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, 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


2,886,907 shares of the Registrant's common stock, par value $.01 per share,
were outstanding at March 31, 1998.
<PAGE>

                        FIRST DECATUR BANCSHARES, INC.
                FORM 10-Q FOR THREE MONTHS ENDED MARCH 31, 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                   10
      Item 3.     Quantitative and Qualitative Disclosures About 
                  Market Risk                                           14


PART II - OTHER INFORMATION                                             17

      Item 1.     Legal Proceedings                                     17
      Item 2.     Changes in Securities                                 17
      Item 3.     Defaults upon Senior Securities                       17
      Item 4.     Submission of Matters to a Vote of Security Holders   17
      Item 5.     Other Information                                     17
      Item 6.     Exhibits and Reports on Form 8-K                      18


SIGNATURES                                                              18
<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,
                                                                   1998                 1997
                                                                (Unaudited)
                                                                -----------          ------------
<S>                                                             <C>                  <C>        
Assets
     Cash and due from banks                                     $  27,460           $  22,880
     Federal funds sold                                             16,360              17,145
                                                                -----------          ------------
          Cash and cash equivalents                                 43,820              40,025

     Securities available for sale                                 120,488             106,600
     Securities held to maturity                                    30,097              31,759
     Loans, net                                                    195,716             196,522
     Premises and equipment                                          9,144               9,271
     Other assets                                                    8,719               8,060
                                                                -----------          ------------
               Total assets                                      $ 407,985           $ 392,237
                                                                ===========          ============
Liabilities
     Deposits
        Noninterest bearing                                      $  58,875           $  53,436
        Interest bearing                                           265,536             267,692
                                                                -----------          ------------
          Total Deposits                                           324,411             321,128
     Federal funds purchases and securities sold under
        repurchase agreements                                        9,789               8,448
     Federal Home Loan Bank advances                                12,941               2,954
     U.S. Treasury demand notes                                      2,550               3,151
     Other liabilities                                               4,926               4,257
                                                                -----------          ------------
               Total liabilities                                   354,617             339,938
                                                                -----------          ------------
Stockholders' Equity
     Preferred stock, no par value.  Authorized 200,000
       shares, none issued or outstanding
     Common stock, $.01 par value.  Authorized 5,000,000
       shares; Issued 2,909,397 shares of which 22,490 shares 
        and 30,910 shares were held as treasury stock                   29                  29
     Capital surplus                                                 7,874               7,858
     Paid-in-capital - phantom stock                                   179                 167
     Retained earnings                                              45,571              44,506
     Net unrealized gain on securities available for sale              200                 380
                                                                -----------          ------------
                                                                    53,853              52,940
     Treasury stock, at cost                                          (485)               (641)
                                                                ------------         ------------
               Total stockholders' equity                           53,368              52,299
                                                                ------------         ------------
                    Total liabilities and stockholders' equity   $ 407,985           $ 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
                                                             March 31, 1998             March 31, 1997
                                                              (Unaudited)                (Unaudited)
<S>                                                          <C>                        <C>
Interest Income
     Interest on loans                                       $      4,207               $      4,419
     Interest on investments                                        2,154                      2,014
     Interest on federal funds sold                                   217                         70
     Other interest income                                             10                         14
                                                             ------------               ------------
          Total interest income                                     6,588                      6,517
                                                             ------------               ------------
Interest Expense
     Interest on deposits                                           2,778                      2,648
     Interest on borrowings                                           214                        158
                                                             ------------               ------------
          Total interest expense                                    2,992                      2,806
                                                             ------------               ------------
Net Interest Income                                                 3,596                      3,710
     Provision for loan losses                                         81                         96
                                                             ------------               ------------
Net Interest Income After Provision for
    Loan Losses                                                     3,515                      3,614
                                                             ------------               ------------
Other Income
     Trust fees                                                       399                        369
     Loan fee income                                                  183                         78
     Remittance processing fees                                     1,193                      1,117
     Service charges on deposit accounts                              249                        256
     Security transactions, net                                        20                         15
     Other                                                            256                        298
                                                             ------------               ------------
          Total other income                                        2,300                      2,133
                                                             ------------               ------------
Other Expenses
     Salaries and employee benefits                                 2,065                      1,961
     Net occupancy                                                    269                        281
     Equipment expenses                                               474                        684
     Data processing fees                                              37                         61
     Supplies                                                         109                        102
     Service charges from corresponding banks                         168                        131
     Other operating expenses                                         620                        678
                                                             ------------               ------------
          Total other expenses                                      3,742                      3,898
                                                             ------------               ------------

Income Before Income Tax                                            2,073                      1,850
     Income tax expense                                               633                        583
                                                             ------------               ------------
          Net Income                                         $      1,440               $      1,267
                                                             ============               ============
Dividends Per Share                                          $       0.13               $       0.11
Basic Earnings Per Share                                     $       0.50               $       0.44
Average Shares Outstanding                                      2,880,833                  2,887,810
Diluted Earnings Per Share                                   $       0.50               $       0.44
Average Shares Outstanding                                      2,893,214                  2,898,538
</TABLE>
                                       Page 2

<PAGE>

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

<TABLE>
<CAPTION>
                                                    Three Months Ended                     Three Months Ended
                                                      March 31, 1998                         March 31, 1997
                                                        (Unaudited)                            (Unaudited)
                                             -------------------------------          ------------------------------
<S>                                          <C>              <C>                     <C>             <C>
Net Income                                                    $       1,440                           $       1,267
Other comprehensive income, net of tax
     Unrealized gains on securities:
       Unrealized holding gain arising
       during the period                     $       (180)                            $       (538)
       Less:  Reclassification adjustment
       for gains included in net income              (  0)                                    (  0)
                                             -------------                            --------------
Other comprehensive income                                             (180)                                   (538)
                                                              --------------                         ---------------
Comprehensive income                                          $       1,260                          $          729
                                                              ==============                         ===============
</TABLE>

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


<TABLE>
<CAPTION>
                                                                                    Three Months Ended
                                                                           March 31,                   March 31,
                                                                             1998                        1997
                                                                          (Unaudited)                 (Unaudited)
                                                                      -------------------          -----------------
<S>                                                                   <C>                          <C>
Cash flows from operating activities:
     Net cash provided by operating activities                        $             1,889          $          2,117
Cash flows from investing activities:
     Purchases of securities available for sale                                   (26,230)                   (9,333)
     Proceeds from maturities of securities available for sale                     11,872                     7,696
     Proceeds from sales of securities available for sale                                                     6,004
     Purchases of securities held to maturity                                        (260)                     (572)
     Proceeds from maturities of securities held to maturity                        2,193                     1,811
     Net change in loans                                                              725                   (10,516)
     Purchases of premises and equipment                                             (200)                      (43)
                                                                      --------------------         -----------------
          Net cash used by investing activities                                   (11,899)                   (4,953)
                                                                      --------------------         -----------------
Cash flows from financing activities:
     Net change in
          Noninterest-bearing, interest-bearing demand and                                              
          savings deposits                                                         11,293                     9,011
          Certificates of deposit                                                  (8,010)                   (5,341)
          Federal funds purchased and securities sold under
          repurchase agreements                                                     1,341                      (655)
          Federal Home Loan Bank loans                                              9,987                       489
          U.S. Treasury demand notes                                                 (601)                      737
     Cash dividends                                                                  (375)                     (318)
     Net cash from sale of treasury stock                                             172                       148
                                                                      --------------------         -----------------
          Net cash provided by financing activities                                13,806                     4,071
                                                                      --------------------         -----------------
Net increase in cash and cash equivalents                                           3,795                     1,235
Cash and cash equivalents, beginning of period                                     40,025                    48,588
                                                                      --------------------         -----------------
Cash and cash equivalents, end of period                              $            43,820          $         49,823
                                                                      ====================         =================
Supplemental disclosures of cash flow information:
     Cash paid during the period for:
          Interest                                                    $             2,948          $          2,760
          Income taxes                                                $                 0          $             10
</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 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 quarter 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)

                                 Unrealized Gains on      Accumulated Other
                                     Securities         Comprehensive Income
        March 31, 1998
--------------------------       -------------------    --------------------
<S>                              <C>                    <C>
Beginning balance                $        380           $            380
Current period change                    (180)                      (180)
                                 -------------------    --------------------
Ending balance                   $        200           $            200
                                 ===================    ====================

        March 31, 1997
-------------------------
Beginning balance                $        133           $            133
Current period change                    (538)                      (538)
                                 -------------------    --------------------
Ending balance                   $       (405)          $           (405)
                                 ===================    ====================
</TABLE>


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

                                                     Before-Tax       Tax (Expense)        Net-of-Tax
                 March 31, 1998                        Amount           or Benefit          Amount
------------------------------------------           ----------       -------------        ----------
<S>                                                  <C>              <C>                  <C>
Unrealized gains on securities:
   Unrealized holding gains rising during
       period                                        $    (273)       $         93         $    (180)
   Less:  reclassification adjustment for
       Gains realized in income                              0                   0                 0
                                                     ----------       -------------        ----------
Other comprehensive income                           $    (273)       $         93         $    (180)
                                                     ==========       =============        ==========

               March 31, 1997
-----------------------------------------
Unrealized gains on securities:
   Unrealized holding gains rising during
       Period                                        $    (815)       $        277         $    (538)
   Less:  reclassification adjustment for
       Gains realized in income                              0                   0                 0
                                                     ----------       -------------        ----------
Other comprehensive income                           $    (815)       $        277         $    (538)
                                                     ==========       =============        ==========
</TABLE>
                                        Page 8

<PAGE>

     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 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 netowrk,
money management software such  as QUICKEN and through networks such as Visa e-
Pay and Mastercard RPS.  The following  is  a  summary of selected data for the
various business segments:

<TABLE>
<CAPTION>
                                    BANKING           REMITTANCE
                                   SERVICES            SERVICES           COMPANY(1)        ELIMINATIONS            TOTAL
                                  ---------          -----------         -----------        ------------          ---------
<S>                               <C>                 <C>                <C>                <C>                   <C>
   MARCH 31, 1998

   Total interest income          $   6,588           $     17           $                  $     (17)            $   6,588
   Total non-interest income          1,100              1,273                  35               (108)                2,300
   Total interest expense             3,009                                                       (17)                2,992
   Total non-interest expense         2,740              1,086                  24               (108)                3,742
   Income before income tax           1,857                204                  12                                    2,073
   Inocme tax expense                   558                 71                   4                                      633
   Total assets                     405,234              5,408              53,380            (56,037)              407,985
   Captital expenditures
   Depreciation and amortization        241                 86                   6                                      333

                                        Page 9
<PAGE>
  MARCH 31, 1997
   Total interest income          $   6,517           $     18           $                  $     (18)            $   6,517
   Total non-interest income            905              1,323                  35               (130)                2,133
   Total interest expense             2,824                                                       (18)                2,806
   Total non-interest expense         2,814              1,192                  22               (130)                3,898
   Income before income tax           1,688                149                  13                                    1,850
   Income tax expense                   525                 54                   4                                      583
   Total assets                     396,651              4,998              49,068            (51,547)              399,170
   Capital expenditures
   Depreciation and                     278                105                   6                                      389
   amortization

(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.

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  March 31, 1998, 16,234 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-month periods ended March 31, 1998 and 1997
and  its  consolidated  financial condition at March 31, 1998  as  compared  to
December 31, 1997.  This  discussion  should  be  read  in conjunction with the
Company's  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 10
<PAGE>

RESULTS OF OPERATIONS

SUMMARY OF OPERATIONS

     Net  income in the first quarter of 1998 increased to $1,440,000,  up  14%
from $1,267,000 earned in the same quarter of 1997.  Earnings per share for the
quarterly period  increased  to  50  cents  per share, up 14% from 44 cents per
share earned in the first quarter of 1997.  Higher  earnings were primarily due
to increases in loan fee income and remittance processing  fees  as  well  as a
reduction  in equipment expenses and other operating expenses.  These increases
to net earnings  were  offset  by  a reduction in net interest income and other
income and an increase in   salary and employee benefits and correspondent bank
charges.

NET INTEREST INCOME

     First quarter net interest income  was  $3,596,000, a decrease of $114,000
or 3% compared with the first quarter of 1997.   The  decrease  in net interest
income for the three month period was mainly due to a decreases in  the  volume
of loans, offset by an increase in securities and Federal funds sold.  For  the
three  months ended March 31, 1998, average loans decreased $7,581,000, average
securities  increased  $12,214,000  and  average  Federal  funds sold increased
$10,486,000 compared to the same period in 1997.

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 that 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 first quarter of 1998 was $81,000
compared to $96,000 in  1996.   The  lower  provisions  for loan losses for the
first  quarter  of  1998  were  primarily due to lower net charge-offs  in  the
installment loan area.

OTHER INCOME

     Other income increased from  $2,133,000  for  the three months ended March
31,  1997,  to  $2,300,000  for the three months ended March  31,  1998.   This
represents an increase of $167,000  (8%).   This  increase  is attributed to an
increase in trust fees, loan fee income and remittance processing income.

     Trust  fees  increased  $30,000  or  8% during the first quarter  of  1998
compared to the first quarter of 1997.  This  increase  is mainly attributed to
an increase in the number of accounts and dollar amount of trusts handled.

                                        Page 11
<PAGE>

     Remittance  processing  and  collecting  income  generated   by   FirsTech
increased  by  $76,000  or 7% during the first quarter of 1998 compared to  the
first quarter of 1997.  The  increase in 1998 is the result of increased volume
of checks processed in the retail lockbox business.

     Loan service fees increased  $105,000  or 135% during the first quarter of
1998 compared to the first quarter of 1997.  This increase is mainly attributed
to an increase in mortgage servicing right income and origination fees with the
Federal National Mortgage Association ("FNMA").   Due  to lower interest rates,
real estate loans were being sold in the secondary market  to  FNMA  instead of
being kept in house.

OTHER EXPENSES

     Other expenses decreased from $3,898,000 for the three months ended  March
31,  1997,  to  $3,742,000  for  the  three  months ended March 31, 1998.  This
represents a $156,000 (4%) decrease.  The decrease  was attributed to decreases
in equipment expenses and other operating expenses offset  by  and  increase in
salaries and employee benefits and service charges from corresponding banks.

     Salaries  and  employee  benefits  increased $104,000 or 5% for the  first
quarter of 1998 compared to the first quarter of 1997.  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 the use
of temporary services.

     Equipment expenses decreased $210,000 or 31% for the first quarter of 1998
compared to the first quarter of 1997.  This 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.

     Service charges  increased  $37,000  or  28% for the first quarter of 1997
compared  to  the first quarter of 1996.  This increase  is  attributed  to  an
increased volume  of  checks  processed  by  FirsTech  in  the  retail  lockbox
business.

Other  expenses  decreased $58,000 or 9% for the first quarter of 1998 compared
to the first quarter  of  1997.  This decrease is mainly attributed a reduction
in postage expenses and FirsTech travel and entertainment expenses.

INCOME TAXES

     Income tax expense increased  $50,000  or 9% for the first quarter of 1998
compared to the first quarter of 1997. Higher  income  tax  expense in 1998 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, 1998 and 1997.

                                        Page 12
<PAGE>

FINANCIAL CONDITION

     Bancshares' assets increased $15,748,000 or 4.0% from December 31, 1997 to
March 31, 1998.  This increase was primarily due to increases in cash and  cash
equivalents  and  securities.   The  growth  in  total assets were funded by an
increase in deposits and both short and long-term borrowings.

CASH AND CASH EQUIVALENTS

     Cash and cash equivalents increased $3,795,000  from  December 31, 1997 to
March 31, 1998.  This change occurred due to an increase in  cash  and due from
banks  offset  by  a  decrease in federal funds sold.  Cash and due from  banks
increased $4,580,000 and  federal  funds  sold  decreased  $785,000.   See  the
consolidated statement of cash flows for the three months ended March 31, 1997,
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.

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 increased by $12,226,000 from December 31, 1997
to March  31,1998.  During the first three months of 1998, Bancshares purchased
$26,490,000  ($26,230,000  classified  as available-for-sale), and had proceeds
from maturities of $14,075,000 ($11,872,000 classified as available-for-sale).

DEPOSITS

      Total deposits increased $3,283,000  from  December 31, 1997 to March 31,
1998.  This increase is attributed to FirsTech customers  making large deposits
at the end of March to meet minimum required average deposits for the month.

FHLB ADVANCES AND U.S. TREASURY DEMAND NOTES

     Federal  Home Loan Bank ("FHLB") advances and U.S. Treasury  demand  notes
increased $9,386,000  from  December 31, 1997 to March 31, 1998.  This increase
is attributed to an increase  of  $9,987,000 in borrowings from the FHLB offset
by a decrease of $601,000 in Treasury,  Tax  & Loans.  Two $5,000,000 long-term
borrowings  were made with the FHLB during the  first  quarter  of  1998.   One
borrowing was  used  to  purchase  a  security with a higher yield but the same
maturity as the borrowing and the other  borrowing  is  being used to fund loan
growth with matching maturities.

STOCKHOLDERS' EQUITY

     Total stockholders' equity rose $1,069,000 or 2.0% from  December 31, 1997
to  March  31,  1998.   The  increase  is  mainly  attributed to net income  of
$1,440,000 less cash dividends of $375,000 and a reduction  in  the  unrealized
gain on securities available-for-sale of $180,000, net of deferred taxes.

                                        Page 13
<PAGE>

     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, 1997, Bancshares' consolidated
Tier 1 and total  risk-based capital ratios were 25.6% and 26.8%, respectively.
Bancshares' leverage ratio at December 31, 1997 was 13.0%.

YEAR 2000

     Bancshares has  established a Project Team to address the Year 2000 issue.
They are following guidelines  established  in an OCC Advisory Letter dated May
16, 1997.  This letter contains guidance regarding  measures  banks  should  be
taking  to  make  certain they are ready for the year 2000 and beyond.  The OCC
describes 5 phases  in Year 2000 project management: (1) Awareness - define the
problem and develop a  strategy,  (2)  Assessment  -  identify,  inventory, and
assess,  (3) Renovation - enhancements, upgrades, repairs and replacement,  (4)
Validation - testing to ensure desired results and (5) Implementation - certify
systems and contingency plans.

     The project  team  is currently in phase 3.  Based on current assessments,
Bancshares does not expect  the  amounts to be expended over the next two years
to have a material effect on its financial  position  or results of operations.
The amount expensed in the first quarter of 1998 and for  the  year  ended 1997
was immaterial.


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 

                                        Page 14
<PAGE>

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 
$117.4 million or 32.07% 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 1998 or during
1997.

     The  following  table  summarizes,  as of March 31, 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 15
<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                     $  24,557    $  13,379    $  22,960    $  26,831    $  25,899   $  14,294    $127,920    $135,023
   Average interest rate              8.52%        8.88%        8.75%        8.86%        8.80%       7.74%       8.63%
   Variable rate                     44,561       11,093        3,596        7,163        3,917       1,024      71,354      75,316
    Average interest rate             8.85%        7.04%        7.91%        7.71%        7.80%       7.04%       8.29%
Securities (2)
   Fixed rate                        42,175       20,840       17,945       19,014       11,585      35,294     146,853     147,247
   Average interest rate              6.16%        6.24%        5.74%        6.64%        6.12%       6.67%       6.18%
   Variable rate                                                                            251       3,481       3,732       3,766
    Average interest rate                                                                 6.65%       6.80%       6.79%
Federal funds sold                   16,360                                                                      16,360      16,360
    Average interest rate             5.50%                                                                       5.50%
                                 ----------    ---------    ---------    ---------    ---------   ---------    --------    --------
    Total interest-earning assets   127,653       45,312       44,501       53,008       41,652      54,093     366,219     377,712
                                 ----------    ---------    ---------    ---------    ---------   ---------    --------    --------

NOW and savings accounts              4,778        4,778        4,778        4,778        4,778      71,666      95,556      95,556
    Average interest rate             2.50%        2.50%        2.50%        2.50%        2.50%       2.50%       2.50%
Money market accounts                30,518                                                                      30,518      30,518
    Average interest rate             3.68%                                                                       3.68%
Time deposits
   Fixed rate                        90,567       26,896        4,041          729          664                 122,897     125,759
    Average interest rate             5.29%        6.03%        5.95%        6.02%        6.47%                   5.49%
   Variable rate                     16,060          505                                                         16,565      16,942
    Average interest rate             5.54%        5.85%                                                          5.54%
Federal funds purchased and
securities sold under
repurchase agreements                 9,789                                                                       9,789       9,789
    Average interest rate             5.20%                                                                       5.20%
FHLB advances                            51           54           58           62           67      12,649      12,941      13,077
    Average interest rate             5.57%        5.57%        5.57%        5.57%        5.57%       5.57%       5.57%
U.S. Treasury demand notes            2,550                                                                       2,550       2,550
    Average interest rate             5.25%                                                                       5.25%
                                 ----------    ---------    ---------    ---------    ---------   ---------    --------    --------
     Total interest-bearing        
     liabilities                    154,313       32,233        8,877        5,569        5,509      84,315     290,816     294,191
                                 ----------    ---------    ---------    ---------    ---------   ---------    --------    --------
Interest-earning assets less
 interest- bearing liabilities 
 ("Gap")                         $ (26,660)    $  13,079    $  35,624    $  47,439    $  36,143   $(30,222)    $ 75,403    $ 83,521
                                 ==========    =========    =========    =========    =========   =========    ========    ========
Cumulative gap                   $ (26,660)    $(13,581)    $  22,043    $  69,482    $ 105,625   $  75,403    $ 75,403    $ 83,521
                                 ==========    =========    =========    =========    =========   =========    ========    ========
Cumulative Gap as a percentage 
of total interest earning assets    (7.28%)      (3.71%)        6.02%       18.97%       28.84%      20.59%      20.59%      22.81%
                                 ==========    =========    =========    =========    =========   =========    ========    ======== 
</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 March 31, 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  $266,600 in one year and
$135,800  in  two years assuming no management intervention.   A  fall  in  the
interest rates  would  have  the  opposite  effect  for  the  same  period.  In
analyzing  interest  rate  sensitivity, Bancshares' management considers  these
differences and incorporates  other  assumptions  and  factors, such as balance
sheet growth and prepayments, to better measure interest rate risk.

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

                                        Page 16

<PAGE>

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


PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

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


ITEM 2.    CHANGES IN SECURITIES

     Not Applicable


ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

     Not Applicable


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

     First Decatur Bancshares, Inc. held its annual Shareholder meeting on
March 10, 1998.

     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  2,506,186  total   shares  voted  out  of  2,878,487
outstanding (87%).  All shares voted in favor of  the Directors and terms.  The
Board of Directors remained unchanged from 1997.


ITEM 5.    OTHER INFORMATION

     Not Applicable

                                        Page 17
<PAGE>
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.


May 13, 1998       By:  /s/ John W. Luttrell
                        -------------------------------------------
                        John W. Luttrell
                        President and Chief Executive Officer



May 13, 1998        By:  /s/ Craig A. Wells
                         ------------------------------------------
                         Craig A. Wells
                         Vice President and Chief Financial Officer

           
                                        Page 18