BEVERLY BANCORPORATION INC, S-1/A, 1996-08-06

BEVERLY BANCORPORATION INC
S-1/A, 1996-08-06
COMMERCIAL BANKS, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1996

REGISTRATION NO. 333-6651

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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BEVERLY BANCORPORATION, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 6712 36-4090152
(State or other jurisdiction (Primary standard industrial (I.R.S. employer
of classification code number) identification
incorporation or organization) number)
</TABLE>

1357 W. 103RD STREET
CHICAGO, ILLINOIS 60643
(312) 881-2214
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)

JOHN D. VAN WINKLE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BEVERLY BANCORPORATION, INC.
1357 W. 103RD STREET
CHICAGO, ILLINOIS 60643
(312) 881-2223

(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPY TO:

<TABLE>
<S> <C>
Louis E. Rosen, Esq. Matthew C. Boba, Esq.
Lord, Bissell & Brook Chapman and Cutler
115 South LaSalle Street 111 West Monroe Street
Chicago, Illinois 60603 Chicago, Illinois 60603
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>

SUBJECT TO COMPLETION, DATED AUGUST 6, 1996

1,000,000 SHARES

BEVERLY BANCORPORATION, INC.

COMMON STOCK

All of the shares of Common Stock, par value $.01 per share (the "Common
Stock"), offered hereby are being issued and sold by Beverly Bancorporation,
Inc. (the "Company").

The Company's Common Stock is traded occasionally in the over-the-counter
market and the bid price is quoted in the National Quotation Bureau's "pink
sheets." It is currently estimated that the initial public offering price per
share will be between $14.00 and $16.00. See "Market for Common Stock and
Dividends." For information relating to the determination of the initial public
offering price of the Common Stock, see "Underwriting." The Company has applied
for quotation of the Common Stock on the Nasdaq National Market under the symbol
"BEVB."

INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" BEGINNING ON PAGE 6.

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THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION
INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC DISCOUNT (1) COMPANY (2)
<S> <C> <C> <C>
Per Share................................ $ $ $
Total (3)................................ $ $ $
</TABLE>

(1) See "Underwriting" for information concerning indemnification arrangements
with the Underwriters.

(2) Before deducting expenses of the offering, estimated at $450,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
150,000 additional shares of Common Stock solely to cover over-allotments,
if any, on the same terms and conditions as shown above. If such option is
exercised in full, the total Price to Public, Underwriting Discount and
Proceeds to Company will be $ , $ and $ , respectively.

The shares of Common Stock being offered hereby are being offered severally
by the Underwriters named herein subject to receipt and acceptance by them and
subject to the right to reject any order in whole or in part. See
"Underwriting." It is anticipated that delivery of the certificates for the
shares of Common Stock will be made against payment therefor on or about August
, 1996.

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HOWE BARNES INVESTMENTS, INC.

August , 1996

<PAGE>
BEVERLY BANCORPORATION, INC.

Graphic Material -- Map of location of bank branches

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

The Company intends to furnish its stockholders with annual reports
containing financial statements audited by an independent public accounting firm
for each fiscal year and with quarterly reports containing unaudited summary
information for the first three quarters of each fiscal year.

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PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO APPEARING
ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, THE INFORMATION
CONTAINED IN THIS PROSPECTUS (I) ASSUMES THE REINCORPORATION OF BEVERLY
BANCORPORATION, INC., AN ILLINOIS CORPORATION ("BEVERLY ILLINOIS"), AS A
DELAWARE CORPORATION, WHICH WILL TAKE PLACE PRIOR TO THE COMPLETION OF THE
OFFERING (THE "REINCORPORATION"), (II) GIVES EFFECT TO THE ISSUANCE OF FIVE
SHARES OF COMMON STOCK OF THE COMPANY FOR EACH SHARE OF COMMON STOCK OF BEVERLY
ILLINOIS IN CONNECTION WITH THE REINCORPORATION AND ALL STOCK DIVIDENDS PAID
THROUGH THE DATE HEREOF, AND (III) ASSUMES NO EXERCISE OF THE UNDERWRITERS'
OVER-ALLOTMENT OPTION. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
MATTERS SET FORTH IN "RISK FACTORS."

THE COMPANY

Beverly Bancorporation, Inc. (the "Company") is a community-based financial
services holding company headquartered in Chicago, Illinois. Through its
subsidiaries, the Company provides a full range of banking services and also
provides personal and corporate trust services. The Company's principal
operating subsidiaries are Beverly Bank, Beverly Bank Matteson, First National
Bank of Wilmington ("Wilmington") and Beverly Bank Lockport (collectively, the
"Banks"), and Beverly Trust Company ("Beverly Trust"). The Banks are chartered
as Illinois state banks, with the exception of Wilmington, which was federally
chartered in 1863 and is the second oldest active national bank in Illinois.

As of December 31, 1995, the Company's total assets were $591.2 million and
net income for the year ended December 31, 1995 was $6.2 million, with a return
on average assets of 1.09% and a return on average equity of 13.37% for the year
then ended. As of June 30, 1996, the Company's total assets had grown to $614.6
million, with net income of $3.0 million for the six months then ended, an
increase in net income of 5.5% from the six months ended June 30, 1995.

The Company's strategy is to continue to increase its core banking business
through its commercial community banking presence and its retail product sales
and distribution system. The Company will also pursue an increased market share
in personal and corporate trust services and intends to further develop its
securities sales and insurance activities. Where opportunities arise, the
Company may seek to augment its internal growth through the establishment of
additional branches and offices, as well as acquisitions or joint ventures in
both banking and non-banking areas. In 1996, Wilmington formed a joint venture,
currently in its initial stages, with a prominent realtor for the purpose of
increasing its mortgage origination business.

The Company was incorporated in Delaware on June 13, 1996 as a wholly-owned
subsidiary of Beverly Bancorporation, Inc., an Illinois corporation ("Beverly
Illinois"). Beverly Illinois was organized in 1969 and at present owns all of
the outstanding capital stock of the Banks and Beverly Trust. Pursuant to the
Reincorporation, prior to the completion of the offering, Beverly Illinois will
be merged with and into the Company and the Company will be the surviving
corporation. After the

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Reincorporation, the Company will own all of the outstanding capital stock of
the Banks and Beverly Trust. In connection with the Reincorporation, each
outstanding share of common stock of Beverly Illinois will be converted into
five shares of Common Stock of the Company.

The Company intends to merge Beverly Bank, Beverly Bank Matteson and Beverly
Bank Lockport with and into Wilmington by year-end 1996. Pursuant to the merger,
Wilmington will be renamed Beverly National Bank and will remain a nationally
chartered bank. The anticipated result of the merger, assuming all regulatory
approvals are received, will be to consolidate the operations of the Banks and
to reduce the administrative costs under which the Banks presently operate.

The Company's principal executive offices are located at 1357 West 103rd
Street, Chicago, Illinois 60643, and its telephone number is (312) 881-2214.

Except where the context otherwise requires, when used herein the term
"Company" refers to Beverly Bancorporation, Inc., a Delaware corporation, its
predecessor and its subsidiaries.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered.............. 1,000,000 shares
Common Stock to be outstanding
after the offering (1)........... 4,974,942 shares
Nasdaq symbol..................... BEVB
Use of Proceeds................... The Company will use a portion of the net proceeds from
the sale of shares of Common Stock offered hereby to
repay outstanding short-term borrowings of $9.0 million.
The remaining net proceeds will be used for general
corporate purposes including, if and when opportunities
arise, establishing additional branches and offices and
acquiring businesses complementary to those of the
Company. See "Use of Proceeds."
</TABLE>

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(1) Based on the number of shares of Common Stock outstanding as of June 30,
1996 and excluding 7,159 shares of Common Stock issued on July 15, 1996
pursuant to the reinvestment of dividends and the payment of directors' fees
and 1,100 shares of Common Stock issued on July 23, 1996 pursuant to the
exercise of options. In addition, as of June 30, 1996, 532,945 shares of
Common Stock were reserved for issuance under the Company's stock option
plan pursuant to which options to purchase 418,040 shares of Common Stock
were outstanding, 146,610 of which were exercisable.

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<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, (1) YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Total interest income..................... $ 20,778 $ 19,512 $ 39,970 $ 35,206 $ 33,468 $ 36,583 $ 42,328
Total interest expense.................... 9,649 8,335 17,184 12,949 12,805 15,256 20,858
--------- --------- --------- --------- --------- --------- ---------
Net interest income....................... 11,129 11,177 22,786 22,257 20,663 21,327 21,470
Provision for loan losses................. 75 103 159 311 1,299 3,577 2,923
Other income.............................. 4,149 3,762 7,870 8,017 9,820 11,300 9,048
Operating expense......................... 10,879 10,727 21,416 20,875 22,169 23,127 22,513
Income tax expenses....................... 1,317 1,257 2,877 2,672 2,143 1,519 1,036
Cumulative effect of change in accounting
principle................................ -- -- -- -- 374 -- --
--------- --------- --------- --------- --------- --------- ---------
Net income................................ $ 3,007 $ 2,852 $ 6,204 $ 6,416 $ 5,246 $ 4,404 $ 4,046
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
PER SHARE DATA (2):
Income before cumulative effect of change
in accounting principle.................. $ .74 $ .58 $ 1.26 $ 1.34 $ 1.05 $ .96 $ .89
Net income................................ .74 .58 1.26 1.34 1.13 .96 .89
Cash dividends declared................... .10 .10 .19 .18 .17 .17 .12
Book value at end of period............... 10.19 9.87 10.35 8.44 8.58 7.69 6.94
Net tangible book value at end of
period................................... 9.92 9.57 10.02 8.11 8.14 7.15 6.29
Stock dividends declared.................. 5.00% 5.00% 5.00% 5.00% 5.00% -- --
SELECTED FINANCIAL RATIOS:
Return on average assets.................. 1.00% 1.02% 1.09% 1.20% 1.03% .90% .85%
Return on average equity.................. 14.58 13.03 13.37 16.10 13.33 12.61 12.95
Dividend payout ratio (dividends declared
per share to net income per share)....... 13.51 17.24 15.08 13.43 15.04 17.71 13.48
Average equity to average assets.......... 6.86 7.84 8.17 7.47 7.72 7.17 6.53
Net interest margin (tax equivalent)...... 4.18 4.49 4.49 4.66 4.52 5.05 5.27
Allowance for loan losses to total loans
at end of period......................... 1.21 1.24 1.13 1.37 1.51 1.79 1.51
Non-performing loans to total loans at end
of period................................ .55 .59 .57 .82 1.05 1.76 2.70
Net loans charged off (recoveries) to
average loans............................ (.11) .06 .21 .13 .70 1.23 2.02
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
-------------------- -----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Total assets...................... $ 614,569 $ 567,312 $ 591,203 $ 561,339 $ 519,635 $ 510,642 $ 467,287
Total earning assets.............. 566,425 524,183 539,842 505,307 477,196 462,549 422,185
Loans............................. 324,573 314,572 312,160 291,042 267,517 251,062 279,511
Total deposits.................... 553,792 507,946 527,131 504,445 459,132 454,917 418,134
Short-term borrowings............. 14,770 7,678 17,292 11,414 13,346 15,795 12,884
Long-term obligations............. 596 -- -- -- -- -- --
Total stockholders' equity........ 40,587 47,951 40,961 40,808 40,055 35,253 31,266
Net tangible book value........... 39,426 46,510 39,660 39,202 38,017 32,651 28,365
</TABLE>

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(1) Ratios for interim periods are stated on an annualized basis. However,
interim operating results and ratios for the six months ended June 30, 1996
are not necessarily indicative of results that may be experienced for the
full year.

(2) All per share amounts have been adjusted to give effect to the issuance of
five shares of Common Stock of the Company for each share of common stock of
Beverly Illinois in connection with the Reincorporation and all stock
dividends paid through the date hereof.

5
<PAGE>
RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING THE COMPANY AND ITS
BUSINESS AND DECIDING WHETHER TO PURCHASE ANY OF THE COMMON STOCK OFFERED
HEREBY.

ADVERSE IMPACT OF CHANGES IN INTEREST RATES AND OTHER ECONOMIC CONDITIONS

The Company's earnings depend to a great extent upon the level of net
interest income, which is the difference between total interest income earned on
earning assets and total interest expense paid on interest bearing liabilities.
Although management believes that the maturities of the Company's assets are
well balanced in relation to maturities of liabilities ("asset/liability
management"), asset/ liability management involves estimates as to how changes
in the general level of interest rates will impact the yields earned on assets
and the rates paid on liabilities. As community banks, the Banks are primarily
dependent on local deposits as a source of funds. Additionally, the Company uses
a number of funding sources as alternatives to local area deposits. These
alternatives include repurchase agreements, municipal deposits and federal funds
purchased from correspondent banks. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition -- Asset/ Liability Management."
Because the Banks are community banks operating solely in the Chicago
metropolitan area, the success of the Company is also dependent to a certain
extent upon the general economic conditions in the Chicago metropolitan area.

NO ASSURANCE AS TO SUFFICIENCY OF ALLOWANCE FOR LOAN LOSSES

The Company's allowance for loan losses is maintained at a level considered
adequate by management to absorb anticipated losses in its loan portfolio. The
amount of future loan losses is susceptible to changes in economic, operating
and other conditions, including changes in interest rates, that may be beyond
the Company's control. Such losses may exceed current estimates. Although
management believes that the Company's allowance for loan losses is adequate,
there can be no assurance that the allowance will prove sufficient to cover
actual loan losses in the future. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition -- Analysis of Allowance for Loan
Losses."

LIMITED PUBLIC MARKET FOR COMMON STOCK

Prior to this offering, there has been a limited public market for the
Common Stock. See "Market for Common Stock and Dividends." While the Company has
applied for quotation of the Common Stock on the Nasdaq National Market, there
can be no assurance that following this offering an active public market for the
Common Stock will develop or be sustained. The initial public offering price of
the Common Stock will be determined by negotiations between the Company and the
Underwriters and may not be indicative of the market price of the Common Stock
after this offering. See "Underwriting."

ADVERSE IMPACT OF CURRENT AND FUTURE GOVERNMENT REGULATION

The Company, the Banks and Beverly Trust are subject to extensive federal
and state legislation, regulation and supervision. Since April 1994, the Company
and each of the Banks have undergone at least one regulatory examination. Future
legislation and regulations may have significant impact on the financial
services industry. Some of the legislative and regulatory changes may benefit
the Company; others, however, may increase the Company's costs of doing business
and assist competitors of the Company. See "Supervision and Regulation."

Although the Company has certain investments and expects to continue to
generate some revenues at the holding company level, the Company has been and is
likely to continue to be largely dependent upon the receipt of dividends from
the Banks to fund dividends on the Company's Common Stock. Dividends payable by
the Banks are limited by law and applicable capital adequacy requirements and
are also subject to regulation by the various regulators. At June 30, 1996, the
amount of

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retained earnings of the Banks available for dividends, while maintaining the
Banks in a well-capitalized status, totaled approximately $14,000,000. See
"Supervision and Regulation -- Regulation of Banks -- Dividends."

COMPETITION

The financial services business is highly competitive. The Company
encounters strong direct competition for deposits, loans and other financial
services. The Company's principal competitors include other commercial banks,
savings banks, savings and loan associations, mutual funds, money market funds,
finance companies, credit unions, mortgage companies, private issuers of debt
obligations and suppliers of other investment alternatives, such as securities
firms. In addition, in recent years, several major multi-bank holding companies
have entered or expanded in the Chicago metropolitan market. Generally, these
financial institutions are significantly larger than the Company and have access
to greater capital and other resources. Many of the Company's non-bank
competitors are not subject to the same degree of regulation as that imposed on
bank holding companies, federally insured banks and national or Illinois
chartered banks. As a result, such non-bank competitors have advantages over the
Company in providing certain services. See "Business -- Competition."

NO ASSURANCE OF ACQUISITIONS OR EXPANSION

A portion of the net proceeds from the offering is intended to be used to
support future growth, which may include establishing additional branches and
offices and acquiring businesses complementary to those of the Company. See "Use
of Proceeds." Acquisition candidates may not be available on terms favorable to
the Company. The Company must compete with a variety of institutions and
individuals for suitable acquisition candidates. In recent years, several major
bank holding companies have actively pursued acquisition opportunities in the
Chicago metropolitan area. Competition from other institutions could affect the
Company's ability to make acquisitions and increase the price that the Company
pays for certain acquisitions. Furthermore, acquisitions of financial
institutions are subject to regulatory approval. There can be no assurance that
potential acquisitions which meet the Company's investment criteria will be
available on terms acceptable to the Company or that the required regulatory
approval of any proposed acquisitions will be obtained. There can also be no
assurance that the Company will continue to experience growth or be able to
successfully operate and manage any business that it does acquire so as to
establish, maintain or increase profitability. At present, the Company is not a
party to any understanding, letter of intent or agreement with respect to the
acquisition of the stock or assets of another entity.

LOSS OF KEY PERSONNEL

The Company's success has been and will be largely dependent on its
continuing ability to retain the services of its existing senior management and,
as it expands, to attract and retain qualified additional senior and middle
management. The loss of the services of any of its key management personnel, or
the inability to recruit and retain qualified personnel in the future, could
have an adverse effect on the Company's business and financial results. See
"Management."

ADVERSE IMPACT ON MARKET PRICE AS A RESULT OF SHARES ELIGIBLE FOR FUTURE SALE

Following completion of the offering, the Company will have 4,974,942 shares
of Common Stock issued and outstanding (5,124,942 shares if the Underwriters'
over-allotment option is exercised in full). The 1,000,000 shares offered hereby
(1,150,000 shares if the over-allotment option is exercised in full) along with
2,815,237 previously issued and outstanding shares will be freely tradeable
without restriction under the Securities Act of 1933, as amended (the "1933
Act"), except for any shares which are purchased in this offering by affiliates
of the Company. Additionally, approximately 964,600 additional shares of Common
Stock currently outstanding will become eligible for public sale 90 days after
completion of the offering pursuant to the provisions of Rule 144 under the 1933
Act. However, the Company and all the directors and executive officers of the
Company have agreed with the Underwriters not to offer, sell or otherwise
dispose of any shares of Common Stock (except, in the case of the Company,
shares issuable pursuant to outstanding options, reinvestment of dividends and
payment of directors' fees) for a period of 180 days after the date of this
Prospectus without the prior

7
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written consent of the Representative of the Underwriters. Upon expiration of
this 180-day period, however, all of these shares (representing 19.4% of the
total number of shares which will be outstanding following completion of the
offering) could be resold by these and other persons who are affiliates of the
Company, subject to certain requirements of Rule 144 under the 1933 Act. As of
June 30, 1996, options to purchase 418,040 shares of Common Stock were
outstanding, of which options with respect to 146,610 shares of Common Stock
were exercisable. Sales of substantial amounts of Common Stock in the public
market following the offering could adversely affect the market price of the
Company's Common Stock. See "Shares Eligible for Future Sale" and
"Underwriting."

DILUTION

Purchasers of shares of Common Stock offered hereby will suffer an immediate
and substantial dilution in net tangible book value per share of Common Stock.
The net tangible book value of the Company at June 30, 1996 was approximately
$39.4 million or $9.92 per share of Common Stock. Based upon an initial public
offering price of $15.00 per share, the dilution per share to new stockholders
is $4.36. See "Dilution."

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions in the Company's Certificate of Incorporation and Bylaws
could discourage potential acquisition proposals and could delay or prevent a
change in control of the Company. Such provisions could diminish the
opportunities for stockholders to participate in tender offers, including tender
offers at a price above the then current market value of the Common Stock, or
proxy contests. These provisions, among other things, (i) establish certain
advance notice procedures with regard to the nomination of candidates for
election as directors and the proposal of business to be considered at annual
stockholders meetings, (ii) provide that stockholders may not take action by
written consent and (iii) provide that special meetings of stockholders may only
be called by the Chairman of the Board or the Board of Directors. In addition,
the Board of Directors, without further stockholder approval, may issue
Preferred Stock with such terms as the Board of Directors may determine. See
"Description of Capital Stock." Additionally, bank regulatory laws require
advance approval by certain governmental agencies of any change in control of
banks and bank holding companies. Any purchaser of 20% or more of the
outstanding shares of Common Stock will be presumed to have acquired control of
the Banks and the Company. The need for such approval may deter, delay or
prevent certain transactions affecting the control or the ownership of Common
Stock, including transactions that could be advantageous to the stockholders of
the Company. See "Supervision and Regulation -- Regulation of Banks -- Change In
Control."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,000,000 shares of
Common Stock offered hereby are estimated to be approximately $13.5 million
($15.6 million if the over-allotment option is exercised in full), assuming an
initial public offering price of $15.00 per share and after deducting the
estimated underwriting discount and offering expenses.

The Company will use a portion of the net proceeds to repay $9.0 million of
outstanding short-term bank borrowings under a demand note, bearing interest at
adjusted LIBOR rates (a weighted average of 7.49% at June 30, 1996) and
collateralized by the common stock of the Banks, issued to finance the Company's
repurchase of 881,340 shares of Common Stock in December 1995. The remaining net
proceeds will be used for general corporate purposes including, if and when
opportunities arise, establishing additional branches and offices and acquiring
businesses complementary to those of the Company. At present, the Company is not
a party to any understanding, letter of intent or agreement with respect to the
acquisition of the stock or assets of another entity. Pending such uses, the
Company intends to invest the net proceeds in short-term, marketable, investment
grade interest bearing securities.

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<PAGE>
MARKET FOR COMMON STOCK AND DIVIDENDS

LIMITED PRIOR TRADING MARKET

The Company's Common Stock trades occasionally in the over-the-counter
market and the bid price is quoted in the National Quotation Bureau's "pink
sheets." Accordingly, although a limited market for the Company's Common Stock
exists, quotations of the bid and ask prices may not be indicative of the fair
value of the Common Stock.

On August 2, 1996, the last reported bid and ask prices for the Common Stock
as quoted by Howe Barnes Investments, Inc. were $67.00 and $75.00, respectively
(or $13.40 and $15.00, respectively, as adjusted to give effect to the issuance
of five shares of Common Stock of the Company for each share of common stock of
Beverly Illinois in connection with the Reincorporation). As of the close of
business on June 30, 1996, the Company had 314 holders of record of its Common
Stock.

It is expected that the Common Stock will trade in the over-the-counter
market and will be quoted on the Nasdaq National Market under the symbol "BEVB."
There can be no assurance, however, that an active or liquid trading market will
develop in the Common Stock.

DIVIDENDS

The Company has paid quarterly cash dividends on the Common Stock since June
1991. Since January 1, 1994, the Company has declared per share cash dividends
with respect to its Common Stock as follows:

<TABLE>
<S> <C>
1994
First Quarter................................................... $ .04513
Second Quarter.................................................. .04513
Third Quarter................................................... .04513
Fourth Quarter.................................................. .04513
1995
First Quarter................................................... .04750
Second Quarter.................................................. .04750
Third Quarter................................................... .04750
Fourth Quarter.................................................. .04750
1996
First Quarter................................................... .05000
Second Quarter.................................................. .05000
</TABLE>

The Company has declared a five percent stock dividend on the Common Stock
in the first quarter of each year since 1993.

Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors from time to time and paid out of funds
legally available therefor. Because the Company's consolidated net income
consists largely of the net income of the Banks, the Company's ability to pay
dividends depends, in part, upon its receipt of dividends from the Banks. The
Banks' ability to pay dividends is regulated by banking statutes. See
"Supervision and Regulation -- Regulation of Banks -- Dividends." The
declaration of dividends by the Company is discretionary and will depend on the
Company's earnings and financial condition, regulatory limitations, tax
considerations, and other factors. While the Board of Directors expects to
continue to declare dividends quarterly, there can be no assurance that
dividends will be paid in the future.

9
<PAGE>
CAPITALIZATION

The following table sets forth the consolidated short-term borrowings and
capitalization of the Company as of June 30, 1996, and as adjusted to give
effect to the sale of the 1,000,000 shares of Common Stock offered hereby (at an
assumed initial public offering price of $15.00 per share and after deducting
the estimated underwriting discount and offering expenses) and the application
of the net proceeds as described in "Use of Proceeds."

<TABLE>
<CAPTION>
JUNE 30, 1996
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-Term Borrowings
Securities sold under agreements to repurchase, funds purchased, and treasury tax
deposits.............................................................................. $ 5,770 $ 5,770
Short-term bank borrowings............................................................. 9,000 --
--------- -----------
Total short-term borrowings.......................................................... $ 14,770 $ 5,770
--------- -----------
--------- -----------
Long-term Obligations
Capitalized lease obligation........................................................... $ 596 $ 596
Stockholders' Equity
Preferred Stock, par value $.01 per share -- 1,000,000 shares authorized; no shares
issued and outstanding................................................................ -- --
Common Stock, par value $.01 per share -- 8,000,000 shares authorized; 3,974,942 shares
issued and outstanding; 4,974,942 shares outstanding as adjusted (1).................. 40 50
Additional paid-in-capital (1)......................................................... 11,410 24,900
Retained earnings...................................................................... 33,392 33,392
Net unrealized loss on available-for-sale securities................................... (2,575) (2,575)
Notes receivable -- officer stockholders............................................... (1,680) (1,680)
--------- -----------
Total Stockholders' Equity........................................................... $ 40,587 $ 54,087
--------- -----------
Total Capitalization................................................................. $ 41,183 $ 54,683
--------- -----------
--------- -----------
</TABLE>

- ------------------------

10
<PAGE>
DILUTION

The net tangible book value of the Company as of June 30, 1996 was $39.4
million or $9.92 per share of Common Stock. "Net tangible book value" is defined
as the total stockholders' equity of the Company less intangible assets. "Net
tangible book value per share" is determined by dividing the net tangible book
value of the Company by the number of outstanding shares of Common Stock.

After giving effect to the sale of the Common Stock offered hereby (assuming
an initial public offering price of $15.00 per share and after deducting the
estimated underwriting discount and offering expenses), the Company's pro forma
net tangible book value as of June 30, 1996 would have been $52.9 million or
$10.64 per share of Common Stock. This represents an immediate increase in net
tangible book value of $.72 per share to the existing stockholders, and an
immediate dilution of $4.36 per share to investors who purchase shares of Common
Stock in this offering. "Dilution" is the difference between the offering price
per share and the pro forma net tangible book value per share as adjusted for
the offering.

The following table illustrates this per share dilution as of June 30, 1996,
which is determined by subtracting the net tangible book value per share after
the offering from the price paid by a new investor.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share (1)......................... $ 15.00
Net tangible book value per share as of June 30, 1996 (2)................. $ 9.92
Increase in net tangible book value per share attributable to payments by
new investors (3)........................................................ 0.72
---------
Pro forma net tangible book value per share after offering.................. 10.64
---------
Dilution of net tangible book value per share to new investors (4).......... $ 4.36
---------
---------
</TABLE>

- ------------------------
(1) Before deducting the estimated underwriting discount and offering expenses.

(2) Based on the number of shares of Common Stock outstanding as of June 30,
1996 and excluding 7,159 shares of Common Stock issued on July 15, 1996
pursuant to the reinvestment of dividends and the payment of directors' fees
and 1,100 shares of Common Stock issued on July 23, 1996 pursuant to the
exercise of options.

(3) After deducting the estimated underwriting discount and offering expenses.

(4) After giving effect to the exercise of outstanding options to purchase
418,040 shares of Common Stock, the pro forma net tangible book value per
share after offering would be $10.45 and the dilution of net tangible book
value per share to new investors would be $4.55.

The following table summarizes as of June 30, 1996, the number of shares
purchased from the Company, the total consideration paid and the average price
per share paid by: (i) the officers, directors and affiliated persons of the
Company who acquired such shares since December 31, 1990 and (ii) investors in
this offering assuming an initial public offering price of $15.00 per share
(before deducting the estimated underwriting discount and offering expenses):

<TABLE>
<CAPTION>
NUMBER OF SHARES TOTAL AVERAGE PRICE
PURCHASED CONSIDERATION PER SHARE
----------------- -------------- -------------
<S> <C> <C> <C>
Officers, directors and affiliated persons (1).................. 148,678 $ 1,137,807 $ 7.65
New investors................................................... 1,000,000 15,000,000 15.00
</TABLE>

- ------------------------

(1) Excludes 7,159 shares of Common Stock issued on July 15, 1996 pursuant to
the reinvestment of dividends and the payment of directors' fees and 1,100
shares of Common Stock issued on July 23, 1996 pursuant to the exercise of
options.

11
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected consolidated financial and other
data of the Company. The selected statement of income and balance sheet data,
insofar as they relate to the five years in the five-year period ended December
31, 1995, have been derived from the Company's audited consolidated financial
statements. The consolidated financial statements of the Company for each of the
three years in the period ended December 31, 1995 and as of December 31, 1995
and 1994 are included elsewhere herein. The selected financial data for the six
month periods ended June 30, 1996 and 1995 and as of June 30, 1996 and 1995 are
derived from the Company's unaudited interim financial statements. Such
unaudited interim financial statements include all adjustments (consisting only
of normal, recurring accruals) that the Company considers necessary for a fair
presentation of the financial position and the results of operation as of the
dates and for the periods indicated. Information for any interim period is not
necessarily indicative of results that may be anticipated for the full year. The
following information should be read in conjunction with "Management's
Discussion and Analysis of Results of Operations and Financial Condition" and
the Consolidated Financial Statements and Notes thereto included elsewhere
herein.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, (1) YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Total interest income...................... $ 20,778 $ 19,512 $ 39,970 $ 35,206 $ 33,468 $ 36,583 $ 42,328
Total interest expense..................... 9,649 8,335 17,184 12,949 12,805 15,256 20,858
--------- --------- --------- --------- --------- --------- ---------
Net interest income........................ 11,129 11,177 22,786 22,257 20,663 21,327 21,470
Provision for loan losses.................. 75 103 159 311 1,299 3,577 2,923
Other income............................... 4,149 3,762 7,870 8,017 9,820 11,300 9,048
Operating expense.......................... 10,879 10,727 21,416 20,875 22,169 23,127 22,513
Income before income tax expense........... 4,324 4,109 9,081 9,088 7,015 5,923 5,082
Income tax expense......................... 1,317 1,257 2,877 2,672 2,143 1,519 1,036
Cumulative effect of change in accounting
principle................................. -- -- -- -- 374 -- --
--------- --------- --------- --------- --------- --------- ---------
Net income................................. $ 3,007 $ 2,852 $ 6,204 $ 6,416 $ 5,246 $ 4,404 $ 4,046
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
PER SHARE DATA (2):
Income before cumulative effect of change
in accounting principle................... $ .74 $ .58 $ 1.26 $ 1.34 $ 1.05 $ .96 $ .89
Net income................................. .74 .58 1.26 1.34 1.13 .96 .89
Cash dividends declared.................... .10 .10 .19 .18 .17 .17 .12
Book value at end of period................ 10.19 9.87 10.35 8.44 8.58 7.69 6.94
Net tangible book value at end of period... 9.92 9.57 10.02 8.11 8.14 7.15 6.29
Stock dividends declared................... 5.00% 5.00% 5.00% 5.00% 5.00% -- --
SELECTED FINANCIAL RATIOS:
Return on average assets................... 1.00% 1.02% 1.09% 1.20% 1.03% .90% .85%
Return on average equity................... 14.58 13.03 13.37 16.10 13.33 12.61 12.95
Dividend payout ratios (dividends declared
per share to net income per share)........ 13.51 17.24 15.08 13.43 15.04 17.71 13.48
Average equity to average assets........... 6.86 7.84 8.17 7.47 7.72 7.17 6.53
Net interest margin (tax equivalent)....... 4.18 4.49 4.49 4.66 4.52 5.05 5.27
Allowance for loan losses to total loans at
end of period............................. 1.21 1.24 1.13 1.37 1.51 1.79 1.51
Nonperforming loans to total loans at end
of period................................. .55 .59 .57 .82 1.05 1.76 2.70
Net loans charged off (recoveries) to
average loans............................. (.11) .06 .21 .13 .70 1.23 2.02
Tier 1 risk-based capital.................. 11.50 15.24 12.25 14.78 13.15 12.97 9.74
Total risk-based capital................... 12.58 16.50 13.34 16.09 14.51 14.75 11.19
</TABLE>

12
<PAGE>

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
-------------------- -----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Total assets....................... $ 614,569 $ 567,312 $ 591,203 $ 561,339 $ 519,635 $ 510,642 $ 467,287
Total earning assets............... 566,425 524,183 539,842 505,307 477,196 462,549 422,185
Loans.............................. 324,573 314,572 312,160 291,042 267,517 251,062 279,511
Allowance for loan losses.......... 3,943 3,904 3,524 3,995 4,026 4,484 4,230
Total deposits..................... 553,792 507,946 527,131 504,445 459,132 454,917 418,134
Short-term borrowings.............. 14,770 7,678 17,292 11,414 13,346 15,795 12,884
Long-term obligations.............. 596 -- -- -- -- -- --
Total stockholders' equity......... 40,587 47,951 40,961 40,808 40,055 35,253 31,266
Net tangible book value............ 39,426 46,510 39,660 39,202 38,017 32,651 28,365
</TABLE>

- ------------------------------

13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following discussion and analysis is intended as a review of significant
factors affecting the results of operations and the financial condition of the
Company for the periods indicated. This discussion should be read in conjunction
with the Consolidated Financial Statements and the Notes thereto and the
Selected Consolidated Financial Data presented herein.

OVERVIEW

The Company provides a full range of banking services, including personal
and corporate trust services. The strategy of the Company is to continue to
increase its core banking business and to further develop its mortgage, trust,
securities sales and insurance activities in order to provide an array of
household financial services encompassing banking and other investment products.
As of December 31, 1995, the Company's total assets were $591.2 million and net
income for the year ended December 31, 1995 was $6.2 million, with a return on
average assets of 1.09% and a return on average equity of 13.37% for the year
then ended. As of June 30, 1996, the Company's total assets had grown to $614.6
million, with net income of $3.0 million for the six months then ended, an
increase in net income of 5.5% from the six months ended June 30, 1995.

RESULTS OF OPERATIONS

NET INTEREST INCOME

Net interest income equals the difference between interest income earned on
assets and the interest expense paid on liabilities and is a measure of how
effectively management has balanced and allocated the Company's
interest-rate-sensitive assets and liabilities. Net interest income on a tax-
equivalent basis was constant at $11.6 million for the six months ended June 30,
1996 and 1995. Net interest income on a tax-equivalent basis increased 2.6% to
$23.6 million in 1995 from $23.0 million in 1994 and increased 8.1% in 1994 from
$21.3 million in 1993.

14
<PAGE>
The following tables set forth the average balances, net interest income and
expense and average yields and rates for the Company's earning assets and
interest-bearing liabilities for the indicated periods on a tax-equivalent basis
assuming a 34% tax rate.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, (1)
------------------------------------------------------------------------------------
1996 1995
----------------------------------------- -----------------------------------------
AVERAGE BALANCE INTEREST YIELD/RATE(%) AVERAGE BALANCE INTEREST YIELD/RATE(%)
--------------- --------- ------------- --------------- --------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Investment securities (2):
Taxable.................................. $ 195,107 $ 5,983 6.13% $ 188,080 $ 5,673 6.03%
Tax exempt (tax equivalent).............. 32,083 1,214 7.57 26,248 1,035 7.89
--------------- --------- --------------- ---------
Total investment securities............ 227,190 7,197 6.34 214,328 6,708 6.26
--------------- --------- --------------- ---------
Funds sold................................. 17,701 463 5.25 5,448 159 5.89
--------------- --------- --------------- ---------
Loans (3):.................................
Commercial and industrial................ 50,983 2,372 9.33 51,061 2,457 9.70
Residential real estate.................. 150,669 5,677 7.54 149,408 5,693 7.62
Commercial real estate................... 73,119 3,314 9.09 66,095 2,985 9.11
Other consumer........................... 37,678 2,090 11.12 34,731 1,770 10.28
Fees on loans............................ -- 145 -- 171
--------------- --------- --------------- ---------
Total loans (tax equivalent)........... 312,449 13,598 8.73 301,295 13,076 8.75
--------------- --------- --------------- ---------
Total earning assets................. 557,340 $ 21,258 7.65% 521,071 $ 19,943 7.72%
--------- ---------
--------- ---------
Cash and due from banks.................. 26,612 23,577
Other assets............................. 18,629 15,173
--------------- ---------------
Total assets......................... $ 602,581 $ 559,821
--------------- ---------------
--------------- ---------------

INTEREST BEARING LIABILITIES:
Interest bearing deposits:
Interest bearing demand deposits......... $ 112,377 $ 1,222 2.18% $ 108,073 $ 1,473 2.75%
Savings deposits......................... 108,207 1,447 2.68 109,395 1,567 2.89
Time deposits............................ 234,884 6,469 5.52 197,687 5,049 5.15
--------------- --------- --------------- ---------
Total interest bearing deposits........ 455,468 9,138 4.02 415,155 8,089 3.93
Short-term borrowings:
Securities sold under agreements to
repurchase, funds purchased, and
treasury tax deposits................. 5,113 142 5.57 7,180 195 5.48
Short-term bank borrowings............. 9,678 369 7.65 973 51 10.57
--------------- --------- --------------- ---------
Total interest bearing liabilities..... 470,259 $ 9,649 4.11 423,308 $ 8,335 3.97
--------- ---------
--------- ---------
Demand deposits.......................... 85,894 88,268
Other liabilities........................ 5,068 4,341
Stockholders' equity..................... 41,360 43,904
--------------- ---------------
Total liabilities and stockholders'
equity.................................. $ 602,581 $ 559,821
--------------- ---------------
--------------- ---------------
Net interest income (tax equivalent)....... $ 11,609 $ 11,608
--------- ---------
--------- ---------
Net interest margin (4).................... 4.18% 4.49%
Interest bearing liabilities to earning
assets.................................... 84.38% 81.24%
--------------- ---------------
--------------- ---------------
</TABLE>

- ------------------------------
(1) Yield/Rates are annualized.

(2) Based on amortized cost.

(3) Nonaccrual loans are included in average balances.

(4) Net interest margin is net interest income divided by average total earning
assets.

15
<PAGE>

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
1995 1994 1993
----------------------------------- ----------------------------------- ---------
AVERAGE YIELD/RATE AVERAGE YIELD/RATE AVERAGE
BALANCE INTEREST (%) BALANCE INTEREST (%) BALANCE
--------- --------- ------------- --------- --------- ------------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Investment securities (1):
Taxable............................... $ 184,703 $ 11,168 6.05% $ 192,760 $ 11,393 5.91% $ 198,052
Tax-exempt (tax equivalent)........... 26,271 2,048 7.80 23,211 1,882 8.11 17,395
--------- --------- --------- --------- ---------
Total investment securities......... 210,974 13,216 6.26 215,971 13,275 6.15 215,447
--------- --------- --------- --------- ---------
Funds sold.............................. 8,389 478 5.70 5,908 228 3.86 6,173
--------- --------- --------- --------- ---------
Loans (2):
Commercial and industrial............. 50,879 4,960 9.75 49,950 4,293 8.60 51,420
Residential real estate............... 150,028 11,634 7.75 128,034 9,197 7.18 98,206
Commercial real estate................ 70,240 6,373 9.07 60,249 5,196 8.62 55,850
Other consumer........................ 36,050 3,818 10.59 34,697 3,385 9.76 44,151
Fees on loans......................... -- 341 -- -- 414 -- --
--------- --------- --------- --------- ---------
Total loans (tax equivalent)........ 307,197 27,126 8.83 272,930 22,485 8.24 249,627
--------- --------- --------- --------- ---------
Total earning assets.............. 526,560 $ 40,820 7.75 494,809 $ 35,988 7.27 471,247
--------- ---------
--------- ---------
Cash and due from banks............... 24,647 22,041 20,034
Other assets.......................... 16,996 17,132 22,640
--------- --------- ---------
Total assets...................... $ 568,203 $ 533,982 $ 513,921
--------- --------- ---------
--------- --------- ---------
INTEREST BEARING LIABILITIES:
Interest bearing deposits:
Interest bearing demand deposits...... $ 108,487 $ 2,738 2.52 $ 104,784 $ 2,515 2.40 $ 105,441
Savings deposits...................... 108,656 3,072 2.83 112,397 2,981 2.65 106,539
Time deposits......................... 203,874 10,916 5.35 172,453 7,016 4.07 162,860
--------- --------- --------- --------- ---------
Total interest bearing deposits..... 421,017 16,726 3.97 389,634 12,512 3.21 374,840
Short-term borrowings:
Securities sold under agreements to
repurchase, funds purchased, and
treasury tax deposits.............. 7,211 379 5.26 5,680 231 4.07 9,547
Short-term bank borrowings.......... 781 79 10.12 2,971 206 6.93 6,000
--------- --------- --------- --------- ---------
Total interest bearing
liabilities........................ 429,009 $ 17,184 4.01 398,285 $ 12,949 3.25 390,387
--------- ---------
--------- ---------
Demand deposits....................... 88,009 91,474 81,274
Other liabilities..................... 4,783 4,372 2,904
Stockholders' equity.................. 46,402 39,851 39,356
--------- --------- ---------
Total liabilities and stockholders'
equity............................... $ 568,203 $ 533,982 $ 513,921
--------- --------- ---------
--------- --------- ---------
Net interest income (tax equivalent).... $ 23,636 $ 23,039
--------- ---------
--------- ---------
Net interest margin (3)................. 4.49% 4.66%
Interest bearing liabilities to earning
assets................................. 81.47% 80.49% 82.84%
--------- --------- ---------
--------- --------- ---------

<CAPTION>
YIELD/RATE
INTEREST (%)
--------- ---------------
<S> <C> <C>
INTEREST EARNING ASSETS:
Investment securities (1):
Taxable............................... $ 11,680 5.90%
Tax-exempt (tax equivalent)........... 1,538 8.84
---------
Total investment securities......... 13,218 6.14
---------
Funds sold.............................. 177 2.87
---------
Loans (2):
Commercial and industrial............. 3,929 7.64
Residential real estate............... 7,116 7.25
Commercial real estate................ 4,944 8.85
Other consumer........................ 4,339 9.83
Fees on loans......................... 390
---------
Total loans (tax equivalent)........ 20,718 8.30
---------
Total earning assets.............. $ 34,113 7.24
---------
---------
Cash and due from banks...............
Other assets..........................
Total assets......................
INTEREST BEARING LIABILITIES:
Interest bearing deposits:
Interest bearing demand deposits...... $ 2,398 2.27
Savings deposits...................... 3,104 2.91
Time deposits......................... 6,576 4.04
---------
Total interest bearing deposits..... 12,078 3.20
Short-term borrowings:
Securities sold under agreements to
repurchase, funds purchased, and
treasury tax deposits.............. 350 3.67
Short-term bank borrowings.......... 377 6.28
---------
Total interest bearing
liabilities........................ $ 12,805 3.28
---------
---------
Demand deposits.......................
Other liabilities.....................
Stockholders' equity..................
Total liabilities and stockholders'
equity...............................
Net interest income (tax equivalent).... $ 21,308
---------
---------
Net interest margin (3)................. 4.52%
Interest bearing liabilities to earning
assets.................................
</TABLE>

- ------------------------------
(1) Based on amortized cost.

(2) Nonaccrual loans are included in average balances.

(3) Net interest margin is net interest income divided by average total earning
assets.

16
<PAGE>

Net interest income, on a tax-equivalent basis, was $11.6 million for the
six months ended June 30, 1996 and 1995. Interest income on total earning assets
increased $1.3 million for the six months ended June 30, 1996 as compared to the
six months ended June 30, 1995. Interest income on loans increased $522,000 for
the six months ended June 30, 1996 as compared to the six months ended June 30,
1995 due to a $11.2 million increase in average loans outstanding while average
loan rates decreased slightly. Interest expense on interest-bearing liabilities
increased $1.3 million for the six months ended June 30, 1996 as compared to the
six months ended June 30, 1995 as a result of a $1.0 million increase in
interest expense on deposits, which was due to a combination of a $40.3 million
increase in average deposits and an increase in the average rate paid to 4.02%
from 3.93%. The increase in the average rate on deposits is due to the
increasing market rates experienced over the past year plus a high rate
certificate of deposit promotion to introduce the Company's new Will-Cook branch
in February 1996. The $318,000 increase in interest expense on short-term bank
borrowings for the six months ended June 30, 1996 is attributable to the
borrowings incurred to finance the repurchase of the Company's Common Stock in
December 1995. Net interest margin decreased .31% to 4.18% for the six months
ended June 30, 1996 from 4.49% for the six months ended June 30, 1995 as a
result of the above factors.

Net interest income, on a tax-equivalent basis, was $23.6 million for the
year ended December 31, 1995 and $23.0 million for the year ended December 31,
1994. Interest income on total earning assets increased $4.8 million in 1995
from 1994. Interest income on loans increased $4.6 million in 1995 from 1994
primarily due to a combination of a $34.3 million increase in loans and an
increase in the average yield to 8.83% from 8.24%. Interest expense on interest
bearing deposits increased $4.2 million in 1995 from 1994 due to growth of $31.4
million in deposits and an increase in the average rate paid to 3.97% from
3.21%. Interest on securities sold under agreements to repurchase and funds
purchased increased $148,000 due to an increase of $1.5 million in the average
balance. Interest expense on short-term bank borrowings decreased $127,000 in
1995 from 1994 attributable to a decrease of $2.2 million in the average balance
of those borrowings. Net interest margin decreased .17% to 4.49% in 1995 from
4.66% in 1994 as a result of the above factors.

Net interest income, on a tax-equivalent basis, was $23.0 million for the
year ended December 31, 1994 and $21.3 million for the year ended December 31,
1993. Interest income on total earning assets increased $1.9 million in 1994
from 1993. Interest income on loans increased $1.8 million in 1994 from 1993
primarily due to a $23.3 million increase in loans. Interest expense on deposits
increased $434,000 in 1994 from 1993 due to an increase of $14.8 million in
deposits. Interest on securities sold under agreements to repurchase and funds
purchased decreased $119,000 due to a decrease of $3.0 million in the average
balance. Interest expense on short-term bank borrowings decreased $171,000 in
1994 from 1993 attributable to a decrease of $3.9 million in the average balance
of those borrowings. Net interest margin increased .14% to 4.66% in 1994 from
4.52% in 1993 as a result of the above factors.

The changes in net interest income from period to period are reflective of
changes in the rate environment, changes in the composition of assets and
liabilities as to type and maturity (and the inherent rate differences related
thereto), and volume changes. The Company's emphasis on residential loans, as
compared to commercial loans which generally bear higher rates, has also had an
impact on net interest income. Later sections of this discussion and analysis
address the changes in maturity composition of loans and investments, and in the
asset and liability repricing gaps associated with interest rate risk, all of
which contribute to changes in net interest margin.

The following table sets forth an analysis of volume and rate changes in
interest income and interest expense of the Company's average earning assets and
average interest-bearing liabilities for the indicated periods on a
tax-equivalent basis assuming a 34% tax rate. The table distinguishes between
the changes related to average outstanding balances (changes in volume holding
the initial interest rate constant) and the changes related to

17
<PAGE>
average interest rates (changes in average rate holding the initial outstanding
balance constant). The change in interest due to both volume and rate has been
allocated to volume and rate changes in proportion to the relationship of the
absolute dollar amounts of the change in each.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
FOR THE SIX MONTHS ----------------------------------------------
ENDED JUNE 30, 1994
--------------------------------- COMPARED TO
1993
1996 COMPARED TO 1995 1995 COMPARED TO 1994 -----------
--------------------------------- ---------------------------------
CHANGE DUE
CHANGE DUE TO CHANGE DUE TO TO
--------------------------------- --------------------------------- -----------
VOLUME RATE NET VOLUME RATE NET VOLUME
----------- --------- --------- ----------- --------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST EARNED ON:
Investment securities:
Taxable.................................... $ 428 $ (118) $ (310) $ (476) $ 251 $ (225) $ (510)
Tax-exempt................................. 460 (281) 179 248 (82) 166 514
Funds sold................................. 722 (418) 304 96 154 250 (8)
Total loans................................ 976 (454) 522 2,824 1,817 4,641 1,934
----------- --------- --------- ----------- --------- --------- -----------
Total Interest Earned...................... 2,586 (1,271) 1,315 2,692 2,140 4,832 1,930
----------- --------- --------- ----------- --------- --------- -----------
INTEREST PAID ON:
Interest bearing demand deposits........... 118 (369) (251) 89 134 223 (15)
Savings deposits........................... (34) (86) (120) (99) 190 91 170
Time deposits.............................. 1,916 (496) 1,420 1,279 2,621 3,900 388
Short-term borrowings:
Securities sold under agreements to
repurchase, funds purchased, and
treasury tax deposits................... (113) 60 (53) 62 86 148 (142)
Short-term bank borrowings............... 920 (602) 318 (152) 25 (127) (190)
----------- --------- --------- ----------- --------- --------- -----------
Total Interest Paid.......................... 2,807 (1,493) 1,314 1,179 3,056 4,235 211
----------- --------- --------- ----------- --------- --------- -----------
Net Interest Income.......................... $ 82 $ (81) $ 1 $ 1,513 $ (916) $ 597 $ 1,719
----------- --------- --------- ----------- --------- --------- -----------
----------- --------- --------- ----------- --------- --------- -----------

RATE NET
--------- ---------

<S> <C> <C>
INTEREST EARNED ON:
Investment securities:
Taxable.................................... $ 223 $ (287)
Tax-exempt................................. (170) 344
Funds sold................................. 59 51
Total loans................................ (167) 1,767
--------- ---------
Total Interest Earned...................... (55) 1,875
--------- ---------
INTEREST PAID ON:
Interest bearing demand deposits........... 132 117
Savings deposits........................... (293) (123)
Time deposits.............................. 52 440
Short-term borrowings:
Securities sold under agreements to
repurchase, funds purchased, and
treasury tax deposits................... 23 (119)
Short-term bank borrowings............... 19 (171)
--------- ---------
Total Interest Paid.......................... (67) 144
--------- ---------
Net Interest Income.......................... $ 12 $ 1,731
--------- ---------
--------- ---------
</TABLE>

OTHER INCOME

The Company's total other income for the six months ended June 30, 1996
increased $387,000 to $4.1 million from $3.8 million for the six months ended
June 30, 1995. The Company's total other income decreased $147,000 to $7.9
million in 1995 from $8.0 million in 1994 and decreased $1.8 million in 1994
from $9.8 million in 1993. The following table sets forth the Company's other
income for the indicated periods.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEARS ENDED
ENDED JUNE 30, DECEMBER 31,
-------------------- -------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Income from fiduciary activities............................................ $ 998 $ 954 $ 1,927 $ 1,872 $ 1,764
Service charges on deposit accounts......................................... 2,172 1,988 4,078 4,256 4,123
Net gains on sales of investment securities................................. 35 33 49 207 1,421
Mortgage origination fees................................................... 202 246 555 336 1,266
Securities sales............................................................ 123 55 132 174 117
Insurance activities........................................................ 132 111 207 218 183
Loan servicing fees......................................................... 110 97 206 196 198
Other....................................................................... 377 278 716 758 748
--------- --------- --------- --------- ---------
Total other income...................................................... $ 4,149 $ 3,762 $ 7,870 $ 8,017 $ 9,820
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

The $387,000 increase in total other income for the six months ended June
30, 1996 over the six months ended June 30, 1995 is primarily due to a $184,000
increase in service charges on deposit accounts, additional gains on sales of
investment securities of $68,000 and modest increases in most other income
categories, which offset the decrease in mortgage origination fees. The $147,000
decrease in 1995 from 1994 is primarily attributable to a $178,000 decrease in
service charges on deposit accounts and a reduction of $158,000 in net gains on
sales

18
<PAGE>
of investment securities, offset by increases in mortgage origination fees of
$219,000. The $1.8 million decrease in total other income in 1994 from 1993 is
attributable to a $930,000 decrease in mortgage origination fees due to an
unusually high level of refinancings in 1993 and decreases in net gains on sales
of investment securities.

OPERATING EXPENSES

The Company's total operating expenses increased $152,000 to $10.9 million
from $10.7 million for the six months ended June 30, 1996 compared to the six
months ended June 30, 1995. The Company's total operating expenses increased
$541,000 to $21.4 million in 1995 from $20.9 million in 1994 and decreased $1.3
million in 1994 from $22.2 million in 1993. The following table sets forth the
Company's operating expenses for the indicated periods.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEARS ENDED DECEMBER
ENDED JUNE 30, 31,
-------------------- -------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits..................................... $ 5,372 $ 5,382 $ 10,730 $ 10,496 $ 10,486
Occupancy.......................................................... 1,188 1,068 2,134 2,003 2,102
Equipment.......................................................... 797 1,111 1,918 2,155 2,156
FDIC insurance..................................................... 4 551 570 1,035 999
Marketing and promotion............................................ 427 413 952 647 854
Computer system and services....................................... 515 56 492 124 158
Supplies........................................................... 456 341 724 717 782
Loan, legal and collection fees.................................... 184 136 257 143 443
Other real estate.................................................. 13 -- 53 50 388
Other.............................................................. 1,923 1,669 3,586 3,505 3,801
--------- --------- --------- --------- ---------
Total operating expenses....................................... $ 10,879 $ 10,727 $ 21,416 $ 20,875 $ 22,169
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

The increase in total operating expenses for the six months ended June 30,
1996 is primarily due to the following factors. Occupancy expense increased
$120,000 for the six months ended June 30, 1996 compared to the six months ended
June 30, 1995 due to the addition of the Will-Cook branch and additional
depreciation due to expansion and remodeling of other facilities. The remaining
operating expenses increased $32,000 for the six months ended June 30, 1996
compared to the six months ended June 30, 1995 due primarily to an increase of
$459,000 for computer system and services which were outsourced in mid-1995 and
an increase in other expenses of $254,000, offset by decreases of $547,000 for
FDIC insurance and a decrease in equipment cost of $314,000 primarily due to the
outsourcing of data processing. The increase of $541,000 in total operating
expenses in 1995 from 1994 is attributable to increases in salaries and employee
benefits, occupancy, marketing and promotion and other operating expenses. The
$1.3 million decrease in total operating expenses in 1994 compared to 1993 is
primarily attributable to a decrease in other operating expenses resulting from
a reduction in collection and repossessed asset costs.

FEDERAL INCOME TAX

The Company's consolidated income tax rate varies from statutory rates
principally due to interest income from tax-exempt securities and loans. The
Company recorded income tax expenses totaling $2.9 million in 1995, $2.7 million
in 1994, and $2.1 million in 1993, reflecting changes in income. The provision
for income taxes was constant at $1.3 million for the six months ended June 30,
1996 and 1995.

19
<PAGE>
FINANCIAL CONDITION

LOANS

The Company's loan portfolio largely reflects the profile of the communities
in which it operates. The following table sets forth the composition of the
Companys loan portfolio as of the indicated dates.

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
----------- --------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Commercial and industrial............................... $ 54,414 $ 50,258 $ 50,339 $ 51,162 $ 53,970
Residential real estate................................. 128,755 119,153 110,045 80,172 50,746
Home equity lines of credit............................. 29,053 31,152 32,256 37,684 42,848
Commercial real estate.................................. 73,630 74,199 64,789 56,774 54,308
Other consumer.......................................... 38,721 37,398 33,613 41,725 49,190
----------- ----------- ----------- ----------- -----------
Total loans......................................... 324,573 312,160 291,042 267,517 251,062
Allowance for loan losses............................... (3,943) (3,524) (3,995) (4,026) (4,484)
----------- ----------- ----------- ----------- -----------
Net loans........................................... $ 320,630 $ 308,636 $ 287,047 $ 263,491 $ 246,578
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------

1991
-----------

<S> <C>
Commercial and industrial............................... $ 58,372
Residential real estate................................. 51,949
Home equity lines of credit............................. 48,293
Commercial real estate.................................. 54,236
Other consumer.......................................... 66,661
-----------
Total loans......................................... 279,511
Allowance for loan losses............................... (4,230)
-----------
Net loans........................................... $ 275,281
-----------
-----------
</TABLE>

Total loans increased $12.4 million as of June 30, 1996 from December 31,
1995. This increase is primarily attributable to an increase in commercial and
industrial loans and residential real estate loans. Total loans increased $21.2
million to $312.2 million as of December 31, 1995 from $291.0 million as of
December 31, 1994. This increase in total loans was principally due to increased
residential and commercial real estate loans.

Commercial and industrial loans increased $4.2 million to $54.4 million as
of June 30, 1996 from $50.3 million as of December 31, 1995. The net increase in
1996 is attributable to purchases of short-term commercial leases aggregating
$5.6 million. Commercial and industrial loans remained relatively constant at
$50.3 million at December 31, 1995 and December 31, 1994.

Residential real estate loans increased $9.6 million to $128.8 million as of
June 30, 1996 from $119.2 million as of December 31, 1995 due to increased
origination of adjustable rate mortgages. The Company originates fixed-rate
residential loans for the secondary market, retaining the servicing rights. See
"Business -- Services." As of December 31, 1995, residential real estate loans
increased $9.1 million from December 31, 1994. As of December 31, 1995,
residential real estate loans increased $67.2 million from December 31, 1991.
The increase in this category since 1991 is due to the Company's mortgage
origination operation and emphasis on residential real estate lending.

Home equity lines of credit decreased $2.1 million to $29.1 million as of
June 30, 1996 from $31.2 million as of December 31, 1995. As of December 31,
1995, home equity lines of credit decreased $1.1 million from December 31, 1994.
As of December 31, 1995, home equity lines of credit decreased $17.1 million
from December 31, 1991. Management believes this trend is due to mortgage
refinancings which include the home equity lines, and aggressive competition
within the banking industry for home equity lines of credit.

Commercial real estate loans decreased $569,000 to $73.6 million as of June
30, 1996 from $74.2 million as of December 31, 1995. As of December 31, 1995,
commercial real estate loans increased $9.4 million from December 31, 1994. As
of December 31, 1995, commercial real estate loans increased $20.0 million from
December 31, 1991. This increase in commercial real estate loans reflects the
overall improvement in the commercial real estate market during this period.

Other consumer loans increased $1.3 million to $38.7 million as of June 30,
1996 from $37.4 million as of December 31, 1995. As of December 31, 1995, other
consumer loans increased $3.8 million from December 31, 1994. As of December 31,
1995, other consumer loans decreased $29.3 million from December 31, 1991. The
significant decreases in consumer loans were due to the sale of the credit card
portfolio in 1992 and the run-off of other installment loans, including indirect
auto loans in 1993 and 1994. The Companys recent increase in consumer loans is
due primarily to the moderate re-entry into the indirect auto loan market. As of
June 30, 1996, the Company's consumer loan portfolio included $8.7 million of
indirect auto loans. These loans generally carry a

20
<PAGE>

slightly higher risk than direct loans because they are originated through auto
dealers to individuals who do not have other banking relationships with the
Company. However, the same underwriting criteria are applied to indirect auto
loans as are applied to other consumer 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 loans are quality of the borrower's
management and the impact of local economic factors. Risks associated with real
estate loans include concentrations of loans in a loan type such as commercial
or residential and fluctuating land values. Consumer loans also have risks
associated with concentrations of loans in a single type of loan. Consumer loans
additionally face the risk of a borrower's unemployment as a result of
deteriorating economic conditions.

The Company attempts to balance the types of loans in its portfolio with the
objective of reducing risk. While the Company has a sizable portion of its loan
portfolio secured by real estate in one form or another, almost all of those
loans have adjustable or floating interest rates. The Company believes that its
philosophy in extending credit is relatively conservative in nature, with a
presumption that most credit should have both a primary and a secondary source
of repayment, and that the primary source should generally be operating cash
flows, while the secondary source should generally be disposition of collateral.
The Company engages in very little unsecured lending, and generally requires
personal guarantees of principals for business obligations. The Company
practices a system of concurrence in the approval of commercial credit whereby
the documented concurrence of a higher-ranking officer (or approval by the board
or a board committee, where applicable) is obtained in addition to that of the
recommending officer. This system is intended to assure that commercial credit
is subjected to the independent objective review of at least two lending
officers.

LOAN MATURITIES

The following table sets forth the remaining maturities, based upon
contractual dates, for selected loan categories as of June 30, 1996.

<TABLE>
<CAPTION>
ONE YEAR
OR LESS TOTAL
-------- --------
OVER 1 YEAR
THROUGH 5 YEARS OVER 5 YEARS
-------------------------- --------------------------
FIXED RATE FLOATING RATE FIXED RATE FLOATING RATE
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Commercial and industrial.......... $ 16,753 $17,099 $ 8,617 $ 6,340 $ 5,605 $ 54,414
Residential real estate............ 7,313 15,840 241 4,816 100,545 128,755
Home equity lines of credit........ 5,037 -- 17,743 -- 6,273 29,053
Commercial real estate............. 11,894 33,178 7,087 1,099 20,372 73,630
Other consumer..................... 4,139 30,393 1,652 2,537 -- 38,721
-------- ---------- ------------- ---------- ------------- --------
Total.......................... $ 45,136 $96,510 $35,340 $14,792 $132,795 $324,573
-------- ---------- ------------- ---------- ------------- --------
-------- ---------- ------------- ---------- ------------- --------
</TABLE>

21
<PAGE>
NON-PERFORMING LOANS

The Company discontinues the accrual of interest income on any loan when, in
the opinion of management, there is reasonable doubt as to the timely
collectibility of interest or principal. Generally, the Company discontinues the
accrual of interest on a loan once it becomes 90 days past due. All accrued and
uncollected interest is charged against income at the time a loan is placed on
nonaccrual status. Nonaccrual loans are returned to an accrual status when, in
the opinion of management, the financial position of the borrower indicates that
there is no longer any reasonable doubt as to the timely payment of principal
and interest. There are no potential problem loans as to which management has
serious doubts as to collectibility that are not included in the following
table.

The following table sets forth information on the Companys non-performing
loans and other assets as of the indicated dates.

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -----------------------------------------------------
1996 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual loans................................... $ 1,639 $ 1,606 $ 2,221 $ 2,599 $ 3,006 $ 4,571
Other loans 90 days past due....................... 159 177 167 227 1,416 2,964
Other real estate.................................. 988 858 1,081 1,401 3,238 2,344
--------- --------- --------- --------- --------- ---------
Total nonperforming assets....................... $ 2,786 $ 2,641 $ 3,469 $ 4,227 $ 7,660 $ 9,879
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Nonaccrual and other loans 90 days past due to
total loans....................................... .55% .57% .82% 1.05% 1.76% 2.70%
Nonperforming assets to total loans plus other real
estate............................................ .86 .84 1.19 1.57 3.01 3.50
Nonperforming assets to total assets............... .45 .45 .62 .81 1.50 2.11
</TABLE>

For the six month period ended June 30, 1996, gross interest income that
would have been recorded if the nonaccrual loans had been current in accordance
with their original terms and had been outstanding throughout the period was
$65,000. During the six months ended June 30, 1996, the Company recognized
interest income on such nonaccrual loans of $42,000.

Nonperforming assets have decreased in each of the last five years and
constitute .45% of total assets as of June 30, 1996, down from 2.11% as of
December 31, 1991. Management believes that the significant improvement in the
level of nonperforming assets is due to the Company's conservative lending
philosophy and increased collection efforts, along with improved economic
conditions. See "Business -- History."

ANALYSIS OF ALLOWANCE FOR LOAN LOSSES

An allowance for loan losses has been established to provide for those loans
that may not be repaid in their entirety. The allowance for loan losses is
maintained at a level considered by management to be adequate to provide for
potential loan losses. The allowance is increased by provisions charged to
earnings and is reduced by charge-offs, net of recoveries. The provision for
loan losses is based on past loan loss experience and managements evaluation of
the loan portfolio under current economic conditions. Loans are charged to the
allowance for loan losses when, and to the extent, they are deemed by management
to be uncollectible. The allowance for loan losses is composed of specific
reserves for impaired loans and general reserves for all other loans.

22
<PAGE>
The following table sets forth loans charged-off and recovered by type of
loan and an analysis of the allowance for loan losses for the indicated periods.

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, ----------------------------------------------------------
1996 1995 1994 1993 1992 1991
------------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Average total loans............................ $ 312,449 $ 307,197 $ 272,930 $ 249,627 $ 270,113 $ 285,895
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total loans at end of period................... $ 324,573 $ 312,160 $ 291,042 $ 267,517 $ 251,062 $ 279,511
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Allowance at beginning of year................. $ 3,524 $ 3,995 $ 4,026 $ 4,484 $ 4,230 $ 7,083
Charge offs:
Commercial and industrial.................... 58 269 125 329 1,440 951
Residential real estate...................... 29 344 45 124 101 3
Home equity lines of credit.................. -- -- 43 180 -- 3
Commercial real estate....................... 108 200 28 309 403 858
Other consumer............................... 66 288 727 1,161 1,890 4,910
------------- ---------- ---------- ---------- ---------- ----------
Total charge-offs.......................... 261 1,101 968 2,103 3,834 6,725
------------- ---------- ---------- ---------- ---------- ----------
Recoveries:
Commercial and industrial.................... 2 73 263 87 143 466
Residential real estate...................... 1 18 39 5 -- --
Home equity lines of credit.................. -- -- 1 12 -- --
Commercial real estate....................... 490 7 2 33 5 10
Other consumer............................... 112 373 321 209 363 473
------------- ---------- ---------- ---------- ---------- ----------
Total recoveries........................... 605 471 626 346 511 949
------------- ---------- ---------- ---------- ---------- ----------
Net charge-offs (recoveries)................... (344) 630 342 1,757 3,323 5,776
------------- ---------- ---------- ---------- ---------- ----------
Provision for loan losses...................... 75 159 311 1,299 3,577 2,923
------------- ---------- ---------- ---------- ---------- ----------
Allowance at end of period..................... $ 3,943 $ 3,524 $ 3,995 $ 4,026 $ 4,484 $ 4,230
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Net charge-offs (recoveries) to average total
loans......................................... (.11)% .21% .13% .70% 1.23% 2.02%
Allowance to total loans at end of period...... 1.21 1.13 1.37 1.51 1.79 1.51
Allowance to nonperforming loans............... 219.30 197.64 167.29 142.46 101.40 56.14
</TABLE>

The allowance for loan losses was $3.9 million as of June 30, 1996, $3.5
million as of December 31, 1995 and $4.0 million as of December 31, 1994. For
the six months ended June 30, 1996, net recoveries on loans previously
charged-off were $344,000, due primarily to payment from a former customer's
bankruptcy proceeding. Net charge-offs increased $288,000 to $630,000 or 0.21%
of average loans in 1995 from $342,000 or 0.13% of average loans in 1994.
Management considers the allowance for loan losses to be adequate to meet
potential losses in the loan portfolio as of June 30, 1996. See "-- Non-
Performing Loans."

23
<PAGE>
ALLOCATION OF ALLOWANCE FOR LOAN LOSS

The following table sets forth the Company's allocation of the allowance for
loan losses by types of loans as of the indicated dates.

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
------------------------ ---------------------------------------------------------------
1996 1995 1994 1993
------------------------ ------------------------ ------------------------ -----------
LOAN LOAN LOAN
CATEGORY TO CATEGORY TO CATEGORY TO
AMOUNT GROSS LOANS AMOUNT GROSS LOANS AMOUNT GROSS LOANS AMOUNT
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Allocated:
Commercial and industrial.......... $ 686 16.76% $ 702 16.10% $ 642 17.30% $ 469
Residential real estate............ 749 39.67 676 38.17 510 37.81 318
Home equity line of credit......... 131 8.95 129 9.98 164 11.08 135
Commercial real estate............. 634 22.69 652 23.77 588 22.26 636
Other consumer..................... 379 11.93 421 11.98 562 11.55 1,634
Unallocated:......................... 1,364 -- 944 -- 1,529 -- 834
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total allowance for loan
losses.......................... $ 3,943 100.00% $ 3,524 100.00% $ 3,995 100.00% $ 4,026
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------

1992 1991
------------------------ ------------------------
LOAN LOAN LOAN
CATEGORY TO CATEGORY TO CATEGORY TO
GROSS LOANS AMOUNT GROSS LOANS AMOUNT GROSS LOANS
----------- ----------- ----------- ----------- -----------

<S> <C> <C> <C> <C> <C>
Allocated:
Commercial and industrial.......... 19.12% $ 300 21.50% $ 1,297 20.88%
Residential real estate............ 29.97 451 20.21 101 18.59
Home equity line of credit......... 14.09 210 17.07 -- 17.28
Commercial real estate............. 21.22 494 21.63 398 19.40
Other consumer..................... 15.60 1,273 19.59 1,527 23.85
Unallocated:......................... -- 1,756 -- 907 --
----------- ----------- ----------- ----------- -----------
Total allowance for loan
losses.......................... 100.00% $ 4,484 100.00% $ 4,230 100.00%
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>

INVESTMENT SECURITIES

The Company manages its investment portfolio to provide both a source of
liquidity and earnings. To assist in the process, the Company utilizes a firm
specializing in portfolio management consultation with commercial banks in the
Midwest. The Company follows an investment policy which generally requires the
securities in its investment portfolio to be rated, at the date of purchase,
investment grade by a nationally recognized rating agency. In accordance with
the Company's investment policy, no derivative securities may be purchased,
other than collateralized mortgage obligations, without the prior approval of
the Board of Directors. As of June 30, 1996, the Company owned short-tranche
Fannie Mae and FHLMC collateralized mortgage obligations with an amortized cost
totaling $46.3 million, short-term U.S. Treasury and agency strips with an
amortized cost totaling $14.9 million and short-term structured notes with an
amortized cost totaling $4.5 million. As of June 30, 1996, the Company did not
hold any off-balance sheet derivative financial instruments such as futures,
forwards, swaps or option contracts. As of June 30, 1996, the Company held no
securities with a book value exceeding 10% of stockholders' equity of a single
issuer other than the U.S. Treasury or other U.S. government agencies.

Adjustable rate mortgage pools and collateralized mortgage obligations are
mortgage backed obligations of Fannie Mae and FHLMC. These obligations have
contractual maturities ranging from less than four years to 25 years and have an
anticipated average life to maturity ranging from less than one year to 5.1
years. All adjustable rate mortgage pools and collateralized mortgage
obligations contain a certain amount of risk related to the uncertainty of
prepayments of the underlying mortgages. Interest rate changes have a direct
impact upon prepayment rates. The Company uses computer simulation models to
test the average life and yield volatility of adjustable rate mortgage pools and
collateralized mortgage obligations under various interest rate assumptions to
monitor volatility. At June 30, 1996, the Company owned no high risk
collateralized mortgage obligations as defined by the Federal Financial
Institutions Examination Council's Supervisory Policy Statement on Securities
Activities. U. S. Treasury strips are direct obligations of the United States
government which have had the coupons removed. These securities are sold at a
discount to par similar to U.S. Treasury bills and pay no interest until
maturity. The market value fluctuation of these securities is greater than the
fluctuation on similar maturity full coupon U.S. Treasury securities because
these types of securities are more sensitive to changes in interest rates. U.S.
government agency strips held by the Company pay no interest until late 1996,
are callable at par beginning in late 1996 and, if not called, begin making
coupon interest payments ranging from 7.56% to 8.04% thereafter until maturity.
The market value fluctuation of these securities is greater than the fluctuation
on similar maturity full coupon U.S. government agency securities due to the
uncertainty of the redemption date. The interest rates on the structured notes
reprice based on formulas applied to various indices. The maturities on the
structured notes range from one to four years.

24
<PAGE>
Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" ("SFAS No. 115"). SFAS No. 115 requires that all
debt and equity securities be classified either as held-to-maturity,
available-for-sale or trading. Held-to-maturity securities are classified as
such only when the Company determines it has the ability and intent to hold
these securities to maturity. Held-to-maturity securities are carried at cost,
adjusted for amortization of premiums and accretion of discounts.
Available-for-sale securities and trading securities are carried at market
value. Net unrealized gains and losses on available-for-sale securities are
excluded from earnings and reported as a separate component of stockholders'
equity, net of tax. Unrealized gains and losses on trading securities are
included in earnings. The Company has not classified any securities as trading.
Gains or losses on the sale of investment securities are determined based on the
amortized cost of the specific securities sold.

The following tables set forth the composition of the Company's investment
portfolio by major category as of the indicated dates. The investment securities
portfolio as of June 30, 1996, December 31, 1995 and December 31, 1994 have been
categorized as either available-for-sale or held-to-maturity in accordance with
SFAS No. 115. Because SFAS No. 115 was adopted by the Company effective January
1, 1994, the investment securities portfolio as of December 31, 1993 has not
been categorized.

<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------------------------------------------------------------------------
AVAILABLE-FOR-SALE HELD-TO-MATURITY TOTAL
------------------------ ------------------------ ---------------------------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED AMORTIZED ESTIMATED % OF
COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE PORTFOLIO (1)
----------- ----------- ----------- ----------- ----------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury................ $ 46,657 $ 45,672 $ 2,176 $ 2,072 $ 48,833 $ 47,744 20.38%
U.S. Treasury strips......... 1,817 1,810 -- -- 1,817 1,810 .76
U.S. government agencies..... 55,601 54,480 -- -- 55,601 54,480 23.21
U.S. government agency
strips...................... 13,105 13,077 -- -- 13,105 13,077 5.47
Obligations of state and
political subdivisions...... 30,660 29,947 16,726 16,595 47,386 46,542 19.78
Corporate debt securities.... 19,962 19,059 -- -- 19,962 19,059 8.33
Adjustable rate mortgage
pools....................... 5,840 5,943 -- -- 5,840 5,943 2.44
Collateralized mortgage
obligations................. 31,104 30,581 15,201 14,888 46,305 45,469 19.33
Federal reserve stock and
other securities............ 714 695 10 10 724 705 .30
----------- ----------- ----------- ----------- ----------- ----------- -------------
Total.................... $ 205,460 $ 201,264 $ 34,113 $ 33,565 $ 239,573 $ 234,829 100.00%
----------- ----------- ----------- ----------- ----------- ----------- -------------
----------- ----------- ----------- ----------- ----------- ----------- -------------
</TABLE>

- ------------------------------

(1) Based on amortized cost.

25
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------------------------------------------------------------
AVAILABLE-FOR-SALE HELD-TO-MATURITY TOTAL
------------------------ ------------------------ ---------------------------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED AMORTIZED ESTIMATED % OF
COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE PORTFOLIO (1)
----------- ----------- ----------- ----------- ----------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury................ $ 69,576 $ 69,825 $ 2,196 $ 2,173 $ 71,772 $ 71,998 34.73%
U.S. Treasury strips......... 1,661 1,679 -- -- 1,661 1,679 .80
U.S. government agencies..... 49,452 49,759 -- -- 49,452 49,759 23.93
U.S. government agency
strips...................... 12,719 12,687 -- -- 12,719 12,687 6.15
Obligations of state and
political subdivisions...... 15,692 15,974 14,984 15,130 30,676 31,104 14.84
Corporate debt securities.... 17,556 17,539 -- -- 17,556 17,539 8.50
Adjustable rate mortgage
pools....................... 7,266 7,393 -- 20 7,226 7,413 3.51
Collateralized mortgage
obligations................. -- -- 15,449 15,301 15,449 15,301 7.48
Federal reserve stock and
other securities............ 107 107 15 15 122 122 .06
----------- ----------- ----------- ----------- ----------- ----------- -------------
Total.................... $ 174,029 $ 174,963 $ 32,644 $ 32,639 $ 206,673 $ 207,602 100.00%
----------- ----------- ----------- ----------- ----------- ----------- -------------
----------- ----------- ----------- ----------- ----------- ----------- -------------
</TABLE>

- ------------------------------

(1) Based on amortized cost.

<TABLE>
<CAPTION>
DECEMBER 31, 1994
-------------------------------------------------------------------------------------------
AVAILABLE-FOR-SALE HELD-TO-MATURITY TOTAL
------------------------ ------------------------ ---------------------------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED AMORTIZED ESTIMATED % OF
COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE PORTFOLIO (1)
----------- ----------- ----------- ----------- ----------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury................ $ 76,722 $ 73,192 $ 6,991 $ 6,417 $ 83,763 $ 79,609 37.80%
U.S. Treasury strips......... -- -- 1,557 1,499 1,557 1,499 .70
U.S. government agencies..... 39,707 38,337 9,523 8,718 49,230 47,055 22.21
U.S. government agency
strips...................... -- -- 11,979 11,383 11,979 11,383 5.41
Obligations of state and
political subdivisions...... -- -- 30,537 29,507 30,537 29,507 13.78
Corporate debt securities.... 17,653 14,762 -- -- 17,653 14,762 7.97
Adjustable rate mortgage
pools....................... -- -- 10,045 9,884 10,045 9,884 4.53
Collateralized mortgage
obligations................. -- -- 16,715 15,675 16,715 15,675 7.54
Federal reserve stock and
other securities............ 102 102 25 25 127 127 .06
----------- ----------- ----------- ----------- ----------- ----------- -------------
Total.................... $ 134,234 $ 126,393 $ 87,372 $ 83,108 $ 221,606 $ 209,501 100.00%
----------- ----------- ----------- ----------- ----------- ----------- -------------
----------- ----------- ----------- ----------- ----------- ----------- -------------
</TABLE>

- ------------------------------

(1) Based on amortized cost.

<TABLE>
<CAPTION>
DECEMBER 31, 1993
---------------------------------------
TOTAL
---------------------------------------
AMORTIZED ESTIMATED % OF
COST FAIR VALUE PORTFOLIO (1)
----------- ----------- -------------
<S> <C> <C> <C>
U.S. Treasury................................................................ $ 84,266 $ 86,034 40.48%
U.S. Treasury strips......................................................... 1,373 1,373 .66
U.S. government agencies..................................................... 49,495 50,268 23.77
U.S. government agency strips................................................ 11,284 11,649 5.42
Obligations of state and political subdivisions.............................. 24,231 25,391 11.64
Corporate debt securities ................................................... 17,742 16,748 8.52
Collateralized mortgage obligations.......................................... 19,651 19,533 9.44
Federal reserve stock and other securities................................... 137 137 .07
----------- ----------- -------------
Total.................................................................... $ 208,179 $ 211,133 100.00%
----------- ----------- -------------
----------- ----------- -------------
</TABLE>

- ------------------------------

(1) Based on amortized cost.

26
<PAGE>

The Company's total investment securities portfolio increased $32.9 million
as of June 30, 1996 from December 31, 1995, decreased $14.9 million as of
December 31, 1995 from December 31, 1994 and increased $13.4 million as of
December 31, 1994 from December 31, 1993. The increase as of June 30, 1996 is
primarily the result of the investment of the influx of deposits in the
Will-Cook and Oak Lawn branches resulting from promotional activities, as well
as the investment of $13.6 million from a reduction in the funds sold position.
The investments purchased were primarily collateralized mortgage obligations and
tax exempt obligations. The decline in the investment securities portfolio in
the year ended December 31, 1995 reflects the use of proceeds from maturing
securities to fund higher loan levels. The increase in the investment securities
portfolio in the year ended December 31, 1994 is primarily the result of the
investment of increased deposits.

INVESTMENT MATURITIES AND YIELDS

The following table sets forth the contractual maturities of investment
securities as of June 30, 1996, and the weighted average yields of such
securities on a tax-equivalent basis assuming a 34% tax rate.

<TABLE>
<CAPTION>
MATURING
------------------------------------------------------------------------------------------
AFTER ONE BUT WITHIN AFTER FIVE BUT WITHIN
WITHIN ONE YEAR
FIVE YEARS TEN YEARS AFTER TEN YEARS
--------------------- --------------------- --------------------- ---------------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
--------- ---------- --------- ---------- --------- ---------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-For-Sale Securities (1):
U.S. Treasury........................... $ 11,757 5.55% $ 33,915 5.58% $ -- --% $ -- --%
U.S. Treasury strips.................... 944 6.31 866 5.94 -- -- -- --
U.S. government agencies................ 8,046 6.16 40,717 5.96 5,717 6.12 -- --
U.S. government agency strips........... -- -- -- -- 13,077 6.09 -- --
Obligations of state and political
subdivisions (2)....................... 2,634 9.09 8,264 7.08 12,783 7.23 6,266 7.91
Corporate debt securities............... -- -- -- -- 1,015 7.26 18,044 7.59
Adjustable rate mortgage pools.......... -- -- 5,943 7.51 -- -- -- --
Collateralized mortgage obligations..... -- -- 30,581 6.65 -- -- -- --
Federal reserve stock and other
securities............................. -- -- 695 6.00 -- -- -- --
--------- --------- --------- ---------
Total available-for-sale............ $ 23,381 $ 120,981 $ 32,592 $ 24,310
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average yield (4).............. 6.16% 6.18% 6.58% 7.67%
--- --- --- ---
--- --- --- ---
Held-to-Maturity Securities (5):
U.S. Treasury........................... $ -- -- % $ -- -- % $ 2,176 5.68% $ -- -- %
U.S. government agencies................ -- -- -- -- -- -- -- --
Obligations of state and political
subdivisions (2)....................... 2,772 6.84 10,861 6.96 1,962 7.49 1,131 8.10
Corporate debt securities............... -- -- -- -- -- -- -- --
Adjustable rate mortgage pools.......... -- -- -- -- -- -- -- --
Collateralized mortgage obligations..... 2,999 6.34 12,202 5.80 -- -- -- --
Federal reserve stock and other
securities............................. 10 5.50 -- -- -- -- -- --
--------- --------- --------- ---------
Total held-to-maturity.............. $ 5,781 $ 23,063 $ 4,138 $ 1,131
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average yield (4).............. 6.58% 6.35% 6.54% 8.10%
--- --- --- ---
--- --- --- ---

TOTAL
---------------------
AMOUNT YIELD
--------- ----------

<S> <C> <C>
Available-For-Sale Securities (1):
U.S. Treasury........................... $ 45,672 5.57%
U.S. Treasury strips.................... 1,810 6.13
U.S. government agencies................ 54,480 6.00
U.S. government agency strips........... 13,077 6.09
Obligations of state and political
subdivisions (2)....................... 29,947 7.49
Corporate debt securities............... 19,059 7.57
Adjustable rate mortgage pools.......... 5,943 7.51
Collateralized mortgage obligations..... 30,581 6.65
Federal reserve stock and other
securities............................. 695 6.00
---------
Total available-for-sale............ $ 201,264
---------
---------
Weighted average yield (4).............. 6.42%
---
---
Held-to-Maturity Securities (5):
U.S. Treasury........................... $ 2,176 5.68%
U.S. government agencies................ -- --
Obligations of state and political
subdivisions (2)....................... 16,726 7.08
Corporate debt securities............... -- --
Adjustable rate mortgage pools.......... -- --
Collateralized mortgage obligations..... 15,201 5.86
Federal reserve stock and other
securities............................. 10 5.50
---------
Total held-to-maturity.............. $ 34,113
---------
---------
Weighted average yield (4).............. 6.45%
---
---
</TABLE>

- ------------------------------

(1) Based on estimated fair value.
(2) Rates on obligations of states and political subdivisions have been adjusted
to tax-equivalent yields using a 34% tax rate.

(3) Maturities on adjustable rate mortgage pools and collateralized mortgage
obligations are based on anticipated lives of the underlying mortgages, not
contractual maturities.

(4) The weighted average was computed using estimated fair value for securities
available-for-sale and amortized cost for securities held-to-maturity as set
forth in the table.
(5) Based on amortized cost.

27
<PAGE>
DEPOSITS

The Company has experienced growth in total deposits in recent years.
Average total deposits were $541.4 million for the six months ended June 30,
1996, $509.0 million for the year ended December 31, 1995 and $481.1 million for
the year ended December 31, 1994. These increases in deposits are the result of
increased marketing activity in 1995 and 1996 in connection with the opening of
the Will-Cook branch and a special promotion in 1996 in connection with the
renovation of the Oak Lawn branch, as well as normal growth in the Company's
core market area.

The following table sets forth the average amount of and the average rate
paid on deposits by category for the indicated periods.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
----------------------------------- ------------------------------------------------------------
1996 1995 1994
----------------------------------- ----------------------------------- -----------------------
AVERAGE PERCENT OF AVERAGE PERCENT OF AVERAGE PERCENT OF
BALANCE DEPOSITS RATE BALANCE DEPOSITS RATE BALANCE DEPOSITS
--------- ------------ ---------- --------- ------------ ---------- --------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Non-interest bearing
demand.................. $ 85,894 15.86% -- % $ 88,009 17.29% -- % $ 91,475 19.01%
Interest bearing demand.. 112,377 20.76 2.18 108,487 21.31 2.52 104,784 21.78
Savings.................. 108,207 19.99 2.68 108,656 21.35 2.83 112,397 23.36
Time:
Certificates of
deposit, under
$100,000 (1).......... 182,227 33.66 5.50 156,589 30.76 5.26 141,620 29.44
Certificates of
deposit, over $100,000
(1)................... 36,972 6.83 5.70 28,613 5.62 5.55 15,899 3.30
Public funds........... 15,685 2.90 5.43 18,672 3.67 5.78 14,934 3.11
Total time........... 234,884 43.39 5.52 203,874 40.05 5.35 172,453 35.85
--------- ------------ --- --------- ------------ --- --------- ------------
Total.............. $ 541,362 100.00% 3.39% $ 509,026 100.00% 3.28% $ 481,109 100.00%
--------- ------------ --- --------- ------------ --- --------- ------------
--------- ------------ --- --------- ------------ --- --------- ------------

1993
-----------------------------------
AVERAGE PERCENT OF
RATE BALANCE DEPOSITS RATE
---------- --------- ------------ ----------

<S> <C> <C> <C> <C>
Non-interest bearing
demand.................. -- % $ 81,274 17.82% -- %
Interest bearing demand.. 2.40 105,441 23.11 2.27
Savings.................. 2.65 106,539 23.36 2.91
Time:
Certificates of
deposit, under
$100,000 (1).......... 4.02 143,495 31.46 4.00
Certificates of
deposit, over $100,000
(1)................... 4.22 7,750 1.70 3.70
Public funds........... 4.33 11,615 2.55 3.83
Total time........... 4.07 162,860 35.71 3.98
--- --------- ------------ ---
Total.............. 2.60% $ 456,114 100.00% 2.63%
--- --------- ------------ ---
--- --------- ------------ ---
</TABLE>

- ------------------------------

(1) Certificates of deposit exclusive of public funds.

The following table summarizes as of June 30, 1996 the maturity distribution
of deposits in amounts of $100,000 or more. These deposits have been made by
individuals, businesses and public and other not-for-profit entities, most of
which are located within the Company's market area.

<TABLE>
<CAPTION>
JUNE 30, 1996
-------------
(IN
THOUSANDS)
<S> <C>
Three months or less........................................................... $ 18,920
Over three months through six months........................................... 16,279
Over six months through twelve months.......................................... 15,227
Over twelve months............................................................. 6,570
-------------
Total...................................................................... $ 56,996
-------------
-------------
</TABLE>

28
<PAGE>
SHORT-TERM BORROWINGS

The Company uses short-term borrowings on a limited basis. These borrowings
include overnight funds purchased and securities sold under agreements to
repurchase. The following table sets forth categories of short-term borrowings
of the Company as of the indicated dates or for the indicated periods.

<TABLE>
<CAPTION>
AT OR FOR
THE SIX
MONTHS
ENDED AT OR FOR THE YEARS ENDED
JUNE 30, DECEMBER 31,
--------- -------------------------------
1996 1995 1994 1993
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Funds Purchased and Securities
Sold Under Repurchase Agreements:
Balance at end of period......................................... $ 5,770 $ 6,292 $ 9,614 $ 8,646
Weighted average interest rate at end of period (1).............. 4.84% 5.20% 4.77% 4.42%
Maximum amount outstanding (2)................................... $ 10,578 $ 31,400 $ 23,402 $ 35,071
Average amount outstanding....................................... 5,113 7,211 5,680 9,547
Weighted average interest rate during period (1)................. 5.57% 5.26% 4.07% 3.67%
</TABLE>

- ------------------------

(1) Interim period annualized.

(2) Based on amount outstanding at month-end during each period.

SHORT-TERM BANK BORROWINGS

The Company's short-term bank borrowings at December 31, 1995 consisted of a
demand note in the principal amount of $11.0 million payable to the Company's
principal correspondent bank. The Company incurred the indebtedness to fund the
repurchase of 881,340 shares of Common Stock from the estate of its late
chairman in December 1995 for $11.5 million. The indebtedness was reduced to
$9.0 million as of June 30, 1996. The note is due on demand, requires quarterly
interest payments at a rate pegged to LIBOR (generally less than prime), and is
collateralized by the common stock of the Banks. The Company intends to repay
this indebtedness with the proceeds from this offering. See "Use of Proceeds."

The following table sets forth categories of short-term bank borrowings of
the Company as of the indicated dates or for the indicated periods.

<TABLE>
<CAPTION>
AT OR FOR
THE SIX
MONTHS
ENDED AT OR FOR THE YEARS ENDED
JUNE 30, DECEMBER 31,
--------- -------------------------------
1996 1995 1994 1993
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Short-Term Bank Borrowings:
Balance at end of period......................................... $ 9,000 $ 11,000 $ 1,800 $ 4,700
Weighted average interest rate at end of period (1).............. 7.49% 8.20% 8.50% 5.50%
Maximum amount outstanding (2)................................... $ 11,000 $ 11,000 $ 4,700 $ 7,550
Average amount outstanding......................................... 9,678 781 2,971 6,000
Weighted average interest rate during period (1)................... 7.65% 9.90% 7.00% 6.28%
</TABLE>

- ------------------------

(1) Interim period annualized.

(2) Based on amount outstanding at month-end during each period.

CAPITAL RESOURCES

The Company monitors compliance with bank and bank-holding company
regulatory capital requirements, focusing primarily on risk-based capital
guidelines. Under the risk-based capital

29
<PAGE>

method of capital measurement, the ratio computed is dependent upon the amount
and composition of assets recorded on the balance sheet, and the amount and
composition of off-balance sheet items, in addition to the level of capital.
Included in the risk-based capital method are two measures of capital adequacy,
Tier 1 or core capital, and Total capital, which consists of Tier 1 plus Tier 2
capital. See "Supervision and Regulation -- Regulation of Banks -- Capital
Requirements" for definitions of Tier 1 and Tier 2 capital.

The following tables set forth the Company's capital ratios as of the
indicated dates.

RISK-BASED CAPITAL RATIOS

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
---------------------- ----------------------------------------------------------------------
1996 1995 1994 1993
---------------------- ---------------------- ---------------------- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Tier 1 capital...................... $ 42,001 11.50% $ 39,442 12.25% $ 44,938 14.78% $ 38,867 13.15%
Tier 1 capital minimum requirement
(1)................................ 14,595 4.00 19,326 4.00 18,248 4.00 11,822 4.00
---------- ----- ---------- ----- ---------- ----- ---------- -----
Excess.............................. $ 27,406 7.50% $ 20,116 8.25% $ 26,690 10.78% $ 27,045 9.15%
---------- ----- ---------- ----- ---------- ----- ---------- -----
---------- ----- ---------- ----- ---------- ----- ---------- -----
Total capital....................... $ 45,945 12.58% $ 42,966 13.34% $ 48,933 16.09% $ 42,893 14.51%
Total capital minimum requirement
(1)................................ 29,190 8.00 32,210 8.00 30,413 8.00 23,644 8.00
---------- ----- ---------- ----- ---------- ----- ---------- -----
Excess.............................. $ 16,755 4.58% $ 10,756 5.34% $ 18,520 8.09% $ 19,249 6.51%
---------- ----- ---------- ----- ---------- ----- ---------- -----
---------- ----- ---------- ----- ---------- ----- ---------- -----
Total risk adjusted assets.......... $ 364,870 $ 322,097 $ 304,127 $ 295,545
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>

- ------------------------

(1) Based on risk-based capital guidelines of the Federal Reserve Bank, a bank
holding company is required to maintain a Tier 1 capital to risk-adjusted
assets ratio of 4% and a total capital to risk-adjusted assets ratio of 8%.
See "Supervision and Regulation -- Regulation of Banks -- Capital
Requirements."

LEVERAGE RATIOS

- ------------------------

(1) The leverage ratio is defined as the ratio of Tier 1 capital to average
total assets. Based on Federal Reserve Bank guidelines, a bank holding
company generally is required to maintain a leverage ratio of 3%. See
"Supervision and Regulation -- Regulation of Banks -- Capital Requirements."

LIQUIDITY

The Company manages its liquidity position with the objective of maintaining
sufficient funds to respond to the needs of depositors and borrowers and to take
advantage of earnings enhancement opportunities. In addition to the normal
inflow of funds from core-deposit growth, together with

30
<PAGE>
repayments and maturities of loans and investments, the Company utilizes other
short-term funding sources such as securities sold under agreements to
repurchase, overnight funds purchased from correspondent banks and the
acceptance of short-term deposits from public entities.

The Company monitors and manages its liquidity position on several bases,
which vary depending upon the time period. As the time period is expanded, other
data is factored in, including estimated loan funding requirements, estimated
loan payoffs, investment portfolio maturities or calls, and anticipated
depository buildups or runoffs.

The Company classifies the majority of its investment securities as
available-for-sale, thereby maintaining significant liquidity. The Company's
liquidity position is further enhanced by structuring the majority of its loan
portfolio interest payments as monthly, and also by the significant
representation of retail credit and residential mortgage loans in the Company's
loan portfolio, resulting in a steady stream of pre-payments. In managing its
investment portfolio, the Company provides for staggered maturities so that cash
flows are provided as such investments mature.

The Company's cash flows are composed of three classifications: cash flows
from operating activities, cash flows from investing activities, and cash flows
from financing activities. Net cash provided by operating activities, consisting
primarily of earnings, was $4.5 million for the six months ended June 30, 1996,
$4.5 million for the year ended December 31, 1995 and $19.1 million for the year
ended December 31, 1994. Net cash used in operating activities for the six
months ended June 30, 1995 was $441,000. A significant component in the
fluctuation of net cash provided by or used in operating activities is the
timing of the transfer of loans held for sale to permanent investors. Net cash
used in investing activities, consisting primarily of loan and investment
funding, was $48.6 million and $7.3 million for the six months ended June 30,
1996 and 1995, respectively, and $3.6 million and $51.2 million for the years
ended December 31, 1995 and 1994, respectively. Net cash provided by financing
activities, consisting principally of deposit growth, was $24.5 million for the
six months ended June 30, 1996 and $16.7 million and $42.9 million for the years
ended December 31, 1995 and 1994, respectively. Net cash used in financing
activities for the six months ended June 30, 1995 was primarily due to the net
decrease in short-term borrowings made possible by the net increase in deposits.
During the year ended December 31, 1995, the Company borrowed $11.0 million from
the Company's principal correspondent bank to finance the repurchase of 881,340
shares of Common Stock from the estate of its late chairman for $11.5 million
pursuant to an agreement dated July 3, 1995, which gave the Company the right to
purchase the shares following his death.

ASSET/LIABILITY MANAGEMENT

A principal function of asset/liability management is to coordinate the
levels of interest-sensitive assets and liabilities to minimize net interest
income fluctuations in times of fluctuating market interest rates.
Interest-sensitive assets and liabilities are those that are subject to
repricing in the near term, including both variable-rate instruments and those
fixed-rate instruments which are approaching maturity. Changes in net yield on
interest-sensitive assets arise when interest rates on those assets (e.g. loans
and investment securities) change in a different time period from that of
interest rates on liabilities (e.g. time deposits). Changes in net yield on
interest-sensitive assets also arise from changes in the mix and volumes of
earning assets and interest-bearing liabilities.

The Company's strategy with respect to asset/liability management is to
maximize net interest income while limiting exposure to risks associated with
volatile interest rates. This strategy is implemented by the Company's ongoing
analysis and management of its interest rate risk, utilizing duration modeling
applied to the actual assets and liabilities comprising the Company's statement
of condition. The model uses cash flows and repricing information from each
individual loan and certificate of deposit, plus repricing assumptions on
products without specific repricing dates (e.g. savings and interest-bearing
demand deposits) to calculate the durations of the Company's assets and
liabilities. The model also projects the effect on the Company's earnings and
theoretical value for a change in interest rates.

31
<PAGE>

The following table sets forth the interest rate sensitivity of the
Company's assets and liabilities as of June 30, 1996, and sets forth the
repricing dates of the Company's interest-earning assets and interest-bearing
liabilities as of that date, as well as the Company's interest rate sensitivity
gap percentages for the periods presented. The table is based upon assumptions
as to when assets and liabilities will reprice in a changing interest rate
environment, and since such assumptions can be no more than estimates, certain
assets and liabilities indicated as maturing or otherwise repricing within a
stated period may, in fact, mature or reprice at different times and at
different volumes than those estimated. Also, the renewal or repricing of
certain assets and liabilities can be discretionary and subject to competitive
and other pressures. Therefore, the following table does not and cannot
necessarily indicate the actual future impact of general interest rate movements
on the Company's net interest income.

<TABLE>
<CAPTION>
4-12 1-5 OVER 5
0-3 MONTHS MONTHS YEARS YEARS TOTAL
----------- ------------ ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Interest Earning Assets:
Funds sold.................................... $ 6,475 $ -- $ -- $ -- $ 6,475
Investment securities......................... 5,014 24,148 144,044 62,171 235,377
----------- ------------ ----------- ----------- -----------
Total loans................................. 86,500 50,010 171,028 17,035 324,573
----------- ------------ ----------- ----------- -----------
Total earning assets...................... $ 97,989 $ 74,158 $ 315,072 $ 79,206 $ 566,425
----------- ------------ ----------- ----------- -----------
----------- ------------ ----------- ----------- -----------
Interest Bearing Liabilities:
Interest bearing demand deposits.............. $ -- $ 16,168 $ 78,959 $ 15,698 $ 110,825
Savings deposits.............................. -- -- 86,544 21,636 108,180
Time deposits................................. 71,101 146,323 32,251 200 249,875
----------- ------------ ----------- ----------- -----------
Total interest bearing deposits........... 71,101 162,491 197,754 37,534 468,880
----------- ------------ ----------- ----------- -----------
Short-term borrowings:
Securities sold under agreements to
repurchase, funds purchased, and treasury tax
deposits..................................... 6,366 -- -- -- 6,366
Short-term bank borrowings.................... 9,000 -- -- -- 9,000
----------- ------------ ----------- ----------- -----------
Total borrowings.......................... 15,366 -- -- -- 15,366
----------- ------------ ----------- ----------- -----------
Total interest bearing liabilities.............. 86,467 162,491 197,754 37,534 484,246
----------- ------------ ----------- ----------- -----------
Interest sensitivity gap........................ $ 11,522 $ (88,333) $ 117,318 $ 41,672 $ 82,179
----------- ------------ ----------- ----------- -----------
----------- ------------ ----------- ----------- -----------
Cumulative gap.................................. $ 11,522 $ (76,811) $ 40,507 $ 81,179 $ 82,179
Interest sensitivity gap to total assets........ 1.87% (14.37)% 19.09% 6.78% 13.37%
Cumulative sensitivity gap to total assets...... 1.87 (12.50) 6.59 13.37 13.37
</TABLE>

Mortgage backed securities, including adjustable rate mortgage pools and
collateralized mortgage obligations, are included in the above table based on
their estimated weighted average lives obtained from outside analytical sources.
Loans are included in the above table based on contractual maturity or
contractual repricing dates. Interest bearing demand and savings deposits are
included in the above table based on the proposed policy statement issued by
bank regulators on August 4, 1995. The table uses the maximum maturity
distribution allowed, which is consistent with the Company's actual historical
experience.

The Company uses a duration model for its internal asset/liability
management. This model computes the duration of the Company's rate-sensitive
assets and liabilities, a theoretical market value of the Company, and the
effects of rate changes on the Company's earnings and market value. The results
of the model indicate that the Company is moderately liability sensitive. The
rate shock

32
<PAGE>

analysis provided by the model shows that the effect of an immediate 200 basis
point increase in rates would be to reduce the Company's net interest income for
the next 12 months by less than $1.5 million.

EFFECTS OF INFLATION

Inflation can have a significant effect on the operating results of all
industries. However, management believes that inflationary factors are not as
critical to the banking industry as they are to other industries, due to the
high concentration of relatively short-duration monetary assets in the banking
industry. Inflation does, however, have some impact on the Company's growth,
earnings and total assets and on its need to closely monitor its equity capital
levels.

Interest rates are significantly affected by inflation, but it is difficult
to assess the impact, since neither the timing nor the magnitude of the changes
in the various inflation indices coincides with changes in interest rates.
Inflation does impact the economic value of longer-term interest-bearing assets
and liabilities, but the Company attempts to limit its long-term assets and
liabilities, as indicated in the tables set forth under "-- Financial Condition"
and "-- Asset/Liability Management."

IMPACT OF NEW ACCOUNTING STANDARDS

Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("SFAS No. 121"), requires that long-lived assets and certain identifiable
intangibles that are used in operations be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of assets
might not be recoverable. The adoption of this standard on January 1, 1996 had
no material impact on the Company's consolidated financial statements as of and
for the period ended June 30, 1996. Management believes the adoption of SFAS No.
121 will not have a material effect on the Company's 1996 financial condition or
results of operations.

Statement of Financial Accounting Standards No. 122, "Accounting for
Mortgage Servicing Rights" ("SFAS No. 122"), was adopted by the Company as of
January 1, 1996. As a result of applying SFAS No. 122, the value of retained
servicing on loans sold subsequent to January 1, 1996 has been capitalized and
amortized over the expected life of the loans. The adoption of this standard on
January 1, 1996 had no material impact on the Company's consolidated financial
statements as of and for the period ended June 30, 1996. The Company expects
that the adoption of SFAS No. 122 will not have a material effect on the
reported earnings of the Company in 1996.

Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"), requires entities to disclose the
fair value of their employees' stock options, but permits entities to continue
to account for employee stock options under APB 25, Accounting for Stock Issued
to Employees. The Company has determined that it will continue to use the method
prescribed by APB 25, which recognizes compensation to the extent of the
difference between the estimated market value and the exercise price at the
grant date. The only effect of the Company's adoption of SFAS No. 123 as of
January 1, 1996, will be new disclosure requirements in its 1996 consolidated
financial statements.

33
<PAGE>
BUSINESS

THE COMPANY

The Company is a community-based financial services holding company
headquartered in Chicago, Illinois. Through its subsidiaries, the Company
provides a full range of banking services and also provides personal and
corporate trust services. The Company's principal operating subsidiaries are the
Banks and Beverly Trust. The Banks are chartered as Illinois state banks, with
the exception of Wilmington, which was federally chartered in 1863 and is the
second oldest active national bank in Illinois.

The Banks are community-oriented, full-service commercial banks, providing a
full range of banking services to individuals, small-to-medium-sized businesses,
and not-for-profit organizations. The Banks operate out of 12 full-service
locations in the south and southwest parts of the Chicago metropolitan area, a
business development office located in downtown Chicago and a mortgage
origination office located in Naperville, Illinois. Through Wilmington, the
Company also operates a full-service insurance agency and a residential mortgage
brokerage business and offers a broad range of annuities and mutual funds
through a relationship with a securities firm. In 1996, Wilmington formed a
joint venture, currently in its initial stages, with a prominent realtor for the
purpose of increasing its mortgage origination business. Beverly Trust provides
a wide array of trust services for individuals and corporations. As of June 30,
1996, Beverly Trust managed $277.1 million in assets, primarily in the areas of
personal living trusts and corporate employee benefit plans, and administered
more than 3,000 land trusts. The strategy of the Company is to continue to
increase its core banking business and to further develop its mortgage, trust,
securities sales and insurance activities in order to provide an array of
household financial services encompassing banking and other investment products.

The Company focuses on establishing and maintaining long-term relationships
with customers and is committed to serving the financial services needs of its
community. In particular, the Company has and will continue to emphasize its
relationship with individuals and small-to-medium-sized businesses. The
Company's policy is to respond to all creditworthy segments of its market.
Management believes that doing so is basic to good business practice and to the
Company's long-term vitality. The Company makes an active effort to determine
the credit needs of the community, including those of low- and moderate-income
areas and individuals, and to evaluate the products it offers and the design of
those products to determine whether the Company's responsiveness to the
community can be improved. The markets served by the Company provide a mix of
real estate, commercial and consumer lending opportunities, while also providing
a stable core deposit base.

HISTORY

The Company was formed in the late 1960's as a one-bank holding company,
with its principal asset being Beverly Bank. Beverly Bank has served the Beverly
community on Chicago's south side since 1923, providing individuals and
businesses with a variety of deposit and loan products in a traditional banking
environment. Beverly Bank and the Company were on the leading edge of the
banking industry in data processing and marketing during the late 1960's and
early 1970's, and the Company provided data processing, marketing, investment
and other services on a fee basis for several years to approximately twelve
community bank holding companies in the Chicago metropolitan area. In the
mid-1970's, the affiliation of the Beverly-serviced bank holding companies
ended, and the Company's activities and influence diminished accordingly. Over
the late 1970's and the 1980's,

34
<PAGE>
Beverly Bank opened three branches, in Oak Lawn, in Orland Hills and at 112th
Street and Western Avenue in Chicago, and continued to provide traditional
banking services to an increasingly diverse customer and market base.

In the mid to late 1980's, the Company acquired the Matteson-Richton Bank
and renamed it Beverly Bank Matteson, acquired Wilmington, and acquired an
inactive bank charter which it used to organize Beverly Bank Lockport. During
that period, the Company also separated its longstanding trust business from the
banking business by creating Beverly Trust in 1987.

Although the acquisitions of the late 1980's increased the size of the
organization, the Company experienced weakened internal controls and a number of
poor quality loans were made. The Company also incurred losses in its credit
card business and a significant charge-off for loans to a single borrower.

As a result of these problems, major changes were made in the management of
the Company. The Board of Directors was reconstituted and new management,
including the Company's current Chief Executive Officer and Chief Financial
Officer, was hired. During the next several years, this new management team
strengthened internal controls, identified and resolved problems within the
Company and took steps to improve the Company's asset quality. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition --
Non-Performing Loans" and "-- Analysis of Allowance for Loan Losses."

Because of the problems the Company experienced, bank regulatory agencies
imposed restrictions on the Company and its subsidiaries. Between June 1990 and
January 1993, the Federal Reserve Board ("FRB") did not permit the Company to
pay dividends on its stock without the FRB's prior consent or notification. In
January 1993, because of the Company's improved financial condition, the FRB
informed the Company that it could resume paying dividends without restriction.
Additionally, in February 1991, Memoranda of Understanding were issued by the
FDIC for Beverly Bank and Beverly Bank Matteson, which prohibited these banks
from paying dividends without prior FDIC approval and which required these banks
to lessen their respective risk positions, increase capital, revise loan,
liquidity and other operating policies, improve internal controls and manage
growth within specified limitations. Because of operational improvements, the
Memoranda of Understanding were terminated in March 1993.

STRATEGY

Management believes the key to its community banking strategy is having high
level officers of the Company direct business development in each of its local
geographic markets, presenting the Company as highly autonomous within those
markets, while at the same time managing all of the markets through a
centralized control and delivery system. Management believes that this strategy
differentiates the Company from its competition and will result in increased
competitiveness of the Company.

Following the planned consolidation of the Banks by year-end 1996, the
Company intends to fully retain the separate market autonomy it has established
through its existing organization, but will under the new structure be able to
take advantage of the economies of a consolidated charter. This reorganization,
combined with a consultant-assisted program of identifying other efficiencies
throughout the organization, is intended to enhance the Company's operating
performance.

35
<PAGE>
The Company's competition includes other commercial banks, savings banks,
savings and loan associations, mutual funds, money market funds, finance
companies, credit unions, mortgage companies, private issuers of debt
obligations and suppliers of other investment alternatives, such as securities
firms. Competition is intense and increasing. The Company attempts to
aggressively address these competitive challenges by creating market
differentiation and by maintaining a relatively autonomous presence within its
markets. The Company competes for talented people by offering competitive levels
of compensation, and by augmenting compensation with stock options pursuant to
its stock option plan. Attracting and retaining high quality employees is
important in enabling the Company to compete effectively for market share with
both the Company's large and small competitors.

The Company serves in excess of 35,000 customers with more than 90,000
accounts. Additional business from existing customers is a key element of the
Company's strategy, since the Company believes that it holds only a portion of
its customers' total bankable resources. With more than 80% of the Company's
economic activity emanating from roughly 20% of its customer base, the Company
intends to focus marketing attention on this segment.

SERVICES

LENDING ACTIVITIES

The Company aggressively seeks quality loan relationships. The Company's
loan portfolio consists of real estate (including residential and commercial),
commercial and industrial, home equity lines of credit and consumer loans. The
Company's management emphasizes sound credit analysis and loan documentation.
Management also seeks to avoid undue concentrations of loans to a single
industry or based on a single class of collateral. The Company has concentrated
its efforts on building its lending business in the following areas:

(i) COMMERCIAL AND INDUSTRIAL LOANS. These loans are made to
small-to-medium-sized businesses that are sole proprietorships,
partnerships, and corporations. Generally, these loans are secured with
collateral including accounts receivable, inventory and equipment, and
generally require personal guarantees of the principals.

(ii) COMMERCIAL REAL ESTATE LOANS. These are construction and
development loans for acquisition, development, and construction of real
estate which are secured by the real estate involved, and other loans
secured by farmland, commercial real estate, multi-family residential
properties, and other non-farm, nonresidential properties. Loans retained by
the Company for its portfolio are short-term balloon loans and adjustable
rate mortgages with initial fixed terms of one to five years.

(iii) RESIDENTIAL REAL ESTATE LOANS. These are loans made to finance
residential units that will house from one to four families. While the
Company originates both fixed and adjustable rate residential real estate
loans, virtually all fixed-rate loans originated pursuant to Fannie Mae and
FHLMC guidelines are sold in the secondary market with servicing retained by
the Company. In the normal course of business, the Company retains
one-to-five year adjustable rate loans. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition -- Financial
Condition."

(iv) HOME EQUITY LINES OF CREDIT. These lines of credit are secured by
the borrower's home and can be drawn on at the discretion of the borrower.
These lines of credit are generally at variable interest rates. When made,
home equity lines, combined with the outstanding loan balance of prior
mortgage loans, generally do not exceed 80% of the appraised value of the
underlying real estate collateral.

(v) OTHER CONSUMER LOANS. Most of these loans are collateralized loans
to individuals for various personal reasons such as automobile financing and
home improvements.

36
<PAGE>
Lending officers are assigned various levels of loan approval authority
based upon their respective levels of experience and expertise. Loan approval is
also subject to the Company's formal loan policy, as established by each Bank's
board of directors, and to concurrence of a higher-ranking officer (or the
Bank's board of directors or a committee of the board) in addition to the
recommendation of the lending officer. This system is meant to assure that
commercial credit is subjected to the independent objective review of at least
two lending officers and is believed to be a key element of the Company's low
level of loan losses.

Management believes that the effectiveness of the Company's loan
administration is evidenced in its low delinquency rate and its low loss
experience in recent periods. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition -- Financial Condition -- Analysis
of Allowance for Loan Losses."

TRUST ACTIVITIES

Beverly Trust provides a wide array of trust services for individuals and
corporations. As of June 30, 1996, Beverly Trust managed eighteen funds with an
aggregate of $277.1 million in assets, primarily in the areas of personal living
trusts and corporate employee benefit plans. Beverly Trust also administers more
than 3,000 land trusts. Recent PIPER reports cited Beverly Trust's fixed-income
funds as among the most consistently high-performing funds among all such funds
covered by the PIPER report in each of the past one, five and ten-year periods.
The PIPER report is an investment performance report published by Crain
Communications, Inc., which records the performance of over 500 financial
managers.

OTHER ACTIVITIES

Through Wilmington, the Company operates a full-service insurance agency and
offers investment securities, including a broad range of annuities and mutual
funds, through a relationship with a securities firm. Wilmington also provides
residential mortgage brokerage services. In 1996, Wilmington formed a joint
venture, currently in its initial stages, with a prominent realtor for the
purpose of increasing its mortgage origination activities. The Company also
services residential real estate loans originated through its mortgage
activities. The servicing portfolio as of June 30, 1996 totaled $99.1 million of
loans serviced for Fannie Mae, FHLMC and the Illinois Housing Development
Authority. The Company believes these services are an important element in its
growth strategy.

MARKET

The Company considers its primary market areas to be those areas immediately
surrounding its offices. The Banks operate out of 12 full-service locations in
the south and southwest parts of the Chicago metropolitan area, a business
development office located in downtown Chicago and a mortgage origination office
located in Naperville, Illinois. Accordingly, the Company's business extends
throughout the Chicago metropolitan area, but is highly concentrated in the
areas in which the Company's offices are located. The communities in which the
Company's offices are located have a broad spectrum of demographic
characteristics, including a number of densely populated areas as well as rural
areas; some extremely high-income areas, as well as many middle-income areas and
some low to moderate income areas; and encompass significant diversity in
racial, ethnic and other characteristics.

According to the 1990 census, the Chicago metropolitan area is the third
largest metropolitan area in the United States with a population of
approximately 7.1 million. With approximately 600,000 manufacturing jobs, 1.1
million service jobs, 1.1 million jobs in retail/wholesale trade, transportation
and public utilities, and 300,000 jobs in finance, insurance and real estate,
the Chicago metropolitan area followed only the New York and Los Angeles
metropolitan areas in total non-agricultural wage and salary employment.

37
<PAGE>
COMPETITION

The Company competes in the financial services industry through the Banks
and Beverly Trust. The financial services business is highly competitive. The
Company encounters strong direct competition for deposits, loans and other
financial services. The Company's principal competitors include other commercial
banks, savings banks, savings and loan associations, mutual funds, money market
funds, finance companies, credit unions, mortgage companies, private issuers of
debt obligations and suppliers of other investment alternatives, such as
securities firms. In addition, in recent years, several major multi-bank holding
companies have entered or expanded in the Chicago metropolitan market.
Generally, these financial institutions are significantly larger than the
Company and have access to greater capital and other resources. Many of the
Company's non-bank competitors are not subject to the same degree of regulation
as that imposed on bank holding companies, federally insured banks and national
or Illinois chartered banks. As a result, such non-bank competitors have
advantages over the Company in providing certain services. The Company competes
for deposits principally by offering depositors a variety of deposit programs,
convenient office locations, hours and other services, and competes for loan
originations primarily through the interest rates and loan fees it charges, the
efficiency and quality of services it provides to borrowers and the variety of
its loan products.

PROPERTIES

The principal offices of both the Company and Beverly Bank are located at
1357 West 103rd Street, Chicago, Illinois. This two story building is owned by
the Company and comprises approximately 40,012 square feet.

Beverly Bank also maintains five full-service banking facilities in Chicago,
Blue Island, Orland Hills, Orland Park (Will-Cook) and Oak Lawn, Illinois and a
business development office in Chicago, Illinois. Beverly Bank occupies a total
of 42,359 square feet at these locations. All of these facilities are owned by
the Company, except the Blue Island and Orland Park banking facilities and the
Chicago business development office, which are leased.

Beverly Bank Matteson is located at 4350 West Lincoln Highway, Matteson,
Illinois. This facility is owned by the Company and comprises approximately
15,684 square feet. Beverly Bank Matteson also maintains two full-service
banking facilities in Richton Park and Homewood, Illinois. These two facilities,
totaling 22,400 square feet, are leased.

Beverly Bank Lockport is located at 1103 East 9th Street, Lockport,
Illinois. This facility is owned by the Company and comprises approximately
4,420 square feet.

Wilmington maintains its principal office at 417 South Water Street,
Wilmington, Illinois and also occupies a full-service banking facility in
Braidwood, Illinois and a mortgage origination office in Naperville, Illinois.
Wilmington occupies a total of 17,700 square feet at these locations. All of
these facilities are owned by the Company, except the Naperville facility, which
is leased.

Beverly Trust is located at 10312 South Cicero Avenue, Oak Lawn, Illinois.
This facility is owned by the Company and comprises approximately 6,595 square
feet. This facility also houses the Oak Lawn branch of Beverly Bank.

LEGAL PROCEEDINGS

The Company and its subsidiaries are from time to time parties to various
legal actions arising in the normal course of business. Management believes that
there is no proceeding threatened or pending against the Company or any of its
subsidiaries which, if determined adversely, would have a material adverse
effect on the financial condition or results of operations of the Company.

EMPLOYEES

As of June 30, 1996, the Company had 263 full-time employees and 88
part-time employees. Management considers its relationship with its employees to
be good.

38
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME POSITION AGE
- -------------------------------- -------------------------------------------------------------------------- ---
<S> <C> <C>
Anthony R. Pasquinelli Chairman of the Board and Director 62
John D. Van Winkle President, Chief Executive Officer and Director 50
Christopher M. Cronin Director 47
Richard I. Polanek Director 64
William C. Waddell Director 53
Brent E. Frank Executive Vice President, Chief Lending Officer 36
James W. Martin, Jr. Executive Vice President, Manager of Consumer Sales and President of First 56
National Bank of Wilmington
Charles E. Ofenloch Executive Vice President, Manager of Commercial Sales and President of 54
Beverly Bank Matteson
John T. O'Neill Executive Vice President, Chief Financial Officer 47
Bruce G. Park Executive Vice President, Chief Operations Officer 59
Ronald F. Stajkowski Executive Vice President and Manager of Beverly Trust 56
</TABLE>

Mr. Pasquinelli has been Chairman of the Board of the Company since November
1995 and a Director of the Company since 1985. Mr. Pasquinelli has been
Executive Vice President and Secretary of Pasquinelli Construction Co., a
Homewood, Illinois construction company, since 1962. He currently serves on the
board of directors of each of the Banks and Beverly Trust.

Mr. Van Winkle has been President and Chief Executive Officer and a Director
of the Company since August 1989, when he joined the Company. He has also served
on the board of directors of each of the Banks and Beverly Trust since 1989.
Prior to joining the Company, from 1976, Mr. Van Winkle held various management
positions at a publicly-held community bank located in Chicago, Illinois.

Mr. Cronin has been a Director of Beverly Bank since 1985; he was a Director
of the Company from 1986 to 1990 and again became a Director of the Company in
1995. Mr. Cronin has been President of Knickerbocker Roofing and Paving Co., a
Harvey, Illinois roofing and paving company, since 1986. He currently serves on
the board of directors of each of the Banks and Beverly Trust.

Mr. Polanek has been a Director of the Company since 1989. Mr. Polanek is
presently retired. Prior to 1993, Mr. Polanek was Vice President, Finance, and
Chief Financial Officer of Interlake Corporation, a metals and materials
handling company, for 31 years. He currently serves on the board of directors of
each of the Banks and Beverly Trust and also serves as Chairman of the Audit
Committee.

Mr. Waddell has been a Director of the Company since 1989. Mr. Waddell has
been First Vice President of Smith Barney Inc., an investment banking firm, and
predecessor firms since 1989, and he currently serves on the board of directors
of Beverly Bank, Beverly Bank Matteson and Beverly Trust.

Mr. Frank has been Executive Vice President, Chief Lending Officer of the
Company since 1995. From 1990 to 1995, he served as Senior Vice President,
Lending, of Beverly Bank Matteson. Mr. Frank joined the Company in 1990.

Mr. Martin has been Executive Vice President, Manager of Consumer Sales of
the Company since January 1996. Mr. Martin has also been President of Wilmington
since 1990 and a Director of Wilmington since 1963. He has served in various
capacities since joining Wilmington in 1967.

Mr. Ofenloch has been Executive Vice President, Manager of Commercial Sales
of the Company since January 1996. Mr. Ofenloch has also been President and a
Director of Beverly Bank Matteson since joining the Company in 1991.

39
<PAGE>
Mr. O'Neill has been Executive Vice President, Chief Financial Officer of
the Company since joining the Company in 1990.

Mr. Park has been Executive Vice President, Chief Operations Officer of the
Company since 1991. From 1964 to 1991, he served in various capacities at
Wilmington. Mr. Park joined the Company in 1964.

Mr. Stajkowski has been Executive Vice President of the Company since 1991.
He has served as Manager of Beverly Trust since 1980, and has served in various
capacities since joining the Company in 1964.

All directors of the Company hold office until the next annual meeting of
stockholders and until their successors have been elected and qualified.
Officers of the Company serve at the discretion of the Board of Directors of the
Company.

The Board of Directors has an Audit Committee consisting of all Directors
who are not employees of the Company ("Outside Directors"). The Audit Committee
recommends to the Board of Directors the appointment of the independent auditors
for the following year. The Audit Committee also reviews the scope of the annual
audit of the financial statements of the Company and the auditor's report
thereon and the auditor's comments relative to the adequacy of the Company's
system of internal controls and accounting systems.

EXECUTIVE COMPENSATION

The following table sets forth certain information regarding compensation
paid or accrued by the Company for services rendered in all capacities with
respect to the Company's fiscal year ended December 31, 1995 to the Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1)
- ----------------------------------------------------------- --------- ----------- ----------- -------------------
<S> <C> <C> <C> <C>
John D. Van Winkle, 1995 $ 175,000 $ 150,000 $ 7,370
President and Chief Executive Officer.....................
James W. Martin, Jr., 1995 110,000 75,000 6,861
Executive Vice President, Manager of Retail Sales.........
Charles E. Ofenloch, 1995 150,000 85,000 7,175
Executive Vice President, Manager of Commercial Sales.....
Bruce G. Park, 1995 93,500 25,000 5,338
Executive Vice President, Chief Operations Officer........
Ronald F. Stajkowski, 1995 90,000 45,000 6,177
Executive Vice President..................................
</TABLE>

- ------------------------
(1) Consists of matching contributions made by the Company pursuant to the
Company's Employees Retirement and Savings Plan and life insurance premiums
paid by the Company on behalf of each executive officer. For 1995, life
insurance premiums in the following amounts were paid by the Company: Mr.
Van Winkle, $1,370; Mr. Martin, $861; Mr. Ofenloch, $1,175; Mr. Park, $732;
and Mr. Stajkowski, $705.

EMPLOYEE STOCK OPTIONS

None of the executive officers of the Company named in the Executive
Compensation Table were granted or exercised any options to purchase shares of
Common Stock during 1995. The following

40
<PAGE>
table sets forth certain information regarding the number and value of
unexercised options to purchase shares of Common Stock held at December 31, 1995
by the executive officers of the Company named in the Executive Compensation
Table.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN- THE-MONEY OPTIONS
DECEMBER 31, 1995 AT DECEMBER 31, 1995(1)
----------------------- -----------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
John D. Van Winkle............................................. 8,269/33,075 $ 23,897/$95,587
James W. Martin, Jr............................................ 5,513/22,050 15,931/63,725
Charles E. Ofenloch............................................ 6,615/26,460 19,117/76,469
Bruce G. Park.................................................. 4,410/17,640 12,745/50,980
Ronald F. Stajkowski........................................... 4,410/17,640 12,745/50,980
</TABLE>

- ------------------------
(1) Value of unexercised in-the-money options is equal to the difference between
the bid price per share of Common Stock at December 31, 1995 and the option
exercise price per share multiplied by the number of shares subject to
options.

DIRECTORS' COMPENSATION

Directors who are employees of the Company do not receive any compensation
for serving as directors of the Company. Outside Directors receive an annual
retainer of $13,600, plus an attendance fee for each Outside Director of $600
per regular meeting and $500 per committee meeting. Outside Directors receive
their annual retainer in the form of shares of Common Stock valued at 95% of the
current bid price of the Common Stock on the date of issuance. The Chairman of
the Board receives an annual retainer of $84,000 which is also paid in the form
of shares of Common Stock valued at 95% of the current bid price of the Common
Stock on the date of issuance. Additionally, all non-employee directors are
reimbursed for expenses incurred in attending board meetings.

CERTAIN TRANSACTIONS

Some of the directors, executive officers and affiliates of the Company are,
and have been during the preceding three fiscal years, customers of the Banks,
and some of the directors, executive officers and affiliates of the Company are
direct or indirect owners of 10% or more of the stock of corporations which are,
or have been in the past, customers of the Banks. As such customers, they have
had transactions in the ordinary course of business of the Banks, including
borrowings, all of which transactions are or were on substantially the same
terms (including interest rates and collateral on loans) as those prevailing at
the time for comparable transactions with nonaffiliated persons. In the opinion
of management of the Company, none of the transactions involved more than the
normal risk of collectibility or presented any other unfavorable features. As of
June 30, 1996 the Banks had $3,480,593 in loans outstanding to the directors,
executive officers and affiliates of the Company, which amount represented 8.6%
of total stockholders' equity as of that date. In addition, as of June 30, 1996,
the Banks had $3,328,407 in loans outstanding to directors and officers of the
Banks who are not also directors or executive officers of the Company.

The Company purchases architectural services from Archideas, Inc., a
corporation in which Joseph A. Pasquinelli is a 20% principal. Under the terms
of the agreements between the Company and Archideas, Inc., the Company paid
Archideas, Inc. $5,606 in 1994, $57,561 in 1995 and $35,796 through July 31,
1996. Joseph A. Pasquinelli is the son of Anthony R. Pasquinelli and the nephew
of Bruno A. Pasquinelli.

The Company leases its Orland Park (Will-Cook) facility from a partnership
in which Anthony R. Pasquinelli and Bruno A. Pasquinelli each have a 14.1%
partnership interest. Under the terms of the lease, which is a triple net lease
that expires in 2016, the Company currently pays annual rent of $100,700, which
increases annually as set forth in the lease.

41
<PAGE>
The Company leases its Homewood facility from a partnership in which Anthony
R. Pasquinelli and Bruno A. Pasquinelli have an indirect, minority partnership
interest. Under the terms of the leases, which expire in 2008, the Company
currently pays an aggregate annual rent of $101,400, subject to three percent
annual increases as provided in the leases.

During 1996, the Company has purchased less than $1,000,000 of investment
securities through Smith Barney Inc. William C. Waddell, a First Vice President
of Smith Barney Inc., has received aggregate commissions of less than $9,000 in
connection with these transactions.

The following executive officers of the Company delivered full recourse
promissory notes to the Company as consideration for shares of Common Stock:

John D. Van Winkle purchased 50,000 shares of Common Stock in 1989 and
delivered a note in the principal amount of $436,000, of which $436,000 was
outstanding as of July 31, 1996. The note is payable on demand and bears
interest at a rate which equals the dividend rate on the Common Stock.

Charles E. Ofenloch purchased 50,000 shares of Common Stock in 1994 and
delivered a note in the principal amount of $474,500, of which $474,500 was
outstanding as of July 31, 1996. The note is payable on demand and bears
interest at the prime rate.

Ronald F. Stajkowski purchased 1,000 shares of Common Stock in 1987 and
delivered a note in the principal amount of $65,000, which was fully repaid in
1995.

John D. Van Winkle also received a loan from the Company in 1994 of
$224,640, of which $214,640 was outstanding as of July 31, 1996. The loan is
payable in annual principal installments of $10,000 and bears interest at the
prime rate.

42
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of July 31, 1996, and as adjusted to
reflect the sale of the Common Stock offered hereby, by (i) each person who is
known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock, (ii) each of the Company's directors, (iii) each of
the executive officers of the Company named in the Executive Compensation Table
and (iv) all directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF OUTSTANDING SHARES (1)
SHARES ------------------------
BENEFICIALLY PRIOR TO AFTER
NAME OWNED (1) OFFERING OFFERING
- --------------------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Heartland Advisors Inc. (2)...................................................... 302,625 7.6% 6.1%
Anthony R. Pasquinelli (3)(13)................................................... 288,932 7.3 5.8
Bruno A. Pasquinelli (4)......................................................... 272,337 6.8 5.5
John D. Van Winkle (5)(13)(14)................................................... 95,480 2.4 1.9
Christopher M. Cronin (6)(13).................................................... 8,661 * *
Richard I. Polanek (7)(13)....................................................... 75,405 1.9 1.5
William C. Waddell (8)(13)....................................................... 64,263 1.6 1.3
James W. Martin, Jr. (9)(13)..................................................... 27,929 * *
Charles E. Ofenloch (10)(13)..................................................... 91,792 2.3 1.8
Bruce G. Park (11)(13)(14)....................................................... 26,714 * *
Ronald F. Stajkowski (12)(13).................................................... 108,210 2.7 2.1
All directors and executive officers as a group (11 persons) (13)................ 823,418 20.2 16.2
</TABLE>

- ------------------------
*Less than one percent.

(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of 1934,
as amended. Unless otherwise stated below, each such person has sole voting
and investment power with respect to all such shares. Under Rule 13d-3(d),
shares not outstanding which are subject to options, warrants, rights or
conversion privileges exercisable within 60 days are deemed outstanding for
the purpose of calculating the number and percentage owned by such person,
but are not deemed outstanding for the purpose of calculating the percentage
owned by each other person listed.

(2) Number of shares reported by Heartland Advisors Inc. as of March 31, 1996 in
its most recent Schedule 13F filed with the Securities and Exchange
Commission. Includes 250,125 shares as to which Heartland Advisors Inc. has
sole voting power and 52,500 shares as to which Heartland Advisors Inc. has
sole dispositive power. The business address of Heartland Advisors Inc. is
790 N. Milwaukee Street, Milwaukee, Wisconsin 53202.

(3) Includes 11,828 shares held in trust for Anthony R. Pasquinelli's benefit.
Anthony R. Pasquinelli's business address is 905 W. 175th Street, Homewood,
Illinois 60430.

(4) Includes 11,801 shares held in trust for Bruno A. Pasquinelli's benefit.
Bruno A. Pasquinelli's business address is 905 W. 175th Street, Homewood,
Illinois 60430.

(5) Includes 64,280 shares beneficially owned by Mr. Van Winkle and his wife and
12 shares beneficially owned by Mr. Van Winkle's daughters.

(6) Includes 3,030 shares in the Knickerbocker Roofing Pension Plan.

(7) Includes 59,680 shares held in trust for Mr. Polanek's benefit and 2,865
shares beneficially owned by Mr. Polanek's wife.

(8) Includes 4,729 shares beneficially owned by Mr. Waddell's wife.

(9) Includes 16,904 shares held in trust for Mr. Martin's benefit.

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(10) Includes 11,312 shares beneficially owned by Mr. Ofenloch and his wife.

(11) Includes 10,330 shares held in trust for Mr. Park's benefit.

(12) Includes 99,390 shares beneficially owned by Mr. Stajkowski and his wife.

(13) Includes shares of Common Stock that could be acquired through the exercise
of stock options as follows: Mr. A. Pasquinelli, 6,615 shares; Mr. Van
Winkle, 16,538 shares; Mr. Cronin, 1,103 shares; Mr. Polanek, 6,615 shares;
Mr. Waddell, 6,615 shares; Mr. Martin, 11,026 shares; Mr. Ofenloch, 13,230
shares; Mr. Park, 8,820 shares; Mr. Stajkowski, 8,820 shares; and all
directors and executive officers as a group, 94,711 shares.

(14) Excludes 9,146 shares of Common Stock held by the Company's Employees
Retirement and Savings Plan (the "Plan"). Messrs. Van Winkle and Park and
three other persons are members of the administration committee of the Plan.
As such, they are entitled to vote the shares of Common Stock held by the
Plan and therefore may be deemed to beneficially own such shares.

SUPERVISION AND REGULATION

GENERAL

Financial institutions and their holding companies are extensively regulated
under federal and state laws. As a result, the business, financial condition and
prospects of the Company and the Banks can be materially affected not only by
management decisions and general economic conditions, but also by applicable
statutes and regulations and other regulatory pronouncements and policies
promulgated by regulatory agencies with jurisdiction over the Company and the
Banks, such as the Board of Governors of the Federal Reserve System ("FRB"), the
Office of the Comptroller of the Currency ("OCC"), the Federal Deposit Insurance
Corporation ("FDIC") and the Office of the Illinois Commissioner of Banks and
Real Estate (the "Commissioner"). The effect of such statutes, regulations and
other pronouncements and policies can be significant, cannot be predicted with a
high degree of certainty and can change over time. Furthermore, such statutes,
regulations and other pronouncements and policies are intended to protect
depositors and the FDIC's deposit insurance funds, not to protect stockholders.

Bank holding companies and banks are subject to enforcement actions by their
regulators for regulatory violations. In addition to compliance with statutory
and regulatory limitations and requirements concerning financial and operating
matters, regulated financial institutions such as the Company and the Banks must
file periodic and other reports and information with their regulators and are
subject to examination by each of their regulators.

The statutory requirements applicable to and regulatory supervision of bank
holding companies and banks have increased significantly and have undergone
substantial change in recent years. To a great extent, these changes are
embodied in the Financial Institutions Reform, Recovery and Enforcement Act
("FIRREA"), enacted in August 1989, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"), enacted in December 1991, and the
regulations promulgated under FIRREA and FDICIA. Many of the regulations
promulgated pursuant to FDICIA have only recently been finalized and their
impact on the business, financial condition and prospects of the Company and the
Banks cannot be predicted with certainty.

Currently, various initiatives have been proposed that could result in a
wide-ranging restructuring of the bank regulatory system in the United States.
These include (i) the merger or other combination of the financial institution
regulators, including the FRB, the OCC and the FDIC, (ii) the combination of the
OCC and FDIC, with the FRB remaining independent, and (iii) the creation of a
new federal banking agency to provide comprehensive supervision of financial
institutions. There can be no certainty as to the effect, if any, that such
restructuring would have on the regulation of the Company or the Banks.

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The following discussion and other references to and descriptions of the
regulation of financial institutions contained herein constitute brief summaries
thereof. This discussion is not intended to constitute and does not purport to
be a complete statement of all legal restrictions and requirements applicable to
the Company and the Banks and all such descriptions are qualified in their
entirety by reference to applicable statutes, regulations and other regulatory
pronouncements.

REGULATION OF BANK HOLDING COMPANIES AND THEIR NON-BANK SUBSIDIARIES

The Company is a registered bank holding company within the meaning of the
Bank Holding Company Act of 1956, as amended ("BHCA"). As such, the Company is
subject to regulation, supervision and examination by the FRB. The Company is
also subject to the limitations and requirements of the Illinois Bank Holding
Company Act ("IBHCA"). These limitations and requirements, however, are no more
restrictive in most instances than those imposed by the BHCA and the FRB. The
business and affairs of the Company are regulated in a variety of ways,
including limitations on acquiring control of other banks and bank holding
companies, limitations on activities and investments, limitations on interstate
acquisitions, regulatory capital requirements and limitations on payment of
dividends. In addition, it is the FRB's policy that a bank holding company is
expected to act as a source of financial strength to banks that it owns or
controls and, as a result, the FRB could require the Company to commit resources
to support the Banks in circumstances in which the Company might not do so
absent the FRB's policy. The Company's most recent regulatory examination was
conducted by the FRB as of March 31, 1996.

ACQUISITION OF BANKS AND BANK HOLDING COMPANIES

The BHCA generally prohibits a bank holding company from (i) acquiring,
directly or indirectly, more than 5% of the outstanding shares of any class of
voting securities of a bank or bank holding company, (ii) acquiring control of a
bank or another bank holding company, (iii) acquiring all or substantially all
the assets of a bank, or (iv) merging or consolidating with another bank holding
company, without first obtaining FRB approval. In considering an application
with respect to any such transaction, the FRB is required to consider a variety
of factors, including the potential anti-competitive effects of the transaction,
the financial condition and future prospects of the combining and resulting
institutions, the managerial resources of the resulting institution, the
convenience and needs of the communities the combined organization would serve,
the record of performance of each combining organization under the Community
Reinvestment Act ("CRA"), and the prospective availability to the FRB of
information appropriate to determine ongoing regulatory compliance with
applicable banking laws.

In addition, the federal Change in Bank Control Act imposes limitations on
the ability of one or more individuals or other entities to acquire control of
the Company or the Banks. Further, the Illinois Banking Act ("IBA") also
regulates the acquisition of control of Illinois-chartered banks.

Banking laws and regulations, including the Federal Reserve Act, generally
impose certain limitations on extensions of credit and other transactions by and
between banks and other banks and non-bank companies in the same holding company
system. See "Regulation of Banks -- Insider and Affiliate Transactions." A bank
holding company and its subsidiaries also are prohibited from engaging in
certain tie-in arrangements in connection with any extension of credit, lease or
sale of property or furnishing of services.

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Act"), which became effective in September 1995, has eliminated many
of the historical barriers to the acquisition of banks by out-of-state bank
holding companies. The Interstate Act facilitates the interstate expansion and
consolidation of banking organizations by permitting: (i) bank holding companies
that are adequately capitalized and managed to acquire banks located in states
outside their home states regardless of whether such acquisitions are authorized
under the law of the host state; (ii) the interstate merger of banks after June
1, 1997, subject to the right of individual states either to pass legislation
providing for earlier effectiveness of such mergers or to "opt out" of this
authority prior to such date; (iii) banks to establish new branches on an
interstate basis provided that such action is

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specifically authorized by the law of the host state; (iv) foreign banks to
establish, with approval of the appropriate regulators in the United States,
branches outside their home states to the same extent that national or state
banks located in such state would be authorized to do so; and (v) banks to
receive deposits, renew time deposits, close loans, service loans and receive
payments on loans and other obligations as agent for any bank or thrift
affiliate, whether the affiliate is located in the same or different state.

The IBHCA permits Illinois bank holding companies to acquire control of
banks in any state and permits bank holding companies whose principal place of
business is in another state to acquire control of Illinois banks or bank
holding companies upon satisfactory application to the Commissioner. In
reviewing any such application, the Commissioner will review, among other
things, compliance by the applicant banks with the requirements of the CRA, and
other information designed to determine such banks' abilities to meet community
credit needs.

PERMISSIBLE NON-BANKING ACTIVITIES

The BHCA generally prohibits a bank holding company from engaging in
activities or acquiring or controlling, directly or indirectly, voting
securities or assets of any company engaged in any activity other than banking,
managing or controlling banks or another activity that the FRB has determined,
by regulation or otherwise, to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. Subject to certain
exceptions, before making any such acquisition or engaging in any such activity,
a bank holding company must obtain the prior approval of the FRB as provided in
applicable regulations.

In evaluating such applications, the FRB will consider, among other relevant
factors, whether permitting the bank holding company to engage in the activity
in question can reasonably be expected to produce benefits to the public (such
as increased convenience, competition or efficiency) that outweigh any possible
adverse effects (such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or safety and soundness concerns). Those
activities that the FRB has determined by regulation to be closely related to
banking include: (i) making, acquiring and servicing loans such as would be made
by mortgage companies (for the company's account or the account of others); (ii)
trust company functions; (iii) certain investment advisory services; (iv)
certain security brokerage services; and (v) certain insurance agency
activities.

Notwithstanding applicable restrictions on both the acquisition of control
of banks and companies engaged in permissible non-banking activities, a bank
holding company may acquire, without the prior approval of the FRB, 5% or less
of the outstanding shares of any class of voting securities of a company,
assuming the investment does not otherwise result in control of such company.
The BHCA prohibits bank holding companies, with certain exceptions, from
acquiring direct or indirect ownership of more than five percent of the voting
securities of any company that is not a bank or does not engage in specifically
permitted activities such as those described in the preceding paragraph.

As mentioned above, trust company activities are among those determined by
the FRB to be closely related to banking. Beverly Trust is an Illinois-chartered
trust company with a Certificate of Authority to perform trust functions from
the Commissioner. Beverly Trust is subject to regulation and examination by the
Commissioner and, as a direct subsidiary of the Company, by the FRB.

CAPITAL REQUIREMENTS

Regulatory capital requirements applicable to all regulated financial
institutions, including bank holding companies and banks, have increased
significantly in recent years and further increases are possible in future
periods. The FRB has adopted risk-based capital standards for bank holding
companies. The articulated objectives of Congress and the FRB in establishing a
risk-based method of measuring capital adequacy are (i) to make regulatory
capital requirements applicable to bank holding companies more sensitive to
differences in risk profiles among bank holding companies, (ii) to factor
off-balance sheet liabilities into the assessment of capital adequacy, (iii) to
reduce disincentives for bank holding companies to hold liquid, low risk assets
and (iv) to achieve greater consistency in the

46
<PAGE>
evaluation of capital adequacy of major banking organizations throughout the
world by conforming to the framework developed jointly by supervisory
authorities from countries that are parties to the so-called "Basle Accord"
adopted by such supervisory authorities in July 1988.

The FRB requires bank holding companies to maintain a minimum ratio of
qualifying total capital to risk-weighted assets. Banking organizations,
however, generally are expected to operate well above the minimum risk-based
ratios. Risk-weighted assets include a "credit equivalent amount" of off balance
sheet items, determined in accordance with conversion formulae set forth in the
FRB's regulations. Each asset and off balance sheet item, after certain
adjustments, is assigned to one of four risk-weighting categories, 0%, 20%, 50%
or 100%, and the risk-adjusted values then are added together to determine
risk-weighted assets.

A bank holding company must meet two risk-based capital standards, a "core"
or "Tier 1" capital requirement and a total capital requirement. The current
regulations require that a bank holding company maintain Tier 1 capital equal to
4% of risk-weighted assets and qualifying total capital equal to 8% of
risk-weighted assets. Tier 1 capital must represent at least 50% of total
capital and may consist of those items defined in applicable regulations as core
capital elements. Core capital elements include common stockholders' equity;
qualifying noncumulative, perpetual preferred stock; qualifying (i.e., up to 25%
of total Tier 1 capital) cumulative perpetual preferred stock; and minority
interests in the equity accounts of consolidated subsidiaries. Core capital
excludes goodwill, deferred tax assets and other intangible assets required to
be deducted in accordance with applicable regulations.

Total capital represents the sum of Tier 1 capital plus "Tier 2" capital,
less certain deductions. Tier 2 or "supplementary" capital consists of:
allowances for loan and lease losses; perpetual preferred stock (to the extent
not included in Tier 1 capital); hybrid capital instruments; perpetual debt;
mandatory convertible debt securities; term subordinated debt; and intermediate
term preferred stock, in each case subject to applicable regulatory limitations.
The maximum amount of Tier 2 capital that may be included in an organization's
qualifying total capital cannot exceed 100% of Tier 1 capital. In determining
total capital, a bank holding company must deduct from the sum of Tier 1 and
Tier 2 capital: its investments in unconsolidated subsidiaries; reciprocal
holdings of certain securities of banking organizations; and other deductions
required by regulation or determined on a case-by-case basis by the appropriate
supervisory authority.

Another capital measure, the Tier 1 leverage ratio, is defined as Tier 1
capital divided by average total assets (net of allowance for loan and lease
losses, goodwill, and other intangible assets). The minimum leverage ratio is 3%
for banking organizations that do not anticipate significant growth and that
have well-diversified risk (including no undue interest rate risk), excellent
asset quality, high liquidity and good earnings. Other banking organizations are
expected to have ratios of at least 4%-5%, depending upon their particular
condition and growth plans. Higher capital ratios could be required if warranted
by the particular circumstances or risk profile of a given banking organization.
The FRB has not advised the Company of any specific minimum Tier 1 leverage
ratio applicable to it.

As of June 30, 1996, the Company had Tier 1 and total risk-based capital
ratios of 11.50% and 12.58%, respectively, and had a Tier 1 leverage ratio of
6.97%.

The failure of a bank holding company to meet its required capital ratios
may result in supervisory action, as well as inability to obtain approval of any
regulatory applications and, potentially, increased frequency of examination.
The nature and intensity of the supervisory action will depend upon the level of
noncompliance. Under the IBHCA, no bank holding company may acquire control of a
bank if, at the time it applies for approval or at the time the transaction is
consummated, its ratio of total capital to total assets, as determined in
accordance with then applicable FRB regulations, is or will be less than 7%.

Risk-based capital ratios focus principally on broad categories of credit
risk and do not incorporate factors that can affect the Company's financial
condition, such as overall interest rate risk exposure, liquidity, funding and
market risks, the quality and level of earnings, investment or loan

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<PAGE>
portfolio concentrations, the quality of loans and investments, the
effectiveness of loan and investment policies and management's ability to
monitor and control financial and operating risks. For this reason, the overall
financial health of the Company and the Banks and the assessment of the Company
and the Banks by various regulatory agencies may differ from conclusions that
might be drawn solely from the level of the Company or the Banks' risk-based
capital ratios.

DIVIDENDS

The FRB has issued a policy statement on the payment of cash dividends by
bank holding companies. In the policy statement, the FRB expressed its view that
a bank holding company should not pay cash dividends unless net income over the
past year was sufficient to fully fund the dividends and the prospective rate of
earnings retention appears consistent with capital needs, asset quality and
overall financial condition. Further, the FRB stated that it believes it is
inappropriate for a banking organization that is experiencing serious financial
problems or that has inadequate capital to borrow in order to fund dividends.
The FRB also may impose limitations on the payment of dividends as a condition
to its approval of certain applications, including applications for approval of
mergers and acquisitions. Between June 1990 and January 1993, the FRB did not
permit the Company to pay dividends on its stock without the FRB's prior consent
or notification. In January 1993, because of the Company's improved financial
condition, the FRB informed the Company that it could resume paying dividends
without restriction.

REGULATION OF BANKS

Beverly Bank, Beverly Bank Matteson and Beverly Bank Lockport are Illinois
banking corporations (sometimes collectively referred to herein as the "Illinois
Banks") organized under the IBA. Wilmington is a national banking association
organized under the National Bank Act. As Illinois banks, Beverly Bank, Beverly
Bank Matteson and Beverly Bank Lockport are subject to regulation, supervision
and examination by the Commissioner, and Wilmington is subject to regulation,
supervision and examination by the OCC. Beverly Bank Lockport is a member of the
Federal Reserve System and, therefore, is also subject to regulation,
supervision and examination by the FRB. The deposit accounts of the Banks are
insured up to applicable limits by the FDIC's Bank Insurance Fund ("BIF"). Thus,
the Banks also are subject to regulation, supervision and examination by the
FDIC. In certain instances, the statutes administered by and regulations
promulgated by certain of these agencies are more stringent than those of other
agencies with jurisdiction. In these instances, the Banks must comply with the
more stringent restrictions, prohibitions or requirements. Beverly Bank's most
recent regulatory examinations were conducted by the Commissioner as of July 31,
1995 and by the FDIC as of June 30, 1994. Beverly Bank Matteson's most recent
regulatory examinations were conducted by the FDIC as of December 31, 1994 and
by the Commissioner as of March 31, 1994. Beverly Bank Lockport's most recent
regulatory examinations were conducted by the Commissioner as of April 14, 1994
and by the FRB as of March 12, 1993. Wilmington's most recent regulatory
examination was conducted by the OCC as of October 3, 1995.

The business and affairs of the Banks are regulated in a variety of ways.
Regulations apply to, among other things, insurance of deposit accounts, the
Banks' capital ratios, payment of dividends, liquidity requirements, the nature
and amount of the investments that the Banks may make, transactions with
affiliates, community and consumer lending laws, internal policies and controls,
reporting by and examination of the Banks and changes in control of the Banks.

DEPOSIT INSURANCE

As FDIC-insured institutions, the Banks are required to pay deposit
insurance premiums to the FDIC. FDICIA authorized the FDIC to implement a
risk-based deposit insurance assessment system. Pursuant to this requirement,
the FDIC has adopted a risk-based assessment system, under which each insured
depository institution is placed into one of nine categories and assessed
insurance premiums accordingly. Beginning with the first semi-annual assessment
period of 1996, these premiums range from 0% to .27% of deposits included in an
institution's "assessment base," depending

48
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upon its level of capital and evaluation of other supervisory factors, and
subject to an annual minimum payment of $2,000. A bank's assessment base
generally includes all of its demand, time and savings deposits, regardless of
whether they are FDIC insured.

Institutions classified as "well-capitalized" (see "Regulation of Banks --
Capital Requirements") and part of a supervisory subgroup of financially sound
institutions with a few minor weaknesses would pay the lowest premium while
institutions that are "undercapitalized" (see "Regulation of Banks -- Capital
Requirements") and considered of substantial supervisory concern would pay the
highest premium. Risk classification of all insured institutions is made by the
FDIC for each semi-annual assessment period. In the first semi-annual assessment
period of 1995, the Banks were assessed at the rate of .23% of deposits and in
the second semi-annual period were assessed at the rate of .04% of deposits,
which were the rates for "well-capitalized" and financially sound institutions.

The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institution has
engaged or is engaging in unsafe or unsound banking practices, is in a condition
that is unsafe or unsound for the continuation of operations or otherwise has
violated any applicable law, regulation or order, or any condition imposed in
writing by or in a written agreement with the FDIC. The FDIC also may suspend
deposit insurance temporarily during the pendency of a proceeding to terminate
insurance if the institution has no tangible capital. Management of the Company
is not aware of any activity or condition that could result in termination of
the deposit insurance of the Banks.

Legislation also is being considered by Congress that would result in the
merger of the Bank Insurance Fund and the Savings Association Insurance Fund
("SAIF"). This legislation could result in banks sharing in the payments for
Financing Corp. ("FICO") bonds, which were issued in connection with the savings
and loan crisis. FICO bonds currently are supported through the payment of SAIF
assessments by savings institutions, and thus adoption of this legislation could
result in higher BIF premium payments by banks.

CAPITAL REQUIREMENTS

The FRB regulations establish the same three minimum capital standards for
insured state member banks as are in place for bank holding companies. The OCC
and FDIC regulations also establish the same minimum Tier 1 and risk-based
capital ratios and Tier 1 leverage ratios for national banks and state nonmember
banks. Under the FRB, OCC and FDIC regulations, the Banks' capital ratios are
computed in a manner substantially similar to the manner in which bank holding
company capital ratios are determined. See "Regulation of Bank Holding Companies
and Their Non-Bank Subsidiaries -- Capital Requirements." These capital
requirements are minimum requirements and higher levels of capital will be
required if warranted by the particular circumstances or risk profile of an
individual bank.

FDICIA provides the federal banking regulators with broad power to take
"prompt corrective action" to resolve the problems of undercapitalized
institutions. The extent of the regulators' powers depends on whether the
institution in question is "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." Under regulations adopted by the federal banking regulators,
a bank would be considered "well capitalized" if it (i) has a total risk-based
capital ratio of 10% or greater, (ii) has a Tier 1 risk-based capital ratio of
6% or greater, (iii) has a leverage ratio of 5% or greater and (iv) is not
subject to any order or written directive to meet and maintain a specific
capital level. An "adequately capitalized" bank is defined under the regulations
as one that (i) has a total risk-based capital ratio of 8% or greater, (ii) has
a Tier 1 risk-based capital ratio of 4% or greater, (iii) has a leverage ratio
of 4% or greater (or 3% or greater in the case of a bank with the highest
composite regulatory examination rating that is not experiencing or anticipating
significant growth) and (iv) does not meet the definition of a well capitalized
bank. A bank would be considered (A) "undercapitalized" if it has (i) a total
risk-based capital ratio of less than 8%, (ii) a Tier 1 risk-based capital ratio
of less than 4% or (iii) a leverage ratio of less than 4% (or 3% in the case of
a bank with the highest composite regulatory examination rating that is not
experiencing or

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anticipating significant growth); (B) "significantly undercapitalized" if the
bank has (i) a total risk-based capital ratio of less than 6%, (ii) a Tier 1
risk-based capital ratio of less than 3% or (iii) a leverage ratio of less than
3%; and (C) "critically undercapitalized" if the bank has a ratio of tangible
equity to total assets of equal to or less than 2%. The regulations would permit
the appropriate federal banking regulator to downgrade a bank to the next lower
category if the regulator determines (i) after notice and opportunity for
hearing or response, that the bank is in an unsafe or unsound condition or (ii)
that the bank has received (and not corrected) a less-than-satisfactory rating
for any of the categories of asset quality, management, earnings or liquidity in
its most recent exam.

As of June 30, 1996, Beverly Bank qualified as "well-capitalized," with a
total risk-based capital ratio of 14.28%; a Tier 1 risk-based capital ratio of
13.04% and a leverage ratio of 7.49%. As of June 30, 1996, Beverly Bank Matteson
qualified as "well-capitalized," with a total risk-based capital ratio of
13.28%; a Tier 1 risk-based capital ratio of 12.44% and a leverage ratio of
7.57%. As of June 30, 1996, Beverly Bank Lockport qualified as
"well-capitalized," with a total risk-based capital ratio of 12.85%; a Tier 1
risk-based capital ratio of 11.81% and a leverage ratio of 6.89%. As of June 30,
1996, Wilmington qualified as "well-capitalized," with a total risk-based
capital ratio of 13.67%; a Tier 1 risk-based capital ratio of 12.66% and a
leverage ratio of 7.57%.

Depending upon the capital category to which an institution is assigned, the
regulators' corrective powers, many of which are mandatory in certain
circumstances, include: prohibition on capital distributions; prohibition on
payment of management fees to controlling persons; requiring the submission of a
capital restoration plan; placing limits on asset growth; limiting acquisitions,
branching or new lines of business; requiring the institution to issue
additional capital stock (including additional voting stock) or to be acquired;
restricting transactions with affiliates; restricting the interest rates that
the institution may pay on deposits; ordering a new election of directors of the
institution; requiring that senior executive officers or directors be dismissed;
prohibiting the institution from accepting deposits from correspondent banks;
prohibiting the institution's bank holding company from making any capital
distributions; requiring the institution to divest certain subsidiaries;
prohibiting the payment of principal or interest on subordinated debt; and,
ultimately, appointing a receiver for the institution.

DIVIDENDS

Under the IBA, each of the Illinois Banks is permitted to declare and pay
dividends in amounts up to the amount of its accumulated net profits, provided
that it shall retain in its surplus at least one-tenth of its net profits since
the date of the declaration of its most recent previous dividend until said
additions to surplus, in the aggregate, equal at least the paid-in capital of
the Bank. In no event may any Illinois Bank, while it continues its banking
business, pay dividends in excess of its net profits then on hand (after
deductions for losses and bad debts).

The FRB permits a state member bank such as Beverly Bank Lockport to pay
dividends, while it continues its banking operations, in an amount not greater
than its net profits then on hand, after deducting therefrom its losses and bad
debts. No state member bank may pay as a dividend a portion of its paid-in
capital and no state member bank may pay dividends if its accumulated losses
equal or exceed its undivided profits then on hand. The FRB policy statement
described above (see "Regulation of Bank Holding Companies and Their Non-Bank
Subsidiaries -- Dividends") also applies to the payment of dividends by state
member banks. Accordingly, it is the FRB's view that a state member bank
experiencing earnings weaknesses should not pay cash dividends exceeding current
net income or that only can be funded in ways that weaken such bank's financial
health, such as by borrowing.

The payment of dividends by Wilmington is regulated by the OCC under the
National Bank Act. Pursuant to the National Bank Act, all dividends must be paid
out of the undivided profits of the bank. The National Bank Act further
restricts the payment of dividends by prohibiting a national bank from declaring
a dividend on its shares of common stock until its surplus fund equals the
amount of capital stock or, if the surplus fund does not equal the amount of
capital stock, until not less than one-tenth of a bank's net income for the
preceding half year in the case of quarterly or semi-annual dividends, or

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the preceding two half-year periods in the case of annual dividends, are
transferred to the surplus fund. The approval of the OCC is required prior to
the payment of a dividend if the total of all dividends declared by a national
bank in any calendar year would exceed the total of its net income for that year
combined with its retained net income for the two preceding years, less any
required transfers to surplus or a fund for the retirement of any preferred
stock.

Under FDICIA, none of the Banks may pay a dividend if, after paying the
dividend, such Bank would be undercapitalized.

At June 30, 1996, the amount of retained earnings of the Banks available for
dividends, while maintaining the Banks in a well-capitalized status, totaled
approximately $14,000,000.

INSIDER AND AFFILIATE TRANSACTIONS

Each of the Banks is subject to certain restrictions on "covered
transactions" between and among the Banks, the Company and other affiliates.
"Covered transactions" are defined by the Federal Reserve Act to include a loan
or extension of credit to an affiliate, a purchase of securities issued by an
affiliate, a purchase of assets from the affiliate (unless otherwise exempted by
the FRB), the acceptance of securities issued by an affiliate as collateral for
a loan and the issuance of a guarantee, acceptance, or letter of credit for the
benefit of an affiliate. The covered transactions that an insured bank and its
subsidiaries are permitted to engage in with their nonbank affiliates are
limited to the following amounts: (i) in the case of any one such affiliate, the
aggregate amount of "covered transactions" of the insured bank and its
subsidiaries cannot exceed 10% of the capital stock and the surplus of the
insured bank; and (ii) in the case of all affiliates, the aggregate amount of
"covered transactions" of the insured bank and its subsidiaries cannot exceed
20% of the capital stock and surplus of the insured bank. Loans and other
extensions of credit by insured banks and their affiliates must, in general,
also be collateralized at required minimum levels. In addition, covered
transactions, as well as certain other transactions between or among an insured
bank and its affiliates, must be on terms that are substantially the same as
those prevailing for comparable transactions with nonaffiliated entities.

Certain limitations and reporting requirements also are placed on extensions
of credit by the Banks to principal stockholders of the Company, and to
directors and certain executive officers of the Company, its non-bank
subsidiaries and the Banks and to "related interests" of such principal
stockholders, directors and officers. Extensions of credit (i) must be made on
substantially the same terms, including interest rates and collateral as, and
following credit underwriting procedures that are not less stringent than, those
prevailing at the time for comparable transactions with persons not covered
above and who are not employees, and (ii) must not involve more than the normal
risk of repayment or present other unfavorable features. In addition, any
director or officer of the Company or the Banks or principal stockholder of the
Company may be limited in his or her ability to obtain credit from banks with
which the Banks maintain a correspondent relationship.

COMMUNITY INVESTMENT AND CONSUMER PROTECTION LAWS

In connection with its lending activities, each of the Banks is subject to a
variety of federal laws designed to protect borrowers and promote lending to
various sectors of the economy and population. Included among these are the
federal Home Mortgage Disclosure Act, Real Estate Settlement Procedures Act,
Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act
and the CRA. The Illinois Banks are subject to similar Illinois laws applicable
to, among other things, usury, credit discrimination and business practices.

The CRA requires banks to define the communities that they serve, identify
the credit needs of those communities and adopt and implement a "Community
Reinvestment Act Statement" pursuant to which they offer credit products and
take other actions that respond to the credit needs of the community. Under
FIRREA, the responsible federal banking regulatory agency must conduct annual
CRA examinations of insured financial institutions and assign to them a CRA
rating of "outstanding," "satisfactory," "needs to improve" or "substantial
noncompliance."

51
<PAGE>
The federal banking regulatory agencies will take into account the CRA
ratings of institutions in connection with their consideration of applications
filed by the institutions, including applications to establish branch offices or
applications of depository institutions to convert to national bank charters. In
addition, regulatory agencies will take CRA ratings of combining organizations
into account in connection with acquisitions involving the change of control of
a financial institution. Based on the institutions' records of performance, the
appropriate agency may deny the application on CRA grounds or require corrective
action as a condition of its approval. In 1995, Beverly Bank's CRA rating was
outstanding, Beverly Bank Matteson's CRA rating was outstanding, Beverly Bank
Lockport's CRA rating was satisfactory, and Wilmington's CRA rating was
outstanding.

In September 1994, the Riegle Community Development and Regulatory
Improvement Act (the "Community Development Act") was enacted. The Community
Development Act includes (i) Subtitle A, the "Community Development and
Financial Institutions Act," which establishes the "Community Development
Financial Institutions Fund" to promote economic revitalization and community
development through investment in "Community Development Financial
Institutions," and (ii) Subtitle B, "The Home Ownership and Equity Protection
Act of 1994," which seeks to increase the protections afforded to individuals
most at risk from abusive lending practices, particularly high-interest
mortgages secured by the borrowers' homes.

The Community Development Act also provides a number of initiatives to
lessen the regulatory burden placed upon depository institutions and also
affects a number of the consumer compliance laws by allowing streamlined
disclosures for radio advertising of consumer leases, providing consumers with
information necessary to challenge an "adverse characterization" due to a credit
reporting agency report and by clarifying the disclosure requirements under the
Real Estate Settlement Procedures Act regarding the transfer of serviced
mortgage loans.

In addition, the Community Development Act reforms currency transaction
reports to increase their usefulness to the Federal Government and to various
law enforcement agencies in combating money laundering. The measure also calls
for improvement in the identification of money laundering schemes, better
controls over negotiable instruments drawn on foreign banks by making them
subject to reporting, and uniform licensing and registration of check cashing
and money transmitting businesses, which are often used to facilitate illegal
currency transactions.

ANNUAL AUDIT, REPORTING AND MANAGERIAL CONTROL REQUIREMENTS

Under FDICIA, the FDIC was required to promulgate regulations requiring FDIC
insured financial institutions over a certain size to have an annual independent
audit of their financial statements in accordance with generally accepted
auditing standards, to have an independent audit committee of outside directors,
and to file with the FDIC and their respective primary federal regulators annual
reports, attested to by their independent auditors, as to their internal control
structure and compliance with certain designated laws and regulations (including
laws and regulations governing insider transactions and payment of dividends).
The FDIC's regulations apply these requirements to insured depository
institutions with total assets of $500 million or more. The requirements can be
satisfied by audit procedures adhered to by a parent entity such as the Company
that is consolidated with the Banks for financial reporting purposes.

OTHER FDICIA RULES

Other rules adopted or currently proposed to be adopted pursuant to FDICIA
include: (i) real estate lending standards for banks, which provide guidelines
concerning loan-to-value ratios for various types of real estate loans; (ii)
revisions to the risk-based capital rules to account for interest rate risk,
concentration of credit risk and the risks posed by "non-traditional
activities"; (iii) rules requiring depository institutions to develop and
implement internal procedures to evaluate and control credit and settlement
exposure to their correspondent banks; (iv) rules implementing the FDICIA
provision prohibiting, with certain exceptions, state banks from making equity
investments of types and amounts not permissible for national banks; (v) rules
addressing various "safety and

52
<PAGE>
soundness" issues, including operations and managerial standards, standards for
asset quality, earnings and stock valuations, and compensation standards for the
officers, directors, employees and principal shareholders of the depository
institution; and (vi) rules restricting the ability of depository institutions,
in certain cases, to accept brokered deposits.

CHANGE IN CONTROL

In addition to the restrictions imposed by the BHCA, the Federal Deposit
Insurance Act imposes the requirements of prior notice to the appropriate
federal banking agency in the event of the acquisition of control of an insured
bank. The appropriate federal banking agency in the case of state nonmember
banks is the FDIC, in the case of state member banks and bank holding companies
is the FRB, and in the case of national banks is the OCC. In reviewing
change-in-control notices, the agencies generally review factors such as: the
effect of the transaction upon competition; the convenience and needs of the
community to be served; the financial history and condition of the institutions;
the existence of insider transactions; the competence of the acquiring person
and the impact on the BIF. In addition, each of the Illinois Banks is subject to
the rules regarding change in control of Illinois banks contained in the IBA.
The Company is also subject to these rules by virtue of its control of the
Illinois Banks. Generally, the IBA provides that no person or entity or group of
affiliated persons or entities may, without the Commissioner's consent, directly
or indirectly, acquire control of an Illinois bank. Such control is presumed if
any person owns or controls 20% or more of the outstanding stock of an Illinois
bank or such lesser amount as would enable the holder or holders, by applying
cumulative voting, to elect one director of the bank.

In evaluating applications for acquisition of control of an Illinois bank or
bank holding company, in addition to the Commissioner's consideration of other
factors deemed relevant, the Commissioner must find that the character of the
proposed management of the bank after the change in control will assure
reasonable promise of successful, safe and sound operation; that the future
earnings prospects of the bank after the proposed change in control are
favorable; and that any prior involvement that the proposed controlling persons
or the proposed management of the institution after the change in control have
had with any other financial institution has been conducted in a safe and sound
manner. See "Regulation of Bank Holding Companies and Their Non-Bank
Subsidiaries -- Acquisition of Banks and Bank Holding Companies."

DESCRIPTION OF CAPITAL STOCK

As of June 30, 1996, the authorized capital stock of the Company consisted
of 8,000,000 shares of Common Stock, par value $.01 per share, of which
3,974,942 shares were outstanding and held of record by 314 stockholders, and
1,000,000 shares of Preferred Stock, par value $.01 per share, none of which was
outstanding.

COMMON STOCK

Each holder of Common Stock is entitled to one vote per share on all matters
voted upon by the Company's stockholders. Common stockholders have no preemptive
or other rights to subscribe for additional shares or other securities of the
Company. There are no cumulative voting rights, and, accordingly, holders of
more than fifty percent of the outstanding shares of Common Stock will be able
to elect all of the members of the Board of Directors.

Common stockholders are entitled to dividends in such amounts as may be
declared by the Board of Directors from time to time from funds legally
available therefor. In the event of liquidation, the common stockholders are
entitled to share ratably in any assets of the Company remaining after payment
in full of creditors and preferred stockholders to the extent of any liquidation
preferences.

The outstanding shares of Common Stock are, and the shares of Common Stock
to be issued in the offering will be (when issued and delivered in accordance
with the terms and conditions of the offering), validly issued, fully paid and
nonassessable.

53
<PAGE>
PREFERRED STOCK

The Board of Directors is authorized, pursuant to the Company's Certificate
of Incorporation, to issue one or more series of Preferred Stock with respect to
which the Board, without stockholder approval, may determine voting, conversion
and other rights which could adversely affect the rights of holders of Common
Stock. The rights of the holders of the Common Stock would generally be subject
to the prior rights of the Preferred Stock with respect to dividends,
liquidation preferences and other matters. Among other things, Preferred Stock
could be issued by the Company to raise capital or to finance acquisitions. The
issuance of Preferred Stock under certain circumstances could have the effect of
delaying or preventing a change in control of the Company. The Company has no
present plans to issue any shares of Preferred Stock.

CERTAIN ANTI-TAKEOVER PROVISIONS

The Company's Certificate of Incorporation establishes certain procedures,
including advance notice procedures, with regard to the nomination, other than
by or at the direction of the Board of Directors, of candidates for election as
directors and the proposal of business to be considered at annual stockholders
meetings. In general, notice must be delivered to the Company at its principal
executive offices not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting. The Company's Certificate of
Incorporation also provides that stockholders may not take action by written
consent. The Company's Bylaws also provide that special meetings of stockholders
may only be called by the Chairman of the Board or the Board of Directors. These
provisions could delay or defer a change in control of the Company if the Board
determines that such a change in control is not in the best interests of the
Company and its stockholders, and could have the effect of making it more
difficult to acquire the Company or remove incumbent management.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock of the Company is
Harris Trust and Savings Bank, Chicago, Illinois.

SHARES ELIGIBLE FOR FUTURE SALE

All of the Restricted Shares will be eligible for sale pursuant to the
exemption contained in Rule 144 under the 1933 Act, if the conditions of that
rule have been met. In general, under Rule 144, as currently in effect, a person
(or persons whose shares are aggregated) who has beneficially owned Restricted
Shares for at least two years is entitled to sell within any three-month period
a number of shares that does not exceed the greater of one percent of the then
outstanding shares of Common Stock (49,749 shares immediately after this
offering) or the average weekly trading volume in the Common Stock during the
four calendar weeks preceding such sale. Sales under Rule 144 are also subject
to certain manner-of-sale provisions, notice requirements and the availability
of current public information about the Company. Approximately 964,600
Restricted Shares, including shares held by affiliates, will be eligible for
sale subject to the volume limitations described above, as such shares will have
been beneficially owned for at least two years by the holders thereof. However,
Rule 144 will not become available to any such two-year holders of the Common
Stock until 90 days after the date of this Prospectus.

54
<PAGE>

As of June 30, 1996, options to purchase 418,040 shares of Common Stock were
outstanding under the Company's stock option plan, of which options with respect
to 146,610 shares of Common Stock were exercisable. A total of 114,905 shares of
Common Stock were also available for future option grants under the Company's
stock option plan.

The Company and all directors and executive officers of the Company have
agreed with the Underwriters not to offer, sell or otherwise dispose of any
shares of Common Stock (except, in the case of the Company, shares issuable
pursuant to outstanding options, reinvestment of dividends and payment of
directors' fees) for a period of 180 days after the date of this Prospectus
without the prior written consent of the Representative.

Prior to this offering, there has been a limited public market for the
Common Stock, and no predictions can be made as to the effect, if any, that
market sales of shares or the availability of shares for sale will have on the
market price prevailing from time to time. Sales of substantial amounts of
Common Stock in the public market could adversely affect prevailing market
prices.

55
<PAGE>
UNDERWRITING

The Company has entered into an Underwriting Agreement (the "Underwriting
Agreement") with the underwriters listed in the table below (referred to
individually as an "Underwriter" and collectively as the "Underwriters"), for
whom Howe Barnes Investments, Inc. is acting as representative (the
"Representative"). Subject to the terms and conditions set forth in the
Underwriting Agreement, the Company has agreed to sell to each of the
Underwriters, and each of the Underwriters has severally agreed to purchase from
the Company, the number of shares of Common Stock set forth opposite each
Underwriter's name in the table below.

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- --------------------------------------------------------------------------- -----------------
<S> <C>
Howe Barnes Investments, Inc...............................................
-----------------
TOTAL.................................................................... 1,000,000
-----------------
-----------------
</TABLE>

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters have agreed to purchase all of the Common Stock being sold pursuant
to the Underwriting Agreement if any is purchased (excluding shares covered by
the over-allotment option granted therein). In the event of a default by any
Underwriter, the Underwriting Agreement provides that, in certain circumstances,
purchase commitments of the non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.

The Representative has advised the Company that the Underwriters propose to
offer the Common Stock to the public initially at the public offering price set
forth in the cover page of this Prospectus and to selected dealers at such price
less a concession of not more than $ per share. Additionally, the
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain other dealers. After the initial public offering,
the public offering price and other selling terms may be changed by the
Underwriters.

The Company has granted to the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional 150,000
shares of Common Stock at the same price per share to be paid by the
Underwriters for the other shares offered hereby. If the Underwriters purchase
any of such additional shares pursuant to this option, each Underwriter will be
committed to purchase such additional shares in approximately the same
proportion as set forth in the table above. The Underwriters may exercise the
option only for the purpose of covering over-allotments, if any, made in
connection with the distribution of the Common Stock offered hereby.

The Company, and the executive officers and directors of the Company who in
the aggregate own 728,707 shares of Common Stock as of the date hereof, have
agreed not to offer, sell, contract to sell or otherwise dispose of any capital
stock of the Company or any security convertible into or exchangeable for such
capital stock (except, in the case of the Company, shares issuable pursuant to
outstanding options, reinvestment of dividends and payment of directors' fees)
for a period of 180 days after the effective date of the Registration Statement
of which this Prospectus is a part without the written consent of the
Representative.

The initial public offering price of the shares of Common Stock will be
determined by negotiation between the Company and the Representative. Among the
factors to be considered in determining the initial public offering price are
prevailing market and economic conditions, revenues and earnings of the Company,
estimates of the business potential and prospects of the Company, the present
state of the Company's business operations, an assessment of the Company's
management and the consideration of the above factors in relation to market
valuations of companies in related businesses.

The Representative has informed the Company that the Underwriters will not,
without customer authority, confirm sales to any accounts over which they
exercise discretionary authority.

56
<PAGE>
The Company has agreed to indemnify the Underwriters and their controlling
persons against certain liabilities, including civil liabilities under the 1933
Act, or to contribute to payments the Underwriters may be required to make in
respect thereof.

LEGAL MATTERS

Certain legal matters in connection with this offering are being passed upon
for the Company by Lord, Bissell & Brook, Chicago, Illinois, and for the
Underwriters by Chapman and Cutler, Chicago, Illinois.

EXPERTS

The consolidated financial statements of the Company as of December 31, 1995
and 1994 and for each of the years in the three-year period ended December 31,
1995 have been included herein in reliance on the report of Grant Thornton LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), in Washington, D.C., a Registration Statement on Form S-1
(together with all amendments and exhibits thereto, the "Registration
Statement") under the 1933 Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the Rules and Regulations of the Commission. Statements made in the Prospectus
as to the contents of any contract, agreement or other document referred to are
not necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description thereof, and each such statement
shall be deemed qualified in its entirety by such reference. The Registration
Statement, including the exhibits filed therewith, may be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, Room 1204; 500 West Madison Street,
Chicago, Illinois 60661, Suite 1400; and Seven World Trade Center, New York, New
York 10048. Copies of such material may be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549.

57
<PAGE>
BEVERLY BANCORPORATION, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Certified Public Accountants......................................................... F-2

Consolidated Financial Statements

Consolidated Balance Sheets as of June 30, 1996 (unaudited) and as of December 31, 1995 and 1994......... F-3

Consolidated Statements of Income for the Six Months Ended June 30, 1996 and 1995 (unaudited) and the
Years ended December 31, 1995, 1994 and 1993............................................................ F-4

Consolidated Statements of Changes in Stockholders' Equity for the Six Months Ended June 30, 1996
(unaudited) and the Years ended December 31, 1995, 1994 and 1993........................................ F-5

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995 (unaudited) and the
Years ended December 31, 1995, 1994 and 1993............................................................ F-6

Notes to Consolidated Financial Statements............................................................... F-8
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Beverly Bancorporation, Inc.

We have audited the consolidated balance sheets of Beverly Bancorporation,
Inc. and Subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Beverly
Bancorporation, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.

As discussed in the notes to the consolidated financial statements, the
Company changed its method of accounting for investment securities in 1994 and
income taxes in 1993.

GRANT THORNTON LLP

Chicago, Illinois

February 9, 1996 (except for Note
17, as to which the date is
February 27, 1996 and Note 18,
as to which the date is June
13, 1996)

- --------------------------------------------------------------------------------

The foregoing report of independent certified public accountants is in the
form which will be signed upon consummation of the transactions described in
Note 18 to the consolidated financial statements.

GRANT THORNTON LLP

Chicago, Illinois
August 2, 1996

F-2
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995 AND 1994
(AMOUNTS IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------
1996 1995 1994
----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Cash and due from banks................................... $ 26,708 $ 32,635 $ 34,572
Funds sold................................................ 6,475 20,075 500
Investment securities:
Available-for-sale, at fair value....................... 201,264 174,963 126,393
Held-to-maturity, at amortized cost (fair value $33,565,
$32,639, and $83,108, respectively).................... 34,113 32,644 87,372
Loans..................................................... 324,573 312,160 291,042
Less allowance for possible loan losses................. 3,943 3,524 3,995
----------- --------- ---------
Net loans............................................. 320,630 308,636 287,047
Premises and equipment, net............................... 14,507 13,204 13,944
Accrued interest receivable............................... 5,111 4,826 4,571
Other real estate......................................... 988 858 1,081
Intangible assets, net.................................... 1,161 1,301 1,606
Other assets.............................................. 3,612 2,061 4,253
----------- --------- ---------
TOTAL ASSETS........................................ $ 614,569 $ 591,203 $ 561,339
----------- --------- ---------
----------- --------- ---------

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest bearing........................................ $ 468,880 $ 439,020 $ 403,771
Non-interest bearing.................................... 84,912 88,111 100,674
----------- --------- ---------
Total deposits........................................ 553,792 527,131 504,445
Securities sold under agreements to repurchase, funds
purchased, and treasury tax deposits..................... 5,770 6,292 9,614
Bank notes payable........................................ 9,000 11,000 1,800
Accrued expenses and other liabilities.................... 5,420 5,819 4,672
----------- --------- ---------
Total liabilities..................................... 573,982 550,242 520,531

STOCKHOLDERS' EQUITY:
Preferred stock, par value $.01 per share; authorized
1,000,000 shares; no shares issued and outstanding..... -- -- --
Common stock, $.01 par value; authorized 8,000,000
shares; issued and outstanding 3,974,942, 3,769,815 and
4,383,690, respectively................................ 40 38 44
Additional paid-in capital.............................. 11,410 9,005 17,792
Retained earnings....................................... 33,392 33,011 29,886
Net unrealized gains (losses) on available-for-sale
securities............................................. (2,575) 617 (5,175)
Note receivable -- officer stockholders................. (1,680) (1,710) (1,739)
----------- --------- ---------
Total stockholders' equity............................ 40,587 40,961 40,808
----------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......... $ 614,569 $ 591,203 $ 561,339
----------- --------- ---------
----------- --------- ---------
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEARS ENDED DECEMBER 31,
------------------------ -------------------------------------
1996 1995 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest income:
Interest and fees on loans................. $ 13,531 $ 12,997 $ 26,972 $ 22,343 $ 20,596
Interest on investment securities:
Taxable.................................. 5,983 5,673 11,168 11,393 11,680
Tax-exempt............................... 801 683 1,352 1,242 1,015
Funds sold................................. 463 159 478 228 177
----------- ----------- ----------- ----------- -----------
Total interest income.................. 20,778 19,512 39,970 35,206 33,468
Interest expense:
Deposits................................... 9,138 8,089 16,726 12,512 12,078
Securities sold under agreements to
repurchase, funds purchased, and treasury
tax deposits.............................. 142 195 379 231 350
Notes payable.............................. 369 51 79 206 377
----------- ----------- ----------- ----------- -----------
Total interest expense................. 9,649 8,335 17,184 12,949 12,805
----------- ----------- ----------- ----------- -----------
Net interest income.................... 11,129 11,177 22,786 22,257 20,663
Provision for loan losses.................... 75 103 159 311 1,299
----------- ----------- ----------- ----------- -----------
Net interest income after provision for
loan losses........................... 11,054 11,074 22,627 21,946 19,364
Other income:
Income from fiduciary activities........... 998 954 1,927 1,872 1,764
Service charges on deposit accounts........ 2,172 1,988 4,078 4,256 4,123
Net gains on sales of investment
securities................................ 35 33 49 207 1,421
Mortgage origination and servicing fees.... 312 343 761 532 1,464
Other...................................... 632 444 1,055 1,150 1,048
----------- ----------- ----------- ----------- -----------
Total other income..................... 4,149 3,762 7,870 8,017 9,820
Operating expenses:
Salaries and employee benefits............. 5,372 5,382 10,730 10,496 10,486
Occupancy.................................. 1,188 1,068 2,134 2,003 2,102
Equipment.................................. 797 1,111 1,918 2,155 2,156
FDIC insurance............................. 4 551 570 1,035 999
Marketing and promotion.................... 427 413 952 647 854
Computer system and services............... 716 56 492 124 158
Supplies................................... 456 341 724 717 782
Loan legal and collection.................. 184 136 257 143 443
Other real estate.......................... 13 -- 53 50 388
Other...................................... 1,722 1,669 3,586 3,505 3,801
----------- ----------- ----------- ----------- -----------
Total operating expenses............... 10,879 10,727 21,416 20,875 22,169
----------- ----------- ----------- ----------- -----------
Income before income taxes and
cumulative effect of change in
accounting principle.................. 4,324 4,109 9,081 9,088 7,015
Income tax expense........................... 1,317 1,257 2,877 2,672 2,143
----------- ----------- ----------- ----------- -----------
Income before cumulative effect of
change in accounting principle........ 3,007 2,852 6,204 6,416 4,872
Cumulative effect of change in accounting for
income taxes................................ -- -- -- -- 374
----------- ----------- ----------- ----------- -----------
NET INCOME............................. $ 3,007 $ 2,852 $ 6,204 $ 6,416 $ 5,246
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Income per share:
Income before cumulative effect of change
in accounting principle................... $ .74 $ .58 $ 1.26 $ 1.34 $ 1.05
Cumulative effect of change in accounting
for income taxes.......................... -- -- -- -- .08
----------- ----------- ----------- ----------- -----------
Net income per share......................... $ .74 $ .58 $ 1.26 $ 1.34 $ 1.13
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Common and common equivalent shares.......... 4,088,950 4,912,430 4,908,930 4,782,460 4,655,975
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND THE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NET
UNREALIZED
GAINS
(LOSSES) ON
PREFERRED ADDITIONAL AVAILABLE-FOR-
STOCK PREFERRED COMMON PAID-IN RETAINED SALE
SERIES B STOCK STOCK CAPITAL EARNINGS SECURITIES
----------- ----------- ----------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993........................ $ 226 $ -- $ 37 $ 13,218 $ 22,562 $ --
Net income........................................ -- -- -- -- 5,246 --
Common stock cash dividend declared ($.17 per
share)........................................... -- -- -- -- (800) --
Preferred stock Series B dividends declared ($8.55
per share)....................................... 20 -- -- -- (20) --
Conversion of 2,590 shares of preferred stock
Series B into 33,980 shares of common stock...... (246) -- -- 246 -- --
Issuance of 52,780 shares of common stock......... -- -- 1 326 -- --
5% common stock dividend (188,115 shares)......... -- -- 2 1,182 (1,184) --
Note paydown...................................... -- -- -- -- -- --
----------- ----- ----- ----------- --------- -------------
Balance December 31, 1993......................... -- -- 40 14,972 25,804 --
Net income........................................ -- -- -- -- 6,416 --
Cumulative effect of change in accounting for
investment securities available-for-sale at
January 1, 1994.................................. -- -- -- -- -- 947
Common stock cash dividend declared ($.18 per
share)........................................... -- -- -- -- (870) --
5% common stock dividend (201,770 shares)......... -- -- 2 1,462 (1,464) --
Issuance of 149,455 shares of common stock........ -- -- 2 1,361 -- --
Cancellation of 500 shares of Treasury Stock...... -- -- -- (3) -- --
Note paydowns..................................... -- -- -- -- -- --
Change in net unrealized losses on
available-for-sale securities.................... -- -- -- -- -- (6,122)
----------- ----- ----- ----------- --------- -------------
Balance at December 31, 1994...................... -- -- 44 17,792 29,886 (5,175)
Net income........................................ -- -- -- -- 6,204 --
Common stock cash dividend declared ($.19 per
share)........................................... -- -- -- -- (887) --
5% common stock dividend (219,175 shares)......... -- -- 2 2,190 (2,192) --
Issuance of 48,290 shares of common stock......... -- -- 1 471 -- --
Repurchase and cancellation of 881,340 shares of
common stock..................................... -- -- (9) (11,448) -- --
Note paydowns..................................... -- -- -- -- -- --
Change in net unrealized gains on
available-for-sale securities.................... -- -- -- -- -- 5,792
----------- ----- ----- ----------- --------- -------------
Balance at December 31, 1995...................... -- -- 38 9,005 33,011 617
Net income (unaudited)............................ -- -- -- -- 3,007 --
Common stock cash dividend ($.10 per share)
(unaudited)...................................... -- -- -- -- (403) --
5% common stock dividend (188,473 shares)
(unaudited)...................................... -- -- 2 2,221 (2,223) --
Issuance of 8,195 shares of common stock
(unaudited)...................................... -- -- -- 184 -- --
Note paydowns (unaudited)......................... -- -- -- -- -- --
Change in net unrealized losses on
available-for-sale securities (unaudited)........ -- -- -- -- -- (3,192)
----------- ----- ----- ----------- --------- -------------
Balance at June 30, 1996 (unaudited).............. $ -- $ -- $ 40 $ 11,410 $ 33,392 $ (2,575)
----------- ----- ----- ----------- --------- -------------
----------- ----- ----- ----------- --------- -------------

NOTE
RECEIVABLE- TOTAL
OFFICER TREASURY STOCKHOLDERS'
STOCKHOLDERS STOCK EQUITY
------------- ----------- -------------
<S> <C> <C> <C>
Balance at January 1, 1993........................ $ (787) $ (3) $ 35,253
Net income........................................ -- -- 5,246
Common stock cash dividend declared ($.17 per
share)........................................... -- -- (800)
Preferred stock Series B dividends declared ($8.55
per share)....................................... -- -- --
Conversion of 2,590 shares of preferred stock
Series B into 33,980 shares of common stock...... -- -- --
Issuance of 52,780 shares of common stock......... -- -- 327
5% common stock dividend (188,115 shares)......... -- --
Note paydown...................................... 29 -- 29
------------- ----------- -------------
Balance December 31, 1993......................... (758) (3) 40,055
Net income........................................ -- -- 6,416
Cumulative effect of change in accounting for
investment securities available-for-sale at
January 1, 1994.................................. -- -- 947
Common stock cash dividend declared ($.18 per
share)........................................... -- -- (870)
5% common stock dividend (201,770 shares)......... -- -- --
Issuance of 149,455 shares of common stock........ (1,221) -- 142
Cancellation of 500 shares of Treasury Stock...... -- 3 --
Note paydowns..................................... 240 -- 240
Change in net unrealized losses on
available-for-sale securities.................... -- -- (6,122)
------------- ----------- -------------
Balance at December 31, 1994...................... (1,739) -- 40,808
Net income........................................ -- -- 6,204
Common stock cash dividend declared ($.19 per
share)........................................... -- -- (887)
5% common stock dividend (219,175 shares)......... -- -- --
Issuance of 48,290 shares of common stock......... -- -- 472
Repurchase and cancellation of 881,340 shares of
common stock..................................... -- -- (11,457)
Note paydowns..................................... 29 -- 29
Change in net unrealized gains on
available-for-sale securities.................... -- -- 5,792
------------- ----------- -------------
Balance at December 31, 1995...................... (1,710) -- 40,961
Net income (unaudited)............................ -- -- 3,007
Common stock cash dividend ($.10 per share)
(unaudited)...................................... -- -- (403)
5% common stock dividend (188,473 shares)
(unaudited)...................................... -- -- --
Issuance of 8,195 shares of common stock
(unaudited)...................................... -- -- 184
Note paydowns (unaudited)......................... 30 -- 30
Change in net unrealized losses on
available-for-sale securities (unaudited)........ -- -- (3,192)
------------- ----------- -------------
Balance at June 30, 1996 (unaudited).............. $ (1,680) $ -- $ 40,587
------------- ----------- -------------
------------- ----------- -------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
---------------------- -----------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 3,007 $ 2,852 $ 6,204 $ 6,416 $ 5,246
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for credit losses................... 75 103 159 311 1,299
Provision for depreciation and amortization... 788 857 1,560 1,813 1,823
Investment security accretion and amortization
-- net....................................... 391 381 673 825 1,204
Deferred tax expense (benefit)................ (258) (88) 189 (155) 635
Cumulative effect of change in accounting
principle.................................... -- -- -- -- (374)
Amortization of intangible assets............. 135 162 320 464 467
Realized investment security
(gains), net................................. (35) (33) (49) (207) (1,421)
Realized gain on credit card and lease sale... -- -- -- -- (215)
Gain on sale of other real estate............. -- (25) (79) (180) (228)
(Increase) decrease in accrued interest
receivable................................... (285) (358) (255) (492) 574
Decrease (increase) in loans held for sale.... 1,033 (3,275) (4,374) 10,030 (4,305)
Decrease (increase) in other assets........... 346 (82) (243) (39) (124)
(Decrease) increase in accrued expense and
other liabilities............................ (672) (935) 408 280 (563)
---------- ---------- ---------- ---------- -----------
Net cash provided by (used in)
operating activities..................... 4,525 (441) 4,513 19,066 4,018

Cash flows from investment activities:
Investment securities available-for-sale:
Proceeds from maturities and call of
securities................................... 20,099 14,378 13,646 2,044 --
Proceeds from sales of securities............. 19,305 1,444 15,394 32,900 --
Purchases of securities....................... (70,836) (3,030) (20,206) (50,826) --
Investment securities held-to-maturity:
Proceeds from maturities and calls of
securities................................... 890 2,792 11,059 10,783 40,784
Proceeds from sales of investment
securities................................... -- -- -- -- 61,559
Purchases of securities....................... (2,710) (1,926) (5,582) (9,152) (102,332)
Net increase in loans........................... (13,379) (20,879) (17,975) (36,617) (15,192)
Purchases of premises and equipment............. (2,110) (379) (936) (926) (1,227)
Proceeds from sale of other real estate and
equipment...................................... 148 301 1,004 610 2,065
---------- ---------- ---------- ---------- -----------
Net cash used in investment activities.... $ (48,593) $ (7,299) $ (3,596) $ (51,184) $ (14,343)
</TABLE>

F-6
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- CONTINUED
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
---------------------- ----------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flow from financing activities:
Net increase in deposits.......................... $ 26,661 $ 3,501 $ 22,686 $ 45,313 $ 4,215
Net increase (decrease) in securities sold under
agreements to repurchase, funds purchased and
treasury tax deposits............................ 74 (2,436) (3,322) 968 5,005
Proceeds from notes payable....................... -- -- 11,000 -- --
Principal reductions on notes payable............. (2,000) (1,300) (1,800) (2,900) (2,850)
Capital lease payments............................ (5) -- -- -- --
Cash dividends.................................... (403) (467) (887) (870) (800)
Proceeds from issuance of common stock............ 184 234 472 142 298
Repurchase of common stock........................ -- -- (11,457) -- --
Proceeds from notes receivable -- officer
stockholders..................................... 30 29 29 240 29
---------- ---------- ---------- ---------- ----------
Net cash provided by financing activities... 24,541 (439) 16,721 42,893 5,897
---------- ---------- ---------- ---------- ----------
(Decrease) increase in cash and cash
equivalents................................ (19,527) (8,179) 17,638 10,775 (4,428)

Cash and cash equivalents, beginning of period...... 52,710 35,072 35,072 24,297 28,725
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period............ $ 33,183 $ 26,893 $ 52,710 $ 35,072 $ 24,297
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest........................................ $ 9,483 $ 7,960 $ 16,641 $ 12,811 $ 13,002
Income taxes.................................... 1,300 1,400 2,900 2,775 2,000
Non-cash investing and financing activities:
Unrealized gain (loss) on available-for-sale
securities..................................... (5,125) 6,807 8,775 (7,841) --
Transfer of held-to-maturity securities to
available-for-sale............................. -- -- 49,472 -- --
Net change in loans transferred to other real
estate......................................... 278 430 472 110 1,071
Decrease in recourse obligations................ -- -- -- 2,710 1,749
Common stock issued for notes receivable........ -- -- -- 1,221 --
Common stock dividends.......................... 2,223 2,192 2,192 1,464 1,184
Capital lease obligations....................... 601 -- -- -- --
</TABLE>

The accompanying notes are an integral part of these statements.

F-7
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Beverly Bancorporation, Inc. (the "Company"), and its wholly-owned
subsidiaries (the "Banks"), Beverly Bank, Beverly Bank Matteson, Beverly Trust
Company, Beverly Bank Lockport, and First Wilmington Corporation and its
wholly-owned subsidiary, First National Bank of Wilmington, follow generally
accepted accounting principles including, where applicable, general practices
within the banking industry.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.

BASIS OF PRESENTATION

The consolidated financial statements of the Company include the accounts of
its respective subsidiaries. All significant intercompany accounts and
transactions have been eliminated. Certain amounts in the 1993 and 1994
financial statements have been reclassified to conform to the 1995 presentation.

INTERIM FINANCIAL INFORMATION (UNAUDITED)

The unaudited interim financial statements have been prepared in conformity
with generally accepted accounting principles and include all adjustments which
are, in the opinion of management, normal and recurring in nature and necessary
to a fair presentation of the interim periods presented. Results of operations
for the six months ended June 30, 1996 are not necessarily indicative of the
results to be expected for the full year.

INVESTMENT SECURITIES

Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115 requires that all debt
and equity securities be classified either as held-to-maturity,
available-for-sale or trading. Held-to-maturity securities are classified as
such only when the Company determines it has the ability and intent to hold
these securities to maturity. Held-to-maturity securities are carried at cost,
adjusted for amortization of premiums and accretion of discounts.
Available-for-sale securities and trading securities are carried at market
value. Net unrealized gains and losses on available-for-sale securities are
excluded from earnings and reported as a separate component of stockholders'
equity, net of tax. Unrealized gains and losses on trading securities are
included in earnings. The Company has not classified any securities as trading.
Gains or losses on the sale of investment securities are determined based on the
amortized cost of the specific securities sold.

On adoption of this standard, the Company classified debt securities with a
market value of $120,835,000 as available-for-sale and recorded a $947,000
increase in stockholders' equity.

LOANS

Loans are stated at the principal amount outstanding, net of allowance for
loan losses, unearned discount and deferred loan fees. Interest income is
accrued daily as earned. Loan origination fees in excess of incremental direct
costs are deferred and recognized to approximate a level yield. The accrual of
interest income is discontinued when management determines that there is doubt
as to future collectibility and the loan is impaired.

F-8
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company adopted SFAS No. 114, "Accounting by Creditors for Impairment of
a Loan," and SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures," as of January 1, 1995. SFAS No. 114
requires that certain impaired loans be measured based on the present value of
expected future cash flows discounted at the loans' original effective interest
rate. As a practical expedient, impairment may be measured based on the loan's
observable market price of the fair value of the collateral if the loan is
collateral dependent. When the measure of the impaired loan is less than the
recorded investment in the loan, the impairment is recorded through a valuation
allowance. Payments received on impaired loans are recorded as reductions of
principal. As a result of adopting these statements, no specific allowance for
possible loan losses was required as of January 1, 1995.

Loan balances less than $10,000 in each loan category are considered as
small balance homogeneous loan pools for purposes of impairment. All other loans
are specifically evaluated for impairment. The Company considers a loan impaired
when it is probable that all amounts of principal and interest due, according to
the contractual terms of the loan agreement, will not be collected, which is
also the criteria the Company uses for the transfer of loans to nonaccrual.
Therefore, the total of impaired loans generally equal nonaccrual loans. For
collateralized impaired loans, loan balances in excess of net realizable value,
are deemed impaired. In the determination of the valuation, the major risk
classifications such as historical net charge offs over the last three calendar
years for each category of loans, local economic trends, the source of loans and
concentrations of credit in specific industries, if any, are considered.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is maintained at a level considered adequate
to provide for potential loan losses. The allowance is increased by provisions
charged to operations and by recoveries, and decreased by charge-offs. The
provision for loan losses is based on past loan loss experience and management's
evaluation of the loan portfolio under current economic conditions. Loans are
charged to the allowance for loan losses when, and to the extent, they are
deemed by management to be uncollectible. The allowance for loan loss is
composed of specific reserves for impaired loans and general reserves for all
other loans.

OTHER REAL ESTATE

Other real estate represents properties acquired through foreclosure or
other proceedings and is recorded at the lower of the amount of the loan
satisfied or the net realizable value of the property acquired. Any write-down
at the time of foreclosure is charged to the allowance for loan losses.

MORTGAGE SERVICING RIGHTS

Effective January 1, 1996, the Company adopted SFAS No. 122, "Accounting for
Mortgage Servicing Rights," for all residential mortgage loans originated for
sale to permanent investors, but with the servicing rights retained.

The Company allocates the total cost of the mortgage loans to the mortgage
servicing rights and the loans based on their relative fair values at the date
of origination. The allocation is based on the assumption that a normal
servicing fee will be received and that the rights to remaining cash flows from
the underlying mortgages will be sold. The Company only originates loans for
resale within permanent investor guidelines, with commitments from these
permanent investors to purchase the mortgage loans.

For the purpose of evaluating and measuring impairment of capitalized
mortgage servicing rights, the Company stratifies those rights based on the
predominant risk characteristics of the underlying loans, including the loan
type, size, interest rate, date of origination and term.

F-9
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impairment is recognized through a valuation allowance for each individual
stratum. The amount of impairment recognized is the amount by which the
capitalized mortgage servicing rights for a stratum exceed their fair value. The
fair value of mortgage servicing rights, if any, that have not been capitalized
are not used in the evaluation of impairment. Subsequent to the initial
measurement of impairment, the Company periodically adjusts the valuation
allowance to reflect changes in the measurement of impairment. However, fair
value in excess of the amount capitalized as mortgage servicing rights, net of
amortization, is not recognized.

PREMISES AND EQUIPMENT

Premises, equipment and leasehold improvements are carried at cost, less
accumulated depreciation and amortization. Depreciation is charged to expense on
a straight-line basis over the estimated useful lives of the assets. Leasehold
improvements are amortized on a straight-line basis over the lease terms.

TRUST ASSETS

Assets held in fiduciary or agency capacities are not included in the
consolidated balance sheet, since such items are not assets of the Company.

INTANGIBLE ASSETS

The excess of cost over fair value of net assets acquired, resulting from
the acquisitions of Beverly Bank Matteson and First Wilmington Corporation, is
being amortized on a straight-line basis over periods of 10 and 15 years,
respectively.

INCOME TAXES

The Company and its subsidiaries file consolidated federal and state income
tax returns. The Banks determine their income taxes on the separate return
method. Under this method, the Banks pay to or receive from the parent the
amount of income taxes which would have been calculated had each of the Banks
filed a separate return.

Amounts provided for income tax expense are based on income reported for
financial statement purposes, rather than amounts currently payable under tax
laws. Deferred taxes, which arise from temporary differences between the period
in which certain income and expenses are recognized for financial accounting
purposes and the period in which they affect taxable income, are included in the
amounts provided for income tax.

CASH FLOWS

For the purposes of the consolidated statement of cash flows, the Company
considers amounts due from banks and Federal funds sold to be cash equivalents.

PER SHARE COMPUTATIONS

Net income per share is based upon the weighted average number of common
shares and common share equivalents outstanding during each year. All per share
financial information has been adjusted to reflect the 5% stock dividends paid
to stockholders and the proposed merger and conversion of shares (Note 18). The
calculation of net income per share reflects shares issuable upon exercise of
stock options under the treasury stock method for the years ended December 31,
1995, 1994 and 1993 and periods ended June 30, 1996 and 1995.

NEW ACCOUNTING PRONOUNCEMENTS

In March, 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," which is effective for financial
statements issued for fiscal years beginning after December 15, 1995.

F-10
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles that are used in operations be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of assets
might not be recoverable. On January 1, 1996, the Company adopted this standard.
There was no material effect on the Company's consolidated financial condition
or consolidated results of operations as a result of this adoption nor is any
anticipated in fiscal 1996.

The FASB issued SFAS No. 122, "Accounting for Mortgage Servicing Rights."
The Company adopted this statement as of January 1, 1996. As a result of
applying the new rules, the value of retained servicing of loans sold subsequent
to January 1, 1996, will be capitalized and amortized over the expected life of
the loans. On January 1, 1996, the Company adopted this standard. There was no
material effect on the Company's consolidated financial condition or
consolidated results of operations as a result of this adoption nor is any
anticipated in fiscal 1996. Through June 30, 1996, the Company recorded mortgage
servicing rights under this new standard of $209,000, and mortgage servicing
income for the six months ended June 30, 1996 of $66,000 was recorded. The
balance of loans added to the serviced portfolio since January 1, 1996 was
$21,366,000, and the total balance of the servicing portfolio as of June 30,
1996 was $99,112,000.

The FASB issued SFAS No. 123, "Accounting for Stock Based Compensation." The
statement requires entities to disclose the fair value of their employee stock
options, but permits entities to continue to account for employee stock options
under APB 25, "Accounting for Stock Issued to Employees." The Company has
determined that it will continue to use the method prescribed by APB 25, which
recognizes compensation to the extent of the difference between the estimated
market value and the exercise price at the grant date. The only effect of the
Company's adoption of SFAS No. 123 on January 1, 1996 will be the new disclosure
requirements.

F-11
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2 -- INVESTMENT SECURITIES AVAILABLE-FOR-SALE
A comparison of the amortized cost, fair value and unrealized gains and
losses of the investment securities available-for-sale is as follows (in
thousands):

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED FAIR UNREALIZED UNREALIZED
DECEMBER 31, 1995 COST VALUE GAIN LOSS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury.................................................. $ 69,576 $ 69,825 $ 411 $ 162
U.S. Treasury strips........................................... 1,661 1,679 18 --
U.S. government agencies....................................... 49,452 49,759 513 206
U.S. government agency strips.................................. 12,719 12,687 -- 32
Obligations of state and political subdivisions................ 15,692 15,974 325 43
Corporate debt securities...................................... 17,556 17,539 281 298
Adjustable rate mortgage pools................................. 7,266 7,393 127 --
Federal Reserve stock and other securities..................... 107 107 -- --
----------- ----------- ----------- -----------
Total........................................................ $ 174,029 $ 174,963 $ 1,675 $ 741
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
DECEMBER 31, 1994
U.S. Treasury.................................................. $ 76,772 $ 73,192 $ 18 $ 3,598
U.S. government agencies and corporations...................... 39,707 38,337 4 1,374
Corporate debt securities...................................... 17,653 14,762 -- 2,891
Federal Reserve stock.......................................... 102 102 -- --
----------- ----------- ----------- -----------
Total........................................................ $ 134,234 $ 126,393 $ 22 $ 7,863
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>

The amortized cost and fair value of debt securities available-for-sale at
December 31, 1995, by contractual maturity are shown below (in thousands).
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- -----------
<S> <C> <C>
Due in one year or less................................................................. $ 40,922 $ 40,977
Due in one year through five years...................................................... 92,802 93,478
Due in five years through ten years..................................................... 14,689 14,790
Due after ten years..................................................................... 18,248 18,223
Federal Reserve stock................................................................... 102 102
Adjustable rate mortgage pools.......................................................... 7,266 7,393
----------- -----------
Total................................................................................. $ 174,029 $ 174,963
----------- -----------
----------- -----------
</TABLE>

At December 31, 1995, investment securities with a carrying value of
approximately $54,296,000 were pledged as collateral for public funds deposits
and other purposes.

For the year ended December 31, 1995, net realized gains on securities sales
were $37,000 comprised of gross realized gains of $73,000 and gross realized
losses of $36,000. Proceeds from sales of securities totaled $15,394,000 in
1995.

For the year ended December 31, 1994, net realized gains on securities sales
were $207,000 comprised of gross realized gains of $277,000 and gross realized
losses of $70,000. Proceeds from sales of securities totaled $32,900,000 in
1994.

F-12
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2 -- INVESTMENT SECURITIES AVAILABLE-FOR-SALE (CONTINUED)

to 5.1 years. All adjustable rate mortgage pools and collateralized mortgage
obligations contain a certain amount of risk related to the uncertainty of
prepayments of the underlying mortgages. Interest rate changes have a direct
impact upon prepayment rates. The Company uses computer simulation models to
test the average life and yield volatility of adjustable rate mortgage pools and
collateralized mortgage obligations under various interest rate assumptions to
monitor volatility. At December 31, 1995 and 1994, the Company owned no high
risk collateralized mortgage obligations as defined by the Federal Financial
Institutions Examination Council's Supervisory Policy Statement on Securities
Activities.

The Company did not hold any off-balance sheet derivative financial
instruments such as futures, forwards, swaps or option contracts during 1995 or
1994. In accordance with the Company's investment policy, derivative securities
and derivative financial instruments, other than mortgage backed obligations,
may not be purchased without the prior approval of the Board of Directors.

Included in the investment portfolio are certain securities classified as
U.S. Treasury and U.S. government agency strips and structured notes. The U.S.
Treasury strips are direct obligations of the United States government which
have had the coupons removed. These securities are sold at a discount to par
similar to U.S. Treasury bills and pay no interest until maturity. The market
value fluctuation of these securities is greater than the fluctuation similar
maturity full coupon U.S. Treasury securities because these types of securities
are more sensitive to changes in interest rates. U.S. government agency strips
pay no interest until late 1996, are callable at par in late 1996 and, if not
called, begin making coupon interest payments thereafter until maturity. The
market value fluctuation of these securities is greater than the fluctuation on
similar maturity full coupon U.S. agency securities due to the uncertainty of
the redemption date. The interest rates on the structured notes reprice based on
formulas applied to various indexes. The maturities on these securities range
from one to four years.

The market values and amortized costs of the structured notes in the
available-for-sale portfolio are shown below (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
Market value.................................................................... $ 5,377 $ 5,100
Amortized cost.................................................................. 5,503 5,504
</TABLE>

The market values and amortized costs of the U.S. Treasury and U.S.
government agency strips in both the available-for-sale and held-to-maturity
portfolio are shown below (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
Market value.................................................................. $ 14,366 $ 12,882
Amortized cost................................................................ 14,380 13,356
</TABLE>

F-13
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3 -- INVESTMENT SECURITIES HELD-TO-MATURITY
A comparison of the amortized cost, fair value and unrealized gains and
losses of the investment securities held-to-maturity is as follows (in
thousands):

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED FAIR UNREALIZED UNREALIZED
DECEMBER 31, 1995 COST VALUE GAIN LOSS
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury..................................................... $ 2,196 $ 2,173 $ -- $ 23
Obligations of state and political subdivisions................... 14,984 15,130 180 34
Adjustable rate mortgage pools.................................... -- 20 20 --
Collateralized mortgage obligations............................... 15,449 15,301 -- 148
Other securities.................................................. 15 15 -- --
----------- --------- ----- -----------
Total........................................................... $ 32,644 $ 32,639 $ 200 $ 205
----------- --------- ----- -----------
----------- --------- ----- -----------

DECEMBER 31, 1994
<S> <C> <C> <C> <C>
U.S. Treasury..................................................... $ 6,991 $ 6,417 $ -- $ 574
U.S. Treasury strips.............................................. 1,557 1,499 -- 58
U.S. government agency strips..................................... 9,523 8,718 30 835
U.S. government corporations...................................... 11,979 11,383 -- 596
Obligations of state and political subdivisions................... 30,537 29,507 219 1,249
Adjustable rate mortgage pools.................................... 10,045 9,884 -- 161
Collateralized mortgage obligations............................... 16,715 15,675 -- 1,040
Other securities.................................................. 25 25 -- --
----------- --------- ----- -----------
Total........................................................... $ 87,372 $ 83,108 $ 249 $ 4,513
----------- --------- ----- -----------
----------- --------- ----- -----------
</TABLE>

The amortized cost and fair value of debt securities held-to-maturity at
December 31, 1995, by contractual maturity are shown below (in thousands).
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- ---------
<S> <C> <C>
Due in one year or less.................................................................... $ 3,688 $ 3,694
Due in one year through five years......................................................... 10,145 10,282
Due in five years through ten years........................................................ 2,863 2,844
Due after ten years........................................................................ 499 498
Mortgage backed securities................................................................. 15,449 15,321
----------- ---------
Total.................................................................................... $ 32,644 $ 32,639
----------- ---------
----------- ---------
</TABLE>

At December 31, 1995, investment securities with an adjusted cost of
approximately $8,302,000 were pledged as collateral for public funds deposits
and other purposes.

For the year ended December 31, 1995, a security was called. Gross realized
gain was $12,000 and proceeds from this security were $1,000,000. No
held-to-maturity securities were sold during 1994. For the year ended December
31, 1993, prior to the adoption of SFAS No. 115, net realized gains on
securities sales were $1,421,000. There were no realized losses in 1993.
Proceeds from sales of securities totaled $61,559,000 in 1993.

F-14
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3 -- INVESTMENT SECURITIES HELD-TO-MATURITY (CONTINUED)
On November 30, 1995, the Company transferred certain investment securities
from held-to-maturity to available-for-sale in accordance with the guidance
issued in the SPECIAL REPORT ON STATEMENT NO. 115. At the date of transfer, the
amortized cost and unrealized gains on these securities were $49,472,000 and
$313,000, respectively.

NOTE 4 -- LOANS
The components of the loan portfolio are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
JUNE 30, 1996 1995 1994
------------- -------- --------
<S> <C> <C> <C>
(UNAUDITED)
Commercial and industrial..... $ 54,414 $ 50,258 $ 50,339
Commercial real estate........ 73,630 74,199 64,789
Residential real estate....... 128,755 119,153 110,045
Home equity lines of credit... 29,053 31,152 32,256
Other consumer................ 38,721 37,398 33,613
------------- -------- --------
Total loans................. 324,573 312,160 291,042
Less allowance for loan
losses....................... 3,943 3,524 3,995
------------- -------- --------
Loans, net.................. $320,630 $308,636 $287,047
------------- -------- --------
------------- -------- --------
</TABLE>

The Company extends credit to businesses in the Chicago metropolitan area,
with minimal exposure in other geographic areas. The Company is primarily a
secured lender, with the security depending on the loan type. The Company's
opinion as to the ultimate collectibility of its loan portfolio is subject to
estimates regarding the future cash flows of its customers' operations, and the
value of customers' collateral utilized as security. These estimates are
affected by changing economic conditions and the economic prospect of the
customers.

Loans with three or more installment payments past due, and loans past due
90 days or more which are still accruing interest, amounted to $177,000 and
$167,000 at December 31, 1995 and 1994, respectively.

The Company has extended loans to directors and executive officers of the
Company and their related interests. The aggregate loans outstanding as reported
by the directors and executive officers of the Company and their related
interests, which exceeded $60,000, totaled $6,044,000 and $8,526,000 at December
31, 1995 and 1994, respectively. During 1995, new loans totaled $4,166,000 and
repayments totaled $6,648,000. In the opinion of management, these loans were
made in the normal course of business and on substantially the same terms for
comparable transactions with other borrowers and do not involve more than a
normal risk of collectibility. The Company relies on its directors and executive
officers for identification of loans to their related interests.

F-15
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5 -- ALLOWANCE FOR LOAN LOSSES
The following summarizes the changes in the allowance for loan losses (in
thousands):

<TABLE>
<CAPTION>
PERIOD ENDED JUNE
30, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance, beginning of period................................ $ 3,524 $ 3,995 $ 3,995 $ 4,026 $ 4,484
Recoveries.................................................. 605 251 471 626 346
Charge-Offs................................................. (261) (445) (1,101) (968) (2,103)
Provision for loan losses................................... 75 103 159 311 1,299
--------- --------- --------- --------- ---------
Balance, end of period.................................... $ 3,943 $ 3,904 $ 3,524 $ 3,995 $ 4,026
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

As of December 31, 1995, the Company's recorded investment in impaired loans
was $1,606,000. No specific valuation allowance was required for these loans as
of December 31, 1995. The average recorded investment in impaired loans for the
year ended December 31, 1995 was $1,824,000. The Company recognized $110,000 of
interest on impaired loans for the year ended December 31, 1995. There was no
significant change in impaired loans as of June 30, 1996 or during the period
then ended.

NOTE 6 -- PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
Land....................................................................................... $ 2,482 $ 2,482
Buildings and improvements (note 13)....................................................... 11,413 10,864
Furniture, equipment and leasehold improvements............................................ 12,563 14,312
--------- ---------
Total cost................................................................................. 26,458 27,658
Less allowance for depreciation and amortization........................................... 13,254 13,714
--------- ---------
Premises and equipment, net.............................................................. $ 13,204 $ 13,944
--------- ---------
--------- ---------
</TABLE>

Depreciation and amortization amounted to $1,560,000, $1,813,000 and
$1,823,000 for the years ended December 31, 1995, 1994 and 1993, respectively.

NOTE 7 -- DEPOSITS
Certificates of deposit, including public funds, greater than $100,000
totaled $50,635,000 and $41,315,000, at December 31, 1995 and 1994,
respectively.

NOTE 8 -- NOTES PAYABLE
At December 31, 1995, the $11,000,000 note payable bears interest at 30
basis points less than the prime rate of the lending bank (8.5% at December 31,
1995), is due on demand, requires quarterly interest payments and is
collateralized by shares of common stock of the Company's banking subsidiaries,
having book values of approximately $46,375,000 at December 31, 1995. In
January, 1996, the Company exercised its option under the note agreement to
split the note into two separate components: $7,000,000 bearing interest at
6-month LIBOR plus 200 basis points and $4,000,000 bearing interest at 30-day
LIBOR plus 200 basis points. The Company may repay principal for each component
on the interest repricing date. At June 30, 1996, the principal balance of the
30-day LIBOR component had been reduced to $2,000,000 resulting in a total note
payable balance at June 30, 1996 of $9,000,000.

F-16
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8 -- NOTES PAYABLE (CONTINUED)
The note payable at December 31, 1994 was a demand note, bearing interest at
the lending bank's prime rate, and was collateralized by the shares of common
stock of the Company's banking subsidiaries. This loan was repaid in 1995.

The Company has a $500,000 demand line of credit, bearing interest on
advances at the lending bank's prime rate plus 30 basis points. At June 30,
1996, the Company had no borrowings outstanding under this line.

NOTE 9 -- EMPLOYEE BENEFIT PLANS
The Company's 401(k) Plan covers all full-time and certain part-time
employees after completion of one year of service as defined. Contributions from
participants are voluntary and are limited to the Internal Revenue Code maximum
contribution.

The Plan requires the Company to match 50% of the first 4% of a
participant's contributions. In addition, the Company contributes another 2% of
gross salaries of all participants. Total contributions to the Plan for 1995,
1994 and 1993 were $290,000, $272,000 and $383,000, respectively.

NOTE 10 -- STOCK OPTIONS
The stockholders approved the adoption of an Incentive Stock Option Plan in
1994. The plan is administered by the Stock Option Plan Committee of the Board
of Directors. Directors and key officers of the Company are eligible to
participate in the plan. Under the plan, 532,945 shares of common stock are
available for distribution. The options allow for the purchase of common stock
at a price not less than fair market value on the date the option is granted.
The options vest ratably over a five year period and are exercisable no later
than ten years after the date of grant. In addition, the plan provides that all
options become fully vested upon a change of control of the Company as defined
in the plan. As of December 31, 1995 and June 30, 1996, 146,610 of the issued
options are vested and exercisable.

The following table summarizes the changes in the number of common shares
granted under the stock option plan:

<TABLE>
<CAPTION>
PRICE RANGE OF
SHARES OPTIONS
---------- ---------------
<S> <C> <C>
Options outstanding at January 1, 1993.................................... 42,500 $ 9.49
Granted................................................................. 62,500 9.49
----------
Options outstanding at December 31, 1993.................................. 105,000 9.49
Granted................................................................. 416,195 8.16
Exercised............................................................... (105,000) 9.49
----------
Options outstanding at December 31, 1994.................................. 416,195 8.16
Granted................................................................. 36,750 9.90 - 10.00
Exercised............................................................... (5,855) 8.16
Canceled or terminated.................................................. (24,465) 8.16
----------
Options outstanding at December 31, 1995.................................. 422,625 8.16 - 10.00
Granted (unaudited)..................................................... 13,125 11.43
Exercised (unaudited)................................................... (2,205) 8.16
Canceled or terminated (unaudited)...................................... (15,505) 8.16
----------
Options outstanding at June 30, 1996 (unaudited).......................... 418,040 8.16 - 11.43
----------
----------
</TABLE>

F-17
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11 -- INCOME TAXES
The components of income tax expense for the periods indicated were as
follows (in thousands):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Currently payable
Federal................................................................ $ 2,475 $ 2,827 $ 1,508
State.................................................................. 213 -- --
--------- --------- ---------
2,688 2,827 1,508
Deferred expense (benefit)
Federal................................................................ 153 (155) 635
State.................................................................. 36 -- --
--------- --------- ---------
189 (155) 635
--------- --------- ---------
Total.................................................................. $ 2,877 $ 2,672 $ 2,143
--------- --------- ---------
--------- --------- ---------
</TABLE>

Deferred tax assets (liabilities) consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
Deferred Tax Assets 1995 1994
--------- ---------
<S> <C> <C>
Allowance for loan loss........................................... $ 887 $ 622
Deferred loan fees and other..................................... 163 160
Unrealized loss on available-for-sale securities................. -- 2,666
--------- ---------
Total deferred tax assets........................................ 1,050 3,448
Deferred Tax Liabilities
Premises and equipment........................................... (409) (453)
Deferred loan costs and other.................................... (370) (290)
Unrealized gain on available-for-sale securities................. (317) --
--------- ---------
Total deferred tax liabilities................................... (1,096) (743)
--------- ---------
Net deferred tax (liabilities) asset............................. $ (46) $ 2,705
--------- ---------
--------- ---------
</TABLE>

There was no valuation allowance for deferred tax assets as of December 31,
1995 or 1994. Management believes that it is more likely than not that the
deferred tax assets will be recoverable from available income tax carrybacks or
future taxable income.

The total income tax expense for the years ended December 31, 1995, 1994 and
1993 reflect effective tax rates of 31.7%, 29.4% and 30.5%, respectively. The
differences between the U.S. Federal income tax rate of 34% and the effective
rates derive from the following (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Provision computed at statutory rate..................................... $ 3,088 $ 3,090 $ 2,385
Tax-exempt interest, net of cost to carry................................ (498) (470) (407)
State income taxes, net of Federal tax benefit........................... 164 -- --
Non-deductible amortization of intangible assets......................... 109 158 159
Other.................................................................... 14 (106) 6
--------- --------- ---------
Total................................................................ $ 2,877 $ 2,672 $ 2,143
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-18
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12 -- FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
During the normal course of meeting the needs of its customers, the Company
is a party to financial instruments with off-balance sheet risk. These financial
instruments include commitments to extend credit and letters of credit, and they
involve elements of credit risk in excess of the amount recognized in the
balance sheet. The contractual amounts of those instruments reflect the extent
of involvement the Company has in particular classes of financial instruments.
The Company's exposure to credit loss in the event of non-performance by the
debtor for commitments to extend credit and letters of credit is represented by
the contractual amount of those instruments. The Company uses the same credit
policies in making commitments and conditional obligations as it does for
on-balance sheet instruments. The Company requires collateral or other security
to support financial instruments with off-balance sheet credit risk. The
approximate amount of such commitments and conditional obligations is as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Stand-by letters of credit............................................. $ 2,729,000 $ 3,741,000
Unused home equity lines............................................... 18,150,000 19,554,000
Unused credit card lines............................................... 5,523,000 5,047,000
Other unused commitments............................................... 30,607,000 30,718,000
</TABLE>

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements.

Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. Such instruments
are generally issued for one year or less. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loan
facilities to customers. The majority of the standby letters of credit are
collateralized by deposits.

NOTE 13 -- COMMITMENTS AND CONTINGENT LIABILITIES

LEASES

Rental expense related to facilities and equipment leases was $158,000 in
1995, $153,000 in 1994 and $150,000 in 1993. One of these facilities agreements
is with an entity in which a stockholder and director of the Company has an
interest. Future minimum rental commitments under these leases at December 31,
1995 are as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, RELATED PARTY OTHER
--------------- -----------
<S> <C> <C>
1996........................................................................... $ 97 $ 19
1997........................................................................... 99 21
1998........................................................................... 102 11
1999........................................................................... 104 6
2000........................................................................... 71 6
----- ---
Total Future Minimum Lease Payments............................................ $ 473 $ 63
----- ---
----- ---
</TABLE>

In February, 1996, the Company entered into a 20-year lease agreement for
ground and building leases with an entity in which a stockholder and director of
the Company has an interest. Currently, the lease provisions are being
finalized. The Company will account for the ground lease as an operating lease
and the building lease as a capital lease. The Company has the option to
purchase the building in years 11, 16, and 20 of the lease for approximately
$931,000, $1,112,000, and $1,289,000,

F-19
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13 -- COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)

respectively. The Company also has an option to renew the leases for another
10-year term at the expiration of the original 20-year lease term. At June 30,
1996, the Company capitalized building costs (included in premises and
equipment) and the obligation under capital lease (included in accrued expenses
and other liabilities) in the amount of $596,000. Estimated minimum future lease
payments, including interest, are as follows (in thousands):

<TABLE>
<CAPTION>
GROUND BUILDING
LEASE LEASE
--------- ---------
<S> <C> <C>
YEAR ENDING DECEMBER 31,
1996............................................................................. $ 23 $ 54
1997............................................................................. 30 72
1998............................................................................. 30 72
1999............................................................................. 31 74
2000............................................................................. 33 76
Thereafter....................................................................... 873 1,473
--------- ---------
$ 1,020 1,821
---------
---------
Amount representing interest....................................................... (1,225)
---------
Obligation under capital lease..................................................... $ 596
---------
---------
</TABLE>

LEGAL PROCEEDINGS

NOTE 14 -- STOCKHOLDER'S EQUITY AND REGULATORY RESTRICTIONS
In July 1995, the Company entered into Stock Repurchase Agreements with
certain of its shareholders. The agreements grant the Company the option to
repurchase common shares held by those shareholders upon the shareholders'
deaths. Pursuant to one of the agreements, the Company repurchased 881,340
common shares of stock from the estate of its late chairman in December, 1995.
The purchase price of $13.00 per share was based on a valuation by an
independent investment banking firm. As of December 31, 1995, agreements cover
772,335 shares of the Company's common stock.

Cash dividends paid to the parent Company by the Banks amounted to
$4,000,000, $3,424,000 and $4,000,000 for the years ended December 31, 1995,
1994 and 1993, respectively. The payment of dividends to the Company by the
Banks is subject to various state and federal regulatory limitations. At
December 31, 1995, the total amount of subsidiary-retained earnings available
for dividends, while maintaining the subsidiaries in a well-capitalized status,
amounted to approximately $16,000,000.

The Company is required to maintain consolidated minimum levels of
"risk-based capital" and "leverage capital" as defined by banking regulations as
a "well-capitalized" institution. At December 31, 1995, the minimum Tier 1 and
total risk-based capital ratios required to be maintained, to be considered
"well-capitalized," were 6% and 10%, respectively. Consolidated ratios were
approximately 12.25% and 13.34%, respectively. The Company's leverage ratio at
December 31, 1995 was 6.94% which is in excess of the minimum requirement of 5%
to be considered "well-capitalized." The subsidiary banks maintained capital
ratios in excess of the requirements to be considered "well-capitalized."

The Company has provided financing for certain officers to purchase common
stock of the Company. The notes are recourse, demand notes, secured by the
common stock, and require annual or

F-20
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 14 -- STOCKHOLDER'S EQUITY AND REGULATORY RESTRICTIONS (CONTINUED)
quarterly interest payments at either the prime rate (8.5% at December 31, 1995)
or the Company's dividend rate with an interest cap of 9.0%. The balance of
these notes as of June 30, 1996, was $1,680,000, and is shown as a reduction of
stockholders' equity.

The Banks are required to maintain average reserve balances with the Federal
Reserve Bank. The average amount of reserve balances for the years ended
December 31, 1995 and 1994 were approximately $6,777,000 and $6,086,000,
respectively.

NOTE 15 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value information about those financial instruments
for which it is practicable to estimate that value. In cases where quoted market
prices are not available, fair values are based on estimates, using present
value or other valuation techniques. Those techniques are significantly affected
by the assumptions used, including the discount rate, and estimates of future
cash flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could not
be realized in immediate settlement of the instrument. The statement excludes
certain financial instruments, and all non-financial instruments from its
disclosure requirements. Accordingly, the aggregate fair value amounts presented
do not represent the underlying value of the Company.

The following table provides summary information on the carrying amounts and
fair values of the Company's financial instruments at December 31, 1995 and 1994
(in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------------- --------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
OF ASSETS OF ASSETS OF ASSETS OF ASSETS
(LIABILITIES) (LIABILITIES) (LIABILITIES) (LIABILITIES)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash and equivalents...................................... $ 52,710 $ 52,710 $ 35,072 $ 35,072
Investment securities..................................... 207,607 207,603 213,765 209,501
Loans and notes receivable................................ 310,346 320,917 288,786 285,699
Non-Interest Bearing Demand Deposits...................... (88,111) (88,111) (100,674) (100,674)
Money Market, NOW and Savings Accounts.................... (218,943) (218,943) (215,124) (215,124)
Certificates of Deposit................................... (220,077) (221,962) (188,647) (188,432)
Short-Term Borrowings..................................... (17,292) (17,292) (11,514) (11,514)
</TABLE>

The following notes summarize the major methods and assumptions used in
estimating the fair values of financial instruments.

CASH AND CASH EQUIVALENTS

Fair value of cash, cash equivalents and federal funds sold approximate
their carrying amounts. The Company places its cash and funds with various
financial institutions and, by policy, limits its credit exposure to only
well-capitalized institutions. The Company performs periodic evaluations on the
capital adequacy of the financial institutions.

INVESTMENT SECURITIES

Fair values of investments are based on quoted market prices.

F-21
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15 -- FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

LOANS AND NOTES RECEIVABLE

For variable-rate loans that reprice frequently and have no significant
change in credit risk, fair values are based on carrying values. The fair values
for other loans are estimated using discounted cash flow analysis, using
interest rates currently being offered for loans with similar terms to borrowers
of similar credit quality. The fair values do not include any potential value
from the bulk sale of loans.

DEPOSITS

The fair values disclosed for deposits payable on demand, interest and
non-interest bearing checking, savings accounts and money market accounts are,
by definition, equal to their carrying amounts. Fair values for fixed-rate
certificates of deposit are estimated using a discounted cash flow calculation
that applies interest rates currently being offered on certificates to a
schedule of aggregated expected monthly maturities on time deposits.

The value derived from retaining demand and savings deposits, commonly
referred to as core deposit intangibles, is not considered in the above fair
value amounts.

SHORT-TERM BORROWINGS

The carrying amounts of securities sold under repurchase agreements, funds
purchased, treasury tax deposits, bank notes payable and other short-term
borrowings approximate their fair values.

OFF-BALANCE-SHEET ITEMS

There is no material difference between the notional amount and the
estimated fair value of off-balance-sheet items, primarily comprised of unfunded
loan commitments, which are generally priced at the time of funding.

NOTE 16 -- CONDENSED FINANCIAL STATEMENTS -- PARENT COMPANY ONLY

The following presents the condensed Balance Sheets as of December 31, 1995
and 1994 and June 30, 1996 (unaudited), and Statements of Income and of Cash
Flows for each of the three years ended December 31, 1995 and the six months
ended June 30, 1996 and 1995 (unaudited), for Beverly Bancorporation, Inc. (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
JUNE 30, 1996 1995 1994
------------- --------- ---------
<S> <C> <C> <C>
(UNAUDITED)
BALANCE SHEETS
Cash in non-interest-bearing deposits with subsidiaries..................... $ 266 $ 734 $ 270
Investment in subsidiaries.................................................. 45,868 50,856 41,955
Other assets, net........................................................... 3,670 1,030 1,003
------------- --------- ---------
Total assets............................................................ $ 49,804 $ 52,620 $ 43,228
------------- --------- ---------
------------- --------- ---------
Bank notes payable.......................................................... $ 9,000 $ 11,000 $ 1,800
Accrued interest, taxes and other liabilities............................... 217 659 620
Stockholders' equity........................................................ 40,587 40,961 40,808
------------- --------- ---------
Total liabilities and stockholders' equity.............................. $ 49,804 $ 52,620 $ 43,228
------------- --------- ---------
------------- --------- ---------
</TABLE>

F-22
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16 -- CONDENSED FINANCIAL STATEMENTS -- PARENT COMPANY ONLY (CONTINUED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
-------------------- -------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME
Income:
Dividends from subsidiaries................................. $ 3,226 $ 2,700 $ 4,000 $ 3,424 $ 4,000
Interest.................................................... 59 65 126 76 41
Intercompany fees........................................... 2,346 1,962 3,770 3,478 3,063
--------- --------- --------- --------- ---------
Total income.............................................. 5,631 4,727 7,896 6,978 7,104
Expenses:
Interest.................................................... 369 51 79 206 377
Salaries and benefits....................................... 1,912 1,570 3,263 2,810 2,261
Amortization of intangibles................................. 135 162 320 464 467
Other....................................................... 811 885 1,607 1,545 1,603
--------- --------- --------- --------- ---------
Total expenses............................................ 3,227 2,668 5,269 5,025 4,708
--------- --------- --------- --------- ---------
Income before income taxes and equity in undistributed net
income of subsidiaries....................................... 2,404 2,059 2,627 1,953 2,396
Income tax benefit............................................ 220 161 352 400 745
Equity in undistributed net income of subsidiaries............ 383 632 3,225 4,063 2,105
--------- --------- --------- --------- ---------
Net income................................................ $ 3,007 $ 2,852 $ 6,204 $ 6,416 $ 5,246
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

F-23
<PAGE>
BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16 -- CONDENSED FINANCIAL STATEMENTS -- PARENT COMPANY ONLY (CONTINUED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
-------------------- --------------------------------
1996 1995 1995 1994 1993
--------- --------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF CASH FLOWS (CONTINUED)
Cash flows from investing activities:
Investment in subsidiaries............................ $ (607) $ -- $ (200) $ -- $ --
--------- --------- ---------- --------- ---------
Net cash used in investment activities.............. (607) -- (200) -- --
Cash flows from financing activities:
Cash dividends........................................ (403) (467) (887) (870) (800)
Proceeds from issuance of stock....................... 184 234 472 142 298
Proceeds from note payable............................ -- -- 11,000 -- --
Repayments of note payable............................ (2,000) (1,300) (1,800) (2,900) (2,850)
Repurchase of common stock............................ -- -- (11,457) -- --
Proceeds from note receivable -- officer
stockholders......................................... 30 29 29 240 29
--------- --------- ---------- --------- ---------
Net cash used in financing activities............... (2,189) (1,504) (2,643) (3,388) (3,323)
--------- --------- ---------- --------- ---------
Net (decrease) increase in cash..................... (468) 292 464 (516) 383
Cash, beginning of period............................... 734 270 270 786 403
--------- --------- ---------- --------- ---------
Cash, end of period..................................... $ 266 $ 562 $ 734 $ 270 $ 786
--------- --------- ---------- --------- ---------
--------- --------- ---------- --------- ---------
</TABLE>

NOTE 17 -- SUBSEQUENT EVENTS

On February 27, 1996, the Board of Directors declared a 5% stock dividend on
the Company's common stock. The record date for the foregoing stock dividend is
April 5, 1996. The 5% stock dividend has been given retroactive effect in the
consolidated financial statements and notes thereto.

NOTE 18 -- PROPOSED INITIAL PUBLIC OFFERING, REINCORPORATION AND MERGER
The Company was incorporated in Delaware on June 13, 1996 as a wholly-owned
subsidiary of Beverly Bancorporation, Inc., an Illinois Company ("Beverly
Illinois"). The Company has authorized 8,000,000 common shares with a par value
of $.01 per common share. The Company intends to file a Registration Statement
on Form S-1 with the Securities and Exchange Commission for an offering of its
common stock and intends to sell 1,000,000 common shares with an additional
150,000 shares subject to the Underwriters' over-allotment option.

The Board of Directors is authorized to issue one or more series of
preferred stock. The Board, without stockholder approval, may determine voting,
conversion and other rights. Under the certificate of incorporation, the Board
of Directors has authorized 1,000,000 shares of preferred stock.

Prior to the completion of the offering, Beverly Illinois will be merged
with and into the Company and the Company will be the surviving corporation.
Each outstanding share of common stock of Beverly Illinois will be converted
into five shares of common stock of the Company.

The consolidated financial statements have been restated to reflect the
reincorporation and merger.

F-24
<PAGE>

GRAPHIC MATERIAL -- PICTURE OF
BEVERLY BANK'S 1923 FINANCIAL STATEMENT

F-25
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE AS OF
WHICH INFORMATION IS SET FORTH HEREIN. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 6
Use of Proceeds................................ 8
Market for Common Stock and Dividends.......... 9
Capitalization................................. 10
Dilution....................................... 11
Selected Consolidated Financial Data........... 12
Management's Discussion and Analysis of Results
of Operations and Financial Condition......... 14
Business....................................... 34
Management..................................... 39
Principal Stockholders......................... 43
Supervision and Regulation..................... 44
Description of Capital Stock................... 53
Shares Eligible for Future Sale................ 54
Underwriting................................... 56
Legal Matters.................................. 57
Experts........................................ 57
Available Information.......................... 57
Index to Consolidated Financial Statements..... F-1
</TABLE>

------------------------------

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

1,000,000 SHARES

BEVERLY
BANCORPORATION, INC.

COMMON STOCK

---------------------

PROSPECTUS

---------------------

HOWE BARNES INVESTMENTS, INC.

AUGUST , 1996

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
SEC registration fee..................................................... $ 6,345
NASD filing fee.......................................................... 2,340
Nasdaq listing fee....................................................... 29,875
Printing and engraving expenses.......................................... 55,000
Fees and expenses of counsel............................................. 150,000
Fees and expenses of accountants......................................... 150,000
Transfer agent and registrar fees........................................ 5,000
Blue sky fees and expenses............................................... 15,000
Miscellaneous............................................................ 36,440
---------
Total................................................................ $ 450,000
---------
---------
</TABLE>

Except for the SEC registration, NASD filing and Nasdaq listing fees, all of
the foregoing expenses have been estimated. All expenses will be paid by the
Company.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Pursuant to the Reincorporation, prior to the completion of the offering,
Beverly Illinois will be merged with and into the Company and the Company will
be the surviving corporation. After the Reincorporation, the Company will own
all of the outstanding capital stock of the Banks and Beverly Trust. In
connection with the Reincorporation, each outstanding share of common stock of
Beverly Illinois will be converted into five shares of Common Stock of the
Company.

The only other securities sold by the Company within the past three years
and not registered under the 1933 Act have been in connection with either the
exercise of employee stock options granted to certain key employees of the
Company pursuant to the Company's stock option plan; with the purchase of Common
Stock through the Company's Dividend Reinvestment Plan; or with the issuance of
Common Stock as Director's compensation.

During fiscal year 1994, four employees of the Company exercised stock
options for the purchase of a total of 105,000 shares of Common Stock at an
average exercise price of $9.49 per share. During fiscal year 1995, three
employees of the Company exercised stock options for the purchase of a total of
5,575 shares of Common Stock at an average exercise price of $8.57 per share. As
of July 31, 1996, in fiscal year 1996, one employee of the Company has exercised
stock options for the purchase of a total of 2,150 shares of Common Stock at an
average exercise price of $8.36 per share.

During fiscal year 1993, 91 stockholders of the Company acquired a total of
52,780 shares of Common Stock through the Dividend Reinvestment Plan at an
average price of $6.23 per share. During fiscal year 1994, 103 stockholders of
the Company acquired a total of 44,905 shares of Common Stock through the
Dividend Reinvestment Plan at an average price of $8.49 per share. During fiscal
year 1995, 114 stockholders of the Company acquired a total of 38,633 shares of
Common Stock through the Dividend Reinvestment Plan at an average price of $9.96
per share. As of July 31, 1996, in fiscal year 1996, 114 stockholders of the
Company acquired a total of 16,372 shares of Common Stock through the Dividend
Reinvestment Plan at an average price of $11.73 per share. Only stockholders who
are Illinois residents could participate in the Dividend Reinvestment Plan.

During fiscal year 1995, four directors of the Company were issued a total
of 3,060 shares of Common Stock as compensation for their services at an average
price of $9.52 per share. As of July 31, 1996, in fiscal year 1996, four
directors of the Company were issued a total of 7,846 shares of Common Stock as
compensation for their services at an average price of $11.70 per share.

II-1
<PAGE>
Such issuances have not and will not involve an underwriter, and no discount
or commission has been or will be paid in connection therewith. Exemption from
registration is provided under Rule 145 regarding transactions the sole purpose
of which is to change an issuer's domicile solely within the United States,
Section 4(2) of the 1933 Act for transactions by an issuer not involving any
public offering, and Section 3(a)(11) of the 1933 Act for securities offered and
sold only to persons resident within a single state.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ---------------------------------------------
<S> <C>
1 Form of Underwriting Agreement.
2 Agreement and Plan of Merger between Beverly
Bancorporation, Inc., an Illinois
corporation, and Beverly Bancorporation,
Inc., a Delaware corporation (filed
herewith).
3(a) Certificate of Incorporation of the
Registrant (filed herewith).
3(b) By-Laws of the Registrant (filed herewith).
4(a) Form of Common Stock certificate (to be filed
by amendment).
5 Opinion of Lord, Bissell & Brook (to be filed
by amendment).
10(a) Promissory Note by Beverly Bancorporation,
Inc. to Harris Trust & Savings Bank dated
December 22, 1995 for $11,000,000.
10(b) Pledge and Security Agreement between Beverly
Bancorporation, Inc. and Harris Trust &
Savings Bank dated December 22, 1995.
10(c) Letter approving $500,000 revolving credit
facility from Harris Trust & Savings Bank to
Beverly Bancorporation, Inc. dated January
31, 1996.
10(d) Floating Rate Loan -- Procedures letter
between Beverly Bancorporation and Harris
Trust & Savings Bank dated January 31, 1996.
10(e) Beverly Bancorporation, Inc. Stock Option
Plan.
10(f) Architecture service proposals from
Archideas, Inc. to Beverly Bancorporation,
Inc. and First National Bank of Wilmington
dated February 5, 1996, February 8, 1996 and
April 25, 1996 (filed herewith).
10(g) Leases between Halstead Investment Group and
Matteson-Richton Bank, as amended, relating
to facility in Homewood, Illinois (filed
herewith).
10(h) Lease between Beverly Bank and LaSalle
National Trust, as Trustee, relating to a
facility in Orland Park, Illinois (filed
herewith).
21 Subsidiaries of the Registrant.
23(a) Consent of Grant Thornton LLP (filed
herewith).
23(b) Consent of Lord, Bissell & Brook (to be
included in Exhibit 5).
24 Powers of Attorney.
27 Financial Data Schedule (filed herewith).
</TABLE>

(b) Financial Statement Schedules:

All schedules have been omitted either as inapplicable or because the
required information is included in the financial statements or notes thereto.

II-2
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Chicago
and State of Illinois on August 5, 1996.

BEVERLY BANCORPORATION, INC.

By: /s/ ANTHONY R. PASQUINELLI

-----------------------------------
Anthony R. Pasquinelli
CHAIRMAN OF THE BOARD

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below on August 5, 1996 by the
following persons in the capacities indicated.

<TABLE>
<C> <S>
NAME TITLE
- ------------------------------------------------------ ---------------------------------------------------------

/s/ ANTHONY R. PASQUINELLI
------------------------------------------- Chairman of the Board
Anthony R. Pasquinelli

/s/ JOHN D. VAN WINKLE
------------------------------------------- President, Chief Executive Officer and Director
John D. Van Winkle

/s/ JOHN T. O'NEILL
------------------------------------------- Executive Vice President, Chief Financial Officer and
John T. O'Neill Principal Accounting Officer

/s/ CHRISTOPHER M. CRONIN*
------------------------------------------- Director
Christopher M. Cronin

/s/ RICHARD I. POLANEK*
------------------------------------------- Director
Richard I. Polanek

/s/ WILLIAM C. WADDELL*
------------------------------------------- Director
William C. Waddell
</TABLE>

* By /s/ JOHN D. VAN WINKLE

- ----------------------------------------

John D. Van Winkle, Attorney-in-fact
Pursuant to a power of attorney

II-3
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------ --------------------------------------------- ----
<S> <C> <C>
1 Form of Underwriting Agreement...............
2 Agreement and Plan of Merger between Beverly
Bancorporation, Inc., an Illinois
corporation, and Beverly Bancorporation,
Inc., a Delaware corporation (filed
herewith)...................................
3(a) Certificate of Incorporation of the
Registrant (filed herewith).................
3(b) By-Laws of the Registrant (filed herewith)...
4(a) Form of Common Stock certificate (to be filed
by amendment)...............................
5 Opinion of Lord, Bissell & Brook (to be filed
by amendment)...............................
10(a) Promissory Note by Beverly Bancorporation,
Inc. to Harris Trust & Savings Bank dated
December 22, 1995 for $11,000,000...........
10(b) Pledge and Security Agreement between Beverly
Bancorporation, Inc. and Harris Trust &
Savings Bank dated December 22, 1995........
10(c) Letter approving $500,000 revolving credit
facility from Harris Trust & Savings Bank to
Beverly Bancorporation, Inc. dated January
31, 1996....................................
10(d) Floating Rate Loan -- Procedures letter
between Beverly Bancorporation and Harris
Trust & Savings Bank dated January 31,
1996........................................
10(e) Beverly Bancorporation, Inc. Stock Option
Plan........................................
10(f) Architecture service proposals from
Archideas, Inc. to Beverly Bancorporation,
Inc. and First National Bank of Wilmington
dated February 5, 1996, February 8, 1996 and
April 25, 1996 (filed herewith).............
10(g) Leases between Halstead Investment Group and
Matteson-Richton Bank, as amended, relating
to facility in Homewood, Illinois (filed
herewith)...................................
10(h) Lease between Beverly Bank and LaSalle
National Trust, as Trustee, relating to a
facility in Orland Park, Illinois (filed
herewith)...................................
21 Subsidiaries of the Registrant...............
23(a) Consent of Grant Thornton LLP (filed
herewith)...................................
23(b) Consent of Lord, Bissell & Brook (to be
included in Exhibit 5)......................
24 Powers of Attorney
27 Financial Data Schedule (filed herewith).....
</TABLE>

II-4

<PAGE>

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger ("Merger Agreement") is made as of June
24, 1996, by and between Beverly Bancorporation, Inc., an Illinois corporation
("Beverly Illinois"), and Beverly Bancorporation, Inc., a Delaware corporation
("Beverly Delaware"). Beverly Illinois and Beverly Delaware are sometimes
referred to as the "Constituent Corporations."

The authorized capital stock of Beverly Illinois consists of 1,700,000
shares of common stock, without par value, and 100,000 shares of preferred
stock, without par value, and the authorized capital stock of Beverly Delaware
consists of 8,000,000 shares of common stock, par value $.01 per share, and
1,000,000 shares of preferred stock, par value $.01 per share. The directors of
the Constituent Corporations deem it advisable and to the advantage of said
corporations that Beverly Illinois be merged into Beverly Delaware upon the
terms and conditions provided in this Agreement.

Now Therefore, the parties adopt the plan of merger encompassed by this
Merger Agreement and agree that Beverly Illinois shall be merged into Beverly
Delaware on the following terms, conditions and other provisions:

I. TERMS AND CONDITIONS

1.1 Merger

Subject to the approval of the shareholders of Beverly Illinois, Beverly
Illinois shall be merged with and into Beverly Delaware, and Beverly Delaware
shall be the surviving corporation (sometimes referred to below as the
"Surviving Corporation") effective upon the date when (i) a Certificate of
Merger relating to this Merger Agreement is filed with the Secretary of State of
the State of Delaware in accordance with the General Corporation Law of the
State of Delaware and (ii) Articles of Merger relating to this Merger Agreement
are filed with the Secretary of State of Illinois in accordance with the
Illinois Business Corporation Act (the "Effective Date"). The name of the
Surviving Corporation shall be "Beverly Bancorporation, Inc."

1.2 Succession

As of the Effective Date, Beverly Delaware shall succeed to all of the
rights, privileges, powers and property, including without limitation all
rights, privileges, franchises, patents, trademarks, licenses, registrations and
other assets of every kind and description, of the Constituent Corporations, in
the manner of and as more fully set forth in Section 259 of the General
Corporation Law of the State of Delaware and in Section 11.50 of the Illinois
Business Corporation Act. As of the Effective Date, Beverly Delaware shall
succeed to all debts, liabilities and obligations of Beverly Illinois, and any
claim existing or action or proceeding against, and all rights of creditors in
respect of, and all liens upon any

<PAGE>

property of the Constituent Corporations shall be preserved unimpaired and may
be enforced against the Surviving Corporation as if incurred or contracted by
it, all as more fully set forth in Section 259 of the General Corporation Law of
the State of Delaware and in Section 11.50 of the Illinois Business Corporation
Act.

1.3 Common Stock of Beverly Illinois and Beverly Delaware

As of the Effective Date, by virtue of the merger and without any further
action on the part of the Constituent Corporations or their shareholders: (i)
each share of common stock of Beverly Illinois, without par value, issued and
outstanding immediately prior to the Effective Date shall be changed and
converted into five fully paid and nonassessable shares of the common stock of
Beverly Delaware, par value $.01 per share; and (ii) each share of common stock
of Beverly Delaware, par value $.01 per share, issued and outstanding
immediately prior to the Effective Date shall be canceled and of no further
force or effect.

1.4 Stock Certificates

On and after the Effective Date, all of the outstanding certificates which
prior to that time represented shares of common stock of Beverly Illinois shall
be deemed for all purposes to evidence ownership of and to represent an equal
number of shares of the common stock of Beverly Delaware into which the shares
of common stock of Beverly Illinois represented by such certificates have been
converted as provided in this Agreement and shall be so registered on the books
and records of Beverly Delaware or its transfer agents. Stock certificates
representing the additional four shares of common stock of Beverly Delaware into
which each share of common stock of Beverly Illinois is converted in the merger
shall be mailed to shareholders of Beverly Illinois following the effective date
of the merger. The registered owner of any such outstanding stock certificate
shall, until such certificate shall have been surrendered for transfer or
conversion or otherwise accounted for to Beverly Delaware or its transfer agent,
have and be entitled to exercise any voting and other rights with respect to and
to receive any dividend and other distributions upon the shares of Beverly
Delaware evidenced by such outstanding certificate as above provided.

1.5 Options

As of the Effective Date, the Surviving Corporation shall assume and
continue Beverly Illinois' Stock Option Plan (the "Plan"), and the outstanding
and unexercised portions of all options to buy common stock of Beverly Illinois,
whether issued pursuant to the Plan or otherwise, shall become options for that
number of shares of common stock of Beverly Delaware equal to five times the
number of shares of common stock of Beverly Illinois subject to outstanding
options and the exercise prices per share thereof shall be proportionately
adjusted, with no other changes in the terms and conditions of such options and,
as of the Effective Date, the Surviving Corporation shall assume the obligations
of Beverly Illinois with respect to such options.

<PAGE>

II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS

2.1 Certificate of Incorporation and By-Laws

From and after the Effective Date, the Certificate of Incorporation of the
Surviving Corporation shall read in full as set forth in Appendix I attached to
and made a part of this Agreement; and, from and after the Effective Date and
until further amended and provided by law, said Appendix I, separate and apart
from this Merger Agreement, shall be and may be certified as the certificate of
incorporation of the Surviving Corporation. The By-Laws of Beverly Delaware in
effect on the Effective Date shall continue to be the By-Laws of the Surviving
Corporation without change or amendment until further amended in accordance with
their provisions and applicable law.

2.2 Directors

The directors of Beverly Delaware immediately prior to the Effective Date
shall be the directors of the Surviving Corporation on and after the Effective
Date to serve until the expiration of their terms and until their successors are
elected and qualified.

2.3 Officers

The officers of Beverly Illinois immediately prior to the Effective Date
shall be the officers of the Surviving Corporation as of the Effective Date to
serve at the pleasure of its Board of Directors.

III. MISCELLANEOUS

3.1 Further Assurances

From time to time, as and when required by the Surviving Corporation or by
its successors and assigns, there shall be executed and delivered on behalf of
Beverly Illinois such deeds and other instruments, and there shall be taken or
caused to be taken by it such further and other action, as shall be appropriate
or necessary in order to vest or perfect or to confirm of record or otherwise,
in the Surviving Corporation the title to and possession of all the property,
interests, assets, rights, privileges, immunities, powers, franchises, and
authority of Beverly Illinois and otherwise to carry out the purposes of this
Merger Agreement, and the officers and directors of the Surviving Corporation
are fully authorized in the name and on behalf of Beverly Illinois or otherwise
to take any and all such action and to execute and deliver any and all such
deeds and other instruments.

3.2 Amendment

At any time before or after approval by the shareholders of Beverly
Illinois, this Merger Agreement may be amended in any manner (except that, after
approval of this

<PAGE>

Merger Agreement by the shareholders of Beverly Illinois, any of the principal
terms may not be amended without the approval of the shareholders of Beverly
Illinois) as may be determined in the judgment of the respective Boards of
Directors of Beverly Delaware and Beverly Illinois to be necessary, desirable or
expedient in order to clarify the intention of the parties hereto or to effect
or facilitate the purpose and intent of this Merger Agreement.

3.3 Termination

At any time before the Effective Date, this Merger Agreement may be
terminated and the merger may be abandoned by the Board of Directors of either
Beverly Illinois or Beverly Delaware or both, notwithstanding the approval of
this Merger Agreement by the shareholders of Beverly Illinois.

In Witness Whereof, this Merger Agreement, having first been duly approved
by the Board of Directors of Beverly Illinois and Beverly Delaware, is hereby
executed on behalf of each said corporation by their respective officers
thereunto duly authorized.

BEVERLY CORPORATION, INC.,
an Illinois corporation

By: /s/ John D. Van Winkle
--------------------------------
John D. Van Winkle, President

By: /s/ Anthony R. Pasquinelli
--------------------------------
Anthony R. Pasquinelli, Chairman

BEVERLY BANCORPORATION, INC.,
a Delaware corporation

By: /s/ John D. Van Winkle
--------------------------------
John D. Van Winkle, President

By: /s/ Anthony R. Pasquinelli
--------------------------------
Anthony R. Pasquinelli, Chairman

<PAGE>

CERTIFICATE OF INCORPORATION

BEVERLY BANCORPORATION, INC.

FIRST. The name of the corporation is: Beverly Bancorporation, Inc. (the
"Corporation").

SECOND. The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of Newcastle
(the "Registered Office"). The name of its registered agent at such address is
The Corporation Trust Company.

THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"GCL").

FOURTH. The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 9,000,000 shares, divided into
two classes as follows:

1,000,000 shares of Preferred Stock of the par value of $0.01 per
share ("Preferred Stock"); and

8,000,000 shares of Common Stock of the par value of $0.01 per
share ("Common Stock").

The designations, powers, preferences and rights, and the qualifications,
limitations or restrictions of the above classes of stock are as follows:

DIVISION I

Preferred Stock

1. The board of directors is expressly authorized at any time, and from
time to time, to issue shares of Preferred Stock in one or more series, and for
such consideration as the board of directors may determine, with such voting
powers, full or limited but not to exceed one vote per share, or without voting
powers, and with such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as shall be stated in the resolution or resolutions
providing for the issue thereof, and as are not stated in this Certificate of
Incorporation, or any amendment thereto. All shares of any one series shall be
of equal rank and identical in all respects.

<PAGE>

2. No dividend shall be paid or declared on any particular series of
Preferred Stock unless dividends shall be paid or declared PRO RATA on all
shares of Preferred Stock at the time outstanding of each other series which
ranks equally as to dividends with such particular series.

3. Unless and except to the extent otherwise required by law or provided
in the resolution or resolutions of the board of directors creating any series
of Preferred Stock pursuant to this Division I, the holders of the Preferred
Stock shall have no voting power with respect to any matter whatsoever. In no
event shall the Preferred Stock be entitled to more than one vote in respect of
each share of stock. Subject to the protective conditions or restrictions of
any outstanding series of Preferred Stock, any amendment to this Certificate of
Incorporation which shall increase or decrease the authorized capital stock of
any class or classes may be adopted by the affirmative vote of the holders of a
majority of the outstanding shares of the voting stock of the Corporation.

4. Shares of Preferred Stock redeemed, converted, exchanged, purchased,
retired or surrendered to the Corporation, or which have been issued and
reacquired in any manner, shall, upon compliance with any applicable provisions
of the GCL, have the status of authorized and unissued shares of Preferred Stock
and may be reissued by the board of directors as part of the series of which
they were originally a part or may be reclassified into and reissued as part of
a new series or as a part of any other series, all subject to the protective
conditions or restrictions of any outstanding series of Preferred Stock.

DIVISION II

Common Stock

1. Dividends. Subject to the preferential dividend rights, if any,
applicable to shares of the Preferred Stock and subject to applicable
requirements, if any, with respect to the setting aside of sums for purchase,
retirement or sinking funds for the Preferred Stock, the holders of the Common
Stock shall be entitled to receive to the extent permitted by law, such
dividends as may be declared from time to time by the board of directors.

2. Liquidation. In the event of the voluntary or involuntary liquidation,
dissolution, distribution of assets or winding up of the Corporation, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of the Preferred Stock, holders of the Common Stock shall
be entitled to receive all the remaining assets of the Corporation of whatever
kind available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.

3. Voting rights. Except as may be otherwise required by law or this
Certificate of Incorporation, each holder of the Common Stock shall have one
vote in respect of each share of stock held by him or her of record on the books
of the Corporation on all matters voted upon by the stockholders.

<PAGE>

DIVISION III

Elimination of Preemptive
Rights

No holder of stock of any class of the Corporation shall be entitled as a
matter of right to purchase or subscribe for any part of any unissued stock of
any class, or of any additional stock of any class or capital stock of the
Corporation, or of any bonds, certificates of indebtedness, debentures, or other
securities convertible into stock of the Corporation, now or hereafter
authorized, but any such stock or other securities convertible into stock may be
issued and disposed of pursuant to resolution by the board of directors to such
persons, firms, corporations or associations and upon such terms and for such
consideration (not less than the par value or stated value thereof) as the board
of directors in the exercise of its discretion may determine and as may be
permitted by law without action by the stockholders.

FIFTH. (1) Nominations of persons for election to the board of directors
of the Corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) by or at the
direction of the board of directors or (b) by any stockholder of record of the
Corporation who is entitled to vote at the meeting and who complies with the
notice procedures set forth in this Article FIFTH.

(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (b) of paragraph (1) of this
Article, the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice shall be
delivered to the Secretary at the principal executive offices of the Corporation
not less than sixty (60) days nor more than ninety (90) days prior to the first
anniversary of the preceding year's annual meeting; provided, further, in the
event that the date of the annual meeting is advanced by more than thirty (30)
days or delayed by more than sixty (60) days from such anniversary date, notice
by the stockholder to be timely must be so delivered not earlier than the 90th
day prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the 10th day following the
day on which public announcement of the date of such meeting is first made.
Such stockholder's notice shall set forth (1) as to each person whom the
stockholder proposes to nominate for election or reelection as a director (i)
the name, age, business address and residence address of each such person, (ii)
the principal occupation or employment of such person, (iii) the class and
number of shares of the Corporation which are beneficially owned by each such
person and (iv) such other information relating to such person as would be
required to be disclosed by the federal securities laws and the rules and
regulations promulgated thereunder in respect of an individual nominated as a
director of the Corporation and for whom proxies are solicited by the board of
directors of the Corporation (including without limitation such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (2) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at the
meeting; and (3) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made

<PAGE>

(i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner, (ii) the class and number of
shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner and (iii) a description of all
arrangements or understandings between such stockholder or beneficial owner and
any other person or persons (including their names) in connection with such
nomination or business and any material interest of such stockholder or
beneficial owner in such nomination or business.

(3) Notwithstanding anything in the second sentence of paragraph (2) of
this Article to the contrary, in the event that the number of directors to be
elected to the board of directors of the Corporation is increased and there is
no public announcement naming all of the nominees for director or specifying the
size of the increased board of directors made by the Corporation at least
seventy (70) days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by this Article shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.

(4) Only such persons who are nominated in accordance with the procedures
set forth in this Article shall be eligible to serve as directors and only such
business shall be conducted at an annual meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this Article. The presiding officer of the meeting shall have the power and
duty to determine whether a nomination or any business proposed to be brought
before the meeting was made in accordance with the procedures set forth in this
Article and, if any proposed nomination or business is not in compliance with
this Article, to declare that such defective proposed business or nomination
shall be disregarded.

(5) For the purposes of this Article, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or a comparable national news service or in a document publicly filed by
the Corporation with the Securities and Exchange Commission pursuant to Section
13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").

(6) Notwithstanding the foregoing provisions of this Article, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Article. Nothing in this Article shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.

SIXTH. The name and mailing address of the incorporator are as follows:
Dov J. Pinchot, 115 South LaSalle Street, Chicago, IL 60603.

SEVENTH. The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition,

<PAGE>

limitation and regulation of the powers of the Corporation and of its directors
and stockholders:

(1) The business and affairs of the Corporation shall be managed by or
under the direction of the board of directors.

(2) The directors shall have concurrent power with the stockholders to
make, alter, amend, change, add to or repeal the by-laws of the Corporation.

(3) The number of directors of the Corporation shall be as from time to
time fixed by, or in the manner provided in, the by-laws of the Corporation.
Election of directors need not be by written ballot unless the by-laws so
provide.

(4) No director shall be personally liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the GCL or (iv) for any transaction from
which the director derived an improper personal benefit. If the GCL is amended
to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the GCL as so
amended. Any repeal or modification of this Article SEVENTH by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification
with respect to acts or omissions occurring prior to such repeal or
modification.

(5) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the provisions of the GCL, this
Certificate of Incorporation, and any by-laws adopted by the stockholders;
provided, however, that no by-laws adopted by the stockholders shall invalidate
any prior act of the directors which would have been valid if such by-laws had
not been adopted.

(6) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a meeting,
to the taking of any action is specifically denied.

EIGHTH. Meetings of stockholders may be held within or without the State
of Delaware, as the by-laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the Corporation.

<PAGE>

NINTH. (1) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he or she is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.

(2) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he or she is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with the defense or settlement of such action or suit if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Corporation and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery of the State of Delaware
or such other court shall deem proper.

(3) To the extent that any person referred to in paragraphs (1) and (2) of
this Article NINTH has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to therein or in defense of any claim,
issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith.

(4) Any indemnification under paragraphs (1) and (2) of this Article NINTH
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director
or officer is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in said paragraphs (1) and (2). Such
determination shall be made (a) by a majority vote of the

<PAGE>

directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (b) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (c) by the
stockholders.

(5) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation as provided in this Article NINTH.

(6) The Corporation may, to the extent authorized from time to time by the
board of directors, grant rights to indemnification and to the advancement of
expenses, to any employee or agent of the Corporation or its subsidiaries, or to
any employee or agent of any entity providing contractual services for the
Corporation or its subsidiaries, to the fullest extent of the provisions of this
Article NINTH with respect to the indemnification and advancement of expenses of
directors and officers of the Corporation.

(7) The indemnification and advancement of expenses provided by or granted
pursuant to the other subsections of this Article NINTH shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any statute, by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his or her official capacity and as to action in another capacity while
holding such office.

(8) The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of this
Article.

(9) For the purposes of this Article NINTH, references to the
"Corporation" shall include in addition to the resulting Corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article NINTH with
respect to the resulting or surviving corporation as he or she would have with
respect to such constituent corporation if its separate existence had continued.

<PAGE>

(10) For purposes of this Article NINTH, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
paragraph.

(11) The indemnification and advancement of expenses provided by, or
granted pursuant to this Article NINTH shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person. Any repeal or modification of
this Article NINTH shall not adversely affect any right to indemnification or
advancement of expenses of any present or former director, officer, employee or
agent of the Corporation existing at the time of such repeal or modification.

(12) If this Article NINTH or any portion hereof is invalidated by any
court of competent jurisdiction, then the Corporation shall nevertheless provide
such indemnification and advancement of expenses as would otherwise be permitted
under any portion of this Article NINTH that shall not have been invalidated.

TENTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of the GCL or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of the GCL, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.

ELEVENTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.

<PAGE>

I, the undersigned, being the sole incorporator hereinbefore named, for the
purpose of forming a Corporation pursuant to the GCL, do make this certificate,
hereby declaring and certifying that the facts herein stated are true and
accordingly have hereunto set my hand this 13th day of June, 1996.

/s/ Dov J. Pinchot

--------------------------
Incorporator

<PAGE>

BYLAWS

BEVERLY BANCORPORATION, INC.

ARTICLE I

OFFICES

SECTION 1. The registered office shall be in the City of Wilmington,
County of Newcastle, State of Delaware.

SECTION 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

SECTION 1. All meetings of the stockholders for the election of directors
shall be held at such place, either within or without the State of Delaware, as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting. Meetings of stockholders for any other purpose may
be held at such time and place, within or without the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.

SECTION 2. Annual meetings of stockholders shall be held on the first
Wednesday of May if not a legal holiday, and if a legal holiday, then on the
next secular day following, or on such other date as shall be designated from
time to time by the board of directors and stated in the notice of the meeting,
at which they shall elect by a plurality vote by written ballot a board of
directors, and transact such other business as may properly be brought before
the meeting.

SECTION 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not fewer than ten nor more than sixty days before the date of the
meeting.

SECTION 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each

<PAGE>

stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.

SECTION 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may only be called by the chairman of the board or by the
president or the secretary at the request in writing of a majority of the board
of directors. Such request shall state the purpose or purposes of the proposed
meeting.

SECTION 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not fewer than ten nor more than sixty days before the date of
the meeting, to each stockholder entitled to vote at such meeting.

SECTION 7. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted at the meeting as originally notified. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.

SECTION 8. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power, present in person or
represented by proxy, shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.

SECTION 9. Unless otherwise provided in the certificate of incorporation,
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.

<PAGE>

ARTICLE III

DIRECTORS

SECTION 1. The number of directors which shall constitute the whole board
shall be five (5). Such directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article, and shall hold
office until their successors are elected and qualified or until their earlier
resignation or removal. Directors need not be stockholders.

SECTION 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute.

SECTION 3. The business of the corporation shall be managed by its board
of directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the certificate of
incorporation or by these bylaws directed or required to be exercised or done by
the stockholders.

MEETINGS OF THE BOARD OF DIRECTORS

SECTION 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.

SECTION 5. The first meeting of each newly elected board of directors
shall be held immediately following the adjournment of the annual meeting of the
stockholders at the same place as such annual meeting and no notice of such
meeting shall be necessary to the newly elected directors in order legally to
constitute the meeting, provided a quorum shall be present. In the event such
meeting is not held at such time and place, the meeting may be held at such time
and place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.

SECTION 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.

SECTION 7. Special meetings of the board may be called by the chairman of
the board or the president on at least two (2) days' notice to each director,
either personally or by mail or telegram. Special meetings shall be called by
the chairman of the board, the president or the secretary in like manner and on
like notice at the written request of two (2) or more directors stating the
purpose or purposes for which such meeting is requested. A meeting of the board
of directors or any committee thereof by conference telephone or similar

<PAGE>

communication equipment by means of which all of the members of the board or
committee participating may hear one another shall be permitted with proper
notice as described above, or without notice if all of the members of the board
or committee are participating.

SECTION 8. At all meetings of the board a majority of the then duly
elected directors shall constitute a quorum for the transaction of business and
the act of a majority of the directors present at any meeting at which there is
a quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.

SECTION 9. Any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.

COMMITTEES OF DIRECTORS

SECTION 10. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the absence
or disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.

SECTION 11. Each committee shall keep regular minutes of its meetings and
shall file such minutes and all written consents executed by its members with
the secretary of the corporation.

<PAGE>

COMPENSATION OF DIRECTORS

SECTION 12. In the discretion of the board of directors, the directors may
be paid their expenses, if any, of attendance at each meeting of the board of
directors and may be paid a fixed sum for attendance at each meeting of the
board of directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.

ARTICLE IV

NOTICES

SECTION 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his or her address as it appears on the records of
the corporation, with postage thereon prepaid, and such notice shall be deemed
to be given at the time when the same shall be deposited in the United States
mail. Notice to directors may also be given by telegram.

SECTION 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.

ARTICLE V

OFFICERS

SECTION 1. The initial officers of the corporation shall be elected by the
board of directors and shall be a chairman of the board, a president, a
secretary and a treasurer. The board of directors may also elect one or more
vice-presidents, assistant vice-presidents, assistant secretaries and assistant
treasurers. Any number of offices may be held by the same person, unless the
certificate of incorporation or these bylaws otherwise provide. The chairman of
the board of directors shall be chosen from the members of the board of
directors. The board of directors may also designate persons as officers of
divisions of the corporation, but such persons shall not necessarily be officers
of the corporation.

SECTION 2. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be provided for
in these bylaws determined from time to time by the board.

<PAGE>

SECTION 3. The compensation of all executive officers of the corporation
shall be fixed by the board of directors, and the executive officers of the
corporation shall be designated as such by the board of directors.

SECTION 4. The officers of the corporation shall hold office until the
next annual meeting of the board of directors, until their successors are
elected and qualified, or until their earlier resignation or removal. Any
officer elected or appointed by the board of directors may be removed at any
time by the affirmative vote of a majority of the board of directors. Any
vacancy occurring in any office of the corporation shall be filled by the board
of directors.

THE CHAIRMAN OF THE BOARD

SECTION 5. The chairman of the board of directors shall preside at all
meetings of the stockholders and of the board of directors of the corporation
and shall perform such other duties as may from time to time be prescribed by
the board of directors or these bylaws. In the absence of the president or in
the event of his or her inability to act, the chairman of the board of directors
shall perform the duties of the president, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the president, pending
designation by the board of directors at its next meeting of a president or
acting president.

THE PRESIDENT

SECTION 6. The president shall be the chief executive officer of the
corporation. He or she shall, under the general direction and supervision of
the board of directors, perform such duties as are customarily incident to the
office of president and shall have general and active supervision over the
business affairs of the corporation. He or she shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and executing thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation. He or
she shall perform such other duties as may from time to time be prescribed by
the board of directors or these bylaws. In the absence or disability of the
chairman of the board or an alternate designated by the board of directors, he
or she shall perform the duties and exercise the powers of the chairman of the
board.

THE VICE-PRESIDENTS

SECTION 7. The vice-presidents shall perform such duties and have such
powers as the board of directors or the president may from time to time
prescribe. A vice-president may execute contracts on behalf of the corporation
pertaining to the normal course of his or her duties.

<PAGE>

THE SECRETARY AND ASSISTANT SECRETARY

SECTION 8. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He or she shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board of directors
or the president, under whose supervision he or she shall be. He or she shall
have custody of the corporate seal of the corporation and he or she, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his or her signature or
by the signature of such assistant secretary.

The board of directors may give general authority to any other officer to
affix the seal of the corporation and to attest the affixing by his or her
signature.

SECTION 9. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.

THE TREASURER AND ASSISTANT TREASURERS

SECTION 10. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors. He or she
shall disburse the funds of the corporation as may be ordered by the board of
directors, taking proper vouchers for such disbursements, and shall render to
the president and the board of directors, at its regular meetings, or when the
board of directors so requires, an account of all of his or her transactions as
treasurer and of the financial condition of the corporation. If required by the
board of directors, he or she shall give the corporation a bond (which shall be
renewed every six years) in such sum and with such surety or sureties as shall
be satisfactory to the board of directors for the faithful performance of the
duties of his or her office and for the restoration to the corporation, in case
of his or her death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in his or her
possession or under his or her control belonging to the corporation.

SECTION 11. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the treasurer or in the event of his or her inability or
refusal to act, perform the duties and exercise the powers

<PAGE>

of the treasurer and shall perform such other duties and have such other powers
as the board of directors may from time to time prescribe.

ARTICLE VI

CERTIFICATES OF STOCK

SECTION 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by (a) the
chairman of the board, the president or a vice-president, and (b) the treasurer
or an assistant treasurer, the secretary or an assistant secretary of the
corporation; certifying the number of shares owned in the corporation. If the
corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate which the corporation shall issue to represent such class or
series of stock; provided that, except as otherwise provided in section 202 of
the General Corporation Law of Delaware, in lieu of the foregoing requirements,
there may be set forth on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, a statement
that the corporation will furnish without charge to each stockholder who so
requests the designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.

SECTION 2. Where a certificate is countersigned (l) by a transfer agent
other than the corporation or its employee, or, (2) by a registrar other than
the corporation or its employee, any other signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he or she
were such officer, transfer agent or registrar at the date of issue.

SECTION 3. Subject to the foregoing, certificates for stock of the
corporation shall be in such form as the board of directors may from time to
time prescribe.

LOST CERTIFICATES

SECTION 4. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such

<PAGE>

manner as it shall require and/or to give the corporation a bond in such sum as
it may direct as indemnity against any claim that may be made against the
corporation or its transfer agent or registrar with respect to the certificate
alleged to have been lost, stolen or destroyed.

TRANSFERS OF STOCK

SECTION 5. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Reasonable fees may be charged by the corporation for the issuance of multiple
certificates to any particular stockholder.

FIXING RECORD DATE

SECTION 6. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor fewer than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.

REGISTERED STOCKHOLDERS

SECTION 7. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends and to vote as such owner and to hold liable for calls and assessments
a person registered on its books as the owner of shares, and shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VII

CONFLICTS OF INTEREST

SECTION 1. No contract or transaction between the corporation and one or
more of its directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of

<PAGE>

the board or committee thereof which authorizes the contract or transaction, or
solely because his, her or their votes are counted for such purpose, if:

(l) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the board of
directors or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or

(2) The material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the stockholders; or

(3) The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified, by the board of
directors, a committee thereof, or the stockholders.

SECTION 2. Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the board of directors or of a
committee which authorizes the contract or transaction.

ARTICLE VIII

GENERAL PROVISIONS

DIVIDENDS

SECTION 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.

SECTION 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.

<PAGE>

ANNUAL STATEMENT

SECTION 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.

CHECKS

SECTION 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.

FISCAL YEAR

SECTION 5. The fiscal year of the corporation shall be determined by
resolution of the board of directors.

SEAL

SECTION 6. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.

ARTICLE IX

AMENDMENTS

SECTION 1. These bylaws may be altered, amended or repealed or new bylaws
may be adopted by the stockholders or by the board of directors, at any regular
meeting of the stockholders or of the board of directors or at any special
meeting of the stockholders or of the board of directors if notice of such
alteration, amendment, repeal or adoption of new bylaws be contained in the
notice of such special meeting.

<PAGE>

[LETTERHEAD]

February 5, 1996

Mr. Bruce Park
Executive Vice President
Chief Operations Officer
Beverly Bancorporation, Inc.
1357 W. 103rd Street
Chicago, Illinois 60643

RE: BEVERLY BANK - LOCKPORT
RENOVATION AND ADDITION

Dear Bruce:

I have developed the following revised proposal for architectural services for
the millwork design in the Lockport Facility.

The proposal is based on the millwork locations described on Sheet A2.2
(Power/Telephone Plan) of the set of documents Issued For Permit, dated
12.15.95. The proposal includes design and development of millwork elements,
construction documents and contract administration services.

Bruce, I appreciate the opportunity to follow through and complete the vision
for the Lockport Facility and look forward to continuing our working
relationship.

Sincerely,
ARCHIDEAS, INC.

/s/ Joseph A. Pasquinelli
Joseph A. Pasquinelli
Principal

<PAGE>

[LETTERHEAD]

BEVERLY BANK LOCKPORT
PAGE 2 OF 4

BASIC SERVICES
Professional services for this project shall be provided by ARCHIDEAS, INC. in
accordance with the following scope and schedule of fees.

I. Design and development of millwork elements. *$2,500.00

- Design and develop millwork elements - greeter station,
investment center, queue line check writing stand and
video/printer unit.
- Prepare color scheme for millwork to coordinate with
existing finishes to remain and new furniture systems
and interior finishes proposed by Winfield and
Associates.
- Provide coordination of millwork and required
equipment.

II. Meetings *$1,250.00

- Attend two meetings to present design concepts,
coordinate work and obtain approvals. The design must
be approved before proceeding with construction
documents.

III. Construction Documents. *$2,200.00

- Finalize color scheme and millwork design.
- Produce architectural drawings and specifications.
- Issue contract documents for bid, permit and
construction.

IV. Contract Administration *$1,000.00

- Site observation visits during construction are provided
in the base contract.
- Interpret requirements of the contract documents.
- Review shop drawings and product submittals.

TOTAL *$6,950.00

*All work will be performed at Hourly Rates to the maximum amount indicated.

<PAGE>

[LETTERHEAD]

BEVERLY BANK LOCKPORT
PAGE 3 OF 4

REIMBURSABLES

Reimbursable expenses will only be incurred when necessary on this project.
These expenses are billed in addition to our professional services and may
include personal automobile travel, parking, tolls, blueprinting, long distance
telephone charges, and messenger/overnight courier services. These are billable
to you at 1.10 times cost, while personal automobile travel will be charged at
the allowable IRS rate, currently $0.30 per mile.

RATES

The following hourly rate schedule is applicable for professional services as
well as all authorized services provided in addition to the referenced scope of
work.

ARCHIDEAS, INC.
- Principal/Project Manager $75/Hr
- Senior Staff $60/Hr
- Staff $45/Hr

SCHEDULE

We estimate each phase described under Basic Services will be completed within
the time frame outlined below. Periods listed are durations for preparation of
architectural work only and are exclusive of time required for client review.

Interval
--------

- Approval of Basic Concept

- Design Development 2 1/2 Weeks
Two Meetings for review and approval of designs

- Construction Documents 1 Week

- Bidding 2 to 4 Weeks

- Contract Administration to continue
throughout construction (part of original contract) 2 to 3 Months

<PAGE>

[LETTERHEAD]

BEVERLY BANK LOCKPORT
PAGE 4 OF 4

INITIATION OF WORK

Beverly Bank may initiate the work previously described by signing where
indicated below as agreement and acceptance of this proposal, and as
authorization for ARCHIDEAS, INC. to proceed. We will begin the referenced work
upon receipt of this executed document. Drawing will commence at your
direction, and will be in accordance with an agreed upon time frame that will
coordinate with your established Master Schedule.

Bruce, we appreciate the opportunity to submit this proposal, and look forward
to our continued working relationship. Upon your election to proceed with this
proposal, we will execute AIA Document B141, Standard Form of Agreement between
Owner and Architect - 1987 Edition which will be used in conjunction with AIA
Document A201, General Conditions of the Contract for Construction.

AGREED AND ACCEPTED:

/s/
- ----------------------------------- ---------
Beverly Bank Date

/s/ Joseph A. Pasquinelli 2.5.96
- ----------------------------------- ---------
ARCHIDEAS, INC. Date

<PAGE>

[LETTERHEAD]

February 8, 1996

Ms. Shawn Croft
Senior Vice President
First National Bank of Wilmington
417 S. Water Street
Wilmington, IL 60481

RE: INTERIOR RENOVATION
BEVERLY BANK-WILMINGTON FACILITY
WILMINGTON, ILLINOIS

Dear Shawn:

We are pleased to present this proposal for professional services for the
interior renovation of the Wilmington facility.

The proposal is based on the Scope of Work indicated in the preliminary space
plan, dated 11.28.95 developed by VRA, Inc. As discussed we will revise the
space plan to retain the existing teller line and review the location of the
greeter desk.

Thank you for interest in ARCHIDEAS, INC. for professional services. If I can
be of assistance, please feel free to call me.

Sincerely,
ARCHIDEAS, INC.

/s/ Joseph A. Pasquinelli
Joseph A. Pasquinelli
Principal

311 West Superior
Suite 410
Chicago, Illinois 60610
312-951-1108 Fax 951-0442
<PAGE>

[LETTERHEAD]

Beverly Bank - Wilmington
Page 2 of 4

PROJECT PROGRAM REQUIREMENTS

The following confirms our understanding of the Scope of Work for the building
renovation.
- Teller Area Renovation: Reorganize the area behind the walk-up teller
line to provide clear visual and physical access between the
Commercial Teller Area and the Walk-up area. Also, provide for
a Conference room (separate from the secure Teller Area),
Private Office and Teller work area.
- Side Entrance and Canopy: Address issues of grade change, extent of
glass, canopy and landscaping in developing the entrance into
the new retail area of the bank.
- Merchandising/Retail Sales Area: Define the appropriate location for
the Greeter station, develop the design and provide detail
drawings for construction. Color and material selections will
coordinate with the Interior Designer's work.

BASIC SERVICES

Professional services for this project shall be provided by ARCHIDEAS, INC. and
our consultants in accordance with the following scope and schedule of fixed
fees.

Mechanical, Electrical and Plumbing services for projects of this scale are
typically provided by the respective subcontractors and the fees are generally
built into their contracts. We have not included this work under Basic
Services.

Documentation of Existing Interior Conditions $1,100.00
- Measure and draw the existing conditions
- Document the configuration of existing ceiling grid
light fixture and mechanical diffuser locations
- Identify locations of existing electrical outlets

Design $3,250.00
- Study optional locations for the Greeter station and
review with VRA and owner
- Develop the space plan and side entrance concept for
Owner review and comment
- Finalize space plan
- Develop the design and details for the Greeter station
- Coordinate with bank equipment

Construction Documents $6,500.00
- Produce architectural and structural construction
drawings and specifications
- Issue Contract Documents for bid, permit and
construction

Contract Administration $3,500.00
- Perform 6 site observation visits during demolition
and construction
- Interpret requirements of the contract documents
- Prepare construction punch list
- Prepare certification of substantial completion

----------
TOTAL $14,350

<PAGE>

[LETTERHEAD]

Beverly Bank - Wilmington
Page 3 of 4

SCHEDULE

We estimate each phase described under Basic Services will be completed within
the time frame outlined below. Periods listed are durations for preparation of
architectural and structural work only and are exclusive of time required for
client review. The calendar schedule is based on acceptance of the proposal by
Friday, February 9, 1996

Interval Calendar
-------- --------
- Documentation of existing conditions 1 Week 02.14.96

- Design Phase, includes two meetings for 2 1/2 Weeks 02.14.96(start)
review and approval

- Design Phase complete: client approval 03.01.96
of design concepts with authorization
to proceed. Issue drawings for budget
estimate

- Construction Document Phase 4 Weeks 03.04.96(start)

- Construction Documents complete,
Issue for Permit and Bidding 04.03.96

- Municipal Permit Review Process and 4 Weeks
Bidding

- Construction Start

ADDITIONAL SERVICES

The following services may be necessary to complete this project but have not
been included in this proposal:

- Site work/Civil Engineering
- Furniture systems planning, selection and implementation
- Color and material selections
- Landscape architecture
- Mechanical, Electrical and Plumbing Engineering

RATES

The following hourly rate schedule is applicable for professional services as
well as all authorized services provided in addition to the referenced scope of
work.

ARCHIDEAS, INC.
- Principal/Project Manager...........................$75/Hr
- Senior Staff........................................$60/Hr
- Staff...............................................$45/Hr

<PAGE>

[LETTERHEAD]

Beverly Bank - Wilmington
Page 4 of 4

REIMBURSABLES

Reimbursable expenses will only be incurred when necessary on this project.
These expenses are billed in addition to our professional services and may
include personal automobile travel, parking, tolls, blueprinting, long distance
telephone charges and messenger/overnight courier services. These are billable
to you at 1.10 time cost, while personal automobile travel will be charged at
the allowable IRS rate, currently $0.30 per mile.

INITIATION OF WORK

Beverly Bank may initiate the work previously described by signing where
indicated below as agreement and acceptance of this proposal and as
authorization for ARCHIDEAS, INC. to proceed. We will begin the referenced work
upon receipt of this executed document. Drawing will commence at your
direction, and will be in accordance with an agreed upon time frame that will
coordinate with you established Master Schedule.

Shawn, we appreciate the opportunity to submit this proposal and look forward to
working with you. Upon you election to proceed with this proposal, we will
execute AIA Document B141, Standard Form of Argument between Owner and Architect
- - 1987 Edition which will be used in conjunction with AIA Document A201, General
Conditions of the Contract for Construction.

AGREED AND ACCEPTED:

/s/ James W. Martin, President 2-13-96
- ------------------------------ --------------------
First National Bank Date
of Wilmington
<PAGE>

[LETTERHEAD]

April 25, 1996

Mr. Bruce Park
Executive Vice President
Chief Operations Officer
Beverly Bancorporation, Inc.
1357 W. 103rd Street
Chicago, IL 60643

RE: FEE PROPOSAL FOR BEVERLY BANK - WEST
BUILDING RENOVATION AND SITE MODIFICATION

Dear Bruce:

I have prepared the following revised fee proposal for the building renovation
and site modification to the existing Beverly Bank - West facility as described
in the conceptual design drawings dated March 16, 1996. Our proposal is for
professional services: including Architecture; Structural Engineering;
Mechanical, Electrical & Plumbing Engineering; and Civil Engineering.

I have outlined our understanding of the general characteristics of the project
based upon our previous work and recent discussions with you.

Again, we appreciate the opportunity to submit this proposal and look forward to
working with you on this project.

Sincerely,
ARCHIDEAS, INC.

/s/ Joseph A. Pasquinelli

Joseph A. Pasquinelli

<PAGE>

BEVERLY BANK- WEST
PAGE 2 OF 6

The following information outlines known characteristics of this project, and
generally defines the scope of work for the purposes of this proposal:

- Existing Site. . . . . . . . . . The site is located at the corner of
Western Ave. and 112th Street in Chicago.
It is a rectangular site which
gently slopes from the north (high
point) to the south. The building is
situated in the center of the site with
a drive-up teller function and parking
on the north side and a drive-up
commercial teller with parking on the
south side. The existing drive-up
teller function on the north currently
utilizes the alley for vehicular
exiting.

- Existing Building. . . . . . . . One-story brick building with
approximately 6,150 SF of office space.
The exterior material is painted face
brick with a stone fascia at 3 sides of
the building. The entrance is along
Western Ave. on the east side of the
building. The building features a central
banking hall with a split drive-up teller
operation.

- Renovation of the Existing
Building . . . . . . . . . . . . The new work will consolidate the drive-
up teller function by relocating the
commercial drive-up to the north side of
the building. The interior design will
reorganize the existing sales and teller
functions to accommodate a new greeter
station and respond to the new
merchandising concepts. Alternate
options for the building entrance will
be studied.

- Site Modifications . . . . . . . Develop vehicular circulation on the
north side of the building to
accommodate the existing drive-up
teller, the relocated commercial drive-
up and the addition of up to two ATM
drive-up lanes. The south side of the
building will be developed as a parking
lot.

<PAGE>

BEVERLY BANK- WEST
PAGE 3 OF 6

B A S I C S E R V I C E S
Professional services for this project shall be provided by ARCHIDEAS, INC. and
our consultants in accordance with the following scope and schedule of fees.

Preliminary Work . . . . . . . . .Hourly to a budget of $ 2,000.00
- Measure and document existing building conditions.
- Review project program requirements (i.e. entrance location
merchandising concepts, site circulation)
- Meet with the City of Chicago Building and Zoning Department to
review the conceptual design.
- Issue preliminary conceptual design for budget pricing.

Design . . . . . . . . . . . . . Hourly to a budget of $ 5,000.00
- Review applicable building codes.
- Develop floor plan and office space plan to respond to
merchandising concepts.
- Develop exterior elevation concepts.
- Develop millwork design for Greeter station and other millwork
elements (to be determined).
- Present design concepts and development
sketches for review.
- Revise design concepts per review comments.
- Coordinate with Civil, Structural and M.E.P. consultants.
- Select colors and materials for building exterior.
- Finalize site plan, building plan, and exterior
elevations.
- Coordinate with the work of the interior design consultant. (See
additional services)
- Issue design drawings for budget pricing.

Construction Documents. . . . . . . . . . . . . . . . . $18,500.00
- Produce Architectural, Civil, M.E.P. and Structural construction
drawings
and specifications.
- Produce millwork documents.
- Coordinate consultant documents.
- Issue Contract Documents for bid, permit,
and construction.

Contract Administration . . . . . . . . . . . . . . . . $ 5,000.00
- Review shop drawings and sample submittals.
- Perform six (6) site observation visits during
construction (approximately one per month).
- Interpret requirements of the contract documents.
- Prepare construction punch list.
- Prepare Certificate of Substantial Completion.

TOTAL BASIC SERVICES $30,500.00
----------

<PAGE>

[LETTERHEAD]

BEVERLY BANK - WEST
PAGE 4 OF 6

REIMBURSABLES
Reimbursable expenses will only be incurred when necessary on this project.
These expenses are billed in addition to our professional services and may
include personal automobile travel, parking, tolls, blueprinting, long distance
telephone charges, and messenger/overnight courier services. These are billable
to you at 1.10 times cost, while personal automobile travel will be charged at
the allowable IRS rate, currently $0.30 per mile.

FEE SUMMARY
Total professional fees and expenses based on the preceding scope of work are
summarized as follows:

- Architectural Services $22,200
- Civil Engineering Services $ 4,300
- Structural Engineering Services $ 1,000
- MEP & FP Engineering Services $ 3,000
-------
- TOTAL BASIC SERVICES $30,500

OPTIONAL SERVICES
The following services are often times necessary in a building program of this
scope. ARCHIDEAS, INC. will assist you in defining the actual extent of
required services and the fees involved.

- Boundary and topographic survey (required for Civil
Engineering)
- Landscape Architecture.
- Coordination of New Furniture Systems.
- Procuring the building permit from the City of Chicago.
- Attendance at zoning meetings and hearings.

RATES
The following hourly rate schedule is applicable for all authorized
Architectural services provided in addition to the referenced scope of work

ARCHIDEAS,INC.
- Principal/Project Manager . . . . . . . .$80/Hr
- Senior Staff. . . . . . . . . . . . . . .$65/Hr
- Staff . . . . . . . . . . . . . . . . $50/60/Hr

<PAGE>

[LETTERHEAD]

BEVERLY BANK - WEST
PAGE 5 OF 6

SCHEDULE
We estimate each phase described under the Scope of Work will be completed
within the time frame outlined below. Periods listed are durations for
preparation of architectural work only and are exclusive of time required for
client review.

Interval Calendar

Authorization to proceed April 29, 1996

Preliminary work 1 week Complete May 6, 1996

Design 3 weeks Complete May 27, 1996

Budget Pricing 2 weeks Complete June 10, 1996

Board Review & Approval 1 week Complete June 17, 1996

Contract Documents 4 - 6 weeks Complete July 22, 1996

Issue for Permit 1 - 3 months Permit Issued approx.
October 1, 1996

Issue for Bid 4 weeks Bids due August 19, 1996

Construction 5 months Fall of 1996 start

CONSTRUCTION PHASING OPTIONS

PHASE I Fall start 1996
- - Interior renovation including new commercial drive up window with deal drawer
- - Northside parking lot improvements

PHASE II Spring start 1997
- - Exterior renovation
- - Southside parking lot improvement

or:
PHASE I Fall start 1996
- - Install commercial drive-up window
- - Interior renovation

PHASE II Spring start 1997
- - North and south parking lot improvements
- - Exterior renovation

<PAGE>

[LETTERHEAD]

BEVERLY BANK - WEST
PAGE 6 OF 6

INITIATION OF WORK
The Beverly Bank may initiate the work previously described by signing where
indicated below as agreement and acceptance of this proposal, and as
authorization for ARCHIDEAS, INC. to proceed. We will begin the referenced work
upon receipt of this executed document. Drawing will commence at your
direction, and will be in accordance with an agreed upon time frame that will
coordinate with your established Master Schedule.

Bruce, we appreciate the opportunity to submit this proposal. Should this
outline of services vary from those you require for this project, please contact
us with further clarifications so we may more accurately address your specific
needs. Upon your election to proceed with this proposal, we will execute AIA
Document B141, Standard Form of Agreement between Owner and Architect - 1987
Edition which will be used in conjunction with AIA Document A201, General
Conditions of the Contract for Construction. Thank you for your interest in
ARCHIDEAS, INC. for professional services.

AGREED AND ACCEPTED:

/s/ illegible 4-29-96
- ----------------------------------- -------------
Beverly Bank Date

/s/ Joseph A. Pasquinelli 4.25.96
- ----------------------------------- -------------
ARCHIDEAS, INC. Date

<PAGE>

THIS INDENTURE, made this 1st day of July, 1984, between MATTESON-RICHTON BANK,
an Illinois Banking Corporation, Lessor, MATTESON-RICHTON BANK, an Illinois
Banking Corporation, as Trustee Under and Trust Agreement dtd July
1, 1984 aka Trust #74-1420, Lessee:
WITNESSETH
That Lessor, for and in consideration of the covenants and agreements
hereinafter mentioned, to be kept and performed by Lessee, has demised and
leased to Lessee, all those premises situated in the Village of Homewood in the
County of COOK and State of Illinois, known and described as follows, to wit:

Lot 1 in Richmond Subdivision being a Subdivision in the East 1/2 of the
Southeast 1/4 of Section 29, Township 36 North, Range 14, East of the Third
Principal Meridian, according to the Plat thereof recorded December 2, 1980, as
Document 25,688,712, in Cook County, Illinois.

TO HAVE AND TO HOLD the above described premises, with the appurtenances,
unto Lessee, from the 1st day of July, 1984, to and including the 30th day of
June, 2034.
AND Lessee, in consideration of the leasing of the premises aforesaid by
Lessor to Lessee, does covenant and agree with Lessor to pay Lessor, as rent for
said demised premises, at the office of MATTESON-RICHTON BANK in Matteson,
Illinois the sum as set out in Paragraph R-1 of the Rider attached.

IT IS FURTHER COVENANTED AND AGREED by Lessee that Lessee will pay or cause
to be paid all water rates, and all taxes and assessments that may be laid,
charged or assessed on said demised premises, pending the existence of this
lease, or if at any time after tax, assessment or water rate shall have become
due or payable Lessee shall neglect to pay such water rates, tax or assessment,
it may be lawful for Lessor to pay the same at any time thereafter, and the
amount of any and all such payments so made by Lessor be deemed and taken, and
are hereby declared to be so much additional and further rent for the above
demised premises due from and payable by Lessee; and may be collected in the
same manner, by distress or otherwise, as is hereinafter provided for the
collection of other rents to grow due thereon.

AND IT IS EXPRESSLY UNDERSTOOD AND AGREED by Lessee that the whole amount
of rent reserved and agreed to be paid for said above demised premises, and each
and every installment thereof, shall be and is hereby declared to be a valid and
first lien upon any and all buildings and improvements on said premises, or that
may at any time be erected, placed or put on said premises by Lessee, and upon
his interests in this lease, and the premises hereby demised; and that whenever
and as often as any installment or rent or any other amount above declared to be
deemed and taken as rent shall become due and remain unpaid for one day after
the same becomes due and payable, Lessor may sell at public auction, to the
highest bidder for cash, after having first given ten days' notice of the time
and place of such sale in some newspaper published in the county aforesaid, all
the buildings and improvements on said premises, and all the right, title and
interest acquired by Lessee under this lease to the premises herein described,
and out of the proceeds arising from such sale, after first paying all costs and
expenses of such sale, including commissions and attorney's fees, retain to
himself the whole amount due on said lease, up to the date of said sale,
rendering the surplus (if any) to Lessee, which sale shall be a perpetual bar to
and against all rights and equities of Lessee in and to the property sold.

AND Lessee further covenants with Lessor that Lessee will keep said demised
premises in a clean and wholesome condition, in accordance with the ordinances
of the city, and directions of the health officers, and that, at the expiration
of the time in this lease mentioned, Lessee will yield up said premises to the

<PAGE>

Lessor in as good condition as when the same were entered [hard copy text
cut-off at edge of page] accident, and ordinary wear excepted.

IT IS FURTHER AGREED by Lessee that it will not permit said premises, to be
used, for any purpose calculated to injure the reputation of
the premises, or of the neighborhood, or to impair the value of the surrounding
neighborhood property for present use or otherwise, provided, however, lessee
shall cause to be constructed office building in accordance with plans &
specifications heretofore approved by Lessor.
IT IS EXPRESSLY UNDERSTOOD AND AGREED by and between the parties aforesaid
that if the rent above reserved, or any part thereof, shall be behind or
unpaid, on the day of payment whereon it ought to be paid as aforesaid, of if
default shall be made in any of the covenants herein contained to be kept by
Lessee, it shall be lawful for Lessor, at his election, to declare said term
ended, and into the said demised premises, or any part thereof, either with or
without process of law, to re-enter, and Lessee or any persons occupying, in or
upon the same, to expel, remove and put out, using such force as may be
necessary in so doing, and the said premises again to repossess and enjoy, as in
Lessor's first and former estate; and to distrain for any rent that may be due
thereon, upon any property belonging to Lessee, whether the same be exempt
from execution and distress by law or not; and Lessee in that case hereby waives
all legal rights which he now has, or may have, to hold or retain any such
property under any exemption laws now in force in this State, or in any other
way; meaning and intending hereby to give Lessor a valid and first lien upon any
and all the goods, chattels, or other property belonging to Lessee as security
for the payment of said rent in manner aforesaid, anything hereinbefore
contained to the contrary notwithstanding. And if at any time said term shall
be ended at such election of Lessor as aforesaid, or in any other way, Lessee
does hereby covenant and agree to surrender and deliver up said above described
premises and property peaceably to Lessor immediately upon the termination of
said term as aforesaid; and if Lessee shall remain in possession of the same one
day after notice of such default, or after the termination of this lease, in any
of the ways above named, Lessee shall be deemed guilty of a forcible detainer of
the premises under the statute, and shall be subject to all conditions and
provisions above named, and to [illegible] and removal, forcibly or otherwise,
with or without process of law, as above stated. To comply with the Uniform
Commercial Code with respect to security interests in personal property, Lessee
agrees to [illegible] pay for the filing of such financing statements as Lessor
may require from time to time.

AND IT IS FURTHER UNDERSTOOD AND AGREED by Lessee that neither the right
given in this lease to Lessor, to collect the rent that may be due under the
terms of this lease by sale, or any proceedings under the same, shall in any way
affect the right of Lessor to declare this lease void and the term hereby
created ended as above provided under default made by Lessee.

AND Lessee hereby waives his right to any notice from Lessor of his
election to declare this lease at an end, under any of its provisions, or any
demand for the payment of rent, or the possession of premises leased herein; but
the simple fact of the non-payment of the rent reserved shall constitute a
forcible detainer as aforesaid.

Lessee further agrees not to remove any buildings or other improvements
from said premises, without written consent of Lessor, and that Lessee shall pay
and discharge all costs and attorney's fees and expenses that shall arise from
enforcing the covenants of this indenture by Lessor.

IT IS FURTHER UNDERSTOOD AND AGREED that all the conditions and covenants
contained in this lease shall be binding upon the heirs, executors,
administrators and assigns of the parties of these presents, respectively.

* and remains unpaid for thirty (30) days hereafter.

** provided Lessee is given written notice of said default and allows Lessee
one hundred eighty (180) days from the date of receipt of said notice to
cure said default.

SEE RIDER ATTACHED FOR ADDITIONAL TERMS OF THIS AGREEMENT.

This instrument is executed by the MATTESON-RICHTON BANK, not personally, but
solely as Trustee, as aforesaid. All covenants and conditions to be performed
hereunder by the MATTESON-RICHTON BANK are undertaken by it solely as Trustee,
as aforesaid, and not individually, and no personal liability shall be assured
or be enforceable against the MATTESON-RICHTON BANK by reason of any of the
covenants, statements, representations or warranties contained in this
instrument.

IN WITNESS WHEREOF, the said parties have hereunto set their hands and
seals the day and year first above written.
LESSOR: LESSEE:
MATTESON-RICHTON BANK, an MATTESON-RICHTON BANK, an Illinois
Illinois Banking Corporation Banking Corporation, Trustee UTA dated
July 1, 1984 aka Trust # 74-1420
---------------------------------------
By: /s/ By: /s/ William Walter
- ----------------------------------- ------------------------------------
President Senior Vice President

Attest: /s/ Attest: /s/
---------------------------- --------------------------------
Vice President Vice President

<PAGE>

RIDER ATTACHED TO AND FORMING A PART OF THAT CERTAIN GROUND LEASE, made JULY 1,
1984, between MATTESON-RICHTON BANK, an Illinois Banking Corporation, as LESSOR,
and MATTESON-RICHTON BANK, a National Banking Association, as Trustee Under
Trust Agreement dated JULY 1, 1984 and known as Trust No. 74-1420, as LESSEE,
covering the property commonly known as the Northwest corner of 175th Street and
Halsted, Homewood, Illinois . . . . . . . . . . . . . . . . . . . . . . . . . .
- --------------------------------------------------------------------------------

All terms and conditions of this agreement to the contrary notwithstanding,
it is hereby understood and agreed by the parties hereto as follows:

R-1: The rental for the property in question shall be as follows:

A. (1) Construction period - July 1, 1984 to January 31, 1985 - no
charge.

(2) February 1, 1985 to January 31, 1986 $27,000 per year.

(3) February 1, 1986 to January 31, 1987 $28,000 per year.

(4) September 1, 1987 to August 31, 1988 $29,000 per year.

(5) September 1, 1988 to August 31, 1989 $30,000 per year.

Payments shall be made quarterly on February 1st, May 1st, August 1st,
November 1st of each respective year.

B. On December 1, 1988, Lessor will employ an MAI Certified
Appraiser to appraise the value of the property in question. The
annual rental due commencing February 1, 1989 shall be ten (10%)
percent of said appraised value. That annual rental amount shall
increase at the rate of $1,000.00 per year over each of the
following two (2) years (i.e., February 1, 1990 to January 31,
1991, and February 1, 1991 to January 31, 1992), at which time
another appraisal will be obtained to determine the new rental
amount. This process will be repeated each three (3) years
during the life of this Lease Agreement, until and unless changed
by mutual agreement of the parties.

PROVIDED, HOWEVER, if the Lessee at any time disagrees with the
opinion of the Lessor's designated appraiser, then in that event,
the Lessee may engage the services of its own MAI designated
Appraiser and present its opinion of value to the Lessor for
Lessor's approval. If Lessor and Lessee cannot agree as to value
by each of its designated appraisers, then in that event a third
MAI designated appraiser shall be mutually chosen by the parties
and the new annual rental rate will be established at ten (10%)
percent of the average of the three (3) appraisals.

PROVIDED HOWEVER, anything to the contrary contained herein
notwithstanding, it is hereby understood and agreed by the
parties hereto as follows:
<PAGE>

(1) The minimum annual rental shall be $27,000.00.

(2) The amount of rental increase, if any, based upon the
appraisals as contemplated herein, shall not exceed ten
(10%) percent of the then previous annual rate as may be in
effect from time to time.

C. All appraisal costs shall be shared equally by the parties
hereto.

R-2: It is understood and agreed by and between the parties hereto that
Lessee has submitted to Lessor for its approval and lessor has
herewith approved plans and specifications for the construction on the
leased property of a building suitable for use as an office building.

R-3: Lessor herein agrees to execute mortgage documents as required by
Lessee's Mortgagee and in so doing will subordinate its fee interest
to the lien of Lessee's Mortgagee.

R-4: Lessee shall pay in addition to the rent heretofore provided, all of
said mortgage payments and all of the costs of maintenance and repair
of the building and improvements as contemplated, including all
charges for gas, electricity, light, heat, power, telephone, and real
estate taxes and special assessments, if any, rendered or supplied
upon or in connection with the property and Lessee shall indemnify the
Lessor against all liability or damage on such account, it being
understood that all expenses of operating the building shall be
chargeable to and paid by Lessee, it being the intention of the
parties that all improvements on the premises are to be paid by the
Lessee and that the Lessee is entitled to the depreciation of the
building and improvements and the expenses of operating the building
and improvements for income tax purposes. All leasehold improvements
shall belong to the Lessee.

R-5: The Lessee shall, at all times during the term of this lease at its
own expense, put in, maintain in thorough repair and good and safe
condition, all buildings and improvements on the leased property,
whether or not necessitated by wear, tear, obsolescence or defects
latent or otherwise. The Lessee shall also, at its own expense, put
and maintain in thorough repair and in good and safe condition and
free from dirt, snow, ice, rubbish and other obstructions and
encumbrances, the sidewalks, area chutes, sidewalk hoists, railings,
gutters, and curbs in front of and adjacent to the leased ground, and
shall hold Lessor harmless from any and all liabilities arising as a
result of the Lessee's failure to fulfill the above obligations.

R-6: Lessee, at its own expense, shall comply with all the laws, orders and
regulations of Federal, State and Municipal authorities, and with any
direction of any public office, pursuant to Law, which shall impose
any duty upon the Lessor or the Lessee with respect to the leased
property. Lessee, at its sole expense, shall obtain all licenses or
permits which may be required for the conduct of its business within
the terms of this Lease, or for the making of repairs, alterations,
improvements, or additions, and the Lessor, where necessary, will join
with the Lessee in applying for all such permits or licenses.

-2-

<PAGE>

R-7: From the date hereof and during the term of the Lease, the Lessee shall
keep the improvements and the ground insured, at its sole cost and
expense against claims for personal injury or property damage under a
policy of general public liability insurance, with limits acceptable
to the Lessor. Such policy shall name the Lessor and the Lessee as
the insureds. Within ten (10) days after the date hereof the Lessee
shall deliver to the Lessor, Certificates of Insurance certifying that
such insurance is in full force and effect. Additionally, throughout
the term of this Lease, Lessee shall pay all premiums for insurance
coverage on the leased property, including fire and windstorm
insurance in such amounts and with such companies as is agreed between
the parties hereto.

R-8: If the leased ground, or any part thereof, is taken by eminent domain,
this Lease shall expire on the date that the leased property shall be
so taken, and the rent shall be apportioned as of that date. All
proceeds received from any condemnation award shall be first used to
liquidate the balance due on the mortgage. The balance of any
proceeds shall be divided as follows: Lessee shall receive the
leasehold value of the estate plus the value of the improvements, and
the Lessor shall receive the value of the fee subject to the ground
lease. The parties hereto hereby expressly waive any right to share
in any award other than on the terms above set forth.

R-9: It is understood and agreed by and between the parties hereto that the
Lessee may sublet all or portions of the improvements to be built on
the leased ground, for the remainder of the Lease term, without the
approval of the Lessor. Lessee has an absolute right to sublease all
or any portion of the premises to any subtenant upon such terms and
conditions as are solely determined by the Lessee. It is further
agreed that any obligation of the Lessee may be performed by any of
its subtenants with the same force in effect as if performed by the
Lessee itself.

R-10: Lessor shall not be liable for any personal injury to the Lessee or to
its officers, agents and employees, or to any other occupant or any
part of the improvements constructed by Lessee, or for any damage to
any property of the Lessee, or of any other occupant of any other part
of the improvement on the leased property, irrespective of how such
injury or damage may be caused, whether from action of the elements or
acts of negligence of the Lessor, or occupants of adjacent property.

R-11: Lessee shall indemnify the Lessor against all liabilities, expenses
and losses incurred by the Lessor as a result of (a) failure by the
Lessee to perform any covenant required to be performed by the Lessee
hereunder; (a) any accident, injury or damage which shall happen in or
about the leased property or appurtenances or on or under the
adjoining streets, sidewalks curbs or vaults, or resulting from the
condition, maintenance, or operation of the leased property, or of the
improvements thereon, or of the adjoining streets,

-3-

<PAGE>

sidewalks, curbs or vaults; (c) failure to comply with any
requirements of any governmental authority; and (d) any mechanic's
lien or security agreement filed against the leased property, any
equipment therein, or any materials used in the construction or
alteration of any building or improvement thereon.

R-12: This Lease contains the entire agreement between the parties and
cannot be changed or terminated orally.

R-13: It is the purpose and intent of the Lessor and Lessee that the rent
hereinabove provided to be paid to the Lessor by the Lessee be
absolutely net to Lessor so that this Lease shall yield net to Lessor
the rent as hereinabove provided to be paid in each month during the
term of this Lease and that all costs, expenses, and obligations of
every kind or nature whatsoever relating to the demised premises or
any improvements thereon which may arise or become due during the term
of this Lease shall be paid by the Lessee and that the Lessor shall be
indemnified and saved harmless by the Lessee from and against the
same.

R-14: Parties understand and agree that the relationship between them is
that of Landlord and Tenant and the Lessee specifically acknowledges
that all statutory proceedings in the State of Illinois regulating the
relationship of Landlord and Tenant respecting collection of rent or
possession of the premises accrue to the Landlord hereunder.

R-15: Should the Lessor, during the lease term, elect to sell all or any
portion of the leased premises, whether separately or as a part of the
larger parcel of which the leased premises are a part, the Lessee
shall have the right of first refusal to meet any bona fide offer of
sale on the same terms and conditions of such offer. Upon the
Lessee's failure to meet such bona fide offer within thirty (30) days
after notice thereof from the Lessor, the Lessor shall be free to sell
the premises or portion thereof to such third person in accordance
with the terms and conditions of his offer.

R-16: Lessor herein shall be entitled to receive copies of any and all
notices, including but not limited to, Notices of Default from
Lessee's mortgagee.

R-17: Lessor hereby reserves the right to cure any default that may exist
from time to time with Lessee's mortgagee or with respect to payment
of real estate taxes and insurance premiums. Further, Lessor reserves
the right to set off any rent due to Lessee under the terms and
conditions of that certain Office Lease dated JULY 1, 1984 by and
between Halsted Investment Group, as LESSOR, and MATTESON-RICHTON
BANK, an Illinois Banking Corporation, as LESSEE against any sums so
advanced by Lessor hereunder required to cure any of Lessee's
defaults.

R-18: If the Lessee shall fail, refuse, or neglect to make any of the
payments required, then the Lessor may pay the same, and the amount or
amounts of money so paid, including reasonable attorneys' fees and
expenses which might have been reasonably incurred because of or in
connection with

-4-
<PAGE>

such payments, together with interest on all such amounts, at the
rate of 13% per annum, shall be repaid by the Lessee to the Lessor,
upon the demand of the Lessor, and the payment thereof may be
collected or enforced by the Lessor in the same manner as though
such amount were an installment of rent specifically required by
the terms of this Lease to be paid by the Lessee to the Lessor,
upon the day when the Lessor demands repayment thereof or
reimbursement therefor of and from the Lessee.

R-19: Anything to the contrary contained herein notwithstanding, the parties
hereto understand and agree that real estate taxes for the first and
last years shall be prorated proportionately between Lessor and Lessee.

R-20: This Lease is freely assignable, but no assignment or transfer
shall be valid unless the assignee shall expressly assume and agree
to perform each and every covenant of this Lease which, by the
terms hereof, the Lessee agrees to keep and perform, which
assumption shall be evidenced by written instrument, nor shall such
assignment be deemed valid, unless the assignment and assumption
agreement are delivered to the Lessor.

R-21: If the Lessee's interest in and to this Lease Agreement is
assigned, the Lessee's liability for the performance of any of the
terms, conditions, covenants, and agreements contained herein to be
performed by the Lessee, shall remain in full force and effect.

R-22: Nothing herein shall be construed as authorizing the Lessor to
declare this lease in default, however, until (1) any nonpayment
(e.g., rent, taxes, insurance, mortgage payments) in violation of
the terms of this lease shall have continued for thirty (30) days
after the respective due dates for payment AND (2) Lessee is given
one hundred eighty (180) days from the date of receipt of said
notice to cure said default. After expiration of said one hundred
eighty (180) day period Lessor may pursue any and all remedies
available either at Law or Equity.

IN WITNESS WHEREOF, the parties hereto have set their hands
and seals the day first above written.

LESSOR: LESSEE:
MATTESON-RICHTON BANK, an MATTESON-RICHTON BANK, an Illinois
Illinois Banking Corporation Banking Corporation, as Trustee Under
Trust Agreement dated July 1, 1984
By: /s/ and known as Trust No. 74-1420
--------------------------------
President

Attest: /s/ By: /s/ William Walter
---------------------------- ------------------------------------
Vice President Senior Vice President

Attest: /s/
--------------------------------
Vice President

This instrument is executed by MATTESON-RICHTON BANK, not personally but
solely as Trustee, as aforesaid. All covenants and conditions to be
performed hereunder by MATTESON-RICHTON BANK are undertaken by it solely as
Trustee, as aforesaid and not individually, and no personal liability shall
be assured or be enforceable against MATTESON-RICHTON BANK by reason of any
of the covenants, statements, representations or warranties contained in this
instrument.

-5-

<PAGE>

No. 23 GEORGE E. COLE
OFFICE LEASE August, 1966 LEGAL FORMS
----------------------------------------------------------------
----------------------------------------------------------------

OFFICE LEASE

THIS INDENTURE, Made June 1, 1985
between: HALSTED INVESTMENT GROUP

Lessor and
MATTESON-RICHTON BANK, an Illinois Banking Corporation,

Lessee.

WITNESSETH, That in considertaion of the Lessee's
covenants and agreements herein contained, the Lessor
hereby demises and leases unto the Lessee the premisees
known and described as follows:

The room or rooms known and designated as the first floor of the
building knows an the Matteson-Richton Bank Building,

at number 17450 South Halsted Street in Homewood: State
of Illinois, or as shown on the floor plan attached
hereto and initialed by the parties.

TO HAVE AND TO HOLD the same for a term of Fifteen (15)
commencing July 1, 1985
and expiring June 30, 2000, unless previously terminated, as
hereinafter provided.

IN CONSIDERATION of said demise, the lessee covenants and
agrees with the lessor as follows:

RENT 1. To pay as rent for said premises, for said term,
the sum of See Rider Attached Dollars in lawful money of
the United States of America, payable in monthly
installments of

See Rider Attached

Dollars, each in advance upon the first
day of every calendar month of the term hereof, and at
the same rate for fractions of a month if said term shall
be terminated, as hereinafter provided, on any day other
than the last day of the month, and all of said payments
shall be made at the office of in Chicago, or at such
place as the lessor may from time to time designate.

USE 2. The lessee shall use and occupy said promises for
professional office space and for no other use or
purpose; and the lessee shall, at his own expense, keep
said premises in good repair and tenantable condition
during said term, replacing at his own expense, any and
all broken glass in or about said premises with glass of
the same size and quality, adn replacing signs thereon.

CONDITION 3. No representations, except such as are endorsed
OF hereon, have been made to the lessees respecting the
PREMISES condition of said premises. The taking posession of said
premises by the lessee whall be conclusive evidence as
against the lessee that said premises were in good and
satisfactory condition when prssession of the same was so
taken; and the lessee will, at the termination of this
lease by lapse of time or otherwise, return said premises
to the lessor in as good condition as when received, loss
by fire and ordinary wear excepted.

TRANSFER 4. The lessee shall not assign this lease or any
OF interest hereunder and will not sublet said premise or
LESSEE'S any part thereof; and will not permit the use of said
INTEREST premises by any other parties than the lessee and the
agent and servants of the lessee, except with the written
consent of the lessor. If the lessee shall at any time
during the term hereby demised become insolvent, or if
proceedings in bankruptcy shall be instituted by or
against the lessee, or if a receiver or a trustee shall
be appointed of the lessee's property, or if the lessee
shall make an assignment for the benefit of creditors, or
if this lease shall, by operation of law, devolve upon or
pass to any person or persons other than lessee, then and
in each of said cases it shall and may be lawful for the
lessor, at the lessor's election, to forfeit this lease
and re-enter said premises and take possession thereof
as of its former state without the service of any notice
or demand whatever.

REPAIRS 5. The lessor may enter said premises at all
AND reasonable times for the purpose of making such repair or
ALTERATIONS alterations therein as it shall deem necessary for the
safety, preservation or improvement of said premises or
said building. The lessee will lmake no alterations in
or additions to said premises without first obtinaing the
lessor's written consent and lessee shall submit to
lessor upon request paid bills, contractor's affidavits
and full and final lien waivers for any alterations or
repairs made by lessee. All erections, additions,
fixtures and improvements, whether temporary or permanent
in character, (except only the movable office furniture
of the lessee), made in or upon said premises, either by
the lessor or the lessee, shall be the lessor's property,
and shall remain upon said premises at the termination of
this lease, by lapse of time or otherwise.

<PAGE>

ceedings, including the issuance of execution upon any
such judgment, and to stipulate [illegible] erroror appeal shall
be prosecuted from such judgment or judgments, nor any bill
[illegible] proceedings of any kind taken in law or equity to
interfere in any way with the operation of such judgment
or judgments or of execution issued thereon and to consent
that execution may immediately issue thereon.

FIRE AND 18. If, during the life of this lease, the premises
CASUALTY shall be so injured by fire, explosion or other
casualty, as to be untenantable, then unless said injury
be repaired within sixty days thereafter either party
hereto may cancel this lease, in which case rent shall be
apportioned and paid to the day of such fire, explosion
or other casualty.

REMEDIES 19. All rights and remedies of the lessor under this
CUMULATIVE lease shall be cumulative, and none shall exclude any other
rights and remedies allowed by law.

SUCCESSORS 20. Each of the provisions of this lease
AND shall extend to and shall, as the case may require, bind
ASSIGNS or inure to the benefit of, not only the lessor and the
lessee, but also their respective successors, legal
representatives and assigns.

IN WITNESS WHEREOF; The parties hereto have hereunto set
their hands and affixed their respective seals, the day
and year first above written.

LESSOR:
FLOYD M. PHILLIPS & CO., as Agents
for HALSTED INVESTMENT GROUP
ATTEST: --------------------------------[SEAL]

- ----------------------------------- By: /s/ [illegible]
-----------------------------[SEAL]
LESSEE:
MATTESON-RICHTON BANK, an Illinois
Banking Corporation,
--------------------------------[SEAL]

- ----------------------------------- By: /s/ [illegible]
-----------------------------[SEAL]

RULES AND REGULATIONS

(Applicable only to the premises demised by the within lease and to the
tenants thereof.)

1. No sign, picture, advertisement or notice shall be displayed,
inscribed, painted or affixed on any part of the outside or inside of said
building or on or about the premises hereby demised, except on glass of the
doors and windows of said premises and on the directory board of the
building, and then only of such color, size, style and material as shall be
first specified by the lessor in writting on this lease.

2. The tenants shall not (without the lessor's written consent)
put up or operate any steam engine boiler, electric motor, machinery or stove
upon the premises or carry on any mechanical business thereon, or use
flammable fluid therein. No article deemed extra hazardous on account of
fire and or explosives shall be brought into said premises.

3. No additional locks shall be placed upon any doors of the
premises and lessees shall not permit any duplicate keys to be made (all
necessary keys will be furnished by the lessor), but if more than two keys
for any door-lock are desired, the additional number must be paid for by the
lessee. Upon the termination of this lease the lessees shall surrender all
keys of the premises and of the building and give to the lessor the
explanation of the combination of all locks on vault doors in the premises.

4. All safes, furniture, boxes and other bulky articles shall be
carried up or into the premises at such times and in such manner as shall be
specified by the lessor; the lessor reserves the right to prescribe the
position of all safes and other heavy articles, and any damage done to the
building or to other tenants in the building by taking in or pulling out a
safe or from overloading the floor in any way shall be paid by the lessee.

5. Lessor agrees to furnish hot water in the tubs, basins,
pipes and faucets provided for such purposes during the term of this lease and
heat will be furnished at reasonable hours if the weather and temperature
require it, from the first day of October till the thirtieth day of April of
the succeeding year for the use of lessee, except when prevented by strike,
accident, or other cause beyond the control or prevention of lessor, and
except during the repairing of the apparatus provided in said building for
the furnishing of said water and heat. Lessor shall not be held liable for
any injury or damage whatsoever which may arise or accrue from his failure to
furnish cold or hot water heater, elevator service, regardless of the cause
of said failure all claims for such injury or damage being hereby expressly
waived by lessee.

6. All janitor work and the caring for the demised premises
shall be paid for by the lessor and no person other than the janitor of the
building shall, without the lessor's consent, be employed by the lessees for
the purpose of cleaning or taking charge of said premises. Any person or
persons so employed by the lessees, with the lessor's consent, shall be
subject to and under the control and direction of the janitor but not as
agent, or servant of said janitor or of the lessors. The janitor of said
building shall at all times keep a pass key and be allowed admittance to said
premises, to cover any emergencies of fire that may arise and to enable him
to examine said premises from time to time.

7. The lessor and its agents shall have the right to enter the
demised premises at all reasonable hours to examine or exhibit the same, and
may place and keep on the windows and doors of said premises "for rent"
notices at any time.

8. If the lessees desire telegraph, telepone, or electric
connections the lessor will direct the electrician as to where and how the
wires are to be introduced and without such directions no boring or cutting
for wires will be permitted.

9. If the lessees desire awnings or shades or drapings either
inside or outside of the windows, they must be erected at the expense of
the lessees, and must be of such shape, color, material and make as may be
prescribed by the lessor.

10. The lessees shall not allow anything to be placed against or
near the glass in the partitions between the premises leased and the halls or
corridors of the building which shall diminish the light in the halls or
corridors.

11. Water on said premises shall not be wasted by the lessees or
their employees by tying or wedging back the faucets of the washbowls or
otherwise. Neither the lessees nor their employees shall undertake to regulate
the thermostats which control the heat; but shall report to the office of the
building whenever the [illegible] are not working properly or satisfactorily.

12. No bicycle or other vehicle and no dogs or other animals
shall be allowed in the offices halls, corridors or any other parts of said
building.

13. The lessor reserves the right to make such other and further
reasonable rules and regulations as in its judgment may from time to time be
needful for the safety.

14. The building shall be opened at _________ and closed at
______ daily, or at such hours as the lessor may from time to time determine.
Before and after said hours admittance may be claimed only by tenants known
to the watchman. Elevator service will be furnished daily (Sundays and
holidays excepted), from _______ to ________ Elevator service will be
furnished on holidays and Sundays as will reasonably meet the needs of
tenants.

15. Ice, mineral waters, newspapers, towels, or other supplies
shall not be furnished by other persons than those allowed by lessor.

16. The lessees shall not be permitted to canvass among tenants
of the building.

17. The lessees shall at their expense, provide artificial light
for the employees of the lessor while doing janitor service or other cleaning
and in making repairs or alterations in said demised premises.

18. Tenants must close their windows to secure protection against
the weather, and shall be responsible for any damage growing out of the
neglect of this rule. Nothing shall be thrown by the tenants, their clerks or
servants, out of the windows of the building.

19. The lessees shall list all articles to be taken from the
building upon a blank furnished by the lessor. Such list shall be presented
at the office of the building for approval before it will be accepted by the
watchman.

<PAGE>

GUARANTY

IN CONSIDERATION that the within lease was executed and delivered to the lessee
within named at request, and in further consideration
--------------------------
of one dollar to paid by the lessee above named,
---------------------
hereby guarantee to the said lessor, its successors and assigns,
- ------------
the performance by the said lessee of all the obligations of the said lessee
under the above lease, and will pay all the lessor's
----------------------
expenses, including attorney's fees, incurred in enforcing said obligations, or
incurred in enforcing this guaranty; and hereby waive notice
-----------------
of any default by the lessee under the terms of said lease and consent to any
extension of time for the payment of money due under said lessee or to any other
indulgences granted thereunder to said lessee by the lessor.

------------------------------ (Seal)

ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby assign all right,
------- --------
title and interest in and to the within lease unto
-------------------------
successors, legal representatives, heirs and assigns, and in
- -------------
consideration of the consent to this assignment by the lessor, the undersigned
guarantee the performance by said of all the
-------- ---------------
obligations of the lessee under said lease, and hereby waive notice of any
subsequent assignment of the said lessee or any default by said assignee
- ---------------- under the terms of said lease, and the undersigned hereby
consents to any extensions of time for the payment of money due under said
lease or other indulgences granted by said lessor to said assignee.

Dated this day of 19
-------------------- ---------------- ------------------

------------------------------ (Seal)

IN CONSIDERATION of the above assignment and of the consent of the lessor
thereto, the undersigned hereby assume , the within lease, and
-------------
agree to make all the payments yet to be made, and to perform and
--------------
abide by all obligations of the lessee under the within lease.

Dated this day of 19
-------------------- ---------------- ------------------

------------------------------ (Seal)

CONSENT TO ASSIGNMENT

We hereby consent to the assignment of the within lease to
---------------
, on the express condition, however, that
- -----------------------------------
both the assignors and the assignee shall be and remain liable
-----------------
for the prompt payment of the rent and for the performance of all the
obligations of the lessee under said lease, and that no further assignment of
said lease, and no subletting of the premises or any part of the premises, by
said lease deemed, shall hereafter be made.

Dated this day of 19
-------------------- ---------------- ------------------

------------------------------ (Seal)

OFFICE LEASE

FROM

- --------------------

GEORGE E. COLE
LEGAL FORMS

<PAGE>

RIDER ATTACHED TO AND FORMING A PART OF THAT CERTAIN LEASE AGREEMENT
made June 1, 1985, by and between FLOYD M. PHILLIPS & CO., as Agents
for Halsted Investment Group, LESSOR, and MATTESON-RICHTON BANK, an
Illinois Banking Corporation, LESSEE, as follows:
---------------------------------------------------------------------

All terms and conditions of this agreement to the contrary
notwithstanding, it is hereby understood and agreed by the parties hereto as
follows:

R-1: Notwithstanding any other provisions contained in this lease, in the
event the Lessee is closed or taken over by the banking authority of
the State of Illinois, or other bank supervisory authority, the Lessor
may terminate the lease only with the concurrence of such banking
authority or other bank supervisory authority, and any such authority
shall in any event have the election either to continue or to
terminate the lease: Provided, that in the event this lease is
terminated, the maximum claim of Lessor for damages or indemnity for
injury resulting from the rejection or abandonment of the unexpired
term of the lease shall in no event be in an amount exceeding the rent
reserved by the lease, without acceleration, for the year next
succeeding the date of the surrender of the premises to the Lessor,
or the date of re-entry of the Lessor, whichever first occurs,
whether before or after the closing of the bank, plus an amount equal
to the unpaid rent accrued, without acceleration up to such date.

R-2: As additional consideration, the Lessee agrees to pay as additional
rent for use and occupancy its proportionate share of any increase in
the real estate taxes in excess of $1.00 per square foot to the Lessor
in direct proportion of the amount of square footage leased by the
Lessee. The proportionate share of taxes provided for in this
paragraph shall be computed on the basis of the ratio of the leased
premises, (1,806 square feet) in relation to the net rentable square
foot area of the building (15,962 square feet) times the total amount
of the real estate tax bill for the gross square foot area of the
entire property including common areas. The Lessee's ratio of square
foot area in relation to the total rentable area of the building is
computed as 11.3%.

R-3: The Lessee's space will be finished with standard carpeting, ceilings,
lay-in light fixtures and masonry exterior walls. Lessee will also be
allowed $5.00/square foot of first floor area for upgrading standard
construction and/or finishing interior areas.

R-4: If the Lessee desires alterations and improvements in excess of or
other than the work heretofore provided for, the Lessor shall do same
at the Lessee's expense. All work shall be approved by Lessor, which
approval shall not be unreasonably withheld, and further provide that
no part of the work shall be of a character which will require changes
outside the premises or will adversely affect the legality of the use
of the building, or the cost of insurance for the building. The
Lessee shall reimburse the Lessor from time to time upon demand for
the cost of Lessee's additional work including the cost of
architectural or engineering, if any, and said costs shall be
considered as rent under the lease terms.

<PAGE>

R-5: The Lessee shall be responsible for the cost of all heating, air-
conditioning and electrical service used within the demised premises.
Electrical service shall include but is not limited to, the following:
wall outlets, lighting fixtures, lamps and all office equipment.

R-6: Lessee shall maintain all carpeting installed by Lessor, and agrees to
shampoo, change or replace, in the event of damage by Lessee, save
ordinary wear and tear. Lessee further agrees to have all carpeting
professionally cleaned upon vacating the demised premises.

R-7: Lessor shall supply the initial bulbs for all ceiling lighting
fixtures. All replacement of bulbs are to be supplied and installed
by Lessee.

R-8: Lessee shall be responsible for the payment of all inspection fees,
license fees or business operating fees that may be required by the
Village, City or any other governmental agency that pertains
specifically to the Lessee's rented area.

R-9: Lessor shall provide rest-room facilities for men and women and a
water fountain on each floor.

R-10: All window treatment installed by Lessee, consisting of draperies,
blinds, etc., shall be in a solid off-white color or lining, on that
side exposed to public streets or areas.

R-11: Rental for the premises shall be as follows:

1st Month through and including 12th month of occupancy:
12 installments of $1,806.00 per installment, due on the First
day of each and every calendar month.

13th Month through and including 24th month of occupancy:
12 installments of $1,956.50 per installment, due on the First
day of each and every calendar month.

25th Month through and including 36th month of occupancy:
12 installments of $2,107.00 per installment, due on the First
day of each and every calendar month.

37th Month through and including 48th month of occupancy:
12 installments of $2,182.25 per installment, due on the First
day of each and every calendar month.

49th Month through and including 60th month of occupancy:
12 installments of $2,257.50 per installment, due on the First
day of each and every calendar month.

The lease rate for the remaining ten (10) years of the initial lease
term will be as follows:

Sixty (60) days prior to the expiration of the Fifth year of this
lease agreement, the parties shall attempt

-2-
<PAGE>

to negotiate a mutually acceptable lease rate for future years.
If the parties cannot determine a mutually agreeable lease rate
then, in that event, the most recent annual lease rate will be
increased by fifty (50%) percent of the most recent increase in
the Consumer Price Index for Chicago All Urban Consumers as
published by the Bureau of Labor Statistics of the U.S.
Department of Labor.

This process shall be repeated annually unless changed by mutual
agreement of the parties.

In all events, the minimum annual rental shall be $27,090.00.

R-12: The Lessee may sublet all or portions of the leased property for the
remainder of the term with the approval of the Lessor, which approval
shall not be unreasonably withheld, provided that the business or
occupation of the subtenant is not extra-hazardous, disreputable, or
illegal, and provided further that the Lessee shall remain primarily
liable for the payment of the rent herein reserved and for the
performance of all the other terms of this lease required to be
performed by the Lessee.

R-13: This lease is subject and subordinate at all times to the lien of
existing and future mortgages on the leased property. Although no
instrument or act on the part of the Lessee shall be necessary to
effectuate such subordination, the Lessee will, nevertheless, execute
and deliver such further instruments subordinating this lease to the
lien of all such mortgages as may be desired by the mortgagee.

R-14: Lessee shall defend, indemnify and hold Lessor harmless from and
against any claim, loss, expense or damage to any person or property
in or upon the demised premises or any area allocated to or used
exclusively by Lessee or its agents, employees, or invitees, arising
out of Lessee's use or occupancy of said premises, or any act or
neglect of Lessee or Lessee's servants, employees, or agents, or any
change, alteration or improvement made by Lessee in the demised
premises.

R-15: A. The term of this lease may be extended, at the option of the Lessee,
for two (2) successive periods of five (5) years being herein
sometimes referred to as an extended term.

B. The option to extend shall be exercised by the Lessee by giving
written notice to the Lessor at least sixty (60) days prior to the
expiration of the then existing term.

Each extended term shall be upon the same terms, covenants and
conditions as provided in this Lease for the initial term, except as
specifically set forth in number R-15-C below. The Lessee may not
extend this Lease beyond the second extended term. Any termination of
this lease during the initial or any extended term shall terminate all
rights of any further extension hereunder.

C. For each lease year of any of the extended terms provided for in this
lease, Lessee shall pay to Lessor a net annual

-3-

<PAGE>
rental at a rate per annum equal to the amount of annual rental due
and payable for the final lease year immediately prior to the
expiration of the initial fifteen (15) year term, hereinafter referred
to as "Base Year Renewal"; plus such additional amount, if any, as
shall be sufficient to give to the Lessor for each lease year during
such extended terms a total net rent equal to the purchasing power of
the base year rental during the final year of the initial fifteen (15)
year term.

D. Within 30 days after the publication and issuance thereof, the Lessor
shall deliver to the Lessee a true copy of the Consumer Price Index
(the "Index"), for Chicago, Illinois, for all terms of the Bureau of
Labor Statistics All Urban Consumers of the United States Department
of Labor for the month ending the final month of the 14th year of the
initial fifteen (15) year term hereunder (Base Year), for the month
ending the final month of the final (15) year of the initial fifteen
(15) year term hereunder, and for the corresponding month in each
lease year thereafter. If the Index shows a decrease in the
purchasing power of Base Year Rental, the Lessor, as soon as possible
after the delivery of each Index subsequent to the Index for the
base month, shall furnish the Lessee with the computation of
the additional amount, if any, to be paid by the Lessee for the lease
year in question. Such additional amount shall be divided and paid in
12 equal monthly installments during each such lease year. Pending
the determination of the additional amount, if any, to be paid by the
Lessee, the Lessee shall continue to pay the then existing rent and
when the additional amount has been determined, the Lessee, on the
first day of the month immediately following the furnishing by the
Lessor to the Lessee of the computation thereof, shall pay to the
Lessor the number of installments that shall have elapsed from the
commencement of the lease year in question up to and including the
first day of such month.

E. If at the time required for the determination of the additional rent
the Index is no longer published or issued, or if at that time either
the Lessor or the Lessee is of the opinion that the Index does not
accurately reflect, in relationship to the base date, the purchasing
power of the Base Year Rental, the parties shall use such other index
as is then generally recognized and accepted for similar
determinations of purchasing power. If the parties are unable to
agree on the selection of an index which would most accurately carry
out the intent hereof, or if there is a dispute with respect to the
computation of the additional rent as herein provided, then the issue
with respect thereto shall be determined by arbitration.

LESSOR: LESSEE:
FLOYD M. PHILLIPS & CO. MATTESON-RICHTON BANK, an
as Agents for Halsted Investment, Illinois Banking Corporation
Group

By: /s/ By: /s/
-------------------------------- ------------------------------------

<PAGE>

LEASE ADDENDUM AGREEMENT

This Agreement, made and entered into this 21st day of January, 1994, by and
between Halsted Investment Group, Lessor, and Beverly Bank-Matteson for
Matteson-Richton Bank, Lessee, does hereby set out the following:

1. This Agreement is made a part of the Leases as outlined below:

- Lease dated 6/1/85, Suite 1W (1,860/sf), at 17450 South Halsted Street,
Homewood, IL;

- Lease dated 7/1/84, Suite 1E (3,566/sf), at 17450 South Halsted Street,
Homewood, IL; and,

- Lease dated 9/1/86, Drive-In Facility (400/sf), at 17450 South Halsted
Street, Homewood, IL.

2. Monthly rental payments for the period of 9/1/93 through 8/31/94 shall be
extended through 12/31/94 at the same rental rate. The Lease term as
outlined in the Leases in Paragraph 1 shall be adjusted to commence January
1, 1995 and expire December 31, 2000, and all rental payments shall be
adjusted accordingly.

3. The Lease term has been extended for the premises as shown in Paragraph 1
of this Agreement for an additional eight (8) year term, commencing January
1, 2001 and expiring December 31, 2008.

4. Rental for the adjusted Lease term and the Lease Extension term shall be
computed for each 12 month term using a three (3%) percent annual increase.

5. As part of this Agreement, Lessor agrees to reimburse the Bank for thirty
(30%) percent of the cost associated with the exterior renovation scheduled
for the spring of 1994, not to exceed $39,000, whichever is less.

6. All other terms, conditions and provisions of the Leases outlined in
Paragraph 1 of this Agreement shall remain in effect during the adjusted
and extended Lease terms.

LESSOR:
Halsted Investment Group

By: /s/ Wilbert S. Zager
--------------------------------
Wilbert S. Zager, President
Floyd M. Phillips & Co., Inc., Agents

LESSEE:
Beverly Bank-Matteson for
Matteson-Richton Bank

By: /s/
Pres & CEO
------------------------------------

<PAGE>

SHOPPING CENTER LEASE

SECTION 1. BASIC LEASE PROVISIONS.

The following terms shall have the meanings hereinafter set forth when used
in this Lease:

(A) LEASE DATE:

(B) LANDLORD: LaSalle National Trust, N.A., as Trustee
u/t/a dated July 14, 1988 and known as
Trust No. 113367

LANDLORD'S ADDRESS: 828 Nerge Road
Roselle, Illinois 60172

TENANT'S ADDRESS: 1357 West 103rd Street
Chicago, Illinois 60643

(D) LEASED PREMISES: Approximately 60,000 square feet,
located at the southwest corner of 143rd
and Pinewood, Orland Park, Illinois, as
shown on the Site Plan attached hereto
as Exhibit A.

THE SHOPPING CENTER: Pinewood Plaza
Orland Park, Illinois

(E) COMMENCEMENT DATE: The earlier to occur of fifteen (15)
days after the Possession Date, as
defined in Section 11 (I) hereof, or the
date that Tenant opens the Leased
Premises for business.

(F) LEASE TERM: Twenty (20) Lease Years (the "Original
Term") plus four (4) five (5) year
options (each an "Option Term")

-1-

<PAGE>

(G) ANNUAL BASE RENT: Annual Base Rent shall consist of two
(2) components:

(i) Ground Rent; and
(ii) Building Rent, each in the amounts
set forth below:

Lease Year Annual Ground Rent
---------- ------------------

1 - 3 $30,000
4 $31,500
5 $33,000
6 $35,000
7 $40,000
8 $45,000
9 $50,000
10 $55,000
11 - 15 $60,000
16 - 20 $69,000
21 - 25 $79,350 (Option)
26 - 30 $91,252.50 (Option)
31 - 35 $104,940.38 (Option)
36 - 40 $120,681.32 (Option)

Lease Year Annual Building Rent
---------- --------------------

1 - 3 Twelve percent (12%) of the aggregate cost of the (i) Building
Costs and, (ii) the cost of the Leased Premises Site Work (as
defined in Section 11(A) hereof).

For the fourth Lease Year and each Lease Year thereafter, Annual Building
Rent shall increase by an amount equal to three percent (3%) of the Annual
Building Rent for the immediately preceding Lease Year.

(H) PERMITTED USE: A retail banking facility or savings and
loan association, including, but not
limited to, the deployment of one or
more ATMS, both shared and proprietary,
and/or any other interactive machines,
as Tenant may from time to time deem
appropriate; the sale of securities and
other investments; the sale of insurance
and annuities; the acceptance and
processing of loans; the issuance of
traveler's checks and money orders; and
the provision of such other financial
services or products which may be
legally

-2-

<PAGE>

permitted during the Term to be provided
by banks or savings and loan
associations (the "Banking Uses"), or
such other retail uses as may be
permitted from time to time by
applicable zoning ordinances and in
accordance with Section 10(A) hereof.
As used in this Section, "Tenant" shall
mean Tenant and/or any Permitted
Assignee (as defined in Section 28(B) of
this Lease.

(I) SECURITY DEPOSIT: None

(J) TENANT'S PROPORTIONATE
SHARE OF TAXES: As set forth in Section 7(A)(ii) hereof.

(K) TENANT'S PROPORTIONATE
SHARE OF OPERATING
EXPENSES: As set forth in Section 7(A) hereof.

(L) PERCENTAGE RENT: None

(M) BROKER: None

(N) OPTION TO PURCHASE: As defined in Section 53 hereof.

The parties hereto hereby enter into this Lease consisting of 30 pages and
Exhibits A - E, and agree to be bound hereby.

LANDLORD: TENANT:

LaSalle National Bank, Beverly Bank
as Trustee as aforesaid, by
Mid-Northern Equities Management,
Ltd., the agent of its beneficiary

By: /s/ By: /s/
------------------------------- -------------------------------

Its Vice President Its President
---- ----

Attest: Attest:
---------------------------- ----------------------------
Its Secretary Its Secretary
---- ----

-3-

<PAGE>

SECTION 2. DEMISE OF LEASED PREMISES.

Landlord, for and in consideration of the covenants hereinafter contained
and made on the part of Tenant, does hereby demise and lease to Tenant the
Leased Premises described in Section 1(D) hereof. Tenant acknowledges that the
Site Plan attached hereto (the "Site Plan") is a preliminary plan, and that
Landlord may modify the Site Plan from time to time provided that any such
change shall not adversely affect access to, or visibility of, the Leased
Premises, and provided further that any modification of the Site Plan that
affects the Leased Premises shall have the prior written approval of Tenant.

SECTION 3. CROSS EASEMENTS.

In conjunction herewith, Landlord and Tenant shall execute a Cross Easement
Agreement in the form attached hereto as Exhibit B, whereby each grants to the
other rights of ingress and egress and the use of parking spaces.

SECTION 4. LEASE TERM.

(A) TERM. The Term of this Lease, along with Tenant's obligation to pay
rent hereunder, shall commence on the Commencement Date as defined in
Section 1(E) hereof, and shall terminate on the last day of the Lease Year set
forth in Section 1(F) hereof. In addition, Tenant shall have the right to
extend the Term for four (4) successive Option Terms, by written notice
delivered to Landlord no later than one hundred eighty (180) days prior to
expiration of the Original Term or the applicable Option Term, as the case may
be. Annual Base Rent for the Option Terms is set forth in Section 1(G) hereof.
All other terms and conditions of this Lease shall remain in full force and
effect during each Option Term.

(B) LEASE YEAR DEFINED. The term "Lease Year" as used herein shall mean
twelve consecutive calendar months. The first Lease Year shall commence on the
Commencement Date if the Commencement Date shall be on the first day of a
calendar month; if not, then the first Lease Year shall commence on the first
day of the calendar month next following the Commencement Date. In the event
that the Commencement Date shall occur on a day other than the first of the
month, the first payment of all rentals due hereunder shall be adjusted for the
proportionate fraction of the whole month and shall be due and payable on the
Commencement Date. All subsequent rental payments other than the first shall be
made and become due and payable, in advance, on the first day of each calendar
month during the term hereof.

(C) LETTER CONFIRMING COMMENCEMENT DATE. Upon Tenant's taking possession
of the Leased Premises, Landlord and Tenant shall execute and deliver a written
statement setting forth the

-4-

<PAGE>

actual Commencement Date, which statement shall be in recordable form.

SECTION 5. EXCUSE OF LANDLORD'S PERFORMANCE.

Anything in this Lease to the contrary notwithstanding, providing such
cause is not due to the willful or gross negligence of the Landlord, the
Landlord shall not be deemed in default with respect to the performance of any
of the terms, covenants and conditions of this Lease if same shall be due to any
force majeure, including but not limited to, civil commotion, warlike operation,
invasion, rebellion, hostilities, military or usurped power, sabotage,
governmental regulations or controls (including the building permit process), or
inability to obtain any material or service, through act of God or other cause
beyond the control of the Landlord. (The causes set forth above shall sometimes
hereinafter be referred to as "Force Majeure".)

Anything in this Lease to the contrary notwithstanding, providing such
cause is not due to the willful or gross negligence of the Tenant, the Tenant
shall not be deemed in default with respect to the performance of any of the
terms, covenants and conditions of this Lease if same shall be due to Force
Majeure, including but not limited to, civil commotion, warlike operation,
invasion, rebellion, hostilities, military or usurped power, sabotage,
governmental regulations or controls, or inability to obtain any material or
service, through act of God or other cause beyond the control of the Tenant.

SECTION 6. ANNUAL BASE RENT.

Tenant shall pay to Landlord as Annual Base Rent for the Leased Premises
the total of Annual Ground Rent plus Annual Building Rent as set forth in
section 1(G) hereof, payable in equal monthly installments, without notice, on
the first day of every calendar month, monthly in advance.

SECTION 7. ADDITIONAL RENT.

(A) TENANT'S OBLIGATION. In addition to Annual Base Rent, Tenant shall
pay to Landlord as Additional Rent, Tenant's Proportionate Share of Taxes (as
hereinafter defined), as set forth below and Tenant's Proportionate Share of
Operating Expenses (as hereinafter defined) as set forth herein. Tenant's
Proportionate Share of Operating Expenses shall be determined by dividing the
total square feet of the ground area of the Leased Premises by the total
square feet of the ground area of the Shopping Center and multiplying the
quotient thereof by 100. The ground area of the Leased Premises shall be
determined in accordance with the survey to be provided pursuant to Section
14 hereof. The total square feet of the ground area of the Shopping Center
is 229,934 square feet, subject to verification. Tenant's

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Proportionate Share of Taxes shall be determined as set forth below.

(i) TAXES DEFINED. For purposes hereof, "Taxes" shall mean all
real estate taxes, rates, levies, charges and assessments, general and special,
ordinary and extraordinary, of every kind and nature whatsoever, whether now
know to law or hereafter created, which are due and payable during the Term
upon (a) the Shopping Center, (b) the Leased Premises, (c) the leasehold estate
hereby created, (d) the reversionary interest or estate of the Landlord, or (e)
arising with respect to the occupancy, use or possession of the Shopping Center
or Leased Premises. Any cost incurred by Landlord in an effort to minimize,
reduce, protest, negotiate or otherwise adjust any real estate tax bill, tax
assessment or assessed valuation, including the cost of appraisals, witness
fees and attorneys' fees related thereto, shall be included in the definition
of Taxes. If a special assessment is payable in installments, Taxes for any
year shall include the installment of such assessment for that year.

If at any time during the Lease Term, the methods of taxation
prevailing at the commencement of the Term shall be changed or altered so that
in lieu of, in addition to, or as a substitute for the whole or any part of the
taxes now levied, assessed or imposed on real estate, there shall be levied,
assessed or imposed, then the same shall be included in the definition and
computation of Taxes hereunder.

Anything contained in this Lease to the contrary notwithstanding,
Tenant shall not be obligated to pay any franchise, income, estate,
inheritance, excise, sales or excess profits tax or other similar taxes or
impositions which may be levied upon, required to be collected by or assessed
against Landlord or its successors in title.

(ii) DETERMINATION OF TENANT'S PROPORTIONATE SHARE OF TAXES.
Prior to issuance of a separate permanent index number for the Leased
Premises, Tenant's Proportionate Share of Taxes shall be determined with
respect to that portion of Taxes attributable to the land by dividing the
land area of the Leased Premises by the total area of the Shopping Center,
and with respect to that portion of the Taxes attributable to the building to
be constructed by Landlord upon the Leased Premises (the "Building") by
dividing the gross floor area of Tenant's building by the gross floor area of
all buildings in the Shopping Center. Currently, the gross floor area of all
buildings in the Shopping Center, without the building to be built on the
Leased Premises, is Forty Thousand Eighty Nine (40,089) square feet, subject
to verification. (If Landlord has an existing

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survey showing all of the buildings on the Shopping Center, Landlord will
provide Tenant with same to verify measurements. Landlord, however, shall not
be obligated to have a survey prepared if not already in Landlord's
possession.) The gross floor area of the Leased Premises will be added to that
number to determine the denominator of the fraction to be used to determine
Tenant's Proportionate Share of Taxes with respect to the building.

(iii) SEPARATE TAX NUMBER. Landlord agrees to use reasonable
commercial efforts to obtain a separate permanent index number for the Leased
Premises. Until such time as a separate tax identification number is obtained,
Tenant's Proportionate Share of Taxes shall be determined in accordance with
sub-paragraph (ii) above.

(iv) TAX CONTEST. With respect to the contest of Taxes, at such
time as a separate permanent index number shall be effective, Tenant shall have
the right to contest Taxes for the Leased Premises, provided that if Tenant
chooses not to contest such Taxes, it shall notify Landlord of same in
sufficient time to allow Landlord to contest Taxes for the Leased Premises.
Until a separate permanent index number shall be effective, Landlord shall
contest Taxes for the Shopping Center, including the Leased Premises, provided
that if Landlord chooses not to contest such Taxes for the Leased Premises,
Landlord shall notify Tenant of same in sufficient time to allow Landlord to
contest Taxes for the Leased Premises. In the event that Landlord shall receive
any refund of Taxes attributable to the Leased Premises for a period during
which Tenant has paid Taxes or Additional Rent including any payment of Taxes
promptly which includes Tenant's Proportionate Share of Taxes, Landlord shall
promptly pay Tenant said refund upon receipt thereof.

(v) OPERATING EXPENSES DEFINED. For purposes hereof, Operating
Expenses shall mean the total of all premiums paid by Landlord for insurance
carried by Landlord with respect to the Shopping Center, including liability,
property damage, fire, extended coverage, malicious mischief, vandalism,
workmen's compensation and employees' liability, rent interruption insurance
and any other casualty and liability insurance (but excluding insurance
provided and paid for by Tenant under Section 15 (A) hereof); and all items
of cost and expense expended (including appropriate reserves) in operating,
managing, equipping, protecting, policing, lighting, repairing, replacing and
maintaining the Common Areas (as hereinafter defined) of the Shopping Center
and its facilities, including but not limited to, all costs and expenses for
or pertaining to (1) such maintenance and repair as shall be required in
Landlord's or its designee's

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<PAGE>

judgment to preserve the utility and condition of the Common Areas in
substantially the same condition and status as the Common Areas shall be in as
of the time of the completion of the original construction and installation
thereof; (2) cleaning and removal of rubbish, dirt, debris, snow and ice; (3)
planting, replanting and replacing flowers and landscaping; (4) water, drainage
and sewerage; (5) supplies; (6) utility services and lighting (including the
cost of light bulbs and electric current); (7) parking lot striping; (8)
maintenance, repair and after the fifth anniversary of the Commencement Date,
replacement of all or any portion of the parking lot, sidewalks, curbing or
drainage and lighting facilities; (9) management fees equal to three percent
(3%) of rentals generated by the Shopping Center; and (10) administrative
charges not to exceed seven percent (7%) of the total costs of operating and
maintaining the Common Areas (exclusive of such administrative charges), and
(11) such other costs as Landlord may determine are required for the proper
maintenance, repair and replacement of the Common Areas and their facilities.

Operating Expenses shall exclude (i) the cost to construct the Shopping
Center and the buildings thereon, (ii) restoration costs resulting from fire,
casualty or condemnation, (iii) leasing commissions, (iv) services provided to
individual tenants, (v) items covered by warranty, and (vi) capital costs,
except for repair and replacement of (w) the parking lot after the fifth
anniversary of the Commencement Date, (x) landscaping, (y) lighting standards,
and (z) sidewalks.

For purposes hereof, "Common Areas" shall mean the parking lot, sidewalks,
loading areas, driveways, surface drain facilities, traffic control signs,
fences and all other portions of the Shopping Center which are not occupied by
buildings as depicted on the Site Plan and such other improvements as Landlord
shall provide for the common use of the tenants of the Shopping Center. The
Leased Premises shall at all times have reasonable, adequate and direct access
to the Common Areas and through them to the public streets adjacent to the
Shopping Center.

(B) METHOD OF PAYMENT OF ADDITIONAL RENT. On the first day of each
month, Tenant shall pay to Landlord, together with Tenant's monthly installment
of Annual Base Rent, a sum equal to one-twelfth (1/12) of Landlord's reasonable
estimate of Tenant's Proportionate Share of Taxes and Operating Expenses (the
"Additional Rent Items") for the calendar year in which such payment becomes
due, provided that unless required by Landlord's lender, (i) Tenant may pay
Tenant's Proportionate Share of Taxes twice per year, no later than August 15
and no later than February 15, and (ii) after issuance of a separate permanent
index number, Tenant may pay Taxes upon the Leased Premises directly to the
taxing authority. Within sixty (60) days after

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the end of each calendar year Landlord shall notify Tenant in writing of
its actual expenses for the Additional Rent Items for such calendar year and
Tenant's Proportionate Share thereof. In the event that Tenant shall have paid
to Landlord as Additional Rent an amount less than Tenant's Proportionate Share
of Additional Rent Items for such calendar year, Tenant shall remit to Landlord
such deficiency within ten (10) days after the date of Landlord's invoice
therefor. In the event that the Tenant has paid an amount greater than its
Proportionate Share of Additional Rent Items, said excess shall be applied
towards Tenant's obligation for Additional Rent Items for the next calendar
year, or if such excess is attributable to the final Lease Year of the Lease
Term, such excess shall be refunded to Tenant within thirty (30) days after
expiration of the Lease Term. At such time as Landlord notifies Tenant of its
actual expenses for Additional Rent Items for any calendar year, Landlord shall
also notify Tenant of its estimate of Tenant's Proportionate Share of
Additional Rent Items for the then current calendar year, and Tenant's monthly
payments therefor shall be adjusted accordingly. For any partial calendar year
during the Lease Term, Taxes shall be prorated.

At such time as a separate permanent index number for the Leased Premises
shall become effective, Tenant shall pay Taxes directly to the taxing
authority, provided that if Landlord's lender shall require Landlord to make
monthly payments into a tax escrow, then Tenant shall continue to pay Taxes
monthly as Additional Rent in accordance herewith.

(C) LATE PAYMENT. Any payment of Base Rent or Additional Rent that is
not received by Landlord on or before the tenth (10th) day of the month for
which such payment is due shall result in a late charge assessed against Tenant
equal to five percent (5%) of the amount past due. Said late charge shall be
due and payable within five (5) days after notice thereof.

(D) No more than once per calendar year, Tenant shall have the right,
upon reasonable written notice to Landlord to audit Landlord's books and
records pertaining to Taxes and operating Expenses. In the event that any such
audit reveals any overcharge to Tenant for any calendar year in excess of two
percent (2%) after year-end adjustments pursuant to sub-paragraph (B) above,
then Landlord shall pay the cost of such audit.

SECTION 8. Intentionally Omitted.

SECTION 9. COMPLIANCE WITH LAW.

(A) GENERAL. Tenant shall, throughout the entire Lease Term, at its sole
cost and expense, comply and cause the Leased Premises to comply with all
statutes and ordinances, including but not limited to, the Americans with
Disabilities Act, and the

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orders, rules, regulations, and requirements of all federal, state and
municipal governments or other governmental or quasi-governmental authorities
having jurisdiction over the Leased Premises, including, but not limited to,
the Illinois Environmental Protection Agency, and appropriate departments,
commissions, boards, and officers thereof, foreseen or unforeseen, ordinary as
well as extraordinary, and whether or not said compliance shall require
structural repairs or alterations to the Leased Premises, its use or manner of
use, the fixtures and equipment thereof, provided that at the time of delivery
of the Leased Premises to Tenant the Leased Premises was in compliance with all
such orders, rules, regulations and requirements. To the extent that the Leased
Premises did not so comply, Landlord shall be liable for the performance, and
the cost, of compliance. Tenant, likewise, shall observe and comply with the
requirements of all policies of public liability, fire, and all the other
contracts of insurance at any time in force with respect to the building and
improvements on the Leased Premises and the fixtures and equipment thereof.

Tenant shall have the right to contest the enforcement of any such
orders, rules, regulations and requirements so long as such contest does not
result in the imposition of any lien, criminal charges or other liability
against Landlord or the Shopping Center.

(B) TENANT'S ENVIRONMENTAL OBLIGATION. Tenant shall not cause or permit
any Hazardous Substance to be used, stored, released, generated or disposed of
on or in the Leased Premises by Tenant, Tenant's agents, employees, contractors
or invitees, except for supplies used in the ordinary course of business in
accordance with applicable law. If Hazardous Substances are used, stored,
generated or disposed of on or in the Leased Premises by Tenant except in
accordance herewith, or if the Leased Premises become contaminated by Hazardous
Substances in any manner during the Lease Term (except for such contamination
as may be caused by a release made by Landlord or another tenant of the
Shopping Center), Tenant shall indemnify and hold harmless the Landlord,
Landlord's beneficiary and the agents of its beneficiary from any and all
claims, damages, fines, judgments, penalties, costs, liabilities or losses,
including attorneys' fees, consultants or experts' fees arising during or after
the Lease Term, as a result of a breach of the covenants set forth herein by
Tenant. This indemnification includes, without limitation, any and all costs
incurred due to any investigation of the site or any cleanup, removal or
restoration mandated by a federal, state or local agency or political
subdivision. Without limitation of the foregoing, if Tenant causes or permits
the presence of any Hazardous Substance on the Leased Premises and such results
in contamination, Tenant shall promptly, at its sole expense, take any and all
necessary action to return the Leased Premises to the condition existing prior
to the presence of any

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such Hazardous Substance on the Leased Premises. Tenant shall first obtain
Landlord's reasonable approval for any such remedial action.

(C) LANDLORD'S ENVIRONMENTAL OBLIGATION. Landlord shall not cause or
permit any Hazardous Substance to be used, stored, released, generated or
disposed of on or in the Shopping Center by Landlord, Landlord's agents,
employees, or contractors, except for supplies used in the ordinary course of
business in accordance with applicable law. If Hazardous Substances are used,
stored, generated or disposed of on or in the Shopping Center by Landlord,
Landlord's agents, employees, or contractors except as permitted above, or if
the Leased Premises become contaminated by Hazardous Substances by Landlord in
any manner during the Lease Term, Landlord shall indemnify and hold Tenant
harmless from any and all claims, damages, fines, judgments, penalties, costs,
liabilities or losses, and any and all sums paid for settlement of claims,
attorneys' fees, consultant and expert fees, arising during or after the Lease
Term, arising as a result of a breach of the covenants set forth herein by
Landlord. This indemnification includes, without limitation, any and all costs
incurred due to any investigation of the site or any cleanup, removal or
restoration mandated by a federal, state or local agency or political
subdivision. Without limitation of the foregoing, if Landlord causes the
presence of any Hazardous Substance on the Leased Premises and such results in
contamination, Landlord shall promptly, at its sole expense, take any and all
necessary action to return the Leased Premises to the condition existing prior
to the presence of any such Hazardous Substance on the Leased Premises. Landlord
shall first obtain Tenant's reasonable approval for any such remedial action. If
any remediation by Landlord shall cause cessation of Tenant's business due to
lack of ingress or egress to the Leased Premises or because of an order by any
governmental agency, Tenant's Base Rent shall abate until Tenant's ingress and
egress are restored or such order has been revoked.

(D) HAZARDOUS SUBSTANCE DEFINED. As used herein, "Hazardous Substance"
means any substance which is defined by any federal, state or local statute,
ordinance, rule or regulation as toxic, ignitable, reactive, corrosive,
and/or which is regulated by any federal, state or local governmental agency
and shall include but not be limited to, any and all materials or substances
which are defined as "hazardous waste", "extremely hazardous waste",
"hazardous substance", "toxic waste" or "toxic substance" including, but not
limited to, asbestos, polychlorobiphinyls, urea formaldehyde and petroleum
and petroleum-based products.

(E) Tenants or Landlord shall each have the right to contest the
enforcement of any such orders, rules, regulations and requirements, for which
they respectively indemnified the other

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under Section 9 (B) or (C) above so long as such contest does not result in the
imposition of any lien, criminal charges or other liability against the other,
or in the case of a contest by the Tenant, the Shopping Center.

SECTION 10. USE.

(A) The Tenant agrees that the Leased Premises shall be used for the
Banking Uses set forth in Section 1(H), and may be used for other retail
purposes without the prior written consent of Landlord provided that Tenant may
not use the Leased Premises for a use that (i) conflicts with the exclusive use
provisions of any then existing lease for space in the Shopping Center, (ii) is
in competition with any of the then existing tenants of the Shopping Center, or
(iii) a proposed use is not inconsistent with the type of use usually associated
with a shopping center of this type. Tenant covenants and agrees that the
Leased Premises shall not be used by Tenant nor leased nor sublet for any trade,
business, vocation or occupation whatsoever which may be unlawful, or which may
otherwise be prohibited herein. For purposes hereof, a proposed use shall be
deemed to be in competition with an existing tenant if (i) twenty percent (20%)
of the projected gross receipts for the proposed use would arise from the sale
of products or services being sold by another tenant in the Shopping Center who
derives twenty percent (20%) or more of its gross receipts from the sale of said
products or services or who has designated twenty percent (20%) or more of its
floor area for the sale of such products or services, or (ii) twenty percent
(20%) or more of the floor area of the Leased Premises would be designated for
the sale of products or services that are sold by an existing tenant of the
Shopping Center who has designated twenty percent (20%) of its floor area for
the sale of such products or who derives twenty percent (20%) or more or its
gross receipts from the sale of said products or services. From time to time,
at the request of Tenant, Landlord shall notify Tenant of the then existing
exclusives in the Shopping Center. At such time as Tenant shall propose to
change the use of the Leased Premises, Tenant shall notify Landlord in writing
of same, and within ten (10) days after receipt of such notice, Landlord shall
notify Tenant of whether such use is in violation of this paragraph. If no such
notice is received, Tenant's proposed use shall be deemed not in violation of
this provision. Landlord shall notify Tenant from time to time of the then
existing exclusives affecting the Shopping Center and of the other uses that
would be prohibited by this Section 10 (A).

(B) EXCLUSIVE USE. Subject to the rights of Walgreens, as a tenant of the
Shopping Center, Tenant shall have the exclusive right in the Shopping Center to
operate a retail savings facility, a savings and loan association, to
deploy ATM's and/or any other interactive machines serving the same purpose as
an ATM, and the acceptance and processing of loans.

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<PAGE>

(C) PROHIBITED USES. Subject to the rights of Walgreens, as a tenant of
the Shopping Center, no portion of the Shopping Center shall be used for any of
the following:

(i) movie theater;

(ii) adult bookstore;

(iii) massage parlor;

(iv) a bar, pub, night club, music hall or disco that
derives less than fifty percent (50%) of its revenues from food service;

(v) a facility for the sale of paraphernalia for use with illicit
drugs;

(vi) a facility for the sale or display of pornographic materials
(as determined by community standards for the area in which the Shopping
Center is located);

(vii) auto repair, except that a first class car repair facility,
such as Goodyear or Firestone shall be permitted, provided that any bays
shall face east and any cars stored on the premises shall be concealed
by landscaping shielding said store and cars from view from the
Leased Premises;

(viii) any use which is illegal or dangerous, constitutes a nuisance
or is inconsistent with a community-oriented retail or commercial Shopping
Center; or

(ix) an arcade, pinball or computer gameroom.

SECTION 11. CONSTRUCTION OF IMPROVEMENTS.

(A) LANDLORD'S WORK. (i) Landlord, at its expense, shall cause the
construction of Tenant's Building in accordance with Exhibit C attached hereto
and made a part hereof, as incorporated into and in accordance with the Approved
Plans and Specifications (as defined in sub-paragraph (C) below), provided that
Landlord shall not be required to expend in excess of Seventy Five Dollars
($75.00) per square foot for "Building Costs" (the "Construction Cap"). The
parties acknowledge that the Construction Cap is based upon a 6400 square foot
building, and that if Tenant's Building, including drive-thru and entrance
canopies, is in excess of 6400 square feet, the Building Costs for that excess
portion of Tenant's Building shall be paid entirely by Tenant. For purposes
hereof, Building Costs shall include, but not be limited to, all of the so-
called "hard costs" of construction, including, but not limited to, all labor,
materials, and contractors' profit and overhead incurred in connection with
construction of the Building as described in Exhibit C, and

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running utility lines from a distance of five (5) feet from the perimeter of the
building, and all so-called "soft costs" attributable thereto, including but not
limited to, architect's fees, engineering fees, soil tests, environmental
studies, permit fees, impact fees, development fees and the cost of the use of
utilities, temporary or otherwise. Landlord shall also perform the site work
for the Leased Premises (the "Leased Premises Site Work"), at Landlord's
expense. The Leased Premises Site Work shall be installed in accordance with
the Approved Plans and Specifications, and shall include, but not be limited to,
grading, drainage, compaction, excavation, fill, landscaping within the Leased
Premises, paving, light standards within the Leased Premises, sidewalk, running
utilities to the Building to a distance five (5) feet from the perimeter thereof
and other site preparation work for the Leased Premises Site Work as set forth
in the Approved Plans and Specifications. For purposes of determining the cost
of the Leased Premises Site Work all soft costs attributable thereto shall be
included.

(ii) In addition to the construction of Tenant's Building and the Leased
Premises Site Work, Landlord shall cause additional common areas for the
Shopping Center to be constructed, at Landlord's expense, consisting of a
parking lot and driveways in the locations set forth in the Site Plan (the
"Common Area Site Work"), and in accordance with specifications therefor to be
delivered by Landlord to Tenant (the "Site Work Specifications"). The Common
Area Site Work shall include paving the parking lot and driveways not within the
Leased Premises, installation of such drainage as shall be required by the City
of Orland Park and the County of Cook, running utilities (except for telephone)
to the boundary of the Leased Premises, landscaping not located within the
Leased Premises and electric light standards not located within the Leased
Premises, all in accordance with the Site Work Specifications. The cost of
installation of the Common Area Site Work shall not be included in Building
Costs, provided, however, that if Tenant shall request any change in the Site
Work Specifications acceptable to Landlord, and such change shall result in an
increase in the cost of the Common Area Site Work, then the amount of such
increase shall be payable by Tenant to Landlord. (The construction of Tenant's
Building, the installation of the Leased Premises Site Work and the Common Area
Site Work shall sometimes hereinafter be referred to collectively as "Landlord's
Work".)

(iii) Landlord shall supervise the construction of Tenant's Work for a
fee of Seven Thousand Five Hundred Dollars ($7,500). Said fee shall be payable
monthly in equal installments over the period required for the installation of
Tenant's Work. Upon substantial completion of Tenant's Work, Tenant shall pay
to Landlord the balance, if any, of said fee. For purposes of this Section,
Landlord's Work and Tenant's Work shall sometimes hereinafter be referred to as
the "Work".

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(B) ARCHITECT AND TENANT'S SITE PLAN. Landlord shall employ Archideas,
Inc. ("Architect") as the architect for Tenant's Building. Landlord and Tenant
shall work with the Architect to design Tenant's Building. Within thirty (30)
days from the Lease Date, Landlord and Tenant shall agree an a site plan showing
the elevations of Tenant's Building and the location of lights, landscaping,
curbs, parking spaces, entrances, exits, driveways and parking lot for the
Leased Premises (the "Tenant Site Plan").

(C) PLANS AND SPECIFICATIONS. Landlord shall deliver to Architect
Landlord's Specifications for the Work, which specifications are attached hereto
and made a part hereof as Exhibit C (the "Specifications"), and Landlord shall
cause Architect to prepare plans and specifications for the Work based upon the
Specifications and Tenant's Site Plan. Landlord shall deliver the completed
Plans and Specifications to Tenant for Tenant's review and approval. If Tenant
shall have any objection to the Plans and Specifications, it shall notify
Landlord of same, and Landlord shall cause the Architect to revise the Plans
within ten (10) days after receipt of Tenant's objections to the Plans and
Specifications, provided said changes are in accordance with applicable law.
The Plans and Specifications, as approved by Tenant shall be referred to herein
as the "Approved Plans and Specifications". Landlord shall cause to be prepared
such working drawings as may be required. Tenant's approval of the Plans and
Specifications shall not in any way be deemed to place any responsibility on
Tenants as to their accuracy, completeness and sufficiency.

(D) MUNICIPAL APPROVALS AND COMMENCEMENT AND COMPLETION OF CONSTRUCTION.
Landlord shall submit the Approved Plans and Specifications to the City of
Orland Park (the "City") for issuance of a building permit (the "Building
Permit"). Landlord shall also obtain such permits as may be required by the
Metropolitan Sanitary District, Illinois Department of Transportation, and such
other agencies as have jurisdiction over the Leased Premises. (The Building
Permit and such other permits shall sometimes hereinafter be referred to
collectively as the "Permits".)

After submission of the Approved Plans and Specifications to the City,
Landlord shall make such changes thereto as the City shall require, provided
that if any such requested change shall cause a material change in the
appearance of the Building or cause an increase in the cost of the Building,
which increase shall cause the Building Costs to exceed the Construction Cap, or
if the Building Costs for the Approved Plans and Specifications already exceed
the Construction Cap, and such changes shall further increase the Building
Costs, then Landlord shall obtain Tenant's approval prior to causing any such
change to be made to the Approved Plans and Specifications.

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Landlord shall commence construction of the Work as soon as reasonably
practicable after issuance of the Permits. Landlord shall complete construction
of the Work within two hundred forty (240) days after commencement of
construction, subject to Force Majeure. Landlord shall construct the Work in
accordance with the Approved Plans and Specifications, in accordance with all
applicable laws, rules and regulations and in a good and workmanlike, lien-free
manner.

(E) BIDDING PROCESS. Landlord shall cause a bid package to be prepared
based upon the Approved Plans and Specifications. Tenant shall have the right to
review and approve the general contractor's contract prior to execution thereof.
All portions of the Work shall be put out to bid to duly licensed and qualified
subcontractors, and the general contractor shall obtain a minimum of three (3)
bids from qualified bidders for all "Major Subcontracts" and shall select the
lowest bid for each portion of the Work. For purposes hereof, "Major
Subcontracts" shall be HVAC, plumbing, electrical and masonry. For other
contractors, the general contractor may obtain less than three (3) bids. At
Tenant's option, Tenant may be present at the opening of the bids. Tenant
acknowledges that Landlord may employ William A. Shiner, Inc. as its general
contractor. Landlord shall deliver to Tenant copies of all contracts let in
accordance herewith.

(F) BUILDING COSTS AND CHANGE ORDERS. The Building Costs shall initially
be the costs demonstrated by the contracts let in accordance with the bidding
process described in sub-paragraph (E) above (the "Initial Building Costs").
During the course of construction, certain change orders may be required by
Landlord as a result of governmental requirements ("Landlord's Change Orders").
In the event that any such change order shall increase the Building Costs, then
Landlord shall obtain Tenant's approval prior to executing such change order,
provided that if such change order is required by any governmental authority
with jurisdiction over the Leased Premises in order to complete construction of
Tenant's Building, Tenant may not withhold its consent, provided further that in
the event of such a change order Landlord shall notify Tenant of same and prior
to implementation of any such change order, Tenant shall have the right, but not
the obligation, to protest such requirement with the appropriate governmental
authorities within a reasonable time after receipt of Landlord's notice. In the
event that during the course of construction, Tenant shall request any change
order ("Tenant's Change Orders") to the extent that such change order causes an
increase in Building Costs in excess of the Construction Cap, or increases the
cost of the Leased Premises Site Work, then Tenant shall pay to Landlord the
cost of such increase upon presentation to Tenant of appropriate documentation
substantiating such increased cost.

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For purposes of determining Building Costs in excess of the Construction
Cap and for purposes of determining Annual Building Rent, Building Costs shall
include the Initial Building Costs plus the cost of Landlord's Change Orders and
Tenant's Change Orders.

(G) PAYMENT OF EXCESS BUILDING COSTS. Upon substantial completion of
Tenant's Building, the Leased Premises Site Work and the Common Area Site Work,
Landlord shall submit to Tenant an invoice for the Building Costs in excess of
the Construction Cap, and Tenant shall pay Landlord same within thirty (30) days
after the date of said invoice. The square footage of Tenant's Building for
purposes of determining the Construction Cap shall be determined by the
Architect, provided that Tenant shall have the right to have an independent
architect verify said measurement. The square footage of Tenant's Building for
purposes of determining the Construction Cap shall be the area computed by
measurement of the ground floor and any additional floor or mezzanine space made
to and from the center of the outside exterior walls.

(H) TENANT'S RIGHT TO INSPECT. During the course of construction of the
improvements, Tenant and any architect, engineer or other representative Tenant
may select to act for it, may, upon reasonable prior notice of Landlord, inspect
(but shall have no duty or obligation to inspect) the Work and the materials
being used in, or to be used in, the performance of such Work, provided that
Tenant shall not interfere with the performance of the Work.

(I) DELIVERY OF POSSESSION AND PUNCHLIST. The date of delivery of
possession of the Leased Premises shall be the date that Landlord shall have
substantially completed the Work (the "Possession Date"). For purposes hereof,
"substantial completion" shall mean that:

(i) A certificate of occupancy shall have been issued by the
governmental authority having jurisdiction over the Leased Premises, provided
that said certificate of occupancy may be a temporary certificate, subject only
to "punchlist" type items and landscaping, and provided further, that if the
certificate of occupancy cannot be issued because Tenant has not yet completed
the installation of its security system, Landlord shall not be required to
deliver said certificate of occupancy until such time as Tenant completes
installation of said security system. If the certificate of occupancy shall not
be issued because Tenant has not completed installation of its security system,
said failure to deliver the certificate of occupancy shall not delay the
Commencement Date of the Possession Date.

(ii) A certificate of substantial completion shall have been issued by
the Architect and executed by Landlord and the

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general contractor employed by Landlord with respect to the Work. Said
certification shall include a statement that (a) all of the Work has been
constructed in a good and workmanlike manner, free of defects in workmanship or
material, and (b) Tenant's Building, the Leased Premises Site Work and the
Common Area Site Work have been constructed in accordance with the Final Plans
and Specifications, as may have been modified by change orders in accordance
with the terms of this Lease and all applicable laws; and

(iii) Landlord shall have caused a leasehold title insurance
commitment to have been issued insuring Tenant's leasehold estate against
mechanic's liens resulting from the Work, and subject to the title exceptions
set forth in Exhibit D.

No later than thirty (30) days prior to the estimated Possession Date,
Landlord shall notify Tenant of the estimated Possession Date (the "Possession
Notice"). Within ten (10) days after the Possession Date, Tenant shall have the
right, but not the obligation, to inspect the Work with the Architect and, at
Tenant's option, any architect, engineer or contractor that Tenant may select,
for the purpose of creating a punchlist of items that Landlord has yet to
complete. Landlord shall complete such punchlist within thirty (30) days after
the date of said punchlist, provided that Tenant agrees that landscaping may not
be completed within said 30 day period, and such non-completion shall not be a
default hereunder, and that to the extent punchlist items cannot be completed
within said 30 day period because of inability to obtain materials or similar
causes beyond Landlord's reasonable control, Landlord shall complete said
punchlist items as soon as reasonably practicable after the Commencement Date.

If Landlord shall be in default under this section, Tenant shall have the
right to complete said work, upon thirty (30) days written notice to Landlord,
and if Tenant performs such work, the cost thereof may be deducted from rents
and other sums due to Landlord hereunder; provided that if Landlord shall
commence cure of such default within said thirty (30) day period, Tenant shall
not have the right to perform such work.

(J) TENANT'S WORK. All work other than Landlord's Work is referred to
herein as Tenant's Work. Landlord shall install Tenant's Work in accordance
herewith. The cost of Tenant's Work shall be borne by Tenant. Tenant's
security system shall be installed by Tenant at its expense. Prior to receipt
of the Possession Notice, Tenant's contractors for the installation of said
security system shall have the right to enter upon the Leased Premises to
perform installation of Tenant's security system, provided that Tenant's
contractors shall not interfere with the performance by Landlord's contractors
of the Work. Prior to the entry onto the Leased Premises of any contractor

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performing all or any part of the installation of Tenant's security system,
Tenant shall deliver to Landlord a certificate of insurance for each such
contractor demonstrating the existence of such contractor's liability and
worker's compensation insurance and naming Landlord, Landlord's beneficiary and
the agents of its beneficiaries as additional insureds. The entry by any of
Tenant's contractors onto the Leased Premises shall not be deemed an acceptance
of the Leased Premises, or a waiver of Landlord's performance of its obligations
to complete the Work. Any damage to Work by Tenant's contractors shall be
repaired by Landlord at Tenant's expense. Any damage to Tenant's security
system by Landlord's contractors shall be repaired by Tenant's contractors at
Landlord's expense.

(K) "AS BUILT" PLANS. As soon as reasonably practicable after completion
of Work, Landlord shall deliver to Tenant a set of "as built" plans for the
Leased Premises.

(L) WARRANTIES. Landlord shall assign all warranties to Tenant with
respect to the items that Tenant is required to maintain hereunder.

SECTION 12. ACCEPTANCE OF LEASED PREMISES.

Tenant's taking possession of the Leased Premises on the Possession Date
shall constitute Tenant's acknowledgment that the Leased Premises are in good
condition and ready for Tenant's use and occupancy, subject to the punchlist
provided for in Section 11.I above and subject to latent defects. Tenant's
taking possession of the Leased Premises shall not limit or modify Landlord's
obligations hereunder, whether with respect to the warranties relating to the
Work or otherwise, nor constitute a waiver of any of Tenant's right and
remedies.

SECTION 13. SECURITY DEPOSIT.

No security deposit shall be required.

SECTION 14. SURVEY. As soon as reasonably practicable after completion
of the Work, Landlord shall deliver to Tenant an ALTA survey of the Leased
Premises. In addition, upon completion of the foundation, Landlord shall
deliver its survey to Tenant, provided said survey need not be ALTA certified.

SECTION 15. INSURANCE.

(A) TENANT'S OBLIGATION. Tenant shall, at its expense, from and after the
Possession Date, and during the entire Lease Term, keep in full force and effect
the following policies of insurance, under which policies (except the policy
described in sub-paragraph (iv) below) Landlord, Landlord's beneficiary and

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the agents of its beneficiary and their successors and assignees shall be named
as additional insureds:

(i) A policy of public liability insurance with respect to the Leased
Premises and the business operated by the Tenant thereon under which the
limits of liability shall not be less than Two Million Dollars ($2,000,000)
in the form of single limit broad form coverage, and which policy shall
include contractual liability;

(ii) Business Interruption Insurance;

(iii) Worker's compensation in statutory amounts and employer's
liability insurance; and

(iv) an all risk fire insurance policy with extended coverage
endorsement including, but not limited to, vandalism and malicious mischief
covering all of the improvements, stock in trade, fixtures, furnishing,
furniture, equipment, personal property and the contents of the Leased
Premises to the extent of their full replacement cost with no deduction for
depreciation. For purposes hereof, "improvements" shall mean partition
walls, wall coverings, ceilings, floor coverings, hvac system, light
fixtures, plate glass, equipment, including ATM and drive-thru equipment,
and such other items as Tenant is obligated to maintain and repair in
accordance herewith.

Tenant shall furnish to Landlord a certificate or certificates of insurance
or other acceptable evidence that all of the aforesaid insurance is in force
before Tenant may take possession of the Leased Premises, and at least thirty
(30) days prior to the expiration of any such policy, Tenant shall furnish
evidence to Landlord that any such policy has been renewed by Tenant. In the
event that Tenant fails to furnish Landlord with the required insurance,
Landlord may, but shall not be so obligated, obtain such insurance, and the cost
thereof shall be deemed to be additional rent hereunder, and the failure of
Tenant to pay same on demand shall constitute a default hereunder, and shall
entitle Landlord to institute action for recovery thereof, and/or avail itself
of all of the remedies afforded to it under this Lease or otherwise. Tenant may
satisfy its insurance obligation by adding the Leased Premises to an existing
blanket policy, which shall include other properties.

(B) LANDLORD'S OBLIGATION. Landlord shall carry public liability
insurance for the Common Areas with $1,000,000 per occurrence coverage and with
umbrella coverage and shall carry casualty insurance for Tenant's Building as
part of its casualty insurance policy for the Shopping Center. Tenant shall
pay Landlord its Proportionate Share of insurance premiums in accordance with
Section 7 above.

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Landlord shall carry builder's risk insurance during construction of the
Leased Premises, and said policy shall name Tenant as an additional insured.
The cost of builder's risk insurance shall be included in Landlord's Cap.

SECTION 16. INDEMNIFICATION.

(A) TENANT'S OBLIGATION.

Subject to Section 17 below, Tenant agrees to indemnify, defend and save
Landlord harmless against and from any and all claims by or on behalf of any
person or persons, firm or firms, corporation or corporations, arising from the
conduct or management of the business conducted on the Leased Promises or from
any work or thing done by Tenant or its subtenants on or about the Leased
Premises and/or the Shopping Center, and will further indemnify and save
Landlord harmless against and from any and all claims arising during the Lease
Term from any breach or default on the part of Tenant in the performance of any
covenant or agreement on the part of Tenant to be performed pursuant to the
terms of this Lease, or arising from any act of negligence of Tenant, or any of
its agents, contractors, servants, employees or licensees or sublicensees, on or
about the Leased Premises and/or the Shopping Center, and from and against all
costs, counsel fees, expenses and liabilities arising from any such claim or
action or proceeding brought thereon. If any action or proceeding is brought
against Landlord by reason of any such claim, Tenant, upon request of Landlord,
shall defend such action or proceeding by counsel reasonably satisfactory to
Landlord.

(B) LANDLORD'S OBLIGATION.

Subject to Section 17 below, Landlord agrees to indemnify and save Tenant
harmless against and from any and all claims by or on behalf of any person or
persons, firm or firms, corporation or corporations, arising from any work or
thing done by Landlord on or about the Leased Premises and/or the Shopping
Center, and will further indemnify and save Tenant harmless against and from any
and all claims arising during the Lease Term from any breach or default on the
part of Landlord in the performance of any covenant or agreement on the part of
Landlord to be performed pursuant to the terms of this Lease, or arising from
any act of negligence of Landlord, or any of its agents, contractors, servants,
employees or licensees or sublicensees, on or about the Leased Promises and/or
the Shopping Center, and from and against all costs, counsel fees, expenses and
liabilities arising from any such claim or action or proceeding brought thereon.
If any action or proceeding is brought against Tenant by reason of any such
claim, Landlord, upon request of Tenant, shall defend such action or proceeding
by counsel reasonably satisfactory to Tenant.

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SECTION 17. WAIVER OF SUBROGATION.

The parties release each other and their respective officers, directors and
employees, from any claims for injury to any person or damage to the Leased
Premises and/or the Shopping Center, and/or to the fixtures, personal property,
Tenant's improvements, and alterations of either Landlord or Tenant in or on the
Leased Premises and the Shopping Center that are caused by or result from risks
insured against under any insurance policies carried by the parties and in force
at the time of any such injury or damage.

To the extent available, each party shall cause each insurance policy
obtained by it to provide that the insurance company waives all right of
recovery by way of subrogation against either party in connection with any
damage covered by any policy. Neither party shall be liable to the other for
any damage caused by fire or any of the other risks insured against under any
insurance policy required by this lease.

SECTION 18. MAINTENANCE AND REPAIR.

(A) TENANT'S OBLIGATION. Throughout the Lease Term, Tenant shall at its
sole cost and expense maintain and repair Tenant's Building, subject to ordinary
wear and tear and fire and other casualty, except for those items to be
maintained and repaired by Landlord in accordance with sub-section (B) below.
Tenant's obligation shall include, but not be limited to, exterior entrances;
window frames and all plate glass windows; molding; partitions; doors, door
frames and checks; plumbing and light fixtures; equipment and appurtenances and
all heating, ventilating and air conditioning equipment; floors coverings;
interior walls and wall coverings, including paint; ceilings; doorways; utility
lines within the interior of the building; all drive through structures or
facilities (except the roof, foundation and steel frames) and all other things
installed in the Leased Premises, so that the Building shall at all times be in
the same condition as when originally installed. The maintenance and repair of
all directional signals and markers in the Leased Premises shall be Tenant's
obligation. For purposes hereof, the term "repairs" shall include replacements,
renewals, alterations, additions and improvements. All repairs made by Tenant
shall consist of material and workmanship at least equal to the original
condition of the repaired or replaced item. Tenant shall not be obligated to
make any repairs caused by the negligence of Landlord, its contractors or
agents.

(B) LANDLORD'S OBLIGATION. Landlord shall maintain and repair the roof and
foundation of Tenant's building and drive through structure or facilities, the
utility lines running to Tenant's Building, the exterior walls and the concrete
floors of Tenant's Building and steel framing of Tenant's Building,

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including any drive through structure or facility, except to the extent such
maintenance or repair is required because of damage caused by act, omission or
negligence of Tenant or its employees, agents, invitees, licensees or
contractors. The provisions of this paragraph shall not apply in the case of
damage or destruction by fire or other casualty or a taking under the power of
eminent domain, in which event the obligations of Landlord shall be controlled
by Sections 24 and 31 hereof, respectively. Landlord shall not be obligated to
maintain or repair any drive through structure or facility.

In addition, Landlord shall, at its expense, maintain and repair the Common
Areas of the Shopping Center, including the parking lot and driveway surrounding
the Leased Premises, in substantially the same condition as when originally
installed, subject to ordinary wear and tear. Such obligation shall include the
following:

(i) Resurfacing of walks, driveways and parking areas, at such
times as Landlord shall deem appropriate;

(ii) Keeping the walks, drives and parking areas in a level,
smooth and evenly covered condition with the type of surfacing material
originally installed or such substitute as shall in all respects be equal in
quality, use and durability;

(iii) Cleaning, painting, striping, removing rubbish, debris and
soil and stone washed into Common Areas and all other tasks necessary to
maintain the parking and Common Areas in a clean, safe and orderly condition;

(iv) Maintaining all curbs, parking dividers, landscape
enclosures, fences, retaining walls in good condition and repair;

(v) Maintaining landscaped areas;

(vi) Illuminating all Common Areas until ___ p.m. each day. In
the event that any occupant of the Shopping Center shall require any
illumination of any portion of the Common Areas at any time after ___ p.m., that
occupant shall be solely responsible for the payment of all costs associated
with such prolonged lighting of the Common Areas. The cost of security lighting
shall be apportioned as a Common Area charge among all occupants and Tenant
shall be responsible for the its portion in accordance with Section 7 (A) (iv);

(v) Maintaining all utility lines within the Common Areas that
are not maintained by a public utility or governmental authority; and

(vi) Keeping in repair and replacing light fixtures.

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(C) INSPECTION OF PREMISES. Upon providing Tenant with advance notice
(except in the event of an emergency), Tenant shall permit Landlord and the
authorized representatives of Landlord to enter the Leased Premises at all times
during Tenant's usual business hours for the purpose of inspecting the same or
for the purpose of making any repairs or performing any other work on the Leased
Premises required to be performed by Landlord, or pursuant to the term of this
Lease, Tenant is required but has failed to perform after applicable cure
periods shall have expired, provided that in the course of such entry, Landlord
shall not unreasonably interfere with the conduct of Tenant's business, and
Landlord shall comply with Tenant's security procedures. Nothing herein shall
imply any duty upon the part of Landlord to do any work to be performed by
Tenant, and the performance thereof by Landlord shall not constitute a waiver of
Tenant's default in failing to perform the same. Except to the extent caused by
the negligence of Landlord or its agents, Landlord shall not be liable for
inconvenience, annoyance, disturbance, loss of business, or other damage to
Tenant by reason of making repairs or the performance of any work in the Leased
Premises, or on account of bringing materials, supplies, and equipment into or
through the Leased Premises during the course thereof, and the obligations of
Tenant under this Lease shall not thereby be affected in any manner whatsoever.
To the extent that Landlord's obligations may be performed after Tenant's
business hours without incurring additional expense, Landlord will do so.

Landlord shall have and hereby reserves the right during Tenant's usual
business hours to enter the Leased Premises and to exhibit the same for the
purpose of sale.

SECTION 19. UTILITIES.

Tenant shall be separately metered for all utilities used on the Leased
Premises, including without limitation, gas, electricity, water and telephone,
and shall pay all connection charges with respect to said utilities. Tenant
shall pay all such metered charges directly to the applicable utility.

SECTION 20. ALTERATIONS.

The Tenant shall not make any structural alterations in, or additions to,
the Leased Premises without Landlord's prior written consent, which consent
shall not be unreasonably withheld. If the Landlord consents to such
alterations or additions, before commencement of the work or delivery of any
material onto the Leased Premises or onto the Shopping Center, Tenant shall
deliver such items as Landlord may request, including insurance certificates
from contractors, plans and specifications, sworn statements, copies of building
permits and the like. Upon completion of such construction, Tenant shall

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deliver to Landlord such sworn statements, lien waivers and indemnifications as
Landlord may request or that Landlord's title company may request to insure
Landlord's title over Tenant's construction. Tenant shall pay for any date down
endorsement to Landlord's title insurance policy as Landlord may request. It
shall be Tenant's obligation to maintain any additions to the Leased Premises,
including structural components.

SECTION 21. BUILDING AND FIXTURES.

Upon the expiration of the Term, and from time to time during the Term, as
long as Tenant is not then in default hereunder, all fixtures installed and paid
for by Tenant may be removed by Tenant, provided that such removal shall not
substantially damage the Leased Premises, and to the extent that such removal
does cause damage, it shall be Tenant's obligation to pay the cost of repair of
same, provided further, however, that Tenant may not remove any HVAC equipment
or any other item that may have been installed by Tenant as a replacement for
any item originally installed by Landlord. If Tenant shall not remove any
fixtures within thirty (30) days after expiration of the Term, such property
shall become the Landlord's property and shall remain upon the Leased Premises
at the termination of this Lease by lapse of time or otherwise, without
compensation, allowance or credit to the Tenant. The Tenant shall remove the
Tenant's furniture, machinery, safe or safes, trade fixtures and other items of
personal property of every kind and description from the Leased Premises upon
expiration of the Lease Term. If the Tenant does not remove said personal
property, the Landlord may remove the same and the Tenant shall pay the
reasonable cost of such removal to the Landlord upon demand. All building
additions and permanent improvements installed by Tenant shall be the property
of Landlord upon expiration of the Term.

SECTION 22. SIGNS AND ADVERTISING.

(A) Tenant shall be obligated, at its expense, to obtain any permit
required by the Village with respect to any sign for the Leased Premises, and
such sign shall comply with all applicable governmental or quasi-governmental
ordinances, rules and regulations. Tenant shall install any signage at Tenant's
expense, provided that at Tenant's request, Landlord shall install said sign at
Tenant's expense.

(B) Tenant shall not, without Landlord's prior written consent, place,
construct or maintain on the Leased Premises any advertising media, including,
without limitation, search lights, flashing lights, loud speakers, phonographs,
or other similar visual or audio media.

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(C) Tenant shall not solicit business in, on or about the Common Areas, or
distribute hand bills or other advertising or promotional media in, on, or about
the Common Areas.

SECTION 23. DAMAGE TO OR DESTRUCTION OF LEASED PREMISES.

If the event that the Leased Promises are damaged by fire, explosion
or any other casualty, the damage shall be repaired by Landlord at Landlord's
expense, within a reasonable time period after the occurrence of the damage,
provided that Landlord shall not be obligated to expend for such repair an
amount in excess of the insurance proceeds recovered an a result of such damage,
and that in no event shall Landlord be required to repair or replace Tenant's
stock in trade, fixtures, furniture, furnishings, floor coverings and equipment
or any other items Tenant is required to insure hereunder. In the event that
Landlord shall not have commenced such repair within one hundred eighty (180)
days after such casualty, or Landlord shall not have completed such repair
within three hundred sixty five (365) days after the date of such casualty, then
Tenant shall have the right to terminate this Lease, and in such event, all
insurance proceeds not relating to Tenant's trade fixtures, furnishings or
personal property (including currency and business records) shall be payable to
Landlord. In the event of any such damage that (a) is to an extent that is more
than fifty percent (50%) of the cost of replacement of the Leased Premises, or
(b) results in damage or destruction of the buildings (taken in the aggregate)
in the Shopping Center to the extent of more than twenty five percent (25%) of
the cost of replacement thereof, and such damage or destruction occurs in the
last two (2) years of the Original Term or the last year of any Option Term,
then Landlord or Tenant may elect or to terminate this Lease, which election
shall be exercised by written notice delivered to the other party within one
hundred twenty (120) days after the occurrence of the event causing the damage.
If either party elects to terminate the Lease, all insurance proceeds not
relating to Tenant's trade fixtures, furnishings or personal property (including
currency and business records) shall be payable to Landlord. If the casualty,
repairing or rebuilding shall render the Leased Premises untenantable, in whole
or in part, and the damage shall not have been due to the default or neglect of
Tenant, a proportionate abatement of Annual Base Rent shall be allowed from the
date that the damage occurred until the date Landlord substantially completes
the work, said proportion to be computed on the basis of the relation which the
gross square foot floor area of the space rendered untenantable bears to the
gross square foot floor space of the Leased Premises. If the Landlord is
required or elects to repair the Leased Premises as set forth herein, Tenant
shall repair or replace its stock in trade, fixtures, furniture, furnishings,
floor coverings and equipment, and if Tenant has closed, Tenant shall, within
sixty (60) days

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after substantial completion of Landlord's work, promptly reopen for business.

SECTION 24. LIENS AND CHARGES.

Tenant shall be solely and wholly responsible to contractors,
subcontractors, materialmen and laborers furnishing and performing material
and labor for Tenant with respect to Tenant's Work and any subsequent work
performed on behalf of Tenant, as well an for other costs and expenses
incurred by Tenant with respect to the Leased Premises. If any lien or
charge for the payment of money owed by Tenant shall be filed against the
Leased Premises or any improvements thereon or against Landlord, or if any
form of security agreement shall be filed with respect to equipment or
materials used in the construction or alteration of any such improvement,
which in any such case shall, in the reasonable opinion of counsel selected
by Landlord, create a lien or other charge upon or otherwise adversely affect
Landlord's interest in the Leased Premises, then Tenant shall, at its own
cost and expense, cause the same to be canceled and discharged of record or
bonded in a reasonably adequate amount within twenty-one (21) days after
notice of filing thereof. Should Tenant fail to furnish such bond or pay any
such lien or charge or other cost or expense in connection with the Leased
Premises or any improvements thereon, Landlord may, at its option and in
addition to any other remedy hereunder, pay the same, in which event the
amount of any such payment shall become immediately due and payable by Tenant
to Landlord as additional rent hereunder, with interest thereon from the date
of payment by Landlord to the date Tenant pays such amount to Landlord, at an
annual rate of fourteen (14%).

SECTION 25. DEFAULT OF THE TENANT.

The following events shall be deemed a "Default" hereunder:

(i) Any failure of Tenant to pay any rent due hereunder within ten
(10) days after written notice shall be received by Tenant; or

(ii) Any failure of Tenant to perform any other of the terms,
conditions or covenants of this Lease to be observed or performed by Tenant for
more than thirty (30) days (forthwith if the Default involves a hazardous
condition) after written notice of such Default shall have been received by
Tenant, however, if the default cannot with due diligence be cured prior to the
expiration of thirty (30) days from the date of receipt of the notice provided
for above and if Tenant commences within thirty (30) days from the date of
receipt of said notice to eliminate the cause of such default and proceeds
diligently and with reasonable dispatch to take all steps and do all work
required to cure

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such default, then Landlord shall not have the right to re-enter
the Leased Premises or declare this Lease terminated by reason of such
default.

(iii) Tenant or any guarantor of this Lease shall become bankrupt or
insolvent, or file any debtor proceedings or take or have taken against Tenant
or any guarantor of this Lease in any court pursuant to any statute either of
the United States or of any state a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver of trustee or all or a
portion of Tenant's or any such guarantor's property; or

(iv) Tenant or any such guarantor makes an assignment for the benefit
of creditors, or petitions for or enters into an arrangement.

SECTION 26. LANDLORD'S REMEDIES.

(A) In the event of a Default by Tenant hereunder, Landlord shall
have the following described remedies, which remedies shall not be exclusive:

(i) Landlord shall have the immediate right of re-entry and may
remove all persons and property from the Leased Premises, and such property
may be removed and stored in a public warehouse or elsewhere at the cost of,
and for the account of Tenant, all in accordance with applicable law, without
being deemed guilty of trespass, or becoming liable to any party for any loss
or damage which may be occasioned thereby; and

(ii) Landlord may from time to time without terminating this
Lease, and without releasing Tenant in whole or in part from Tenant's
obligation to pay rent and perform any of the covenants, conditions and
agreements to be performed by Tenant as provided in this Lease, make such
reasonable alterations and repairs as may be necessary in order to relet the
Leased Premises. After making such alterations and repairs, Landlord may
relet the Leased Premises or any part thereof for such term or terms (which
may be for a term extending beyond the term of this Lease) and at such rental
or rentals and upon such other terms and conditions as Landlord in its
reasonable discretion may deem advisable; upon each such reletting if all
rentals received by the Landlord from such reletting during any month shall
be less than that to be paid during that month by Tenant hereunder, Tenant
shall pay any such deficiency to Landlord. Such deficiency shall be
calculated and paid monthly. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this
Lease for such previous breach. Tenant shall be liable to

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Landlord for all costs of reletting, including, but not limited to,
alterations and repairs of the Leased Premises for a new tenant, brokerage
commissions, attorneys fees, advertising and any other expenses incurred by
Landlord in connection therewith; and

(iii) Landlord may terminate this Lease, in which event Landlord
shall be entitled to recover as liquidated damages and not as a penalty, all
rent and other sums due and payable by Tenant on the date of termination plus
an amount equal to the present value of Annual Base Rent and Additional Rent
for the remainder of the Original Term or the then applicable Option Term; and

(iv) Landlord may seek any and all remedies at law or in equity; and

(v) Landlord may enter upon the Leased Premises and cure any Default
of Tenant with respect to non-performance hereunder and charge the cost of such
cure to Tenant as additional rent due hereunder together with interest thereon
at the annual rate of 14% from the date expended until the date repaid in full.

(B) The Landlord's re-entry, demand for possession, a notice that the
tenancy hereby created will be terminated on the date therein named, institution
of an action of forcible detainer or ejectment or the entering of a judgment for
possession in such action, or any other act or acts resulting in the termination
of Tenant's right to possession of the Leased Premises shall not relieve Tenant
from Tenant's obligation to pay all rents due hereunder, and other costs
incurred during the balance of the Lease Term or any extension thereof, except
as herein expressly provided. The Landlord may collect and receive any rent due
from the Tenant, and the payment thereof shall not constitute a waiver of or
affect any notice or demand given, suit instituted or judgment obtained by
Landlord, or be held to waive, affect, change, modify or alter the rights or
remedies which Landlord has in equity or at law or by virtue of this Lease.

SECTION 27. LANDLORD'S RIGHT TO TERMINATE IF TENANT "GOES
DARK".

In the event that Tenant shall cease to operate its business from the
Leased Premises for a period in excess of one hundred eighty (180) consecutive
days, Landlord shall have the right to terminate the Lease upon written notice
delivered to Tenant at any time after expiration of said 180 day period.
Termination shall be effective as of the last day of the month in which said
notice is served. In the event of such termination, Tenant shall have no
further obligation to Landlord from and after the

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effective date thereof, except for obligations accruing prior to such
termination.

SECTION 28. TRANSFER OF LEASED-PREMISES.

(A) Without the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed, neither Tenant nor Tenant's
successors or assigns shall sell, assign, sublet, mortgage (including the
extension, modification or refinancing of any mortgage), pledge, encumber or
otherwise dispose of the Tenant's interest in the Leased Premises. Consent
shall not be deemed unreasonably withheld if not given if the proposed tenant or
assignee is not financially qualified in Landlard's reasonable opinion. If
Tenant shall charge any sublessee rent in excess of Annual Base Rent, then
Landlord shall be entitled to any such excess. If Landlord shall consent to any
sublet or assignment, Tenant shall nevertheless remain fully obligated for the
performance of all of the terms and conditions hereof to be performed by Tenant.

(B) Anything herein to the contrary notwithstanding, Tenant shall
have the right, without Landlord's consent to; provided Tenant shall remain
liable for the performance of all of Tenant's obligations hereunder:

(i) assign or convey the Lease, or any interest therein to any
Permitted Assignee; or

(ii) sublet the Leased Premises or assign the Lease to any Permitted
Assignee.

For purposes hereof, Permitted Assignee shall mean:

(i) any corporation or other entity of which Tenant is a subsidiary
(on any level);

(ii) any corporation or other entity which is a subsidiary of Tenant
(on any level);

(iii) any corporation or other entity with which Tenant is commonly
owned or controlled;

(iv) any corporation or other entity into which Tenant is merged or
consolidated;

(v) any corporation or other entity which is merged or consolidated
into Tenant;

(vi) any corporation or other entity which performs and/or markets
financial services pursuant to any contract entered into with Tenant or any
parent, subsidiary or related corporation or entity of Tenant; or

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<PAGE>

(vii) any corporation or other entity which acquires all or
substantially all of the assets of Tenant; or

(viii) any successor to Tenant's assets or business by reason of
merger, consolidation, reorganization, purchase of assets, or action of
governmental or regulatory authority;

(C) In the event that the Tenant's leasehold interest is sold at
any foreclosure sale, judicial or otherwise, the Landlord may be a purchaser at
any such sale.

(D) Landlord shall have the right to assign, pledge or encumber
its interest in this Lease, subject to the terms hereof, but nothing herein
contained shall permit or allow Landlord in any manner to create a lien upon or
encumber Tenant's interest in the Leased Premises, except as otherwise
specifically provided for herein.

(E) Anything herein to the contrary notwithstanding, Tenant may
place a lien on its trade fixtures, equipment and the like, and Tenant may
pledge its leasehold interest hereunder as collateral to an institutional
lender, and Landlord shall acknowledge such assignment upon terms and conditions
reasonably acceptable to Landlord.

SECTION 29. SURRENDER OF LEASED PREMISES.

Upon expiration of the Lease Term, Tenant shall surrender to Landlord
the Leased Premises and all Tenant's improvements and alterations in good
condition, ordinary wear and tear accepted, except for fixtures that Landlord
has requested Tenant to remove pursuant to Section 22 hereof. Tenant shall, at
its expense, perform all restoration made necessary by the removal of any
alterations or Tenant's trade fixtures and personal property prior to surrender
of the Leased Premises.

In the event that Tenant does not remove its property upon expiration
of the Lease, such property shall become the property of Landlord to retain or
dispose of as it determines, provided however, that Tenant shall be subject to
the hold-over provisions set forth in Section 30 hereof in the event any of
Tenant's property remains on the Leased Promises after expiration of the Lease
Term. Tenant hereby waives all claims against Landlord arising from Landlord's
taking possession of such property. Tenant shall be liable to Landlord
for Landlord's cost for storing, removing and disposing of any such property.

SECTION 30. HOLDING OVER.

In the event Tenant continues to occupy the Leased Premises after the
last day of the Lease Term, then at Landlord's

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<PAGE>

election, by written notice to Tenant, a tenancy from month to month only
shall be created and not for any longer period, at a base rent of one hundred
fifty percent (150%) of the rent of the last day of the Least Term. Tenant
shall also pay to Landlord all damaqes sustained by Landlord resulting from
retention of possession by Tenant*

SECTION 21. EMINENT DOMAIN.

If the whole of the Leased Premises shall be taken by any public
authority under the power of eminent domain, the Lease Term shall cease as of
the day possession shall be taken by such public authority and Tenant shall pay
all rentals due hereunder up to that date with an appropriate refund by Landlord
of any such rent as may have been paid in advance for any period subsequent to
the date possession in taken. If less than all of the Leased Premises shall be
so taken, so long as Tenant has reasonably determined that it can continue its
operation without any substantial diminishment in operation or income or
increase in expense, the Lease Term shall cease only on the parts so taken as of
the day possession shall be taken by such public authority and Tenant shall pay
all rents due hereunder up to that day with appropriate refund by Landlord of
such rent as may have been paid in advance for any period subsequent to the date
possession is taken and thereafter the Annual Base Rent and Additional Rent
shall be equitably adjusted. If Tenant determines that it cannot continue its
operations as set forth above, then the Lease shall terminate on of the date of
possession by the public authority. Landlord shall at its expense perform all
necessary repairs or alterations to Tenant's Building so as to constitute the
remaining premises a complete architectural unit, provided that Landlord shall
not be obligated to undertake any such repairs and alterations if the cost
thereof exceeds the award received by Landlord. If the portion of the Leased
Premises so taken leaves the Leased Promises no longer suitable for the purpose
set forth in this Lease, then the Lease Term shall cease and Tenant shall pay
all rents due hereunder up to the day possession is so taken, with an
appropriate refund by Landlord of such rent as may have been paid in advance for
any period subsequent to the date of the takinq of possession by such public
authority. If more than twenty five percent (25%) of the floor area of Tenant's
Building or more than twenty five percent (25%) of the floor area of all of the
buildings in the Shopping Center shall be taken under the power of eminent
domain, or if parking is reduced below zoning requirements or if access drives
are taken without adequate substitution, Landlord or Tenant may, by written
notice delivered on or before the day of surrendering possession to the public
authority, terminate this Lease and all rents shall be paid or refunded as of
the date of termination. All compensation awarded for any taking of the Leased
Premises shall be the property of Landlord, and Tenant hereby assiqns to
Landlord any of Tenant's right, title and interest in and to any and all such

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<PAGE>

compensation, provided that nothing herein contained shall prevent Tenant
from seeking a separate award for damages related to any leasehold
improvements installed by Tenant. If this Lease is not terminated by either
party in accordance herewith, the compensation received by Landlord shall be
used for restoration of the Leased Premises or the Shopping Center, as
applicable.

SECTION 32. QUIET ENJOYMENT.

Landlord warrants that it has good and marketable fee simple title to
the Leased Premises and Shopping Center, that it has full right and lawful
authority to enter into this Lease for the full term hereof, that Tenant will be
put in possession of the Leased Premises when Tenant is entitled hereunder, and
that Tenant, on paying the rent and performing all of the other terms,
conditions and provisions of this Lease to be performed by Tenant, shall
peaceably and quietly have, hold and enjoy the Leased Premises for the full term
of this Lease, subject to the provisions herein contained; provided that the
Leased Premises may be subject to any and all public and private easements,
covenants, conditions and restrictions, building lines, rights of way for
drainage tiles, ditches, feeders and laterals, zoning and building use
restrictions, and other such encumbrances affecting the Leased Premises and the
Shopping Center, none of which would materially adversely affect the use of the
Leased Premises for the uses provided for in this Lease.

SECTION 33. SUBORDINATION AND NON-DISTURBANCE.

This Lease shall be subject and subordinate to the lien of any
mortgage and/or deed of trust which Landlord may place upon the Leased Premises
and to all of the terms, conditions and provisions thereof, to all advances
made, and to any renewals, extensions, modifications or replacements thereof,
provided that (i) if there are no defaults hereunder on the part of the Tenant,
the right of possession of Tenant to the Leased Premises and Tenant's rights
arising out of this Lease, including, but not limited to, Tenant's option to
purchase, shall not be affected or disturbed by the mortgagee or trustee or
beneficiary under the mortgage, deed of trust or the notes secured thereby; (2)
if Tenant is not then in default hereunder, shall not in any foreclosure or
other proceeding under the mortgage and/or deed of trust not in any other way be
deprived of its rights under this Lease, nor shall this Lease, including, but
not limited to, Tenant's option to purchase, be terminated or affected by any
foreclosure or sale or any proceeding under any mortgage or deed of trust; and
(3) the mortgagee and Tenant shall execute and deliver an Agreement of
Attornment and Non-Disturbance in form reasonably acceptable to the parties
within thirty (30) days from the Lease Date.

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<PAGE>

SECTION 34. BROKER.

Landlord and Tenant each warrant and represent to the other that it
has not dealt with any broker except the broker set forth in Section 1(M)
hereof. Landlord and Tenant each agree to indemnify, defend and hold the
other harmless with respect to any claim of liability asserted against the
indemnified party arising from the indemnifying party's alleged business
relationship with any other broker.

SECTION 35. INVALIDITY OF PROVISIONS.

If any term or provision of this Lease or the application thereof
to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term
or provision to persons whose circumstances are other than those as to which
it is held invalid or unenforceable, shall not be affected thereby.

SECTION 36. SERVICE OF NOTICE.

Notices hereunder shall be in writing signed by the party serving
the same and shall be sent by (i) registered or certified United States Mail,
return receipt requested, postage prepaid, and shall be addressed to the
parties at the addresses appearing in Section 1 hereof, which notice shall be
deemed given three (3) days after deposit thereof in the U.S. mail, (ii)
Federal Express or other overnight courier, or (iii) personal delivery.

SECTION 37. BINDING ON SUCCESSORS AND ASSIGNS.

The terms, conditions and covenants of this Lease shall be binding
upon and shall inure to the benefit of each of the parties hereto, their
heirs, personal representatives, successors or assigns.

SECTION 38. AMENDMENTS.

No waivers, alterations or modifications of this Lease or any
agreements in connection therewith shall be valid unless in writing duly
executed by both Landlord and Tenant herein.

With respect to Tenant, any amendment hereto shall be executed by
an officer having a title of at lease vice president, senior or executive
vice president. Further, any amendment, waiver, or modification must
expressly state that it is an amendment, waiver or modification of this Lease.

SECTION 39. MERGER.

This Lease supersedes any and all other agreements, either oral or
in writing between the parties hereto with respect to the

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<PAGE>

demised premises and contains all of the covenants, agreements and other
obligations between the said parties with respect to said premises.

SECTION 40. PARAGRAPH HEADINGS.

The words appearing at the commencement of paragraphs and
sub-paragraphs of this Lease are included only as a guide to the content
thereof and are not to be considered in the construction of this Lease.

SECTION 41. GOVERNING LAWS.

The laws of the State of Illinois shall govern the validity,
performance and enforcement of this Lease.

SECTION 42. INTENTIONALLY OMITTED.

SECTION 43. ASSIGNMENT OF LEASE OR RENT.

If the Leased Premises or any part thereof or premises of which the
Leased Premises are a part are at any time subject to a first mortgage or a
first deed of trust and this Lease or the rent is assigned to such mortgagee,
beneficiary or trustee, and the Tenant is given written notice thereof,
including the address of such assignee, then the Tenant shall not terminate this
Lease nor claim any offset for any default on the part of the Landlord without
first giving written notice to such assignee, specifying the default in
reasonable detail, and affording such assignee a reasonable opportunity to make
performance for and on behalf of the Landlord.

SECTION 44. ATTORNEYS' FEES.

Tenant agrees to pay all costs and expenses, including reasonable
attorneys' fees which may be incurred or imposed on the Landlord in enforcing
the terms of this Lease against Tenant, whether or not such enforcement involves
litigation. Landlord agrees to pay all costs and expenses, including reasonable
attorneys' fees which may be incurred or imposed on the Tenant in enforcing the
terms of this Lease against Landlord, whether or not such enforcement involves
litigation. In the event that any litigation shall arise with respect to any
dispute pertaining to this Lease, then the prevailing party to such litigation
shall be entitled as a part of its damages all costs and attorneys's fees
incurred in connection with such litigation.

SECTION 45. MISCELLANEOUS AFFIRMATIVE COVENANTS.

Tenant covenants at its expense at all times during the Lease Term,
including Option Terms, and such further time as Tenant occupies the Leased
Premises or any part thereof:

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<PAGE>

(A) To store all trash and refuse in adequate containers within the
Leased Premises, or within such outside areas as may be designated, but which
must first be approved by Landlord, which, in each case, shall be maintained
in a neat and clean condition and so as not to be visible to members of the
public shopping in the Shopping Center and so as not to create any health or
fire hazard; to keep all drains pipes and sewers on the Leased Premises
clean, unobstructed, and free of accumulation of grease and other waste from
the Leased Premises, and to remove all such waste with proper traps,
disposals, etc. so as to prevent such waste from accumulating in any drains
or pipes or being improperly discharged through any drains or pipes into any
system of pipes or sewers located outside the Leased Premises and if, as a
result of the improper discharge of waste from operation of Tenant's
business, Landlord experiences any sewer, plumbing or other problems of any
kind in any area of the Shopping Center, Tenant shall, immediately after
notice from Landlord, correct such problem to Landlord's satisfaction at
Tenant's reasonable expense, and if Tenant fails to do so within ten (10)
days after notice from Landlord, Landlord may do so and Tenant shall pay to
Landlord, as additional rent, all reasonable costs of correcting the problem,
provided that Landlord first delivers to Tenant copies of all bills
evidencing the amount expended by Landlord to correct such problems and the
purposes for such expenditures, and to conform to all reasonable rules and
regulations which Landlord may make in the management and use of the Shopping
Center, and to require such conformance by Tenant's employees.

(B) To arrange for the regular pickup of all trash and garbage from
the Leased Premises at Tenant's expense. Tenant shall not burn any trash or
garbage at any time in or about the building, and Tenant shall attend to the
regular disposal thereof in a reasonable manner.

(C) To give Landlord prompt written notice of any casualty,
material damage or other similar occurrence in or to the Leased Premises of
which Tenant has actual knowlege.

SECTION 46. MISCELLANEOUS NEGATIVE COVENANTS.

Tenant covenants at all times during the Lease Term and such
further times as Tenant occupies the Leased Premises or any part thereof:

(A) Not to injure, overload, deface or otherwise harm the Leased
Premises; nor commit any nuisance; nor unreasonably annoy owners or occupants
of neighboring property; nor permit any unreasonable odors to emanate from
the Leased Premises or any improvement thereon other than the momentary odor
which may be discharged through a door when open for exit or entrance; nor
use the Leased Premises for any extra-hazardous purpose or in any manner that
will suspend, void or make inoperative any liability

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<PAGE>

policy or policies of insurance of the kind generally in use in the state
at any time carried on any improvement within the Shopping Center; nor
sell, distribute or give away any product which tends to create a nuisance;
nor make any use of the Leased Premises which is improper, offensive or
contrary to any law or ordinance or any regulation of any governmental
authority; nor conduct or permit any going-out-of-business, bankruptcy
fire, or auction sales on the Leased Promises; nor use any advertising
medium such as hand bills, flashing lights, searchlights, loud speakers
(except for the pick-up window orderinq system), phonographs, sound
amplifiers or radio or television receiving equipment in a manner to be
seen or heard outside the building on the Leased Premises; nor load, unload
or park any truck or other delivery vehicle in any area of the Shopping
Center except that designated for such purposes, nor use any sidewalks, or
other area on the portion of the Leased Premises located outside the
building thereon, excepting Tenant's use of the trash enclosure approved by
Landlord on the Approved Plans and Specifications, for the storage or
disposal of trash or refuse or for the keeping, selling, or displaying of
any merchandise or other object or for the conduction of any activity
whatsoever except pedestrian movement and vehicular parking and movement;
nor place any fence, barricade, division rail or obstruction of any type or
kind on any part of the Leased Premises.

SECTION 47. RULES AND REGULATIONS.

Landlord shall have the right from time to time to form such
reasonable rules and regulations for the Shopping Center as it deems
desirable, and Tenant agrees to comply with same upon written notice thereof;
provided such rules and regulations do not interfere with the conduct of
Tenant's business or require Tenant to breach or violate any laws, rules or
regulations applicable to the operation of its business.

SECTION 48. EXCULPATION. It is expressly understood and agreed by and
between the parties hereto, anything herein to the contrary notwithstanding,
that each and all of the representations, covenants, undertakings and agreements
herein made on the part of Landlord while in form purporting to be the
representations, covenants, undertakings and agreements of the Landlord are
nevertheless each and every one of them, made and intended not as personal
representations, covenants, undertakings and agreements by the Landlord
personally, but are made and intended for the purpose of binding only that
portion of the trust property specifically leased hereunder and this Lease is
executed and delivered by said Landlord not in its own right, but solely in the
exercise of the powers conferred upon it as such trustee; that no duty shall
rest upon Landlord to sequester the trust estate or the rents, issue and profits
arising therefrom, or the proceeds arising from any other disposition thereof;
and that no personal liability or personal responsibility is assumed

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<PAGE>

nor shall at any time be asserted or enforceable against Landlord, or any of
the beneficiaries of Landlord, or the agents of its beneficiaries, on account
of this Lease or on account of any representations, covenants, undertakings
or agreements of the Landlord, in this Lease contained either expressly or
implied, all such personal liability, if any, being expressly waived and
released by the Tenant herein and all persons claiming by, through or under
said Tenant. The Tenant shall look solely to the equity of Landlord in the
Leased Premises for the satisfaction of the remedies of Tenant in the event
of a breach by the Landlord of any of the covenants and conditions of this
Lease.

SECTION 49. NON-WAIVER.

The failure of the Landlord or Tenant to enforce any of the rights
given to it under this Lease by reason of the violation of any of the
covenants in this Lease to be performed by Landlord or Tenant shall not be
construed as a waiver of the rights of the Landlord or Tenant to exercise any
such rights as to any subsequent violations of such covenants, or as a waiver
of any of the rights given to the Landlord or Tenant by reason of the
violation of any of the other covenants of this Lease.

SECTION 50. MEMORANDUM OF LEASE.

Landlord agrees that upon request from Tenant, Landlord will
promptly execute and deliver to Tenant a memorandum or short form lease to be
recorded in the public office in which records relating to the Leased
Premises are kept and take such other and further action as may be neessary
to give all persons now or hereafter interested in title to the Leased
Premises notice of the existence of this Lease, including such terms and
provision as Tenant deems appropriate, provided, however, that no copy of
this lease or other instrument shall be filed for record which sets forth the
rental provisions contained herein.

SECTION 51. ESTOPPEL LETTERS. At any time and from time to time,
Tenant agrees, upon request in writing from Landlord, to execute, acknowledge
and deliver to Landlord a statement in writing certifying that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the same are in full force and effect as modified and stating the
modifications) and the date to which Annual Base Rent and Additional Rent
have been paid in full or any other information relative to this Lease which
Landlord may reasonably request.

SECTION 52. OPTION TO PURCHASE. Tenant shall have the option to
purchase the Leased Premises in Lease Years Eleven (11), Sixteen (16) and
Twenty (20) (the "Option to Purchase"). The Option to Purchase may be
exercised by written notice delivered to Landlord no later than ninety (90)
days prior to

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<PAGE>

expiration of the tenth (10th) Lease Year, the fifteenth (15th) Lease Year or
the twentieth (20th) Lease Year, as the case may be. The purchase price for
the Leased Premises shall be an amount derived by dividing the Annual Base
Rent for the eleventh (11th), sixteenth (16th) or twenty first (21st) Lease
Year, as the case may be, by nine and one-half percent (9 1/2%). In the
event that Tenant exercises the Option to Purchase, closing shall be on a
date agreed to by the parties, but no sooner than upon expiration of the
Lease Year in which the Option to Purchase shall have been exercised. The
Lease shall be deemed terminated as of the date of such closing. Until the
date of closing, Tenant shall pay to Landlord all Annual Base Rent and
Additional Rent due in accordance with the terms hereof and comply with all
other terms and conditions hereof. The amount of Annual Base Rent payable
between the date of Tenant's exercise of the Option to Purchase and the date
of closing shall be the Annual Base Rent that would have been due if said
Option had not been exercised, and in the event that the Option to Purchase
is exercised during the twentieth Lease Year, after expiration thereof, the
Annual Base Rent shall be the amount due for the twenty first (21st) Lease
Year, as though Tenant had exercised its first option to renew.

The purchase transaction shall be in accordance with the terms set
forth in the form of Real Estate Sale Contract attached hereto and made a
part hereof as Exhibit E. Landlord shall be obligated to provide Tenant with
title insurance, but Landlord shall not be obligated to provide Tenant with a
new survey at the time of closing.

SECTION 53. TENANT'S SELF HELP. If Landlord shall be in default of
any of its obligations hereunder, and if within thirty (30) days after
written notice thereof from Tenant to Landlord, Landlord fails to cure said
default, or if said default is incapable of cure within said thirty (30) day
period and Landlord fails to commence to cure said default within said thirty
(30) day period, Tenant shall have the right to cure same, and Landlord shall
reimburse Tenant for the amount of same within ten (10) days after receipt of
an invoice therefore and appropriate documentation. The amount paid by Tenant
shall bear interest at the fourteen percent (14%) per annum from the date
paid until the date repaid, and if not paid within said ten (10) day period,
may be set-off as a credit against Annual Base Rent. If Tenant shall notify
Landlord of a default more than twice in any Lease Year, then the cure period
for any said default shall be reduced to twenty (20) days to cure or to
commence the cure. In the event of an emergency, Tenant shall use its best
efforts to notify Landlord, and Landlord shall use its best efforts to
promptly respond. If Tenant is unable to notify Landlord, or if Landlord is
notified and fails to promptly respond, Tenant shall have the right to cure
said default, provided however, if Tenant is unable to notify Landlord,
Landlord shall not be liable for interest on

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<PAGE>

costs incurred by Tenant. For purposes hereof, "emergency" shall mean imminent
danger of injury or death to person or material damage to property, or the
continued failure to promptly remove impediments to egress and ingress or to
light the Shopping Center, including the Leased Premises.

54. SOIL BORINGS. Prior to the commencement of the Work, Landlord
shall cause soil tests to be performed on the Leased Premises to determine the
suitability of the soil for construction of Tenant's Building. In the event
that said soil tests demonstrate that said soil cannot support Tenant's
Building, Landlord shall notify Tenant thereof in writing, and within fifteen
(15) days after receipt of such notice, Tenant shall have the right to terminate
this Lease upon written notice delivered to Landlord within said 15 day period.

THIS LEASE HAS BEEN EXECUTED BY THE PARTIES ON PAGE 3 HEREOF

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<PAGE>
EXHIBIT 23A

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated February 9, 1996 (except for Note 17, as to
which the date is February 27, 1996 and Note 18, as to which the date is June
13, 1996), accompanying the consolidated financial statements of Beverly
Bancorporation, Inc. and Subsidiaries contained in the Registration Statement
and Prospectus, which will be signed upon consummation of the transaction
described in Note 18 to the consolidated financial statements. We consent to the
use of the aforementioned report in the Registration Statement and Prospectus,
and to the use of our name as it appears under the caption "Experts."

GRANT THORNTON LLP

Chicago, Illinois
August 5, 1996

<PAGE>
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