 
and in other earning assets within certain limitations.  The Board of 
Directors has established and periodically reviews the investment policy, the 
objectives of which include holding investments that provide and maintain 
liquidity and generate a favorable return without incurring undue interest 
rate risk.  At present, the investment securities portfolio includes mortgage-
backed and related securities and securities issued or guaranteed by the U.S. 
government and various federal agencies.  In recent years, no investment 
products designed to hedge interest rate risk, such as futures, options, swaps 
or other derivative securities, have been purchased or held.  All investment 
securities are designated as 'available-for-sale' and are reported at fair 
value as of December 31, 1998.  Investment securities can also be designated 
as 'trading securities' or 'held-to-maturity' according to Generally Accepted 
Accounting Principals and regulatory guidelines but no securities have been so 
designated in recent years.

     Mortgage-Backed and Related Securities.  Mortgage-backed securities 
represent a participation interest in a pool of mortgages, the principal and 
interest payments of which are passed through intermediaries, who pooled and 
                                  -Page 23-
repackaged the participation interest as securities, to investors.  
Intermediaries include quasi-governmental agencies such as Federal Home Loan 
Mortgage Corp. ('FHLMC'), Federal National Mortgage Association ('FNMA') and 
Government National Mortgage Association ('GNMA'), each of whom guarantees or 
insures payment of principal and interest to investors.  By virtue of the 
guarantees, mortgage-backed securities generally increase the quality of the 
Company's assets.  In addition, mortgage-backed securities can be used to 
collateralize borrowings or other obligations of the Company and are generally 
more liquid than mortgage loans.  Mortgage loans with similar interest rates 
and maturities are normally pooled so that the characteristics of the 
mortgage-backed security, which will mirror the underlying mortgage loans, can 
be reasonably defined.  Mortgage-backed securities can have fixed or 
adjustable interest rates.

     Mortgage-backed security holders assume the interest rate risk 
characteristics of the underlying pool of mortgage loans.  Prepayments made by 
the mortgage loan holders are passed on to the security holders which can 
adversely affect the yield to maturity and market value of the mortgage-backed 
security.  Prepayment assumptions, based on historical performance, are used 
to determine anticipated maturity dates, which are then used to amortize 
premium or discount on a level yield basis.  When actual prepayments on a 
mortgage-backed security differ from previous assumptions, adjustments to 
anticipated maturity dates may be necessary.  

     At December 31, 1998, mortgage-backed securities with a book value of 
$29,864,000 and a market value of $29,712,000 were held.  Holdings of these 
securities increased significantly in 1998 due to investment of residential 
loan sale proceeds and reinvestment of funds received from U. S. government 
and agency securities that matured, were called or were sold.  In addition, 
principal payments and sale proceeds of mortgage related securities were also 
reinvested in mortgage-backed securities.

     Mortgage related securities were created to reduce the prepayment risk 
associated with mortgage-backed securities.  Collateralized mortgage 
obligations ('CMOs') and real estate mortgage investment conduits ('REMICs'), 
issued in a variety of legal forms by both quasi-government agencies and 
private entities, are aggregate pools of mortgage-backed securities or 
mortgage loans.  Once combined, separate classes or tranches of individual 
securities are created each having designated priority to future cash flows.  
As principal and interest payments are received on the underlying pools or 
mortgage loans, the class or tranche with highest priority is first to receive 
such payments.  Once a class or tranche is fully paid out, the cash flows are 
directed to the class or tranche with the next highest priority.  Security 
purchasers can buy certain classes or tranches with reasonable expectation as 
to when principal will be repaid.  Prepayment risk is reduced with CMOs and 
REMICs compared to mortgage-backed securities but is not eliminated since 
changes in the general level of interest rates can affect prepayment rates.  
The market value of CMOs and REMICs, most of which have fixed interest rates, 
can also be more affected by the general level of interest rates than 
adjustable rate mortgage-backed securities.  At December 31, 1998, CMOs with a 
book value of $7,563,000 and a market value of $7,532,000 were held.

     Regulatory policy requires at least an annual 'stress' test of mortgage 
related securities to determine if price volatility under a 200 basis point 
interest rate shock for each security exceeds a benchmark 30 year mortgage-
backed security.  Securities that fail the stress test are considered high 
                                  -Page 24-
risk and may only be purchased to reduce interest rate risk.  Regulators can 
require institutions to dispose of such high risk securities.  At December 31, 
1998, First Federal held one mortgage-related security, with a book value of 
$293,000 and a market value of $291,000, that was considered high risk by 
virtue of failing the stress test.  To date, the OTS has not required the 
disposal of the security, which has been held over 5 years.  

     Other Investment Securities.  First Federal also owns U.S. government and 
federal agency securities, commercial paper and stock in the Federal Home Loan 
Bank of Chicago.  The commercial paper held was issued by U.S. corporations 
and was rated A1/P1.  At December 31, 1998, other investment securities held 
had a book value of $12,613,000 and a market value $12,578,000.
<TABLE>
     The table below sets forth information with respect to the amortized cost 
of investment securities at the dates indicated (in thousands):
<CAPTION>
                                                    December 31, 
                                           1998         1997        1996
<S>                                     <C>          <C>         <C>
Mortgage-backed securities:
  Collateralized mortgage obligations    $ 7,563      $12,467     $18,125
  Other mortgage-backed                   29,864       12,296      19,685 
U.S. government and agencies               8,141       12,642      15,181
Other securities                           3,222          395         447
FHLB stock                                 1,250        1,310         955
  Total investments, at amortized cost   $50,040      $39,110     $54,393
</TABLE>
                                  -Page 25-
<TABLE>
     The following table sets forth information with respect to the carrying 
value, weighted average yields and scheduled maturities of investment 
securities at December 31, 1998 (amounts in thousands):
<CAPTION>
                                              Over One        Over Five
                       One Year or Less    to Five Years    to Ten Years
                               Weighted          Weighted          Weighted 
                       Carrying Average  Carrying Average  Carrying Average
                         Value   Yield     Value   Yield     Value   Yield
<S>                    <C>      <C>      <C>      <C>     <C>       <C>
Mortgage-backed securities:
  Collateralized mortgage
    obligations         $   35   5.64%    $    -      -    $ 2,939   5.97%
  Other mortgage-backed  3,505   5.71      1,014   6.54      1,045   5.47
U.S. government and
  agencies               1,643   5.62          -      -      6,498   6.30
Other securities         2,983   5.78          -      -          -      -
FHLB stock                   -                 -      -          -      -      
  Total Investments     $8,166   5.72%    $1,014   6.54%   $10,482   6.12%
</TABLE>
<TABLE>
                                Over Ten Years        Total               
                                       Weighted          Weighted  
                               Carrying Average  Carrying Average   Market
                                 Value   Yield     Value   Yield     Value
<S>                           <C>       <C>     <C>       <C>    <C>
Mortgage-backed securities:
  Collateralized mortgage
    obligations                $ 4,589   5.43%   $ 7,563   5.64%   $ 7,532  
  Other mortgage-backed         24,300   6.32     29,864   6.23     29,712
U.S. government and
  agencies                           -      -      8,141   6.16      8,153
Other securities                   239   2.00      3,222   5.50      3,175 
FHLB stock                       1,250   6.75      1,250   6.75      1,250  
Total Investments              $30,378   5.72%   $50,040   6.09%   $49,822
</TABLE>
     With the exception of the U.S. government and federal agencies, as of 
December 31, 1998, the Company did not hold securities of any one issuer the 
aggregate total of which exceeded 10% of stockholder's equity.

Deposit Activities and Other Sources of Funds

     General.  Primary sources of funds for use in lending, investing and 
other general purposes are deposits and proceeds from principal and interest 
payments on loans, mortgage-backed and other securities and FHLB advances.  
Contractual loan repayments are a relatively stable source of funds while loan 
and mortgage-backed security prepayments and deposit inflows and outflows are 
significantly influenced by general interest rate levels and money market 
conditions.  Borrowings can be used to increase liquidity on a short-term 
basis and on a long-term basis for general operational purposes.

     Deposit Accounts.  First Federal offers a full line of demand account 
products.  Non-interest bearing accounts feature unlimited check writing, no 
minimum balance and no service charge.  NOW accounts earn interest and feature 
unlimited check writing, a Visa check debit card (to qualifying customers) and 
no service charge if the customer has a loan or other deposit account with 
First Federal or a minimum balance.  Money market accounts have the same 
features as NOW accounts but earn higher interest with a tiered rate schedule 
under which higher balance accounts earn the highest rate.  ATM cards are 
                                 -Page 26-
available for qualifying customers on all accounts and First Federal operates 
ATMs at all but its new Lexington branch.  Commercial accounts are also 
offered and in 1999, new commercial demand products will be available.  
Passbook savings accounts are available under two plans with higher interest 
earned on one plan with a minimum balance. Certificate of deposit accounts, 
with maturities of up to six years, are also offered.  Interest rates offered 
on all accounts are reviewed by management and subject to change as deemed 
necessary.  The flow of deposits is greatly influenced by general economic 
conditions, changes in money market and local interest rates and competition.  
Brokered deposits are not solicited or accepted.  

     First Federal attracts and maintains deposit accounts, in part, because 
of its tradition of customer service and seventy-nine years as a locally owned 
and managed savings association.  Locally competitive interest rates, 
convenient locations with hours of service designed to meet customer needs and 
membership in a nationwide ATM network are used by First Federal to attract  
customers.  
<TABLE>
     The following table sets forth information with respect to the average 
amount outstanding and the weighted average rate paid on the categories of 
deposit accounts listed for the years indicated (amounts in thousands):
<CAPTION>
                                  For the Year Ended December 31, 
                              1998             1997              1996
                                Average          Average           Average
                        Average  Rate    Average   Rate    Average   Rate
                        Balance  Paid    Balance   Paid    Balance   Paid
<S>                   <C>       <C>     <C>       <C>     <C>      <C>
Demand Accounts:
  Non-interest bearing $    552  0.00%   $   786   0.00%   $   549   0.00%
  NOW                    11,129  2.44      6,751   1.96      5,338   1.80
  Money market            2,081  2.79      2,438   2.87      2,964   2.87
  Passbook               15,599  3.52     15,832   3.66     15,462   3.73
    Total Demand         29,361  3.05     25,807   3.12     24,313   3.13

Certificate of Deposit Accounts:
  6 months or less        7,882  5.01      8,075   5.10      9,335   4.95
  7 to 12 months         22,460  5.43     23,400   5.44     27,011   5.71
  13 to 24 months        20,247  5.81     20,532   5.91     18,390   6.17
  25 to 36 months        21,720  6.02     22,642   6.04     27,509   5.94
  37 to 60 months        14,386  6.34     13,116   6.29     12,077   6.30
  Over 60 months         10,373  6.52     10,236   6.63     10,117   6.61
  Jumbo                   6,977  5.99      8,490   6.16      7,420   6.31
    Total Certificates  104,045  5.87    106,491   5.90    111,859   5.97

    Total Deposits     $133,406  5.26%  $132,298   5.37%  $136,172   5.48%
</TABLE>
      Jumbo time certificates of deposit require minimum deposits of $100,000 
with negotiated interest rates and terms and are not automatically renewable.  
Other certificates of deposit over $100,000 are not classified as Jumbo 
certificates of deposit if the interest rates and terms were the same as 
offered on certificates of deposit of less than $100,000.  Such certificates 
of deposit can also be automatically renewed.  The total of these certificates 
of deposit at December 31, 1998 was $5,804,000. 
                                  -Page 27-
<TABLE>
     The following table sets forth information with respect to the maturity of
Jumbo time certificates of deposit as of December 31, 1998 (in thousands):
<CAPTION>
                                                 Amount
<S>                                             <C>
Due in three months or less                      $1,750
Due in over three through six months                603
Due in over six through twelve months               750
Due in over twelve months                         3,347
</TABLE>
     In July, 1995, First Federal ended a time deposit attraction marketing 
program that ran for seven months and attracted over $15,000,000 in new time 
deposits.  The higher rates paid on the new certificates resulted in an 
increase in the cost of funds as the average rate paid on certificates 
increased to 5.81% in 1995 from 4.64% in 1994.  Since then, efforts to reduce 
the cost of funds, including the use of FHLB advances as a funding source, not 
offering special rates at maturity on the certificates attracted as part of 
the marketing program and increasing balances of lower cost demand and savings 
deposits, have been made.  
<TABLE>
     The following table sets forth information with respect to the amounts 
and remaining maturities of certificates of deposit at December 31, 1998 
(in thousands):
<CAPTION>
                                     Amount due in
             Under 3    4-6      7-12      1-2      2-3   Over 3  
              Months   months   months    years    years   years     Total
<S>         <C>      <C>      <C>       <C>      <C>     <C>     <C>
Under 5%     $ 2,769  $ 2,429  $ 4,196   $    26  $   -   $   -   $  9,420 
5.01% to 6%   17,527    8,665   18,744    13,272   4,618   3,751    66,577
6.01% to 7%    1,770    1,393      610     4,803   1,570   2,891    13,037
Over 7.01%     3,385    3,303       -      6,559      -      166    13,413
  TOTAL      $25,451  $15,790  $23,550   $24,660  $6,188  $6,808  $102,447
</TABLE>
     Borrowings.  Prior to 1996, First Federal relied on Federal Home Loan 
Bank ('FHLB') advances only in the event of a reduction in available funds 
from other sources.  In 1996, FHLB advances were used to fund loan 
originations rather than more traditional sources of funds due to the lower 
cost of the advances relative to similar term certificates of deposit.  Since 
then, First Federal has continued to use FHLB advances as a source of funds.  
In the first quarter of 1998, new advances were obtained to prefund repayment 
of advances that matured in the second quarter in an effort to reduce the 
average cost of borrowed funds.  The new advances had an average cost 140 
basis less than the maturing advances.  The average cost of all advances 
decreased to 5.37% in 1998 from 5.89% in 1997 and the average rate at year-
end, 1998 was 5.05% compared to 5.74% at year-end, 1997.

     The change in lending strategy in 1997, namely the decision of sell most 
residential mortgage originations, has reduced the dependence on advances as a 
source of funds.  Advances are available with a variety of terms including 
fixed or variable rate and open line or fixed maturity.  Some fixed maturity 
advances allow prepayments under certain conditions or are subject to periodic 
call.  At December 31, 1998, all FHLB advances were fixed rate and totaling 
$25,000,000.  All advances had fixed maturity dates and were subject to 
periodic call at various dates.  All advances are secured by stock in the FHLB 
and a blanket floating lien on First Federal's one-to-four family residential 
mortgage loans.  The FHLB determines the creditworthiness of and sets a credit 
limit for each institution.  
                                  -Page 28-
<TABLE>
     The following table sets forth information with respect to FHLB advances 
at the end of and during the periods indicated (amounts in thousands):
<CAPTION>
                                 At and For the Year Ended December 31,
                                        1998              1997
<S>                                  <C>               <C>
Balance on December 31                $25,000           $18,000
Highest month-end balance              27,000            21,050
Average balance during the year        22,917            17,905
Average rate during the year             5.37%             5.89%
Average rate at year-end                 5.05%             5.74%
</TABLE>
     During 1996, First Federal entered into repurchase agreements under which 
funds were borrowed in exchange for investment securities pledged to and held 
by counterparties.  No such agreements were in effect at any time in 1997 or 
1998.  In certain circumstances, repurchase agreements may be used as a source 
of funds in the future but there are no plans to make frequent use of this 
source of funds.

     At December 31, 1998, the Company had 48 full-time and 19 part-time 
employees none of whom were represented by a union or collective bargaining 
group.  The Company considers its relations with employees to be satisfactory.

                       	REGULATION AND SUPERVISION
General
     First Federal is chartered under federal law by the OTS.  It is a member 
of the FHLB System, and its deposit accounts are insured up to legal limits by 
the FDIC under the SAIF.  The OTS is charged with overseeing and regulating 
First Federal's activities and monitoring its financial condition.

     This regulatory framework sets parameters for First Federal's activities 
and operations and grants the OTS extensive discretion with regard to its 
supervisory and enforcement powers and examination policies.  First Federal 
files periodic reports with the OTS concerning its activities and financial 
condition, must obtain OTS approval prior to entering into certain 
transactions or initiating new activities, and is subject to periodic 
examination by the OTS to evaluate First Federal's compliance with various 
regulatory requirements.

     Eagle is a savings and loan holding company and, like First Federal, is 
subject to regulation by the OTS.   As part of this regulation, Eagle is 
required to file certain reports with, and is subject to periodic examination 
by, the OTS.  

Recent Legislative and Regulatory Developments

     Deposit Insurance Reform Legislation. On September 30, 1996, President 
Clinton signed the Deposit Insurance Funds Act of 1996 ('DIFA') that was part 
of the omnibus spending bill enacted by Congress at the end of its 1996 
session.  DIFA mandated that the FDIC impose a special assessment on the SAIF-
assessable deposits of each insured depository institution at a rate 
applicable to all such institutions that the FDIC determined would cause the 
SAIF to achieve its designated reserve ratio of 1.25 percent as of October 1, 
1996.  The assessment was based on the amount of SAIF-insured deposits owned 
by each institution as of March 31, 1995, the record date established in the 
original drafts of the legislation.
                                  -Page 29-
     On October 10, 1996, the FDIC adopted a final rule governing the payment 
of the SAIF special assessment.  The FDIC imposed a special assessment in the 
amount of 65.7 basis points.  The SAIF special assessment was due by November 
27, 1996.  First Federal's portion of this special assessment amounted to 
$875,000 on a pre-tax basis.  First Federal paid this amount to the FDIC 
during its fiscal third quarter ended September 30, 1996, as mandated by the 
Financial Accounting Standards Board that ruled that the SAIF special 
assessment should be recorded as an ordinary non-interest expense for the 
quarter ended September 30, 1996 for calendar year reporting institutions.  
DIFA also confirmed that the special assessment is tax deductible.

     In response to the recapitalization of the SAIF, the FDIC announced on 
December 11, 1996 that deposit insurance rates for most savings associations 
insured under the SAIF would be lowered to zero effective January 1, 1997.  
BIF-insured institutions would also no longer have to pay the $2,000 minimum 
for deposit insurance, thereby equalizing deposit premiums for savings 
associations and banks. 

     FICO Bond Payments.  Before DIFA, federal regulators and thrift industry 
trade groups were predicting that a default would occur on the FICO Bonds 
(bonds issued in the late 1980s to recapitalize the Federal Savings and Loan 
Insurance Corporation) as SAIF-assessable deposits continued to decline.  DIFA 
amends The Federal Home Loan Bank Act to impose the FICO assessment against 
both SAIF and BIF deposits beginning after December 31, 1996.  But the 
assessment imposed on insured depository institutions with respect to any BIF-
assessable deposit is assessed at a rate equal to one-fifth of the rate 
(approximately 1.3 basis points) of the assessments imposed on insured 
depository institutions with respect to any SAIF-assessable deposit 
(approximately 6.7 basis points).   The FICO assessment for 1996 was paid 
entirely by SAIF-insured institutions.  BIF-insured banks will pay the same 
FICO assessment as SAIF-insured institutions beginning as of the earlier of 
December 31, 1999 or the date as of which the last savings association ceases 
to exist.

     Deposit Shifting.  DIFA provides that until the earlier of December 31, 
1999 or the date as of which the last savings association ceases to exist, the 
Office of the Comptroller of the Currency (the 'OCC'), the FDIC, the Board of 
Governors of the Federal Reserve System, and the OTS will take appropriate 
actions, including enforcement actions and denial of applications, to prevent 
insured depository institutions from facilitating or encouraging the shifting 
of deposits from SAIF-assessable deposits to BIF-assessable deposits for the 
purpose of evading the assessments imposed on insured depository institutions 
with respect to SAIF-assessable deposits.    

     Relaxation of the Qualified Thrift Lender Test.  In September 1996, the 
Economic Growth and Regulatory Paperwork Reduction Act of 1996 became law (the 
'Economic Growth Act of 1996').  In the past, savings associations were 
required to satisfy a qualified thrift lender test ('QTL' test) by maintaining 
65 percent of their portfolio assets (defined as all assets minus intangible 
assets, property used by the association in conducting its business and liquid 
assets equal to 20% of total assets) in certain 'qualified thrift investments' 
(primarily residential mortgages and related investments, including certain 
mortgage-backed securities) on a monthly basis in nine out of every twelve 
months.
                                  -Page 30-
     The Economic Growth Act of 1996 liberalized the QTL test for savings 
associations by permitting them to satisfy a similar-but-different 60 percent 
asset test under the Internal Revenue Code.  Alternatively, savings 
associations may meet the QTL test by satisfying a more liberal 65 percent 
asset test that allows an institution to include small business, credit card 
and education loans as qualified investments for purposes of the test.  
Furthermore, consumer loans now count as qualified thrift investments up to 20 
percent of portfolio assets.  On November 27, 1996, OTS issued an interim 
final rule that implements provisions of the Economic Growth Act of 1996, 
including the amended QTL test.

     Increased Commercial and Consumer Lending Authority.  Before the Economic 
Growth Act of 1996, federal savings associations were able to lend up to 10 
percent of their assets in commercial business loans (i.e., secured or 
unsecured loans for commercial, corporate, business, or agricultural purposes) 
and, subject to OTS approval for a higher amount, up to 400 percent of their 
capital in commercial real estate loans.  In addition, federal savings 
associations were permitted to make consumer loans (i.e., loans for personal, 
family or household purposes) in an amount not to exceed 35 percent of their 
assets.

     The Economic Growth Act of 1996 amended the commercial-lending-asset 
limit by increasing the ceiling from 10 percent to 20 percent, but provides 
that amounts in excess of 10 percent may be used only for small business 
loans.  Moreover, the new law exempts credit card and educational loans from 
any percentage of asset limitations applicable to consumer loans. The interim 
final rule issued by the OTS on November 27, 1996, defines a 'small business 
loan' as one which meets the Small Business Administration size eligibility 
standards.  This definition also applies for purposes of the new QTL test. 

     Effective October 30, 1996, the OTS (as part of its regulatory 
streamlining project) amended its lending regulations for federal savings 
associations to remove the requirement that commercial loans made at the 
service corporation level be aggregated with the 10 percent of assets limit on 
commercial lending.

     Capital Distribution. Effective April 1, 1999 the OTS revised its capital 
distribution regulation.  Under the revised regulation, institutions that are 
not subsidiaries of a savings and loan holding company can qualify for a 
capital distribution without a notice or application to OTS, if they meet 
certain conditions, including retaining a well capitalized designation 
following the distribution and having CAMELS and compliance ratings of 1 or 2.
Other institutions either have to notify OTS or obtain the OTS's approval, 
depending on the condition of the institution and the amount and nature of the 
capital distribution, but such institutions may now file a schedule of 
proposed capital distributions for a year at a time, rather than filing 
separate notices.

     TB 13a. On December 1, 1998, the OTS adopted comprehensive guidance, in 
the form of Thrift Bulletin 13a (TB 13a), covering interest rate risk, 
investment securities and the use of financial derivatives.  TB 13a replaces 
seven prior OTS thrift bulletins covering these and related topics.  The OTS 
also updated its regulations with a new rule (effective January 1, 1999) on 
forward commitments, futures transactions and financial options transactions.  
The new rule, which is designed to work with TB 13a, establishes general 
requirements applicable to all derivative instruments, sets forth 
                                 -Page 31-
responsibilities of the board of directors and management with respect to 
financial derivatives and makes clear that reducing risk exposure should be 
the primary reason for entering into a derivative transaction.  TB 13a 
provides guidelines for evaluating an institution's risk management, 
identifies a set of 'sound practices' for consideration of management and 
describes the qualitative and quantitative guidelines the OTS will use in 
assessing an institution's current exposure to interest rate changes and its 
ability to manage that exposure effectively.  The OTS will use the results of 
its NPV model to measure an institution's current exposure.  Under TB 13a, an 
institution's board of directors should establish interest rate risk limits in 
terms of its capital position (its economic capital-to-assets ratio).  
Investment securities and derivatives, especially those with the potential to 
alter significantly an institution's risk profile, should be evaluated on the 
basis of their impact on the institution's economic capital.  Institutions 
with greater capacity to absorb potential losses will have greater latitude in 
using derivatives and other complex financial instruments.
 
Federal-Savings-Association Regulation

     Business Activities.  The activities of savings associations are governed 
by the Home Owners' Loan Act, as amended (the 'HOLA'), and, in certain 
respects, the Federal Deposit Insurance Act (the 'FDI Act').  The OTS and the 
FDIC promulgate regulations implementing other provisions of HOLA and the FDI 
Act.

     Branching.  A federally-chartered savings association, like First 
Federal, can establish branches in any state or states in the United States 
and its territories, subject to a few exceptions.  The exercise by the OTS of 
its authority to permit interstate branching by federal savings associations 
is preemptive of any state law purporting to address the subject of branching 
by a federal savings association.

     Loans to One Borrower.  Under HOLA, savings associations are generally 
subject to the national bank limits regarding loans to one borrower.  
Generally, savings associations may not make a loan or extend credit to a 
single or related group of borrowers in excess of 15 percent of the 
association's unimpaired capital and surplus, where the borrowing is not fully 
secured by readily-marketable collateral.  An additional amount may be lent, 
equal to 10 percent of the association's unimpaired capital and surplus, if 
such additional borrowing is secured by readily-marketable collateral at least 
equal to the amount of such additional funds.  At December 31, 1998, First 
Federal had not originated loans and had no outstanding commitments that 
exceeded the loans to one borrower limit at the time made or committed.
                                                                  
     Brokered Deposits.   Well-capitalized savings associations that are not 
troubled are not subject to brokered deposit limitations.   Adequately-
capitalized associations are able to accept, renew or roll over brokered 
deposits but only (i) with a waiver from the FDIC and (ii) subject to the 
limitation that they do not pay an effective yield on any such deposit that 
exceeds by more than (a) 75 basis points the effective yield paid on deposits 
of comparable size and maturity in such association's normal market area for 
deposits accepted in its normal market area or (b) 120 basis points of the 
current yield on similar maturity U.S. Treasury obligations or, in the case of 
any deposit at least half of which is uninsured, 130 percent of such Treasury 
yield.  Undercapitalized associations are not permitted to accept brokered 
deposits and may not solicit deposits by offering an effective yield that 
                                 -Page 32-
exceeds by more than 75 basis points the prevailing effective yields on 
insured deposits of comparable maturity in the association's normal market 
area or in the market area in which such deposits are being solicited.  First 
Federal is not presently soliciting brokered deposits.

     Enforcement.  Under the FDI Act, the OTS has primary enforcement 
responsibility over savings associations and has the authority to bring 
enforcement action against all "institution-related parties," including 
stockholders, and any attorneys, appraisers and accountants who knowingly or  
recklessly participate in wrongful action likely to have an adverse effect on 
an insured association.  Civil penalties cover a wide range of violations and 
actions.  Criminal penalties for most financial association crimes include 
fines and imprisonment.  In addition, regulators have substantial discretion 
to impose enforcement action on an association that fails to comply with its 
regulatory requirements, particularly with respect to amounts of capital.  
Possible enforcement action ranges from requiring the preparation of a capital 
plan or imposition of a capital directive to receivership, conservatorship or 
the termination of deposit insurance.  Under the FDI Act, the FDIC has the 
authority to recommend to the Director of OTS enforcement action be taken with 
respect to a particular savings association.  If action is not taken by the 
Director, the FDIC has authority to take enforcement action under certain 
circumstances.

     Assessments.  Savings associations are required by OTS regulation to pay 
assessments to the OTS to fund the operations of the OTS.  The general 
assessment paid on a semi-annual basis is computed based upon the savings 
association's total assets, including consolidated subsidiaries, as reported 
in the association's latest quarterly thrift financial report.

     Federal Home Loan Bank System.  First Federal is a member of the FHLB 
System, which consists of 12 regional FHLB's. The FHLB provides a central 
credit facility primarily for member associations.  First Federal, as a member 
of the FHLB-Chicago, is required to acquire and hold shares of capital stock 
in that FHLB in an amount at least equal to 1 percent of the aggregate 
principal amount of its unpaid residential mortgage loans and similar 
obligations at the beginning of each year, or 1/20 of its advances 
(borrowings) from the FHLB-Chicago, whichever is greater.  First Federal is in 
compliance with this requirement, with an investment in FHLB-Chicago stock at 
December 31, 1998, of $1,250,000.  FHLB advances must be secured by specified 
types of collateral and may be obtained only for the purpose of purchasing or 
funding new residential housing finance assets.

     OTS Capital Requirements.  The OTS capital regulations require savings 
associations to meet three capital standards: a 1.5 percent tangible capital 
standard, a 3 percent leverage ratio (or core capital ratio) and an 8 percent 
risk-based capital standard.
                                                       
     Tangible capital is defined as common stockholders' equity (including 
retained earnings), noncumulative perpetual preferred stock and related 
earnings, certain nonwithdrawable accounts and pledged deposits of mutual 
savings associations, and minority interests in equity accounts of fully 
consolidated subsidiaries, less intangible assets (other than certain mortgage 
servicing rights) and certain equity and debt investments in nonqualifying 
subsidiaries (as hereinafter defined).
                                 -Page 33-
     Core capital is defined as common stockholders' equity (including 
retained earnings), certain noncumulative perpetual preferred stock and 
related surplus, minority interests in equity accounts of consolidated 
subsidiaries, certain nonwithdrawable accounts and pledged deposits of mutual 
savings associations, certain amounts of goodwill resulting from prior 
regulatory accounting practices, less intangible assets (other than mortgage 
servicing rights) and certain equity and debt investments in nonqualifying 
subsidiaries.

     The OTS capital regulation requires that in meeting the leverage ratio, 
tangible and risk-based capital standards, savings associations must deduct 
investments in and loans to subsidiaries engaged in activities not permissible 
for a national bank (a "nonqualifying subsidiary").  At December 31, 1998, 
First Federal did not own a nonqualifying subsidiary.

     In April 1991, the OTS issued a proposal to amend its regulatory capital 
regulation to establish a 3 percent leverage ratio (defined as the ratio of 
core capital to adjusted total assets) for associations in the strongest 
financial and managerial condition, with a 1 CAMEL Rating (the highest rating 
of the OTS for savings associations).  For all other associations, the minimum 
core capital leverage ratio would be 3 percent plus at least an additional 100 
to 200 basis points.  In determining the amount of additional capital under 
the proposal, the OTS would assess both the quality of risk management systems 
and the level of overall risk in each individual association through the 
supervisory process on a case-by-case basis.  Associations that failed the new 
leverage ratio would be required to file with the OTS a capital plan that 
details the steps they would take to reach compliance. If enacted in final 
form as proposed, management does not believe that the proposed regulation 
would have a material effect on First Federal.

     Although the OTS has not adopted this regulation in final form, generally 
a savings association that has a leverage capital ratio of less than 4 percent 
will be deemed to be "undercapitalized" under the OTS prompt corrective action 
regulations and consequently can be subject to various limitations on 
activities.

     The OTS' risk-based capital standard requires that savings associations 
maintain a ratio of total capital (which is defined as core capital and 
supplementary capital) to risk-weighted assets of 8 percent.  In calculating 
total capital, a savings association must deduct reciprocal holdings of 
depository institution capital instruments, all equity investments and that 
portion of land loans and nonresidential construction loans in excess of 80 
percent loan-to-value ratio and its interest rate risk component (as discussed 
below), in addition to the assets that must be deducted in calculating core 
capital.  In determining the amount of risk-weighted assets, all assets, 
including certain off-balance sheet assets, are multiplied by a risk-weight of 
0 percent to 100 percent, as assigned by the OTS capital regulation based on 
the risks OTS believes are inherent in the type of asset.

     The components of core capital are equivalent to those discussed above 
under the 3 percent leverage standard.  The components of supplementary 
capital include cumulative preferred stock, long-term perpetual preferred 
stock, mutual capital certificates, certain nonwithdrawable accounts and 
pledged deposits, certain net worth certificates, income capital certificates, 
certain perpetual subordinated debt, mandatory convertible subordinated debt, 
certain intermediate-term preferred stock, certain mandatorily redeemable 
                                  -Page 34-
preferred stock, allowance for loan and lease losses (up to 1.25 percent of 
risk-weighted assets) and certain unrealized gains on equity investments.  
Allowance for loan and lease losses includable in supplementary capital is 
limited to a maximum of 1.25 percent.  Overall, the amount of capital counted 
toward supplementary capital cannot exceed 100 percent of core capital.  At 
December 31, 1998, First Federal met each of its capital requirements.

     The OTS' interest rate risk component of the risk-based capital standards 
became effective on January 1, 1994.  Under the rule, savings associations 
with "above normal" interest rate risk exposure would be subject to a 
deduction from total capital for purposes of calculating their risk-based 
capital requirements.  A savings association's interest rate risk is measured 
by the decline in the net portfolio value of its assets (i.e., the difference 
between incoming and outgoing discounted cash flows from assets, liabilities 
and off-balance sheet contracts) that would result from a hypothetical 200-
basis point increase or decrease in market interest rates (except when the 
three-month Treasury bond equivalent yield falls below 4%, then the decrease 
would be equal to one-half of that Treasury rate) divided by the estimated 
economic value of the association's assets, as  calculated in accordance with 
guidelines set forth by the OTS.  A savings association whose measured 
interest rate risk exposure exceeds 2% must deduct an interest rate component 
in calculating its total capital under the risk-based capital rule.  The 
interest rate risk component is an amount equal to one-half of the difference 
between the association's measured interest rate risk and 2%, multiplied by 
the estimated economic value of the association's assets.  That dollar amount 
is deducted from an association's total capital in calculating compliance with 
its risk-based capital requirement.  Savings associations with assets of less 
than $300 million and risk-based capital ratios in excess of 12% are not 
subject to the interest rate risk component.  The rule also provides that the 
Director of the OTS may waive or defer an association's interest rate risk 
component.  The OTS has postponed the date that the risk component will first 
be deducted from an institution's total capital to allow, among other things, 
the OTS to evaluate the interest rate risk proposals issued by the other 
banking agencies.  

     Liquidity.  First Federal is required to maintain an average daily 
balance of liquid assets (e.g., cash, accrued interest on liquid assets,  
certain time deposits, savings accounts, bankers' acceptances, specified 
United States Government, state or federal agency obligations, shares of 
certain mutual funds and certain corporate debt securities and commercial 
paper) equal to not less than a specified percentage of the average daily 
balance of its net withdrawal deposit accounts plus short-term borrowings.  
This liquidity requirement may be changed from time to time by the OTS. The 
OTS may initiate enforcement actions for failure to meet these liquidity 
requirements. First Federal has never been subject to monetary penalties for 
failure to meet its liquidity requirements.

     Insurance of Deposit Accounts.  The FDIC has established a risk-based 
assessment system for insured depository associations that takes into account 
the risks attributable to different categories and concentrations of assets 
and liabilities.  Under the rule, the FDIC assigns an association to one of 
three capital categories consisting of (i) well capitalized, (ii) adequately 
capitalized or (iii) undercapitalized, and one of three supervisory 
subcategories.  The supervisory subgroup to which an association is assigned 
is based on a supervisory evaluation provided to the FDIC by the association's 
primary federal regulator and information which the FDIC determines to be
                                  -Page 35- 
relevant to the association's financial condition and the risk posed to the 
deposit insurance funds (which may include, if applicable, information 
provided by the association's state supervisor).  An association's assessment 
rate depends on the capital category and supervisory category to which it is 
assigned.  There are nine assessment risk classifications (i.e., combinations 
of capital groups and supervisory subgroups) to which different assessment 
rates are applied.  Assessment rates range from 23 basis points for an 
association in the highest category (i.e., well-capitalized and healthy) to 31 
basis points for an association in the lowest category (i.e., undercapitalized 
and of substantial supervisory concern).

     Limitation on Capital Distributions.  The OTS regulations impose 
limitations upon all capital distributions by savings associations, such as 
cash dividends, payments to repurchase or otherwise acquire its shares, 
payments to shareholders of another association in a cash-out merger and other 
distributions charged against capital.  The regulations establish three tiers 
of associations.  An association that exceeds all fully phased-in capital 
requirements before and after the proposed capital distribution ("Tier 1 
Association") and has not been advised by the OTS that it is in need of more 
than normal supervision, could, after prior notice but without the approval of 
the OTS, make capital distributions during a calendar year up to the higher of 
(a) 100 percent of its net income to date during the calendar year plus the 
amount that would reduce by one-half its "surplus capital ratio" (the excess 
capital over its fully phased-in capital requirements) at the beginning of the 
calendar year or (b) 75 percent of its net reserve over the most recent four-
quarter period.  Any additional capital distributions would require prior 
regulatory approval.  In computing the association's permissible percentage of 
capital distributions, previous distributions made during the prior four 
quarter period must be included.  As of December 31, 1998, First Federal met 
the requirements of a Tier 1 Association.  In the event First Federal's 
capital fell below its fully phased-in requirement or the OTS notified it that 
it was in need of more than normal supervision, the First Federal's ability to 
make capital distributions could be restricted.  In addition, the OTS could 
prohibit a proposed capital distribution by any association, which would 
otherwise be permitted by regulation, if the OTS determines that such 
distribution would constitute an unsafe or unsound practice.  Moreover, under 
the OTS prompt corrective action regulations, First Federal would be 
prohibited from making any capital distribution if, after the distribution, 
First Federal would have, (i) total risk-based capital ratio of less than 8 
percent, (ii) Tier 1 risk-based capital ratio of less than 4 percent, or (iii) 
a leverage ratio of less than 4 percent or has a leverage ratio that is less 
than 3 percent if the association is rated composite 1 under the CAMEL rating 
system in the most recent examination of the association and is not 
experiencing or anticipating significant growth. 

     Community Reinvestment.  The OTS, the FDIC, the Federal Reserve Board and 
the OCC have jointly issued a final rule (the "Final Rule") under the 
Community Reinvestment Act (the "CRA").  The Final Rule eliminates the 
existing CRA regulation's twelve assessment factors and substitutes a 
performance based evaluation system.  The Final Rule became effective by July 
1, 1997.  Under the Final Rule, an institution's performance in meeting the 
credit needs of its entire community, including low- and moderate-income 
areas, as required by the CRA, will generally be evaluated under three tests:  
the "lending test," the "investment test," and the "service test."
                                  -Page 36-
     The lending test analyzes lending performance using five criteria: (i) 
the number and amount of loans in the institution's assessment area, (ii) the 
geographic distribution of lending, including the proportion of lending in the 
assessment area, the dispersion of lending in the assessment area, and the 
number and amount of loans in low-, moderate-, middle-, and upper-income areas 
in the assessment area, (iii) borrower characteristics, such as the income 
level of individual borrowers and the size of businesses or farms, (iv) the 
number and amount, as well as the complexity and innovativeness of an 
institution's community development lending and (v) the use of innovative or 
flexible lending practices in a safe and sound manner to address the credit 
needs of low- or moderate-income individuals or areas.  The investment test 
analyzes investment performance using four criteria: (i) the dollar amount of 
qualified investments, (ii) the innovativeness or complexity of qualified 
investments, (iii) the responsiveness of qualified investments to credit and 
community development needs, and (iv) the degree to which the qualified 
investments made by the institution are not routinely provided by private 
investors.  The service test analyzes service performance using six criteria: 
(i) the institution's branch distribution among low-, moderate-, middle-, and 
upper-income areas, (ii) its record of opening and closing branches, 
particularly in low- and moderate-income areas, (iii) the availability and 
effectiveness of alternative systems for delivering retail banking services, 
(iv) the range of services provided in low-, moderate-, middle- and upper-
income areas and extent to which those services are tailored to meet the needs 
of those areas, (v) the extent to which the institution provides community 
development services, and (vi) the innovativeness and responsiveness of 
community development services provided.

     An independent financial institution with assets of less than $250 
million, or a financial institution with assets of less than $250 million that 
is a subsidiary of a holding company with assets of less than $1 billion, will 
be evaluated under a streamlined assessment method based primarily on its 
lending record.  The streamlined test considers an institution's loan-to-
deposit ratio adjusted for seasonal variation and special lending activities, 
its percentage of loans and other lending related activities in the assessment 
area, its record of lending to borrowers of different income levels and 
businesses and farms of different sizes, the geographic distribution of its 
loans, and its record of taking action, if warranted, in response to written 
complaints.  In lieu of being evaluated under the three assessment tests or 
the streamlined test, a financial institution can adopt a "strategic plan" and 
elect to be evaluated on the basis of achieving the goals and benchmarks 
outlined in the strategic plan.  

     Transactions with Related Parties.  First Federal's authority to engage 
in transactions with related parties or "affiliates," (i.e., any company that 
controls or is under common control with an association) including the 
Corporation and its non-savings-association subsidiaries or to make loans to 
certain insiders, is limited by Sections 23A and 23B of the 
Federal Reserve Act ("FRA").  Subsidiaries of a savings association are 
generally exempted from the definition of "affiliate."  Section 23A limits the 
aggregate amount of transactions with any individual affiliate to 10 percent 
of the capital and surplus of the savings association and also limits the 
aggregate amount of transactions with all affiliates to 20 percent of the 
savings association's capital and surplus.  Certain transactions with
                                 -Page 37- 
affiliates are required to be secured by collateral in an amount and of a type 
described in the FRA and the purchase of low quality assets from affiliates is 
generally prohibited.  Section 23B provides that certain transactions with 
affiliates, including loans and asset purchases, must be on terms and under 
circumstances, including credit standards, that are substantially the same or 
at least as favorable to the association as those prevailing at the time for 
comparable transactions with non-affiliated companies.  In the absence of 
comparable transactions, such transactions may only occur under terms and 
circumstances, including credit standards, that in good faith would be offered 
to or would apply to non-affiliated companies.  Notwithstanding Sections 23A 
and 23B, no savings association may lend to any affiliate that is engaged in 
activities that are not permissible for bank holding companies under Section 
4(c) of the Bank Holding Company Act ("BHC Act").  Further, no savings 
association may purchase the securities of any affiliate other than a 
subsidiary.

     First Federal's authority to extend credit to executive officers, 
directors and 10 percent shareholders, as well as such entities such persons 
control are currently governed by Section 22(g) and 22(h) of the FRA and 
Regulation O promulgated by the Federal Reserve Board.  Among other things, 
these regulations require such loans to be made on terms substantially similar 
to those offered to unaffiliated individuals, place limits on the amount of 
loans the Savings Bank may make to such persons based, in part, on the Savings 
Bank's capital position, and require certain approval procedures to be 
followed.  OTS regulations, with the exception of minor variations, apply 
Regulation O to savings associations.

     Prompt Corrective Regulatory Action.  FDICIA establishes a system of 
prompt corrective action to resolve the problems of undercapitalized 
associations.  Under this system, the OTS is required to take certain 
supervisory actions against undercapitalized associations, the severity of 
which depends upon the association's degree of undercapitalization. 
                                  
     Real Estate Lending Standards.  The OTS and the other federal banking 
agencies have uniform regulations prescribing real estate lending standards.  
The OTS regulation requires each savings association to establish and maintain 
written internal real estate lending standards consistent with safe and sound 
banking practices and appropriate to the size of the institution and the 
nature and scope of its real estate lending activities.  The policy must also 
be consistent with accompanying OTS guidelines, which include maximum loan-to-
value ratios for the following types of real estate loans: raw land (65 
percent), land development (75 percent), nonresidential construction (80 
percent), improved property (85 percent) and one- to four-family residential 
construction (85 percent).  Owner-occupied one- to four-family mortgage loans 
and home equity loans do not have maximum loan-to-value ratio limits, but 
those with a loan-to-value ratio at origination of 90 percent or greater are 
to be backed by private mortgage insurance or readily marketable collateral.  
Institutions are also permitted to make a limited amount of loans that do not 
conform to the proposed loan-to-value limitations so long as such exceptions 
are appropriately reviewed and justified.  The guidelines also list a number 
of lending situations in which exceptions to the loan-to-value standard are 
justified.

     Standards for Safety and Soundness.   The federal banking regulators 
adopted interagency guidelines establishing standards for safety and soundness 
for depository institutions on matters such as internal controls, loan 
documentation, credit underwriting, interest-rate risk exposure, asset growth, 
compensation and other benefits and asset quality and earnings.  The agencies 
expect to request a compliance plan from an institution whose failure to meet 
                                  -Page 38-
one or more of the standards is of such severity that it could threaten the 
safe and sound operation of the institution.  

Federal Reserve System

     The Federal Reserve Board regulations require savings institutions to 
maintain non-interest-earning reserves against their transaction accounts 
(primarily NOW and regular checking accounts), non-personal time deposits 
(those which are transferable or held by a person other than a natural person) 
with an original maturity of less than one and one-half years and certain 
money market accounts.  The Federal Reserve Board regulations generally 
require that reserves of 3% must be maintained against aggregate transaction 
accounts of $52 million or less (subject to adjustment by the Federal Reserve 
Board) and an initial reserve of $1.6 million plus 10 percent (subject to 
adjustment by the Federal Reserve Board between 8 percent and 14 percent) 
against that portion of total transaction accounts in excess of $52 million.  
The first $4.3 million of otherwise reservable balances (subject to 
adjustments by the Federal Reserve Board) are exempted from the reserve 
requirements. First Federal is in compliance with the foregoing requirements.

     The balances maintained to meet the reserve requirements imposed by the 
Federal Reserve Board may be used to satisfy liquidity requirements by the 
OTS.  Because required reserves must be maintained in the form of either vault 
cash, a non-interest-bearing account at a Federal Reserve Bank or a pass-
through account as defined by the Federal Reserve Board, the effect of this 
reserve requirement is to reduce the Savings Bank's interest-earning assets.

     FHLB System members are also authorized to borrow from the Federal 
Reserve "discount window," but Federal Reserve Board regulations require 
institutions to exhaust all FHLB sources before borrowing from a Federal 
Reserve Bank.

Holding Company Regulation

     Eagle is considered a non-diversified, savings and loan holding company 
within the meaning of the HOLA, has registered as a savings and loan holding 
company with the OTS and is subject to OTS regulations, examinations, 
supervision and reporting requirements.  In addition, the OTS has enforcement 
authority over the Corporation and its non-savings association subsidiaries.  
Among other things, this authority permits the OTS to restrict or prohibit 
activities that are determined to be a serious risk to the subsidiary savings 
association.

     The HOLA prohibits a savings and loan holding company, directly or 
indirectly, or through one or more subsidiaries, from (i) acquiring control 
of, or acquiring by merger or purchase of assets, another savings association 
or holding company thereof, without prior written approval of the OTS; (ii) 
acquiring or retaining, with certain exceptions, more than 5 percent of a non-
subsidiary savings association, a non-subsidiary holding company, or a non-
subsidiary company engaged in activities other than those permitted by the 
HOLA; or (iii) acquiring or retaining control of an institution that is not 
federally insured.  In evaluating applications by holding companies to acquire 
savings associations, the OTS must consider the financial and managerial 
resources and future prospects of the company and institution involved, the 
effect of the acquisition on the risk to the insurance funds, the convenience 
and needs of the community and competitive factors.
                                 -Page 39-
     As a unitary savings and loan holding company, Eagle generally is not 
restricted under existing laws as to the types of business activities in which 
it may engage, provided that its savings association subsidiary continues to 
satisfy the QTL test. Upon any acquisition by Eagle of another SAIF-insured 
institution (other than the Corporation), a federal savings bank insured by 
the BIF, or a state-chartered BIF-insured savings bank meeting the QTL test 
that is deemed to be a savings institution by OTS, except for a supervisory 
acquisition, Eagle would become a multiple savings and loan holding company 
(if the acquired institution is held as a separate subsidiary) and would be 
subject to extensive limitations on the types of business activities in which 
it could engage.  The HOLA, as amended by the FIRREA, limits the activities of 
a multiple savings and loan holding company and its non-insured institution 
subsidiaries primarily to activities permissible for bank holding companies 
under Section 4(c)(8) of the BHC Act, subject to the prior approval of the 
OTS, and activities in which multiple savings and loan holding companies were 
authorized by regulation to engage in on March 5, 1987.  Such activities 
include mortgage banking, consumer finance, operation of a trust company, and 
certain types of securities brokerage.  The services and activities in which 
multiple holding companies were authorized to engage in on March 5, 1987 
generally correspond to the activities which are permitted for service 
corporations of federally-chartered savings institutions.

Executive Officers of the Registrant
<TABLE>
     The following are the executive officers of the Company, each of whom is 
elected annually, and there are no arrangements or understandings between any 
of the persons so named and any other person pursuant to which such person was 
elected as an executive officer.  
<CAPTION>
Name                    Age  Positions with Registrant
<S>                    <C>  <C>
Donald L. Fernandes      41  President, Chief Executive Officer and Director 
                             of Eagle since formation of the Company in 1996.
                             Chairman of the Board and Chief Executive Officer
                             Of First Federal since August, 1997.  From
                             August, 1995 to August, 1997, President and Chief
                             Executive Officer of First Federal.  Senior Vice 
                             President and Chief Financial Officer of First
                             Federal prior thereto.

David R. Wampler         38  Vice President and Director of Eagle since
                             August, 1997.  President and Director of First
                             Federal since August, 1997.  From July, 1993
                             through July, 1997, President of Central Illinois
                             Bank of McLean County.  Commercial Lending
                             Officer for Bank One, Bloomington, prior thereto. 
                             
Larry C. McClellan       44  Vice President - Operations of First Federal
                             since August, 1995.  Controller of First Federal
                             prior thereto.

Gary L. Richardson       46  Vice President - Lending of First Federal since
                             February, 1993.  Senior Consumer Lending Officer
                             for First of America Bank-Illinois, NA,
                             Bloomington prior thereto.
                                  -Page 40-
James E. Lyons           39  Vice President - Finance of First Federal since
                             March, 1998.  From October, 1995 to March, 1998,
                             Assistant Vice President of First Federal.
                             Assistant Vice President of Commerce Bank prior
                             thereto.
                           
Donald L. Lambert        38  Vice President - Retail Banking Services of First
                             Federal since November, 1998.  Vice President - 
                             Business Development of Pontiac National Bank 
                             From January, 1997 to November, 1998.  Vice
                             President - Farm Manager of Pontiac National
                             Bank prior thereto.  
</TABLE>
Item 2.  PROPERTIES

     The Company conducts its business through four full-service offices.  The 
main office is located at 301 Fairway Drive, Bloomington, Illinois.  All 
offices are owned in fee and are unencumbered with the exception of the 
Lexington branch, which opened in December, 1998 in an office building shared 
with an insurance agency.  The owner of the insurance agency owns the 
building, which First Federal paid to renovate.  First Federal signed a three 
year lease in August, 1998 and has an option to renew.  The Company believes 
that its current facilities are adequate to meet its present and foreseeable 
needs.
<TABLE>
<CAPTION>
                                              Date         Net Book Value
Office                                      Acquired     December 31, 1998
                                                           (in thousands)
<S>                                         <C>              <C>
Main Office
  301 Fairway Drive
  Bloomington, Illinois 61701                 1981            $1,213
Veterans Parkway Branch
  1111 South Veterans Parkway
  Bloomington, Illinois  61701                1994             1,272
LeRoy Branch
  207 South East Street
  LeRoy, Illinois 61752                       1983               220
Lexington Branch
  302 West Main Street
  Lexington, Illinois 61753                   1998               114
</TABLE> 
Item 3.  LEGAL PROCEEDINGS

     The Company is, from time to time, party to legal proceedings arising in 
the normal course of its business, including legal proceedings to enforce its 
rights against borrowers.  The Company is not currently party to any legal 
proceedings which could reasonably be expected to have a material adverse 
effect on the financial condition or operations of the Company.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders through a 
solicitation of proxies or otherwise in the quarter ended December 31, 1998.
                                  -Page 41
                                  PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
MATTERS

     The information called for by this item is incorporated by reference to 
'Common Stock - Market Information' on page 37 of the Corporation's Annual 
Report to Stockholders for the year ended December 31, 1998.
                                                               
Item 6.  SELECTED FINANCIAL DATA

     The information called for by this item is incorporated by reference to 
'Financial Highlights' on page 1 of the Corporation's Annual Report to 
Stockholders for the year ended December 31, 1998. 

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

     The information called for by this item is incorporated by reference to 
'Management's Discussion and Analysis' on pages 2 through 9 of the 
Corporation's Annual Report to Stockholders for the year ended December 31, 
1998.

Item 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The information called for by this item is incorporated by reference to 
'Management's Discussion and Analysis' on pages 2 through 9 of the 
Corporation's Annual Report to Stockholders for the year ended December 31, 
1998.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
     The following financial statements of the Corporation and its 
subsidiaries included in the Corporation's Annual Report to Stockholders for 
the year ended December 31, 1998 are incorporated herein by reference.
<CAPTION>  
                                                             1998 Annual
                                                            Report Page(s)
<S>                                                          <C>
Report of Independent Auditors                                    10

Consolidated Statements of Condition as of
     December 31, 1998 and 1997                                   11

Consolidated Statements of Income for the Years
     Ended December 31, 1998, 1997 and 1996                       12

Consolidated Statements of Cash Flows for the Years
     Ended December 31, 1998, 1997 and 1996                     14-15

Consolidated Statements of Changes in Stockholders' Equity
     For the Years Ended December 31, 1998, 1997 and 1996         13

Notes to Consolidated Financial Statements                      16-36
</TABLE>
                                  -Page 42-
Note 13 of Notes to Consolidated Financial Statements titled 'Quarterly 
Financial Data' on pages 33 and 34 of the Corporation's 1998 Annual Report to 
Stockholders for the year ended December 31, 1998 is incorporated herein by 
reference.

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE

     None.

                                   PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

     The information called for by this item with respect to directors and 
director nominees is presented in Eagle's Notice and Proxy Statement dated 
March 22, 1999 on pages 4 and 5 under the caption 'Proposal 1 - Election of 
Directors' and on page 13 under the caption 'Section 16(a) Beneficial 
Ownership Reporting Compliance' and is incorporated herein by reference.

     The information called for by this item with respect to executive 
officers is included under the caption 'Executive Officers of the Registrant' 
under Item 1 of this Form 10-K on page 40.

Item 11.  EXECUTIVE COMPENSATION

     The information called for by this item is presented in Eagle's Notice 
and Proxy Statement dated March 22, 1999 on pages 6 through 10 under the 
caption 'Executive Compensation' and is incorporated herein by reference.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information called for by this item is presented in Eagle's Notice 
and Proxy Statement dated March 22, 1999 on pages 2 through 4 under the 
caption 'Voting Securities and Principal Holders Thereof' and is incorporated 
herein by reference.
                                  
Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information called for by this item is presented in Eagle's Notice 
and Proxy Statement dated March 22, 1999 on page 9 under the caption  
'Compensation Committee Interlocks and Insider Participations' and is 
incorporated herein by reference.

                                 PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a) The following documents are filed as part of this report:

          1. Financial Statements - The financial statements required by this
     item are listed under Item 8 of Part II of this document.

          2. Financial Statement Schedules - The financial statement schedules
     required by this item are either not applicable or are included in the 
     financial statements.
                                  -Page 43-            
          3. Exhibits - The exhibits listed on the Exhibit Index beginning on  
     page 45 of this Form 10-K are filed herewith or are incorporated herein 
     by reference to other Filings.

     (b) Reports on Form 8-K:

         No reports on Form 8-K filed during the quarter ended December 31, 
1998. 


                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned, thereunto duly authorized.

                                             EAGLE BANCGROUP, INC


               Date: March 26, 1999          By: /s/ Donald L. Fernandes
                                             ---------------------------
                                             DONALD L. FERNANDES,
                                             President and Chief	 
                                             Executive Officer
                                  -Page 44-
     Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
Registrant and in the capacities and on the dates indicated.

Signature                     Title                         Date

                              President, Chief Executive
/s/ Donald L. Fernandes       Officer, Director, Chief      March 26, 1999
-----------------------       Financial Officer and                         
  DONALD L. FERNANDES         Principal Accounting Officer

/s/ Gerald A. Bradley         Chairman of the Board         March 26, 1999
---------------------
  GERALD A. BRADLEY

/s/ David R. Wampler          Vice President and Director   March 26, 1999
--------------------
  DAVID R. WAMPLER

/s/ Robert P. Dole            Director                      March 26, 1999
------------------
  ROBERT P. DOLE

/s/ William J. Hanfland       Director                      March 26, 1999
-----------------------
  WILLIAM J. HANFLAND

/s/ Louis F. Ulbrich          Director                      March 26, 1999
--------------------
  LOUIS F. ULBRICH

/s/ Steven J. Wannemacher     Director                      March 26, 1999
-------------------------
  STEVEN J. WANNEMACHER

<TABLE>
                                  EXHIBIT INDEX
<CAPTION>
Item                      Exhibit                                       Page
<S>                      <C>                                           <C>
3. Articles of            3.1  Certificate on Incorporation of
Incorporation and              Registrant as filed in Delaware on
Bylaws                         January 24, 1996 (1)

                          3.2  Bylaws of Registrant as adopted by the
                               Board of Directors of Registrant on
                               January 25, 1996 (1)

4. Instruments defining   4.1  Specimen Stock Certificate of 
the rights of holders,         Registrant (1)
including indentures      
                          4.2  Articles IV, V, VI, VII, XI, XII, XIII,
                               XIV, XVI, and XVII of the Registrant's
                               Certificate of Incorporation (See 
                               Exhibit 3.1)
                                  -Page 45-
                          4.3  Articles II, III, IV, VIII and XI of
                               the Registrant's Bylaws (See
                               Exhibit 3.2)

10. Material contracts   10.1  First Federal Savings and Loan 
                               Association of Bloomington Employee
                               Stock Ownership Plan (1)

                         10.2  Credit Agreement between Registrant
                               and First Federal Savings and Loan
                               Association of Bloomington Employee
                               Stock Ownership Plan (1)

                         10.3  Eagle BancGroup, Inc. 1996 Stock  
                               Option and Incentive Plan (2)

                         10.4  Eagle BancGroup, Inc. Management
                               Development and Recognition Plan
                               and Trust Agreement (2)

                         10.5  Deferred Compensation Agreement, 
                               dated as of September 22, 1992, 
                               between First Federal Savings and
                               Loan Association of Bloomington
                               and Donald L. Fernandes (1)

                         10.6  Employment Security Agreement, dated
                               as of July 1, 1996, between the
                               Registrant and Larry C. McClellan          48 

                         10.7  Employment Security Agreement, dated
                               as of July 8, 1996, between the
                               Registrant and Gary L. Richardson          53

                         10.8  Employment Agreement, dated as of October
                               23, 1998, among Eagle BancGroup, Inc., 
                               First Federal Savings and Loan Association     
                               of Bloomington and Donald L. Fernandes     58

                         10.9  Employment Agreement, dated as of October
                               23, 1998, among Eagle BancGroup, Inc., 
                               First Federal Savings and Loan Association     
                               of Bloomington and David R. Wampler        68

                         10.10 Employment Security Agreement, dated as
                               of October 23, 1998, between the
                               Registrant and James E. Lyons              78
            
                         10.11 Employment Security Agreement, dated as
                               of November 30, 1998, between the 
                               Registrant and Donald L. Lambert           82

13. Annual report to     13.1  1998 Annual Report to
security holders               Stockholders                               87
                                   -Page 46-
21. Subsidiaries of      21.1  List of subsidiaries of the 
the registrant                 Registrant                                128

23. Consent of experts   23.1  Consent of McGladrey & Pullen, LLP        129
and counsel
                         23.2  Consent of Ernst & Young LLP              129

27. Financial Data       27.1  Financial Data Schedule as of
Schedule                       December 31, 1999

99. Additional exhibits  99.1  Report of Independent Auditors            129
<FN>    
<F1>
 Incorporated by reference to Exhibits filed with the Registration 
Statement on Form S-1, Registration No. 333-2474.
<F2>
 Incorporated by reference to Notice and Proxy Statement for Special 
Meeting of Stockholders dated January 10, 1997, filed January 9, 1997.
                                  -Page 47-
</FN>
</TABLE>