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 March 31, 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


2,766,490  shares of the  Registrant's  common stock,  par value $.01 per share,
were outstanding at March 31, 1999.


<PAGE>

                         FIRST DECATUR BANCSHARES, INC.
                 FORM 10-Q FOR THREE MONTHS ENDED MARCH 31, 1999
                                      INDEX
<TABLE>
<CAPTION>
                                                                                               Page
<S>     <C>               <C>   
PART I - FINANCIAL INFORMATION                                                                   3

         Item 1.           Condensed Consolidated Financial Statements                           3
         Item 2.           Management's Discussion and Analysis of Financial
                           Condition and Results of Operations                                  11
         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                                                    19
         Item 6.           Exhibits and Reports on Form 8-K                                     19


SIGNATURES                                                                                      19

EXHIBIT 11.                Computation of Earnings per Share                                    20
</TABLE>
                                      (2)
<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                         FIRST DECATUR BANCSHARES, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                     March 31,          December 31,
                                                                                       1999                 1998
                                                                            -------------------- --------------------
                                                                                    (Unaudited)
<S>                                                                                <C>                 <C>   
Assets
     Cash and due from banks                                                       $     34,587         $     30,114
     Federal funds sold                                                                  13,650               13,255
                                                                            -------------------- --------------------
          Cash and cash equivalents                                                      48,237               43,369

     Securities available for sale                                                      133,193              137,689
     Securities held to maturity                                                         24,303               25,567
     Loans, net                                                                         216,771              214,812
     Premises and equipment                                                               9,034                9,082
     Other assets                                                                        11,758               11,173
                                                                            ==================== ====================
               Total assets                                                        $    443,296         $    441,692
                                                                            ==================== ====================

Liabilities
     Deposits
        Noninterest bearing                                                        $     64,273         $     65,894
        Interest bearing                                                                291,026              289,874
                                                                            -------------------- --------------------
          Total Deposits                                                                355,299              355,768

     Short-term borrowings                                                               10,967               10,278
     Federal Home Loan Bank advances                                                     17,891               17,904
     Other liabilities                                                                    5,252                4,374
                                                                            -------------------- --------------------
               Total liabilities                                                        389,409              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 142,907 shares and 140,455
        shares were held as treasury stock                                                   29                   29
     Additional paid-in capital                                                           7,929                7,874
     Paid-in-capital - phantom stock                                                        233                  220
     Retained earnings                                                                   49,786               48,618
     Accumulated other comprehensive income                                                  31                  622
                                                                            -------------------- --------------------
                                                                                         58,008               57,363
     Treasury stock, at cost                                                            (4,121)              (3,994)
                                                                            -------------------- --------------------
               Total stockholders' equity                                                53,887               53,368
                                                                            -------------------- --------------------
                    Total liabilities and stockholders' equity                     $    443,296         $    441,692
                                                                            ==================== ====================
</TABLE>
                                      (3)

<PAGE>

                         FIRST DECATUR BANCSHARES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                      (in thousands except per share data)
<TABLE>
<CAPTION>

                                                                  Three Months Ended
                                                            March 31, 1999         March 31, 1998
                                                              (Unaudited)            (Unaudited)
                                                     ---------------------- ----------------------
<S>                                                         <C>                    <C>       
Interest Income
     Interest on loans                                          $    4,451             $    4,216
     Interest on investments                                         2,313                  2,154
     Interest on federal funds sold                                    127                    217
     Other interest income                                              14                     10
                                                     ---------------------- ----------------------
          Total interest income                                      6,905                  6,597
                                                     ---------------------- ----------------------
Interest Expense
     Interest on deposits                                            2,855                  2,778
     Interest on borrowings                                            339                    214
                                                     ---------------------- ----------------------
          Total interest expense                                     3,194                  2,992
                                                     ---------------------- ----------------------
Net Interest Income                                                  3,711                  3,605
     Provision for loan losses                                          61                     81
                                                     ---------------------- ----------------------
Net Interest Income After Provision for Loan Losses                  3,650                  3,524
                                                     ---------------------- ----------------------

Other Income
     Fiduciary activities                                              467                    399
     Loan servicing fees                                                30                     18
     Remittance processing fees                                      2,041                  1,193
     Service charges on deposit accounts                               222                    249
     Security transactions, net                                         11                     20
     Net gains on loan sales                                           102                    131
     Other                                                             296                    256
                                                     ---------------------- ----------------------
          Total other income                                         3,169                  2,266
                                                     ---------------------- ----------------------
Other Expenses
     Salaries and employee benefits                                  2,728                  2,065
     Net occupancy                                                     276                    269
     Equipment expenses                                                538                    474
     Data processing fees                                               57                     37
     Supplies                                                          108                    109
     Service charges from corresponding banks                          272                    168
     Other operating expenses                                          642                    595
                                                     ---------------------- ----------------------
          Total other expenses                                       4,621                  3,717
                                                     ---------------------- ----------------------
Income Before Income Tax                                             2,198                  2,073
     Income tax expense                                                671                    633
                                                     ---------------------- ----------------------
          Net Income                                            $    1,527             $    1,440
                                                     ====================== ======================

Dividends Per Share                                             $     0.13             $     0.13
Basic Earnings Per Share                                        $     0.55             $     0.50
Average Shares Outstanding                                       2,762,967              2,880,833
Diluted Earnings Per Share                                      $     0.55             $     0.50
Average Shares Outstanding                                       2,779,555              2,893,214
</TABLE>
                                      (4)

<PAGE>


                         FIRST DECATUR BANCSHARES, INC.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (in thousands)
<TABLE>
<CAPTION>

                                                         Three Months Ended              Three Months Ended
                                                           March 31, 1999                  March 31, 1998
                                                             (Unaudited)                    (Unaudited)
                                                     ----------------------------    ---------------------------
<S>                                                     <C>             <C>             <C>            <C>
Net Income                                                              $  1,527                       $  1,440

Other comprehensive income, net of tax 
    Unrealized gains on securities:
          Unrealized holding losses arising
          during the period                              $  (584)                        $  (167)
          Less:  Reclassification adjustment for
          gains included in net income                          7                              13
                                                     -------------                   -------------
Other comprehensive income                                                 (591)                          (180)
                                                                   --------------                  -------------
Comprehensive income                                                     $   936                       $  1,260
                                                                   ==============                  =============
</TABLE>
                                      (5)
<PAGE>

                         FIRST DECATUR BANCSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                                      Three Months Ended
                                                                                 March 31,          March 31,
                                                                                    1999                1998
                                                                                   (Unaudited)        (Unaudited)
                                                                             ------------------ -------------------
<S>                                                                                 <C>                <C>       
Cash flows from operating activities:
     Net cash provided by operating activities                                       $   2,685          $    1,889
                                                                             ------------------ -------------------
Cash flows from investing activities:
     Purchases of securities available for sale                                       (20,685)            (26,230)
     Proceeds from maturities of securities available for sale                          21,163              11,872
     Proceeds from sales of securities available for sale                                3,000
     Purchases of securities held to maturity                                                                (260)
     Proceeds from maturities of securities held to maturity                             1,248               2,193
     Net change in loans                                                               (2,020)                 725
     Purchases of premises and equipment                                                 (299)               (200)
                                                                             ------------------ -------------------
          Net cash provided (used) by investing activities                               2,407            (11,900)
                                                                             ------------------ -------------------
Cash flows from financing activities:
     Net change in
          Noninterest-bearing, interest-bearing demand and savings deposits            (3,023)              11,293
          Certificates of deposit                                                        2,554             (8,010)
          Federal funds purchased and securities sold under repurchase        
               Agreements                                                                (185)               1,341
          Federal Home Loan Bank loans                                                    (14)               9,987
          U.S. Treasury demand notes                                                       875               (601)
     Cash dividends                                                                      (359)               (375)
     Net cash from sale (purchase) of treasury stock                                      (72)                 172
                                                                             ------------------ -------------------
          Net cash provided (used) by financing activities                               (224)              13,806
                                                                             ------------------ -------------------

Net increase in cash and cash equivalents                                                4,868               3,795
Cash and cash equivalents, beginning of period                                          43,369              40,025
                                                                             ================== ===================
Cash and cash equivalents, end of period                                             $  42,237          $   43,820
                                                                             ================== ===================


Supplemental  disclosures of cash flow information:  
Cash paid during the period for:
          Interest                                                                   $   2,963          $   2,948
          Income taxes                                                               $       0          $       0
</TABLE>
                                      (6)
<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.
Both footnote disclosures are presented below.

                                      (7)
<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
                   March 31, 1999                             Amount         or Benefit          Amount
------------------------------------------------------ ----------------- ---------------- -----------------
<S>                                                         <C>              <C>               <C>      
Unrealized losses on securities:
   Unrealized holding losses rising during

       period                                                 $   (884)         $    300         $   (584)
   Less:  reclassification adjustment for                                 
       gains realized in income                                      11              (4)                 7
                                                       ----------------- ---------------- -----------------
Other comprehensive income                                    $   (895)         $    304         $   (591)
                                                       ================= ================ =================

                   March 31, 1998
------------------------------------------------------
Unrealized losses on securities:
   Unrealized holding losses rising during
       period                                                 $   (253)          $    86         $   (167)
   Less:  reclassification adjustment for
       gains realized in income                                      20              (7)                13
                                                       ----------------- ---------------- -----------------
Other comprehensive income                                    $   (273)          $    93         $   (180)
                                                       ================= ================ =================
</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  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:

                                      (8)
<PAGE>

<TABLE>
<CAPTION>

                                         Banking         Remittance
                                        Services          Services        Company (1)      Eliminations         Total
----------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>              <C>                 <C>            <C>               <C>
March 31, 1999
   Total interest income             $         6,905  $           21      $              $          (21)   $         6,905
   Total non-interest income                   1,112           2,168                35             (146)             3,169
   Total interest expense                      3,215                                                (21)             3,194
   Total non-interest expense                  2,776           1,965                26             (146)             4,621
   Income before income tax                    1,966             223                 9                               2,198
   Income tax expense                            592              76                 3                                 671
   Total assets                              440,166           5,770            53,889          (56,529)           443,296
   Capital expenditures
   Depreciation and amortization                 255              92                 6                                 353


March 31, 1998
   Total interest income             $         6,597  $           17      $              $          (17)   $         6,597
   Total non-interest income                   1,066           1,273                35             (108)             2,266
   Total interest expense                      3,009                                                (17)             2,992
   Total non-interest expense                  2,715           1,086                24             (108)             3,717
   Income before income tax                    1,857             204                12                               2,073
   Income tax expense                            558              71                 4                                 633
   Total assets                              405,234           5,408            53,380          (56,037)           407,985
   Capital expenditures
   Depreciation and amortization                 241              86                 6                                 333

(1) Excludes dividend income received from subsidiaries.
</TABLE>

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 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 

                                      (9)
<PAGE>

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 will
have 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
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  will not have a material  impact on the Company's  financial
condition and results of operations.

                                      (10)
<PAGE>

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 March 31, 1999,  Bancshares is holding 142,907 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-month  periods ended March 31, 1999 and 1998
and its  consolidated  financial  condition  at March 31,  1999 as  compared  to
December  31,  1998.  This  discussion  should be read in  conjunction  with the
Company's  unaudited  condensed  consolidated  financial  statements  and  notes
thereto.

Results of Operations

Summary of Operations

         Net income in the first quarter of 1999 increased to $1,527,000,  up 6%
from $1,440,000  earned in the same quarter of 1998.  Earnings per share for the
quarterly period increased to 55 cents per share, up 10% from 50 cents per share
earned in the first  quarter of 1998.  Higher  earnings  were  primarily  due to
increases in net interest  income,  fiduciary  income and remittance  processing
fees.  These  increases to net earnings were offset by an increase in salary and
employee benefits, equipment expenses and correspondent bank charges.

Net Interest Income

         First  quarter  net  interest  income was  $3,711,000,  an  increase of
$106,000  or 3% compared  with the first  quarter of 1998.  The  increase in net
interest income for the three-month  period was mainly due to an increase in the
average balance of loans and securities offset by a decrease in the average rate
paid on loans and the volume of federal  funds sold.  For the three months ended
March 31, 1999,  average  loans  increased  $20,241,000  and average  securities
increased  $14,198,000,  while average  Federal funds sold decreased  $5,169,000
compared to the same period in 1998.

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 

                                      (11)
<PAGE>

of the  adequacy  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
first quarter of 1999 was $61,000 compared to $81,000 in 1998.

Other Income

         Other income increased from $2,266,000 for the three months ended March
31,  1998,  to  $3,169,000  for the three  months  ended  March 31,  1999.  This
represents  an increase of $903,000  (40%).  This  increase is  attributed to an
increase in trust fees, remittance processing income, and other income.

         Trust fees  increased  $68,000 or 17% during the first  quarter of 1999
compared to the first quarter of 1998. This increase 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.

         Remittance  processing  and  collecting  income  generated  by FirsTech
increased  by $848,000 or 71% during the first  quarter of 1999  compared to the
first quarter of 1998. The increase in 1999 is primarily the result of increased
volumes of existing  customers as well as the  addition of new  customers in the
retail lockbox business.

         Other income increased  $40,000 or 16% during the first quarter of 1999
compared to the first quarter of 1998. 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.

                                      (12)
<PAGE>

Other Expenses

         Other  expenses  increased  from  $3,717,000 for the three months ended
March 31, 1998,  to $4,621,000  for the three months ended March 31, 1999.  This
represents a $904,000 (24%)  increase.  The increase was attributed to increases
in salaries and employee  benefits,  equipment  expenses,  service  charges from
corresponding banks, and other expenses.

         Salaries and employee benefits  increased $663,000 or 32% for the first
quarter of 1999 compared to the first  quarter of 1998.  This increase is mainly
due to an increased 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  $64,000 or 14% for the first quarter of
1999 compared to the first quarter of 1998.  This increase is mainly  attributed
to an increase in  depreciation  on  equipment at the Decatur Bank as well as an
increase in FirsTech computer maintenance.

         Service charges increased $104,000 or 62% for the first quarter of 1999
compared  to the first  quarter  of 1998.  This  increase  is  attributed  to an
increased volume of checks processed by FirsTech in the retail lockbox business.

Other expenses increased $47,000 or 8% for the first quarter of 1999 compared to
the first  quarter of 1998.  This  increase is mainly  attributed  to  increased
postage and overnight courier fees at FirsTech.

Income Taxes

         Income tax  expense  increased  $38,000 or 6% for the first  quarter of
1999  compared to the first  quarter of 1998.  Higher income tax expense in 1999
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 March
31, 1999 and 1998.

Financial Condition

         Bancshares' assets increased  $1,603,000 or 0.4% from December 31, 1998
to March 31, 1999. This increase was primarily due to increases in cash and cash
equivalents and loans offset by a decrease in securities.

Cash and Cash Equivalents

         Cash and cash equivalents  increased  $4,868,000 from December 31, 1998
to March 31, 1999.  This change occurred due to an increase in cash and due from
banks and an increase in federal funds sold.  Cash and due from banks  increased
$4,473,000  and federal  funds sold  increased  $395,000.  See the  consolidated
statement  of cash  flows for the three  months  ended  March 31,  1999,  in the
interim financial  statements for the details  representing the increase in cash
equivalents.  Federal  funds sold are of a  short-term  nature and  provide  the
needed liquidity to fund loan growth and security acquisitions.

                                      (13)
<PAGE>

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 $5,760,000 from December 31, 1998 to March
31,1999. During the first three months of 1999, Bancshares purchased $20,685,000
classified    as    available-for-sale,    sold    $3,000,000    classified   as
available-for-sale, and had proceeds from maturities of $22,411,000 ($21,163,000
classified as available-for-sale).

Loans

         Net loans  increased  $1,959,000  from  December  31, 1998 to March 31,
1999.  The  increase was  primarily  due to an increase in  commercial  and real
estate  loans offset by a decrease in loans to  individuals  for  household  and
other personal  expenditures.  Commercial loans increased by $2,967,000 and real
estate loans increased $313,000 while loans to individuals and for household and
other personal expenditures decreased $1,321,000.

Other Liabilities

         Other liabilities increase $878,000 from December 31, 1998 to March 31,
1999.  The  increase  is  primarily  due to an  increase  of $335,000 in accrued
interest payable and $436,000 in taxes payable at the banking level.

Stockholders' Equity

         Total stockholders' equity rose $519,000 or 1.0% from December 31, 1998
to March 31, 1999. The increase is mainly attributed to net income of $1,527,000
less cash  dividends  of $359,000  and a  reduction  in the  unrealized  gain on
securities available-for-sale of $591,000, net of deferred taxes.

         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 December 31, 1998, Bancshares'  consolidated
Tier 1 and total risk-based  capital ratios were 22.5% and 23.8%,  respectively.
Bancshares' leverage ratio at December 31, 1998 was 12.4%.

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 

                                      (14)
<PAGE>

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.

         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 is 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 is developing 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 will include  methods to
deal with these situations and continue to service  customers  despite Year 2000
problems  arising.  The contingency plan has been sent to the Company's Board of
Directors for approval.


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  

                                      (15)
<PAGE>

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 $174.0 million or 44.4% 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  quarter of 1999 or during
1998.

         The following table  summarizes,  as of March 31, 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 

                                      (16)
<PAGE>

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.

<TABLE>
<CAPTION>

TABLE 14 Gap Table

                                                                                               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                       $ 19,729    $16,540     $ 20,113    $ 22,599   $ 42,402   $ 33,647   $ 155,030  $ 161,497
   Average interest rate               8.39%      8.32%        8.82%       8.68%      8.08%      7.41%       8.19%
   Variable rate                      45,039      3,202        5,436       3,143      6,983      1,573      65,376     68,107
    Average interest rate              8.26%      7.65%        7.71%       7.54%      7.42%      6.70%       7.62%
Securities (2)
   Fixed rate                         16,402     18,647       16,285      12,406     20,289     70,567     154,596    155,063
   Average interest rate               6.66%      5.72%        5.94%       6.21%      5.94%      6.51%       6.29%
   Variable rate                         425                                 689                 1,786       2,900      2,921
    Average interest rate              5.70%                               5.82%                 6.80r       6.67%
Federal funds sold                    13,650                                                                13,650     13,650
    Average interest rate              4.69%                                                                 4.69%
                                   ---------- ---------- ------------ ----------- ---------- ---------- ----------- ----------
  Total interest-earning assets       95,245     38,389       41,834      38,837     69,674    107,573     391,552    401,238
                                   ---------- ---------- ------------ ----------- ---------- ---------- ----------- ----------

NOW and savings accounts               5,295      5,295        5,295       5,295      5,295     79,426     105,901    105,901
    Average interest rate              2.49%      2.49%        2.49%       2.49%      2.49%      2.49%       2.49%
Money market accounts                 37,442                                                                37,442     37,442
    Average interest rate              3.64%                                                                 3.64%
Time deposits
   Fixed rate                        113,970     25,390        5,539       1,160        218                146,277    147,243
    Average interest rate              5.05%      5.49%        5.19%       6.45%      5.29%                  5.14%
   Variable rate                         936        470                                                      1,406      1,415
    Average interest rate              4.29%      4.75%                                                      4.44%
Federal funds purchased and                                                                                          
securities sold under 
repurchase agreements                  9,201                                                                 9,201      9,201
    Average interest rate              5.07%                                                                 5.07%
FHLB advances                             54         58           62          66         72     17,579      17,891     18,077
    Average interest rate              6.84%      6.84%        6.84%       6.84%      6.84%      5.49%       5.49%
U.S. Treasury demand notes             1,766                                                                 1,766      1,766
    Average interest rate              5.52%                                                                 5.52%
                                   ---------- ---------- ------------ ----------- ---------- ---------- ----------- ----------
  Total interest-bearing liabilities 168,664     31,213       10,896       6,521      5,585     97,005     319,884    321,045
                                   ---------- ---------- ------------ ----------- ---------- ---------- ----------- ----------
Interest-earning assets less                                                                                         
 interest-bearing liabilities      
("Gap")                            $(73,419)    $ 7,176     $ 30,938    $ 32,316   $ 64,089   $ 10,568    $ 71,668   $ 80,193
                                   ========== ========== ============ =========== ========== ========== =========== ==========
Cumulative gap                     $(73,419)  $(66,243)    $(35,305)   $ (2,989)   $ 61,100   $ 71,668    $ 71,668   $ 80,193
                                   ========== ========== ============ =========== ========== ========== =========== ==========
Cumulative  Gap  as a  percentage                                                                              
of total interest earning assets    (18.75%)   (16.92%)      (9.02%)     (0.76%)     15.60%     18.30%      18.30%     20.48%
                                   ========== ========== ============ =========== ========== ========== =========== ==========

(1) Includes consumer loans net of unearned income, and excludes  nonaccrual and impaired loans. 
(2) Reflects fair value adjustments for securities available for sale.
</TABLE>

         At March 31,  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  $734,000 in one year
and $662,000 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.

                                      (17)
<PAGE>

         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 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

         First Decatur Bancshares, Inc. held its annual Shareholder meeting on 
March 9, 1999.

         The primary  purpose of the  shareholder  meeting was to establish  the
number of Directors to be elected at twelve and elect a Board of Directors for a
one-year  term.  There  were  2,072,969  total  shares  voted  out of  2,768,942
outstanding  (75%).  All shares voted in favor of the Directors  and terms.  The
following  changes were made to the Board of Directors  remained during the 1999
meeting:

-        Tom R. Dickes retired as Chairman of the Board of Directors
-        John Luttrell retired as President & CEO of First Decatur Bancshares 
         to become Chairman of the Board of Directors
-        Philip C. Wise became new  President & CEO of First Decatur Bancshares
         and replaces Tom R. Dickes as member of the Board of Directors.

                                      (18)
<PAGE>

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


                                   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.


April 30, 1999               By: /s/ Philip C. Wise  
                                 Philip C. Wise
                                 President and Chief Executive Officer



April 30, 1999               By: /s/ Craig A. Wells  
                                 Craig A. Wells
                                 Vice President and Chief Financial Officer


                                      (19)