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_______________________________________________________________________________


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                            
               ________________________________________________


                                    EXHIBITS
                                       TO
                                    FORM 10-Q

             Quarterly Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

              ____________________________________________________


                            PINNACLE BANC GROUP, INC.

             (Exact name of registrant as specified in its charter)




_______________________________________________________________________________
                                         
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EXHIBIT 1.  REPORT FURNISHED TO SECURITIES HOLDERS.



                                         
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August 7, 1997



Dear Shareholder:

Pinnacle Banc Group, Inc. reported net income of $3,444,000, or $0.46 per 
fully diluted share, for the second quarter of 1997, compared with 
$2,238,000, or $0.34 per share earned in the second quarter of 1996, a per 
share increase of 35%.  For the first six months of 1997, net income totalled 
$6,183,000, or $0.82 per share, compared with $3,794,000, or $0.58 per share, 
earned in the first six months of 1996, a per share increase of 41%.  The 
return on average equity for the first six months of 1997 was 13.2% and the 
return on average assets amounted to 1.21%.  

Total consolidated assets amounted to $1.022 billion, up 23% from the same 
quarter end in 1996.  Total loans were $520 million compared to $331 million 
in the second quarter of 1996, a 57% increase.  Total deposits were up 22% to 
$857 million.  The balance sheet increases were primarily the result of the 
acquisition of Financial Security Corporation in September, 1996, although 
internal loan growth was 10% for the comparable period.  Stockholders' equity 
totalled $104 million at June 30, 1997 resulting in a book value per share of 
$13.85, an increase of 17% over the second quarter end of 1996.

The primary factors contributing to the earnings increase for the second 
quarter and first six months of 1997 versus the same periods one year earlier 
were increases in net interest income and higher net gains on the sale of 
securities. Net interest income increased 32% for the first six months of 
1997 compared with the same period one year earlier.  The increase was the 
result of a 27% rise in average earning assets.  In addition, Pinnacle's net 
interest margin was 3.60% on a year to date basis for 1997, up 11 basis 
points from the comparable period of 1996.

Net securities gains of $1,465,000 for the second quarter and $2,566,000 for 
the first six months of 1997 were recorded compared to a minimal amount of 
net gains (losses) in the same periods of 1996.  The net gains on a year to 
date basis in 1997 consisted of gains of $2,842,000 recorded on the sale of 
equity securities as part of Pinnacle's equity investment program in other 
financial institutions and net losses of $276,000 from the sale of U. S. 
Treasury securities as part of Pinnacle's slope program.

Other operating income increased 15% for the second quarter and 14% for the 
first six months of 1997 compared to the same periods of one year ago.  Other 
operating expense was up 12% and 18% for the quarter and year to date, 
respectively, with the acquisition contributing to the increase.

Non-performing assets totalled $9,858,000 at June 30, 1997, a decrease of 
$485,000, or 5%, from the amount at year end.  The allowance for loan losses 
was $7,880,000, or 1.51% of loans at quarter end.  Non-performing assets at 
June 30, 1997 were 1.89% of total loans plus other real estate owned, and 
amounted to 0.96% of total assets.

At the Board of Directors' meeting on July 15, 1997, the Board declared a 
dividend of $0.22 per share payable on August 7 to shareholders of record as 
of July 28.

Very truly yours,


/s/ JOHN J. GLEASON, JR.

John J. Gleason, Jr.
Vice Chairman and
Chief Executive Officer

                                         

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<CAPTION>

                                PINNACLE BANC GROUP, INC.
                                  FINANCIAL HIGHLIGHTS 
                                      (UNAUDITED)
     
     
                       (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


     
                                            QUARTER ENDED JUNE 30              YEAR TO DATE
                                            ---------------------              -------------
                                              1997          1996          1997             1996
                                            -------        -----          ----            -----
<S>                                        <C>             <C>            <C>           <C>
    INCOME STATEMENT
       Net interest income                  $8,374         $6,537        $16,467        $12,428
       Provision for loan losses                 0              0              0              0
       Net securities gains (losses)         1,465           (130)         2,566            133
       Non-interest income                   2,012          1,747          3,993          3,507
       Non-interest expense                  6,644          5,924         13,670         11,588
       Provision for income taxes            1,763             (8)         3,173            686
       Net income                            3,444          2,238          6,183          3,794
                                                                                
    BALANCE SHEET (END OF PERIOD)
       Total assets                     $1,021,641       $830,700
       Loans                               520,145        330,978
       Portfolio funds                     418,278        431,597
       Deposits                            856,773        705,013
       Debt                                 28,750         25,950
       Stockholders' equity                104,090         76,389
                                                                                
    PER SHARE DATA
       Earnings per share                  $  0.46        $  0.34        $  0.82        $  0.58
       Book value                            13.85          11.83          13.85          11.83
       Dividends                              0.22           0.21           0.44           0.42
       Cash earnings per share                0.54           0.42           0.98           0.73
       Tangible book value                   10.65           9.01          10.65           9.01
    
    RATIOS
       Return on average equity             14.7 %         12.8 %         13.2 %         10.7 %
       Return on average assets               1.36           1.10           1.21           0.94
       Net interest margin                    3.69           3.64           3.60           3.49
       Non-performing assets / total assets   0.96           0.87           0.96           0.87
                                                                                
    MARKET DATA
      Stock price range
      (DURING THE QUARTER):
          High                              $21.75         $23.00
          Low                                19.50          18.67
          Close                              21.00          19.33
       Annual dividend rate                   0.88           0.83

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