<PAGE>   1

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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, 1999

                         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 of  (I.R.S. Employer Identification
incorporation or organization)                No.)
    111 WEST MONROE STREET,                   60603
       CHICAGO, ILLINOIS                   (Zip Code)
(Address of principal executive
           offices)
</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
12, 1999 was 1,000.

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<PAGE>   2

                      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....................................    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...................................    6
Part II    OTHER INFORMATION
Item 6.    Exhibits and Reports on Form 8-K............................   18
Signatures.............................................................   18
</TABLE>

                                        1
<PAGE>   3

                      HARRIS PREFERRED CAPITAL CORPORATION

                                 BALANCE SHEETS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                          SEPTEMBER 30,   DECEMBER 31,   SEPTEMBER 30,
                                                              1999            1998           1998
                                                          -------------   ------------   -------------
                                                               (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                       <C>             <C>            <C>
ASSETS
Cash on deposit with Harris Trust and Savings Bank......    $    167        $    621       $  1,270
Securities purchased from Harris Trust and Savings Bank
  under agreement to resell.............................       9,000          17,004          8,124
Notes receivable from Harris Trust and Savings Bank.....     147,047         207,935        247,062
Securities available-for-sale:
  Mortgage-backed.......................................     324,237         261,494        211,240
  U.S. Treasury.........................................          --              --         19,866
Securing mortgage collections due from Harris Trust and
  Savings Bank..........................................       2,941          13,690         12,279
Other assets............................................       2,677           2,646          2,508
                                                            --------        --------       --------
  Total assets..........................................    $486,069        $503,390       $502,349
                                                            ========        ========       ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses........................................    $     46        $     62       $    111
Dividends on common stock payable to parent.............          --           9,700             --
                                                            --------        --------       --------
  Total liabilities.....................................          46           9,762            111
                                                            --------        --------       --------
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.....................       9,070             392          7,172
Accumulated other comprehensive income -- unrealized
  gains (losses) on available-for-sale securities.......     (13,781)          2,502          4,332
                                                            --------        --------       --------
  Total stockholders' equity............................     486,023         493,628        502,238
                                                            --------        --------       --------
  Total liabilities and stockholders' equity............    $486,069        $503,390       $502,349
                                                            ========        ========       ========
</TABLE>

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

                                        2
<PAGE>   4

                      HARRIS PREFERRED CAPITAL CORPORATION

                            STATEMENT OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                 QUARTER ENDED                                  FROM INCEPTION
                                                  SEPTEMBER 30             NINE MONTHS        (JANUARY 2, 1998)
                                            ------------------------          ENDED                THROUGH
                                              1999           1998       SEPTEMBER 30, 1999    SEPTEMBER 30, 1998
                                              ----           ----       ------------------    ------------------
                                                           (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..............      $     219      $     306        $     719             $     633
  Notes receivable from Harris Trust
     and Savings Bank.................          2,493          4,377            8,514                12,565
  Securities available-for-sale:
     Mortgage-backed..................          5,236          2,778           14,253                 6,275
     U.S. Treasury....................                           254                                    287
                                            ---------      ---------        ---------             ---------
          Total interest income.......          7,948          7,715           23,486                19,760
OPERATING EXPENSES:
  Loan servicing fees paid to Harris
     Trust and Savings Bank...........            118            244              402                   624
  Advisory fees paid to Harris Trust
     and Savings Bank.................             10             13               42                    31
  General and administrative..........             55             86              204                   154
                                            ---------      ---------        ---------             ---------
          Total operating expenses....            183            343              648                   809
                                            ---------      ---------        ---------             ---------
Net income............................          7,765          7,372           22,838                18,951
Preferred dividends...................          4,609          4,609           13,828                11,779
                                            ---------      ---------        ---------             ---------
NET INCOME AVAILABLE TO COMMON
  STOCKHOLDER.........................      $   3,156      $   2,763        $   9,010             $   7,172
                                            =========      =========        =========             =========
Basic and diluted earnings per common
  share...............................      $3,156.00      $2,763.00        $9,010.00             $7,172.00
                                            =========      =========        =========             =========
Net income............................      $   7,765      $   7,372        $  22,838             $  18,951
Other comprehensive
  income -- unrealized gains (losses)
  on available-for-sale securities....           (911)         3,573          (16,283)                4,332
                                            ---------      ---------        ---------             ---------
Comprehensive income..................      $   6,854      $  10,945        $   6,555             $  23,283
                                            =========      =========        =========             =========
</TABLE>

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

                                        3
<PAGE>   5

                      HARRIS PREFERRED CAPITAL CORPORATION

                 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  1999        1998
                                                                  ----        ----
                                                                (IN THOUSANDS EXCEPT
                                                                  PER SHARE DATA)
<S>                                                             <C>         <C>
Balance at January 1, 1999 and January 2, 1998..............    $493,628    $     --
  Issuance of common stock..................................          --           1
  Initial public offering of 7 3/8% Noncumulative
     Exchangeable Preferred Stock, Series A, par value $1,
     on February 11, 1998...................................          --     250,000
  Contribution to capital surplus...........................          --     240,733
  Net income................................................      22,838      18,951
  Other comprehensive income................................     (16,283)      4,332
  Dividends paid on common stock............................        (332)
  Dividends (preferred stock $0.4609).......................     (13,828)    (11,779)
                                                                --------    --------
Balance at September 30.....................................    $486,023    $502,238
                                                                ========    ========
</TABLE>

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

                                        4
<PAGE>   6

                      HARRIS PREFERRED CAPITAL CORPORATION

                            STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                        FROM INCEPTION
                                                                   NINE MONTHS        (JANUARY 2, 1998)
                                                                      ENDED                THROUGH
                                                                SEPTEMBER 30, 1999    SEPTEMBER 30, 1998
                                                                ------------------    ------------------
                                                                             (IN THOUSANDS)
<S>                                                             <C>                   <C>
OPERATING ACTIVITIES:
Net Income..................................................         $ 22,838             $  18,951
Adjustments to reconcile net income to net cash provided by
  operating activities:
Net increase in other assets................................              (31)               (2,508)
Net (decrease) increase in accrued expenses.................              (16)                  111
                                                                     --------             ---------
     Net cash provided by operating activities..............           22,791                16,554
                                                                     --------             ---------
INVESTING ACTIVITIES:
Net decrease (increase) in securities purchased from Harris
  Trust and Savings Bank under agreement to resell..........            8,004                (8,124)
Purchases of notes receivable from Harris Trust and
  Savings Bank..............................................               --              (356,000)
Repayments of notes receivable from Harris Trust and
  Savings Bank..............................................           60,887                84,380
Decrease in securing mortgage collections due from Harris
  Trust and Savings Bank....................................           10,749                12,279
Purchases of securities available-for-sale..................          (95,628)             (253,552)
Proceeds from maturities of securities available-for-sale...           16,603                26,778
                                                                     --------             ---------
     Net cash provided (used) by investing activities.......              615              (494,239)
                                                                     --------             ---------
FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock...................               --               250,000
Proceeds from issuance of common stock......................               --                     1
Contribution to additional paid-in capital, net of
  acquisition costs.........................................               --               240,733
Cash dividends paid on preferred stock......................          (13,828)              (11,779)
Cash dividends paid on common stock.........................          (10,032)                   --
                                                                     --------             ---------
     Net cash (used) provided by financing activities.......          (23,860)              478,955
                                                                     --------             ---------
Net (decrease) increase in cash on deposit with Harris Trust
  and Savings Bank..........................................             (454)                1,270
Cash on deposit with Harris Trust and Savings Bank at
  beginning of period.......................................              621                    --
                                                                     --------             ---------
Cash on deposit with Harris Trust and Savings Bank at end of
  period....................................................         $    167             $   1,270
                                                                     ========             =========
</TABLE>

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

                                        5
<PAGE>   7

                      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's assets
are held in a Maryland real estate 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 presentation 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 1998 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.

     Certain reclassifications were made to conform prior year's financial
statements to the current year's presentation.

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.

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 REIT, liquidity, provision
for loan losses, capital resources, investment activities and Year 2000
statements in "Management's Discussion and Analysis of Financial Condition and
Results of Operations." 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.

                                        6
<PAGE>   8

RESULTS OF OPERATIONS

  QUARTER ENDED SEPTEMBER 30, 1999 COMPARED TO QUARTER ENDED SEPTEMBER 30, 1998

     The Company's net income for the third quarter of 1999 was $7.8 million
compared to $7.4 million in the third quarter of 1998.

     Third quarter 1999 interest income on the Notes totaled $2.5 million and
yielded 6.4% on $156 million of average principal outstanding for the quarter
compared to $4.4 million and a 6.4% yield on $274 million average principal
outstanding for third quarter 1998. The decrease is attributable to the
reduction in the Note balance because of increased payoffs due to refinancing.
Interest income on securities available-for-sale for the current quarter was
$5.2 million resulting in a yield of 6.9% on an average balance of $304 million,
compared to $3.0 million with a yield of 6.5% on an average balance of $188
million for the same period a year ago. The average outstanding balance of the
Securing Mortgage Loans for third quarter 1999 and 1998 was $192 million and
$334 million, respectively. There were no Company borrowings during the quarter.

     Third quarter 1999 operating expenses totaled $183 thousand, a decrease of
$160 thousand or 47% from the third quarter of 1998. Loan servicing expenses
totaled $118 thousand, a decrease of $126 thousand or 52% from the prior year's
third quarter, attributable to the reduction in loan servicing fees payable to
the Bank, resulting from the reduction in the principal balance of the Notes.
General and administrative expenses totaled $55 thousand, a decrease of $31
thousand or 36% over third quarter 1998, primarily attributable to higher
operating expenses for the prior year relating to start-up activities.

     At September 30, 1999 and 1998, 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.

  NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE PERIOD FROM INCEPTION
(JANUARY 2, 1998) THROUGH SEPTEMBER 30, 1998

     The Company's net income for the nine months ended September 30, 1999 was
$22.8 million. This represented a $3.8 million or 21% increase from 1998
earnings of $19 million.

     Interest income on the Notes for the nine months ended September 30, 1999
totaled $8.5 million and yielded 6.4% on $177 million of average principal
outstanding compared to $12.6 million and a 6.4% yield on $310 million average
principal outstanding for the period February 11, 1998 through September 30,
1998. The reduction in income was attributable to the reduction in the Note
balance because of increased payoffs due to refinancing. Interest income on
securities available-for-sale for the nine months ended September 30, 1999 was
$14.3 million resulting in a yield of 6.7% on an average balance of $285
million, compared to $6.3 million with a yield of 6.6% on an average balance for
the period from February 11, 1998 through September 30, 1998. The increase is
attributable to an increase in the investment security portfolio. The average
outstanding balance of the Securing Mortgage Loans was $218 million for the nine
months ended September 30, 1999 and $347 million, for the period February 11,
1998 through September 30, 1998. There were no Company borrowings during this
period

     Operating expenses for the nine months ended September 30, 1999 totaled
$648 thousand, a decrease of $161 thousand from the period February 11, 1998
through September 30, 1998. Loan servicing expenses for the nine months ended
September 30, 1999 totaled $402 thousand, a decrease of $222 thousand or 36%
from the period February 11, 1998 through September 30, 1998. This decrease is
attributable to the reduction in the principal balance of the Notes. Advisory
fees for the nine months ended September 30, 1999 were $42 thousand compared to
$31 thousand over the period from February 11, 1998 through September 30, 1998,
primarily attributable to an increase in the costs of internal services. General
and administrative expenses for the same period totaled $204 thousand, an
increase of $50 thousand or 33% over the period from February 11, 1998 through
September 30, 1998. Generally, the higher general and administrative expenses in
1999 are

                                        7
<PAGE>   9

attributable to substantial operating activities not commencing until February
11, 1998 and to costs related to the filing of the form 10K in 1999.

     On September 30, 1999, the Company paid a cash dividend of $0.46094 per
share on outstanding preferred shares to the stockholders of record on September
15, 1999, as declared on September 2, 1999. On September 8, 1999, the Company
paid a cash dividend of $332 thousand on the outstanding common shares to the
stockholder of record on December 30, 1998, as declared on September 2, 1999.
This dividend completes our 1998 tax compliance requirements. On August 28,
1998, the Company declared a cash dividend of $0.46094 per share on outstanding
preferred shares to stockholders of record on September 15, 1998. The dividend
of $4.6 million was subsequently paid on September 30, 1998. On January 28,
1999, the Company paid cash dividends of $9.7 million on the outstanding common
shares to the stockholder of record on December 30, 1998, as declared on
December 10, 1998. On a year-to-date basis, the Company has declared and paid
$13.8 million of dividends to holders of Preferred Shares for the nine months
ended September 30, 1999 compared to $11.8 million of dividends paid for the
period from inception (January 2, 1998) through September 30, 1998.

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 liquidity needs are to maintain the current
portfolio size through the acquisition of additional notes or other qualifying
assets and 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 from repayment of principal balances by
individual mortgagees. The payment of dividends on the Preferred Shares will be
made from legally available funds, principally 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 and mortgage-backed
securities. 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 95% of its adjusted REIT 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 95% or more of its
adjusted REIT 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 during the nine months ended September 30, 1999 were $61
million provided by principal payments on the Notes and $17 million from the
maturities of securities available-for-sale. In the prior period ended September
30, 1998, the primary sources of funds were $250 million from the issuance of
Preferred Shares and $241 million additional capital contributed by the Bank,
net of acquisition costs. Additional significant sources of funds were $97
million provided by principal payments on the Notes. The primary uses of funds
for the nine months ended September 30, 1999 was $96 million in purchases of
securities available-for-sale and $13.8 million and $10 million in preferred
stock dividends and common stock dividends paid, respectively. For the prior
year ended September 30, 1998 the primary uses of funds were $259 million in
purchases of Notes, net of repayments and the change in securing mortgage
collections due from the Bank, $227 million in net purchases of securities
available-for-sale, and $11.8 million in preferred stock dividends paid.

MARKET RISK MANAGEMENT

     As described in the Company's 1998 Form 10-K, 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, 1998.

                                        8
<PAGE>   10

YEAR 2000

     A critical issue has emerged in the REIT industry and for the economy
overall regarding how existing application software programs, operating systems
and other date sensitive assets can accommodate the date value for the Year
2000. The Year 2000 issue is pervasive, as almost all companies use
date-sensitive systems which could be affected to some degree by the rollover of
the two-digit year from 99 to 00. Potential risks of not addressing this issue
include business interruption, financial loss, reputation loss and/or legal
liability.

     The Company utilizes and is dependent upon the Bank's data processing
systems and software to conduct its business. Management of the Company and the
Bank recognize the need to ensure that the Company's operations will not be
adversely impacted by Year 2000 issues and is managing the related operational
risk accordingly. The Bank's systems and other date sensitive assets have been
updated to manage the Year 2000 date issue seamlessly, and the Bank anticipates
that the transition will be a non-event for its customers. The Bank has assessed
and continues to monitor the readiness of third parties that it interfaces with,
such as vendors, counterparties, customers, and payment systems, to mitigate the
potential risks that Year 2000 poses. In addition, the Bank has assessed the
readiness of companies that have borrowed from or are counterparties of the Bank
or its subsidiaries to ensure that incremental Year 2000-related credit risks
are addressed as part of the Corporation's existing credit risk management
framework. While the Bank's objective is to ensure that all aspects of the Year
2000 issue affecting the Bank, will be fully resolved on time, it is not
possible to be completely certain that all aspects of the Year 2000 issue that
may affect the Bank, particularly those related to the effects of customers,
suppliers, or other third parties with whom the Bank conducts business, will be
addressed in their entirety. Accordingly, the Bank has incorporated Y2K risks
into their regular contingency plans that protect their systems and business
processes against unplanned events that would prevent normal operations. The
Bank then tested these modified contingency plans.

     Emfisys, the Bank's operations group, acting in support of all areas of the
Bank, has overall responsibility for converting systems to accommodate the
calendar change. Each of the Bank's business units is responsible for
remediation of the assets used to conduct its operations and provide services or
products to its clients, while attempting to ensure that both the technical and
the business risks imposed by the Year 2000 issue are addressed. A governance
structure has been established to deal with this issue, which includes a Year
2000 Project Office and regular monitoring of progress by the Bank's Risk
Management Committee, Year 2000 Steering Committees and the Board of Directors.

     The process for Year 2000 compliance has followed four major phases:
inventory, impact assessment and plan, implementation, and integration testing.
The implementation phase includes remediation, validation, conversion, and
replacement or retirement of the asset. Integration testing is to confirm that
the business functions work accurately and without disruption under Year
2000-specific dates, with all applications functioning correctly with interfaces
and infrastructure. All four phases have been completed for all critical
business applications. The costs incurred in addressing the Year 2000 problem
are borne by the Bank.

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.

                                        9
<PAGE>   11

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)

<TABLE>
<CAPTION>
                                                          SEPTEMBER 30,    DECEMBER 31,    SEPTEMBER 30,
                                                              1999             1998            1998
                                                          -------------    ------------    -------------
                                                                 (IN THOUSANDS EXCEPT SHARE DATA)
<S>                                                       <C>              <C>             <C>
ASSETS
Cash and demand balances due from banks...............     $ 1,139,750     $ 1,434,619      $ 1,098,161
Money market assets:
  Interest-bearing deposits at banks..................         171,988          98,929          213,712
  Federal funds sold and securities purchased under
     agreement to resell..............................         148,650         151,575           48,950
Trading account assets................................         102,236         120,668           91,040
Securities available-for-sale.........................       5,773,313       5,295,498        5,039,734
Loans.................................................       9,801,973       9,306,607        9,102,464
Allowance for possible loan losses....................        (111,660)       (108,280)        (104,900)
                                                           -----------     -----------      -----------
  Net loans...........................................       9,690,313       9,198,327        8,997,564
Premises and equipment................................         308,796         284,962          256,915
Customers' liability on acceptances...................          44,067          30,829           34,997
Bank-owned insurance investments......................         753,239         725,302          715,419
Goodwill and other valuation intangibles..............         245,228         257,627          260,478
Other assets..........................................         520,156         399,126          476,739
                                                           -----------     -----------      -----------
       TOTAL ASSETS...................................     $18,897,736     $17,997,462      $17,233,709
                                                           ===========     ===========      ===========
LIABILITIES
Deposits in domestic offices -- noninterest bearing...     $ 2,914,893     $ 3,382,309      $ 2,778,839
                              -- interest-bearing.....       6,625,976       6,859,778        6,680,424
Deposits in foreign offices -- noninterest bearing....          21,682          69,215           23,329
                            -- interest-bearing.......       1,375,098         866,394        1,245,430
                                                           -----------     -----------      -----------
       Total deposits.................................      10,937,649      11,177,696       10,728,022
Federal funds purchased and securities sold under
  agreement to repurchase.............................       3,951,114       3,642,049        3,118,548
Other short-term borrowings...........................         478,148         166,510          440,498
Senior notes..........................................       1,500,000         940,000          762,000
Acceptances outstanding...............................          44,067          30,829           34,997
Accrued interest, taxes and other expenses............         149,592         141,431          150,894
Other liabilities.....................................          99,550          90,550          184,432
Minority interest- preferred stock of subsidiary......         250,000         250,000          250,000
Long-term notes.......................................         225,000         225,000          225,000
                                                           -----------     -----------      -----------
       TOTAL LIABILITIES..............................      17,635,120      16,664,065       15,894,391
                                                           -----------     -----------      -----------
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...............................................         609,913         608,116          607,835
Retained earnings.....................................         657,705         593,973          580,270
Accumulated other comprehensive (loss) income.........        (105,002)         31,308           51,213
                                                           -----------     -----------      -----------
       TOTAL STOCKHOLDER'S EQUITY.....................       1,262,616       1,333,397        1,339,318
                                                           -----------     -----------      -----------
       TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY.....     $18,897,736     $17,997,462      $17,233,709
                                                           ===========     ===========      ===========
</TABLE>

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

                                       10
<PAGE>   12

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   QUARTER ENDED         NINE MONTHS ENDED
                                                                    SEPTEMBER 30            SEPTEMBER 30
                                                                --------------------    --------------------
                                                                  1999        1998        1999        1998
                                                                  ----        ----        ----        ----
                                                                      (IN THOUSANDS EXCEPT SHARE DATA)
<S>                                                             <C>         <C>         <C>         <C>
INTEREST INCOME
Loans, including fees.......................................    $173,871    $169,561    $500,710    $504,917
Money market assets:
  Deposits at banks.........................................          12       1,840         968      10,038
  Federal funds sold and securities purchased under
    agreement to resell.....................................       2,917       2,777       8,160       6,415
Trading account.............................................       1,112       1,291       2,961       2,831
Securities available-for-sale:
  U.S. Treasury and Federal agency..........................      83,100      70,918     238,828     195,465
  State and municipal.......................................         425         723       1,490       2,580
  Other.....................................................         361         325       1,105         957
                                                                --------    --------    --------    --------
  Total interest income.....................................     261,798     247,435     754,222     723,203
                                                                --------    --------    --------    --------
INTEREST EXPENSE
Deposits....................................................      87,464      98,390     259,577     269,373
Short-term borrowings.......................................      51,164      41,244     142,073     125,353
Senior notes................................................      19,136      14,473      48,625      37,979
Minority interest-dividends on preferred stock of
  subsidiary................................................       4,609       4,609      13,828      11,780
Long-term notes.............................................       3,558       3,696      10,701      13,804
                                                                --------    --------    --------    --------
  Total interest expense....................................     165,931     162,412     474,804     458,289
                                                                --------    --------    --------    --------
NET INTEREST INCOME.........................................      95,867      85,023     279,418     264,914
Provision for loan losses...................................       5,290       6,800      17,081      18,776
                                                                --------    --------    --------    --------
Net Interest Income after Provision for Loan Losses.........      90,577      78,223     262,337     246,138
                                                                --------    --------    --------    --------
NONINTEREST INCOME
Trust and investment management fees........................      30,925      28,503      88,467      82,548
Money market and bond trading...............................       3,893       3,589       6,632       8,273
Foreign exchange............................................       1,850       1,650       6,164       4,950
Merchant and charge card fees...............................       8,028       6,792      22,084      20,286
Service fees and charges....................................      27,749      24,369      78,201      72,123
Securities gains............................................         (16)      7,491      13,581      19,345
Gain on sale of credit card portfolio.......................          --          --          --      12,000
Bank-owned insurance investments............................      10,221      10,109      30,746      22,456
Foreign fees................................................       4,388       4,347      14,303      14,386
Other.......................................................       8,446       8,566      28,369      22,384
                                                                --------    --------    --------    --------
  Total noninterest income..................................      95,484      95,416     288,547     278,751
                                                                --------    --------    --------    --------
NONINTEREST EXPENSES
Salaries and other compensation.............................      72,272      66,616     214,282     196,117
Pension, profit sharing and other employee benefits.........      14,009      11,703      42,719      35,417
Net occupancy...............................................      10,792       9,371      27,161      29,711
Equipment...................................................      13,836      11,260      40,601      33,311
Marketing...................................................       7,437       6,206      19,319      17,515
Communication and delivery..................................       5,126       4,769      16,896      15,090
Expert services.............................................       5,047       8,414      20,628      21,456
Contract programming........................................       3,483       7,020       8,942      17,826
Other.......................................................       4,702       1,983       4,342       4,857
                                                                --------    --------    --------    --------
                                                                 136,704     127,342     394,890     371,300
Goodwill and other valuation intangibles....................       5,727       5,310      16,925      16,035
                                                                --------    --------    --------    --------
  Total noninterest expenses................................     142,431     132,652     411,815     387,335
                                                                --------    --------    --------    --------
Income before income taxes..................................      43,630      40,987     139,069     137,554
Applicable income taxes.....................................       7,344       9,214      30,337      36,700
                                                                --------    --------    --------    --------
  Net Income................................................    $ 36,286    $ 31,773    $108,732    $100,854
                                                                ========    ========    ========    ========
Earnings per Common Share (based on 10,000,000 average
  shares outstanding)
Net Income..................................................    $   3.63    $   3.18    $  10.87    $  10.09
                                                                ========    ========    ========    ========
</TABLE>

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

                                       11
<PAGE>   13

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                           QUARTER ENDED         NINE MONTHS ENDED
                                                           SEPTEMBER 30            SEPTEMBER 30
                                                        -------------------    ---------------------
                                                          1999       1998        1999         1998
                                                          ----       ----        ----         ----
                                                                       (IN THOUSANDS)
<S>                                                     <C>         <C>        <C>          <C>
Net income..........................................    $ 36,286    $31,773    $ 108,732    $100,854
Other comprehensive income:
  Unrealized (losses)/gains on available-for-sale
     securities:
     Unrealized holding (losses)/gains arising
       during the period, net of tax
       (benefit)/expense for the quarter of ($6,592)
       in 1999 and $29,320 in 1998 and net of tax
       (benefit)/expense for the year-to-date period
       of ($84,601) in 1999 and $38,095 in 1998.....     (10,007)    44,598     (128,012)     57,880
     Less reclassification adjustment for realized
       (loss)/ gains included in income statement,
       net of tax (benefit)/expense for the quarter
       of ($6) in 1999 and $2,978 in 1998 and net of
       tax expense for the year-to-date period of
       $5,283 in 1999 and $7,690 in 1998............          10     (4,513)      (8,298)    (11,655)
                                                        --------    -------    ---------    --------
  Other comprehensive (loss) income.................      (9,997)    40,085     (136,310)     46,225
                                                        --------    -------    ---------    --------
Comprehensive income (loss).........................    $ 26,289    $71,858    $ (27,578)   $147,079
                                                        ========    =======    =========    ========
</TABLE>

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

                                       12
<PAGE>   14

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   1999          1998
                                                                   ----          ----
                                                                     (IN THOUSANDS)
<S>                                                             <C>           <C>
BALANCE AT JANUARY 1........................................    $1,333,397    $1,279,431
  Net income................................................       108,732       100,854
  Contributions to capital..................................         1,797         6,808
  Dividends -- common stock.................................       (45,000)      (94,000)
  Other comprehensive (loss) income.........................      (136,310)       46,225
                                                                ----------    ----------
BALANCE AT SEPTEMBER 30.....................................    $1,262,616    $1,339,318
                                                                ==========    ==========
</TABLE>

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

                                       13
<PAGE>   15

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                NINE MONTHS ENDED SEPTEMBER 30
                                                                -------------------------------
                                                                    1999              1998
                                                                    ----              ----
                                                                        (IN THOUSANDS)
<S>                                                             <C>              <C>
OPERATING ACTIVITIES:
Net income..................................................     $   108,732      $    100,854
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Provision for loan losses.................................          17,081            18,776
  Depreciation and amortization, including intangibles......          50,454            43,689
  Deferred tax expense......................................             465            10,452
  Gain on sales of securities...............................         (13,581)          (19,345)
  Gain on sale of credit card portfolio.....................              --           (12,000)
  Trading account net sales (purchases).....................          18,432           (37,831)
  Net (increase) decrease in interest receivable............          (9,555)           21,833
  Net increase in interest payable..........................          26,506            15,776
  Net decrease (increase) in loans held for resale..........         164,639          (107,642)
  Other, net................................................           1,814           (14,161)
                                                                 -----------      ------------
     Net cash provided by operating activities..............         364,987            20,401
                                                                 -----------      ------------
  INVESTING ACTIVITIES:
  Net (increase) decrease in interest-bearing deposits at
     banks..................................................         (73,059)          384,350
  Net increase in Federal funds sold and securities
     purchased under agreement to resell....................           2,925            22,775
  Proceeds from sales of securities available-for-sale......         683,264         1,517,180
  Proceeds from maturities of securities
     available-for-sale.....................................       6,277,894         8,830,749
  Purchases of securities available-for-sale................      (7,651,586)      (11,409,289)
  Net increase in loans.....................................        (673,705)         (887,718)
  Proceeds from sales of premises and equipment.............             318            22,755
  Purchases of premises and equipment.......................         (57,682)          (78,017)
  Net increase in bank-owned insurance investments..........         (27,937)         (447,956)
  Other, net................................................         (35,944)           (2,282)
                                                                 -----------      ------------
     Net cash used by investing activities..................      (1,555,512)       (2,047,453)
                                                                 -----------      ------------
  FINANCING ACTIVITIES:
  Net (decrease) increase in deposits.......................        (240,047)           68,437
  Net increase in Federal funds purchased and securities
     sold under agreement to repurchase.....................         309,065           424,948
  Net increase (decrease) in short-term borrowings..........         311,638           (60,529)
  Proceeds from issuance of senior notes....................       3,460,500         6,954,080
  Repayment of senior notes.................................      (2,900,500)       (6,292,080)
  Repayment of long term notes..............................              --          (100,000)
  Proceeds from the sale of the credit card portfolio.......              --           722,748
  Proceeds from issuance of preferred stock of subsidiary...              --           250,000
  Cash dividends paid on common stock.......................         (45,000)          (94,000)
                                                                 -----------      ------------
     Net cash provided by financing activities..............         895,656         1,873,604
                                                                 -----------      ------------
     NET DECREASE IN CASH AND DEMAND BALANCES DUE FROM
      BANKS.................................................        (294,869)         (153,448)
     CASH AND DEMAND BALANCES DUE FROM BANKS AT JANUARY 1...       1,434,619         1,251,609
                                                                 -----------      ------------
     CASH AND DEMAND BALANCES DUE FROM BANKS AT SEPTEMBER
      30....................................................     $ 1,139,750      $  1,098,161
                                                                 ===========      ============
</TABLE>

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

                                       14
<PAGE>   16

                 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., 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 years'
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 $448.3 million and $442.5 million in 1999 and 1998,
respectively. Cash income tax payments over the same periods totaled $43.4
million and $20.0 million, respectively.

4. ACCOUNTING CHANGES

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires all derivatives to be recognized as either assets or liabilities in the
statement of financial position and to be measured at fair value. As issued, the
Statement is effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. In June 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities -- Deferral of the Effective Date
of FASB Statement No. 133". The Statement is effective upon issuance and it
amends SFAS No. 133 to be effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. The Bank is in the process of assessing the
impact of adopting the Statements on its financial position and results of
operations.

                                       15
<PAGE>   17

                 HARRIS TRUST AND SAVINGS BANK AND SUBSIDIARIES

                                FINANCIAL REVIEW

THIRD QUARTER 1999 COMPARED WITH THIRD QUARTER 1998

SUMMARY

     The Bank had third quarter 1999 earnings of $36.3 million, an increase of
$4.5 million or 14 percent from third quarter 1998. For the current quarter,
annualized return on average common stockholder's equity was 11.45 percent
compared to 9.72 percent in the third quarter of 1998. Annualized return on
average assets was 0.78 percent compared to 0.74 percent a year ago.

     Third quarter net interest income on a fully taxable equivalent basis was
$100.1 million, up $10.8 million or 12 percent from $89.3 million in 1998's
third quarter. Average earning assets rose 10 percent to $15.69 billion from
$14.23 billion in 1998, primarily attributable to an increase of $464 million in
average loans and $1.08 billion in the investment securities portfolio, somewhat
offset by a decline in interest bearing deposits at banks of $84 million.
Commercial and residential real estate lending were strong contributors to the
growth in loans. Net interest margin rose to 2.53 percent from 2.49 percent in
the same quarter last year primarily reflecting lower cost of funds.

     The third quarter provision for loan losses of $5.3 million was down $1.5
million from $6.8 million in the third quarter of 1998. Net charge-offs
decreased from $5.3 million to $4.0 million, primarily reflecting decreased
writeoffs in the commercial loan portfolio.

     Noninterest income increased slightly to $95.5 million for third quarter
1999 from the same quarter last year despite a $7.5 million decline in gains on
sales of investment securities. In the current quarter, service charge fees rose
by $3.4 million or 14 percent and trust and investment management fees improved
by $2.4 million or 8 percent compared to third quarter 1998. Other sources of
revenue growth included syndication fees and merchant charge card fees.

     Third quarter 1999 noninterest expenses of $142.4 million increased $9.8
million or 7 percent from the year ago quarter, reflecting continued business
growth.

     Nonperforming assets at September 30, 1999 were $24 million or 0.24 percent
of total loans, compared to $32 million or 0.34 percent at June 30, 1999, and
$31 million or 0.34 percent a year ago. At September 30, 1999, the allowance for
possible loan losses was $112 million, equal to 1.14 percent of loans
outstanding, compared to $105 million or 1.15 percent at the end of third
quarter 1998. As a result, the ratio of the allowance for possible loan losses
to nonperforming assets decreased from 339 percent at September 30, 1998 to 469
percent at September 30, 1999.

     At September 30, 1999 Tier 1 capital of the Bank amounted to $1.38 billion,
up from $1.27 billion one year earlier. The regulatory leverage capital ratio
was 7.47 percent for the third quarter of 1999 compared to 7.65 percent in the
same quarter of 1998. The Bank's capital ratio exceeds the prescribed regulatory
minimum for banks. The Bank's September 30, 1999 Tier 1 and total risk-based
capital ratios were 8.77 percent and 10.92 percent compared to respective ratios
of 8.62 percent and 10.86 percent at September 30, 1998.

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH 1998

     The Bank's earnings for the nine months ended September 30, 1999 were
$108.7 million. This represented a $7.8 million or 8 percent increase from 1998
earnings of $100.9 million. Annualized return on average common equity was 11.22
percent compared to 10.55 percent in 1998. Annualized return on average assets
was 0.79 percent compared to 0.83 percent a year ago.

     Net interest income on a fully taxable equivalent basis was $291.7 million
in the current period, an increase of $13.6 million or 5 percent from $278.1
million in the first nine months of 1998. Average earning assets increased to
$15.42 billion from $13.75 billion a year ago primarily attributable to an
increase of $1.20 billion or 27 percent in investment portfolio securities and
an increase of 8 percent or $675 million in

                                       16
<PAGE>   18

average loans. Commercial and residential real estate lending were contributors
to this loan growth. Net interest margin declined to 2.53 percent from 2.70
percent in 1998 primarily due to continued growth in new business and the
relatively higher cost of additional funding to support the asset growth.

     The 1999 provision for loan losses of $17.1 million was down $1.7 million
from $18.8 million a year ago. Net charge-offs remained unchanged from the prior
year.

     Noninterest income increased $9.8 million to $288.5 million in 1999
compared to a year ago. A $12.0 million gain on the sale of the credit card
portfolio was recognized in 1998. In the current year, trust and investment
management income increased $5.9 million or 7 percent and service charge income
increased $6.1 million or 8 percent. Foreign exchange income increased $1.2
million or 25 percent. Securities gains were $5.8 million lower compared to a
year ago while trading account profits declined by $1.6 million. Other sources
of revenue growth include income from tax-advantaged investments and merchant
charge card fees.

     Noninterest expenses of $411.8 million rose $24.5 million or 6 percent from
a year ago.

                                       17
<PAGE>   19

                           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:

          27               Financial Data Schedule

          (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 12th day of November, 1999.

                                          /s/ MICHAEL D. WILLIAMS
                                          --------------------------------------
                                          Michael D. Williams
                                          Chairman of the Board

                                          /s/ PIERRE O. GREFFE
                                          --------------------------------------
                                          Pierre O. Greffe
                                          Chief Financial Officer

                                          /s/ PAUL R. SKUBIC
                                          --------------------------------------
                                          Paul R. Skubic
                                          President

                                       18