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 September 30, 1998

                                      OR

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

                      For the transition period from   to

                     Commission file 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           


2,883,156 shares of the Registrant's common stock, par value $.01 per share,
were outstanding at September 30, 1998.
<PAGE>

                        FIRST DECATUR BANCSHARES, INC.

         FORM 10-Q FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998

                                     INDEX

                                                                        PAGE

PART I - FINANCIAL INFORMATION                                          1

      Item 1.     Condensed Consolidated Financial Statements           1
      Item 2.     Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                   11
      Item 3.     Quantitative and Qualitative Disclosures about 
                  Market Risk                                           16


PART II - OTHER INFORMATION                                             19

      Item 1.     Legal Proceedings                                     19
      Item 2.     Changes in Securities                                 19
      Item 3.     Defaults upon Senior Securities                       19
      Item 4.     Submission of Matters to a Vote of Security Holders   19
      Item 5.     Other Information                                     19
      Item 6.     Exhibits and Reports on Form 8-K                      19


SIGNATURES                                                              20

EXHIBITS

      Exhibit 11. Computation of Earnings Per Share                     21
<PAGE>
PART 1 - FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                        FIRST DECATUR BANCSHARES, INC.
                          CONSOLIDATED BALANCE SHEETS
                                (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                            September 30,                  December 31,
                                                                                1998                           1997
                                                                            ------------------------------------------
<S>                                                                  <C>                         <C>
                                                                              (Unaudited) 
Assets
     Cash and due from banks                                          $             32,670        $             22,880
     Federal funds sold                                                              4,785                      17,145
                                                                            -------------------------------------------
          Cash and cash equivalents                                                 37,455                      40,025

     Securities available for sale                                                 135,622                     106,600
     Securities held to maturity                                                    26,903                      31,759
     Loans, net                                                                    208,707                     196,522
     Premises and equipment                                                          8,581                       9,271
     Other assets                                                                   10,754                       8,060
                                                                            -----------------------------------------------
               Total assets                                           $            428,022        $            392,237
                                                                            ===============================================    
Liabilities
     Deposits
        Noninterest bearing                                           $             57,050        $             53,436
        Interest bearing                                                           279,040                     267,692
                                                                            -----------------------------------------------  
          Total Deposits                                                           336,090                     321,128
     Federal funds purchased and securities sold under
        repurchase agreements                                                       11,647                       8,448
     Federal Home Loan Bank loans                                                   17,917                       2,954
     U.S. Treasury demand notes                                                      1,219                       3,151
     Other liabilities                                                               4,916                       4,257
                                                                            -----------------------------------------------
               Total liabilities                                                   371,788                     339,938
                                                                            -----------------------------------------------
Stockholders' Equity
     Preferred stock, no par value.  Authorized 200,000 shares,
        none issued or outstanding
     Common stock, $.01 par value.  Authorized 5,000,000shares;
      Issued 2,909,397 shares of which 26,241 shares and                                                    
      30,910 shares were held as treasury stock                                         29                          29   
     Surplus                                                                         7,874                       7,858
     Paid-in-capital - phantom stock                                                   205                         167
     Retained earnings                                                              47,521                      44,506
     Net unrealized gain on securities available for sale                            1,175                         380
                                                                            -----------------------------------------------
                                                                                    56,804                      52,940
     Treasury stock, at cost                                                         (570)                       (641)
                                                                            -----------------------------------------------
         Total stockholders' equity                                                 56,234                      52,299
                                                                            -----------------------------------------------    
           Total liabilities and stockholders' equity               $              428,022        $            392,237
                                                                            ===============================================
</TABLE>                                                             

                                        Page 1
<PAGE>                        


                        FIRST DECATUR BANCSHARES, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
                     (IN THOUSANDS EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                              Three Months Ended                          Nine Months Ended
                                                        September 30          September 30         September 30         September 30
                                                           1998                  1997                 1998                 1997
                                                        (Unaudited)           (Unaudited)          (Unaudited)          (Unaudited)
<S>                                            <C>                   <C>                      <C>                 <C>
Interest Income
     Interest on loans                          $             4,460    $            4,378      $        12,974     $         13,287
     Interest on investments                                  2,261                 1,909                6,615                5,861
     Interest on federal funds sold                             247                   112                  694                  289
     Other interest income                                       12                    15                   39                   47
                                                -----------------------------------------------------------------------------------
          Total interest income                               6,980                 6,414               20,322               19,484

Interest Expense
     Interest on deposits                                     3,007                 2,833                8,658                8,235
     Interest on borrowings                                     346                    13                  845                  319
                                                -----------------------------------------------------------------------------------
          Total interest expense                              3,353                 2,846                9,503                8,554
                                                ----------------------------------------------------------------------------------- 
Net Interest Income                                           3,627                 3,568               10,819               10,930
     Provision for loan losses                                   61                   137                  223                  369
                                                ------------------------------------------------------------------------------------
Net Interest Income After Provision for
   Loan Losses                                                3,566                 3,431               10,596               10,561
                                                ------------------------------------------------------------------------------------
Other Income
     Trust fees                                                 425                   384                1,248                1,132
     Loan fee income                                            153                   147                  465                  333
     Remittance processing fees                               1,284                 1,046                3,598                3,136
     Service charges on deposit accounts                        252                   260                  750                  794
     Security transactions, net                                  13                    14                   37                   43
     Other                                                      291                   255                  827                  768
                                                ------------------------------------------------------------------------------------
          Total other income                                  2,418                 2,106                6,925                6,206
                                                ----------------------------------------------------------------------------------- 
Other Expenses
     Salaries and employee benefits                           2,112                 1,946                6,175                5,871
     Net occupancy                                              287                   323                  831                  884
     Equipment expenses                                         522                   500                1,487                1,681
     Professional fees                                          103                   102                  289                  292
     Data processing fees                                       144                   114                  234                  258
     Supplies                                                    35                    53                  250                  251
     Service charges from corresponding banks                   178                   125                  533                  390
     Other operating expenses                                   653                   566                1,774                1,736
                                               -------------------------------------------------------------------------------------
          Total other expenses                                4,034                 3,729               11,573               11,363
                                               ------------------------------------------------------------------------------------

Income Before Income Tax                                      1,950                 1,808                5,948                5,404
     Income tax expense                                         605                   567                1,809                1,694
                                               ------------------------------------------------------------------------------------
          Net Income                           $              1,345 $               1,241    $           4,139  $             3,710
                                               ====================================================================================
Dividends Per Share                            $               0.13 $                0.13    $            0.39   $             0.35
Basic Earnings Per Share                       $               0.47 $                0.43    $            1.44   $             1.29
Average Shares Outstanding                                2,883,162             2,881,265            2,883,107            2,887,315
Diluted Earnings Per Share                     $               0.46 $                0.43    $            1.43   $             1.28
Average Shares Outstanding                                2,898,338             2,892,627            2,896,590            2,898,272
</TABLE>

                                      Page 2
<PAGE>                         

                        FIRST DECATUR BANCSHARES, INC.
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                  Three Months Ended                      Nine Months Ended
                                                  September 30, 1998                     September 30, 1998
                                                      (Unaudited)                            (Unaudited)
<S>                                                <C>              <C>              <C>                    <C>
Net Income                                                           $1,345                                  $4,139
Other comprehensive income, net of tax
  Unrealized gains on securities:
    Unrealized holding gain arising during
    during the period                               $865                              $795
    Less:  Reclassification adjustment 
    for gains included in net income               (  0)                             (  0)
                                                -----------                         ---------                                   
Other comprehensive income                                              865                                     795
                                                                     --------                                --------       
Comprehensive income                                                 $2,210                                  $4,934
                                                                     ========                                ========  
</TABLE>


<TABLE>
<CAPTION>
                                                  Three Months Ended                      Nine Months Ended
                                                  September 30, 1997                     September 30, 1997
                                                      (Unaudited)                            (Unaudited)
<S>                                                <C>              <C>              <C>                <C>
Net Income                                                           $1,241                                  $3,710
Other comprehensive income, net of tax
  Unrealized gains on securities:
    Unrealized holding gain arising
      during the period                              $244                             $211
       Less:  Reclassification adjustment            
       for gains included in net income             (  0)                            (  0)                                
                                                   --------                         --------                                      
Other comprehensive income                                              244                                      211
                                                                     --------                                --------            
Comprehensive income                                                 $1,485                                   $3,921
                                                                     ========                                ========            
</TABLE>

                                        Page 3
<PAGE>
                        FIRST DECATUR BANCSHARES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                               Nine Months Ended                  
                                                                                        September 30,              September 30,
                                                                                           1998                      1997
                                                                                           (Unaudited)             (Unaudited)
<S>                                                                              <C>                             <C>   
Cash flows from operating activities:
     Net cash provided by operating activities                                    $             2,847             $          4,343

Cash flows from investing activities:
     Purchases of securities available for sale                                              (66,417)                     (19,696)
     Proceeds from maturities of securities available for sale                                 38,289                       19,090
     Proceeds from sales of securities available for sale                                         473                        5,994
     Purchases of securities held to maturity                                                 (1,548)                      (4,343)
     Proceeds from maturities of securities held to maturity                                    6,355                        6,443
     Net change in loans                                                                     (12,408)                      (7,596)
     Purchases of premises and equipment                                                        (315)                        (351)
                                                                                --------------------------------------------------
          Net cash used by investing activities                                              (35,571)                        (459)
                                                                                ---------------------------------------------------
Cash flows from financing activities:
     Net change in
        Noninterest-bearing, interest-bearing demand and savings deposits                     17,826                        (2,211)
        Certificates of deposit                                                               (2,864)                       (5,248)
        Federal funds purchased and securities sold under repurchase
               agreements                                                                      3,199                        (4,371)
        Federal Home Loan Bank loans                                                          14,963                           466
        U.S. Treasury demand notes                                                            (1,932)                          763
     Cash dividends                                                                           (1,125)                       (1,011)
     Net cash from (purchase) sale of treasury stock                                              87                          (175)
                                                                                ----------------------------------------------------
    Net cash provided (used) by financing activities                                           30,154                      (11,787)
                                                                                ----------------------------------------------------
Net (decrease) in cash and cash equivalents                                                   (2,570)                       (7,903)
Cash and cash equivalents, beginning of period                                                40,025                        48,588
                                                                                ---------------------------------------------------
Cash and cash equivalents, end of period                                           $          37,455              $         40,685
                                                                                ===================================================
Supplemental disclosures of cash flow information:
     Cash paid during the period for:
          Interest                                                                $             9,493              $         8,554
          Income taxes                                                            $             1,621              $         1,432
</TABLE>

                                        Page 4
<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 1997 filed on March 19, 1998.

     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.  123,   "Accounting   for   Stock-based
Compensation".   SFAS  No.  123  establishes  a  fair  value  based  method  of
accounting  for  stock-based  compensation  plans.   The  FASB  encourages  all
entities  to  adopt this method for accounting for all arrangements under which
employees receive  shares of stock or other equity instruments of the employer,
or the employer incurs  liabilities  to employees in amounts based on the price
of its stock.

     Due to the extremely controversial  nature  of  this project, SFAS No. 123
permits  a  company  to  continue  the accounting for stock-based  compensation
prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees".  If a company  elects  that option, pro forma disclosures
of  net  income  (and  EPS, if presented) are required  in  the  notes  to  the
financial statements as  if  the  provisions  of  SFAS No. 123 had been used to
measure stock-based compensation.  The disclosure requirements  of  Opinion No.
25 have been superseded by the disclosure requirements of this Statement.  Once
an  entity  adopts  the  fair  value  based  method  of  accounting  for  these
transactions, that election cannot be reversed.

                                        Page 5
<PAGE>

     Equity  instruments  granted  or  otherwise  transferred  directly  to  an
employee by a principal stockholder are stock-based employee compensation to be
accounted  for  in accordance with either Opinion No. 25 or SFAS No. 123 unless
the transfer clearly  is for a purpose other than compensation.  The accounting
requirements of SFAS No.  123 became effective for transactions entered into in
fiscal years beginning after December 31, 1995, and the disclosure requirements
became effective for financial  statements  for  fiscal  years  beginning after
December 15, 1995.  Pro forma disclosures required for entities that  elect  to
continue  to  measure  compensation  cost using Opinion No. 25 must include the
effects of all awards granted in fiscal  years  beginning  after  December  15,
1994.   During  the  initial  phase-in  period,  the  effects  of applying this
Statement  are not likely to be representative of the effects on  reported  net
income for future  years because options vest over several years and additional
awards generally are made each year.

     Bancshares elected to continue to measure compensation costs using Opinion
No. 25.  There were  no pro forma disclosures required pursuant to SFAS No. 123
as no awards were granted in the first three quarters of 1998 or during 1997.

     SFAS No. 125, "Accounting  for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities",  breaks  new  ground  in  resolving  long-
standing  questions  about  whether  transactions  should  be  accounted for as
secured borrowing or as sales.  The Statement provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers that
are considered secured borrowings.

     A transfer of financial assets in which the transferor surrenders  control
over  those  assets is accounted for as a sale to the extent that consideration
other than beneficial  interests  in  the  transferred  assets  is  received in
exchange.  The transferor has surrendered control over transferred assets  only
if all of the following conditions are met:

    -  The  transferred  assets have been isolated from the transferor - put
   presumptively beyond the reach  of the transferor and its creditors, even in
   bankruptcy or other receivership.

    -  Each transferee obtains the  right - free of conditions that constrain
   it  from  taking  advantage  of that right  -  to  pledge  or  exchange  the
   transferred assets, or the transferee is a qualifying special-purpose entity
   and the holders of beneficial  interest in that entity have the right - free
   of conditions that constrain them  from  taking advantage of that right - to
   pledge or exchange those interests.

    -  The  transferor  does  not  maintain  effective   control   over  the
   transferred assets through an agreement that both entities and obligates the
   transferor  to  repurchase  or  redeem  them  before  their  maturity, or an
   agreement  that entitles the transferor to repurchase or redeem  transferred
   assets are not readily obtainable.

     This Statement  provides  detailed  measurement  standards  for assets and
liabilities  included  in  these transactions.  It also includes implementation
guidance for assessing isolation  of  transferred assets and for accounting for
transfers of partial interest, servicing  of  financial assets, securitization,
transfers  or  sales  type and direct financing lease  receivables,  securities
lending transactions, repurchase  agreements,  "wash  sales," loan syndications
and  participation,  risk  participation  in  banker's  acceptances,  factoring
arrangements,  transfers  of  receivables with recourse and  extinguishment  of
liabilities.

                                        Page 6
<PAGE>

     The Statement supersedes FASB  Statements No. 76, "Extinguishment of Debt"
and  No.  77,  "Reporting by Transferors  for  Transfers  of  Receivables  with
Recourse" and No.  122,  "Accounting for Mortgage Servicing Rights", and amends
FASB Statement No. 115, "Accounting  for Certain Investments in Debt and Equity
Securities", in addition to clarifying or amending a number of other statements
and  technical  bulletins.   Except  as amended  by  Statement  No.  127,  this
Statement is effective for transfers and  servicing  of  financial  assets  and
extinguishments  of  liabilities occurring after December 31, 1996 and is to be
applied prospectively.  Earlier or retroactive application is not permitted.

     The FASB was made  aware  that  the volume of certain transactions and the
related  changes  to information systems  and  accounting  processes  that  are
necessary to comply  with  the  requirements of Statement No. 125 would make it
extremely difficult, if not impossible,  for some affected enterprises to apply
the  transfer  and  collateral  provisions  of   Statement  No.  125  to  those
transactions as soon as January 1, 1997.  As a result,  SFAS No. 127 defers for
one year the effective date (a) of paragraph 15 of Statement  No.  125  and (b)
for   repurchase   agreement,  dollar-roll,  securities  lending,  and  similar
transactions, of paragraphs 9-12 and 237(b) of Statement No. 125.

     Statement  No.  127   provides   additional   guidance  on  the  types  of
transactions  for  which  the  effective date of Statement  No.  125  has  been
deferred.  It also requires that  if  it is not possible to determine whether a
transfer occurring during calendar-year 1997 is part of a repurchase agreement,
dollar-roll, securities lending, or similar  transaction,  then paragraphs 9-12
of  Statement  No. 125 should be applied to that transfer.  All  provisions  of
Statement No. 125  should  continue to be applied prospectively, and earlier or
retroactive application is not permitted.

     The FASB has issued SFAS  No.  128,  "Earnings  per  Share".  SFAS No. 128
establishes standards for computing and presenting earnings  per  share.   SFAS
No.  128  simplifies the current standards for computing earnings per share and
makes them  comparable  to  international  earnings per share standards.  Under
SFAS No. 128 the presentation of primary earnings  per share is replaced with a
presentation  of basic earnings per share.  SFAS No.  128  also  requires  dual
presentation of  basic and diluted earnings per share on the face of the income
statement for all  entities  with  complex  capital structures and requires the
reconciliation of the numerator and denominator of the basic earnings per share
computation to the numerator and denominator  of the diluted earnings per share
computation.   SFAS No. 128 is effective for financial  statements  issued  for
periods ending after  December  15,  1997,  including interim periods and early
application is not permitted.  SFAS No. 128 will require the restatement of all
prior period earnings per share data presented.    Refer  to  the "Consolidated
Statement of Income" and Exhibit 11 - Computation of Per Share  Income for this
calculation.

     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.   It  does  not  require  a  specific  format  for  that  financial
statement, but requires that an enterprise display an amount representing total
comprehensive  income  for the period in that financial statement.  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.

                                        Page 7
<PAGE>

     SFAS  No.  130 is effective for both interim and annual periods  beginning
after  December 15,  1997.   Earlier  application  is  permitted.   Comparative
financial   statements   provided  for  earlier  periods  are  required  to  be
reclassified to reflect the  provisions  of  this  statement.   Publicly traded
enterprises that issue condensed financial statements for interim  periods  are
required  to  report  a  total  for  comprehensive  income  in  those financial
statements.  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.  Both footnote disclosures are presented below.


<TABLE>
<CAPTION>
                                DISCLOSURE OF ACCUMULATED OTHER COMPREHENSIVE INCOME BALANCES
                                                       (in thousands)
                                          Three Months Ended                                      Nine Months Ended
                              --------------------------------------                 ----------------------------------------
                                                      Accumulated                                            Accumulated
                               Unrealized Gains   Other Comprehensive                 Unrealized Gains   Other Comprehensive
                                 on Securities          Income                          on Securities          Income
     September 30, 1998
<S>                            <C>                    <C>                                 <C>                 <C>
Beginning balance               $            310       $           310                     $        380        $          380

Current period change                        865                   865                              795                   795
                                ----------------------------------------                   --------------------------------------
Ending balance                  $          1,175       $         1,175                      $     1,175        $        1,175
                                ========================================                   ======================================


     September 30, 1997
Beginning balance               $           100        $          100                       $       133       $           133 

Current period change                       244                   244                               211                   211
                                ----------------------------------------                    ------------------------------------- 
Ending balance                  $           344        $          344                       $       344       $           344
                                ========================================                    =====================================  
</TABLE>

                                        Page 8
<PAGE>

<TABLE>
<CAPTION>
                                  Disclosure of Related Tax Effects Allocated to Each
                                        COMPONENT OF OTHER COMPREHENSIVE INCOME
                                                    (in thousands)
<S>                                                   <C>                      <C>                     <C>
                                                        Before-Tax Amount         Tax (Expense) or          Net-of-Tax Amount
      Three Months Ended September 30, 1998                                         Benefit                                      
Unrealized gains on securities:
   Unrealized holding gains rising during
       Period                                          $           1,311        $         (446)         $          865
   Less:  reclassification adjustment for
       Gains realized in income                                        0                      0                      0
                                                       --------------------------------------------------------------------------
Other comprehensive income                             $           1,311        $         (446)         $          865
                                                       ==========================================================================
      NINE MONTHS ENDED SEPTEMBER 30, 1998
Unrealized gains on securities:
   Unrealized holding gains rising during
       Period                                          $           1,205        $          (410)        $          795         
   Less:  reclassification adjustment for
       Gains realized in income                                        0                      0                      0
                                                       --------------------------------------------------------------------------
Other comprehensive income                             $           1,205        $          (410)        $          795             
                                                       ==========================================================================
</TABLE>


<TABLE>
<CAPTION>
                                  Disclosure of Related Tax Effects Allocated to Each
                                        COMPONENT OF OTHER COMPREHENSIVE INCOME
                                                    (in thousands)

<S>                                               <C>                     <C>                     <C>
                                                       Before-Tax Amount      Tax (Expense) or         Net-of-Tax Amount
      Three Months Ended September 30, 1997                                      Benefit
Unrealized gains on securities:
   Unrealized holding gains rising during          $                 370   $              (126)    $               244
       Period
   Less:  reclassification adjustment for
       Gains realized in income                                        0                      0                      0
                                                   --------------------------------------------------------------------------
Other comprehensive income                                           370                  (126)                    244
                                                   ==========================================================================

      NINE MONTHS ENDED SEPTEMBER 30, 1997
Unrealized gains on securities:
   Unrealized holding gains rising during          $                 320   $              (109)    $               211
       Period
   Less:  reclassification adjustment for
       Gains realized in income                                        0                      0                      0
                                                   --------------------------------------------------------------------------- 
Other comprehensive income                         $                 320                  (109)                    211
                                                   ===========================================================================
</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.

                                        Page 9
<PAGE>

     SFAS No. 131 requires that a public business enterprise report  a  measure
of  segment  profit  or  loss,  certain  specific revenue and expense items and
segment assets.  It requires a reconciliation  of total segment revenues, total
segment profit or loss, total segment assets, and  other  amounts disclosed for
segments to corresponding amounts in the enterprise's general purpose financial
statements.  SFAS No. 131 also requires a public business enterprise  to report
descriptive  information  about  the  way  that  the  operating  segments  were
determined,  the  products  and  services  provided  by the operating segments,
differences between the measurements used in reporting  segment information and
those used in the enterprise's general purpose financial statements and changes
in the measurement of segment amounts from period to period.

     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  a  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 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 network,
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>
   SEPTEMBER 30, 1998
   TOTAL INTEREST INCOME         $   20,322          $      95           $       0           $    (95)           $   20,322
   TOTAL NON-INTEREST INCOME          3,297              4,051                 106               (529)                6,925
   TOTAL INTEREST EXPENSE             9,598                  0                   0                (95)                9,503
   TOTAL NON-INTEREST EXPENSE         8,388              3,638                  76               (529)               11,573
   INCOME BEFORE INCOME TAX           5,410                508                  30                   0                5,948
   INCOME TAX EXPENSE                 1,621                178                  10                   0                1,809
   TOTAL ASSETS                     425,369              5,586              56,233            (59,166)              428,022
   CAPITAL EXPENDITURES                 202                113                   0                   0                  315
   DEPRECIATION AND                     750                257                  18                   0                1,025
   AMORTIZATION

     SEPTEMBER 30, 1997
   Total interest income   $         19,484    $            50 $                 0   $            (50)     $         19,484
   Total non-interest income          2,942              3,565                 105               (406)                6,206
   Total interest expense             8,604                  0                   0                (50)                8,554
   Total non-interest expense         8,573              3,122                  74               (406)               11,363
   Income before income tax           4,880                493                  31                   0                5,404
   Income tax expense                 1,505                178                  11                   0                1,694
   Total assets                     383,587              5,319              51,262            (53,560)              386,608
   Capital expenditures                 173                178                   0                   0                  351
   Depreciation and                     806                315                  18                   0                1,139
   amortization
</TABLE>
{(1)} Excludes dividend income received from subsidiaries.

                                        Page 10
<PAGE>

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

      The FASB has issued SFAS No. 133, "Accounting for Derivative  Instruments
and  Hedging  Activities."    SFAS No. 133 establishes accounting and reporting
standards for derivative instruments.  It requires that an entity recognize all
derivatives as either assets or  liabilities  in  the  statement  of  financial
position  and  measure  those  instruments  at  fair  value.  This statement is
effective for all periods beginning after June 15, 1999.  Bancshares will adopt
SFAS No. 133 during fiscal year 2000 and does not anticipate  any impact to its
financial statements.

COMMON SHARES

     During  the  third  quarter  of  1996,  the  Company's  Board of Directors
approved a stock repurchase program which authorizes the repurchase  of  common
shares to be used for the issuance of shares under the Company's employee stock
option  plan.   The  shares  will  be repurchased from time to time in the open
market or in private transactions.   At  September  30, 1998, 19,385 shares had
been repurchased.


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 nine month periods ended September  30,
1998 and 1997 and its consolidated financial condition at September 30, 1998 as
compared  to  December 31, 1997.  This discussion should be read in conjunction
with Bancshares'  unaudited  condensed  consolidated  financial  statements and
notes thereto.

     On  April  1,  1996, Bancshares completed the acquisition of First  Shelby
Financial Group, Inc. ("First Shelby") and the Shelby Bank.  As a result of the
merger, First Shelby  and  the  Shelby Bank became wholly owned subsidiaries of
Bancshares.  The acquisition was  accounted  for as a pooling of interests and,
accordingly, the financial condition and results  of  operations of Bancshares,
First Shelby and the Shelby Bank have been combined.  Effective  May  13, 1997,
First Shelby was dissolved, with the net assets transferred to Bancshares.

                                        Page 11
<PAGE>

RESULTS OF OPERATIONS

SUMMARY OF OPERATIONS

     Net  income  in  the third quarter of 1998 increased to $1,345,000, up  8%
from $1,241,000 earned  in  the same quarter of 1997.  Basic earnings per share
for the quarterly period increased  to  47 cents per share, up 9% from 43 cents
per share earned in the third quarter of  1997.   For  the  nine  months  ended
September  30,  1998,  net income was $4,139,000, up 12% compared to $3,710,000
for the first three quarters  of  1997.  Basic earnings per share for the nine-
month period ended September 30, 1998  were  $1.44, up 12% compared to $1.29 in
the same period in 1997.  Higher earnings in both periods were primarily due to
an increase in other income and a decrease in  provision for loan losses offset
by an increase in other expenses and taxes.

NET INTEREST INCOME

     For  the  nine  months  ended  September  30, 1998,  net  interest  income
decreased  $111,000  or 1% compared to 1997.  The  reduction  in  net  interest
income was mainly due to a decrease in interest income on loans and an increase
in interest  expense on deposits and borrowings offset by increases in interest
income on investments and Federal Funds sold.

ALLOWANCE AND PROVISION FOR LOAN LOSSES

     Asset quality, particularly in the loan area, continues to be an important
concern of Bancshares'  management.   Both the Decatur Bank and the Shelby Bank
maintain a separate loan review department  which  continuously reviews problem
and  significant  loans  and  the adequacy of the allowance  for  loan  losses.
Separate loan committees of the  board  of  directors  at  the Decatur Bank and
Shelby  Bank  meet  at  least  quarterly to review past due loans  and  problem
credits,  lending  policies  and practices  and  results  of  the  loan  review
department's analyses. The allowance  for  loan losses is maintained at a level
management believes to be adequate to provide  for  known  and  potential risks
inherent in the loan portfolios.

     The provision for loan losses during the third quarter of 1998  was 61,000
compared  to  $137,000 in 1997.  For the nine month period ended September  30,
1998, the provision  for loan losses were $223,000 compared to $369,000 for the
same period in 1997.   The  lower provisions for loan losses were primarily due
to the decrease in net charge-offs in the installment loan area.

OTHER INCOME

     Other income for the three  months  ended  September  30,  1998, increased
$312,000 or 15% compared to the same period in 1997.  On a year-to-date  basis,
other  income  increased  $719,000  or 12% compared to the nine-month period in
1997.  For the three month period, the  increase  is attributed to increases in
remittance processing fees and other income.  For the  nine  month  period, the
increase  is  attributed to increases in loan fee income, remittance processing
fees, trust fee income, and other income.

     For the three  and  nine  months  ended  September  30,  1998,  remittance
processing fees generated by FirsTech increased by $238,000 (23%) and  $462,000
(15%), respectively, compared
                                        Page 12
<PAGE>

to the same periods in 1997.  The increase in 1998 is the result of new clients 
and increased volume from existing clients.

     Loan fee income for the nine  period  ended  September 30, 1998, increased
$132,000 or 40% compared to the nine month period in  1997.    This increase is
mainly  attributed to an increase in mortgage servicing rights fees  associated
with FASB  No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishment of Liabilities."  As a result of lower interest rates during
1998, more loans  were  sold  in  the  secondary market to the Federal National
Mortgage Association.

     Trust fee income increased $116,000  (10%) for the nine month period ended
September 30,1998 compared to the nine month  period in 1997.  This increase is
attributed to an anticipated increase in farm income and market fees over prior
year.

     Other Income increased $36,000 or 14% for the three months ended September
30,  1998, compared to the same period in 1997.   For  the  nine  months  ended
September  30,  1998  other income increased $59,000 (8%) compared to September
30, 1997.  The increase  in  both  periods is mainly attributed to increases in
brokerage commissions and ATM fees for the third quarter compared to 1997.


OTHER EXPENSES

     Other  expenses  increased from $3,729,000  for  the  three  months  ended
September 30, 1997, to  $4,034,000  for  the  three  months ended September 30,
1998.   This  represents a $305,000 (8%) increase. For the  nine  months  ended
September 30, 1998,  other  expenses  increased  $210,000 or 2% compared to the
same period in 1997. This increase in both periods  was attributed to increases
in salaries and employee benefits and service charges  from corresponding banks
offset by a reduction in equipment expense.

     Salaries  and  employee  benefits increased $166,000 (9%)  for  the  three
months ended September 30, 1998.  For the first nine months of 1998 compared to
the  first  nine  months of 1997,  salaries  and  employee  benefits  increased
$304,000 or 5%.  This  increase  is  mainly  due  to  an  increase  in staff at
FirsTech  as  a  result  of  new  clients  and increased processing volume from
existing clients.

     For the nine months ended September 30, 1998, equipment expenses decreased
$194,000 or 12% compared to the same period  in  1997.   The decrease is mainly
attributed to a decrease in depreciation on equipment as well  as a decrease in
FirsTech  machine maintenance.  During April 1997, FirsTech signed  a  two-year
maintenance  agreement that locked in prices at a rate lower than that paid for
the first quarter of 1997.

     For the three  months  ended September 30, 1998, service charges increased
$53,000 or 42% compared to the  same period in 1997.  Service charges increased
$143,000 or 37% for the first nine  months  of  1998 compared to the first nine
months of 1997.  The increase in both periods is  attributed  to  an  increased
volume of checks processed by FirsTech in the retail lockbox business.

                                        Page 13
<PAGE>

INCOME TAXES

     Income  tax expense increased $115,000 or 7% for the first nine months  of
1998, compared to the first nine months of 1997.  Higher income tax expense was
principally due to the increase in pre-tax earnings.  Bancshares' effective tax
rate (income tax  expense  divided  by  income  before  taxes) was 30% and 31%,
respectively, as of September 30, 1998 and 1997.

FINANCIAL CONDITION

     Bancshares'  total assets increased $35,785,000 or 9%  from  December  31,
1997 to September 30,  1998.  This increase was primarily due to an increase in
securities and net loans.

CASH AND CASH EQUIVALENTS

     Cash and cash equivalents  decreased  $2,570,000 from December 31, 1997 to
September 30, 1998.  This change occurred due  to  a  increase  in cash and due
from  banks  of  $9,790,000  offset  by  a  decrease  in federal funds sold  of
$12,360,000.  See the consolidated statement of cash flows  for the nine months
ended September 30, 1998, in the interim financial statements  for  the details
representing the decrease in cash and cash equivalents.  Federal funds sold are
of a short-term nature and provide the needed liquidity to fund loan growth.

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 carrying
value of investment securities increased by  $24,166,000 from December 31, 1997
to  September  30,1998.   During  the  first nine months  of  1998,  Bancshares
purchased  $67,965,000 ($66,417,000 classified  as  available-for-sale),  sold
$473,000 of  securities  classified  as available-for-sale, and had $44,644,000
($38,289,000  classified  as  available-for-sale)   mature.   The  increase  in
investments was primarily due to an increase in total  deposits  and borrowings
from the Federal Home Loan Bank ("FHLB").

LOANS

     Total  loans increased by $12,185,000 from December 31, 1997 to  September
30, 1998 due  mainly  to an increase in commercial and real estate loans offset
by a decrease in consumer loans.  Commercial loans increased by $16,284,000 due
to increases in construction  and  land  development and a long term commercial
real  estate  loan,  while  real estate increased  $1,117,000.   Consumer  loans
decreased  by  $4,917,000 as the  result  of  reallocation  of  resources  from
consumer loans to commercial loans to meet loan demand.

DEPOSITS

      Total deposits  increased $14,962,000 from December 31, 1997 to September
30, 1998.  This increase is attributed to a $2,000,000 deposit by a local school
district and an increase in the pinnacle money market accounts of  $4,000,000.
The remaining increase is related  to  increases in certificates of deposit and
demand deposit accounts.

                                          Page 14
<PAGE>

FHLB ADVANCES & U.S. TREASURY DEMAND NOTES

     FHLB advances and U.S. Treasury demand  notes  increased  $14,963,000 from
December  31,  1997  to  September  30,  1998.  This increase was offset  by  a
decrease of $1,932,000 in U.S. Treasury demand notes.  Two $5,000,000 long-term
borrowings  were  made during the first quarter  of  1998  and  one  $5,000,000
borrowing was made  during  the second quarter of 1998, all with the FHLB.  Two
borrowings were used to purchase  higher  yielding  securities  with  the  same
maturities  as  the borrowings.  The other borrowing is being used to fund loan
growth with matching maturities.

STOCKHOLDERS' EQUITY

     Total stockholders' equity rose $3,935,000 or 8% from December 31, 1997 to
September 30, 1998.   The  increase  is  mainly  attributed  to  net  income of
$4,139,000 and an after-tax unrealized gain of $795,000 on securities less cash
dividends of $1,125,000.

     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  June  30, 1998, Bancshares' consolidated
Tier  1  and  total  risk-based  capital  ratios  were   23.46%   and   24.71%,
respectively.  Bancshares' leverage ratio at June 30, 1998, was 12.9%.

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, date-sensitive systems may not operate properly 
unless the underlying programs are modified or replaced.  Bancshares's lending 
and deposit activities depend significantly upon computer systems to process 
and record transactions, as well as, accrue interest.  Bancshares is aware of 
the Year 2000 problem and has appointed a Year 2000 Project Committee to oversee
the successful completion of the project.  The Committee began identifying Year
2000 related problems in 1997.

Based on FFIEC and OCC bulletins, mission-critical systems and applications 
were identified and priorities were assigned to all software, hardware, and 
interfaces. Identified as mission-critical were: core banking software licensed 
from Information Technology, Inc, Northern Trust Co, and the interface with the 
Federal Reserve Bank of Chicago.  Testing of these mission-critical systems 
has begun and will be substantially completed by December 31, 1998, with final 
testing to be completed no later than March 31, 1999.  Initial testing results
have been positive and testing will expand to include other important systems.
A budget of $10,000 was established for 1998 Y2K-related expenses.  As testing
continues into 1999 and beyond, the Committee will periodically review the
budget and forward their recommendations to the Board of Directors.  The Board
is monitoring the progress in addressing Year 2000 issues and the Committee
provides information to the Board in the form of progress reports.

Through a risk assessment of large corporate depositors and borrowers by the 
Bancshares's Officer Calling Group, management does not expect any significant 
impact on it's net earnings or cash flow due to any anticipated Year 2000 
related business failures.  Although Bancshares 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. 

                                        Page 15
<PAGE>

Bancshares is developing a contingency plan which will incorporate aspects of 
it's Disaster Recovery Plan with Year 2000 related issues. This plan provides 
for dealing effectively with problems that might occur that are related to 
operations, and those which are beyond the scope of Bancshares's control, such 
as failure of the local power supply and telecommnication disruption. The plan 
will include methods to continue to service the customers despite the possible 
occurrence of Year 2000 problems.  Bancshare will complete the final draft on 
this plan by March 31, 1999.


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 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 $160.5  million  or  42.27%  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 

                                        Page 16
<PAGE>

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 1998 or during 1997.

     The following table summarizes,  as of September 30, 1998, 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.

                                        Page 17
<PAGE>

TABLE 14   GAP TABLE

<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                     $  21,442    $  14,755    $  23,205    $  24,660    $  33,246   $  24,619    $141,927    $149,023
   Average interest rate              8.65%        8.61%        8.70%        8.88%        8.46%       7.45%       8.43%
   Variable rate                     47,409        4,096        4,643        4,323        7,106       2,828      70,405      73,925
    Average interest rate             8.64%        7.56%        7.80%        7.71%        7.55%       6.95%       8.35%
Securities (2)
   Fixed rate                        30,291       19,638       27,864       11,761       14,704      55,086     159,344     159,948
   Average interest rate              5.74%        5.97%        5.91%        6.70%        6.03%       6.13%       6.14%
   Variable rate                                      48          500          225                    2,407       3,180       3,208
    Average interest rate                          5.36%        6.33%        5.09%                    6.88%       5.82%
Federal funds sold                    4,785                                                                       4,785       4,785
    Average interest rate             5.54%                                                                       5.54%
                                  -------------------------------------------------------------------------------------------------
     Total interest-earning         103,927       38,537       56,212       40,969       55,056      84,940     379,641     390,889
assets                            --------------------------------------------------------------------------------------------------
        
NOW and savings accounts              5,112        5,112        5,112        5,112        5,112      76,684     102,244     102,244
    Average interest rate             2.08%        2.08%        2.08%        2.08%        2.08%       2.08%       2.08%
Money market accounts                32,189                                                                      32,189      32,189
    Average interest rate             3.84%                                                                       3.84%
Time deposits
   Fixed rate                       116,054       22,742        2,832          624          824          25     143,101     146,435
    Average interest rate             5.42%        5.83%        5.77%        5.94%        6.27%       5.50%       5.49%
   Variable rate                      1,014          492                                                          1,506       1,541
    Average interest rate             4.77%        5.40%                                                          5.09%
Federal funds purchased and
securities sold under
repurchase agreements                11,647                                                                      11,647      11,647
    Average interest rate             5.07%                                                                       5.07%
FHLB advances                            56           56           60           65           69      17,611      17,917      17,938
    Average interest rate             5.49%        5.49%        5.49%        5.49%        5.49%       5.49%       5.49%
U.S. Treasury demand notes            1,219                                                                       1,219       1,219
    Average interest rate             5.67%                                                                       5.67%
                                  -------------------------------------------------------------------------------------------------
     Total interest-bearing
     liabilities                    167,291       28,402        8,004        5,801        6,005      94,320     309,823     313,213
                                  -------------------------------------------------------------------------------------------------
Interest-earning assets less
 interest-bearing liabilities    
 ("Gap")                          $(63,364)   $   10,135    $  48,208    $  35,168   $   49,051    $(9,380)   $  69,818   $  77,676
                                  =================================================================================================
Cumulative gap                    $(63,364)   $  (53,229)   $  (5,021)   $  30,147   $   79,198    $69,818    $  69,818   $  77,676
                                  =================================================================================================
Cumulative Gap as a percentage
of total  interest earning assets  (16.69%)      (14.02%)      (1.32%)       7.94%       20.86%     18.39%       18.39%      19.87%
assets                            =================================================================================================
</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 September 30, 1998, 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 $633,364 in one year
and $532,290 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

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<PAGE>

maturity,  cash  flow estimates or repricing opportunity. It fails to  reflect 
the differences in the timing 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 which 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

     Not Applicable


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

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<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.


November 13, 1998           By:  /s/ John W. Luttell

                                      John W. Luttrell
                                      President and Chief Executive Officer



November 13, 1998           By:  /s/ Craig A. Wells

                                      Craig A. Wells
                                      Principal Financial Officer


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