<PAGE>   1

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


                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

                          Commission File No. 333-14713


                           TAYLOR CAPITAL GROUP, INC.
                Exact Name of Registrant as Specified in Charter

             DELAWARE                                     36-4108550
  State or Other Jurisdiction of                       I.R.S. Employer
  Incorporation or Organization                     Identification Number


                         350 EAST DUNDEE ROAD, SUITE 300
                          WHEELING, ILLINOIS 60090-3199
                     Address of Principal Executive Offices

                                 (847) 808-6873
               Registrant's Telephone Number, Including Area Code


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


The number of outstanding shares of each of the Registrant's classes of common
stock, as of the latest practicable date:

<TABLE>
<CAPTION>
          Class                                    Outstanding at August 4, 1999
          -----                                    -----------------------------
<S>                                                <C>
Common Stock, $.01 Par Value                               4,652,549
</TABLE>

<PAGE>   2

                           TAYLOR CAPITAL GROUP, INC.

                                      INDEX

<TABLE>
<CAPTION>
PART  I.  FINANCIAL INFORMATION..........................................................................   PAGE

<S>                                                                                                          <C>
     Item 1.    Financial Statements

                Consolidated Balance Sheets (Unaudited) -
                    June 30, 1999 and December 31, 1998..................................................     3

                Consolidated Statements of Income (Unaudited) -
                    For the Three and Six Months Ended June 30, 1999
                    and For the Three and Six Months Ended June 30, 1998.................................     4

                Consolidated Statements of Cash Flows (Unaudited) -
                    For the Six Months Ended June 30, 1999 and For
                    the Six Months Ended June 30, 1998...................................................     5

                Notes to Financial Statements (Unaudited)................................................     6

     Item 2.    Management's Discussion and Analysis of Financial Condition and
                    Results of Operations................................................................    17

     Item 3.    Quantitative and Qualitative Disclosures About Market Risk...............................    34


PART II.  OTHER INFORMATION

     Item 1.    Legal Proceedings........................................................................    35

     Item 6.    Exhibits and Reports on Form 8-K.........................................................    35

     SIGNATURES .........................................................................................    36
</TABLE>


                                       2
<PAGE>   3

PART I. FINANCIAL INFORMATION  - ITEM 1.  Financial Statements

                           TAYLOR CAPITAL GROUP, INC.
                     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                 (in thousands, except share and per share data)


<TABLE>
<CAPTION>
                                                                                     June 30,        December 31,
                                                                                        1999             1998
                                                                                    -----------      -----------
                                      ASSETS
<S>                                                                                 <C>              <C>
Cash and due from banks                                                             $    69,710      $    66,192
Interest-bearing deposits with banks                                                         55            1,200
Federal funds sold                                                                         --                 31
Investment securities:
     Available-for-sale, at fair value                                                  361,774          351,408
     Held-to-maturity, at amortized cost (fair value of $84,657 and $91,620 at
         June 30, 1999 and December 31, 1998, respectively)                              84,459           89,753
Loans held for sale, net, at lower of cost or market                                     32,372           42,257
Loans, net of allowance for loan losses of $25,855 and $24,599 at June 30, 1999
     and December 31, 1998, respectively                                              1,359,134        1,269,125
Premises, leasehold improvements and equipment, net                                      24,418           22,702
Other real estate and repossessed assets, net                                             2,721            3,267
Goodwill, net of amortization of $5,895 and $4,683
     at June 30, 1999 and December 31, 1998, respectively                                30,191           32,053
Other assets                                                                             32,304           32,342
                                                                                    -----------      -----------
         Total assets                                                               $ 1,997,138      $ 1,910,330
                                                                                    ===========      ===========

                       LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
     Noninterest-bearing                                                            $   316,989      $   350,711
     Interest-bearing                                                                 1,184,344        1,089,026
                                                                                    -----------      -----------
         Total deposits                                                               1,501,333        1,439,737

Short-term borrowings                                                                   213,145          171,718
Accrued interest, taxes and other liabilities                                            22,720           22,242
Notes payable                                                                           114,500          131,500
                                                                                    -----------      -----------
              Total liabilities                                                       1,851,698        1,765,197
                                                                                    -----------      -----------

Stockholders' equity:
     Preferred stock, $.01 par value, 3,000,000 shares authorized, Series A 9%
         noncumulative perpetual, 1,530,000 shares issued and
         outstanding, $25 stated and redemptive value                                    38,250           38,250
     Common stock, $.01 par value; 7,000,000 shares authorized, 4,652,549
         and 4,658,533 shares issued and outstanding at June 30, 1999 and
         December 31, 1998, respectively                                                     47               47
     Surplus                                                                             99,998           99,990
     Unearned compensation - stock grants                                                (1,713)          (2,083)
     Employee stock ownership plan loan                                                    (576)            (576)
     Retained earnings                                                                   12,191            9,434
     Accumulated other comprehensive income (loss)                                       (2,757)              71
                                                                                    -----------      -----------
              Total stockholders' equity                                                145,440          145,133
                                                                                    -----------      -----------
                  Total liabilities and stockholders' equity                        $ 1,997,138      $ 1,910,330
                                                                                    ===========      ===========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>   4


                           TAYLOR CAPITAL GROUP, INC.
                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                                 (in thousands)


<TABLE>
<CAPTION>
                                                      For the Three Months Ended   For the Six Months Ended
                                                              June 30,                   June 30,
                                                      -------------------------   -------------------------
                                                         1999          1998           1999          1998
                                                      --------      --------        --------      --------
<S>                                                   <C>           <C>           <C>           <C>
Interest income:
     Interest and fees on loans                       $ 28,994      $ 27,405      $ 56,458      $ 53,860
     Interest and dividends on investment
     securities:
         Taxable                                         5,030         5,751         9,679        12,229
         Tax-exempt                                        857           822         1,755         1,607
     Interest on cash equivalents                          193            44           274           134
                                                      --------      --------      --------      --------
              Total interest income                     35,074        34,022        68,166        67,830
                                                      --------      --------      --------      --------

Interest expense:
     Deposits                                           11,898        12,052        23,338        23,994
     Short-term borrowings                               2,121         2,643         4,094         5,140
     Notes payable                                       1,607         1,880         3,356         3,745
                                                      --------      --------      --------      --------
              Total interest expense                    15,626        16,575        30,788        32,879
                                                      --------      --------      --------      --------

Net interest income                                     19,448        17,447        37,378        34,951
Provision for loan losses                                1,500         1,500         3,000         2,250
                                                      --------      --------      --------      --------
              Net interest income after provision
                  for loan losses                       17,948        15,947        34,378        32,701
                                                      --------      --------      --------      --------

Noninterest income:
     Service charges                                     2,392         2,267         4,521         4,591
     Trust fees                                          1,051           977         2,131         1,922
     Gain on sales of loans, net                           684         1,150         1,491         1,951
     Gain on sale of mortgage servicing rights             193            15           193         1,462
     Investment securities gains, net                     --            --             107          --
     Other noninterest income                              620           431         1,306           841
                                                      --------      --------      --------      --------
              Total noninterest income                   4,940         4,840         9,749        10,767
                                                      --------      --------      --------      --------

Noninterest expense:
     Salaries and employee benefits                      9,261         9,242        18,741        18,367
     Occupancy of premises, net                          1,563         1,805         3,320         3,519
     Furniture and equipment                               865           917         1,623         1,726
     Computer processing                                   565           505         1,188         1,066
     Advertising and public relations                      261           805           413           963
     Goodwill and other intangible amortization            600           613         1,212         1,224
     Legal fees                                          1,471         1,688         2,618         2,002
     Other noninterest expense                           2,940         2,691         5,636         5,687
                                                      --------      --------      --------      --------
              Total noninterest expense                 17,526        18,266        34,751        34,554
                                                      --------      --------      --------      --------

Income before income taxes and cumulative
     effect of change in accounting principle            5,362         2,521         9,376         8,914
Income taxes                                             2,137         1,143         3,769         3,655
                                                      --------      --------      --------      --------

Income before cumulative effect of change in
     accounting principle                                3,225         1,378         5,607         5,259
Cumulative effect of change in accounting
     principle, net of tax                                --            --            (214)         --
                                                      --------      --------      --------      --------
                  Net income                          $  3,225      $  1,378      $  5,393      $  5,259
                                                      ========      ========      ========      ========
Preferred dividend requirements                           (860)         (860)       (1,721)       (1,721)
                                                      --------      --------      --------      --------
Net income applicable to common stockholders          $  2,365      $    518      $  3,672      $  3,538
                                                      ========      ========      ========      ========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       4
<PAGE>   5

                           TAYLOR CAPITAL GROUP, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                  For the Six Months Ended
                                                                                          June 30,
                                                                                  ------------------------
                                                                                       1999           1998
                                                                                  ---------      ---------
<S>                                                                               <C>            <C>
Cash flows from operating activities:
     Net income                                                                   $   5,393      $   5,259
     Adjustments to reconcile net income to net cash provided by
         (used in) operating activities:
         Investment securities gains, net                                              (107)          --
         Amortization of premiums and discounts, net                                  1,509          1,881
         Provision for loan losses                                                    3,000          2,250
         Gain on sales of loans originated for sale                                  (1,347)        (2,290)
         Loans originated and held for sale                                        (100,124)      (158,270)
         Proceeds from sales of loans originated for sale                           111,164        151,077
         Depreciation and amortization                                                3,114          3,093
         Other adjustments to net income, net                                         1,097            211
         Net changes in other assets and liabilities                                  3,258         (3,226)
                                                                                  ---------      ---------
              Net cash provided by (used in) operating activities                    26,957            (15)
                                                                                  ---------      ---------

Cash flows from investing activities:
     Purchases of available-for-sale securities                                    (128,366)       (21,516)
     Purchases of held-to-maturity securities                                          (274)       (10,089)
     Proceeds from principal payments and maturities of
         available-for-sale securities                                               62,344         38,532
     Proceeds from principal payments and maturities of
         held-to-maturity securities                                                  5,369         10,165
     Proceeds from sales of available-for-sale securities                            50,102           --
     Net increase in loans                                                          (94,363)       (43,133)
     Decrease in reverse exchange assets                                               --           18,757
     Other, net                                                                      (2,891)        (1,179)
                                                                                  ---------      ---------
              Net cash used in investing activities                                (108,079)        (8,463)
                                                                                  ---------      ---------

Cash flows from financing activities:
     Net increase in deposits                                                        61,596         13,859
     Net increase (decrease) in short-term borrowings                                41,427        (10,696)
     Repayments of notes payable                                                    (42,000)       (86,400)
     Proceeds from notes payable                                                     25,000        106,400
     Decrease in nonrecourse borrowings                                                --          (18,757)
     Dividends paid                                                                  (2,559)        (2,557)
                                                                                  ---------      ---------
              Net cash provided by financing activities                              83,464          1,849
                                                                                  ---------      ---------

Net increase (decrease) in cash and cash equivalents                                  2,342         (6,629)
Cash and cash equivalents, beginning of period                                       67,423         84,616
                                                                                  ---------      ---------
Cash and cash equivalents, end of period                                          $  69,765      $  77,987
                                                                                  =========      =========

Supplemental disclosure of cash flow information: Cash paid during the period
     for:
         Interest                                                                 $  30,631      $  33,284
         Income taxes                                                                 1,572          6,775
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       5
<PAGE>   6

                           TAYLOR CAPITAL GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1.   Basis of Presentation:

     The Taylor Capital Group, Inc. consolidated financial statements include
     the accounts of Taylor Capital Group, Inc. (the "Parent Company") and its
     wholly owned subsidiaries (collectively, with the Parent Company, the
     "Company"): Cole Taylor Bank and its subsidiaries (the "Bank") and CT
     Mortgage Company, Inc. (the "Mortgage Company").

     The unaudited interim financial statements have been prepared pursuant to
     the rules and regulations for reporting on Form 10-Q. Accordingly, certain
     disclosures required by generally accepted accounting principles are not
     included herein. These interim statements should be read in conjunction
     with the financial statements and notes thereto included in the Company's
     Annual Report on Form 10-K for the year ended December 31, 1998, as filed
     with the Securities and Exchange Commission.

     Interim statements are subject to possible adjustment in connection with
     the annual audit of the Company for the year ended December 31, 1999. In
     the opinion of management of the Company, the accompanying unaudited
     interim consolidated financial statements reflect all adjustments
     (consisting of normal recurring adjustments) necessary for a fair
     presentation of the consolidated financial position and consolidated
     results of operations as of the dates and for the periods presented.

     The results of operations for the six months ended June 30, 1999 are not
     necessarily indicative of the results to be expected for the full year.

2.   Investment Securities:

     The amortized cost and estimated fair values of investment securities at
     June 30, 1999 and December 31, 1998 were as follows:

<TABLE>
<CAPTION>
                                                                             June 30, 1999
                                                     ---------------------------------------------------------------
                                                                          Gross           Gross
                                                     Amortized Cost    Unrealized      Unrealized       Estimated
                                                                          Gains          Losses        Fair Value
                                                     ---------------  --------------  --------------  --------------
                                                                          (in thousands)
<S>                                                    <C>             <C>             <C>              <C>
Available-for-sale:
     U.S. Treasury securities                          $ 65,349        $    122        $   (175)        $ 65,296
     U.S. government agency securities                   76,558              28            (494)        $ 76,092
     Collateralized mortgage obligations                115,348              18          (1,935)         113,431
     Mortgage-backed securities                         108,759           1,009          (2,813)         106,955
                                                       --------        --------        --------         --------
              Total available-for-sale                  366,014           1,177          (5,417)         361,774
                                                       --------        --------        --------         --------

Held-to-maturity:
     State and municipal obligations                     69,552           1,416          (1,230)          69,738
     Federal Reserve Bank and Federal Home Loan
         Bank equity securities                          14,057            --              --             14,057
     Other debt securities                                  850              17              (5)             862
                                                       --------        --------        --------         --------
              Total held-to-maturity                     84,459           1,433          (1,235)          84,657
                                                       --------        --------        --------         --------
                  Total                                $450,473        $  2,610        $ (6,652)        $446,431
                                                       ========        ========        ========         ========
</TABLE>


                                       6
<PAGE>   7

                           TAYLOR CAPITAL GROUP, INC.
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)

<TABLE>
<CAPTION>
                                                                           December 31, 1998
                                                    ---------------------------------------------------------------
                                                                        Gross           Gross
                                                    Amortized Cost   Unrealized       Unrealized       Estimated
                                                                        Gains            Losses        Fair Value
                                                    ---------------  --------------  --------------  --------------
                                                                             (in thousands)
<S>                                                    <C>             <C>             <C>              <C>
Available-for-sale:
     U.S. Treasury securities                          $110,019        $    859        $   --           $110,878
     U.S. government agency securities                   51,287             125             (86)          51,326
     Collateralized mortgage obligations                 91,696              52          (2,054)          89,694
     Mortgage-backed securities                          98,296           1,466            (252)          99,510
                                                       --------        --------        --------         --------
              Total available-for-sale                  351,298           2,502          (2,392)         351,408
                                                       --------        --------        --------         --------

Held-to-maturity:
     State and municipal obligations                     74,609           2,752            (947)          76,414
     Federal Reserve Bank and Federal Home Loan
         Bank equity securities                          14,319            --              --             14,319
     Other debt securities                                  825              62            --                887
                                                       --------        --------        --------         --------
              Total held-to-maturity                     89,753           2,814            (947)          91,620
                                                       --------        --------        --------         --------
                  Total                                $441,051        $  5,316        $ (3,339)        $443,028
                                                       ========        ========        ========         ========
</TABLE>


3.   Loans:

     Loans classified by type at June 30, 1999 and December 31, 1998 were as
     follows:

<TABLE>
<CAPTION>
                                                June 30,          December 31,
                                                  1999                1998
                                              -----------         -----------
                                                        (in thousands)
<S>                                           <C>                 <C>
Commercial and industrial                     $   781,627         $   749,984
Real estate-construction                          271,386             232,018
Residential real estate-mortgages                 151,161             150,930
Home equity lines of credit                       104,699             106,521
Consumer                                           76,229              53,751
Other loans                                           662               1,806
                                              -----------         -----------
     Gross loans                                1,385,764           1,295,010

Less:  Unearned discount                             (775)             (1,286)
                                              -----------         -----------
     Total loans                                1,384,989           1,293,724

Less:  Allowance for loan losses                  (25,855)            (24,599)
                                              -----------         -----------
         Loans, net                           $ 1,359,134         $ 1,269,125
                                              ===========         ===========
</TABLE>


                                       7
<PAGE>   8

                           TAYLOR CAPITAL GROUP, INC.
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)

4.   Interest-Bearing Deposits:

     Interest-bearing deposits at June 30, 1999 and December 31, 1998 were as
follows:

<TABLE>
<CAPTION>
                                                  June 30,          December 31,
                                                    1999               1998
                                                ------------      --------------
                                                        (in thousands)
<S>                                             <C>                 <C>
NOW accounts                                    $  125,988          $  120,900
Savings accounts                                   107,191             107,274
Money market deposits                              225,411             234,197
Certificates of deposit                            463,502             448,773
Public time deposits                               113,637             121,614
Brokered certificates of deposit                   148,615              56,268
                                                ----------          ----------
     Total                                      $1,184,344          $1,089,026
                                                ==========          ==========
</TABLE>

 5.  Notes Payable:

     Notes payable at June 30, 1999 and December 31, 1998 were as follows:

<TABLE>
<CAPTION>
                                                                                     June 30,        December 31,
                                                                                      1999              1998
                                                                                    ---------         ---------
                                                                                         (in thousands)
<S>                                                                                  <C>               <C>
TAYLOR CAPITAL GROUP, INC.:
 $25 million term loan bearing interest at prime rate or LIBOR plus 1.15%,
     annual principal reductions of $1 million commencing in February 1999
     and a balloon payment of $22 million on February 12, 2002; interest
     rates at June 30, 1999 and December 31, 1998 were 6.15% and
     6.42% respectively.                                                              $24,000           $25,000


$12  million revolving credit facility bearing interest at prime rate or LIBOR
     plus 1.15%, maturing September 1, 1999; interest rates at June 30, 1999 and
     December 31, 1998 were 6.15% and 6.43% respectively.                                 500             1,500

COLE TAYLOR BANK:
Federal Home Loan Bank (FHLB) - various advances ranging from $10 million to $30
     million due at various dates through October 2000 and $30 million due
     February 2008, callable by the FHLB quarterly beginning February 1999;
     collateralized by qualified first mortgage residential loans and FHLB
     stock; weighted average interest rates at June 30, 1999 and
     December 31, 1998 were 4.94% and 5.23% respectively.                              90,000           105,000
                                                                                     --------          --------
Total                                                                                $114,500          $131,500
                                                                                     ========          ========
</TABLE>


                                       8
<PAGE>   9

                           TAYLOR CAPITAL GROUP, INC.
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)

     The loan agreement requires compliance with certain defined financial
     covenants relating to the Bank, including covenants related to regulatory
     capital, return on average assets, nonperforming assets and Parent Company
     leverage. As of June 30, 1999, the Company was unaware of any instances of
     non-compliance.

 6.  Incentive Compensation Plan:

     The Company has an Incentive Compensation Plan (the "Plan") that allows for
     the granting of stock options and other stock awards. During the six months
     ended June 30, 1999, stock options were granted with respect to 113,370
     shares of common stock at an exercise price of $27.00 per share, the fair
     market value of the common stock on the grant date, as determined by the
     most recent semi-annual independent appraisal. Stock options with respect
     to 25,672 shares of common stock were forfeited during the period. Stock
     options with respect to 4,113 shares were exercised during the period at an
     average exercise price of $24.38. As of June 30, 1999, there were total
     stock options outstanding, net of forfeitures, with respect to 314,021
     shares of common stock at a weighted average option price of $24.45.

     In addition, during the first six months of 1999, 13,925 shares of common
     stock were awarded, and 19,909 shares of common stock were forfeited, under
     restricted stock agreements.

 7.  Comprehensive Income:

     Comprehensive income has been defined as changes in stockholders' equity
     arising from transactions and other economic events from nonstockholder
     sources. For the Company, comprehensive income includes net income and
     unrealized holding gains or losses on available-for-sale investment
     securities. The following table presents comprehensive income for the
     periods indicated:

<TABLE>
<CAPTION>
                                                     For the Three Months Ended         For the Six Months Ended
                                                                June 30,                        June 30,
                                                     -----------------------------------------------------------------
                                                         1999          1998               1999             1998
                                                     ------------  ------------       ------------     ------------
                                                                            (in thousands)
<S>                                                      <C>           <C>                <C>              <C>
     Net income, as reported                             $3,225        $1,378             $5,393           $5,259
     Other comprehensive income:
          Change in unrealized  losses on
              available-for-sale securities              (4,392)       (1,042)            (4,137)          (2,027)
          Less: reclassification adjustment for
              gains included in net income                   --            --               (107)              --
                                                         ------        ------             ------           ------
                                                         (4,392)       (1,042)            (4,244)          (2,027)
          Income tax benefit related
              to other comprehensive loss                (1,537)         (353)            (1,416)            (688)
                                                         ------        ------             ------           ------
          Other comprehensive loss, net of tax           (2,855)         (689)            (2,828)          (1,339)
                                                         ------        ------             ------           ------
                   Total comprehensive income            $  370        $  689             $2,565           $3,920
                                                         ======        ======             ======           ======
</TABLE>


                                       9
<PAGE>   10

                           TAYLOR CAPITAL GROUP, INC.
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)

8.   Litigation:

     Jeffrey W. Taylor, Chairman of the Board and Chief Executive Officer of the
     Company, Bruce W. Taylor, President of the Company, Iris A. Taylor, Sidney
     J. Taylor, Cindy Taylor Bleil, related trusts and a related partnership
     (collectively, the "Taylor Family") have been named as defendants in the
     lawsuits described below relating to (1) the Split-Off Transactions and (2)
     the financial and public reporting of Reliance Acceptance Group, Inc.
     (Reliance). Certain of the lawsuits also named other current or former
     officers and directors of the Company and Reliance, other stockholders of
     the Company, Reliance's public accountants at the time of the Split-Off
     Transactions (who continue to serve as the Company's public accountants),
     the investment banks that were involved in the Split-Off Transactions,
     Reliance and the Company as additional defendants. The filing dates of
     these lawsuits ranged from October 1997 to September 1998.

     The Split-Off Transactions were a series of transactions completed on
     February 12, 1997 in accordance with the Share Exchange Agreement, dated
     June 12, 1996 (the "Share Exchange Agreement") between Reliance and the
     Taylor Family, which owned approximately 25% of the outstanding common
     stock of Reliance prior to the Split-Off Transactions. Pursuant to the
     Split-Off Transactions, the Taylor Family and certain other stockholders of
     Reliance exchanged all of their common stock of Reliance for all of the
     outstanding common stock of the Company. On February 9, 1998, Reliance
     filed a voluntary petition under Chapter 11 of the Bankruptcy Code.

     In September 1998, five class actions, brought on behalf of current and
     former stockholders of Reliance and pending in Delaware Chancery Court,
     were consolidated into one class action. The consolidated class action
     alleges that the Taylor Family, certain directors and officers of the
     Company, and certain other defendants breached their fiduciary duties in
     connection with disclosures made to the stockholders prior to the vote
     which approved the Split-Off Transactions. The case seeks relief in the
     form of unspecified damages, attorneys' fees and recision of the Split-Off
     Transactions. On September 9, 1998 the Delaware Chancery Court stayed this
     consolidated class action indefinitely pending resolution of the
     consolidated class action in Texas that is described below.

     In August 1998, nine class actions, brought on behalf of current and former
     stockholders of Reliance and pending in the United States District Court
     for the Western District of Texas, were consolidated into one class action.
     One class action, brought on behalf of current and former stockholders of
     Reliance, is also pending in the Northern District of Illinois. These cases
     allege that the Taylor Family, certain directors and officers of the
     Company, and certain other defendants violated the federal securities laws
     and breached common law fiduciary duties. In addition, the cases allege
     that the Company and certain other defendants violated ERISA and breached
     certain fiduciary duties, including fiduciary duties owed to a subclass
     consisting of participants in Reliance's ESOP and 401(k) Profit Sharing
     Plan. The Texas and Illinois cases seek unspecified damages and attorneys'
     fees. Cole Taylor Bank is named as an additional defendant in the Illinois
     action. A motion is pending to transfer the Texas case to Illinois, and a
     motion is pending to transfer the Illinois case to Texas.


                                       10
<PAGE>   11

                           TAYLOR CAPITAL GROUP, INC.
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)

     On August 19, 1998, Irwin Cole and other members of his family, who
     collectively owned approximately 25% of the outstanding common stock of
     Reliance prior to the Split-Off Transactions, brought suit in Delaware
     Chancery Court against members of the Taylor Family, the Company, other
     current and/or former officers and directors of Reliance and the Company,
     and other stockholders of the Company. The suit alleges that the Taylor
     Family, certain directors and officers of the Company, and certain other
     defendants breached their fiduciary duties, committed fraud and/or engaged
     in self-dealing in connection with the operation of Reliance and the
     Split-Off Transactions. The lawsuit seeks unspecified damages and
     attorneys' fees and requests that the Court place all of the shares of the
     Company held by the Taylor Family in a constructive trust.

     On October 5, 1998, the United States Bankruptcy Court of the District of
     Delaware (the "Bankruptcy Court") entered an order preliminarily enjoining
     the plaintiffs in most of the above lawsuits from prosecuting their cases
     on account of the pending adversary proceedings by the Reliance Estate
     Representative that are described below. On June 2, 1999 the District Court
     for the District of Delaware reversed the Bankruptcy Court's order. The
     District Court's order has been appealed.

     On July 6, 1998, the Bankruptcy Court entered a confirmation order that
     discharged the liability of Reliance and its subsidiaries in connection
     with all of the lawsuits described above and permanently enjoined the
     filing of similar new suits against them. The Bankruptcy Court also
     appointed an Estate Representative (the "Estate Representative") for the
     Post-Confirmation Chapter 11 Estate of Reliance and its subsidiaries. On
     September 4, 1998, the Estate Representative filed two adversary proceeding
     complaints, since consolidated, which named as defendants members of the
     Taylor Family, certain other directors and officers of the Company, one of
     Reliance's former legal counsel and Reliance's former public accountants
     (both of whom continue to serve the Company), the Company and Cole Taylor
     Bank, as trustee. The complaints allege fraudulent conveyance and breaches
     of fiduciary duties and contract with respect to the Taylor Family, the
     Company and Cole Taylor Bank, as trustee. The complaints charge certain of
     the other defendants with alleged breaches of fiduciary duty, breaches of
     contract, malpractice and negligent misrepresentation and aiding and
     abetting the Taylor Family's and the Company's alleged breaches. These
     complaints seek unspecified damages and attorneys' fees and avoidance of
     the Split-Off Transactions by the transfer to the Estate Representative of
     either the assets exchanged in the Split-Off Transactions or the value of
     such assets. One of the complaints demands monetary damages pursuant to the
     Taylor Family's obligation under the Share Exchange Agreement to indemnify
     Reliance for certain losses resulting from the Split-Off Transactions, and
     asks the court to disallow any claims for indemnification that any of the
     defendants have against Reliance or, in the alternative, to equitably
     subordinate such claims to all other creditor claims against Reliance. On
     July 22, 1999, the District Court for the District of Delaware issued an
     order withdrawing the adversary proceedings from the Bankruptcy Court to
     the District Court.

     On December 7, 1998, the Estate Representative filed a motion for a
     preliminary injunction which seeks to enjoin the Company and Cole Taylor
     Bank from paying directly or indirectly any dividends to any of their
     respective shareholders and from paying any of the litigation defense costs
     of the Taylor Family or any other co-defendants with respect to any
     litigation arising out of the Split-Off Transactions. This motion for a
     preliminary injunction is currently pending.


                                       11
<PAGE>   12

                           TAYLOR CAPITAL GROUP, INC.
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)

     On July 21, 1999, the Company and certain other defendants in the nine
     Texas cases, the one Illinois case and the adversary proceedings submitted
     a request to the Judicial Panel on Multidistrict Litigation seeking to have
     all of these cases transferred to the Northern District of Illinois for
     coordinated or consolidated pretrial proceedings. This request is currently
     pending.

     In accordance with the terms and conditions of the Share Exchange Agreement
     relating to the Split-Off Transactions, the Taylor Family has agreed to
     indemnify Reliance for certain losses incurred by Reliance, including
     certain losses relating to the Split-Off Transactions ("Taylor Family
     Indemnification Obligations"). In accordance with the terms of an agreement
     dated February 6, 1997 between the Taylor Family and the Company, the
     Company has agreed to indemnify the Taylor Family for certain losses that
     the Taylor Family may incur as a result of the Split-Off Transactions,
     including a portion of the Taylor Family Indemnification Obligations under
     the Share Exchange Agreement. The Company is unable at this time to predict
     the extent to which it will be required to pay any amounts under its
     indemnification obligation to the Taylor Family. The Company and its
     subsidiaries have paid and may continue to pay defense and other legal
     costs of the lawsuits described above that are not otherwise advanced by
     insurance carriers on behalf of the Taylor Family and other directors,
     officers and stockholders of the Company who are defendants in these
     lawsuits.

     The Company believes that it has meritorious defenses to all of the actions
     against the Company, and the Company intends to defend itself and its
     subsidiaries vigorously. However, the Company is unable to predict, at this
     time, the potential impact of the litigation, the indemnification
     obligations and the payment of legal fees described above on the
     management, business, financial condition, liquidity and operating results
     of the Company. Even if the Taylor Family, the Company and the other
     defendants are successful in defending themselves in the lawsuits, the
     Company has incurred and will continue to incur significant costs with
     respect to such lawsuits.

     The Company is from time to time a party to various other legal actions
     arising in the normal course of business. Management knows of no such other
     threatened or pending legal actions against the Company that are likely to
     have a material adverse impact on the business, financial condition,
     liquidity or operating results of the Company.

9.   Segment Reporting

     The Company's operations include two primary segments: banking and mortgage
     banking. Through its 12 banking branches located in the Chicago
     metropolitan area, the Company provides a full range of commercial and
     consumer banking services to small and mid size businesses. The mortgage
     banking segment originates residential mortgage and home equity loans from
     approved mortgage brokers and other financial intermediaries, as well as
     employee loan originators who are compensated on a full commission basis.
     The majority of the first mortgage loans originated are conforming loans
     which are generally sold into the secondary market. The home equity loans
     are retained by the Bank and included in the Company's mortgage banking
     segment.


                                       12
<PAGE>   13

                           TAYLOR CAPITAL GROUP, INC.
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)


     The Company's two reportable segments are separately managed, as they offer
     different products and services and have different marketing strategies. In
     addition, the mortgage banking segment, through its wholesale origination
     operation, services a different customer base than the banking segment.

     The segment financial information provided below has been derived from the
     internal profitability reporting system used by management to monitor and
     manage the financial performance of the Bank. The Bank evaluates segment
     performance based on profit or loss before income taxes. Certain indirect
     expenses have been allocated based on actual volume measurements and other
     criteria, as the Bank considers appropriate. The Bank accounts for
     intersegment revenue at current market prices.

     The following tables present reportable segment information for the periods
     indicated:

<TABLE>
<CAPTION>
                                                                  For the Three Months Ended
                                            --------------------------------------------------------------------------
                                                     June 30, 1999                           June 30, 1998
                                            --------------------------------------------------------------------------
                                                         Mortgage                                  Mortgage
                                             Banking      Banking         Total        Banking      Banking      Total
                                            --------------------------------------------------------------------------
                                                                           (in thousands)
<S>                                       <C>            <C>          <C>           <C>            <C>       <C>
Net interest income                          $18,681      $1,144         $19,825       $17,301        $625      $17,926

Noninterest income                             4,026          39           4,065         3,699          59        3,758

Depreciation and amortization                  1,580           5           1,585         1,483          25        1,508

Other significant noncash items:
     Provision for loan losses                 1,451          49           1,500         1,499           1        1,500
     Gain on sales of loans, net                 ---         684             684           ---       1,150        1,150
     Gain on sale of mortgage
         servicing rights                        ---         193             193           ---          15           15
     Impairment of mortgage
         servicing rights                        ---         ---             ---           ---          97           97
     Reduction of impairment
         reserve on mortgage
         servicing rights                        ---         ---             ---           ---         ---          ---

Income taxes (benefit)                         3,125       (176)           2,949         2,052           3        2,055

Segment net income (loss)                     $5,084      $(329)          $4,755        $3,090          $2       $3,092
                                          =============================================================================
Segment average assets                    $1,875,930     $88,963      $1,964,893    $1,793,975     $62,597   $1,856,572
                                          =============================================================================
</TABLE>


                                       13
<PAGE>   14

                           TAYLOR CAPITAL GROUP, INC.
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)

<TABLE>
<CAPTION>
                                                                   For the Six Months Ended
                                          -----------------------------------------------------------------------------
                                                     June 30, 1999                           June 30, 1998
                                          -----------------------------------------------------------------------------
                                                          Mortgage                                  Mortgage
                                              Banking      Banking        Total         Banking      Banking      Total
                                          -----------------------------------------------------------------------------
                                                                        (in thousands)
<S>                                       <C>            <C>          <C>           <C>            <C>       <C>
Net interest income                          $36,046      $2,108         $38,154       $34,714      $1,192      $35,906

Noninterest income                             7,883         140           8,023         7,406         103        7,509

Depreciation and amortization                  3,103          11           3,114         3,041          52        3,093

Other significant noncash items:
     Provision for loan losses                 2,909          91           3,000         2,249           1        2,250
     Gain on sales of loans, net                 ---       1,491           1,491           ---       1,951        1,951
     Gain on sale of mortgage
         servicing rights                        ---         193             193           ---       1,462        1,462
     Impairment of mortgage
         servicing rights                        ---         ---             ---           ---         150          150
     Reduction of impairment
         reserve on mortgage
         servicing rights                        ---          47              47           ---         ---          ---

Income taxes (benefit)                         5,546       (244)           5,302         4,758         488        5,246

Segment net income (loss)                     $9,043      $(492)          $8,551        $7,367        $900       $8,267
                                          =============================================================================
Segment average assets                    $1,843,381     $90,125      $1,933,506    $1,776,375     $68,552   $1,844,927
                                          =============================================================================
</TABLE>


                                       14
<PAGE>   15

                           TAYLOR CAPITAL GROUP, INC.
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)


The following tables reconcile segment information to the consolidated financial
statements for the periods indicated:

<TABLE>
<CAPTION>
                                                                   For the Three Months Ended
                                           -----------------------------------------------------------------------------
                                                     June 30, 1999                            June 30, 1998
                                           -----------------------------------------------------------------------------
                                            Reportable                Consolidated   Reportable               Consolidated
                                             Segments       Other        Totals       Segments       Other       Totals
                                           -----------------------------------------------------------------------------
                                                                           (in thousands)
<S>                                        <C>           <C>          <C>           <C>           <C>         <C>
Net interest income                           $19,825      $(377)        $19,448       $17,926      $(479)       $17,447

Noninterest income                              4,065         (2)          4,063         3,758          14         3,772

Depreciation and amortization                   1,585         ---          1,585         1,508         ---         1,508

Other significant noncash items:
     Provision for loan losses                  1,500         ---          1,500         1,500         ---         1,500
     Gain on sales of loans, net                  684         ---            684         1,150         ---         1,150
     Gain on sale of mortgage
         servicing rights                         193         ---            193            15         ---            15
     Impairment of mortgage
         servicing rights                         ---         ---            ---            97         ---            97

Income taxes (benefit)                          2,949       (812)          2,137         2,055       (912)         1,143

Net income (loss)                              $4,755    $(1,530)         $3,225        $3,092    $(1,714)        $1,378
                                           =============================================================================
Average assets                             $1,964,893         ---     $1,964,893    $1,856,572         ---    $1,856,572
                                           =============================================================================
</TABLE>


                                       15
<PAGE>   16

                           TAYLOR CAPITAL GROUP, INC.
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Continued)


<TABLE>
<CAPTION>
                                                                    For the Six Months Ended
                                           -----------------------------------------------------------------------------
                                                      June 30, 1999                           June 30, 1998
                                           -----------------------------------------------------------------------------
                                            Reportable                 Consolidated   Reportable              Consolidated
                                             Segments       Other         Totals       Segments      Other       Totals
                                           -----------------------------------------------------------------------------
                                                                         (in thousands)
<S>                                        <C>            <C>          <C>          <C>           <C>         <C>
Net interest income                           $38,154       $(776)        $37,378      $35,906      $(955)       $34,951

Noninterest income                              8,023          (5)          8,018        7,509         (5)         7,504

Depreciation and amortization                   3,114          ---          3,114        3,093         ---         3,093

Other significant noncash items:
     Provision for loan losses                  3,000          ---          3,000        2,250         ---         2,250
     Gain on sales of loans, net                1,491          ---          1,491        1,951         ---         1,951
     Gain on sale of mortgage
         servicing rights                         193          ---            193        1,462         ---         1,462
     Impairment of mortgage
         servicing rights                         ---          ---            ---          150         ---           150
     Reduction of impairment
         reserve on mortgage
         servicing rights                          47          ---             47          ---         ---           ---

Income taxes (benefit)                          5,302      (1,533)          3,769        5,246     (1,591)         3,655

Net income (loss)                              $8,551     $(3,158)         $5,393       $8,267    $(3,008)        $5,259
                                           =============================================================================
Average assets                             $1,933,506     $ 2,986      $1,936,492   $1,844,927    $10,558     $1,855,485
                                           =============================================================================
</TABLE>

For the three and six months ended June 30, 1999 and 1998, respectively, amounts
presented in the other columns represent the operations of the Parent Company
and the Mortgage Company that have not been defined as reportable segments.

10. Cumulative Effect of Change in Accounting Principle

As of January 1, 1999, the Company adopted Statement of Position 98-5 (SOP
98-5), "Reporting on the Costs of Start-Up Activities," which requires that the
cost of start-up activities and organization costs be expensed as incurred. The
initial adoption of SOP 98-5 resulted in a charge of $214,000 (net of a tax
benefit of $146,000) and is reported in the Consolidated Statements of Income as
a cumulative effect of change in accounting principle. The charge represents
remaining organization costs associated with the Split-Off Transactions which
had not yet been fully amortized.


                                       16
<PAGE>   17

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following presents management's discussion and analysis of financial
condition and results of operations of the Company as of the dates and for the
periods indicated. This discussion should be read in conjunction with the
Company's Consolidated Financial Statements, and the Notes thereto, appearing
elsewhere in this Form 10-Q.

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Taylor Capital
Group, Inc. (the "Parent Company") and its wholly owned subsidiaries
(collectively, with the Parent Company, the "Company"), Cole Taylor Bank and its
subsidiaries (the "Bank") and CT Mortgage Company, Inc. (the "Mortgage
Company"). This discussion should be read in conjunction with the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.

RESULTS OF OPERATIONS

Overview

The Company's second quarter 1999 financial results reflected an increase in
profitability in comparison to the financial results for the second quarter of
1998. Major factors contributing to this increase included: 1) the increase in
net interest income to $19.4 million from $17.4 million for the same period in
1998, 2) the $193,000 gain on the sale of mortgage servicing rights which
occurred during the second quarter of 1999 and 3) the decrease in noninterest
expenses to $17.5 million in 1999 from $18.3 million in 1998. These factors were
partially offset by a decrease in gain on sales of loans, net, to $684,000 for
the second quarter of 1999 from $1.2 million for the same period in 1998.

For the second quarter of 1999, consolidated net income was $3.2 million.
Annualized return on average assets and return on average equity were 0.66% and
8.81%, respectively. For the second quarter of 1998, consolidated net income was
$1.4 million, and annualized return on average assets and return on average
equity were 0.30% and 3.86%, respectively. Total assets of the Company were
$2.00 billion and $1.91 billion at June 30, 1999 and December 31, 1998,
respectively. Loans and deposits grew to $1.42 billion and $1.50 billion,
respectively, at June 30, 1999 from $1.34 billion and $1.44 billion,
respectively, at December 31, 1998. Stockholders' equity increased to $145.4
million at June 30, 1999 as compared to $145.1 million at December 31, 1998.

For the six months ended June 30, 1999, consolidated net income was $5.4
million. Annualized return on average assets and return on average equity were
0.56% and 7.40%, respectively. For the same period in 1998, consolidated net
income was $5.3 million. Annualized return on average assets and return on
average equity were 0.57% and 7.43%, respectively. Despite an increase in net
interest income to $37.4 million for the six months ended June 30, 1999 from
$35.0 million for the same period in 1998, net income increased only slightly
primarily due to an increase in the loan loss provision to $3.0 million in 1999
from $2.3 million in 1998, a $1.5 million gain on the sale of mortgage servicing
rights in 1998 and an increase in legal fees to $2.6 million in 1999 compared to
$2.0 million in 1998.


                                       17
<PAGE>   18

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)

Net Interest Income

The following table sets forth certain information relating to the Company's
average consolidated balance sheets and reflects the yield on average earning
assets and cost of average liabilities for the periods indicated. Such yields
and costs are derived by dividing annualized income or expense by the average
balance of assets or liabilities. Interest income is measured on a tax
equivalent basis using a 35% income tax rate for each period presented.


                                       18
<PAGE>   19

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)

      ANALYSIS OF AVERAGE BALANCES, TAX EQUIVALENT INTEREST AND YIELD/RATES

<TABLE>
<CAPTION>
                                            FOR THE THREE MONTHS ENDED        FOR THE THREE MONTHS ENDED
                                                   JUNE 30. 1999                    JUNE 30. 1998
                                           ------------------------------    -----------------------------
                                                                   YIELD/                           YIELD/
                                             AVERAGE               RATE        AVERAGE              RATE
                                             BALANCE    INTEREST   (%)(4)      BALANCE    INTEREST  (%)(4)
                                           ------------ ---------  ------    ------------ --------- ------
<S>                                         <C>          <C>        <C>       <C>          <C>       <C>
INTEREST-EARNING ASSETS:                                        (dollars in thousands)
Investment securities (1):
   Taxable                                    $367,759    $5,030    5.48 %      $405,558    $5,751   5.72 %
   Non-taxable (tax equivalent)                 71,323     1,366    7.66          67,145     1,326   7.90
                                             ---------    ------               ---------    ------
     Total investment securities               439,082     6,396    5.83         472,703     7,077   6.00
                                             ---------    ------               ---------    ------
Cash equivalents                                16,306       193    4.68           3,226        44   5.40
                                             ---------    ------               ---------    ------
Loans (2):

   Commercial and industrial                 1,026,783    22,134    8.53         882,482    19,811   8.88
   Real estate mortgages                       177,313     3,189    7.19         210,311     3,782   7.19
   Consumer and other                          174,612     3,494    8.03         157,253     3,492   8.91
   Fees on loans                                             277                               395
                                             ---------    ------               ---------    ------
     Net loans (tax equivalent)              1,378,708    29,094    8.46       1,250,046    27,480   8.81
                                             ---------    ------               ---------    ------
       Total earning assets                  1,834,096    35,683    7.80       1,725,975    34,601   8.04
                                             ---------    ------               ---------    ------

Allowance for loan losses                      (25,289)                          (25,340)
NONEARNING ASSETS:
   Cash and due from banks                      66,746                            64,168
   Accrued interest and other assets            89,340                            91,769
                                             ---------                         ---------
TOTAL ASSETS                                $1,964,893                        $1,856,572
                                            ==========                        ==========

INTEREST-BEARING LIABILITIES:

   Interest-bearing deposits:
     Interest-bearing demand deposits         $356,510     2,695    3.03        $338,948     2,996   3.55
     Savings deposits                          107,960       439    1.63         113,093       666   2.36
     Time deposits                             702,692     8,764    5.00         602,279     8,390   5.59
                                             ---------    ------               ---------    ------
       Total deposits                        1,167,162    11,898    4.09       1,054,320    12,052   4.58
                                             ---------    ------               ---------    ------
Short-term borrowings                          191,598     2,121    4.44         204,258     2,643   5.19
Notes payable                                  121,192     1,607    5.25         130,657     1,880   5.69
                                             ---------    ------               ---------    ------
     Total interest-bearing liabilities      1,479,952    15,626    4.23       1,389,235    16,575   4.79
                                             ---------    ------               ---------    ------
NONINTEREST-BEARING LIABILITIES:

   Noninterest-bearing deposits                316,802                           306,919
   Nonrecourse borrowings (3)                      ---                               ---
   Accrued interest and other liabilities       21,399                            17,297


STOCKHOLDERS' EQUITY                           146,740                           143,121
                                            ----------                         ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $1,964,893                        $1,856,572
                                            ==========                        ==========
Net interest income (tax equivalent)                     $20,057                           $18,026
                                                         =======                           =======
Net interest spread                                                 3.57 %                           3.25 %
Net interest margin                                                 4.38 %                           4.18 %
                                                                    ====                             ====
</TABLE>

<TABLE>
<CAPTION>
                                               FOR THE SIX MONTHS ENDED            FOR THE SIX MONTHS ENDED
                                                    JUNE 30. 1999                       JUNE 30, 1998
                                            -------------------------------     -------------------------------
                                                                    YIELD/                               YIELD/
                                              AVERAGE                RATE        AVERAGE                 RATE
                                              BALANCE     INTEREST  (%)(4)       BALANCE     INTEREST   (%)(4)
                                            ------------  --------- -------     -----------  ---------  -------
<S>                                          <C>           <C>        <C>       <C>           <C>         <C>
INTEREST-EARNING ASSETS:                                           (dollars in thousands)
Investment securities (1):
   Taxable                                     $363,492     $9,679    5.34 %      $413,645    $12,229     5.94 %
   Non-taxable (tax equivalent)                  72,663      2,796    7.70          65,474      2,596     7.93
                                              ---------     ------               ---------     ------
     Total investment securities                436,155     12,475    5.73         479,119     14,825     6.21
                                              ---------     ------               ---------     ------
Cash equivalents                                 11,537        274    4.72           4,872        134     5.47
                                              ---------     ------               ---------     ------
Loans (2):

   Commercial and industrial                  1,007,341     42,894    8.47         871,001     39,035     8.91
   Real estate mortgages                        181,013      6,463    7.14         201,903      7,390     7.32
   Consumer and other                           169,457      6,784    8.07         156,223      6,906     8.91
   Fees on loans                                               517                                697
                                              ---------     ------               ---------     ------
     Net loans (tax equivalent)               1,357,811     56,658    8.41       1,229,127     54,028     8.85
                                              ---------     ------               ---------     ------
       Total earning assets                   1,805,503     69,407    7.74       1,713,118     68,987     8.11
                                              ---------     ------               ---------     ------

Allowance for loan losses                       (25,301)                           (25,559)
NONEARNING ASSETS:
   Cash and due from banks                       66,707                             68,246
   Accrued interest and other assets             89,583                             99,680
                                              ---------                          ---------
TOTAL ASSETS                                 $1,936,492                         $1,855,485
                                             ==========                         ==========

INTEREST-BEARING LIABILITIES:

   Interest-bearing deposits:
     Interest-bearing demand deposits          $358,117      5,473    3.08        $341,381      6,035     3.56
     Savings deposits                           107,442        914    1.72         113,003      1,377     2.46
     Time deposits                              675,642     16,951    5.06         595,680     16,582     5.61
                                              ---------     ------               ---------     ------
       Total deposits                         1,141,201     23,338    4.12       1,050,064     23,994     4.61
                                              ---------     ------               ---------     ------
Short-term borrowings                           184,906      4,094    4.46         200,800      5,140     5.16
Notes payable                                   126,157      3,356    5.29         127,167      3,745     5.86
                                              ---------     ------               ---------     ------
     Total interest-bearing liabilities       1,452,264     30,788    4.28       1,378,031     32,879     4.81
                                              ---------     ------               ---------     ------
NONINTEREST-BEARING LIABILITIES:

   Noninterest-bearing deposits                 315,355                            308,071
   Nonrecourse borrowings (3)                       ---                              8,083
   Accrued interest and other liabilities        22,544                             18,624


STOCKHOLDERS' EQUITY                            146,329                            142,676
                                              ---------                          ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $1,936,492                         $1,855,485
                                             ==========                         ==========
Net interest income (tax equivalent)                       $38,619                            $36,108
                                                           =======                            =======
Net interest spread                                                   3.46 %                              3.30 %
Net interest margin                                                   4.30 %                              4.24 %
                                                                      ====                                ====
</TABLE>

(1)  Investment securities average balances are based on amortized cost.

(2) Nonaccrual loans are included in the above stated average balances.

(3) Interest expense on nonrecourse borrowings is netted against trust fees on
the income statement.

(4) Yields/rates are annualized.


                                       19
<PAGE>   20

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Net Interest Income -- continued

Net interest income, the difference between total interest income earned on
earning assets and total interest expense incurred on interest-bearing
liabilities, is the Company's principal source of earnings. The amount of net
interest income is affected by changes in the volume and mix of earning assets
and interest-bearing liabilities, and the level of rates earned or paid on those
assets and liabilities.

Net interest income (with an adjustment for tax-exempt income) for the second
quarter of 1999 was $20.1 million, compared to $18.0 million for the second
quarter of 1998. The increase in net interest income in 1999 was in part a
result of an increase in average earning assets of $108.1 million, or 6.3%, for
the three months ended June 30, 1999 when compared to the 1998 reporting period.
Net interest margin, which is determined by dividing taxable-equivalent net
interest income by average earning assets, increased to 4.38% for the second
quarter of 1999, from 4.18% for the same 1998 quarter. The net interest margin
was positively impacted by a payoff of a loan which was originally purchased at
a discount by the Bank. This payoff resulted in the recognition of the remaining
unamortized discount as interest income in the amount of $535,000. A change in
asset mix also occurred whereby maturing investment securities were utilized to
fund higher yielding commercial loans. These factors increasing the net
margin were partially offset by reduced yields on investment securities and
commercial loans. The yield on earning assets declined to 7.80% from 8.04% for
the three months ended June 30, 1999 and 1998, respectively. The yield on
commercial loans reflected the 75 basis point reduction in the Company's prime
rate during the fourth quarter of 1998 as well as increased competitive pressure
on loan pricing. The cost of interest-bearing liabilities declined to 4.23% from
4.79% for three months ended June 30, 1999 and 1998, respectively, primarily as
a result of lowering the rate paid on interest-bearing deposits and the renewal
of maturing notes payable at lower interest rates due to the lower interest rate
environment during the latter half of 1998.

Net interest income (with an adjustment for tax-exempt income) for the first six
months of 1999 totaled $38.6 million as compared to $36.1 million for the first
six months of 1998. The increase in net interest income was primarily a result
of an increase in average earning assets of $92.4 million, or 5.0%, for the six
months ended June 30, 1999 when compared to the 1998 reporting period. Net
interest margin was 4.30% for the first six months of 1999 as compared to 4.24%
for the 1998 reporting period. The net interest margin was positively impacted
by a payoff of a loan which was originally purchased at a discount, as described
above, and a 53 basis point decline in the cost of interest-bearing liabilities.
This increase was partially offset by declines in the investment security and
commercial loan yields. The yield on earning assets declined to 7.74% from 8.11%
for the first six months of 1999, as compared to the same period in 1998. In
late 1997 and January 1998, the Bank purchased approximately $92 million of
sequential-paying collateralized mortgage obligations at a premium of $7.5
million. The decline in mortgage interest rates and higher refinancing activity
experienced during 1998 required that the Bank amortize the purchase premium at
a rate faster than originally expected. Accordingly, in the third and fourth
quarters of 1998, adjustments were recorded to reduce the yields of the
securities to an expected yield given actual payments received to date and the
future expected prepayment rate for these securities. At June 30, 1999, these
securities totaled $32.7 million, with $1.4 million of premium remaining and an
expected yield of 3.3%. These securities are backed by pools of single-family
mortgage loans and guaranteed, as to principal and interest, by certain
agencies, including the Federal National Mortgage Association (FNMA) and the
Federal Home Loan Mortgage Corporation (FHLMC). The decreased yield on
commercial loans reflected the 75 basis point reduction in the Company's prime
rate


                                       20
<PAGE>   21

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)

Net Interest Income -- continued

during the fourth quarter of 1998, as well as increased competitive pressure on
loan pricing. The yield on real estate mortgages decreased as mortgage
prepayments increased and new mortgage production rates were lower due to the
lower interest rate environment.

The cost of interest-bearing liabilities declined to 4.28% during the first six
months of 1999 from 4.81% for the six months ended June 30, 1998, primarily
as a result of lowering the rate paid on interest-bearing deposits and the
renewal of maturing notes payable at lower interest rates due to the lower
interest rate environment during the latter half of 1998.

Provision for Loan Losses

Management determines a provision for loan losses which it considers sufficient
to maintain an allowance covering probable losses inherent in the portfolio as
of the balance sheet date. In evaluating the adequacy of the allowance for loan
losses, consideration is given to historical charge-off experience, growth of
the loan portfolio, changes in the composition of the loan portfolio, general
economic conditions, information about specific borrower situations, including
their financial position and collateral values, and other factors and estimates
which are subject to change over time. Estimating the risk of loss and amount of
loss on any loan is subjective. Ultimate losses may vary from current estimates.
These estimates are reviewed quarterly and, as changes in estimates are
identified by management, the amounts are reflected in income through the
provision for loan losses in the appropriate period.

The provision for loan losses in the second quarter of 1999 and the second
quarter of 1998 was $1.5 million. For the first six months of 1999 the provision
for loan losses totaled $3.0 million versus $2.3 million for the same period of
1998. The $750,000 increase in the provision was a result of an increase in loan
volume in 1999. Net charge-offs were $480,000 for the second quarter of 1999 as
compared to $2.6 million for the same 1998 period. For the first six months of
1999 net charge-offs totaled $1.7 million as compared to $3.6 million for the
same 1998 period. The higher net charge-off activity experienced in 1998 was a
result of the resolution of certain older, chronic commercial problem loans. If
the loan portfolio continues to grow and/or future net charge-offs do not
decline, and/or nonperforming loans increase, the Company expects that the
provision for loan losses will continue to exceed 1998 levels. As of June 30,
1999, management believes that the allowance for loan losses is adequate. See
"Financial Condition -- Nonperforming Loans and Assets."


                                       21
<PAGE>   22

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Noninterest Income

The following table displays noninterest income for the periods indicated:

<TABLE>
<CAPTION>
                                                                           NONINTEREST INCOME
                                                       For the Three Months                For the Six Months
                                                          Ended June 30,                     Ended June 30,
                                                   ---------------------------     ---------------------------------
                                                        1999           1998              1999              1998
                                                   ------------   ------------     --------------    ---------------
                                                                          (in thousands)
<S>                                                   <C>            <C>                <C>                <C>
Deposit service charges                               $2,222         $2,097             $4,296             $4,187
Retail credit card service charges                       145            137                198                267
Merchant credit card processing fees                      25             33                 27                137
Trust fees                                             1,051            977              2,131              1,922
Gain on sale of loans, net                               684          1,150              1,491              1,951
Mortgage loan servicing income (loss)                     45           (38)                186               (48)
ATM fees                                                 245            213                502                406
Gain on sale of mortgage servicing rights                193             15                193              1,462
Investment securities gains, net                         ---            ---                107                ---
Other noninterest income                                 330            256                618                483
                                                      ------         ------             ------            -------
     Total noninterest income                         $4,940         $4,840             $9,749            $10,767
                                                      ======         ======             ======            =======
</TABLE>

Noninterest income for the second quarter of 1999 totaled $4.9 million, a
$100,000, or 2.1%, increase from the same quarter in 1998. Increases in deposit
service charges, trust fees, ATM fees, and mortgage loan servicing income, which
totaled $314,000, in the aggregate, for the three months ended June 30, 1999, as
compared to the same period in 1998 were primarily offset by a $466,000 decrease
in gain on sale of loans, net. The decrease in the gain on sale of loans, net
was primarily a result of a 26% decrease in the volume of loans sold as compared
to 1998.

Total noninterest income for the first six months of 1999 was $9.7 million as
compared to $10.8 million for the same period in 1998. The decrease in
noninterest income was primarily due to the 1998 reporting period inclusion of a
gain on sale of mortgage servicing rights of $1.5 million versus a gain of only
$193,000 for the 1999 reporting period. In addition, merchant credit card
processing fees decreased during 1999 due to reductions in pricing of credit
card deposit services.

For the first six months of 1999, trust fees increased $209,000, as compared to
the same period in 1998, primarily due to an increase in corporate trust
business. The increase in mortgage loan servicing income was primarily a result
of a $47,000 reduction in the valuation reserve related to capitalized mortgage
servicing rights during the first quarter of 1999, as mortgage prepayment
activity slowed during 1999. An impairment provision of $150,000 had been
recognized during the first six months of 1998. The Company's higher ATM fee
income during the first six months of 1999 was due to an increase in the
surcharge fee implemented in the fourth quarter of 1998.


                                       22
<PAGE>   23

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Noninterest Expense

The following table displays noninterest expense for the periods indicated:

<TABLE>
<CAPTION>
                                                                            NONINTEREST EXPENSE
                                                       For The Three Months Ended            For the Six Months
                                                                June 30,                       Ended June 30,
                                                      -----------------------------  ------------------------------------
                                                          1999             1998             1999                1998
                                                      ------------     ------------     ------------       --------------
                                                                        (dollars in thousands)
<S>                                                     <C>              <C>              <C>                  <C>
Salaries and employee benefits                          $ 9,261          $ 9,242          $18,741              $18,367
Occupancy of premises, net                                1,563            1,805            3,320                3,519
Furniture and equipment                                     865              917            1,623                1,726
Computer processing                                         565              505            1,188                1,066
Legal fees                                                1,471            1,688            2,618                2,002
Advertising and public relations                            261              805              413                  963
Goodwill and other intangible amortization                  600              613            1,212                1,224
Other real estate and repossessed asset expense              70              111              165                  209
Other noninterest expense                                 2,870            2,580            5,471                5,478
                                                        -------          -------          -------              -------
     Total noninterest expense                          $17,526          $18,266          $34,751              $34,554
                                                        =======          =======          =======              =======
Efficiency ratio (1)                                      71.86 %          81.96 %          73.74 %              75.58 %
                                                        =======          =======          =======              =======
</TABLE>

----------

(1) Noninterest expense divided by an amount equal to net interest income plus
noninterest income.


Total noninterest expense for the second quarter of 1999 was $17.5 million, a
$740,000, or 4.0%, decrease as compared to the prior year's second quarter
noninterest expense of $18.3 million. The primary reason for the lower expense
for the 1999 reporting period was a decrease in advertising and public relations
expense of $544,000. The Company expects this trend to continue as the Company
changed its advertising campaign strategy for 1999. Additionally, occupancy
expense for the second quarter of 1999 decreased $242,000 as compared to the
same 1998 period. A reduction in rent expense related to one of the Bank's
facilities contributed to the decrease.

Noninterest expense for the six months ended June 30, 1999 totaled $34.8
million, as compared to $34.6 million for the 1998 reporting period. The primary
reasons for the higher expense in the 1999 reporting period over that in the
1998 period were increased legal fees and employee benefit costs, partially
offset by a decrease in advertising and public relations expense and occupancy
expenses.

Salaries and benefits expense for the first six months of 1999 increased 2.0%
versus the same period in 1998. The primary reason for the increase was routine
annual salary increases partially offset by a lower number of full-time
equivalents employees in 1999 versus 1998.


                                       23
<PAGE>   24

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Noninterest Expense -- continued

In late 1998 and the first two quarters of 1999, the Bank implemented
significant technology enhancements within the Bank's operations center and
replaced certain hardware and software applications with systems of greater
functionality. Capital expenditures related to the replacement of hardware and
software totaled approximately $2.8 million. The Company anticipates these
enhancements and replacements will increase furniture and equipment expenses in
future periods.

Legal expenses for the first six months of 1999 increased $616,000 from 1998.
Parent Company legal costs increased during 1999, relating to the bankruptcy of
Reliance Acceptance Group, Inc and the defense of the various lawsuits relating
to the Split-Off Transactions. The legal costs relating to the bankruptcy of
Reliance Acceptance Group, Inc. and the defense of the various related lawsuits
relating to the Split-Off Transactions totaled approximately $2.3 million and
$1.8 million during the 1999 and 1998 reporting periods. The Company expects to
continue to incur significant legal expenses in connection with the Split-Off
Transactions litigation, which will continue to adversely affect profitability.
A portion of these defense costs have been, and will be, submitted to insurance
carriers for reimbursement. The Company, however, cannot predict to what extent
such costs will be reimbursed or when such reimbursement could occur. See
"Litigation" below.

Income Taxes

Income tax expense of $2.1 million and $1.1 million was recorded for the second
quarters of 1999 and 1998, respectively, reflecting an effective tax rate of 40%
and 45%, respectively. The income tax expense for the first six months of 1999
and 1998 totaled $3.8 million and $3.7 million, respectively, reflecting an
effective tax rate of 40% and 41%, respectively. The higher effective tax rate
for the 1998 reporting periods was primarily due to certain employee benefit
costs in those periods that were not fully deductible for tax purposes.

Cumulative Effect of Change in Accounting Principle

As of January 1, 1999, the Company adopted Statement of Position 98-5 (SOP
98-5), "Reporting on the Costs of Start-Up Activities," which requires that the
cost of start-up activities and organization costs be expensed as incurred. The
initial adoption of SOP 98-5 resulted in a charge of $214,000 (net of a tax
benefit of $146,000) and is reported in the Consolidated Statements of Income as
a cumulative effect of change in accounting principle. The charge represents
remaining organization costs associated with the Split-Off Transactions which
had not yet been fully amortized.

FINANCIAL CONDITION

Overview

During the first six months of 1999 total assets increased $76.8 million to
$2.00 billion at June 30, 1999 from $1.91 billion at December 31, 1998. The
asset growth in the Company's commercial, real estate construction and home


                                       24
<PAGE>   25

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Financial Condition -- continued

equity loan portfolios was primarily funded with brokered certificates of
deposit. Growth in customer interest-bearing deposits and repurchase agreements
was offset by a seasonal decline in customer non-interest bearing deposits.
Mortgage loans held-for-sale declined due to an increase in the volume of
mortgage loans delivered for sale.

In March 1999, the Company executed a modest restructuring of the
available-for-sale investment portfolio. Approximately $50 million of
short-maturity U.S. Treasury securities were sold, and the proceeds were
reinvested in longer-term Treasury, government agency and mortgage-backed
securities, thereby lengthening the duration of the investment portfolio.

Premises and equipment expenses increased approximately $1.7 million during the
first six months of 1999 primarily as a result of the purchase of operations and
technology hardware and software.

Goodwill may periodically be reduced by the utilization of state net operating
loss carryforwards acquired in connection with the Split-Off Transactions. The
state income tax benefit of these items is applied against goodwill when
recognized, rather than as a reduction of income tax expense.

Nonperforming Loans and Assets

Management reviews the loan portfolio for problem loans through a loan review
function and various credit committees. During the ordinary course of business,
management may become aware of borrowers who may not be able to meet the
contractual requirements of loan agreements. Such loans are placed under close
supervision with consideration given to placing the loan on a nonaccrual status,
the need for an additional allowance for loan loss, and, if appropriate, a
partial or full charge-off.

The following table sets forth the amounts of nonperforming loans and other
assets at the end of the periods indicated:

                              NONPERFORMING ASSETS

<TABLE>
<CAPTION>
                                                                                       June 30,      December 31,
                                                                                         1999            1998
                                                                                     -----------     -----------
                                                                                        (dollars in thousands)
<S>                                                                                    <C>             <C>
Loans contractually past due 90 days or more but still accruing                        $ 2,930         $ 2,618
Nonaccrual loans                                                                         8,322          11,365
                                                                                       -------         -------
         Total nonperforming loans                                                      11,252          13,983
Other real estate                                                                        2,721           3,185
Other repossessed assets                                                                    43              83
                                                                                       -------         -------
         Total nonperforming assets                                                    $14,016         $17,251
                                                                                       =======         =======

Nonperforming loans to total loans                                                        0.79 %          1.05 %
Nonperforming assets to total loans plus repossessed property                             0.95 %          1.29 %
Nonperforming assets to total assets                                                      0.70 %          0.90 %
</TABLE>


                                       25
<PAGE>   26

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Allowance for Loan Losses

An allowance for loan losses has been established to provide for those loans
which may not be repaid in their entirety. The allowance for loan losses is
increased by provisions charged to expense and decreased by charge-offs, net of
recoveries. The allowance is maintained by management at a level it considers
adequate to distinguish probable losses inherent in the portfolio as of the
balance sheet date. Factors considered include past loss experience, general
economic conditions, information about specific borrower situations, including
their financial position, collateral values, and other factors and estimates
which are subject to change over time. These estimates are reviewed quarterly
and, as changes in estimates are identified by management, the resulting amounts
are reflected through the provision for loan losses in the appropriate period.
Although management believes that the Company's allowance for loan losses is
adequate to absorb any losses on existing loans that may become uncollectible,
there can be no assurance that the allowance will prove sufficient to cover
actual loan losses in the future. See "Results of Operations --Provision for
Loan Losses".

The following table summarizes, for the periods indicated, activity in the
allowance for loan losses, including amounts charged-off, amounts of recoveries,
additions to the allowance charged to operating expense, the ratio of annualized
net charge-offs to average total loans, the ratio of the allowance to total
loans at end of period, and the ratio of the allowance to nonperforming loans:

                      ANALYSIS OF ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
                                                     For the Three Months Ended             For The Six Months Ended
                                                              June 30,                              June 30,
                                                   --------------------------------     ---------------------------------
                                                       1999               1998              1999                1998
                                                   -------------      -------------     -------------       -------------
                                                                         (dollars in thousands)
<S>                                                <C>                <C>               <C>                 <C>
Average total loans                                $1,378,592         $1,250,046        $1,357,811          $1,229,127
                                                   ==========         ==========        ==========          ==========
Total loans at end of period                                                            $1,417,361          $1,252,440
                                                                                        ==========          ==========

ALLOWANCE FOR LOAN LOSSES:
Allowance at beginning of period                   $   24,834         $   25,642        $   24,599          $   25,813
Charge-offs                                              (733)            (3,276)           (2,832)             (4,416)
Recoveries                                                254                637             1,088                 856
                                                   ----------         ----------        ----------          ----------
     Net charge-offs                                     (479)            (2,639)           (1,744)             (3,560)
                                                   ----------         ----------        ----------          ----------
Provision for loan losses                               1,500              1,500             3,000               2,250
                                                   ----------         ----------        ----------          ----------
Allowance at end of period                         $   25,855         $   24,503        $   25,855          $   24,503
                                                   ==========         ==========        ==========          ==========

Net charge-offs to average total loans                   0.14 %             0.85 %            0.26 %              0.58 %
     (annualized)
Allowance to total loans at end of period                                                     1.82 %              1.96 %
Allowance to nonperforming loans                                                            229.78 %            148.70 %
</TABLE>

Net charge-offs for the quarter and six months ended June 30, 1999 decreased
over the comparable periods for 1998. Net charge-offs were $1.7 million for the
six months ended June 30, 1999, as compared to $3.6 million for


                                       26
<PAGE>   27

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Allowance for Loan Losses -- continued

the 1998 reporting period. The decrease in 1999 was primarily due to the
resolution of certain older, chronic commercial problem loans which were
charged-off during the second quarter of 1998. The amount of nonperforming loans
was $11.3 million at June 30, 1999 as compared to $14.0 million at December 31,
1998. The ratio of allowance to nonperforming loans increased to 229.78% at June
30, 1999 from 175.92% at December 31, 1998.

Capital Resources

The Company actively monitors compliance with bank regulatory capital
requirements, focusing primarily on the risk-based capital guidelines. Under the
risk-based method of capital measurement, computed ratios are dependent on the
amount and composition of assets recorded on the balance sheet, as well as the
amount and composition of off-balance sheet items, in addition to the level of
capital.

The Company's and the Bank's capital ratios were as follows for the dates
indicated:

<TABLE>
<CAPTION>

                                                                                                    For Capital
                                                            Actual                              Adequacy Purposes
                                                      -------------------                      -------------------
                                                        Amount    Ratio                     Amount              Ratio
                                                      ----------- -------                   -------------------------
                                                                                             (dollars in thousands)
<S>                                                    <C>        <C>      <C>             <C>                    <C>
As of June 30, 1999:
     Total Capital (to Risk Weighted Assets)
         Taylor Capital Group, Inc. - Consolidated     $137,539    9.12 %  greater than    $120,713 greater than  8.00  %
         Cole Taylor Bank                               160,806   10.67    greater than     120,588 greater than  8.00
     Tier I Capital (to Risk Weighted Assets)
         Taylor Capital Group, Inc. - Consolidated      118,591    7.86    greater than      60,357 greater than  4.00
         Cole Taylor Bank                               141,879    9.41    greater than      60,294 greater than  4.00
     Leverage (1)
         Taylor Capital Group, Inc. - Consolidated      118,591    6.12    greater than      77,449 greater than  4.00
         Cole Taylor Bank                               141,879    7.34    greater than      77,283 greater than  4.00

As of December 31, 1998:
     Total Capital (to Risk Weighted Assets)
         Taylor Capital Group, Inc. - Consolidated     $131,218    9.02 %  greater than    $116,405 greater than  8.00  %
         Cole Taylor Bank                               154,943   10.67    greater than     116,144 greater than  8.00
     Tier I Capital (to Risk Weighted Assets)
         Taylor Capital Group, Inc. - Consolidated      112,951    7.76    greater than      58,203 greater than  4.00
         Cole Taylor Bank                               136,717    9.42    greater than      58,072 greater than  4.00
     Leverage (1)
         Taylor Capital Group, Inc. - Consolidated      112,951    6.17    greater than      73,204 greater than  4.00
         Cole Taylor Bank                               136,717    7.33    greater than      74,655 greater than  4.00
</TABLE>

<TABLE>
<CAPTION>
                                                                                  To Be Well
                                                                               Capitalized Under
                                                                               Prompt Corrective
                                                                                Action Provision
                                                                              -------------------
                                                                        Amount                   Ratio
                                                                        ------                   -----
<S>                                                     <C>           <C>         <C>            <C>
As of June 30, 1999:
     Total Capital (to Risk Weighted Assets)
         Taylor Capital Group, Inc. - Consolidated                       NA
         Cole Taylor Bank                               greater than  $150,735    greater than   10.00 %
     Tier I Capital (to Risk Weighted Assets)
         Taylor Capital Group, Inc. - Consolidated                        NA
         Cole Taylor Bank                               greater than    90,441    greater than    6.00
     Leverage (1)
         Taylor Capital Group, Inc. - Consolidated                        NA
         Cole Taylor Bank                               greater than    96,604    greater than    5.00

As of December 31, 1998:
     Total Capital (to Risk Weighted Assets)
         Taylor Capital Group, Inc. - Consolidated                        NA
         Cole Taylor Bank                               greater than  $145,507    greater than   10.00 %
     Tier I Capital (to Risk Weighted Assets)
         Taylor Capital Group, Inc. - Consolidated                        NA
         Cole Taylor Bank                               greater than    87,304    greater than    6.00
     Leverage (1)
         Taylor Capital Group, Inc. - Consolidated                        NA
         Cole Taylor Bank                               greater than    91,506    greater than    5.00
</TABLE>

----------

(1)  The leverage ratio is defined as Tier 1 capital divided by average
     quarterly assets.


                                       27
<PAGE>   28

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Capital Resources -- continued

Management of the Company recognizes the need to effectively manage capital
levels to remain above the regulatory "well capitalized" guidelines as it
relates to asset growth. In order to avoid declining capital levels, management
will continue to evaluate options, to fund Parent Company legal costs and other
expenses, including utilizing the Parent Company's revolving credit facility.

For the first six months of 1999, the Parent Company declared $1.7 million and
$838,000 in preferred and common stock dividends, respectively.

Liquidity

The asset growth of loans was funded primarily through the issuance of brokered
certificates of deposits. Brokered certificates of deposits increased to $148.6
million at June 30, 1999 from $56.3 million at December 31, 1998. Adverse
operating results at the Bank or changes in industry conditions could lead to an
inability to replace such brokered deposits at maturity, which could result in
higher costs to or reduced asset levels of the Bank. The Parent Company paid $1
million on its term loan and $1 million on its revolving credit facility during
the first six months of 1999. The Company believes that its current sources of
funds are adequate to meet all of the Company's financial commitments and asset
growth targets for 1999.

On December 7, 1998 a motion was filed for a preliminary injunction which seeks
to prevent the Company and the Bank from paying any dividends to any of their
respective shareholders. See "Litigation."

As described in Footnote 8 to the consolidated financial statements included in
Part I, Item 1, and under the caption "Litigation" in this Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
Company and its subsidiaries continue to pay defense and other legal costs
related to certain significant litigation. As these costs are being paid
primarily by the Parent Company, the Parent Company's cash needs have increased.
The liquidity requirements for the Parent Company on a standalone basis consist
primarily of dividends to shareholders and expenses for general corporate
purposes including legal costs. The primary source of Parent Company cash flow
is dividends received from the Bank. The Company believes that the Bank
currently has adequate capital to allow continued dividends, out of earnings, to
support the Parent Company.

YEAR 2000 COMPLIANCE

The Company continues to be actively addressing its Year 2000 ("Y2K") compliance
issues. A comprehensive Y2K plan (the "Plan") has been prepared which includes
awareness, assessment, renovation, validation/testing, implementation and
contingency planning. The Company has developed an extensive Y2K communication
program. The Company will continue to update customers as to our progress as the
year ensues. A part of this communication program will focus on Y2K-related
fraud prevention. A Y2K oversight committee is responsible for ensuring that the
Plan is executed on a timely basis.


                                       28
<PAGE>   29

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Year 2000 Compliance -- continued

The Company has substantially completed the awareness, assessment, renovation,
and validation phases of the Plan. The Plan called for the replacement or
upgrade of non-compliant systems and validation of those replacements or
upgrades during the fourth quarter of 1998 and early 1999. Non-compliant systems
were upgraded or replaced during the fourth quarter of 1998 and early 1999 in
accordance with the Company's Plan. The Company has completed testing of mission
critical applications and substantially all mission critical
applications/systems have been remediated as of June 30, 1999 in accordance with
milestones set forth by the Federal Financial Institutions Examination Council
(FFIEC).

The majority of the Company's mission critical systems (specifically those that
process loans, deposits, and general ledger transactions) are provided by third
party processors. At this time, the primary data processing provider reports
that it is on target to meet all required dates to provide compliant systems.
All core applications provided by the Company's primary data processing provider
have been tested and implemented for Y2K readiness with the exception of the
commercial loan system. An upgrade to this system is scheduled for
implementation in September, 1999. This application upgrade has successfully
been tested for Year 2000 readiness.

The Company has made significant progress relative to contingency plans for Year
2000. These plans will continue to be refined as 1999 progresses. In conjunction
with contingency planning, the Company has developed a liquidity strategy for
Y2K in order to meet expected currency demands at the Bank's branches and
automated teller machines. This strategy will be implemented during the second
half of 1999.

The Company expensed approximately $181,000 during the first six months of 1999,
and expects to incur additional costs throughout the remainder of 1999, for its
Y2K compliance program. With respect to certain technology applications, the
Company has elected to replace the existing applications with applications
having greater functionality, rather than limit its response only to remediation
of the Y2K issue. For that reason, the Company's technology expenditures have
materially increased from historical levels. The Company expects the additional
costs incurred related to Y2K remediation to represent only a small portion of
its overall technology expenditures.

Regardless of the Y2K compliance of the Company's systems, there can be no
assurance that the Company will not be adversely affected by the failure of
others to become Y2K compliant. Other risks may include potential losses related
to major loan or deposit customers, vendors or other counterparties who have Y2K
compliance problems. The Company has been evaluating, in accordance with the
guidelines outlined by the FFIEC, the potential credit and liquidity risk
associated with Y2K as it relates to the Company's customer base. The Company's
analysis performed to date has not identified major credit exposure within the
high risk category of customers; in-depth analysis will continue to be performed
during 1999.

Based on the Company's progress to date in executing its Plan, the Company
expects no significant disruption of business activities resulting from the
arrival of the Y2K.


                                       29
<PAGE>   30

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Year 2000 Compliance -- continued

As a regulated financial institution, the Company is subject to possible
supervisory or enforcement action if the governing regulatory agency deems the
Company's response and progress with respect to the Y2K issue to be of serious
concern. At this time, management believes its progress with respect to Y2K
compliance to be satisfactory.

LITIGATION

Jeffrey W. Taylor, Chairman of the Board and Chief Executive Officer of the
Company, Bruce W. Taylor, President of the Company, Iris A. Taylor, Sidney J.
Taylor, Cindy Taylor Bleil, related trusts and a related partnership
(collectively, the "Taylor Family") have been named as defendants in the
lawsuits described below relating to (1) the Split-Off Transactions and (2) the
financial and public reporting of Reliance Acceptance Group, Inc. (Reliance).
Certain of the lawsuits also named other current or former officers and
directors of the Company and Reliance, other stockholders of the Company,
Reliance's public accountants at the time of the Split-Off Transactions (who
continue to serve as the Company's public accountants), the investment banks
that were involved in the Split-Off Transactions, Reliance and the Company as
additional defendants. The filing dates of these lawsuits ranged from October
1997 to September 1998.

The Split-Off Transactions were a series of transactions completed on February
12, 1997 in accordance with the Share Exchange Agreement, dated June 12, 1996
(the "Share Exchange Agreement") between Reliance and the Taylor Family, which
owned approximately 25% of the outstanding common stock of Reliance prior to the
Split-Off Transactions. Pursuant to the Split-Off Transactions, the Taylor
Family and certain other stockholders of Reliance exchanged all of their common
stock of Reliance for all of the outstanding common stock of the Company. On
February 9, 1998, Reliance filed a voluntary petition under Chapter 11 of the
Bankruptcy Code.

In September 1998, five class actions, brought on behalf of current and former
stockholders of Reliance and pending in Delaware Chancery Court, were
consolidated into one class action. The consolidated class action alleges that
the Taylor Family, certain directors and officers of the Company, and certain
other defendants breached their fiduciary duties in connection with disclosures
made to the stockholders prior to the vote which approved the Split-Off
Transactions. The case seeks relief in the form of unspecified damages,
attorneys' fees and recision of the Split-Off Transactions. On September 9, 1998
the Delaware Chancery Court stayed this consolidated class action indefinitely
pending resolution of the consolidated class action in Texas that is described
below.

In August 1998, nine class actions, brought on behalf of current and former
stockholders of Reliance and pending in the United States District Court for the
Western District of Texas, were consolidated into one class action. One class
action, brought on behalf of current and former stockholders of Reliance, is
also pending in the Northern District of Illinois. These cases allege that the
Taylor Family, certain directors and officers of the Company, and certain other
defendants violated the federal securities laws and breached common law
fiduciary duties. In addition, the cases allege that the Company and certain
other defendants violated ERISA and breached certain fiduciary duties, including
fiduciary duties owed to a subclass consisting of participants in Reliance's
ESOP and 401(k) Profit Sharing Plan. The Texas and Illinois cases seek
unspecified damages and attorneys' fees. Cole Taylor Bank is


                                       30
<PAGE>   31

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Litigation -- continued

named as an additional defendant in the Illinois action. A motion is pending to
transfer the Texas case to Illinois, and a motion is pending to transfer the
Illinois case to Texas.

On August 19, 1998, Irwin Cole and other members of his family, who collectively
owned approximately 25% of the outstanding common stock of Reliance prior to the
Split-Off Transactions, brought suit in Delaware Chancery Court against members
of the Taylor Family, the Company, other current and/or former officers and
directors of Reliance and the Company, and other stockholders of the Company.
The suit alleges that the Taylor Family, certain directors and officers of the
Company, and certain other defendants breached their fiduciary duties, committed
fraud and/or engaged in self-dealing in connection with the operation of
Reliance and the Split-Off Transactions. The lawsuit seeks unspecified damages
and attorneys' fees and requests that the Court place all of the shares of the
Company held by the Taylor Family in a constructive trust.

On October 5, 1998, the United States Bankruptcy Court of the District of
Delaware (the "Bankruptcy Court") entered an order preliminarily enjoining the
plaintiffs in most of the above lawsuits from prosecuting their cases on account
of the pending adversary proceedings by the Reliance Estate Representative that
are described below. On June 2, 1999 the District Court for the District of
Delaware reversed the Bankruptcy Court's order. The District Court's order has
been appealed.

On July 6, 1998, the Bankruptcy Court entered a confirmation order that
discharged the liability of Reliance and its subsidiaries in connection with all
of the lawsuits described above and permanently enjoined the filing of similar
new suits against them. The Bankruptcy Court also appointed an Estate
Representative (the "Estate Representative") for the Post-Confirmation Chapter
11 Estate of Reliance and its subsidiaries. On September 4, 1998, the Estate
Representative filed two adversary proceeding complaints, since consolidated,
which named as defendants members of the Taylor Family, certain other directors
and officers of the Company, one of Reliance's former legal counsel and
Reliance's former public accountants (both of whom continue to serve the
Company), the Company and Cole Taylor Bank, as trustee. The complaints allege
fraudulent conveyance and breaches of fiduciary duties and contract with respect
to the Taylor Family, the Company and Cole Taylor Bank, as trustee. The
complaints charge certain of the other defendants with alleged breaches of
fiduciary duty, breaches of contract, malpractice and negligent
misrepresentation and aiding and abetting the Taylor Family's and the Company's
alleged breaches. These complaints seek unspecified damages and attorneys' fees
and avoidance of the Split-Off Transactions by the transfer to the Estate
Representative of either the assets exchanged in the Split-Off Transactions or
the value of such assets. One of the complaints demands monetary damages
pursuant to the Taylor Family's obligation under the Share Exchange Agreement to
indemnify Reliance for certain losses resulting from the Split-Off Transactions,
and asks the court to disallow any claims for indemnification that any of the
defendants have against Reliance or, in the alternative, to equitably
subordinate such claims to all other creditor claims against Reliance. On July
22, 1999, the District Court for the District of Delaware issued an order
withdrawing the adversary proceedings from the Bankruptcy Court to the District
Court.

On December 7, 1998, the Estate Representative filed a motion for a preliminary
injunction which seeks to enjoin the Company and Cole Taylor Bank from paying
directly or indirectly any dividends to any of their respective


                                       31
<PAGE>   32

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


Litigation -- continued

shareholders and from paying any of the litigation defense costs of the Taylor
Family or any other co-defendants with respect to any litigation arising out of
the Split-Off Transactions. This motion for a preliminary injunction is
currently pending.

On July 21, 1999, the Company and certain other defendants in the nine Texas
cases, the one Illinois case and the adversary proceedings submitted a request
to the Judicial Panel on Multidistrict Litigation seeking to have all of these
cases transferred to the Northern District of Illinois for coordinated or
consolidated pretrial proceedings. This request is currently pending.

In accordance with the terms and conditions of the Share Exchange Agreement
relating to the Split-Off Transactions, the Taylor Family has agreed to
indemnify Reliance for certain losses incurred by Reliance, including certain
losses relating to the Split-Off Transactions ("Taylor Family Indemnification
Obligations"). In accordance with the terms of an agreement dated February 6,
1997 between the Taylor Family and the Company, the Company has agreed to
indemnify the Taylor Family for certain losses that the Taylor Family may incur
as a result of the Split-Off Transactions, including a portion of the Taylor
Family Indemnification Obligations under the Share Exchange Agreement. The
Company is unable at this time to predict the extent to which it will be
required to pay any amounts under its indemnification obligation to the Taylor
Family. The Company and its subsidiaries have paid and may continue to pay
defense and other legal costs of the lawsuits described above that are not
otherwise advanced by insurance carriers on behalf of the Taylor Family and
other directors, officers and stockholders of the Company who are defendants in
these lawsuits.

The Company believes that it has meritorious defenses to all of the actions
against the Company, and the Company intends to defend itself and its
subsidiaries vigorously. However, the Company is unable to predict, at this
time, the potential impact of the litigation, the indemnification obligations
and the payment of legal fees described above on the management, business,
financial condition, liquidity and operating results of the Company. Even if the
Taylor Family, the Company and the other defendants are successful in defending
themselves in the lawsuits, the Company has incurred and will continue to incur
significant costs with respect to such lawsuits.

The Company is from time to time a party to various other legal actions arising
in the normal course of business. Management knows of no such other threatened
or pending legal actions against the Company that are likely to have a material
adverse impact on the business, financial condition, liquidity or operating
results of the Company.

NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" was issued in June 1998. This Statement
standardizes the accounting for derivative instruments. Under the standard,
entities are required to carry all derivative instruments in the statement of
financial position at fair value. The accounting for changes in fair value (i.e.
gains or losses) of the derivative instrument depends on whether it has been
designated and qualifies as part of a hedging relationship and, if so, on the
reason for holding it. If certain conditions are met, entities may elect to
designate the derivative instrument as a hedge of exposure to


                                       32

<PAGE>   33

                           TAYLOR CAPITAL GROUP, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (Continued)


New Accounting Pronouncements -- continued

changes in fair values, cash flows or foreign currencies. If the hedged exposure
is a fair value exposure, the gain or loss on the derivative instrument is
recognized in earnings in the period of change, together with the offsetting
gain or loss on the hedged item attributable to the risk being hedged. If the
hedged exposure is a cash flow exposure, the effective portion of the gain or
loss on the derivative instrument is reported initially as a component of other
comprehensive income (outside earnings) an subsequently reclassified into
earnings when the forecasted transaction affects earnings. Any amounts excluded
from the assessment of hedge effectiveness, as well as the ineffective portion
of the gain or loss, is reported in earnings immediately. Accounting for foreign
currency hedged is similar to the accounting for fair value and cash flow
hedges. If the derivative instrument is not designated as a hedge, the gain or
loss is recognized in earnings in the period of change. In June 1999 the
Financial Accounting Standards Board (FASB) issued statement of Financial
Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133 an
amendment of FASB Statement No. 133." This statement delays the effective date
of FASB No. Statement 133 for one year, to fiscal years beginning after June 15,
2000. The Company must adopt the Statement by January 1, 2001, however early
adoption is permitted. Upon adoption, the provisions of the Statement must only
be applied prospectively. The Company has not yet quantified the impact of the
adoption of the Statement.

SAFE HARBOR PROVISION OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements contained in this Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this Form 10-Q,
including the statements in Part I, Item 3 "Quantitative and Qualitative
Disclosures About Market Risk," are forward-looking statements that are based on
the beliefs of the Company's management, as well as assumptions made by and
information currently available to the Company's management. Such
forward-looking statements are subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. When used in this Form 10-Q, the words
"anticipates," "believes," "estimates," "expects" and similar expressions, as
they relate to the Company or its management, are intended to identify such
forward-looking statements but are not the exclusive means of identifying such
statements. The Company cautions readers of this Quarterly Report on Form 10-Q
that a number of risks, uncertainties and other factors could cause the
Company's actual results, performance or achievements in the remainder of 1999
and beyond to differ materially from the results, performance or achievements
expressed in, or implied by, such forward-looking statements. These risks,
uncertainties and other factors include, without limitation, the general
economic and business conditions affecting the Company's customers; the ability
of the Bank to maintain sufficient funds to respond to the needs of depositors
and borrowers; changes in interest rates; changes in customer response to the
Bank's pricing strategies; the effects of the Year 2000 compliance issue on the
computer systems of the Company, its service providers and its loan customers;
competition from the Company's principal competitors; changes in federal and
state legislation or regulatory requirements; the adequacy of the Company's
allowance for loan losses; contractual, statutory or regulatory restrictions on
the Bank's ability to pay dividends to the Company; and continuing obligations
or potential liabilities or restrictions arising from or relating to the
Split-Off Transactions, including pending legal actions. Certain of these risks,
uncertainties and other factors are more fully described elsewhere in this Form
10-Q. Except as specifically required by the federal securities laws the Company
does not undertake any obligation to update or revise any forward looking
statements to reflect new events or circumstances or for any other reason.


                                       33
<PAGE>   34

                           TAYLOR CAPITAL GROUP, INC.


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk is the most significant market risk affecting the Company.
Other types of market risk, such as foreign currency risk and commodity price
risk, do not arise in the normal course of the Company's business activities.
Interest rate risk can be defined as the exposure to a movement in interest
rates that could have an adverse effect on the Company's net interest income or
the market value of its financial instruments. The ongoing monitoring and
management of this risk is an important component of the Company's asset and
liability management process, which is governed by policies established by the
Board of Directors and carried out by the Company's Asset/Liability Management
Committee ("ALCO"). ALCO's objectives are to manage, to the degree prudently
possible, the Company's exposure to interest rate risk over both the one-year
planning cycle and the longer-term strategic horizon and, at the same time, to
provide a stable and steadily increasing flow of net interest income.

The Company uses various interest rate contracts (floors) and forward sale
commitments to manage interest rate and market risk. These contracts are
designated as hedges of specific existing assets and liabilities. The Company's
asset and liability management and investment policies do not allow the use of
derivative financial instruments for trading purposes.

The Company's primary measurement of interest rate risk is earnings at risk,
which is determined through computerized simulation modeling. The simulation
model assumes a static balance sheet, using the balances, rates, maturities and
repricing characteristics of all of the Bank's existing assets and liabilities,
including off-balance sheet financial instruments. Net interest income is
computed by the model assuming market rates remaining unchanged and also
assuming parallel shifts of market interest rates up and down 200 basis points.
The impact of imbedded options in products such as callable securities and
mortgage-backed securities, real estate mortgage loans and callable borrowings
is considered. Changes in net interest income in the rising and declining rate
scenarios are then measured against the modeled net interest income in the rates
unchanged scenario. ALCO utilizes all of the results of the model to quantify
the estimated exposure of net interest income to sustained interest rate
changes.

The second quarter 1999 simulation model indicated that the Bank had limited
exposure to either rising or declining rates in the one-year horizon. At June
30, 1999 the net interest income at risk for year one in the declining rate
scenario was calculated at $8,000, or 0.01% lower than the net interest income
in the rates unchanged scenario. The net interest income for year one in the
rising rate scenario was calculated at $284,000, or 0.35% higher than the net
interest income in the rates unchanged scenario. This exposure was well within
the Bank's policy guidelines of 10%. Computation of prospective effects of
hypothetical interest rate changes are based on numerous assumptions, including
relative levels of market interest rates, loan and security prepayments, deposit
decay, and pricing and reinvestment strategies and, therefore, should not be
relied upon as indicative of actual results. Further, the computations do not
contemplate any actions the Company may take in response to changes in interest
rates. No assurance can be given that the actual net interest income would
increase or decrease by the amounts computed in response to a modeled 200 basis
point parallel increase in market rates.


                                       34
<PAGE>   35

                           TAYLOR CAPITAL GROUP, INC.


PART II.  OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

Footnote 8 to the Consolidated Financial Statements and "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Litigation"
included in this Form 10-Q discuss certain significant litigation relating to
the Split-Off Transactions. Such discussion is incorporated in this Part II.
Item 1. by reference.


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)   Exhibits - Exhibit 10.1 - Taylor Capital Group, Inc. Profit
                                           Sharing and Employee Stock
                                           Ownership Plan
                          - Exhibit 10.2 - Amendment and Restatement of the
                                           Taylor Capital Group, Inc. Profit
                                           Sharing and Employee Stock Ownership
                                           Trust
                          - Exhibit 10.3 - Taylor Capital Group, Inc. 401 (K)
                                           Plan
                          - Exhibit 10.4 - Taylor Capital Group, Inc. 401(k)
                                           Trust
                          - Exhibit 27 - Financial Data Schedule
           (b)   Reports on Form 8-K - No reports on Form 8-K were filed during
                 the period covered by this report.


                                       35
<PAGE>   36

                                   SIGNATURES

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



                                                  Taylor Capital Group, Inc.
                                            -----------------------------------
                                                         (Registrant)


Date:   August 13, 1999                        /s/  Jeffrey W. Taylor
                                            -----------------------------------
                                                    Jeffrey W. Taylor *
                                            Chairman and Chief Executive Officer


Date:   August 13, 1999                        /s/  J. Christopher Alstrin
                                            -----------------------------------
                                                    J. Christopher Alstrin *
                                                    Chief Financial Officer


* Duly authorized to sign on behalf of the Registrant


                                       36