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


                                    Form 10-Q

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

                  For the quarterly period ended June 30, 1999

                                       OR

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

                        For the transition period from to

                           Commission file number [ ]



                         FIRST DECATUR BANCSHARES, INC.
             (Exact name of registrant as specified in its charter)




                  Delaware                   33-80333           37-1085161
         (State or other jurisdiction    (Commission File    (I.R.S. Employer
               of incorporation)               Number)      Identification No.)



                  130 North Water Street, Decatur, IL             62523
                  (Address of principal executive offices)     (Zip Code)



Registrant's telephone number, including area code            217-424-1111


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  twelve 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 ninety days.

                                  Yes X No


2,764,970  shares of the  Registrant's  common stock,  par value $.01 per share,
were outstanding at June 30, 1999.


<PAGE>

                         FIRST DECATUR BANCSHARES, INC.
             FORM 10-Q FOR THREE AND SIX MONTHS ENDED JUNE 30, 1999
                                      INDEX
<TABLE>
<CAPTION>
                                                                                                         Page
<S>                                                                                                      <C>

PART I - FINANCIAL INFORMATION                                                                             2

         Item 1.           Condensed Consolidated Financial Statements                                     2
         Item 2.           Management's Discussion and Analysis of Financial
                           Condition and Results of Operations                                            10
         Item 3.           Quantitative and Qualitative Disclosures about Market Risk                     15


PART II - OTHER INFORMATION                                                                               18

         Item 1.           Legal Proceedings                                                              18
         Item 2.           Changes in Securities                                                          18
         Item 3.           Defaults upon Senior Securities                                                18
         Item 4.           Submission of Matters to a Vote of Security Holders                            18
         Item 5.           Other Information                                                              18
         Item 6.           Exhibits and Reports on Form 8-K                                               18


SIGNATURES                                                                                                19

EXHIBITS

         Exhibit 11.       Computation of Earnings Per Share                                              20
</TABLE>
                                      (1)

<PAGE>


PART 1 - FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                         FIRST DECATUR BANCSHARES, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                                 June 30,           December 31,
                                                                                   1999                 1998
                                                                            -------------------- --------------------
<S>                                                                             <C>                 <C>
                                                                                (Unaudited)
Assets
     Cash and due from banks                                                        $    37,480          $    30,114
     Federal funds sold                                                                  17,310               13,255
                                                                            -------------------- --------------------
          Cash and cash equivalents                                                      54,790               43,369

     Securities available for sale                                                      133,561              137,689
     Securities held to maturity                                                         22,852               25,567
     Loans, net                                                                         229,177              214,812
     Premises and equipment                                                               8,919                9,082
     Other assets                                                                        11,834               11,173
                                                                            ==================== ====================
               Total assets                                                        $    461,133         $    441,692
                                                                            ==================== ====================

Liabilities
     Deposits
        Noninterest bearing                                                         $    67,319         $     65,894
        Interest bearing                                                                304,230              289,874
                                                                            -------------------- --------------------
          Total Deposits                                                                371,549              355,768

     Short-term borrowings                                                               15,440               10,278
     Federal Home Loan Bank loans                                                        17,878               17,904
     Other liabilities                                                                    2,869                4,374
                                                                            -------------------- --------------------
               Total liabilities                                                        407,736              388,324
                                                                            -------------------- --------------------

Stockholders' Equity
     Preferred stock, no par value.  Authorized 200,000 shares,
        none issued or outstanding
     Common stock, $.01 par value.  Authorized 5,000,000 shares;
        Issued 2,909,397 shares of which 144,427 shares and
        140,455 shares were held as treasury stock                                           29                   29
     Additional paid-in capital                                                           8,027                7,874
     Paid-in-capital - phantom stock                                                        242                  220
     Retained earnings                                                                   51,027               48,618
     Accumulated other comprehensive income                                             (1,656)                  622
                                                                            -------------------- --------------------
                                                                                         57,669               57,363
     Treasury stock, at cost                                                            (4,272)              (3,994)
                                                                            -------------------- --------------------
               Total stockholders' equity                                                53,397               53,368
                                                                            -------------------- --------------------
                    Total liabilities and stockholders' equity                      $   461,133         $    441,692
                                                                            ==================== ====================

</TABLE>
                                      (2)
<PAGE>

                         FIRST DECATUR BANCSHARES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                      (in thousands except per share data)
<TABLE>
<CAPTION>
                                                           Three Months Ended                  Six Months Ended
                                                        June 30          June 30           June 30          June 30
                                                         1999              1998             1999              1998
                                                      (Unaudited)      (Unaudited)       (Unaudited)      (Unaudited)
                                                    ---------------- ----------------- ---------------- -----------------
<S>                                                    <C>            <C>               <C>              <C>
Interest Income
     Interest on loans                                   $    4,691        $    4,317       $    9,142        $    8,533
     Interest on investments                                  2,278             2,200            4,591             4,354
     Interest on federal funds sold                             122               231              249               447
     Other interest income                                       14                17               28                27
                                                    ---------------- ----------------- ---------------- -----------------
          Total interest income                               7,105             6,765           14,010            13,361
                                                    ---------------- ----------------- ---------------- -----------------

Interest Expense
     Interest on deposits                                     2,908             2,873            5,763             5,651
     Interest on borrowings                                     350               286              689               499
                                                    ---------------- ----------------- ---------------- -----------------
          Total interest expense                              3,258             3,159            6,452             6,150
                                                    ---------------- ----------------- ---------------- -----------------

Net Interest Income                                           3,847             3,606            7,558             7,211
     Provision for loan losses                                   41                81              102               162
                                                    ---------------- ----------------- ---------------- -----------------
Net Interest Income After Provision for loan losses           3,806             3,525            7,456             7,049
                                                    ---------------- ----------------- ---------------- -----------------

Other Income
     Fiduciary activities                                       488               425              955               824
     Loan servicing fees                                         46                31               76                49
     Remittance processing fees                               2,033             1,121            4,074             2,314
     Service charges on deposit accounts                        243               248              465               497
     Security transactions, net                                  31                 4               42                24
     Net gains on loan sales                                     69                75              171               206
     Other                                                      378               281              674               537
                                                    ---------------- ----------------- ---------------- -----------------
          Total other income                                  3,288             2,185            6,457             4,451
                                                    ---------------- ----------------- ---------------- -----------------

Other Expenses
     Salaries and employee benefits                           2,472             1,999            5,200             4,064
     Net occupancy                                              282               275              558               544
     Equipment expenses                                         643               490            1,181               964
     Data processing fees                                        66                52              123                89
     Supplies                                                   133               105              241               215
     Service charges from corresponding banks                   401               187              673               355
     Other operating expenses                                   782               676            1,424             1,271
                                                    ---------------- ----------------- ---------------- -----------------
          Total other expenses                                4,779             3,784            9,400             7,502
                                                    ---------------- ----------------- ---------------- -----------------

Income Before Income Tax                                      2,315             1,926            4,513             3,998
     Income tax expense                                         714               572            1,385             1,204
                                                    ---------------- ----------------- ---------------- -----------------

          Net Income                                     $    1,601        $    1,354       $    3,128        $    2,794
                                                    ================ ================= ================ =================

Dividends Per Share                                      $     0.13        $     0.13       $     0.26        $     0.26
Basic Earnings Per Share                                 $     0.58        $     0.47        $    1.13         $    0.97
Average Shares Outstanding                                2,768,038         2,885,300        2,765,516         2,883,079
Diluted Earnings Per Share                               $     0.57        $     0.47        $    1.12         $    0.97
Average Shares Outstanding                                2,785,297         2,899,997        2,782,467         2,896,306
</TABLE>
                                      (3)

<PAGE>

                         FIRST DECATUR BANCSHARES, INC.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (in thousands)

<TABLE>
<CAPTION>
                                                         Three Months Ended               Six Months Ended
                                                            June 30, 1999                  June 30, 1999
                                                             (Unaudited)                    (Unaudited)
                                                     ----------------------------    ---------------------------
<S>                                                 <C>            <C>              <C>            <C>
Net Income                                                               $ 1,601                        $ 3,128

Other comprehensive income, net of tax
  Unrealized gains (losses) on securities:
    Unrealized holding gain (loss) arising
    during the period                                $(1,667)                        $(2,250)
     Less:  Reclassification adjustment for
     gains included in net income                         20                              28
                                                     -------------                   -------------
Other comprehensive income                                               (1,687)                        (2,278)
                                                                   --------------                  -------------
Comprehensive income                                                      $ (86)                          $ 850
                                                                   ==============                  =============
</TABLE>

<TABLE>
<CAPTION>
                                                         Three Months Ended               Six Months Ended
                                                            June 30, 1998                  June 30, 1998
                                                             (Unaudited)                    (Unaudited)
                                                     ----------------------------    ---------------------------
<S>                                                 <C>            <C>              <C>            <C>
Net Income                                                               $ 1,354                        $ 2,794

Other comprehensive income, net of tax
  Unrealized gains (losses) on securities:
    Unrealized holding gain (loss) arising
    during the period                                   $ 113                          $  (54)
      Less:  Reclassification adjustment for
      gains included in net income                          3                              16
                                                     -------------                   -------------
Other comprehensive income                                                   110                           (70)
                                                                   --------------                  -------------
Comprehensive income                                                     $ 1 464                        $2,724
                                                                   ==============                  =============
</TABLE>

                                      (4)
<PAGE>


                         FIRST DECATUR BANCSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                        Six Months Ended
                                                                                  June 30,            June 30,
                                                                                    1999                1998
                                                                                 (Unaudited)        (Unaudited)
                                                                              ------------------ -------------------
<S>                                                                             <C>                <C>
Cash flows from operating activities:
     Net cash provided by operating activities                                         $  3,255            $  1,335

Cash flows from investing activities:
     Purchases of securities available for sale                                        (35,091)            (45,425)
     Proceeds from maturities of securities available for sale                           27,538              27,663
     Proceeds from sales of securities available for sale                                 7,957
     Purchases of securities held to maturity                                                                 (785)
     Proceeds from maturities of securities held to maturity                              2,685               4,891
     Net change in loans                                                               (14,467)             (7,393)
     Purchases of premises and equipment                                                  (529)               (294)
                                                                              ------------------ -------------------
          Net cash used by investing activities                                        (11,907)            (21,342)
                                                                              ------------------ -------------------

Cash flows from financing activities:
     Net change in
          Noninterest-bearing, interest-bearing demand and savings deposits              14,855              16,724
          Certificates of deposit                                                           926             (2,679)
          Federal funds purchased and securities sold under repurchase
               agreements                                                                   836               2,400
          Federal Home Loan Bank loans                                                     (26)              14,975
          U.S. Treasury demand notes                                                      4,326                (22)
     Cash dividends                                                                       (719)               (750)
     Net cash from sale of treasury stock                                                 (125)                  86
                                                                              ------------------ -------------------
          Net cash provided by financing activities                                      20,073              30,734
                                                                              ------------------ -------------------

Net change in cash and cash equivalents                                                  11,421              10,727
Cash and cash equivalents, beginning of period                                           43,369              40,025
                                                                              ================== ===================
Cash and cash equivalents, end of period                                               $ 54,790          $   50,752
                                                                              ================== ===================


Supplemental  disclosures of cash flow information:  Cash paid during the period
     for:
          Interest                                                                     $  6,588           $   5,803
          Income taxes                                                                 $  1,350           $   1,184
</TABLE>
                                      (5)
<PAGE>
                         FIRST DECATUR BANCSHARES, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

         First Decatur Bancshares,  Inc. ("Bancshares"),  a Delaware corporation
was  organized  on February 28, 1980 and is a  registered  bank holding  company
under the Bank Holding  Company Act of 1956, as amended.  Bancshares owns all of
the  outstanding  capital stock of the First National Bank of Decatur  ("Decatur
Bank"),  FirsTech,  Inc.  ("FirsTech")  and the First Trust Bank of  Shelbyville
("Shelby Bank"). The Decatur Bank, FirsTech, and the Shelby Bank are referred to
as the "Subsidiaries."

         The interim  financial  statements  have been prepared by First Decatur
Bancshares,  Inc.  ("Bancshares")  pursuant to the rules and  regulations of the
Securities and Exchange Commission applicable to quarterly reports on Form 10-Q.
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 such rules and  regulations.  These
financial statements should be read in conjunction with the audited consolidated
financial  statements and related notes and schedules  included in the Company's
Form 10-K for 1998 filed on March 29, 1999.

         The results for the interim periods are not  necessarily  indicative of
the results of  operations  that may be  expected  for the fiscal  year.  In the
opinion of management,  the information furnished reflects all adjustments which
are of a normal  recurring  nature and are necessary for a fair  presentation of
Bancshares'  financial  position,  results of operations  and cash flows for the
period presented. Such adjustments were of a normal recurring nature.

         The  consolidated   financial   statements   include  the  accounts  of
Bancshares and its  wholly-owned  subsidiaries.  All  significant  inter-company
accounts and transactions have been eliminated.

New Accounting Pronouncements

         The FASB has issued SFAS No.  130,  "Reporting  Comprehensive  Income".
SFAS No.  130  requires  all items  that are  required  to be  recognized  under
accounting  standards as components of comprehensive  income to be reported in a
financial  statement  that is  displayed  in equal  prominence  with  the  other
financial  statements.  Enterprises  are  required to  classify  items of "other
comprehensive income" by their nature in the financial statement and display the
balance of other  comprehensive  income  separately  in the equity  section of a
statement of financial position.  SFAS No. 130 is effective for both interim and
annual  periods  beginning  after  December 15, 1997.  Bancshares has provided a
"Consolidated  Statement of  Comprehensive  Income" in the  financial  statement
section  of this  report.  SFAS No. 130 also  requires  footnote  disclosure  of
accumulated  other  comprehensive  income  balances and footnote  disclosure  of
related tax effects allocated to each component of other comprehensive income.

                                      (6)
<PAGE>

                           Disclosure of Related Tax Effects Allocated to Each
                                 Component of Other Comprehensive Income
                                              (in thousands)
<TABLE>
<CAPTION>

                                                          Before-Tax      Tax (Expense)      Net-of-Tax
          Three Months Ended June 30, 1999                  Amount         or Benefit          Amount
------------------------------------------------------ ----------------- ---------------- -----------------
<S>                                                      <C>             <C>                <C>
Unrealized gains on securities:
   Unrealized holding gains rising during
       Period                                               $   (2,526)          $   859       $   (1,667)
   Less:  reclassification adjustment for
       Gains realized in income                                      31             (11)
                                                                                                 20
                                                       ----------------- ---------------- -----------------
Other comprehensive income                                  $   (2,557)          $   870       $   (1,687)
                                                       ================= ================ =================

           Six Months Ended June 30, 1999
------------------------------------------------------
Unrealized gains on securities:
   Unrealized holding gains rising during
       Period                                                $  (3,409)       $    1,159       $   (2,250)
   Less:  reclassification adjustment for
       Gains realized in income                                      42             (14)                28
                                                       ----------------- ---------------- -----------------
Other comprehensive income                                   $  (3,451)       $    1,173       $   (2,278)
                                                       ================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
                                                          Before-Tax      Tax (Expense)      Net-of-Tax
          Three Months Ended June 30, 1998                  Amount         or Benefit          Amount
------------------------------------------------------ ----------------- ---------------- -----------------
<S>                                                      <C>             <C>                <C>
Unrealized gains on securities:
   Unrealized holding gains rising during
       Period                                                   $   171         $   (58)           $   113
   Less:  reclassification adjustment for
       Gains realized in income                                       4              (1)                 3
                                                       ----------------- ---------------- -----------------
Other comprehensive income                                      $   167         $   (57)           $   110
                                                       ================= ================ =================

           Six Months Ended June 30, 1998
------------------------------------------------------
Unrealized gains on securities:
   Unrealized holding gains rising during
       Period                                                   $  (82)          $    28          $   (64)
   Less:  reclassification adjustment for
       Gains realized in income                                      24              (8)                16
                                                       ----------------- ---------------- -----------------
Other comprehensive income                                     $  (106)          $    36          $   (70)
                                                       ================= ================ =================
</TABLE>

         The FASB has issued SFAS No.  131,  "Disclosures  about  Segments of an
Enterprise  and  Related  Information".  SFAS  No.  131  requires  that a public
business  enterprise  report  financial and  descriptive  information  about its
reportable   operating  segments.   Operating  segments  are  components  of  an
enterprise  about which  separate  financial  information  is  available  and is
evaluated  regularly by the chief  operating  decision  maker in deciding how to
allocate resources and in assessing performance.

         SFAS No. 131 is effective for both interim and annual periods beginning
after December 15, 1997. Bancshares currently operates in two industry segments.
The primary business  involves  providing  banking services to central Illinois.
The Decatur Bank and the Shelby Bank offer a full range of financial services to
commercial,  industrial and individual customers. These services include demand,
savings, and time deposit accounts and programs including individual  retirement
accounts and interest and non-interest  bearing checking  accounts;  commercial,
consumer,  agricultural, and real estate lending including installment loans and
personal  lines of credit;  safe

                                      (7)
<PAGE>

deposit and night  depository  services;  farm  management;  full service  trust
departments;  and  discount  brokerage  services.  The  other  industry  segment
involves retail payment processing.  FirsTech provides the following services to
electric, water and gas utilities, telecommunication companies, cable television
firms and  charitable  organizations:  retail  lockbox  processing  of  payments
delivered by mail to the biller; processing of payments delivered by customer to
pay agents such as grocery  stores,  convenience  stores and check cashers;  and
concentration  of payments  delivered by the Automated  Clearing  House netowrk,
money  management  software  such as Quicken and through  networks  such as Visa
e-Pay and  Mastercard  RPS. The  following is a summary of selected data for the
various business segments:
<TABLE>
<CAPTION>
                                         Banking         Remittance
                                        Services          Services        Company (1)      Eliminations         Total
----------------------------------------------------------------------------------------------------------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
June 30, 1999
   Total interest income                 $    14,010     $        47       $               $        (47)        $   14,010
   Total non-interest income                   2,356           4,331                69             (299)             6,457
   Total interest expense                      6,499                                                (47)             6,452
   Total non-interest expense                  5,805           3,843                51             (299)             9,400
   Income before income tax                    3,960             535                18                               4,513
   Income tax expense                          1,196             183                 6                               1,385
   Total assets                              457,462           5,915            53,390          (55,634)           461,133
   Capital expenditures
   Depreciation and amortization                 509             184                12                                 705


June 30, 1998
   Total interest income                 $    13,361    $         61       $               $        (61)        $   13,361
   Total non-interest income                   2,111           2,617                70             (347)             4,451
   Total interest expense                      6,211                                                (61)             6,150
   Total non-interest expense                  5,449           2,350                50             (347)             7,502
   Income before income tax                    3,650             328                20                               3,998
   Income tax expense                          1,082             115                 7                               1,204
   Total assets                              422,933           5,405            54,383          (57,367)           425,354
   Capital expenditures
   Depreciation and amortization                 494             171                12                                 677

</TABLE>

(1) Excludes dividend income received from subsidiaries.

Information  related to services or transfers  between business  segments is not
reflected because such items are immaterial.

         During 1998, the Financial  Accounting  Standards Board ("FASB") issued
Statement  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities".  This  statement  requires  companies to record  derivatives on the
balance sheet at their fair value.  Statement No. 133 also acknowledges that the
method of recording a gain or loss depends upon the use of the  derivative.  The
new  Statement  applies to all entities.  If hedge  accounting is elected by the
entity, the method

                                      (8)
<PAGE>

of  assessing  effectiveness  of the  hedging  derivative  and  the  measurement
approach of determining the hedge's  ineffectiveness  must be established at the
inception of the hedge.

     Statement No. 133 amends Statement No. 52 and supersedes Statements No. 80,
105, and 119. Statement No. 107 is amended to include the disclosure  provisions
about the concentrations of credit risk from Statement No. 105. Several Emerging
Issues Task Force consensuses are also changed or nullified by the provisions of
Statement No. 133.

         Statement  No. 133 will be  effective  for all fiscal  years  beginning
after June 15, 1999. The Statement may not be applied retroactively to financial
statements  of prior  periods.  The  adoption  of this  Statement  will  have no
material impact on the Company's financial condition or result of operations.

     During  1998,  the FASB also  issued  Statement  No. 134,  "Accounting  for
Mortgage-Backed  Securities  Retained After the Securitization of Mortgage Loans
Held  for Sale by a  Mortgage  Banking  Enterprise.  It  establishes  accounting
standards for certain  activities of mortgage banking  enterprises and for other
enterprises  with similar mortgage  operations.  This Statement amends Statement
No. 65.

     Statement  No. 65, as  previously  amended by  Statements  No. 115 and 125,
required a mortgage banking enterprise to classify a mortgage-backed security as
a trading security  following the  securitization  of the mortgage loan held for
sale.  This  Statement No. 134 further  amends  Statement No. 65 to require that
after the  securitization  of mortgage loans held for sale, an entity engaged in
mortgage  banking  activities  must  reclassify  the  resulting  mortgage-backed
security or other related  interests based on the entity's ability and intent to
sell  or  hold  those   investments.   The   determination  of  the  appropriate
classification  for  securities  retained after the  securitization  of mortgage
loans by a mortgage  banking  enterprise  now conforms to Statement No. 115. The
only new requirement is that if an entity has a sales  commitment in place,  the
security must be classified into trading.

         This  Statement is effective  for the first  fiscal  quarter  beginning
after  December 15, 1998. On the date this  Statement is initially  applied,  an
entity may reclassify  mortgage-backed securities and other beneficial interests
retained  after the  securitization  of  mortgage  loans  held for sale from the
trading  category,  except  for those  with sales  commitments  in place.  Those
securities and other interests shall be classified based on the entity's present
ability and intent to hold the  investments.  The adoption of this Statement had
no  material  impact  on  the  Company's  financial  condition  and  results  of
operations.

         During  1998,  the  Accounting  Standards  Executive  Committee  issued
Statement  of Position  98-5,  "Reporting  on the Costs of Start-Up  Activities.
Statement of Position 98-5 will affect all non-governmental entities,  including
not-for-profits reporting start-up costs in their financial statements.

         Some  existing  industry  practices  result in the  capitalization  and
amortization  of  start-up  costs.  This  Statement  of Position  requires  that
start-up costs be expensed when incurred.  The Statement of Position  applies to
start-up  activities and  organizational  costs associated with both development
stage and  established  operating  entities.  According to Statement of Position
98-5,  start-up  activities are "those one-time  activities related to opening a
new facility, introducing a new product or service, conducting business in a new
territory,  conducting  business  with a new class of customer  or  beneficiary,
initiating  a new  process  in an  existing  facility,  or  commencing  some new

                                      (9)
<PAGE>

operation.  Start-up  activities  include activities related to organizing a new
entity, commonly referred to as organizational costs."

         Statement of Position 98-5 is effective  for fiscal years  beginning on
or after  December 15, 1998.  Earlier  application is encouraged in fiscal years
during which annual financial  statements have not yet been issued. The adoption
of this  Statement  did not have a material  impact on the  Company's  financial
condition and results of operations.

Common Shares

         During the fourth quarter of 1998,  Bancshares'  management  approved a
tender offer to repurchase  130,000  shares at $30 per share for a total cost of
$3,900,000.  By December 31, 1998,  over 113,000 shares had ben repurchased at a
cost of $3,400,000.  At June 30, 1999,  Bancshares is holding  144,427 shares of
treasury stock.


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

         The   following   discussion   represents   management's   analysis  of
Bancshares' results of operations for the three and six month periods ended June
30, 1999 and 1998 and its consolidated  financial  condition at June 30, 1999 as
compared to December 31, 1998.  This  discussion  should be read in  conjunction
with Bancshares' unaudited condensed consolidated financial statements and notes
thereto.

Results of Operations

Summary Of Operations

         Net income in the second quarter of 1999  increased to  $1,601,000,  up
18% from $1,354,000 earned in the same quarter of 1998. Basic earnings per share
for the quarterly  period  increased to 58 cents per share, up 23% from 47 cents
per share earned in the second quarter of 1998.  Diluted  earnings per share for
the quarterly  period  increased to 57 cents per share, up 21% from 47 cents per
share  earned in the second  quarter of 1998.  For the six months ended June 30,
1999,  net income was  $3,128,000,  up 12% compared to $2,794,000  for the first
half of 1998.  Basic earnings per share for the six-month  period were $1.13, up
16%  compared to $0.97 for the same period in 1998.  Diluted  earnings per share
for the  six-month  period  were  $1.12,  up 15%  compared to $0.97 for the same
period in 1998.  Higher earnings for both the three-month and six-month  periods
were primarily due to an increase in net interest income after the provision for
loan losses and other income offset by an increase in other  expenses and income
taxes.

Net Interest Income

         Second  quarter  net  interest  income was  $3,806,000,  an increase of
$281,000  or 8%  compared  with the second  quarter of 1998.  For the six months
ended June 30, 1999, net interest  income  increased  $407,000 or 6% compared to
1998. The increase in net interest  income for both periods was mainly due to an
increase  in  interest  income on loans and  securities  offset by a decrease in
interest income on Federal funds sold as well as an increase in interest expense
on deposits and  borrowings.  For the six months  ended June 30,  1999,  average
loans increased

                                      (10)
<PAGE>

$16,189,000 and average securities increased  $6,569,000,  while average Federal
funds sold decreased $6,882,000.

Allowance and Provision For Loan Losses

The allowance for loan loss is maintained at a level  management  believes to be
adequate  to  provide  for  known  and  potential  risks  inherent  in the  loan
portfolios.  On a  quarterly  basis,  management  assesses  the  adequacy of the
allowance  for loan  losses.  Management's  evaluation  of the  adequacy  of the
allowance  considers  such factors as prior loss  experience,  loan  delinquency
levels and trends,  loan portfolio  growth and reviews of impaired loans and the
value of  underlying  collateral  securing  these  loans.  The  analysis  of the
commercial and industrial loan portfolio includes  assessments based on historic
loan losses and current quality grades of specific credits,  current  delinquent
and non-performing  loans, current economic conditions,  growth in the portfolio
and  the  results  of  recent  internal  loan  reviews,  audits  and  regulatory
examinations.  For the review of the adequact of the  allowance  for loan losses
for real estate loans,  assessments are based on current economic conditions and
real estate values,  historic loan losses and current quality grades of specific
credits,  recent growth and current  delinquent and  non-performing  loans.  The
adequacy of the  allowance  for loan losses as it pertains to the consumer  loan
portfolio is based on the assessments of current economic  conditions,  historic
loan losses and the mix of loans,  recent growth and the current  delinquent and
non-performing loans.

         Although the risk of non-payment  for any reason exists with respect to
all loans,  certain other more specific risks are  associated  with each type of
loan. The primary risks  associated  with  commercial  and industrial  loans are
quality  of the  borrower's  management  and the  impact of  national  and local
economic factors. Currently the business atmosphere remains stable for the local
economy in the Decatur,  Macon County and Shelby County areas, although there is
deterioration  in the  agricultural  industry.  Even though  direct loans to the
agricultural  related  industry  are not  material,  the entire  market  area is
dependent upon the general  agricultural  economy.  Risks  associated  with real
estate loans include concentrations of loans in a loan type, such as residential
real estate,  decline in real estate values and a sudden rise in interest rates.
Individual  loans  face the risk of a  borrower's  unemployment  as a result  of
deteriorating economic conditions or renewed contract differences between unions
and  management  of  several  large  companies  in  Bancshares's   market  area.
Bancshares's  strategy  with respect to addressing  and managing  these types of
risks is for Bancshares to follow its loan policies and underwriting criteria.

                  A  provision  for loan losses is charged to income to increase
the allowance to a level deemed to be adequate based on management's evaluation.
When a loan or a part thereof is considered by management to be uncollectible, a
charge is made against the  allowance.  The provision for loan losses during the
second  quarter  of  1999  was  $41,000  compared  to  $81,000  in  1998.  On  a
year-to-date  basis,  the  provision  for loan losses was  $102,000  compared to
$162,000 for the same period in 1998.

Other Income

         Other  income  for the three  months  ended  June 30,  1999,  increased
$1,103,000 or 50% compared to the same period in 1998. On a year-to-date  basis,
other income  increased  $2,006,000 or 45% compared to the  six-month  period in
1998. For both the three-month  period and the six-month period, the increase is
attributed to increases in fiduciary  activities,  remittance processing income,
and other income.

                                      (11)
<PAGE>

         Fiduciary activities increased $63,000 or 15% for the second quarter of
1999 compared to the second quarter of 1998 and increased $131,000 for the first
six months of 1999  compared to 1998.  The  increase  for both periods is mainly
attributed  to an increase in the number of accounts and dollar amount of trusts
handled by the trust departments of the Decatur Bank and Shelby Bank.

         For the three and six months ended June 30, 1999, remittance processing
fees generated by FirsTech  increased by $912,000  (81%) and  $1,760,000  (76%),
respectively,  compared to the same periods in 1998. The increase in 1999 is the
result of increased volume from existing clients as well as price adjustments on
current contracts.  FirsTech processed 5,700,000 more payments during the second
quarter of 1999 and 12,400,000 more payments during the first six months of 1999
compared to the same periods in 1998.

         Other income  increased  $97,000 or 35% for the three months ended June
30, 1999,  compared to the same period in 1998 and increased $137,000 or 26% for
the first six months of 1999 compared to the same period in 1999.  This increase
is  mainly  attributed  to an  increase  in  brokerage  commissions  within  the
investment  departments  of Decatur  Bank and  Shelby  Bank and an  increase  in
Automated Teller Machine ("ATM") fees generated by the banks.

Other Expenses

         Other  expenses  increased  from  $3,784,000 for the three months ended
June 30, 1998,  to  $4,779,000  for the three  months ended June 30, 1999.  This
represents a $995,000  (26%)  increase.  For the six months ended June 30, 1999,
other expenses increased  $1,898,000 or 25% compared to the same period in 1998.
The  increase in both  periods  was  attributed  to  increases  in salaries  and
benefits,  equipment  expenses,  service charges from  corresponding  banks, and
other expenses.

         Salaries and employee benefits increased $473,000 or 24% for the second
quarter of 1999 and  $1,136,000 or 28% for the first six months of 1999 compared
to the same periods of 1998.  This  increase is mainly due to an increase in the
volume of checks processed by FirsTech in the retail lockbox business  resulting
in the  hiring of  additional  staff as well as an  increased  use of  temporary
services.

         Equipment expenses increased $153,000 or 31% for the three months ended
June 30, 1999, compared to the same period in 1998 and increased $217,000 or 23%
for the first six months of 1999 as  compared  to 1998.  The  increase is mainly
attributed to an increase in depreciation on equipment as well as an increase in
FirsTech computer maintenance.

         For the  three  months  ended  June  30,  1999,  service  charges  from
corresponding  banks  increased  $214,000 or 114% compared to the same period in
1998.  Service  charges  increased  $318,000  or 90% for the first  half of 1999
compared to the first half of 1998.  The increase in both periods is  attributed
to an increased  volume of checks  processed  by FirsTech in the retail  lockbox
business.

         Other  expenses  increased  $106,000 or 16% for the three  months ended
June 30, 1999, compared to the same period in 1998 and increased $153,000 or 12%
for the first six  months of 1999 as  compared  to 1998.  The  increase  in both
periods is mainly  attributed to an increase in

                                      (12)
<PAGE>

professional fees at the Decatur Bank, an increase in Telephone  expenses at the
Decatur  Bank and  FirsTech,  and an increase in postage and  overnight  courier
expense at FirsTech.

Income Taxes

         Income tax expense increased  $142,000 or 25% for the second quarter of
1999 compared to the second quarter of 1998. Income taxes increased  $181,000 or
15% for the first six months of 1999,  compared to the first six months of 1998.
Higher income tax expense for both periods was  principally  due to the increase
in pre-tax earnings.  Bancshares' effective tax rate (income tax expense divided
by income before taxes) was 31% as of June 30, 1999 and 30% as of June 30, 1998.


Financial Condition

         Bancshares' assets increased $19,441,000 or 4.4% from December 31, 1998
to June 30, 1999.  This increase was primarily due to increases in cash and cash
equivalents  and net loans  offset by a decrease in  securities.  The funding of
these assets came primarily from an increase in deposits.

Cash and Cash Equivalents

         Cash and cash equivalents  increased $11,421,000 from December 31, 1998
to June 30, 1999.  This change  occurred due to an increase in cash and due from
banks of $7,366,000 and an increase in federal funds sold of $4,055,000. See the
consolidated  statement of cash flows for the six months ended June 30, 1999, in
the interim  financial  statements for the details  representing the increase in
cash and cash  equivalents.  Federal  funds sold are of a short-term  nature and
provide the needed liquidity to fund loan growth and security acquisitions.

Securities

         Bancshares'  overall  investment  goal is to  maximize  earnings  while
maintaining  liquidity in securities  having  minimal credit risk. The types and
maturities of securities  purchases are primarily  based on Bancshares'  current
and projected liquidity and interest rate sensitivity positions.  The book value
of investment  securities decreased by $6,843,000 from December 31, 1998 to June
30,1999.  During the first six months of 1999,  Bancshares purchased $35,091,000
classified    as    available-for-sale,    sold    $7,999,000    classified   as
available-for-sale,    and   had   $30,223,000    ($27,538,000   classified   as
available-for-sale)  mature. The decrease in investments was primarily due to an
increase in loan demand with higher  yields as well as a decrease of  $3,451,000
in the market value of available-for-sale securities.

Loans

         Net loans  increased by $14,365,000  from December 31, 1998 to June 30,
1999 due mainly to an increase in commercial  loans,  consumer  loans,  and real
estate  loans.  Commercial  loans  increased  by  $9,718,000  due  to  increased
commercial real estate demand.  Also, consumer loans increased by $1,487,000 and
real estate and other loans increased by $3,336,000.

                                      (13)
<PAGE>

Deposits

          Total deposits  increased  $15,781,000  from December 31, 1998 to June
30, 1999.  This increase is attributed to the collection of tax money during the
second  quarter that will not be paid out until the third  quarter and customers
making large deposits at the end of June to meet minimum  required  deposits for
the month.

FHLB Advances and U.S. Treasury Demand Notes

         FHLB advances and U.S. Treasury demand notes increased  $4,300,000 from
December 31, 1998 to June 30, 1999.  This  increase is attributed to an increase
in U.S.  Treasury  demand notes.  During 1999, the limit at the Decatur Bank was
raised from  $2,800,000 to $5,000,000  upon request of the Federal Reserve Bank.
The funds are maintained at a favorable rate and were kept in house for a longer
period of time.

Other Liabilities

         Other liabilities  decreased  $1,505,000 from December 31, 1998 to June
30, 1999.  This decrease is primarily the result of deferred  taxes  recorded on
the reduction in the market value of available-for-sale  securities.  During the
first six months of 1999, the market value in the  available-for-sale  portfolio
decreased $3,451,000.

Stockholders' Equity

         Total stockholders' equity rose $29,000 or 0.05% from December 31, 1998
to June 30, 1999. The increase is mainly  attributed to net income of $3,128,000
less  cash  dividends  of  $719,000  and a  decrease  in  the  market  value  of
available-for-sale securities (net of tax) of $2,278,000.

         The  capital  ratios  of  Bancshares  are  presently  in  excess of the
requirements   necessary  to  meet  the  "well  capitalized"   capital  category
established by bank regulators. At March 31, 1999, Bancshares' consolidated Tier
1 and total  risk-based  capital  ratios  were  22.4% and  23.7%,  respectively.
Bancshares' leverage ratio at March 31, 1999, was 12.0%.

Year 2000

                  The Year 2000  compliance  issue exists  because many computer
systems and applications  currently use two-digit fields to designate a year. As
the century date change occurs,  data  sensitive  systems may either fail or not
operate properly unless the underlying programs are modified or replaced.

         The  Company's  lending  and  deposit  activities,  like  those of most
financial  institutions,  depend  significantly upon computer systems to process
and  record  transactions.  The  Company  is aware of the  potential  Year  2000
problems  that may affect the  operating  systems that control our  computers as
well as those of our third party software providers who supply the software that
maintain many of our records and those of our  customers.  In 1997,  the Company
began the process of identifying  Year 2000 related problems that may affect the
Company's   systems.  A  task  force  of  Company  officers  and  employees  was
established to address the issues related to those problems. Outside consultants
have and will be utilized when required to complete this project.

                                      (14)
<PAGE>

         The task force analyzed the Company's  operations and identified  those
functions  that would be affected by the Year 2000 issues and  determined  which
functions were vital to the day-to-day operations of the Company. The Company is
working with vendors that supply or service the  Company's  computer  systems to
identify  and remedy any Year 2000  related  systems.  Inventory  and testing of
computer equipment was conducted during 1998. New equipment has been obtained to
replace  equipment  that was not found to be Year 2000  compliant.  The Board of
Directors is monitoring the progress in addressing Year 2000 issues.

         The Company's  primary lending and savings systems have been maintained
in-house,  however,  they are run on software  provided by a third party vendor.
These  systems  have  been  identified  as  being  critical  to  the  day-to-day
operations of the Company.  The data center of the Company has been working with
the third party vendor that  supplied the software to test for Year 2000 issues.
No material deficiencies were noted as a result of testing.

         The  Company's  direct  expenses  to date  (other  than the  salary  of
employees  involved in the project)  have been less than $15,000 and the Company
does not currently anticipate that its Year 2000 costs will exceed $30,000.

         Although  the  Company  believes  it is taking the  necessary  steps to
address the Year 2000  compliance  issue,  no assurances  can be given that some
problems  will  not  occur  or that we will  not  incur  significant  additional
expenses in future periods. In the event that the Company is ultimately required
to purchase  replacement computer systems,  programs and equipment,  or to incur
substantial expenses to make current systems,  programs, and equipment Year 2000
compliant,  the Company's net income and financial  condition could be adversely
affected.

         Because  the  Company's  loan  portfolio  to  individual  borrowers  is
diversified and its market area does not depend on one employer or industry,  it
does not expect any Year 2000 related  difficulties  that may affect  depositors
and borrowers to significantly affect the Company's net earnings or cash flow.

         The Company has developed a contingency plan to deal with the Year 2000
related issues. This program will provide for dealing with situations that might
occur that are both related to the Company's operation (e.g., computer system or
equipment  liquidity)  and those  beyond  the  Company's  control  (e.g.,  power
failure,  phone/communication  line failure).  The plan includes methods to deal
with these  situations  and  continue  to service  customers  despite  Year 2000
problems  arising.  The contingency  plan was approved by the Company's Board of
Directors during July.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Asset/liability   management   involves  the  funding  and   investment
strategies  necessary  to  maintain  an  appropriate  balance  between  interest
sensitive assets and liabilities.  It also involves providing adequate liquidity
while  sustaining  stable  growth in net  interest  income.  Regular  review and
analysis  of  deposit  trends,  cash flows in  various  categories  of loans and
monitoring  of interest  spread  relationships  are vital to this  process.  The
nature of the banking business requires  Bancshares  maintain adequate liquidity
to meet  changes in  composition  and volume of assets  and  liabilities  due to
seasonal,  cyclical  or  other  reasons.  Liquidity  describes  the  ability  of
Bancshares to meet financial  obligations that arise during the normal course of
business.  Liquidity  is  primarily  needed to meet the  borrowing  and  deposit
withdrawal  requirements  of the  customers  of

                                      (15)
<PAGE>

Bancshares,  as well as meeting  current and future planned  expenditures.  This
liquidity is typically provided by the funds received through customer deposits,
investment  maturities,  loan  repayments,  borrowings  and income.  Bancshares'
management  considers the current liquidity  position to be adequate to meet the
needs of customers.

         Bancshares  seeks to contain the risks  associated  with  interest rate
fluctuations  by managing  the balance  between  interest  sensitive  assets and
liabilities.  Managing to mitigate interest rate risk is, however,  not an exact
science.  Not only does the interval until repricing of interest rates on assets
and liabilities change from day to day as the assets and liabilities change, but
for some  assets and  liabilities,  contractual  maturity  and  actual  maturity
experienced are not the same. For example,  mortgage-backed  securities may have
contractual  maturities  well in excess of five  years but,  depending  upon the
interest  rate  carried  by the  specific  underlying  mortgages  and  the  then
currently  prevailing  rate of interest,  these  securities  may be prepaid in a
shorter  time  period.   Accordingly,   the   mortgage-backed   securities   and
collateralized  mortgage  obligations  that have average  stated  maturities  in
excess of five years,  are evaluated as part of the  asset/liability  management
process using their expected average lives due to anticipated prepayments on the
underlying  loans. NOW and savings  accounts,  by contract,  may be withdrawn in
their entirety upon demand.  While these  contracts are extremely  short, it has
been  Bancshare's  experience  that these accounts turn over at the rate of five
percent  per  year.  If all of the NOW and  savings  accounts  were  treated  as
repricing in one year or less, the  cumulative  negative gap at one year or less
would be $176.9 million or 43.5% of interest  earning assets.  Due to their very
liquid  nature,  the entire  balance of money  market  accounts is assumed to be
repriced within one year.

         Interest rate  sensitivity is an important  factor in the management of
the composition and maturity  configurations  of Bancshare's  earning assets and
funding sources. An Asset/Liability Committee ("ALCO") manages the interest rate
sensitivity  position in order to maintain an  appropriate  balance  between the
maturity  and  repricing  characteristics  of  assets  and  liabilities  that is
consistent with Bancshare's  liquidity  analysis,  growth,  and capital adequacy
goals.  Bancshares sells fixed-rate real estate loans in the secondary  mortgage
market.  Bancshare's  management  believes that by selling  certain loans rather
than retaining them in its portfolio,  it is better able to match the maturities
of  interest  sensitive  assets to  interest  sensitive  liabilities.  It is the
objective of the ALCO to maximize net interest  margins  during  periods of both
volatile and stable  interest  rates,  to attain earnings growth and to maintain
sufficient  liquidity to satisfy depositors'  requirements and meet credit needs
of customers.

         Sources of market risk include  interest  rate risk,  foreign  currency
exchange rate risk,  commodity price risk, and equity price risk.  Bancshares is
only  subject  to  interest  rate  risk.   Bancshares   purchased  no  financial
instruments for trading purposes during the first half of 1999 or during 1998.

         The following  table  summarizes,  as of June 30, 1999 the  anticipated
maturities  or  repricing  of   Bancshare's   interest   sensitive   assets  and
liabilities,  Bancshare's interest sensitivity gap (interest-earning assets less
interest-bearing  liabilities),  Bancshares cumulative interest rate sensitivity
gap  and  Bancshare's   cumulative  interest  sensitivity  repricing  gap  ratio
(cumulative  interest rate sensitivity gap divided by total assets).  A negative
gap for any period means that more interest-bearing  liabilities will reprice or
maturing during that time period than interest-earning assets. During periods of
rising  interest  rates,  a  negative  gap  position  would  generally  decrease
earnings,  and during  periods  of  declining  interest  rates,  a negative  gap
position would  generally  increase  earnings.  The converse would be true for a
positive gap position.

                                      (16)
<PAGE>
<TABLE>
<CAPTION>
                                                                                              After                  Fair
                                    Year 1      Year 2     Year 3      Year 4     Year 5     Year 5      Total       Value
                                   ---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
<S>                                <C>         <C>        <C>         <C>        <C>        <C>        <C>         <C>
Loans (1)
   Fixed rate                       $ 23,970    $ 14,239   $ 31,930    $ 24,364   $ 41,437   $ 35,564   $ 161,504  $ 168,241
   Average interest rate               8.13%       8.60%      8.76%       8.57%      8.00%      7.37%       8.12%
   Variable rate                      50,817       2,936      5,230       3,558      7,434      1,345      71,321     74,300
    Average interest rate              8.30%       7.70%      7.69%       7.63%      7.45%      6.97%       8.08%
Securities (2)
   Fixed rate                         12,782      16,204     19,223      19,224     19,960     66,192     153,585    152,397
   Average interest rate               6.48%       5.76%      6.03%       6.06%      5.87%      6.36%       6.17%
   Variable rate                         425                                689                 1,714       2,828      2,833
    Average interest rate              5.70%                              5.82%                 6.80%       6.67%
Federal funds sold                    17,310                                                               17,310     17,310
    Average interest rate              4.71%                                                                4.71%
                                   ---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
  Total interest-earning assets      105,304      33,379     46,383      47,835     68,832    104,815     406,548    415,081
                                   ---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------

NOW and savings accounts               5,989       5,989      5,989       5,989      5,989     89,838     119,783    119,783
    Average interest rate              2.49%       2.49%      2.49%       2.49%      2.49%      2.49%       2.49%
Money market accounts                 38,392                                                               38,392     38,392
    Average interest rate              3.70%                                                                3.70%
Time deposits
   Fixed rate                        107,156      32,730      3,703       1,001         70                144,660    145,615
    Average interest rate              4.88%       5.39%      5.17%       6.48%      5.10%                  5.02%
   Variable rate                       1,336          59                                                    1,395      1,404
    Average interest rate              4.29%       4.75%                                                    4.31%
Federal funds purchased and
securities sold under
repurchase agreements                 10,222                                                               10,222     10,222
    Average interest rate              5.08%                                                                5.08%
FHLB advances                             55          59         63          68         73     17,560      17,878     18,063
    Average interest rate              6.84%       6.84%      6.84%       6.84%      6.84%      5.49%       5.49%
U.S. Treasury demand notes             5,218                                                                5,218      5,218
    Average interest rate              5.54%                                                                5.54%
                                   ---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
  Total interest-bearing liabilities 168,368      38,837      9,755       7,058      6,132    107,398     337,548    338,697
                                   ---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------

Interest-earning assets less
 interest-bearing liabilities
 ("Gap")                           $(63,064)    $(5,458)    $36,628    $ 40,777   $ 62,700   $(2,583)    $ 69,000   $ 76,384
                                   ========== =========== ========== =========== ========== ========== =========== ==========
Cumulative gap                     $(63,064)   $(68,522)  $(31,894)     $ 8,883   $ 71,583    $69,000    $ 69,000   $ 76,384
                                   ========== =========== ========== =========== ========== ========== =========== ==========
Cumulative  Gap  as a  percentage                                                                          16.97%
of total interest earning assets    (15.51%)    (16.85%)    (7.85%)       2.18%     17.61%     16.97%                 18.79%
                                   ========== =========== ========== =========== ========== ========== =========== ==========
</TABLE>
(1) Includes consumer loans net of unearned income, and excludes  nonaccrual and
    impaired loans.
(2) Reflects fair value adjustments for securities available for sale.

     At June 30, 1999, the table above  reflects that  Bancshares has a negative
liability gap due to the level of interest  bearing demand  deposits and savings
that are generally  subject to immediate  withdrawal and are  repriceable at any
time.  As such,  the effect of an increase in the prime rate of 100 basis points
would  decrease net interest  income by  approximately  $630,000 in one year and
$685,000  in two  years  assuming  no  management  intervention.  A fall  in the
interest rates would have the opposite effect for the same period.  In analyzing
interest rate sensitivity,  Bancshares'  management  considers these differences
and incorporates other assumptions and factors, such as balance sheet growth and
prepayments, to better measure interest rate risk.

         While  the  gap  analysis  provides  an  indication  of  interest  rate
sensitivity,  experience  has  shown  that it does not  fully  capture  the true
dynamics of interest rate  changes.  Essentially,  the analysis  presents only a
static measurement of asset and liability volumes based on contractual maturity,
cash  flow  estimates  or  repricing  opportunity.   It  fails  to  reflect  the
differences in the timing

                                      (17)
<PAGE>

and degree of repricing of assets and  liabilities due to interest rate changes.
In analyzing interest rate sensitivity,  management  considers these differences
and incorporates other assumptions and factors, such as balance sheet growth and
prepayments, to better measure interest rate risk.

PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

         Bancshares  is  involved  from  time  to  time  in  routine  litigation
incidental to its business. However,  Bancshares' management believes that it is
not a party to any material pending  litigation,  which, if decided adversely to
Bancshares,  would have a significant  negative impact on the business,  income,
assets or operation of  Bancshares.  Bancshares'  management is not aware of any
other material threatened litigation that might involve Bancshares.

ITEM 2.    CHANGES IN SECURITIES

         Not Applicable

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

         Not Applicable

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

         Not Applicable

ITEM 5.    OTHER INFORMATION

         During the second quarter of 1999, FirsTech management decided to close
the remittance  processing facility in Hammond,  Indiana.  The decision was made
for a variety of reasons,  including new technology, new communications methods,
and better control that a more  centralized  environment  provides.  The Decatur
site is the central  location for  FirsTech.  The move is to be completed by the
end of August 1999 and is expected to have no material impact on the earnings of
FirsTech or the Company.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  Exhibit
                  Number            Description of Exhibit

                      11            Computation of Per Share Income

                      27            Financial Data Schedule

         (b)      Reports on Form 8-K

                  Not applicable

                                      (18)
<PAGE>


                                   SIGNATURES


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

FIRST DECATUR BANCSHARES, INC.


August 11, 1999          By: /s/ Philip C. Wise
                                 Philip C. Wise
                                 President and Chief Executive Officer



August 11, 1999          By: /s/ Craig A. Wells
                             -----------------------------------------
                                 Craig A. Wells
                                 Vice President and Chief Financial Officer

                                      (19)
<PAGE>