<PAGE>

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                       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 SEPTEMBER 30, 2002

                         COMMISSION FILE NUMBER 1-13805



                      HARRIS PREFERRED CAPITAL CORPORATION
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                            <C>
                   MARYLAND                                     # 36-4183096
         (State or other jurisdiction               (I.R.S. Employer Identification No.)
      of incorporation or organization)



  111 WEST MONROE STREET, CHICAGO, ILLINOIS                        60603
   (Address of principal executive offices)                      (Zip Code)
</Table>

              REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
                                 (312) 461-2121

                            ------------------------

     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 shares of Common Stock, $1.00 par value, outstanding on
November 13, 2002 was 1,000.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                      HARRIS PREFERRED CAPITAL CORPORATION
                               TABLE OF CONTENTS

<Table>
<S>          <C>                                                             <C>
Part I       FINANCIAL INFORMATION

Item 1.      Financial Statements:
             Balance Sheets..............................................      2
             Statements of Operations and Comprehensive Income...........      3
             Statements of Changes in Stockholders' Equity...............      4
             Statements of Cash Flows....................................      5
             Notes to Financial Statements...............................      6

Item 2.      Management's Discussion and Analysis of
             Financial Condition and Results of Operations...............      7

Item 4.      Controls and Procedures.....................................     20

             The above financial statements, financial review and
             controls and procedures discussion, included in the
             Corporation's 2002 Third Quarter Report, are filed as
             Exhibit A and incorporated herein by reference.

Part II      OTHER INFORMATION

Item 6.      Exhibits and Reports on Form 8-K............................     20
             (a) Exhibits
                  99.1 Certification pursuant to 18 U.S.C. Section 1350,
                  as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002

             (b) Reports on Form 8-K
                  None

Signatures...............................................................     20

             Certification pursuant to Section 302 of the Sarbanes-Oxley
             Act of 2002.................................................     21
</Table>
<PAGE>

                      HARRIS PREFERRED CAPITAL CORPORATION
                                 BALANCE SHEETS
                                  (UNAUDITED)

<Table>
<Caption>
                                                            SEPTEMBER 30     DECEMBER 31     SEPTEMBER 30
                                                                2002             2001            2001
                                                            ------------     -----------     ------------
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                         <C>              <C>             <C>
ASSETS
Cash on deposit with Harris Trust and Savings Bank......      $    501         $    506        $  1,070
Securities purchased from Harris Trust and Savings Bank
  under agreement to resell.............................        17,500           21,000          21,001
Notes receivable from Harris Trust and Savings Bank.....        36,749           55,962          68,659
Securities available-for-sale:
  Mortgage-backed.......................................       273,339          319,644         213,775
  U.S. Treasury.........................................       219,913           84,932         199,724
Securing mortgage collections due from Harris Trust and
  Savings Bank..........................................         2,270            5,353           2,403
Other assets............................................         1,189            1,945           1,520
                                                              --------         --------        --------
       TOTAL ASSETS.....................................      $551,461         $489,342        $508,152
                                                              ========         ========        ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Broker payable -- due to securities purchase............      $ 50,397         $     --        $     --
Accrued expenses........................................            20              100              21
                                                              --------         --------        --------
       TOTAL LIABILITIES................................        50,417              100              21
Commitments and contingencies...........................            --               --              --
STOCKHOLDERS' EQUITY
7 3/8% Noncumulative Exchangeable Preferred Stock,
  Series A ($1 par value); liquidation value of
  $250,000; 20,000,000 shares authorized, 10,000,000
  shares issued and outstanding.........................       250,000          250,000         250,000
Common stock ($1 par value); 1,000 shares authorized,
  issued and outstanding................................             1                1               1
Additional paid-in capital..............................       240,733          240,733         240,733
Earnings in excess of distributions.....................         3,882              385          13,833
Accumulated other comprehensive income
  (loss) -- unrealized gains (losses) on
  available-for-sale securities.........................         6,428           (1,877)          3,564
                                                              --------         --------        --------
       TOTAL STOCKHOLDERS' EQUITY.......................       501,044          489,242         508,131
                                                              --------         --------        --------
       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......      $551,461         $489,342        $508,152
                                                              ========         ========        ========
</Table>

The accompanying notes are an integral part of these financial statements.

                                        2
<PAGE>

                      HARRIS PREFERRED CAPITAL CORPORATION

                            STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME
                                  (UNAUDITED)

<Table>
<Caption>
                                                       QUARTER ENDED              NINE MONTHS ENDED
                                                       SEPTEMBER 30                  SEPTEMBER 30
                                                 -------------------------    --------------------------
                                                   2002            2001         2002             2001
                                                   ----            ----         ----             ----
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                              <C>             <C>          <C>             <C>
INTEREST INCOME:
  Securities purchased from Harris Trust
     and Savings Bank under agreement to
     resell................................      $     676       $     365    $   1,635       $    1,280
  Notes receivable from Harris Trust and
     Savings Bank..........................            641           1,198        2,226            4,164
  Securities available-for-sale:
     Mortgage-backed.......................          3,028           5,832       10,945           17,251
     U.S. Treasury.........................            114              73          284              360
                                                 ---------       ---------    ---------       ----------
       Total interest income...............          4,459           7,468       15,090           23,055
NON-INTEREST INCOME:
  Gain (loss) on sale of securities........            (17)          2,593        2,678            4,796
                                                 ---------       ---------    ---------       ----------
OPERATING EXPENSES:
  Loan servicing fees paid to Harris Trust
     and Savings Bank......................             31              56          106              195
  Advisory fees paid to Harris Trust and
     Savings Bank..........................              8               8           35               28
  General and administrative...............             47              50          172              157
                                                 ---------       ---------    ---------       ----------
       Total operating expenses............             86             114          313              380
                                                 ---------       ---------    ---------       ----------
Net income.................................          4,356           9,947       17,455           27,471
Preferred dividends........................          4,609           4,609       13,828           13,828
                                                 ---------       ---------    ---------       ----------
NET INCOME (LOSS) AVAILABLE TO COMMON
  STOCKHOLDER..............................      $    (253)      $   5,338    $   3,627       $   13,643
                                                 =========       =========    =========       ==========
Basic and diluted earnings (losses) per
  common share.............................      $ (253.00)      $5,338.00    $3,627.00       $13,643.00
                                                 =========       =========    =========       ==========
Net income.................................      $   4,356       $   9,947    $  17,455       $   27,471
Other comprehensive income  -- unrealized
  gains on available-for-sale securities...          4,615           6,652        8,305            5,010
                                                 ---------       ---------    ---------       ----------
Comprehensive income.......................      $   8,971       $  16,599    $  25,760       $   32,481
                                                 =========       =========    =========       ==========
</Table>

The accompanying notes are an integral part of these financial statements.

                                        3
<PAGE>

                      HARRIS PREFERRED CAPITAL CORPORATION

                 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                  (UNAUDITED)

<Table>
<Caption>
                                                                   NINE MONTHS ENDED
                                                                     SEPTEMBER 30
                                                                -----------------------
                                                                  2002           2001
                                                                  ----           ----
                                                                    (IN THOUSANDS,
                                                                EXCEPT PER SHARE DATA)
<S>                                                             <C>            <C>
BALANCE AT JANUARY 1........................................    $489,242       $489,824
  Net income................................................      17,455         27,471
  Other comprehensive income................................       8,305          5,010
  Dividends -- common stock.................................        (130)          (346)
  Dividends (preferred stock $0.4609 per share).............     (13,828)       (13,828)
                                                                --------       --------
BALANCE AT SEPTEMBER 30.....................................    $501,044       $508,131
                                                                ========       ========
</Table>

The accompanying notes are an integral part of these financial statements.

                                        4
<PAGE>

                      HARRIS PREFERRED CAPITAL CORPORATION
                            STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<Table>
<Caption>
                                                                  NINE MONTHS ENDED
                                                                     SEPTEMBER 30
                                                                ----------------------
                                                                  2002         2001
                                                                  ----         ----
                                                                    (IN THOUSANDS)
<S>                                                             <C>          <C>
OPERATING ACTIVITIES:
  Net Income................................................    $  17,455    $  27,471
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Gain on sale of securities.............................       (2,678)      (4,796)
     Net decrease in other assets...........................          756        1,039
     Net increase in broker payable-due to securities
      purchases.............................................       50,397           --
     Net decrease in accrued expenses.......................          (80)         (94)
                                                                ---------    ---------
       Net cash provided by operating activities............       65,850       23,620
                                                                ---------    ---------
INVESTING ACTIVITIES:
  Net decrease (increase) in securities purchased from
     Harris Trust and Savings Bank under agreement to
     resell.................................................        3,500      (18,001)
  Repayments of notes receivable from Harris Trust and
     Savings Bank...........................................       19,213       34,301
  Decrease in securing mortgage collections due from Harris
     Trust and Savings Bank.................................        3,083          383
  Purchases of securities available-for-sale................     (667,075)    (413,304)
  Proceeds from maturities and sales of securities
     available-for-sale.....................................      589,382      387,426
                                                                ---------    ---------
       Net cash used by investing activities................      (51,897)      (9,195)
                                                                ---------    ---------
FINANCING ACTIVITIES:
  Cash dividends paid on preferred stock....................      (13,828)     (13,828)
  Cash dividends paid on common stock.......................         (130)        (346)
                                                                ---------    ---------
       Net cash used by financing activities................      (13,958)     (14,174)
  Net (decrease) increase in cash on deposit with Harris
     Trust and Savings Bank.................................           (5)         251
  Cash on deposit with Harris Trust and Savings Bank at
     beginning of period....................................          506          819
                                                                ---------    ---------
  Cash on deposit with Harris Trust and Savings Bank at end
     of period..............................................    $     501    $   1,070
                                                                =========    =========
</Table>

The accompanying notes are an integral part of these financial statements.

                                        5
<PAGE>

                      HARRIS PREFERRED CAPITAL CORPORATION
                         NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

     Harris Preferred Capital Corporation (the "Company") is a Maryland
corporation whose principal business objective is to acquire, hold, finance and
manage qualifying real estate investment trust ("REIT") assets (the "Mortgage
Assets"), consisting of a limited recourse note or notes (the "Notes") issued by
Harris Trust and Savings Bank (the "Bank") secured by real estate mortgage
assets (the "Securing Mortgage Loans") and other obligations secured by real
property, as well as certain other qualifying REIT assets. The Company holds its
assets through a Maryland real estate investment trust subsidiary, Harris
Preferred Capital Trust. Harris Capital Holdings, Inc., a wholly-owned
subsidiary of the Bank, owns 100% of the Company's common stock.

     The accompanying financial statements have been prepared by management from
the books and records of the Company, without audit by independent certified
public accountants. These statements reflect all adjustments and disclosures
which are, in the opinion of management, necessary for a fair statement of the
results for the interim periods presented and should be read in conjunction with
the notes to financial statements included in the Company's 2001 Form 10-K.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission.

2. COMMITMENTS AND CONTINGENCIES

     Legal proceedings in which the Company is a defendant may arise in the
normal course of business. There is no pending litigation against the Company.

3. ACCOUNTING PRONOUNCEMENTS

     The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 141, "Business Combinations." The Statement addresses financial accounting
and reporting for business combinations and supersedes APB Opinion No. 16,
"Business Combinations." It requires all business combinations within the scope
of the Statement to be accounted for using one method, the purchase method. It
establishes criteria for the initial recognition of intangible assets acquired
in a business combination. The provisions of the Statement apply to all business
combinations initiated after June 30, 2001 and to all business combinations
accounted for by using the purchase method for which the date of acquisition is
July 1, 2001 or later. The implementation of this Statement has not had a
material effect on the Company's financial position or results of operations.

     In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 142, "Goodwill and Other Intangible Assets." The Statement addresses
financial accounting and reporting for acquired goodwill and other intangible
assets and supersedes APB Opinion No. 17, "Intangible Assets." Under this
Statement, goodwill and other intangible assets that have indefinite useful
lives will not be subject to amortization while intangible assets with finite
lives will be amortized. The Statement is effective for fiscal years beginning
after December 15, 2001. However, goodwill and intangible assets acquired after
June 30, 2001 will be subject immediately to the nonamortization and
amortization provisions of the Statement. The implementation of this Statement
has not had a material effect on the Company's financial position or results of
operations.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." The Statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made. The associated asset retirement costs should be capitalized as part of
the carrying amount of the long-lived asset. The Statement is effective for
financial statements issued for fiscal

                                        6
<PAGE>
                      HARRIS PREFERRED CAPITAL CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

years beginning after June 15, 2002. The Company does not expect the
implementation of this Statement to have a material effect on its financial
position or results of operations.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." The Statement addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
establishes a single accounting model for long-lived assets to be disposed of by
sale. It supersedes SFAS No. 121 and the accounting and reporting provisions of
APB Opinion No. 30 for the disposal of a segment of a business. The Statement is
effective for financial statements issued for fiscal years beginning after
December 15, 2001 and interim periods within those fiscal years. The
implementation of this Statement has not had a material effect on the Company's
financial position or results of operations.

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

FORWARD-LOOKING INFORMATION

     The statements contained in this Report on Form 10-Q that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding the Company's expectation, intentions,
beliefs or strategies regarding the future. Forward-looking statements include
the Company's statements regarding tax treatment as a real estate investment
trust, liquidity, provision for loan losses, capital resources and investment
activities. In addition, in those and other portions of this document, the words
"anticipate," "believe," "estimate," "expect," "intend" and other similar
expressions, as they relate to the Company or the Company's management, are
intended to identify forward-looking statements. Such statements reflect the
current views of the Company with respect to future events and are subject to
certain risks, uncertainties and assumptions. It is important to note that the
Company's actual results could differ materially from those described herein as
anticipated, believed, estimated or expected. Among the factors that could cause
the results to differ materially are the risks discussed in the "Risk Factors"
section included in the Company's Registration Statement on Form S-11 (File No.
333-40257), with respect to the Preferred Shares declared effective by the
Securities and Exchange Commission on February 5, 1998. The Company assumes no
obligation to update any such forward-looking statement.

RESULTS OF OPERATIONS

THIRD QUARTER 2002 COMPARED WITH THIRD QUARTER 2001

     The Company's net income for the third quarter of 2002 was $4.4 million.
This represented a $5.5 million or 56% decrease from third quarter 2001 earnings
of $9.9 million. Earnings decreased primarily because of reduced interest income
on earning assets and a $2.6 million gain on sale of securities in 2001 compared
to a small loss in the current year. As assets mature or are sold, proceeds have
been invested in lower yielding securities because market interest rates have
been declining in the last twelve months.

     Third quarter 2002 interest income on the Notes totaled $641 thousand and
yielded 6.4% on $40.1 million of average principal outstanding for the quarter
compared to $1.2 million and a 6.4% yield on $75.1 million average principal
outstanding for third quarter 2001. The decrease in income was attributable to a
reduction in the Notes balance because of customer payoffs on the Securing
Mortgage Loans. The average outstanding balance of the Securing Mortgage Loans
for third quarter 2002 and 2001 was $49 million and $91 million, respectively.
Interest income on securities available-for-sale for the current quarter was
$3.1 million resulting in a yield of 4.6% on an average balance of $276 million,
compared to $5.9 million with a yield of 6.3% on an average balance of $374
million for the same period a year ago. The decrease in interest income is
primarily attributable to the reduction in yield. As securities mature or are
sold, proceeds have been invested in lower yielding securities because market
interest rates have been declining in the past twelve months.

                                        7
<PAGE>
                      HARRIS PREFERRED CAPITAL CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     There were no Company borrowings during third quarter 2002 or 2001.

     Third quarter 2002 operating expenses totaled $86 thousand, a decrease of
$28 thousand or 25% from the third quarter of 2001. Loan servicing expenses
totaled $31 thousand, a decrease of $25 thousand or 45% from a year ago. This
decrease is attributable to the reduction in the principal balance of the Notes,
thereby reducing servicing fees payable to the Bank. Advisory fees for both the
third quarter 2002 and 2001 were $8 thousand. General and administrative
expenses totaled $47 thousand, a decrease of $3 thousand over third quarter
2001.

     At September 30, 2002 and 2001, there were no Securing Mortgage Loans on
nonaccrual status.

     The Company does not currently maintain an allowance for loan losses due to
the over-collateralization of the Notes represented by the Securing Mortgage
Loans.

     For the current quarter, the Company had a $253,000 loss after dividends on
its preferred stock. The Company anticipates that it has sufficient liquidity
and earnings capacity to continue preferred dividend payments on an
uninterrupted basis.

NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED WITH SEPTEMBER 30, 2001

     The Company's net income for the nine months ended September 30, 2002 was
$17.5 million. This represented a $10.1 million or 36% decrease from 2001
earnings of $27.5 million. Earnings decreased primarily because of reduced
interest income on earning assets. As assets mature or are sold, proceeds have
been invested in lower yielding securities because market interest rates have
been declining in the past twelve months. In addition, gains on security sales
declined from $4.8 million in last year's nine month period to $2.7 million in
the current 2002 period.

     Interest income on securities purchased under agreement to resell for the
nine months ended September 30, 2002 was $1.6 million, an increase of $355
thousand from the same period in 2001. Interest income on the Notes for the nine
months ended September 30, 2002 totaled $2.2 million and yielded 6.40% on $46
million of average principal outstanding compared to $4.2 million of income
yielding 6.40% on $87 million of average principal outstanding for the same
period in 2001. The decrease in income was attributable to a reduction in the
Notes balance because of customer payoffs on the Securing Mortgage Loans. There
were no Company borrowings during either period. Interest income on securities
available-for-sale for the nine months ended September 30, 2002 was $11.2
million resulting in a yield of 5.25% on an average balance of $285 million,
compared to $17.6 million of income with a yield of 6.48% on an average balance
of $363 million a year ago. The decrease in interest income is primarily
attributable to the reduction in yield. As securities mature or are sold,
proceeds have been invested in lower yielding securities as a result of market
interest rates declining in recent months. Gains from investment securities
sales for the nine months ended September 30, 2002 were $2.7 million compared to
$4.8 million a year ago. The average outstanding balance of the Securing
Mortgage Loans was $40 million for the nine months ended September 30, 2002 and
$106 million for the same period in 2001.

     Operating expenses for the nine months ended September 30, 2002 totaled
$313 thousand, a decrease of $67 thousand from a year ago. Loan servicing
expenses for the nine months ended September 30, 2002 totaled $106 thousand, a
decrease of $89 thousand or 46% from 2001. This decrease is attributable to the
reduction in the principal balance of the Notes because servicing costs vary
directly with these balances. Advisory fees for the nine months ended September
30, 2002 were $35 thousand compared to $28 thousand a year ago, primarily
attributable to increased securities processing costs in the current year.
General and administrative expenses totaled $172 thousand, an increase of $15
thousand or 10% over the same period in 2001, as a result of additional
reporting and compliance costs.

     On September 30, 2002, the Company paid a cash dividend of $0.46094 per
share on outstanding preferred shares to the stockholders of record on September
15, 2002, as declared on September 6, 2002. On

                                        8
<PAGE>
                      HARRIS PREFERRED CAPITAL CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

September 12, 2002, the Company paid a cash dividend of $130 thousand on the
outstanding common shares to the stockholder of record on September 4, 2002, as
declared on September 4, 2002. This dividend completed the 2001 REIT tax
compliance requirements. On September 30, 2001, the Company paid a cash dividend
of $0.46094 per share on outstanding preferred shares to the stockholders of
record on September 15, 2001, as declared on August 30, 2001. On a year-to-date
basis, the Company declared and paid $13.8 million of dividends to holders of
preferred shares for each of the nine-month periods ended September 30, 2002 and
2001.

LIQUIDITY RISK MANAGEMENT

     The objective of liquidity management is to ensure the availability of
sufficient cash flows to meet all of the Company's financial commitments. In
managing liquidity, the Company takes into account various legal limitations
placed on a REIT.

     The Company's principal asset management requirements are to maintain the
current earning asset portfolio size through the acquisition of additional Notes
or other qualifying assets in order to pay dividends to its stockholders after
satisfying obligations to creditors. The acquisition of additional Notes or
other qualifying assets is funded with the proceeds obtained as a result of
repayment of principal balances of individual Securing Mortgage Loans or
maturities or sales of securities. The payment of dividends on the Preferred
Shares is made from legally available funds, arising from operating activities
of the Company. The Company's cash flows from operating activities principally
consist of the collection of interest on the Notes, mortgage-backed securities
and other earning assets. The Company does not have and does not anticipate
having any material capital expenditures.

     In order to remain qualified as a REIT, the Company must distribute
annually at least 90% of its adjusted REIT ordinary taxable income, as provided
for under the Internal Revenue Code, to its common and preferred stockholders.
The Company currently expects to distribute dividends annually equal to 90% or
more of its adjusted REIT ordinary taxable income.

     The Company anticipates that cash and cash equivalents on hand and the cash
flow from the Notes and mortgage-backed securities will provide adequate
liquidity for its operating, investing and financing needs.

     As presented in the accompanying Statements of Cash Flows, the primary
sources of funds in addition to $65.9 million provided from operations during
the nine months ended September 30, 2002 were $19.2 million provided by
principal payments on the Notes and $589.4 million from the maturities and sales
of securities available-for-sale. In the prior period ended September 30, 2001,
the primary sources of funds other than $23.6 million from operations were $34.3
million provided by principal payments on the Notes and $387.4 million from the
maturities and sales of securities available-for-sale. The primary uses of funds
for the nine months ended September 30, 2002 were $667.1 million for purchases
of securities available-for-sale and $13.8 million in preferred stock dividends
paid. For the prior year's quarter ended September 30, 2001, the primary uses of
funds were $413.3 million for purchases of securities available-for-sale and
$13.8 million in preferred stock dividends paid.

MARKET RISK MANAGEMENT

     The Company's market risk is composed primarily of interest rate risk.
There have been no material changes in market risk or the manner in which the
Company manages market risk since December 31, 2001.

                                        9
<PAGE>
                      HARRIS PREFERRED CAPITAL CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OTHER MATTERS

     As of September 30, 2002, the Company believes that it is in full
compliance with the REIT tax rules, and expects to qualify as a REIT under the
provisions of the Code. The Company expects to meet all REIT requirements
regarding the ownership of its stock and anticipates meeting the annual
distribution requirements.

FINANCIAL STATEMENTS OF HARRIS TRUST AND SAVINGS BANK

     The following unaudited financial information for the Bank is included
because the Company's preferred shares are automatically exchangeable for a new
series of preferred stock of the Bank upon the occurrence of certain events.

                                        10
<PAGE>

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CONDITION
                                  (UNAUDITED)

<Table>
<Caption>
                                                                     SEPTEMBER 30    DECEMBER 31    SEPTEMBER 30
                                                                         2002           2001            2001
                                                                     ------------    -----------    ------------
                                                                          (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                                  <C>             <C>            <C>
ASSETS
Cash and demand balances due from banks..........................    $   998,220     $ 1,203,946    $   968,638
Money market assets:
  Interest-bearing deposits at banks.............................        402,794         195,723        258,001
  Federal funds sold and securities purchased under agreement to
     resell......................................................      1,412,150         579,750        165,700
Trading account assets...........................................        100,986          90,562         60,522
Securities available-for-sale (including $4.12 billion, $3.21
  billion, and $2.99 billion of securities pledged as collateral
  for repurchase agreements at September 30, 2002, December 31,
  2001, and September 30, 2001, respectively)....................      6,133,908       5,822,229      6,372,401
Loans, net of unearned income....................................      9,431,250       9,972,473     10,464,900
Allowance for possible loan losses...............................       (209,146)       (227,374)      (231,308)
                                                                     -----------     -----------    -----------
  Net loans......................................................      9,222,104       9,745,099     10,233,592
Premises and equipment...........................................        291,502         287,549        295,563
Customers' liability on acceptances..............................         14,226          13,365         20,306
Bank-owned insurance.............................................        984,635         952,225        940,182
Loans held for sale..............................................        107,088         121,588        139,219
Goodwill and other valuation intangibles.........................        191,855         206,119        210,394
Other assets.....................................................        445,682         518,016        552,013
                                                                     -----------     -----------    -----------
       TOTAL ASSETS..............................................    $20,305,150     $19,736,171    $20,216,531
                                                                     ===========     ===========    ===========
LIABILITIES
Deposits in domestic offices -- noninterest-bearing..............    $ 2,330,302     $ 3,170,649    $ 2,864,594
                             -- interest-bearing.................      8,847,853       6,311,796      6,736,662
Deposits in foreign offices  -- noninterest-bearing..............         34,160          38,063         34,782
                             -- interest-bearing.................        822,173       1,670,352      1,915,640
                                                                     -----------     -----------    -----------
       Total deposits............................................     12,034,488      11,190,860     11,551,678
Federal funds purchased and securities sold under agreement to
  repurchase.....................................................      4,845,517       4,423,351      4,373,258
Short-term borrowings............................................        595,412         704,699        453,046
Short-term senior notes..........................................        100,000         860,000        910,000
Acceptances outstanding..........................................         14,226          13,365         20,306
Accrued interest, taxes and other expenses.......................        227,137         335,931        314,503
Other liabilities................................................        428,793         167,288        558,346
Minority interest -- preferred stock of subsidiary...............        255,000         255,000        250,000
Long-term notes -- subordinated..................................        225,000         225,000        225,000
                                                                     -----------     -----------    -----------
       TOTAL LIABILITIES.........................................     18,725,573      18,175,494     18,656,137
                                                                     -----------     -----------    -----------
STOCKHOLDER'S EQUITY
Common stock ($10 par value); authorized 10,000,000 shares;
  issued and outstanding 10,000,000 shares.......................        100,000         100,000        100,000
Surplus..........................................................        625,212         620,586        619,463
Retained earnings................................................        786,420         819,991        779,783
Accumulated other comprehensive income...........................         67,945          20,100         61,148
                                                                     -----------     -----------    -----------
       TOTAL STOCKHOLDER'S EQUITY................................      1,579,577       1,560,677      1,560,394
                                                                     -----------     -----------    -----------
       TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY................    $20,305,150     $19,736,171    $20,216,531
                                                                     ===========     ===========    ===========
</Table>

The accompanying notes to the financial statements are an integral part of these
statements.

                                        11
<PAGE>

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (UNAUDITED)

<Table>
<Caption>
                                                           QUARTER ENDED         NINE MONTHS ENDED
                                                            SEPTEMBER 30            SEPTEMBER 30
                                                        --------------------    --------------------
                                                          2002        2001        2002        2001
                                                          ----        ----        ----        ----
                                                             (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                     <C>         <C>         <C>         <C>
INTEREST INCOME
Loans, including fees...............................    $128,809    $170,175    $389,037    $583,009
Money market assets:
  Deposits at banks.................................         694       1,535       1,251       3,014
  Federal funds sold and securities purchased under
     agreement to resell............................       1,673       3,948       6,479      11,794
Trading account.....................................         487         829       1,399       2,265
Securities available-for-sale:
  U.S. Treasury and Federal agency..................      45,382      81,119     150,992     271,556
  State and municipal...............................           3           4          22          95
  Other.............................................         554         587       1,656       1,567
                                                        --------    --------    --------    --------
       Total interest income........................     177,602     258,197     550,836     873,300
                                                        --------    --------    --------    --------
INTEREST EXPENSE
Deposits............................................      41,063      78,133     126,955     283,777
Short-term borrowings...............................      15,862      42,876      47,622     186,625
Senior notes........................................       1,528       9,581      11,550      27,244
Minority interest-dividends on preferred stock of
  subsidiary........................................       4,609       4,609      13,828      13,828
Long-term notes.....................................       2,831       3,357       8,522      10,913
                                                        --------    --------    --------    --------
       Total interest expense.......................      65,893     138,556     208,477     522,387
                                                        --------    --------    --------    --------
NET INTEREST INCOME.................................     111,709     119,641     342,359     350,913
Provision for loan losses...........................       8,075     146,118      58,393     184,316
                                                        --------    --------    --------    --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
  LOSSES............................................     103,634     (26,477)    283,966     166,597
                                                        --------    --------    --------    --------
NONINTEREST INCOME
Trust and investment management fees................      20,527      21,850      62,891      67,049
Money market and bond trading.......................       4,133       4,950       8,260      14,671
Foreign exchange....................................         (69)      1,885       3,615       5,280
Service fees and charges............................      29,213      25,442      90,203      71,140
Securities gains....................................      22,562       7,557      61,273      25,475
Bank-owned insurance................................      13,693      11,859      38,976      35,183
Foreign fees........................................       6,307       5,168      18,160      15,517
Other...............................................      12,680      13,267      36,597      37,065
                                                        --------    --------    --------    --------
       Total noninterest income.....................     109,046      91,978     319,975     271,380
                                                        --------    --------    --------    --------
NONINTEREST EXPENSES
Salaries and other compensation.....................      84,077      77,632     235,229     220,763
Pension, profit sharing and other employee
  benefits..........................................      15,413      12,907      45,998      39,708
Net occupancy.......................................      11,477       9,336      31,060      27,785
Equipment...........................................      13,546      12,623      39,127      38,007
Marketing...........................................       7,024       9,884      21,706      25,082
Other...............................................       6,178      14,683      19,492      31,047
                                                        --------    --------    --------    --------
                                                         137,715     137,065     392,612     382,392
Goodwill and other valuation intangibles............       6,399       5,994      18,882      17,627
                                                        --------    --------    --------    --------
       Total noninterest expenses...................     144,114     143,059     411,494     400,019
                                                        --------    --------    --------    --------
Income (loss) before income taxes...................      68,566     (77,558)    192,447      37,958
Applicable income taxes.............................      19,925     (32,765)     55,580      (4,106)
                                                        --------    --------    --------    --------
       NET INCOME (LOSS)............................    $ 48,641    $(44,793)   $136,867    $ 42,064
                                                        ========    ========    ========    ========
EARNINGS PER COMMON SHARE (based on 10,000,000
  average shares outstanding)
Net Income (Loss)...................................    $   4.86    $  (4.48)   $  13.69    $   4.21
                                                        ========    ========    ========    ========
</Table>

The accompanying notes to the financial statements are an integral part of these
statements.
                                        12
<PAGE>

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
                                  (UNAUDITED)

<Table>
<Caption>
                                                                 2002         2001
                                                                 ----         ----
                                                                  (IN THOUSANDS)
<S>                                                           <C>          <C>
BALANCE AT JANUARY 1........................................  $1,560,677   $1,524,423
  Net income................................................     136,867       42,064
  Contributions to capital..................................       4,626        6,098
  Dividends -- common stock.................................    (170,000)     (84,000)
  Dividends -- preferred stock..............................        (438)          --
  Other comprehensive income................................      47,845       71,809
                                                              ----------   ----------
BALANCE AT SEPTEMBER 30.....................................  $1,579,577   $1,560,394
                                                              ==========   ==========
</Table>

The accompanying notes to the financial statements are an integral part of these
statements.

                                        13
<PAGE>

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                  (UNAUDITED)

<Table>
<Caption>
                                                           QUARTER ENDED         NINE MONTHS ENDED
                                                            SEPTEMBER 30            SEPTEMBER 30
                                                        --------------------    --------------------
                                                          2002        2001        2002        2001
                                                          ----        ----        ----        ----
                                                                       (IN THOUSANDS)
<S>                                                     <C>         <C>         <C>         <C>
NET INCOME (LOSS)...................................    $ 48,641    $(44,793)   $136,867    $ 42,064
OTHER COMPREHENSIVE INCOME:
  Cash flow hedges:
     Cumulative effect of accounting change.........          --          --          --      (7,976)
     Net unrealized gain on derivative instruments,
       net of tax expense for the quarter of $63 in
       2001 and net of tax expense for the
       year-to-date period of $4,684 in 2001........          --         108          --       7,976
  Unrealized gains on available-for-sale securities:
     Unrealized holding gains arising during the
       period, net of tax expense for the quarter of
       $35,177 in 2002 and $48,431 in 2001 and net
       of tax expense for the
       year-to-date period of $55,395 in 2002 and
       $57,862 in 2001..............................      53,809      73,505      85,284      87,374
     Less reclassification adjustment for realized
       gains included in income statement, net of
       tax expense for the quarter of $8,777 in 2002
       and $2,940 in 2001 and net of tax expense for
       the year-to-date period of $23,835 in 2002
       and $9,910 in 2001...........................     (13,785)     (4,617)    (37,439)    (15,565)
                                                        --------    --------    --------    --------
  Other comprehensive income........................      40,024      68,996      47,845      71,809
                                                        --------    --------    --------    --------
COMPREHENSIVE INCOME................................    $ 88,665    $ 24,203    $184,712    $113,873
                                                        ========    ========    ========    ========
</Table>

The accompanying notes to the financial statements are an integral part of these
statements.

                                        14
<PAGE>

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<Table>
<Caption>
                                                                    NINE MONTHS ENDED
                                                                       SEPTEMBER 30
                                                                --------------------------
                                                                   2002           2001
                                                                   ----           ----
                                                                      (IN THOUSANDS)
<S>                                                             <C>            <C>
OPERATING ACTIVITIES:
Net income..................................................    $   136,867    $    42,064
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Provision for loan losses.................................         58,393        184,316
  Depreciation and amortization, including intangibles......         52,302         51,257
  Deferred tax expense......................................          3,343         26,582
  Gain on sales of securities...............................        (61,273)       (25,475)
  Trading account net (purchases) sales.....................        (10,424)         4,689
  Net decrease in interest receivable.......................         15,119         58,497
  Net decrease in interest payable..........................         (1,377)        (7,651)
  Net decrease in loans held for sale.......................         14,500        103,052
  Other, net................................................        333,101        (96,373)
                                                                -----------    -----------
     Net cash provided by operating activities..............        540,551        340,958
                                                                -----------    -----------
INVESTING ACTIVITIES:
  Net increase in interest-bearing deposits at banks........       (207,071)      (116,653)
  Net (increase) decrease in Federal funds sold and
     securities purchased under agreement to resell.........       (832,400)       325,375
  Proceeds from sales of securities available-for-sale......      2,653,662      1,417,046
  Proceeds from maturities of securities
     available-for-sale.....................................      5,901,150      6,026,533
  Purchases of securities available-for-sale................     (8,725,813)    (7,170,579)
  Net decrease in loans.....................................        464,601        231,853
  Purchases of premises and equipment.......................        (37,373)       (45,051)
  Net increase in bank-owned insurance......................        (32,409)       (34,079)
  Other, net................................................       (157,131)       478,045
                                                                -----------    -----------
     Net cash (used) provided by investing activities.......       (972,784)     1,112,490
                                                                -----------    -----------
FINANCING ACTIVITIES:
  Net increase (decrease) in deposits.......................        843,628       (941,699)
  Net increase (decrease) in Federal funds purchased and
     securities sold under agreement to repurchase..........        422,166       (235,621)
  Net decrease in short-term borrowings.....................       (109,287)    (1,036,684)
  Proceeds from issuance of senior notes....................        400,000      2,308,500
  Repayment of senior notes.................................     (1,160,000)    (1,788,000)
  Cash dividends paid on common stock.......................       (170,000)       (84,000)
                                                                -----------    -----------
     Net cash provided (used) by financing activities.......        226,507     (1,777,504)
                                                                -----------    -----------
     NET DECREASE IN CASH AND DEMAND BALANCES DUE FROM
      BANKS.................................................       (205,726)      (324,056)
     CASH AND DEMAND BALANCES DUE FROM BANKS AT JANUARY 1...      1,203,946      1,292,694
                                                                -----------    -----------
     CASH AND DEMAND BALANCES DUE FROM BANKS AT SEPTEMBER
      30....................................................    $   998,220    $   968,638
                                                                ===========    ===========
</Table>

The accompanying notes to the financial statements are an integral part of these
statements.

                                        15
<PAGE>

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES
                         NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

     Harris Trust and Savings Bank (the "Bank") is a wholly-owned subsidiary of
Harris Bankcorp, Inc. ("Bankcorp"), a wholly-owned subsidiary of Bankmont
Financial Corp. (a wholly-owned subsidiary of Bank of Montreal). The
consolidated financial statements of the Bank include the accounts of the Bank
and its wholly-owned subsidiaries. Significant intercompany accounts and
transactions have been eliminated. Certain reclassifications were made to
conform prior year's financial statements to the current year's presentation.

     The consolidated financial statements have been prepared by management from
the books and records of the Bank, without audit by independent certified public
accountants. However, these statements reflect all adjustments and disclosures
which are, in the opinion of management, necessary for a fair presentation of
the results for the interim periods presented.

     Because the results of operations are so closely related to and responsive
to changes in economic conditions, the results for any interim period are not
necessarily indicative of the results that can be expected for the entire year.

2. LEGAL PROCEEDINGS

     The Bank and certain of its subsidiaries are defendants in various legal
proceedings arising in the normal course of business. In the opinion of
management, based on the advice of legal counsel, the ultimate resolution of
these matters will not have a material adverse effect on the Bank's consolidated
financial position.

3. CASH FLOWS

     For purposes of the Bank's Consolidated Statements of Cash Flows, cash and
cash equivalents is defined to include cash and demand balances due from banks.
Cash interest payments (net of amounts capitalized) for the nine months ended
September 30 totaled $209.9 million and $530.0 million in 2002 and 2001,
respectively. Cash income tax payments over the same periods totaled $26.9
million and $62.0 million, respectively.

4. GOODWILL AND OTHER INTANGIBLE ASSETS

     The Bank adopted Statement of Financial Accounting Standards ("SFAS") No.
142, "Goodwill and Other Intangible Assets," on January 1, 2002. Under this
standard, goodwill and other intangible assets that have indefinite useful lives
are not subject to amortization while intangible assets with finite lives are
amortized. The Bank has an unidentifiable intangible asset that is accounted for
in accordance with SFAS No. 72, "Accounting for Certain Acquisitions of Banking
or Thrift Institutions." This asset is excluded from the scope of SFAS No. 142
and continues to be amortized, including amortization of $2.35 million in third
quarter 2002. Effective October 1, 2002, a new accounting standard, SFAS No.
147, "Acquisitions of Certain Financial Institutions," will require that this
unidentifiable intangible asset be reclassified to goodwill and no longer be
amortized starting in fourth quarter 2002. Under the transitional requirements
of SFAS No. 147, the first three quarters of 2002 will be restated to reflect
the reversal of previously amortized goodwill in those quarters. The impact for
each of these three quarters will be $2.35 million ($1.4 million after tax). The
goodwill will be subject to the ongoing impairment testing required by current
accounting standards.

     Upon adoption of SFAS No. 142 and as of September 30, 2002, the Bank had no
goodwill.

     For the quarters and nine months ended September 30, 2002 and September 30,
2001, the Bank had no goodwill amortization expense.

     As of September 30, 2002, the gross carrying amount and accumulated
amortization of the Bank's amortizable intangible assets were $339.9 million and
$148.1 million, respectively.

                                        16
<PAGE>
                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Total amortization expense for the Bank's intangible assets was $6.4
million for the quarter ended September 30, 2002 and $18.9 million for the nine
months ended September 30, 2002.

     Estimated intangible asset amortization expense for the years ending
December 31, 2003, 2004, 2005, 2006 and 2007 is $15.9 million, $16.1 million,
$16.3 million, $16.5 million and $16.7 million, respectively. The estimates
exclude amortization expense associated with the unidentifiable intangible asset
currently accounted for in accordance with SFAS No. 72, which will be accounted
for under SFAS No. 147 as of October 1, 2002.

                                        17
<PAGE>

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES

                                FINANCIAL REVIEW

THIRD QUARTER 2002 COMPARED WITH THIRD QUARTER 2001

SUMMARY

     The Bank had third quarter 2002 net income of $48.6 million. Third quarter
2001 results were impacted by a special provision for loan losses of $121
million pre-tax. Including the effect of this special provision, the Bank had a
net loss of $44.8 million in third quarter 2001. Excluding the impact of the
$121 million special provision for loan losses, earnings increased $15.4 million
from third quarter 2001.

     Cash ROE was 15.52 percent in the current quarter compared to 10.62 percent
one year earlier, excluding the special loan loss provision. Excluding the
unrealized gains and losses on the securities portfolio recorded directly to
equity and the special loan loss provision, cash ROE was 16.04 percent compared
to 10.76 percent last year. Cash ROA was 1.18 percent compared to 0.73 a year
ago, excluding the special provision.

     Third quarter net interest income on a fully taxable equivalent basis was
$114.5 million, down $8.9 million or 7 percent from $123.4 million in 2001's
third quarter. Average earning assets decreased 12 percent to $15.28 billion
from $17.30 billion in 2001, primarily attributable to a decrease of $859
million in average loans and $1.2 billion in the investment portfolio. Net
interest margin rose from 2.84 percent in the year-ago quarter to 2.98 percent
currently, reflecting the impact of the declining interest rate environment
during 2001 and relatively higher levels of retail loans and deposits compared
to wholesale positions.

     The third quarter provision for loan losses was $8.1 million compared to
$146.1 million, including the $121 million special provision, in the third
quarter of 2001. Net charge-offs decreased to $17.6 million from $28.2 million
in the prior year. Most of the decrease resulted from lower commercial loan
write-offs.

     Third quarter noninterest income of $109.0 million increased $17.1 million
from the same quarter last year. Growth in noninterest income resulted from a
$15.0 million increase in net gains from sales of investment securities and
higher service charges on deposits amounting to $3.8 million.

     Third quarter 2002 noninterest expenses of $144.1 million increased $1.1
million or 1 percent from the year ago quarter.

     Nonperforming assets at September 30, 2002 were $171 million or 1.82
percent of total loans, down from $181 million or 1.91 percent at June 30, 2002,
and $193 million or 1.84 percent a year ago. At September 30, 2002, the
allowance for possible loan losses was $209 million, equal to 2.22 percent of
loans outstanding, compared to $231 million or 2.21 percent at the end of third
quarter 2001. As a result, the ratio of the allowance for possible loan losses
to nonperforming assets increased from 120 percent at September 30, 2001 to 122
percent at September 30, 2002.

     At September 30, 2002, Tier 1 capital of the Bank amounted to $1.58
billion, up from $1.55 billion one year earlier. The regulatory leverage capital
ratio was 8.98 percent for the third quarter of 2002 compared to 7.78 percent in
the same quarter of 2001. The Bank's capital ratio exceeds the prescribed
regulatory minimum for banks. The Bank's September 30, 2002 Tier 1 and total
risk-based capital ratios were 10.06 percent and 12.49 percent compared to
respective ratios of 9.25 percent and 11.72 percent at September 30, 2001. The
Bank's capital ratios exceed the prescribed regulatory minimum for banks.

                                        18
<PAGE>
                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES

                        FINANCIAL REVIEW -- (CONTINUED)

NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED WITH 2001

SUMMARY

     The Bank had net income for the nine months ended September 30, 2002 of
$136.9 million. Year-to-year comparative results were affected by a special loan
loss provision of $121 million in third quarter 2001. Excluding the impact of
the special provision, earnings grew 14 percent for the first nine months of
2002.

     Cash ROE was 14.55 percent in the current year, up from 13.09 percent last
year, excluding the special loan loss provision. Excluding the unrealized gains
and losses on the securities portfolio recorded directly to equity and the
special provision, cash ROE increased 171 basis points from last year. Cash ROA
was 1.11 percent compared to 0.86 a year ago, excluding the special provision.

     Net interest income on a fully taxable equivalent basis was $350.0 million,
down $14.0 million or 4 percent from $364.0 million in 2001's year-to-date
period. Average earning assets decreased 12 percent to $15.47 billion from
$17.66 billion in 2001, primarily attributable to a $838 million decrease in
average loans and $1.5 billion decrease in the investment portfolio, which was
somewhat offset by an increase of $192 million in money market assets. Net
interest margin rose from 2.75 percent in 2001 to 3.02 percent currently,
primarily reflecting the impact of the declining interest rate environment in
2001.

     The year-to-date 2002 provision for loan losses of $58.4 million was down
from $184.3 million a year ago, which included the $121 million special
provision. Net charge-offs were $76.6 million, an increase of $4.7 million from
last year, primarily reflecting an increase in commercial loan write-offs.

     Noninterest income of $320.0 million increased $48.6 million from the same
period last year. Most of this increase resulted from additional net gains from
securities sales of $35.8 million and higher service charges on deposits
amounting to $19.1 million.

     Noninterest expenses of $411.5 million increased $11.5 million or 3 percent
from the year ago period. Income tax expense increased $59.7 million, reflecting
substantially higher pretax income.

                                        19
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

     Within 90 days prior to the filing of this Report, Paul R. Skubic, the
Chairman of the Board, Chief Executive Officer and President of the Company, and
Pamela C. Piarowski, the Chief Financial Officer of the Company, evaluated the
effectiveness of the disclosure controls and procedures of the Company and
concluded that these disclosure controls and procedures are effective to ensure
that that material information required to be included in this Report has been
made known to them in a timely fashion. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these internal controls subsequent to the date of their evaluation, including
any corrective action with regard to significant deficiencies and material
weaknesses.

                           PART II. OTHER INFORMATION

ITEMS 1, 2, 3, 4 AND 5 ARE BEING OMITTED FROM THIS REPORT BECAUSE SUCH ITEMS ARE
NOT APPLICABLE TO THE REPORTING PERIOD.

ITEM 6. (a) Exhibits

            99.1 Certification pursuant to 18 U.S.C. Section 1350, As adopted
            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

         (b) Reports on Form 8-K: None

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Harris Preferred Capital Corporation has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized
on the 13th day of November 2002.

                                          /s/ PAUL R. SKUBIC
                                          --------------------------------------
                                          Paul R. Skubic
                                          Chairman of the Board and President

                                          /s/ PAMELA C. PIAROWSKI
                                          --------------------------------------
                                          Pamela C. Piarowski
                                          Chief Financial Officer

                                        20
<PAGE>

CERTIFICATIONS                              HARRIS PREFERRED CAPITAL CORPORATION
--------------------------------------------------------------------------------

I, Pamela C. Piarowski, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Harris Preferred
        Capital Corporation;

     2. Based on my knowledge, this quarterly report does not contain any untrue
        statement of a material fact or omit to state a material fact necessary
        to make the statements made, in light of the circumstances under which
        such statements were made, not misleading with respect to the period
        covered by this quarterly report;

     3. Based on my knowledge, the financial statements, and other financial
        information included in this quarterly report, fairly present in all
        material respects the financial condition, results of operations and
        cash flows of Harris Preferred Capital Corporation as of, and for, the
        periods presented in this quarterly report;

     4. Harris Preferred Capital Corporation's other certifying officer and I
        are responsible for establishing and maintaining disclosure controls and
        procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
        Harris Preferred Capital Corporation and we have:

        a) designed such disclosure controls and procedures to ensure that
           material information relating to Harris Preferred Capital
           Corporation, including its consolidated subsidiaries, is made known
           to us by others within those entities, particularly during the period
           in which this quarterly report is being prepared;

        b) evaluated the effectiveness of Harris Preferred Capital Corporation's
           disclosure controls and procedures as of a date within 90 days prior
           to the filing date of this quarterly report (the "Evaluation Date");
           and

        c) presented in this quarterly report our conclusions about the
           effectiveness of the disclosure controls and procedures based on our
           evaluation as of the Evaluation Date;

     5. Harris Preferred Capital Corporation's other certifying officer and I
        have disclosed, based on our most recent evaluation, to Harris Preferred
        Capital Corporation's auditors and the audit committee of Harris
        Preferred Capital Corporation's board of directors (or persons
        performing the equivalent functions):

        a) all significant deficiencies in the design or operation of internal
           controls which could adversely affect Harris Preferred Capital
           Corporation's ability to record, process, summarize and report
           financial data and have identified for Harris Preferred Capital
           Corporation's auditors any material weaknesses in internal controls;
           and

        b) any fraud, whether or not material, that involves management or other
           employees who have a significant role in Harris Preferred Capital
           Corporation's internal controls; and

     6. Harris Preferred Capital Corporation's other certifying officer and I
        have indicated in this quarterly report whether or not there were
        significant changes in internal controls or in other factors that could
        significantly affect internal controls subsequent to the date of our
        most recent evaluation, including any corrective actions with regard to
        significant deficiencies and material weaknesses.

                                          /s/ PAMELA C. PIAROWSKI
                                          --------------------------------------
                                          Pamela C. Piarowski
                                          Chief Financial Officer
Date:

                                        21
<PAGE>

CERTIFICATIONS                              HARRIS PREFERRED CAPITAL CORPORATION
--------------------------------------------------------------------------------

I, Paul R. Skubic, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Harris Preferred
        Capital Corporation;

     2. Based on my knowledge, this quarterly report does not contain any untrue
        statement of a material fact or omit to state a material fact necessary
        to make the statements made, in light of the circumstances under which
        such statements were made, not misleading with respect to the period
        covered by this quarterly report;

     3. Based on my knowledge, the financial statements, and other financial
        information included in this quarterly report, fairly present in all
        material respects the financial condition, results of operations and
        cash flows of Harris Preferred Capital Corporation as of, and for, the
        periods presented in this quarterly report;

     4. Harris Preferred Capital Corporation's other certifying officer and I
        are responsible for establishing and maintaining disclosure controls and
        procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
        Harris Preferred Capital Corporation and we have:

        a) designed such disclosure controls and procedures to ensure that
           material information relating to Harris Preferred Capital
           Corporation, including its consolidated subsidiaries, is made known
           to us by others within those entities, particularly during the period
           in which this quarterly report is being prepared;

        b) evaluated the effectiveness of Harris Preferred Capital Corporation's
           disclosure controls and procedures as of a date within 90 days prior
           to the filing date of this quarterly report (the "Evaluation Date");
           and

        c) presented in this quarterly report our conclusions about the
           effectiveness of the disclosure controls and procedures based on our
           evaluation as of the Evaluation Date;

     5. Harris Preferred Capital Corporation's other certifying officer and I
        have disclosed, based on our most recent evaluation, to Harris Preferred
        Capital Corporation's auditors and the audit committee of Harris
        Preferred Capital Corporation's board of directors (or persons
        performing the equivalent functions):

        a) all significant deficiencies in the design or operation of internal
           controls which could adversely affect Harris Preferred Capital
           Corporation's ability to record, process, summarize and report
           financial data and have identified for Harris Preferred Capital
           Corporation's auditors any material weaknesses in internal controls;
           and

        b) any fraud, whether or not material, that involves management or other
           employees who have a significant role in Harris Preferred Capital
           Corporation's internal controls; and

     6. Harris Preferred Capital Corporation's other certifying officer and I
        have indicated in this quarterly report whether or not there were
        significant changes in internal controls or in other factors that could
        significantly affect internal controls subsequent to the date of our
        most recent evaluation, including any corrective actions with regard to
        significant deficiencies and material weaknesses.

                                          /s/ PAUL R. SKUBIC
                                          --------------------------------------
                                          Paul R. Skubic
                                          Chairman of the Board and President

Date:

                                        22