BEVERLY BANCORPORATION INC, S-1, 1996-06-24

BEVERLY BANCORPORATION INC
S-1, 1996-06-24

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<PAGE>

As filed with the Securities and Exchange Commission on June 24, 1996
Registration No. 333-
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________

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

Delaware 6712 Applied For
(State or other jurisdiction (Primary standard (I.R.S. employer
of incorporation or industrial classification identification
organization) code number) number)

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)
_________________________

Copy to:

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

_________________________

<PAGE>

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.
_________________________

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
/ / ______________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
/ / ______________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
_________________________

CALCULATION OF REGISTRATION FEE

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Proposed
Title of Each Proposed Maximum
Class of Maximum Aggregate Amount of
Securities to Amount to Offering Price Offering Registration
be Registered be Registered Per Share(1) Price(1) Fee
- -------------------------------------------------------------------------------
Common Stock,
$.01 par value 1,150,000 $16.00 $18,400,000 $6,345.00
per share shares(2)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

(1) Estimated solely for purposes of calculating the amount of the registration
fee.

(2) Includes 150,000 shares subject to the Underwriters' over-allotment option.

_________________________

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.

<PAGE>

BEVERLY BANCORPORATION, INC.

Cross Reference Sheet
Pursuant to Regulation S-K Item 501(b)

Form S-1 Item Prospectus Heading
- ---------------
- ---------------------------------------

1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus . . Forepart of Registration Statement;
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus . . Inside Front and Outside Back Cover
Pages of Prospectus

3. Summary Information, Risk
Factors and Ratio of Earnings
to Fixed Charges . . . . . . Prospectus Summary; The Company; Risk
Factors

4. Use of Proceeds . . . . . . . . . Use of Proceeds

5. Determination of Offering
Price . . . . . . . . . . . . Underwriting

6. Dilution . . . . . . . . . . . . . Dilution

7. Selling Security Holders . . . . . *

8. Plan of Distribution . . . . . . . Underwriting

9. Description of Securities to
Be Registered . . . . . . . . Description of Capital Stock

10. Interests of Named Experts
and Counsel . . . . . . . . . Legal Matters; Experts

11. Information with Respect to
the Registrant . . . . . . . The Company; Market for Common Stock
and Dividends; Capitalization;
Selected Consolidated Financial Data;
Management's Discussion and Analysis
of Financial Condition and Results of
Operations; Business; Management;
Principal Stockholders; Description of
Capital Stock; Shares Eligible for
Future Sale; Consolidated Financial
Statements
12. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities . . . . . . . . .*

------------------------------------------
* Item is omitted because answer is negative or item is inapplicable.

<PAGE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO CONPLETION 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.

SUBJECT TO COMPLETION, DATED JUNE 24, 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 Common Stock has
been approved for quotation on the Nasdaq National Market under the symbol
"BEVB."

Investors should carefully consider the factors set forth under "RISK
FACTORS" beginning on page 7.

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.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Underwriting Proceeds to
Price to Public Discount(1) Company(2)
- -------------------------------------------------------------------------------
Per Share . . . . . . . $ $ $

Total(3) . . . . . . . $ $ $
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

(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 July
__, 1996.
_______________

HOWE BARNES INVESTMENTS, INC.
July __, 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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<PAGE>

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 March 31, 1996, the Company's total assets had grown to
$601.8 million, with net income of $1.4 million for the quarter then ended, an
increase in net income of 5.1% from the quarter ended March 31, 1995.

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<PAGE>

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 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 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.

-4-
<PAGE>

THE OFFERING

Common Stock offered . . . . . . 1,000,000 shares
Common Stock to be outstanding
after the offering(1). . . . . . 4,974,940 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
$9.7 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."

________________
(1) In addition, 513,040 shares of Common Stock are reserved for issuance under
the Company's stock option plan pursuant to which options to purchase
421,965 shares of Common Stock are outstanding, 168,756 of which are
presently exercisable.

-5-
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA

Three Months Ended
March 31,(1) Year Ended December 31,

1996 1995 1995 1994 1993 1992 1991
----- ----- ----- ---- ---- ---- ----
Statement Of Income Data: (dollars in thousands, except per share data)
- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Total interest income $10,253 $9,528 $39,970 $35,206 $33,468 $36,583 $42,328
Total interest expense 4,768 3,984 17,184 12,949 12,805 15,256 20,858
------ ------- ------- ------- ------- ------- -------
Net interest income 5,485 5,544 22,786 22,257 20,663 21,327 21,470
Provision for loan losses 41 76 159 311 1,299 3,577 2,923
Other income 2,123 1,844 7,870 8,017 9,820 11,300 9,048
Operating expense 5,477 5,360 21,416 20,875 22,169 23,127 22,513
Income tax expenses 647 579 2,877 2,672 2,143 1,519 1,036
Cumulative effect of change in
accounting principle - - - - 374 - -
------ ------- ------- ------- ------- ------- -------
Net income $1,443 $1,373 $6,204 $6,416 $5,246 $4,404 $4,046
------ ------- ------- ------- ------- ------- -------
------ ------- ------- ------- ------- ------- -------
Per Share Data(2):
- ------------------
Income before cumulative effect
of change in accounting principle $.35 $.28 $1.26 $1.34 $1.05 $.96 $.89
Net income .35 .28 1.26 1.34 1.13 .96 .89
Cash dividends declared .05 .05 .19 .18 .17 .17 .12
Book value at end of period 10.31 9.13 10.35 8.44 8.58 7.69 6.94
Net tangible book value at end of
period 10.00 8.81 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 .97 % .99% 1.09% 1.20 % 1.03% .90% .85%
Return on average equity 13.93 12.93 13.37 16.10 13.33 12.61 12.95
Dividend payout ratio (dividends
declared per share to net income
per share) 14.29 17.86 15.08 13.43 15.04 17.71 13.48
Average equity to average assets 7.04 7.62 8.17 7.47 7.72 7.17 6.53
Net interest margin (tax equivalent) 4.16 4.56 4.55 4.73 4.56 5.05 5.27
Allowance for loan losses to
total loans at end of period(2) 1.28 1.29 1.13 1.37 1.51 1.79 1.51
Non-performing loans to total loans
at end of period .55 .71 .57 .82 1.05 1.76 2.70
Net loans charged off (recoveries) to
average loans (.12) .24 .21 .13 .70 1.23 2.02
</TABLE>

<TABLE>
<CAPTION>
March 31, December 31,
--------------------- ---------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------------------- ---------------------------------------------------------------
(in thousands)
Selected Balance Sheet Data:
- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

Total assets $601,810 $564,493 $591,203 $561,339 $519,635 $510,642 $467,287
Total earning assets 555,379 517,877 539,842 505,307 477,196 462,549 422,185
Loans 311,405 303,025 312,160 291,042 267,517 251,062 279,511
Total deposits 544,452 504,015 527,131 504,445 459,132 454,917 418,134
Short-term borrowings 11,701 12,786 17,292 11,414 13,346 15,795 12,884
Total stockholders' equity 40,881 44,199 40,961 40,808 40,055 35,253 31,266
Net tangible book value 39,650 42,688 39,660 39,202 38,017 32,651 28,365

</TABLE>

_______________
(1) Ratios for interim periods are stated on an annualized basis. However,
interim operating results and ratios for the three months ended March 31,
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.

-6-
<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.

IMPACT OF 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.

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 been approved for inclusion in 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."

-7-
<PAGE>

GOVERNMENT REGULATION AND LEGISLATION

The Company, the Banks and Beverly Trust are subject to extensive federal
and state legislation, regulation and supervision. 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. 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

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<PAGE>

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.

RELIANCE ON 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."

SHARES ELIGIBLE FOR FUTURE SALE

Following completion of the offering, the Company will have 4,974,940
shares of Common Stock issued and outstanding (5,124,940 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) for a
period of 180 days after the date of this Prospectus without the prior 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 10, 1996,
options to purchase 421,965 shares of Common Stock were outstanding, of which
options with respect to 168,756 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 March 31, 1996 was
approximately $39.7 million or $10.00 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 $4.30. See "Dilution."

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<PAGE>

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 $9.7 million of
outstanding short-term bank borrowings under a demand note, bearing interest at
adjusted LIBOR rates, 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.

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 June 19, 1996, the last reported bid and ask prices for the Common Stock
as quoted by Howe Barnes Investments, Inc. were $62.50 and $66.25, respectively
(or $12.50 and $13.25, 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 10, 1996, the Company had approximately 310 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.

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<PAGE>

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:

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 (through _____, 1996) . . . .

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.

CAPITALIZATION

The following table sets forth the consolidated short-term borrowings and
capitalization of the Company as of March 31, 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."

-11-
<PAGE>

March 31, 1996
------------------------------
Actual As Adjusted
-------- -----------
(in thousands)
<S> <C> <C>
Short-Term Borrowings
Securities sold under agreements to repurchase,
funds purchased, and treasury tax deposits $ 2,001 $ 2,001

Short-term bank borrowings 9,700 -
--------- ---------
Total short-term borrowings $ 11,701 $ 2,001
--------- ---------
--------- ---------
Long-term obligations

Capitalized lease obligation $ 601 $ 601

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; 3,966,485 shares
issued and outstanding; 4,974,940 shares
outstanding as adjusted(1)(2)(3) 40 50

Additional paid-in-capital(3) 11,315 24,905

Retained earnings 32,032 32,032
Net unrealized loss on available-for-sale
securities (816) (816)

Notes receivable - officer stockholders (1,690) (1,690)
--------- ---------
Total Stockholders' Equity $ 40,881 $ 54,481
--------- ---------
Total Capitalization $ 41,482 $ 55,082
--------- ---------
--------- ---------
</TABLE>

_______________
(1) Adjusted for a five percent stock dividend paid on April 15, 1996.
(2) Excludes 513,040 shares of Common Stock reserved for issuance under the
Company's stock option plan pursuant to which options to purchase 421,965
shares of Common Stock are outstanding, 168,756 of which are presently
exercisable.
(3) The as adjusted column includes 8,455 shares issued on April 15, 1996 for
dividends reinvested and directors' fees paid in shares of Common Stock.

-12-
<PAGE>

DILUTION

The net tangible book value of the Company as of March 31, 1996 was $39.7
million or $10.00 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 March 31, 1996 would have been
$53.2 million or $10.70 per share of Common Stock. This represents an immediate
increase in net tangible book value of $.70 per share to the existing
stockholders, and an immediate dilution of $4.30 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 March 31,
1996, which is determined by subtracting the net tangible book value per share
after the offering from the price paid by a new investor.

Assumed initial public offering price per share(1) . . . . . . . . . . . .$15.00
Net tangible book value per share as of March 31, 1996 . . . .$10.00
Increase in net tangible book value per share attributable
to payments by new investors(2) . . . . . . . . . . . . . . . 0.70
-----
Pro forma net tangible book value per share after offering . . . . . . . . 10.70
-----
Dilution of net tangible book value per share to new investors . . . . . . $4.30
-----
-----
_______________
(1) Before deducting the estimated underwriting discount and offering expenses.
(2) After deducting the estimated underwriting discount and offering expenses.

The following table summarizes as of March 31, 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):

-13-
<PAGE>

Number of Shares Total Average Price
Purchased Consideration Per Share
---------------- ------------- -------------
<S> <C> <C> <C>
Officers, directors and affiliated persons . . . . . . 148,678 $ 1,137,807 $7.65
New investors. . . . . . . . . . . . . . . . . . . . . 1,000,000 15,000,000 15.00
</TABLE>

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 three-month periods ended March 31, 1996 and 1995 and as of March 31, 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.

-14-
<PAGE>

Three Months Ended
March 31, (1) Year Ended December 31,
------------------ ---------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
Statement of Income Data: (dollars in thousands, except per share data)
- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income $10,253 $9,528 $39,970 $35,206 $33,468 $36,583 $42,328
Total interest expense 4,768 3,984 17,184 12,949 15,256 20,858 12,805
------- ------ ------- ------- ------- ------- -------
Net interest income 5,485 5,544 22,786 22,257 21,327 21,470 20,663
Provision for loan losses 41 76 159 311 1,299 3,577 2,923
Other income 2,123 1,844 7,870 8,017 9,820 11,300 9,048
Operating expense 5,477 5,360 21,416 20,875 22,169 23,127 22,513
Income before income tax expense 2,090 1,952 9,081 9,088 7,763 5,923 5,082
Income tax expense 647 579 2,877 2,672 2,143 1,519 1,036
Cumulative effect of change in
accounting principle -- -- -- -- 374 -- --
------- ------ ------- ------- ------- ------- -------
Net income $ 1,443 $ 1,373 $ 6,204 $ 6,416 $ 5,246 $ 4,404 $ 4,046
------- ------ ------- ------- ------- ------- -------
------- ------ ------- ------- ------- ------- -------
Per Share Data(2):
- -----------------
Income before cumulative effect $.35 $.28 $1.26 $1.34 $1.05 $.96 $.89
of change in accounting principle
Net income .35 .28 1.26 1.34 1.13 .96 .89
Cash dividends declared .05 .05 .19 .18 .17 .17 .12
Book value at end of period 10.31 9.13 10.35 8.44 8.58 7.69 6.94
Net tangible book value at end of period 10.00 8.81 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 .97% .99% 1.09% 1.20% 1.03% .90% .85%
Return on average equity 13.93 12.93 13.37 16.10 13.33 12.61 12.95
Dividend payout ratios (dividends declared per 14.29 17.86 15.08 13.43 15.04 17.71 13.48
share to net income per share)
Average equity to average assets 7.04 7.62 8.17 7.47 7.72 7.17 6.53
Net interest margin (tax equivalent) 4.16 4.56 4.55 4.73 4.56 5.05 5.27
Allowance for loan losses to total loans at
end of period 1.28 1.29 1.13 1.37 1.51 1.79 1.51
Nonperforming loans to total
loans at end of period .55 .71 .57 .82 1.05 1.76 2.70
Net loans charged off (recoveries) to average (0.12) .24 0.21 0.13 0.70 1.23 2.02
loans(1)
Tier 1 risk-based capital 12.47 13.61 12.25 14.78 13.15 12.97 9.74
Total risk-based capital 13.67 14.35 13.34 16.09 14.51 14.75 11.19
</TABLE>

March 31, 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 $601,810 $564,493 $591,203 $561,339 $519,63 $510,642 $467,2875
Total earning assets 555,379 517,877 539,842 505,307 477,196 462,549 422,185
Loans 311,405 303,025 312,160 291,042 267,517 251,062 279,511
Allowance for loan losses 3,930 3,894 3,524 3,995 4,026 4,484 4,230
Total deposits 544,452 504,015 527,131 504,445 459,132 454,917 418,134

Short term borrowings 11,701 12,786 17,292 11,414 13,346 15,795 12,884
Total stockholders' equity 40,881 44,199 40,961 40,808 40,055 35,120 31,266
Net tangible book value 39,650 42,688 39,660 39,202 38,017 32,651 28,365

</TABLE>

(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.

-15-
<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 March 31, 1996, the Company's total assets had grown to
$601.8 million with net income of $1.4 million for the quarter then ended, an
increase in net income of 5.1% over the quarter ended March 31, 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 relatively constant at $5.7 million for the quarter ended March 31, 1996 and
$5.8 million for the quarter ended March 31, 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.

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.

-16-
<PAGE>

For the Three Months Ended March 31,(1)
------------------------------------------------------------------------
1996 1995
--------------------------------------------- -------------------------
Average Balance Interest Yield/Rate(%) Average Balance Interest Yield/Rate(%)
--------------- -------- ------------- --------------- -------- ------------
INTEREST EARNING ASSETS: (dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Investment securities:
Taxable $187,894 $2,848 6.06% $184,143 $2,887 6.27%
Tax exempt (tax
equivalent) 27,099 509 7.51 26,441 523 7.93
-------- ------- -------- -------
Total investment securities 214,993 3,357 6.25 210,584 3,410 6.48
-------- ------- -------- -------
Funds sold 27,229 359 5.29 2,977 42 5.66
-------- ------- -------- -------
Loans:(2)
Commercial and industrial 48,740 1,153 9.49 50,836 1,195 9.43
Residential real estate 149,277 2,831 7.58 146,400 2,763 7.55
Commercial real estate 73,508 1,668 9.10 64,854 1,443 8.92
Other consumer 37,104 1,030 11.13 33,458 802 9.61
Fees on loans - 61 - 83
Total loans (tax equivalent) 308,629 6,743 8.74 295,548 6,286 8.51
-------- ------- -------- -------
Total earning assets 550,851 $10,459 7.59% 509,109 $9,738 7.65%
-------- ------- -------- --------
-------- ------- -------- --------
Cash and due from banks 25,907 23,134
Other assets 18,016 21,037
-------- -------
Total assets $594,774 $553,280
-------- --------
-------- --------
INTEREST BEARING LIABILITIES:
Interest bearing deposits:
Interest bearing demand
deposits $111,545 $ 614 2.21 $105,491 $ 727 2.76
Savings deposits 107,699 724 2.70 110,003 781 2.85
Time deposits 229,706 3,187 5.56 192,987 2,350 4.88
-------- ------- -------- -------
Total deposits 448,950 4,525 4.04 408,481 3,858 3.79
Short-term borrowings:
Securities sold under
agreements to
repurchase, funds
purchased, and treasury
tax deposits 3,835 55 5.75 7,322 99 5.42
Short-term bank
borrowings 10,103 188 7.46 1,146 27 9.45
------- ------ ------- ------
Total interest bearing
liabilities $462,888 $4,768 4.13 $416,949 $3,984 3.83
-------- ------ -------- ------
-------- ------ -------- ------
Demand deposits 84,642 90,003
Other liabilities 5,373 4,190
Stockholders' equity 41,871 42,138
-------- --------
Total liabilities and
stockholders' equity $594,774 $553,280
-------- --------
-------- --------
Net interest income (tax
equivalent) $5,691 $5,754
------ ------
------ ------
Net interest margin(3) 4.13% 4.52%
---- ----
---- ----
Interest bearing liabilities to
earning assets 84.03% 81.90%
----- -----
----- -----
</TABLE>

_______________
(1) Yield/Rates are annualized.
(2) Nonaccrual loans are included in average balances.
(3) Net interest margin is net interest income divided by average total earning
assets.

-17-
<PAGE>

For the Years Ended December 31,
-------------------------------------------------------------------------------------------------
1995 1994 1993
------------------------------ ----------------------------- ------------------------------
Average Yield/Rate Average Yield/Rate Average Yield/Rate
------- ------- -------
Balance Interest (%) Balance Interest (%) Balance Interest (%)
------- -------- ---------- ------- -------- ---------- ------- -------- ----------
INTEREST EARNING ASSETS: (dollars in thousands)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment securities:
Taxable $181,538 $11,168 6.15% $189,404 $11,393 6.02% $198,052 $11,680 5.90%
Tax-exempt (tax
equivalent) 26,271 2,048 7.80 23,211 1,882 8.11 17,395 1,538 8.84
-------- ------- -------- -------- -------- --------
Total investment
securities 207,809 13,216 6.36 212,615 13,275 6.24 215,447 13,218 6.14
-------- ------- -------- -------- -------- --------
Funds sold 8,389 478 5.70 5,908 228 3.86 6,173 177 2.87
-------- ------- -------- -------- -------- --------
Loans:(1)
Commercial and
industrial 50,879 4,960 9.75 49,950 4,293 8.60 51,420 3,929 7.64
Residential real estate 150,028 11,634 7.75 128,034 9,197 7.18 98,206 7,116 7.25
Commercial real
estate 70,240 6,373 9.07 60,249 5,196 8.62 55,850 4,944 8.85
Other consumer 36,050 3,818 10.59 34,697 3,385 9.76 44,151 4,339 9.83
Fees on loans - 341 - 414 - 390
Total loans (tax
equivalent) 307,197 27,126 8.83 272,930 22,485 8.24 249,627 20,718 8.30
-------- ------- -------- -------- -------- --------
Total earning assets $523,395 $40,820 7.80 $491,453 $35,988 7.32 $471,247 $34,113 7.24
-------- ------- -------- ------- -------- ---------
-------- ------- -------- ------- -------- ---------
Cash and due from banks 24,647 22,041 20,034
Other assets 20,161 20,488 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 $2,398 2.27
Savings deposits 108,656 3,072 2.83 112,397 2,981 2.65 106,539 3,104 2.91
Time deposits 203,874 10,916 5.35 172,453 7,016 4.07 162,860 6,576 4.04
-------- ------- -------- -------- -------- --------
Total deposits 421,017 16,726 3.97 389,634 12,512 3.21 374,840 12,078 3.20
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 9,547 350 3.67
Short-term bank
borrowings 781 79 10.12 2,971 206 6.93 6,000 377 6.28
-------- ------- -------- -------- -------- --------
Total interest
bearing liabilities $429,009 $17,184 4.01 $398,285 $12,949 3.25 $390,387 $12,805 3.28
-------- ------- -------- ------- -------- -------
-------- ------- -------- ------- -------- -------
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 $21,308
------- ------- -------
------- ------- -------
Net interest margin(2) 4.52% 4.69% 4.52%
----- ----- -----
----- ----- -----
Interest bearing liabilities to
earning assets 81.97% 81.04% 82.84%
----- ----- ------
----- ----- ------
</TABLE>

______________
(1) Nonaccrual loans are included in average balances.
(2) Net interest margin is net interest income divided by average total
earning assets.

-18-
<PAGE>

Net interest income, on a tax-equivalent basis, was $5.7 million for the
three months ended March 31, 1996 and $5.8 million for the three months ended
March 31, 1995. Interest income on total earning assets increased $721,000 for
the three months ended March 31, 1996 as compared to the three months ended
March 31, 1995. Interest income on loans increased $457,000 for the three
months ended March 31, 1996 as compared to the three months ended March 31, 1995
primarily due to a $17.1 million increase in average loans outstanding and a
slight increase in average loan rates. Interest expense on interest-bearing
liabilities increased $784,000 for the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995 as a result of a $667,000
increase in interest expense on deposits, which was due to a combination of a
$40.5 million increase in average deposits and an increase in the average rate
paid to 4.04% from 3.79%. 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 $161,000 increase in interest expense on short-term bank
borrowings for the three months ended March 31, 1996 is attributable to the
borrowings incurred to finance the repurchase of the Company's Common Stock in
December 1995. Net interest margin decreased .39% to 4.13% for the three months
ended March 31, 1996 from 4.52% for the three months ended March 31, 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 4.52% in 1995 from
4.69% 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 .17% to
4.69% 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

-19-
<PAGE>

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 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.

For the Three Months Ended
March 31, For the Years Ended December 31,
----------------------------- --------------------------------------------------------------
1996 Compared to 1995 1995 Compared to 1994 1994 Compared to 1993
----------------------------- ---------------------------- ----------------------------
Change due to Change due to Change due to
------------- ------------- -------------
Volume Rate Net Volume Rate Net Volume Rate Net
------ ---- --- ------ ---- --- ------ ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Earned On: (in thousands)
- ------------------

Investment securities:

Taxable $ 235 $ (274) $(39) $ (474) $ 249 $ (225) $ (510) $ 223 $ (287)
Tax-exempt 52 (66) (14) 248 (82) 166 514 (170) 344
Funds sold 1,373 (1,056) 317 96 154 250 (8) 59 51
Total loans 1,113 (656) 457 2,824 1,817 4,641 1,934 (167) 1,767
------ -------- ------- ------- ------- ------- ------- ------- ------
Total Interest Earned 2,773 (2,052) 721 2,694 2,138 4,832 1,930 (55) 1,875
------ -------- ------- ------- ------- ------- ------- ------- ------

Interest Paid On:
Interest bearing
demand deposits 167 (280) (113) 89 134 223 (15) 132 117
Savings deposits (66) 9 (57) (99) 190 91 170 (293) (123)
Time deposits 1,792 (955) 837 1,279 2,621 3,900 388 52 440
Short-term borrowings:
Securities sold under
agreements to
repurchase, funds
purchased, and
treasury tax deposits (189) 145 (44) 62 86 148 (142) 23(119)

Short-term bank
borrowings 846 (685) 161 (152) 25 (127) (190) 19 (171)
------ -------- ------- ------- ------- ------- ------- ------- ------
Total Interest Paid 2,550 (1,766) 784 1,179 3,056 4,235 211 (67) 144
------ -------- ------- ------- ------- ------- ------- ------- ------
Net Interest Income $ 223 $ (286) $ (63) $1,515 $ (918) $ 597 $ 1,719 $ 12 $ 1,731
------ -------- ------- ------- ------- ------- ------- ------- ------
------ -------- ------- ------- ------- ------- ------- ------- ------
</TABLE>

OTHER INCOME

The Company's total other income for the three months ended March 31, 1996
increased $279,000 to $2.1 million from $1.8 million for the three months ended
March 31, 1995. The Company's total other

<PAGE>

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.

For the Three Months
Ended March 31, For the Years Ended December 31,
-------------------- -----------------------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C> <C>
Income from fiduciary activities $497 $467 $1,927 $1,872 $1,764
Service charges on deposit accounts 1,105 1,005 4,078 4,256 4,123

Net gains (losses) on sales of
investment securities - (14) 49 207 1,421

Mortgage origination fees 137 80 555 336 1,266
Securities sales 58 26 132 174 117

Insurance activities 47 59 207 218 183
Loan servicing fees 58 47 206 196 198
Other 221 174 716 758 748
------ ------ ------ ------ ------
Total other income $2,123 $1,844 $7,870 $8,017 $9,820
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>

The $279,000 increase in total other income for the three months ended
March 31, 1996 over the three months ended March 31, 1995 is primarily due to a
$100,000 increase in service charges on deposit accounts and modest increases in
most other income categories. 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 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 $117,000 to $5.5 million
from $5.4 million for the three months ended March 31, 1996 compared to the
three months ended March 31, 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.

-21-
<PAGE>

For the Three Months Ended
March 31, For the Years Ended December 31,
--------------------------- ------------------------------------
1996 1995 1995 1994 1993
(in thousands)
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits $2,755 $2,698 $10,730 $10,496 $10,486
Occupancy 623 504 2,134 2,003 2,102

Equipment 420 529 1,918 2,155 2,156
FDIC insurance 1 278 570 1,035 999
Marketing and Promotion 203 190 952 647 854

Computer system and services 242 26 492 124 158
Supplies 207 174 724 717 782
Loan, legal and collection fees 109 77 257 143 443

Other real estate - - 53 50 388
Other 917 884 3,586 3,505 3,801
------ ------ ------ ------- -------
Total operating expenses $5,477 $5,360 $21,416 $20,875 $22,169
------ ------ ------ ------- -------
------ ------ ------ ------- -------
</TABLE>

The increase in total operating expenses for the three months ended March
31, 1996 is primarily due to the following factors. Salaries and employee
benefits expense increased $57,000 compared to the three months ended March 31,
1995. Occupancy expense increased $119,000 for the three months ended March 31,
1996 compared to the three months ended March 31, 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 $33,000 for the
three months ended March 31, 1996 compared to the three months ended March 31,
1995 due primarily to an increase of $216,000 for computer system and services
which were outsourced in mid-1995, offset by a decrease of $277,000 for FDIC
insurance. 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. Similarly, the
change in provision for income taxes to $647,000 for the quarter ended March 31,
1996 from $579,000 for the quarter ended March 31, 1995 reflects changes in
income.

-22-
<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 Company's loan portfolio as of the indicated dates.

March 31, December 31,
------------------------ ------------------------------------------------------
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial and industrial $52,176 $50,258 $50,339 $51,162 $53,970 $58,372
Residential real estate 118,109 119,153 110,045 80,172 50,746 51,949
Home equity lines of credit 30,875 31,152 32,256 37,684 42,848 48,293
Commercial real estate 72,080 74,199 64,789 56,774 54,308 54,236
Other consumer 38,165 37,398 33,613 41,725 49,190 66,661
-------- -------- -------- -------- -------- --------
Total loans 311,405 312,160 291,042 267,517 251,062 279,511
Allowance for loan losses (3,930) (3,524) (3,995) (4,026) (4,484) (4,230)
-------- -------- -------- -------- -------- --------
Net loans $307,475 $308,636 $287,047 $263,491 $246,578 $275,281
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>

Total loans decreased $755,000 as of March 31, 1996 from December 31, 1995.
This decrease is primarily attributable to a decrease in residential and
commercial 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 $1.9 million to $52.2 million as
of March 31, 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
$3.1 million. Commercial and industrial loans remained relatively constant at
$50.3 million at December 31, 1995 and December 31, 1994.

Residential real estate loans decreased $1.1 million to $118.1 million as
of March 31, 1996 from $119.2 million as of December 31, 1995 primarily due to
refinancing of adjustable rate mortgages held by the Company. The Company
generally sells fixed-rate residential loans into 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.

-23-
<PAGE>

Home equity lines of credit decreased $277,000 to $30.9 million as of March
31, 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 $2.1 million to $72.1 million as of
March 31, 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 $767,000 to $38.2 million as of March 31,
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 Company's recent increase in consumer
loans is due primarily to the moderate re-entry into the indirect auto loan
market.

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.

-24-
<PAGE>

LOAN MATURITIES

The following table sets forth the remaining maturities, based upon
contractual dates, for selected loan categories as of March 31, 1996.

One Year
Or Less Over 1 Year Through 5 Years Over 5 Years Total
--------- ----------------------------- ---------------------------- ------
(in thousands)

Fixed Rate Floating Rate Fixed Rate Floating Rate
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Commercial and industrial $15,266 $15,239 $7,203 $6,611 $7,857 $52,176
Residential real estate 6,768 15,960 415 5,379 89,587 118,109

Home equity lines of
credit 3,206 - 17,277 - 10,392 30,875
Commercial real estate 10,644 34,945 6,828 1,139 18,524 72,080
Other consumer 5,439 30,387 - 1,721 618 38,165
------- ------- ------ ------- ------- -------
Total $41,323 $96,531 $31,723 $14,850 $126,978 $311,405
------- ------- ------ ------- ------- -------
------- ------- ------ ------- ------- -------
</TABLE>

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. Non-accrual 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.

-25-
<PAGE>

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

March 31, December 31,
------------ -------------------------------------------------------
1996 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------

(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual loans $1,482 $1,606 $2,221 $2,599 $3,006 $4,571
Other loans 90 days past due 237 177 167 227 1,416 2,964

Other real estate 858 858 1,081 1,401 3,238 2,344
------ ------ ------ ------ ------ ------
Total nonperforming assets $2,577 $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 .82 .84 1.19 1.57 3.01 3.50
Nonperforming assets to total
assets .43 .45 .62 .81 1.50 2.11
</TABLE>

Nonperforming assets have decreased in each of the last five years and
constitute .43% of total assets as of March 31, 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 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 losses is composed of specific
reserves for impaired loans and general reserves for all other loans.

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.

-26-
<PAGE>

For the Three
Months Ended
March 31, For the Years Ended December 31,
------------- ----------------------------------------------------------------------

1996 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- ------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Average total loans $308,629 $307,197 $272,930 $249,627 $270,113 $285,895
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Total loans at end of period $311,405 $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 40 269 125 329 1,440 951
Residential real estate - 344 45 124 101 3

Home equity lines of credit - - 43 180 - 3
Commercial real estate 108 200 28 309 403 858
Other consumer 30 288 727 1,161 1,890 4,910
-------- -------- -------- -------- -------- --------
Total charge-offs 179 1,101 968 2,103 3,834 6,725
-------- -------- -------- -------- -------- --------
Recoveries:

Commercial and industrial 1 73 263 87 143 466
Residential real estate 1 18 39 5 - -
Home equity lines of credit - - 1 12 - -
Commercial real estate 488 7 2 33 5 10
Other consumer 54 373 321 209 363 473
-------- -------- -------- -------- -------- --------
Total recoveries 544 471 626 346 511 949
-------- -------- -------- -------- -------- --------
Net charge-offs (recoveries) (365) 630 342 1,757 3,323 5,776
-------- -------- -------- -------- -------- --------
Provision for loan losses 41 159 311 1,299 3,577 2,923
-------- -------- -------- -------- -------- --------
Allowance at end of period $3,930 $3,524 $3,995 $4,026 $4,484 $4,230
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Net charge-offs (recoveries) to
average total loans (.12)% .21% .13% .70% 1.23% 2.02%
Allowance to total loans at end
of 1.28 1.13 1.37 1.51 1.79 1.51
period

Allowance to nonperforming loans 228.62 197.64 167.29 142.46 101.40 56.14
</TABLE>

The allowance for loan losses was $3.9 million as of March 31, 1996, $3.5
million as of December 31, 1995 and $4.0 million as of December 31, 1994. For
the three months ended March 31, 1996, net recoveries on loans previously
charged-off were $365,000, 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 March 31, 1996. See "-- Non-
Performing Loans."

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.

-27-
<PAGE>

March 31, December 31,
----------------- ----------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------
Loan Loan Loan Loan Loan Loan
Category to Category to Category to Category to Category to Category to
Amount Gross Loans Amount Gross Loans Amount Gross Loans Amount Gross Loans Amount Gross Loans Amount Gross Loans
------ ----------- ------ ----------- ------ ----------- ------ ----------- ------ ----------- ------ -----------
Allocated: (dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and
industrial $576 16.76% $702 16.10% $642 17.30% $469 19.12% $300 21.50% $1,297 20.88%

Residential real
estate 742 37.93 676 38.17 510 37.81 318 29.97 451 20.21 101 18.59
Home equity line
of credit 139 9.91 129 9.98 164 11.08 135 14.09 210 17.07 - 17.28
Commercial real
estate 650 23.14 652 23.77 588 22.26 636 21.22 494 21.63 398 19.40

Other consumer 386 12.26 421 11.98 562 11.55 1,634 15.60 1,273 19.59 1,527 23.85
Unallocated 1,437 - 944 - 1,529 - 834 - 1,756 - 907 -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Total allowance
for loan losses $3,930 100.00% $3,524 100.00% $3,995 100.00% $4,026 100.00% $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 March 31, 1996, the Company owned short-tranche
Fannie Mae and FHLMC collateralized mortgage obligations with an amortized cost
totaling $36.6 million, short-term Fannie Mae and U.S. Treasury strips with an
amortized cost totaling $14.4 million and short-term structured notes with an
amortized cost totaling $5.5 million. As of March 31, 1996, the Company did not
hold any off-balance sheet derivative financial instruments such as futures,
forwards, swaps or option contracts. As of March 31, 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 or
corporations.

Mortgage backed securities are mortgage backed obligations of Fannie Mae
and FHLMC. These obligations have contractual maturities ranging from less than
four years to 15 years and have an anticipated average life to maturity ranging
from less than one year to 5.5 years. All mortgage backed securities 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 mortgage backed securities under various
interest rate assumptions to monitor volatility. At March 31, 1996, the Company
owned

-28-
<PAGE>

no high risk mortgage backed securities as defined by the Federal Financial
Institutions Examination Council's Supervisory Policy Statement on Securities
Activities. 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.

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 March 31, 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.

March 31, 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 $65,798 $65,415 $2,186 $2,122 $67,984 $67,537 28.91%

U.S. government agencies 78,163 77,913 - - 78,163 77,913 33.24
Obligations of state and
political subdivisions 20,302 20,412 14,420 14,522 34,722 34,934 14.77
Corporate debt securities 17,536 16,862 - - 17,536 16,862 7.46

Mortgage backed securities 21,317 21,176 15,303 15,017 36,620 36,193 15.57
Federal reserve stock and
other securities 102 102 10 10 112 112 0.05
-------- -------- ------- ------- -------- -------- -------
Total $203,218 $201,880 $31,919 $31,671 $235,137 $233,551 100.00%
-------- -------- ------- ------- -------- -------- -------
-------- -------- ------- ------- -------- -------- -------
</TABLE>

_____________
(1) Based on amortized cost.

-29-

<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 $ 71,237 $ 71,504 $ 2,196 $2,173 $ 73,433 $ 73,677 35.53%

U.S. government agencies 62,171 62,446 - - 62,171 62,446 30.08

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

Mortgage backed securities 7,266 7,393 15,449 15,321 22,715 22,714 10.99

Federal reserve stock and
other securities 107 107 15 15 122 122 0.06
-------- -------- ------- ------- -------- -------- ------
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, 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 $76,722 $73,192 $8,548 $7,916 $85,320 $81,108 38.50%

U.S. government agencies 39,707 38,337 21,502 20,101 61,209 58,438 27.62

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

Mortgage backed securities - - 26,760 25,559 26,760 25,559 12.07

Federal reserve stock and
other securities 102 102 25 25 127 127 0.06
-------- -------- ------- ------- -------- -------- ------
Total $134,234 $126,393 $87,372 $83,108 $221,606 $209,541 100.00%
-------- -------- ------- ------- -------- -------- ------
-------- -------- ------- ------- -------- -------- ------
</TABLE>

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

The Company's total investment securities portfolio increased $28.5 million as
of March 31, 1996 from December 31, 1995 and decreased $15.0 million as of
December 31, 1995 from December 31, 1994.

-30-
<PAGE>

The increase as of March 31, 1996 is primarily the result of the investment of
the influx of deposits in the Will-Cook branch resulting from promotional
activities, as well as the investment of approximately $10.0 million from a
reduction in the funds sold position. The investments purchased were primarily
mortgaged backed securities 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.

INVESTMENT MATURITIES AND YIELDS

The following table sets forth the contractual maturities of investment
securities as of March 31, 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 After Five But
Within One Year Within Five Years Within Ten Years After Ten Years Total
----------------- ----------------- ---------------- --------------- ------------------

Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
AVAILABLE-FOR-SALE SECURITIES(1): (dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury $18,839 5.77% $ 46,576 5.61% $ - - % $ - - % $ 65,415 5.66%

U.S. government agencies 7,080 6.31 49,001 6.15 21,832 6.38 - - 77,913 6.23
Obligations of state and
political subdivisions(2) 1,995 9.37 9,247 7.77 7,531 6.76 1,639 7.24 20,412 7.51
Corporate debt securities - - - - 577 7.07 16,285 7.52 16,862 7.50

Mortgage backed securities(3) - - 21,176 6.47 - - - - 21,176 6.47

Federal reserve stock and
other securities - 102 6.00 - - - - 102 6.00
------- -------- ------- ------- --------
Total available-for-sale $27,914 $126,102 $29,940 $17,924 $201,880
------- -------- ------- ------- --------
------- -------- ------- ------- --------
Weighted average yield(4) 6.16% 6.12% 6.49% 7.49% 6.31%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Held-to-Maturity Securities(5):
U.S. Treasury $ - - % $ - - % $ 2,186 5.68% $ - - % $ 2,186 5.68%
U.S. government agencies - - - - - - - - - -

Obligations of state and
political subdivisions(2) $ 2,972 7.02% $ 10,583 7.08% $865 7.37 - - 14,420 7.09
Corporate debt securities - - - - - - - - - -

Mortgage backed securities(3) - - 15,303 5.86 - - - - 15,303 5.86
Federal reserve stock and
other securities 10 5.50 - - - - - - 10 5.50
------- -------- ------- ------- --------
Total held-to-maturity $ 2,982 $ 25,886 $ 3,051 - $ 31,919
------- -------- ------- ------- --------
------- -------- ------- ------- --------
Weighted average yield(4) 7.02% 6.36% 6.16% - 6.40%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</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 mortgage backed securities 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.

DEPOSITS

The Company has experienced growth in total deposits in recent years.
Average total deposits were $533.6 million for the three months ended March 31,
1996, $509.0 million for the year ended December 31, 1995 and $481.1 million for
the year ended December 31, 1994.

-31-
<PAGE>

These increases in deposits are the result of increased marketing activity in
connection with the opening of the Will-Cook 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 Three Months Ended
March 31, For the Years Ended December 31,
------------------------------------- ------------------------------------
1996 1995
------------------------------------- ------------------------------------
Average Percent of Average Percent of
Balance Deposits Rate Balance Deposits Rate
------- -------- ---- ------- -------- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Non-interest
bearing demand $ 84,642 15.86% - % $88,009 17.29% - %

Interest bearing
demand 111,545 20.90 2.20 108,487 21.31 2.52

Savings 107,699 20.18 2.69 108,656 21.35 2.83

Time:

Certificates of
deposit, under
$100,000(1) 178,067 33.38 5.53 156,589 30.76 5.26

Certificates of
deposit, over
$100,000(1) 35,627 6.68 5.71 28,613 5.62 5.55

Public funds 16,012 3.00 5.45 18,672 3.67 5.78
-------- ------ -------- ------
Total time 229,706 43.06 5.55 203,874 40.05 5.35
-------- ------ -------- ------
Total $533,592 100.00% 3.39% $509,026 100.00% 3.28%
-------- ------ ---- -------- ------ ----
-------- ------ ---- -------- ------ ----
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------------------------------------
1994 1993
------------------------------------- ------------------------------------
Average Percent of Average Percent of
Balance Deposits Rate Balance Deposits Rate
------- -------- ---- ------- -------- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Non-interest
bearing demand $ 91,475 19.01% - % $ 81,274 17.82% -

Interest bearing
demand 104,784 21.78 2.40 105,441 23.11 2.27

Savings 112,397 23.36 2.65 106,539 23.36 2.91

Time:

Certificates of
deposit, under
$100,000(1) 141,620 29.44 4.02 143,495 31.46 4.00

Certificates of
deposit, over
$100,000(1) 15,899 3.30 4.22 7,750 1.70 3.70

Public funds 14,934 3.11 4.33 11,615 2.55 3.83
-------- ------ -------- ------
Total time 172,453 35.85 4.07 162,860 35.71 3.98
-------- ------ -------- ------
Total $481,109 100.00% 2.60% $456,114 100.00% 2.63
-------- ------ ---- -------- ------ ----
-------- ------ ---- -------- ------ ----
</TABLE>

- ---------------
(1) Certificates of deposit exclusive of public funds.

The following table summarizes as of March 31, 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.

March 31, 1996
--------------
(in thousands)

Three months or less $ 25,877

Over three months through six months 7,516

Over six months through nine months 15,974

Over twelve months 5,780
---------
Total $ 55,147
---------
---------

-32-
<PAGE>

SHORT-TERM BORROWINGS

The Company uses short-term borrowings on a limited basis. These
borrowings include overnight funds purchased, securities sold under agreements
to repurchase, and borrowings under a revolving line of credit maintained with
the Company's principal correspondent bank. The following table sets forth
categories of short-term borrowings of the Company as of the indicated dates or
for the indicated periods.

At or For
the Three
Months
Ended At or For the Years Ended
March 31, December 31,
---------- -------------------------------
1996 1995 1994 1993
---- ---- ---- ----
Funds Purchased and Securities (dollars in thousands)
Sold Under Repurchase Agreements:

Balance at end of period $ 2,001 $ 6,292 $ 9,614 $ 8,646

Weighted average interest rate 5.61% 5.20% 4.77% 4.42%
at end of period(1)

Maximum amount outstanding(2) $10,778 $31,400 $23,402 $35,071

Average amount outstanding 3,835 7,211 5,680 9,547

Weighted average interest rate 5.75% 5.26% 4.07% 3.67%
during period(1)

- -------------
(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
$9.7 million as of March 31, 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.

-33-
<PAGE>

At or For
the Three
Months
Ended At or For the Years Ended
March 31, December 31,
--------- ------------------------------

1996 1995 1994 1993
---- ---- ---- ----
Short-Term Bank Borrowings: (dollars in thousands)

Balance at end of period $ 9,700 $11,000 $1,800 $4,700

Weighted average interest rate 7.46% 8.20% 8.50% 5.50%
at end of period(1)

Maximum amount outstanding(2) $11,000 $11,000 $4,700 $7,550

Average amount outstanding 10,103 781 2,971 6,000

Weighted average interest rate 7.98% 9.90% 7.00% 6.28%
during period(1)

- ---------------
(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 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.

-34-

<PAGE>

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

RISK BASED CAPITAL RATIOS
<TABLE>
<CAPTION>
March 31, December 31,
-------------------- ------------------------------------------------------------------------
1996 1995 1994 1993
-------------------- -------------------- -------------------- --------------------

(dollars in thousands)

Amount Ratio Amount Ratio Amount Ratio Amount Ratio
-------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Tier 1 capital $40,831 12.47% $39,442 12.25% $44,938 14.78% $38,867 13.15%

Tier 1 capital minimum
requirement(1) 19,641 4.00 19,326 4.00 18,248 4.00 11,822 4.00
-------- ------- -------- ------- -------- ------- -------- -------

Excess $21,190 8.47% 20,116 8.25% $26,690 10.78% $27,045 9.15%
-------- ------- -------- ------- -------- ------- -------- -------
-------- ------- -------- ------- -------- ------- -------- -------

Total capital $44,761 13.67% $42,966 13.34% $48,933 16.09% $42,893 14.51%

Total capital minimum
requirement(1) 32,736 8.00 32,210 8.00 30,413 8.00 23,644 8.00
-------- ------- -------- ------- -------- ------- -------- -------

Excess $12,025 5.67% $10,756 5.34% $18,520 8.09% $19,249 6.51%
-------- ------- -------- ------- -------- ------- -------- -------
-------- ------- -------- ------- -------- ------- -------- -------

Total risk adjusted assets $327,355 $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 total capital to risk-adjusted assets ratio of 8%.
See "Supervision and Regulation -- Regulation of Banks -- Capital
Requirements."

LEVERAGE RATIOS

March 31, December 31,
-------------------- ------------------------------------------------------------------------
1996 1995 1994 1993
-------------------- -------------------- -------------------- --------------------

(dollars in thousands)

Amount Ratio Amount Ratio Amount Ratio Amount Ratio
-------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Tier 1 capital $40,831 6.86% $39,442 6.94% $44,938 8.42% $38,867 7.56%
Minimum
requirement(1) 17,843 3.00 17,046 3.00 16,019 3.00 15,418 3.00
-------- ------- -------- ------- -------- ------- -------- -------

Excess $22,988 3.86% $22,396 3.94% $28,919 5.42% $23,449 4.56%
-------- ------- -------- ------- -------- ------- -------- -------
-------- ------- -------- ------- -------- ------- -------- -------

Average total
assets $594,774 $568,203 $533,982 $513,921
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>

______________

(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."

-35-

<PAGE>

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 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 $1.1 million for the three months ended
March 31, 1996, $800,000 for the three months ended March 31, 1995, $8.9 million
for the year ended December 31, 1995, and $9.0 million for the year ended
December 31, 1994. Net cash used in investing activities, consisting primarily
of loan and investment funding, was $28.6 million for the three months ended
March 31, 1996, $7.3 million for the three months ended March 31, 1995, $8.0
million for the year ended December 31, 1995, and $41.2 million for the year
ended December 31, 1994. Net cash provided by financing activities, consisting
primarily of deposit growth, was $11.6 million for the three months ended March
31, 1996, $31,000 for the three months ended March 31, 1995, $16.7 million for
the year ended December 31, 1995, and $42.9 million for the year ended December
31, 1994.

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

-36-

<PAGE>

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.

The following table sets forth the interest rate sensitivity of the
Company's assets and liabilities as of March 31, 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.

-37-

<PAGE>

Non-Rate
Sensitive
0-3 Months 4-12 Months 1-5 Years and Over 5 Total
Years
--------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Interest Earning Assets:

Funds sold $10,175 $ - $ - $ - $10,175

Investment securities 6,598 30,952 146,361 49,888 233,799

Total loans 86,454 32,638 166,207 26,106 311,405
-------- -------- -------- ------- --------

Total earning assets $103,227 $63,590 $312,568 $75,994 $555,379
-------- -------- -------- ------- --------
-------- -------- -------- ------- --------

Interest Bearing Liabilities:

Interest bearing demand deposits(1) $ - $18,121 $81,199 $15,770 $115,090

Savings deposits(1) - - 86,862 21,716 108,578

Time deposits 71,642 133,806 33,178 200 238,826
-------- -------- -------- ------- --------

Total interest bearing deposits 71,642 151,927 201,239 37,686 462,494
-------- -------- -------- ------- --------

Short-term borrowings:

Securities sold under agreements to
repurchase, funds purchased,
and treasury tax deposits 2,001 - - - 2,001

Short-term bank borrowings 9,700 - - - 9,700
-------- -------- -------- ------- --------

Total borrowings 11,701 - - - 11,701
-------- -------- -------- ------- --------

Total interest bearing liabilities 83,343 151,927 201,239 37,686 474,195
-------- -------- -------- ------- --------

Interest sensitivity gap $19,884 $(88,337) $111,329 $38,308 $81,184
-------- -------- -------- ------- --------
-------- -------- -------- ------- --------

Cumulative gap $19,884 $(68,453) $42,876 $81,184 $81,184

Interest sensitivity gap to total assets 3.30% (14.68)% 18.50% 6.37% 13.49%

Cumulative sensitivity gap to total assets 3.30 (11.38) 7.12 13.49 13.49

</TABLE>

______________
(1) Interest bearing demand and savings deposits are included in the repricing
categories based on the proposed policy statement issued by bank regulators
on August 4, 1995. The table uses the maximum maturity distribution
allowed.

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

-38-

<PAGE>

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 under 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 March 31, 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 March 31, 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.

-39-

<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 March
31, 1996, Beverly Trust managed $276.3 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.

-40-

<PAGE>

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, 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.

-41-

<PAGE>

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.

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 125,000
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.

-42-

<PAGE>

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.

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

-43-

<PAGE>

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" and "--
Analysis of Allowance for Loan Losses."

TRUST ACTIVITIES

Beverly Trust provides a wide array of trust services for individuals and
corporations. As of March 31, 1996, Beverly Trust managed eighteen funds with
an aggregate of $276.3 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 March 31, 1996 totaled $93.4 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.

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<PAGE>

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.

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.

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<PAGE>

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 March 31, 1996, the Company had 282 full-time employees and 107 part-
time employees. Management considers its relationship with its employees to be
good.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

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

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<PAGE>

Name Position Age
---- -------- ---

Anthony R. Pasquinelli Chairman of the Board and Director 62

John D. Van Winkle President, Chief Executive Officer 50
and Director

Christopher M. Cronin Director 47

Richard I. Polanek Director 64

William C. Waddell Director 53

Brent E. Frank Executive Vice President, Chief 36
Lending Officer

James W. Martin, Jr. Executive Vice President, Manager 56
of Consumer Sales and President of
First National Bank of Wilmington

Charles E. Ofenloch Executive Vice President, Manager 54
of Commercial Sales and President
of Beverly Bank Matteson

John T. O'Neill Executive Vice President, Chief 47
Financial Officer

Bruce G. Park Executive Vice President, Chief 58
Operations Officer

Ronald F. Stajkowski Executive Vice President and Manager 56
of Beverly Trust

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.

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<PAGE>

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 each of the Banks 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.

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

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<PAGE>

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

Name and Principal Position Year Salary($) Bonus($) All Other Compensation($)(1)
- --------------------------- ---- --------- -------- ----------------------------
<S> <C> <C> <C> <C>
John D. Van Winkle, President and Chief 1995 $175,000 $150,000 $7,370
Executive Officer

James W. Martin, Jr., Executive Vice 1995 110,000 75,000 6,861
President, Manager of Retail Sales

Charles E. Ofenloch, Executive Vice 1995 150,000 85,000 7,175
President, Manager of Commercial Sales

Bruce G. Park, Executive Vice President, 1995 93,500 25,000 5,338
Chief Operations Officer

Ronald F. Stajkowski, Executive Vice 1995 90,000 45,000 6,177
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.

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<PAGE>

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 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.

Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Options at Money Options
December 31, 1995 at December 31, 1995(1)
----------------------------- ----------------------------

Exercisable/Unexercisable Exercisable/Unexercisable
Name ------------------------- -------------------------
- ----

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

- -----------------
(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

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<PAGE>

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 March 31, 1996 the Banks had $3,186,720
in loans outstanding to the directors, executive officers and affiliates of the
Company, which amount represented 7.8% of total stockholders' equity as of that
date.

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 $25,568 through June 10,
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.

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 $600,000 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 $3,000 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 June 10, 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 June 10, 1996. The note is payable on demand and
bears interest at the prime rate.

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<PAGE>

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 $224,640 was outstanding as of June 10, 1996. The loan is
payable on demand and bears interest at the prime rate.

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of June 10, 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.

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<PAGE>

PERCENTAGE OF OUTSTANDING SHARES (1)
------------------------------------
NUMBER OF
SHARES
BENEFICIALLY AFTER
NAME OWNED(1) PRIOR TO OFFERING OFFERING
---- ------------ ----------------- --------

Heartland Advisors Inc.(2) 302,625 7.6% 6.1%

Anthony R. Pasquinelli(3)(13) 286,052 7.0 5.6

Bruno A. Pasquinelli(4) 271,317 6.7 5.4

John D. Van Winkle(5)(13)(14) 109,435 2.8 2.2

Christopher M. Cronin(6)(13) 8,390 * *

Richard I. Polanek(7)(13) 75,150 1.9 1.5

William C. Waddell(8)(13) 63,794 1.6 1.3

James W. Martin, Jr.(9)(13) 27,865 * *

Charles E. Ofenloch(10)(13) 91,792 2.3 1.8

Bruce G. Park(11)(13)(14) 26,647 * *

Ronald F. Stajkowski(12)(13) 108,210 2.7 2.1

All directors and executive
officers as a group (11
persons)(13) 833,346 20.5 16.8

- -------------
*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 December 31,
1995 in its most recent Schedule 13G filed with the Securities and Exchange
Commission. Includes

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<PAGE>

50,025 shares as to which Heartland Advisors Inc. has sole voting power and
60,525 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 11,783 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 11,757 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 4,711 shares beneficially owned by Mr. Waddell's wife.

(9) Includes 16,840 shares held in trust for Mr. Martin's benefit.

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

(11) Includes 10,291 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 9,112 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.

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<PAGE>

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.

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

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<PAGE>

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.

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 --

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<PAGE>

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 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

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<PAGE>

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 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

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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 March 31, 1996, the Company had Tier 1 and total risk-based capital
ratios of 12.47% and 13.67%, respectively, and had a Tier 1 leverage ratio of
6.86%.

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

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risk exposure, liquidity, funding and market risks, the quality and level of
earnings, investment or loan 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.

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

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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 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.

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.

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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 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 March 31, 1996, Beverly Bank qualified as "well-capitalized," with a
total risk-based capital ratio of 13.70%; a Tier 1 risk-based capital ratio of
12.50% and a leverage ratio of 7.72%. As of March 31, 1996, Beverly Bank
Matteson qualified as "well-capitalized," with a total risk-based capital ratio
of 13.10%; a Tier 1 risk-based capital ratio of 12.23% and a leverage ratio of
7.37%. As of March 31, 1996, Beverly Bank Lockport qualified as "well-
capitalized," with a total risk-based capital ratio of 13.70%; a Tier 1 risk-
based capital ratio of

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12.60% and a leverage ratio of 6.99%. As of March 31, 1996, Wilmington
qualified as "well-capitalized," with a total risk-based capital ratio of
14.02%; a Tier 1 risk-based capital ratio of 13.03% and a leverage ratio of
7.69%.

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

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of quarterly or semi-annual dividends, or 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.

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.

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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."

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
mortgaged loans.

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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 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-

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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 the date hereof, the authorized capital stock of the Company consists
of 8,000,000 shares of Common Stock, par value $.01 per share, of which
3,974,940 shares are outstanding and held of record by approximately 310
stockholders, and 1,000,000 shares of Preferred Stock, par value $.01 per share,
none of which is 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

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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.

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

Following completion of the offering, the Company will have 4,974,940
shares of Common Stock issued and outstanding (5,124,940 shares if the
Underwriters' over-allotment option is

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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 1933 Act, except for any shares which are purchased in this offering by
affiliates of the Company. The 1,159,703 remaining shares (the "Restricted
Shares") were issued and sold by the Company in reliance upon exemptions from
registration under the 1933 Act and may not be sold in the absence of
registration thereunder unless an exemption from registration is available.

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.

As of June 10, 1996, options to purchase 421,965 shares of Common Stock
were outstanding under the Company's stock option plan, of which options with
respect to 168,756 shares of Common Stock are presently exercisable. A total of
91,075 shares of Common Stock are 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) 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.

-69-
<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.

Underwriters Number of Shares
- ------------ ----------------

Howe Barnes Investments, Inc. . . . . . . . . . .
---------

TOTAL . . . . . . . . . . . . . . . . . . . 1,000,000
---------
---------

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 738,635 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

-70-
<PAGE>

or exchangeable for such capital stock (except, in the case of the Company,
shares issuable pursuant to outstanding options) 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.

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,

-71-
<PAGE>

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.

-72-
<PAGE>

BEVERLY BANCORPORATION, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE

Report of Independent Certified Public Accountants . . . . . . . . . . . . F-2

Consolidated Financial Statements

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

Consolidated Statements of Income for the Three Months Ended March 31,
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
Three Months Ended March 31, 1996 (unaudited) and the Years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . F-6

Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1996 and 1995 (unaudited) and the Years ended December 31,
1995, 1994 and 1993. . . . . . . . . . . . . . . . . . . . . . . . . F-7

Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . F-9

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 March 29, 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
June 21, 1996

F-2
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995 AND 1994
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
ASSETS December 31,
------------------------
March 31, 1996 1995 1994
-------------- --------- ---------
(unaudited)
<S> <C> <C> <C>
Cash and due from banks. . . . . . . . . . . . . . . . . . . $ 26,657 $ 32,635 $ 34,572
Funds sold . . . . . . . . . . . . . . . . . . . . . . . . . 10,175 20,075 500
Investment securities:
Available-for-sale, at fair value. . . . . . . . . . . . . 201,880 174,963 126,393
Held-to-maturity, at amortized cost (fair value $31,671,
$32,639, and $83,108, respectively). . . . . . . . . . . 31,919 32,644 87,372

Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 311,405 312,160 291,042
Less allowance for possible loan losses. . . . . . . . . . 3,930 3,524 3,995
-------- -------- --------
Net loans. . . . . . . . . . . . . . . . . . . . . 307,475 308,636 287,047

Premises and equipment, net. . . . . . . . . . . . . . . . . 13,810 13,204 13,944
Accrued interest receivable. . . . . . . . . . . . . . . . . 5,433 4,826 4,571
Other real estate. . . . . . . . . . . . . . . . . . . . . . 858 858 1,081
Intangible assets, net . . . . . . . . . . . . . . . . . . . 1,231 1,301 1,606
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 2,372 2,061 4,253
-------- -------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . $601,810 $591,203 $561,339
-------- -------- --------
-------- -------- --------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Interest bearing . . . . . . . . . . . . . . . . . . . . . $462,493 $439,020 $403,771
Non-interest bearing . . . . . . . . . . . . . . . . . . . 81,959 88,111 100,674
-------- -------- --------
Total deposits . . . . . . . . . . . . . . . . . . 544,452 527,131 504,445

Securities sold under agreements to repurchase,
funds purchased, and treasury tax deposits . . . . . . . . 2,001 6,292 9,614
Bank notes payable . . . . . . . . . . . . . . . . . . . . . 9,700 11,000 1,800
Accrued expenses and other liabilities . . . . . . . . . . . 4,776 5,819 4,672
-------- -------- --------
Total liabilities. . . . . . . . . . . . . . . . . . . . . 560,929 550,242 520,531

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, 3,966,485,
3,769,815 and 4,383,690, respectively. . . . . . . . . . 40 38 44
Additional paid-in capital . . . . . . . . . . . . . . . . 11,315 9,005 17,792
Retained earnings. . . . . . . . . . . . . . . . . . . . . 32,032 33,011 29,886
Net unrealized gains (losses) on available-for-sale
securities . . . . . . . . . . . . . . . . . . . . . . . (816) 617 (5,175)
Note receivable - officer stockholders . . . . . . . . . . (1,690) (1,710) (1,739)
-------- -------- --------
Total stockholders' equity . . . . . . . . . . . . . . . . 40,881 40,961 40,808
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . $601,810 $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
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

Three months ended
March 31, Years ended December 31,
------------------------ ---------------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(unaudited)
<S> <C> <C> <C> <C> <C>
Interest income:
Interest and fees on loans . . . . . . . . $ 6,710 $ 6,253 $ 26,972 $ 22,343 $ 20,596
Interest on investment securities:
Taxable. . . . . . . . . . . . . . . . . 2,848 2,887 11,168 11,393 11,680
Tax-exempt . . . . . . . . . . . . . . . 336 346 1,352 1,242 1,015
Funds sold . . . . . . . . . . . . . . . . 359 42 478 228 177
--------- --------- --------- --------- ---------
Total interest income. . . . . . . . . . 10,253 9,528 39,970 35,206 33,468

Interest expense:
Deposits . . . . . . . . . . . . . . . . . 4,525 3,858 16,726 12,512 12,078
Securities sold under agreements to
repurchase, funds purchased,
and treasury tax deposits. . . . . . . . 55 99 379 231 350
Notes payable. . . . . . . . . . . . . . . 188 27 79 206 377
--------- --------- --------- --------- ---------
Total interest expense . . . . . . . . . 4,768 3,984 17,184 12,949 12,805
--------- --------- --------- --------- ---------
Net interest income. . . . . . . . . . . 5,485 5,544 22,786 22,257 20,663

Provision for loan losses. . . . . . . . . . 41 76 159 311 1,299
--------- --------- --------- --------- ---------
Net interest income after provision
for loan losses. . . . . . . . . . . . 5,444 5,468 22,627 21,946 19,364

Other income:
Income from fiduciary activities . . . . . 497 467 1,927 1,872 1,764
Service charges on deposit accounts. . . . 1,105 1,005 4,078 4,256 4,123
Net gains (losses) on sales of investment
securities . . . . . . . . . . . . . . . - (14) 49 207 1,421
Mortgage origination and
servicing fees . . . . . . . . . . . . . 195 127 761 532 1,464
Other. . . . . . . . . . . . . . . . . . . 326 259 1,055 1,150 1,048
--------- --------- --------- --------- ---------
Total other income . . . . . . . . . . . 2,123 1,844 7,870 8,017 9,820
</TABLE>

F-4
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - CONTINUED
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

Three months ended
March 31, Years ended December 31,
------------------------- ----------------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Operating expenses:
Salaries and employee benefits . . . . . . $ 2,755 $ 2,698 $ 10,730 $ 10,496 $ 10,486
Occupancy. . . . . . . . . . . . . . . . . 623 504 2,134 2,003 2,102
Equipment. . . . . . . . . . . . . . . . . 420 529 1,918 2,155 2,156
FDIC insurance . . . . . . . . . . . . . . 1 278 570 1,035 999
Marketing and promotion. . . . . . . . . . 203 190 952 647 854
Computer system and services . . . . . . . 242 26 492 124 158
Supplies . . . . . . . . . . . . . . . . . 207 174 724 717 782
Loan legal and collection. . . . . . . . . 109 77 257 143 443
Other real estate. . . . . . . . . . . . . - - 53 50 388
Other. . . . . . . . . . . . . . . . . . . 917 884 3,586 3,505 3,801
--------- --------- --------- --------- ---------
Total operating expenses . . . . . . . . 5,477 5,360 21,416 20,875 22,169
--------- --------- --------- --------- ---------
Income before income taxes and
cumulative effect of change
in accounting principle. . . . . . . . 2,090 1,952 9,081 9,088 7,015

Income tax expense . . . . . . . . . . . . . 647 579 2,877 2,672 2,143
--------- --------- --------- --------- ---------
Income before cumulative effect
of change in accounting
principle. . . . . . . . . . . . . . . 1,443 1,373 6,204 6,416 4,872

Cumulative effect of change in accounting
for income taxes . . . . . . . . . . . . . - - - - 374
--------- --------- --------- --------- ---------
NET INCOME . . . . . . . . . . . . . . . $ 1,443 $ 1,373 $ 6,204 $ 6,416 $ 5,246
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Income per share:
Income before cumulative effect of
change in accounting principle . . . . . $ .35 $ .28 $ 1.26 $ 1.34 $ 1.05
Cumulative effect of change in
accounting for income taxes. . . . . . . - - - - .08
--------- --------- --------- --------- ---------
Net income per share . . . . . . . . . . . . $ .35 $ .28 $ 1.26 $ 1.34 $ 1.13
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Common and common equivalent shares. . . . . 4,076,380 4,904,485 4,908,930 4,782,460 4,655,975
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996 (UNAUDITED) AND THE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

Preferred Additional
Stock Preferred Common Paid-in Retained
Series B Stock Stock Capital Earnings
---------- --------- ------- ---------- ----------
<S> <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 . . . . . . . . - - - - -
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 . - - - - -
----- ------ --- -------- -------
Balance at December 31, 1994 . . . . . . . . . . . . . . . . . . . - - 44 17,792 29,886

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. . - - - - -
----- ------ --- -------- -------
Balance at December 31, 1995 . . . . . . . . . . . . . . . . . . . - - 38 9,005 33,011

Net income (unaudited) . . . . . . . . . . . . . . . . . . . . . . - - - - 1,443
Common stock cash dividend ($.05 per share) (unaudited). . . . . . - - - - (198)
5% common stock dividend (188,473 shares) (unaudited). . . . . . . - - 2 2,222 (2,224)
Issuance of 8,195 shares of common stock (unaudited) . . . . . . . - - - 88 -
Note paydowns (unaudited). . . . . . . . . . . . . . . . . . . . . - - - - -
Change in net unrealized losses on available-for-sale
securities (unaudited) . . . . . . . . . . . . . . . . . . . . . - - - - -
----- ------ --- -------- -------
Balance at March 31, 1996 (unaudited). . . . . . . . . . . . . . . $ - $ - $40 $ 11,315 $32,032
----- ------ --- -------- -------
----- ------ --- -------- -------
<CAPTION>
Net Unrealized Note
Gains (Losses) on Receivable - Total
Available-For-Sale Officer Treasury Stockholders'
Securities Stockholders Stock Equity
------------------ ------------ --------- ------------
<S> <C> <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 - - 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) - - (6,122)
------- -------- --- --------
Balance at December 31, 1994 . . . . . . . . . . . . . . . . . . . (5,175) (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 - - 5,792
------- -------- --- --------
Balance at December 31, 1995 . . . . . . . . . . . . . . . . . . . 617 (1,710) - 40,961

Net income (unaudited) . . . . . . . . . . . . . . . . . . . . . . - - - 1,443
Common stock cash dividend ($.05 per share) (unaudited). . . . . . - - - (198)
5% common stock dividend (188,473 shares) (unaudited). . . . . . . - - - -
Issuance of 8,195 shares of common stock (unaudited) . . . . . . . - - - 88
Note paydowns (unaudited). . . . . . . . . . . . . . . . . . . . . - 20 - 20
Change in net unrealized losses on available-for-sale
securities (unaudited) . . . . . . . . . . . . . . . . . . . . . (1,433) - - (1,433)
------- -------- --- --------
Balance at March 31, 1996 (unaudited). . . . . . . . . . . . . $ (816) $ (1,690) $ - $ 40,881
------- -------- --- --------
------- -------- --- --------
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS)

Three months ended
March 31, Years ended December 31,
------------------------ ---------------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 1,443 $ 1,373 $ 6,204 $ 6,416 $ 5,246
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for credit losses. . . . . . . . . . . . . 41 76 159 311 1,299
Provision for depreciation and amortization. . . . . 459 389 1,560 1,813 1,823
Investment security accretion and
amortization - net . . . . . . . . . . . . . . . . 188 189 673 825 1,204
Deferred tax expense (benefit) . . . . . . . . . . . 294 (21) 189 (155) 635
Cumulative effect of change in accounting
principle. . . . . . . . . . . . . . . . . . . . . - - - - (374)
Amortization of intangible assets. . . . . . . . . . 46 45 320 464 467
Realized investment security losses (gains), net . . - 14 (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 . (607) (585) (255) (492) 574
Decrease (increase) in other assets. . . . . . . . . (54) (279) (243) (39) (124)
(Decrease) increase in accrued expense and
other liabilities. . . . . . . . . . . . . . . . . (1,326) (379) 408 280 (563)
--------- --------- --------- --------- ---------
Net cash provided by operating activities. . . . 484 797 8,887 9,036 8,323

Cash flows from investment activities:
Investment securities available-for-sale:
Proceeds from sales or maturities of securities. . . . 13,305 4,976 29,040 34,944 -
Purchases of securities. . . . . . . . . . . . . . . . (42,354) - (20,206) (50,826) -
Investment securities held-to-maturity:
Proceeds from sales, calls and maturities of
investment securities. . . . . . . . . . . . . . . . 701 935 11,059 10,783 102,343
Purchases of securities. . . . . . . . . . . . . . . . (300) (1,221) (5,582) (9,152) (102,332)
Net decrease (increase) in loans . . . . . . . . . . . . 1,112 (12,209) (22,349) (26,587) (19,497)
Purchases of premises and equipment. . . . . . . . . . . (474) (103) (936) (926) (1,227)
Proceeds from sale of other real estate and equipment. . 8 301 1,004 610 2,065
--------- --------- --------- --------- ---------
Net cash used in investment activities . . . . . (28,002) (7,321) (7,970) (41,154) (18,648)
</TABLE>

F-7
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(AMOUNTS IN THOUSANDS)

Three months ended
March 31, Years ended December 31,
------------------------ ---------------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flow from financing activities:
Net increase (decrease) in deposits. . . . . . . . . . . $ 17,321 $ (430) $ 22,686 $ 45,313 $ 4,215
Net (decrease) increase in securities sold under
agreements to repurchase, funds purchased and
treasury tax deposits. . . . . . . . . . . . . . . . . (4,291) 1,372 (3,322) 968 5,005
Proceeds from notes payable. . . . . . . . . . . . . . . 200 - 11,000 - -
Principal reductions on notes payable. . . . . . . . . . (1,500) (800) (1,800) (2,900) (2,850)
Cash dividends . . . . . . . . . . . . . . . . . . . . . (198) (231) (887) (870) (800)
Proceeds from issuance of common stock . . . . . . . . . 88 91 472 142 298
Repurchase of common stock . . . . . . . . . . . . . . . - - (11,457) - -
Proceeds from notes receivable - officer stockholders. . 20 29 29 240 29
--------- --------- --------- --------- ---------
Net cash provided by financing activities. . . . 11,640 31 16,721 42,893 5,897
--------- --------- --------- --------- ---------
(Decrease) increase in cash and cash
equivalents. . . . . . . . . . . . . . . . . . (15,878) (6,493) 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 . . . . . . . . . $ 36,832 $ 28,579 $ 52,710 $ 35,072 $ 24,297
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . $ 4,546 $ 3,831 $ 16,641 $ 12,811 $ 13,002
Income taxes . . . . . . . . . . . . . . . . . . . . . 125 700 2,900 2,775 2,000
Non-cash investing and financing activities:
Unrealized gain (loss) on available-for-sale
securities . . . . . . . . . . . . . . . . . . . . . 2,627 3,226 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 . 8 49 472 110 1,071
Decrease in recourse obligations . . . . . . . . . . . - - - 2,710 1,749
Common stock issued for notes receivable . . . . . . . - - - 1,221 -
Common stock dividends . . . . . . . . . . . . . . . . 2,224 2,192 2,192 1,464 1,184
Capital lease obligations. . . . . . . . . . . . . . . 601 - - - -
</TABLE>

The accompanying notes are an integral part of these statements.

F-8
<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 three months ended March 31, 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.

F-9
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

INVESTMENT SECURITIES - CONTINUED

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.

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.

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.

F-10
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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 March 31, 1996 and 1995.

F-11
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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. 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.

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-12
<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. . . . . . . . . . . . . . . . $ 71,237 $ 71,504 $ 429 $162
U.S. government agencies and
corporations . . . . . . . . . . . . . . . 62,171 62,446 513 238
Obligations of state and political
subdivisions . . . . . . . . . . . . . . . 15,692 15,974 325 43
Corporate debt securities. . . . . . . . . . 17,556 17,539 281 298
Mortgage backed securities . . . . . . . . . 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.

Amortized Fair
Cost Value
--------- ---------
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
Mortgage backed securities . . . . . . . . . . . . . . 7,266 7,393
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . $174,029 $174,963
-------- --------
-------- --------

F-13
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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

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.

Mortgage backed securities include mortgage backed obligations of U.S.
government agencies and corporations, and mortgage backed securities issued by
other organizations. These obligations have contractual maturities ranging from
four to 15 years and have an anticipated average life to maturity ranging from
less than one to 5.5 years. All mortgage backed securities 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 mortgage backed securities under various interest rate assumptions
to determine whether volatility falls within acceptable limits. At December 31,
1995 and 1994, the Company owned no high risk mortgage backed securities 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 securities, may not
be purchased without the prior approval of the Board of Directors.

Included in the available-for-sale portfolio are certain securities classified
as U.S. Treasury and U.S. agency and corporations strips and structured notes.
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):

December 31,
---------------------
1995 1994
------ ------
Market value . . . . . . . . . . . . . . . . . . . . . $5,377 $5,100
Amortized cost . . . . . . . . . . . . . . . . . . . . 5,503 5,504

F-14
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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

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

December 31,
----------------------
1995 1994
------- -------

Market value . . . . . . . . . . . . . . . . . . . . . $14,366 $12,882
Amortized cost . . . . . . . . . . . . . . . . . . . . 14,379 13,357

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

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
Mortgage backed securities . . . . . . . . . 15,449 15,321 14 142
Other securities . . . . . . . . . . . . . . 15 15 - -
------- ------- ---- ------
Total. . . . . . . . . . . . . . . . . . . $32,644 $32,639 $194 $199
------- ------- ---- ------
------- ------- ---- ------
DECEMBER 31, 1994

U.S. Treasury. . . . . . . . . . . . . . . . $ 8,548 $ 7,916 $ - $ 632
U.S. government agencies and
corporations . . . . . . . . . . . . . . . 21,502 20,101 30 1,431
Obligations of state and political
subdivisions . . . . . . . . . . . . . . . 30,537 29,507 219 1,249
Mortgage backed securities . . . . . . . . . 26,760 25,559 - 1,201
Other securities . . . . . . . . . . . . . . 25 25 - -
------- ------- ---- ------
Total. . . . . . . . . . . . . . . . . . . $87,372 $83,108 $ 249 $4,513
------- ------- ---- ------
------- ------- ---- ------
</TABLE>

F-15
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 3 - INVESTMENT SECURITIES HELD-TO-MATURITY - CONTINUED

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.

Amortized Fair
Cost Value
--------- --------

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

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.

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.

F-16
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 4 - LOANS

The components of the loan portfolio are summarized as follows (in thousands):

December 31,
------------------------
March 31, 1996 1995 1994
-------------- --------- ---------
(unaudited)

Commercial and industrial. . . . . . $ 52,176 $ 50,258 $ 50,339
Commercial real estate . . . . . . . 72,080 74,199 64,789
Residential real estate. . . . . . . 118,109 119,153 110,045
Home equity lines of credit. . . . . 30,875 31,152 32,256
Other consumer . . . . . . . . . . . 38,165 37,398 33,613
-------- -------- --------
Total loans. . . . . . . . . . . . 311,405 312,160 291,042
Less allowance for loan losses . . . 3,930 3,524 3,995
-------- -------- --------
Loans, net . . . . . . . . . . . . $307,475 $308,636 $287,047
-------- -------- --------
-------- -------- --------

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-17
<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 March 31, 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 . . . . . . . . . . . 544 122 471 626 346
Charge-Offs. . . . . . . . . . . (179) (299) (1,101) (968) (2,103)
Provision for loan losses. . . . 41 76 159 311 1,299
------ ------ ------ ------ ------
Balance, end of period . . . . $3,930 $3,894 $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 March 31, 1996 or during the period
then ended.

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

NOTE 6 - PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows (in thousands):

December 31,
----------------------
1995 1994
------- -------

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

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.

F-18
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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 March 31, 1996, the principal balance of the 30-day LIBOR
component had been reduced to $2,500,000, resulting in a total note payable
balance at March 31, 1996 of $9,500,000.

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 March 31, 1996, the
Company had $200,000 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.

F-19
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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, 513,040 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 March 31, 1996, 84,393 of the issued
options are vested and exercisable.

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

Price range
Shares of options
-------- -----------

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 . . . . . . . . . . . . . . . . . . . . . 13,125 11.43
Exercised . . . . . . . . . . . . . . . . . . . . (1,105) 8.16
Canceled or terminated. . . . . . . . . . . . . . (12,680) 8.16
--------
Options outstanding at March 31, 1996. . . . . . . . 421,965 $8.16 - $11.43
--------
--------

F-20
<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):

Years ended December 31,
-------------------------------------
1995 1994 1993
------- ------- -------
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
------- ------- -------
------- ------- -------

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

December 31,
--------------------
Deferred Tax Assets: 1995 1994
------ ------

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

F-21
<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 11 - INCOME TAXES - CONTINUED

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):

Year ended December 31,
----------------------------
1995 1994 1993
-------- -------- --------

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

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

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:

December 31,
-------------------------
1995 1994
----------- -----------

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

F-22

<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 12 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK - CONTINUED

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. Two of the facilities agreements are
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):

Year ending December 31, Related Party Other
------------- -----

1996. . . . . . . . . . . . . . . . . . . . . $ 97 $ 19
1997. . . . . . . . . . . . . . . . . . . . . 99 21
1998. . . . . . . . . . . . . . . . . . . . . 102 11
1999. . . . . . . . . . . . . . . . . . . . . 104 6
2000. . . . . . . . . . . . . . . . . . . . . 71 6
--- --

Total Future Minimum Lease Payments . . . . . $473 $63
--- --
--- --

F-23

<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 13 - COMMITMENTS AND CONTINGENT LIABILITIES - CONTINUED

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, 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 March 31, 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 $601,000.
At March 31, 1996, estimated minimum future lease payments, including interest,
are as follows (in thousands):

Ground Builiding
Lease Lease
------- ---------

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 . . . . . . . . . . (1,220)
------

Obligation under capital lease . . . . . . . . . $ 601
------
------

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.

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

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.

F-24

<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 14 - STOCKHOLDER'S EQUITY AND REGULATORY RESTRICTIONS - CONTINUED

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 demand notes, secured by the common stock, and
require annual or quarterly interest payments at either the prime rate (8.5% at
December 31, 1995) or the Company's dividend rate. The balance of these notes
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.

F-25

<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 15 - FAIR VALUE OF FINANCIAL INSTRUMENTS - CONTINUED

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):

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.

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.

F-26

<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 15 - FAIR VALUE OF FINANCIAL INSTRUMENTS - CONTINUED

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.

F-27

<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

NOTE 16 - CONDENSED FINANCIAL STATEMENTS - PARENT COMPANY ONLY

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

BALANCE SHEETS

December 31,
--------------------
March 31, 1996 1995 1994
-------------- -------- --------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Cash in non-interest-bearing deposits with subsidiaries $ 67 $ 734 $ 270
Investment in subsidiaries . . . . . . . . . . . . . . 49,375 50,856 41,955
Other assets, net. . . . . . . . . . . . . . . . . . . 1,633 1,030 1,003
------ ------ ------

Total assets. . . . . . . . . . . . . . . . . . $51,075 $52,620 $43,228
------ ------ ------
------ ------ ------

LIABILITIES AND STOCKHOLDERS' EQUITY
Bank notes payable . . . . . . . . . . . . . . . . . . $ 9,700 $11,000 $ 1,800
Accrued interest, taxes and other liabilities. . . . . 494 659 620
Stockholders' equity . . . . . . . . . . . . . . . . . 40,881 40,961 40,808
------ ------ ------

Total liabilities and stockholders' equity. . . $51,075 $52,620 $43,228
------ ------ ------
------ ------ ------

</TABLE>

STATEMENTS OF INCOME

Three months ended
March 31, Years ended December 31,
------------------ --------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Income:
Dividends from subsidiaries . . . . $1,700 $1,700 $4,000 $3,424 $4,000
Interest. . . . . . . . . . . . . . 29 32 126 76 41
Intercompany fees . . . . . . . . . 1,190 972 3,770 3,478 3,063
----- ----- ----- ----- -----

Total income. . . . . . . . . . 2,919 2,704 7,896 6,978 7,104

Expenses:
Interest. . . . . . . . . . . . . . 188 27 79 206 377
Salaries and benefits . . . . . . . 983 778 3,263 2,810 2,261
Amortization of intangibles . . . . 46 45 320 464 467
Other . . . . . . . . . . . . . . . 393 443 1,607 1,545 1,603
----- ----- ----- ----- -----

Total expenses. . . . . . . . . 1,610 1,293 5,269 5,025 4,708
----- ----- ----- ----- -----

</TABLE>

F-28

<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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

Three months ended
March 31, Years ended December 31,
------------------ ------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
(Unaudited)

STATEMENTS OF INCOME -
CONTINUED

<S> <C> <C> <C> <C> <C>
Income before income taxes and
equity in undistributed net income
of subsidiaries . . . . . . . . . . $1,309 $1,411 $2,627 $1,953 $2,396

Income tax benefit . . . . . . . . . . 105 71 352 400 745

Equity in undistributed net income
of subsidiaries . . . . . . . . . . 29 (109) 3,225 4,063 2,105
----- ----- ----- ----- -----

Net income. . . . . . . . . . . $1,443 $1,373 $6,204 $6,416 $5,246
----- ----- ----- ----- -----
----- ----- ----- ----- -----

</TABLE>

STATEMENTS OF CASH FLOWS

Three months ended
March 31, Years ended December 31,
------------------ ------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
(Unaudited)

<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income. . . . . . . . . . . . . $ 1,443 $1,373 $ 6,204 $ 6,416 $ 5,246
Adjustments to reconcile net
income to net cash provided by
operating activities
Amortization of intangible
assets. . . . . . . . . . . . . 46 45 320 464 467
Provision for depreciation . . . 30 93 255 388 407
Equity in undistributed net
income of subsidiaries. . . . . (29) 109 (3,225) (4,063) (2,105)
(Increase) decrease in other
assets. . . . . . . . . . . . . 74 (232) (286) (268) (166)
Increase (decrease) in
accrued expense and other
liabilities . . . . . . . . . . (821) (366) 39 (65) (143)
------ ----- ------- ------ ------

</TABLE>

F-29

<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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

STATEMENTS OF CASH FLOWS -
CONTINUED

Three months ended
March 31, Years ended December 31,
------------------ ------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
(Unaudited)

<S> <C> <C> <C> <C> <C>
Net cash provided by
operating activities. . . . . $ 743 $1,022 $ 3,307 $ 2,872 $ 3,706

Cash flows from investing activities:
Investment in subsidiaries. . . . . (20) 44 (200) - -
------ ----- ------- ------ ------

Net cash used in
investment activities . . . . (20) 44 (200) - -

Cash flows from financing activities:
Cash dividends. . . . . . . . . . . (198) (231) (887) (870) (800)
Proceeds from issuance of stock . . 88 91 472 142 298
Proceeds from note payable. . . . . 200 - 11,000 - -
Repayments of note payable. . . . . (1,500) (800) (1,800) (2,900) (2,850)
Repurchase of common stock. . . . . - - (11,457) - -
Proceeds from note receivable -
officer stockholders . . . . . . . 20 29 29 240 29
------ ----- ------- ------ ------

Net cash used in
financing activities. . . . . (1,390) (911) (2,643) (3,388) (3,323)
------ ----- ------- ------ ------

Net (decrease) increase
in cash . . . . . . . . . . . (667) 155 464 (516) 383

Cash, beginning of period. . . . . . . 734 270 270 786 403
------ ----- ------- ------ ------

Cash, end of period. . . . . . . . . . $ 67 $ 425 $ 734 $ 270 $ 786
------ ----- ------- ------ ------
------ ----- ------- ------ ------

</TABLE>

F-30

<PAGE>

BEVERLY BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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.

On March 29, 1996, the Company's Stock Repurchase Agreements covering 772,335
shares of the Company's common stock were revoked.

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

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 Bevery 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 reincorporation and merger must
be approved by the holders of at least two-thirds of the outstanding shares of
common stock of Beverly Illinois.

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

F-31

<PAGE>

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

<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
Page
----
Prospectus Summary..............................................................
Risk Factors....................................................................
Use of Proceeds.................................................................
Market for Common Stock and Dividends...........................................
Capitalization..................................................................
Dilution........................................................................
Selected Consolidated Financial Data............................................
Management's Discussion and Analysis
of Results of Operations and Financial
Condition.....................................................................
Business........................................................................
Management......................................................................
Principal Stockholders..........................................................
Supervision and Regulation......................................................
Description of Capital Stock....................................................
Shares Eligible for Future Sale.................................................
Underwriting....................................................................
Legal Matters...................................................................
Experts.........................................................................
Available Information...........................................................
Index to Consolidated Financial Statements...................................F-1
_______________
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.

JULY __, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

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

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 14. Indemnification of Directors and Officers.

Under Delaware law, a corporation may indemnify any person who was or is a
party or is threatened to be made a party to an action (other than an action by
or in the right of the corporation) by reason of his service as a director or
officer of the corporation, or his service, at the corporation's request, as a
director, officer, employee or agent of another corporation or other enterprise,
against expenses (including attorneys' fees) that are actually and reasonably
incurred by him ("Expenses"), and judgments, fines and amounts paid in
settlement that are actually and reasonably incurred by him, in connection with
the defense or settlement of such action, provided that he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
Although Delaware law permits a corporation to indemnify any person referred to
above against Expenses in connection with the defense or settlement of an action
by or in the right of the corporation, provided that he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the corporation's
best interests, if such person has been judged liable to the corporation,
indemnification is only permitted to the extent that the Court of Chancery (or
the court in which the action was brought) determines that, despite the
adjudication of liability, such person is entitled to indemnity for such
Expenses as the court deems proper. The General Corporation Law of the State of
Delaware also provides for mandatory indemnification of any director, officer,
employee or agent against Expenses to the extent such person has been successful
in any proceeding covered by the statute. In addition, the General Corporation
Law of the State of Delaware provides the general authorization of

II-1

<PAGE>

advancement of a director's or officer's litigation expenses in lieu of
requiring the authorization of such advancement by the board of directors in
specific cases, and that indemnification and advancement of expenses provided by
the statute shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement or otherwise.

The Certificate of Incorporation of the Registrant provides for the broad
indemnification of the directors and officers of the Registrant and for
advancement of litigation expenses to the fullest extent permitted by current
Delaware law.

The Certificate of Incorporation of the Registrant eliminates the personal
liability of a director to the Registrant or its stockholders under certain
circumstances, for monetary damages for breach of fiduciary duty as a director.

Under the terms of the Underwriting Agreement filed as Exhibit 1 hereto,
the Underwriters have agreed to indemnify, under certain conditions, the
Company, its directors, certain of its officers and persons who control the
Company within the meaning of the Securities Act of 1933, as amended (the "1933
Act"), against certain liabilities.

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 June 10, 1996, in fiscal year 1996, one employee of the Company has
exercised stock options for the purchase of a total of 1,050 shares of Common
Stock at an average exercise price of $8.57 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

II-2

<PAGE>

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 June 10, 1996, in fiscal year 1996,
114 stockholders of the Company acquired a total of 11,808 shares of Common
Stock through the Dividend Reinvestment Plan at an average price of $11.12 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 June 10, 1996, in fiscal year 1996, four
directors of the Company were issued a total of 3,935 shares of Common Stock as
compensation for their services at an average price of $11.05 per share.

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.

II-3

<PAGE>

ITEM 16. Exhibits and Financial Statement Schedules.

(a) Exhibits:

Exhibit
Number Description of Exhibit
- ------ ----------------------

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
3(a) Certificate of Incorporation of the Registrant
3(b) By-laws of the Registrant
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. (to be filed
by amendment)
10(g) Leases between Halstead Investment Group and Matteson-Richton Bank, as
amended, relating to facility in Homewood, Illinois. (to be filed by
amendment)
10(h) Lease between Beverly Bank and LaSalle National Trust, as Trustee,
relating to a facility in Orland Park, Illinois. (to be filed by
amendment)
21 Subsidiaries of the Registrant
23(a) Consent of Grant Thornton LLP
23(b) Consent of Lord, Bissell & Brook (to be included in Exhibit 5)
24 Powers of Attorney (included on page II-5)
27 Financial Data Schedule

(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.

Item 17. Undertakings.

II-4

<PAGE>

(a) The undersigned Registrant hereby undertakes to provide to the
Representative of the Underwriters at the closings specified in the Underwriting
Agreement certificates in such denominations and registered in such names as
required by such Representative to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.

(c) The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the 1933 Act, (i) the information omitted from
the form of prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the 1933 Act shall be deemed
to be part of this Registration Statement as of the time it was declared
effective, and (ii) each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

II-5

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago and State of
Illinois on June 21, 1996.

BEVERLY BANCORPORATION, INC.

By/s/ Anthony R. Pasquinelli
---------------------------------------
Anthony R. Pasquinelli
Chairman of the Board

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Anthony R. Pasquinelli, John D. Van Winkle and
John T. O'Neill, and each or any of them, as his true and lawful attorneys-in-
fact and agents, with full power of substitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments and post-
effective amendments to this Registration Statement, and to file the same with
all exhibits thereto, unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitutes, may lawfully
do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on June 21, 1996 by the following
persons in the capacities indicated.

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 Principal
John T. O'Neill 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

II-6

<PAGE>

EXHIBIT INDEX

Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----

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
3(a) Certificate of Incorporation of the Registrant
3(b) By-Laws of the Registrant
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. (to be filed
by amendment)
10(g) Leases between Halstead Investment Group and Matteson-Richton Bank, as
amended, relating to facility in Homewood, Illinois. (to be filed by
amendment)
10(h) Lease between Beverly Bank and LaSalle National Trust, as Trustee,
relating to a facility in Orland Park, Illinois. (to be filed by
amendment)
21 Subsidiaries of the Registrant
23(a) Consent of Grant Thornton LLP
23(b) Consent of Lord, Bissell & Brook (to be included in Exhibit 5)
24 Powers of Attorney (included on page II-5)
27 Financial Data Schedule

II-7

<PAGE>

BEVERLY BANCORPORATION, INC.
1,000,000 Shares Common Stock(1)
UNDERWRITING AGREEMENT
JULY ___, 1996
HOWE BARNES INVESTMENTS, INC.
AS REPRESENTATIVE OF THE SEVERAL
UNDERWRITERS NAMED IN SCHEDULE A
135 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
LADIES AND GENTLEMEN:
SECTION 1. INTRODUCTORY. Beverly Bancorporation, Inc.
("COMPANY"), a _________ corporation, has an authorized capital
stock consisting of _______ shares of Common Stock, $_____ par
value ("COMMON STOCK"), of which ________ shares were outstanding
as of July ___, 1996. The Company proposes to issue and sell
1,000,000 shares of its authorized but unissued Common Stock
("FIRM SHARES") to the several underwriters named in Schedule A
as it may be amended by the Pricing Agreement hereinafter defined
("UNDERWRITERS"), who are acting severally and not jointly. In
addition, the Company proposes to grant to the Underwriters an
option to purchase up to 150,000 additional shares of Common
Stock ("OPTION SHARES") as provided in Section 4 hereof. The
Firm Shares and, to the extent such option is exercised, the
Option Shares, are hereinafter collectively referred to as the
"SHARES."
You have advised the Company that the Underwriters
propose to make a public offering of their respective portions of
the Shares as soon as you deem advisable after the registration
statement hereinafter referred to becomes effective, if it has
not yet become effective, and the Pricing Agreement hereinafter
defined has been executed and delivered.
Prior to the purchase and public offering of the Shares by
the several Underwriters, the Company and the Representative,
acting on behalf of the several Underwriters, shall enter into an
agreement substantially in the form of Exhibit A hereto (the
"PRICING AGREEMENT"). The Pricing Agreement may take the form of
an exchange of any standard form of written telecommunication
between the Company and the Representative and shall specify such
applicable information as is indicated in Exhibit A hereto. The
offering of the Shares will be governed by this Agreement, as
supplemented by the Pricing Agreement. From and after the date
of the execution and delivery of the Pricing Agreement, this
Agreement shall be deemed to incorporate the Pricing Agreement.
The Company hereby confirms its agreement with the
Underwriters as follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the several Underwriters
that:
(a) A registration statement on Form S-1 (File No.
333-______) and a related preliminary prospectus with
respect to the Shares have been prepared and filed with the
Securities and Exchange Commission ("COMMISSION") by the
Company in conformity with the requirements of the
Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the
"1933 ACT;" all

---------------------
(1) Plus an option to acquire up to 150,000 additional shares to
cover overallotments.

<PAGE>

references herein to specific rules are rules promulgated
under the 1933 Act); and the Company has so prepared and has
filed such amendments thereto, if any, and such amended
preliminary prospectuses as may have been required to the date
hereof. If the Company has elected not to rely upon Rule
430A, the Company has prepared and will promptly file an
amendment to the registration statement and an amended
prospectus. If the Company has elected to rely upon Rule
430A, it will prepare and file a prospectus pursuant to Rule
424(b) that discloses the information previously omitted from
the prospectus in reliance upon Rule 430A. There have been or
will promptly be delivered to you three signed copies of such
registration statement and amendments, three copies of each
exhibit filed therewith, and conformed copies of such
registration statement and amendments (but without exhibits)
and copies of the related preliminary prospectus or
prospectuses and final forms of prospectus for each of the
Underwriters.
Such registration statement (as amended, if
applicable) at the time it becomes effective and the
prospectus constituting a part thereof (including the
information, if any, deemed to be part thereof pursuant to
Rule 430A(b) and/or Rule 434), as from time to time amended
or supplemented, are hereinafter referred to as the
"REGISTRATION STATEMENT," and the "PROSPECTUS,"
respectively, except that if any revised prospectus shall be
provided to the Underwriters by the Company for use in
connection with the offering of the Shares which differs
from the Prospectus on file at the Commission at the time
the Registration Statement became or becomes effective
(whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b)), the term
Prospectus shall refer to such revised prospectus from and
after the time it was provided to the Underwriters for such
use. If the Company elects to rely on Rule 434 of the 1993
Act, all references to "Prospectus" shall be deemed to
include, without limitation, the form of prospectus and the
term sheet, taken together, provided to the Underwriters by
the Company in accordance with Rule 434 of the 1993 Act
("RULE 434 PROSPECTUS"). Any registration statement
(including any amendment or supplement thereto or
information which is deemed part thereof) filed by the
Company under Rule 462(b) ("RULE 462(B) REGISTRATION
STATEMENT") shall be deemed to be part of the "Registration
Statement" as defined herein, and any prospectus (including
any amendment or supplement thereto or information which is
deemed part thereof) included in such registration statement
shall be deemed to be part of the "Prospectus," as defined
herein, as appropriate. The Securities Exchange Act of
1934, as amended, and the rules and regulations of the
Commission thereunder are hereinafter collectively referred
to as the "EXCHANGE ACT."
(b) The Commission has not issued any order preventing
or suspending the use of any preliminary prospectus, and
each preliminary prospectus has conformed in all material
respects with the requirements of the 1933 Act and, as of
its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary
to make the statements therein not misleading; and when the
Registration Statement became or becomes effective, and at
all times subsequent thereto, up to the First Closing Date
or the Second Closing Date hereinafter defined, as the case
may be, the Registration Statement, including the
information deemed to be part of the

<PAGE>

Registration Statement at the time of effectiveness pursuant
to Rule 430A(b), if applicable, and the Prospectus and any
amendments or supplements thereto, contained or will contain
all statements that are required to be stated therein in
accordance with the 1933 Act and in all material respects
conformed or will in all material respects conform to the
requirements of the 1933 Act, and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement
thereto, included or will include any untrue statement of a
material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading; PROVIDED, HOWEVER, that the
Company makes no representation or warranty as to information
contained in or omitted from any preliminary prospectus, the
Registration Statement, the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any
Underwriter through the Representative specifically for use in
the preparation thereof.
(c) The Company and each of its subsidiaries have been
duly incorporated and are validly existing as corporations
in good standing under the laws of their respective places
of incorporation, with corporate power and authority to own
their properties and conduct their business as described in
the Prospectus; the Company and each of its subsidiaries are
duly qualified to do business as foreign corporations under
the corporation law of, and are in good standing as such in,
each jurisdiction in which they own or lease substantial
properties, have an office, or in which substantial business
is conducted and such qualification is required except in
any such case where the failure to so qualify or be in good
standing would not have a material adverse effect upon the
condition (financial or otherwise) or results of operations
of the Company and its subsidiaries taken as a whole
("MATERIAL ADVERSE EFFECT"); and no proceeding of which the
Company has knowledge has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking
to revoke, limit or curtail, such power and authority or
qualification.
(d) Except as disclosed in the Registration Statement,
the Company owns directly or indirectly 100 percent of the
issued and outstanding capital stock of each of its
subsidiaries, free and clear of any claims, liens,
encumbrances or security interests and all of such capital
stock has been duly authorized and validly issued and is
fully paid and nonassessable.
(e) The issued and outstanding shares of capital stock
of the Company as set forth in the Prospectus have been duly
authorized and validly issued, are fully paid and
nonassessable, and conform to the description thereof
contained in the Prospectus.
(f) The Shares have been duly authorized and when
issued, delivered and paid for pursuant to this Agreement,
will be validly issued, fully paid and nonassessable, and
will conform to the description thereof contained in the
Prospectus.
(g) The making and performance by the Company of this
Agreement and the Pricing Agreement have been duly
authorized by all necessary corporate action and will not
violate any provision of the Company's charter or bylaws and
will not result in the breach, or be in contravention, of
any provision of any agreement, franchise, license,
indenture, mortgage, deed of trust, or other instrument to
which the Company

<PAGE>

or any subsidiary is a party or by which the Company, any
subsidiary or the property of any of them may be bound or
affected, or any order, rule or regulation applicable to the
Company or any subsidiary of any court or regulatory body,
administrative agency or other governmental body having
jurisdiction over the Company or any subsidiary or any of
their respective properties, or any order of any court or
governmental agency or authority entered in any proceeding to
which the Company or any subsidiary was or is now a party or
by which it is bound. No consent, approval, authorization or
other order of any court, regulatory body, administrative
agency or other governmental body is required for the
execution and delivery of this Agreement or the Pricing
Agreement or the consummation of the transactions contemplated
herein or therein, except for compliance with the 1933 Act and
blue sky laws applicable to the public offering of the Shares
by the several Underwriters and clearance of such offering
with the National Association of Securities Dealers, Inc.
("NASD"). This Agreement and the Pricing Agreement have been
duly executed and delivered by the Company.
(h) The accountants who have expressed their opinions
with respect to certain of the financial statements and
schedules included in the Registration Statement are
independent accountants as required by the 1933 Act.
(i) The consolidated financial statements of the
Company included in the Registration Statement present
fairly the consolidated financial position of the Company as
of the respective dates of such financial statements, and
the consolidated results of operations and cash flows of the
Company for the respective periods covered thereby, are in
conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except
as disclosed in the Prospectus; and the supporting schedules
included in the Registration Statement present fairly the
information required to be stated therein. The financial
information set forth in the Prospectus under "Selected
Consolidated Financial Data" presents fairly on the basis
stated in the Prospectus, the information set forth therein.
(j) Neither the Company nor any subsidiary is in
violation of its charter or in default under any consent
decree, or in default with respect to any material provision
of any lease, loan agreement, franchise, license, permit or
other contract obligation to which it is a party; and there
does not exist any state of facts which constitutes an event
of default as defined in such documents or which, with
notice or lapse of time or both, would constitute such an
event of default, in each case, except for defaults which
neither singly nor in the aggregate are material to the
Company and its subsidiaries taken as a whole.
(k) There are no material legal or governmental
proceedings pending, or to the Company's knowledge,
threatened to which the Company or any subsidiary is or may
be a party or of which material property owned or leased by
the Company or any subsidiary is or may be the subject, or
related to environmental or discrimination matters which are
not disclosed in the Prospectus, or which question the
validity of this Agreement or the Pricing Agreement or any
action taken or to be taken pursuant hereto or thereto.
(l) The Company is a bank holding company duly
registered with the Board of Governors of the Federal
Reserve System ("FEDERAL RESERVE BOARD") under

<PAGE>

the Bank Holding Company Act of 1956, as amended. The conduct
of the business of the Company and each of its subsidiaries is
in compliance in all respects with applicable federal, state,
local and foreign laws and regulations, except where the
failure to be in compliance would not have a Material Adverse
Effect. The Company and its subsidiaries own or possess or
have obtained all material governmental licenses, permits,
consents, orders, approvals and other authorizations necessary
to lease or own, as the case may be, and to operate their
properties and to carry on their businesses as presently
conducted, and neither the Company nor its subsidiaries have
received any notice of proceedings related to revocation or
modification of any such licenses, permits, consents, orders,
approvals or authorizations which singly or in the aggregate,
if the subject of an unfavorable ruling or finding, would
result in a Material Adverse Effect. Neither the Company nor
any banking subsidiary is a party or subject to any agreement
or memorandum with, or directive or order issued by, the
Federal Reserve Board, the Office of Thrift Supervision, the
Illinois Commissioner of Banks and Trust Companies or any
other bank regulatory authority, which imposes any
restrictions or requirements not generally applicable to bank
holding companies or commercial banks.
(m) The Company and each of its subsidiaries have good
and marketable title to all the properties and assets
reflected as owned in the financial statements hereinabove
described (or elsewhere in the Prospectus), subject to no
lien, mortgage, pledge, charge or encumbrance of any kind
except those, if any, reflected in such financial statements
(or elsewhere in the Prospectus) or which are not material
to the Company and its subsidiaries taken as a whole. The
Company and each of its subsidiaries hold their respective
leased properties which are material to the Company and its
subsidiaries taken as a whole under valid and binding
leases.
(n) The Company has not taken and will not take,
directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause
or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the
Shares.
(o) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus,
except as otherwise stated or contemplated therein, there
has not been (i) any change in the condition (financial or
otherwise), earnings, affairs, business or prospects of the
Company or its subsidiaries, whether or not arising in the
ordinary course of business which has had a Material Adverse
Effect, (ii) any material transaction entered into, or any
material liability or obligation incurred, by the Company or
its subsidiaries other than in the ordinary course of
business, (iii) any change in the capital stock, or material
increase in the short-term debt or long-term debt, or any
material change in the allowance for loan losses of the
Company or its subsidiaries, or (iv) any dividend or
distribution of any kind declared, paid or made by the
Company on its capital stock.
(p) The Company agrees not to sell, contract to sell
or otherwise dispose of any Common Stock or securities
convertible into Common Stock (except Common Stock issued
pursuant to currently outstanding options) for a period of
180 days after this Agreement becomes effective without the
prior written consent of the

<PAGE>

Representative. The Company has obtained similar agreements
from each of its executive officers and directors.
(q) There is no material contract or other document of
a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement which is not described or filed
as required.
(r) There are no holders of securities of the Company
having rights to registration thereof or preemptive rights
to purchase Common Stock except as disclosed in the
Prospectus. Holders of registration rights have waived such
rights with respect to the offering being made by the
Prospectus.
(s) The conduct of the business of the Company and
each of its subsidiaries is in compliance in all respects
with applicable federal, state, local and foreign laws and
regulations, including Illinois banking laws, except where
the failure to be in compliance would not have a Material
Adverse Effect.
(t) All offers and sales of the Company's capital
stock were exempt from the registration requirements of, or
duly registered under, the 1933 Act and were duly registered
with or the subject of an available exemption from the
registration requirements of the applicable state securities
or blue sky laws.
(u) The Company has filed all necessary federal and
state income and franchise tax returns and has paid all
taxes shown as due thereon, and there is no tax deficiency
that has been, or to the knowledge of the Company might be,
asserted against the Company or any of its properties or
assets that would or could be expected to have a Material
Adverse Effect.
(v) The Company has filed a registration statement
pursuant to Section 12(g) of the Exchange Act to register
the Common Stock thereunder, has filed an application to
list the Shares on the National Market System of the
National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ/ NMS"), and has received
notification that the listing has been approved, subject to
notice of issuance or sale of the Shares, as the case may
be.
(w) The Company is not, and does not intend to conduct
its business in a manner in which it would become, an
"investment company" as defined in Section 3(a) of the
Investment Company Act of 1940, as amended ("INVESTMENT
COMPANY ACT").
(x) The Company together with its subsidiaries owns
and possess all right, title and interest in and to, or has
duly licensed from third parties, all patents, patent
rights, trade secrets, inventions, know-how, trademarks,
trade names, copyrights, service marks and other proprietary
rights ("TRADE RIGHTS") material to the business of the
Company and each of its subsidiaries taken as a whole.
Neither the Company nor any of its subsidiaries has received
any notice of infringement, misappropriation or conflict
from any third party as to such material Trade Rights which
has not been resolved or disposed of and neither the Company
nor any of its subsidiaries has infringed, misappropriated
or otherwise conflicted with material Trade Rights of any
third parties, which infringement, misappropriation or
conflict would have a material adverse effect upon the
condition (financial or otherwise) or results of operations
of the Company and its subsidiaries taken as a whole.

<PAGE>

(y) The Company confirms as of the date hereof that it
is not doing business in Cuba within the meaning of Section
1 of Laws of Florida, Chapter 92-198, AN ACT RELATING TO
DISCLOSURE OF DOING BUSINESS WITH CUBA, and the Company
further agrees that if it commences engaging in business
with the government of Cuba or with any person or affiliate
located in Cuba after the date the Registration Statement
becomes or has become effective with the Commission or with
the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the
information reported in the Prospectus, if any, concerning
the Company's business with Cuba or with any person or
affiliate located in Cuba changes in any material way, the
Company will provide the Department notice of such business
or change, as appropriate, in a form acceptable to the
Department.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE
UNDERWRITERS. The Representative, on behalf of the several
Underwriters, represents and warrants to the Company that the
information set forth (a) on the cover page of the Prospectus
with respect to price, underwriting discount and terms of the
offering and (b) under "Underwriting" in the Prospectus was
furnished in writing to the Company by and on behalf of the
Underwriters specifically for use in connection with the
preparation of the Registration Statement and is correct and
complete in all material respects.
SECTION 4. PURCHASE, SALE AND DELIVERY OF SHARES. On the
basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters named in
Schedule A hereto, and the Underwriters agree, severally and not
jointly, to purchase the Firm Shares from the Company at the
price per share set forth in the Pricing Agreement. The
obligation of each Underwriter to the Company shall be to
purchase from the Company that number of full shares which (as
nearly as practicable, as determined by you) bears to 1,000,000,
the same proportion as the number of Shares set forth opposite
the name of such Underwriter in Schedule A hereto bears to the
total number of Firm Shares to be purchased by all Underwriters
under this Agreement. The initial public offering price and the
purchase price shall be set forth in the Pricing Agreement.
At 9:00 A.M., Chicago Time, on the fourth business day,
if permitted under Rule 15c6-1 under the Exchange Act, (or the
third business day if required under Rule 15c6-1 under the
Exchange Act or unless postponed in accordance with the
provisions of Section 12) following the date the Registration
Statement becomes effective (or, if the Company has elected to
rely upon Rule 430A, the fourth business day, if permitted under
Rule 15c6-1 under the Exchange Act, (or the third business day if
required under Rule 15c6-1 under the Exchange Act) after
execution of the Pricing Agreement), or such other time not later
than ten business days after such date as shall be agreed upon by
the Representative and the Company, the Company will deliver to
you at the offices of counsel for the Underwriters or through the
facilities of The Depository Trust Company for the accounts of
the several Underwriters, certificates representing the Firm
Shares to be sold by it against payment of the purchase price
therefor by wire transfer or certified or bank cashier's check in
Chicago Clearing House funds (next-day funds) payable to the
order of the Company. Such time of delivery and payment is
herein referred to as the "First Closing Date." The certificates
for the Firm Shares so to be delivered will be in such
denominations and registered in such names as you request by
notice

<PAGE>

to the Company prior to 10:00 A.M., Chicago Time, on the third
full business day preceding the First Closing Date, and will
be made available at the Company's expense for checking and
packaging by the Representative at 10:00 A.M., Chicago Time,
on the second full business day preceding the First Closing
Date. Payment for the Firm Shares so to be delivered shall be
made at the time and in the manner described above at the
offices of counsel for the Underwriters.
In addition, on the basis of the representations, warranties
and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants an option
to the several Underwriters to purchase, severally and not
jointly, up to an aggregate of 150,000 Option Shares, at the same
purchase price per share to be paid for the Firm Shares, for use
solely in covering any overallotments made by the Underwriters in
the sale and distribution of the Firm Shares. The option granted
hereunder may be exercised at any time (but not more than once)
within 30 days after the date of the initial public offering upon
notice by you to the Company setting forth the aggregate number
of Option Shares as to which the Underwriters are exercising the
option, the names and denominations in which the certificates for
such shares are to be registered and the time and place at which
such certificates will be delivered. Such time of delivery
(which may not be earlier than the First Closing Date), being
herein referred to as the "Second Closing Date," shall be
determined by you, but if at any time other than the First
Closing Date, shall not be earlier than three nor later than 10
full business days after delivery of such notice of exercise.
The number of Option Shares to be purchased by each Underwriter
shall be determined by multiplying the number of Option Shares to
be sold by a fraction, the numerator of which is the number of
Firm Shares to be purchased by such Underwriter as set forth
opposite its name in Schedule A and the denominator of which is
the total number of Firm Shares (subject to such adjustments to
eliminate any fractional share purchases as you in your absolute
discretion may make). Certificates for the Option Shares will be
made available at the Company's expense for checking and
packaging at 10:00 A.M., Chicago Time, on the first full business
day preceding the Second Closing Date. The manner of payment for
and delivery of the Option Shares shall be the same as for the
Firm Shares as specified in the preceding paragraph.
You have advised the Company that each Underwriter has
authorized you to accept delivery of its Shares, to make payment
and to receipt therefor. You, individually and not as the
Representative of the Underwriters, may make payment for any
Shares to be purchased by any Underwriter whose funds shall not
have been received by you by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such
Underwriter from any obligation hereunder.
SECTION 5. COVENANTS OF THE COMPANY. The Company covenants
and agrees that:
(a) The Company will advise you promptly of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose, or of any
notification of the suspension of qualification of the
Shares for sale in any jurisdiction or the initiation or
threatening of any proceedings for that purpose, and will
also advise you promptly of any request of the Commission
for amendment or supplement of the Registration Statement,
of any preliminary prospectus or of the Prospectus, or for
additional information.

<PAGE>

(b) The Company will give you notice of its intention
to file or prepare any amendment to the Registration
Statement (including any post-effective amendment) or any
Rule 462(b) Registration Statement or any amendment or
supplement to the Prospectus (including any revised
prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Shares
which differs from the prospectus on file at the Commission
at the time the Registration Statement became or becomes
effective, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) and any term
sheet as contemplated by Rule 434) and will furnish you with
copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the
case may be, and will not file any such amendment or
supplement or use any such prospectus to which you or
counsel for the Underwriters shall reasonably object.
(c) If the Company elects to rely on Rule 434 of the
1933 Act, the Company will prepare a term sheet that
complies with the requirements of Rule 434. If the Company
elects not to rely on Rule 434, the Company will provide the
Underwriters with copies of the form of prospectus, in such
numbers as the Underwriters may reasonably request, and file
with the Commission such prospectus in accordance with Rule
424(b) of the 1933 Act by the close of business in New York
City on the second business day immediately succeeding the
date of the Pricing Agreement. If the Company elects to
rely on Rule 434, the Company will provide the Underwriters
with copies of the form of Rule 434 Prospectus, in such
numbers as the Underwriters may reasonably request, by the
close of business in New York on the business day
immediately succeeding the date of the Pricing Agreement.
(d) If at any time when a prospectus relating to the
Shares is required to be delivered under the 1933 Act any
event occurs as a result of which the Prospectus, including
any amendments or supplements, would include an untrue
statement of a material fact, or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary
at any time to amend the Prospectus, including any
amendments or supplements thereto and including any revised
prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Shares
which differs from the prospectus on file with the
Commission at the time of effectiveness of the Registration
Statement, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) to comply with
the 1933 Act, the Company promptly will advise you thereof
and will promptly prepare and file with the Commission an
amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance;
and, in case any Underwriter is required to deliver a
prospectus nine months or more after the effective date of
the Registration Statement, the Company upon request, but at
the expense of such Underwriter, will prepare promptly such
prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the
1933 Act.
(e) Neither the Company nor any of its subsidiaries
will, prior to the earlier of the Second Closing Date or
termination or expiration of the related option, incur

<PAGE>

any liability or obligation, direct or contingent, or enter
into any material transaction, other than in the ordinary
course of business, except as contemplated by the Prospectus.
(f) Neither the Company nor any of its subsidiaries
will acquire any capital stock of the Company prior to the
earlier of the Second Closing Date or termination or
expiration of the related option nor will the Company
declare or pay any dividend or make any other distribution
upon the Common Stock payable to stockholders of record on a
date prior to the earlier of the Second Closing Date or
termination or expiration of the related option, except in
either case as contemplated by the Prospectus.
(g) Not later than November 15, 1997 the Company will
make generally available to its security holders an earnings
statement (which need not be audited) covering a period of
at least 12 months beginning after the effective date of the
Registration Statement, which will satisfy the provisions of
the last paragraph of Section 11(a) of the 1933 Act.
(h) During such period as a prospectus is required by
law to be delivered in connection with offers and sales of
the Shares by an Underwriter or dealer, the Company will
furnish to you at its expense, subject to the provisions of
subsection (d) hereof, copies of the Registration Statement,
the Prospectus, each preliminary prospectus and all
amendments and supplements to any such documents in each
case as soon as available and in such quantities as you may
reasonably request, for the purposes contemplated by the
1933 Act.
(i) The Company will cooperate with the Underwriters
in qualifying or registering the Shares for sale under the
blue sky laws of such jurisdictions as you designate, and
will continue such qualifications in effect so long as
reasonably required for the distribution of the Shares. The
Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of
process in any such jurisdiction where it is not currently
qualified or where it would be subject to taxation as a
foreign corporation.
(j) During the period of five years hereafter, the
Company will furnish you and each of the other Underwriters
with a copy (i) as soon as practicable after the filing
thereof, of each report filed by the Company with the
Commission, any securities exchange or the NASD; (ii) as
soon as practicable after the release thereof, of each
material press release in respect of the Company; and (iii)
as soon as available, of each report of the Company mailed
to shareholders.
(k) The Company will use the net proceeds received by
it from the sale of the Shares in the manner specified in
the Prospectus.
(l) If, at the time of effectiveness of the
Registration Statement, any information shall have been
omitted therefrom in reliance upon Rule 430A and/or Rule
434, then immediately following the execution of the Pricing
Agreement, the Company will prepare, and file or transmit
for filing with the Commission in accordance with such Rule
430A, Rule 424(b) and/or Rule 434, copies of an amended
Prospectus, or, if required by such Rule 430A and/or Rule
434, a post-effective amendment to the Registration
Statement (including an amended Prospectus), containing all
information so omitted. If required, the Company will
prepare and file, or transmit for filing, a

<PAGE>

Rule 462(b) Registration Statement not later than the date of
the execution of the Pricing Agreement. If a Rule 462(b)
Registration Statement is filed, the Company shall make
payment of, or arrange for payment of, the additional
registration fee owing to the Commission required by Rule 111.
(m) The Company will comply with all registration,
filing and reporting requirements of the Exchange Act and
the NASDAQ/NMS and will file with the Commission in a timely
manner all reports on Form SR required by Rule 463 and will
furnish you copies of any such reports as soon as
practicable after the filing thereof.
SECTION 6. PAYMENT OF EXPENSES. Whether or not the
transactions contemplated hereunder are consummated or this
Agreement becomes effective as to all of its provisions or is
terminated, the Company agrees to pay (i) all costs, fees and
expenses (other than legal fees and disbursements of counsel for
the Underwriters and the expenses incurred by the Underwriters)
incurred in connection with the performance of the Company's
obligations hereunder, including without limiting the generality
of the foregoing, all fees and expenses of legal counsel for the
Company and of the Company's independent accountants, all costs
and expenses incurred in connection with the preparation,
printing, filing and distribution of the Registration Statement,
each preliminary prospectus and the Prospectus (including all
exhibits and financial statements) and all amendments and
supplements provided for herein, this Agreement, the Pricing
Agreement and the Blue Sky Memorandum, (ii) all costs, fees and
expenses (including legal fees and disbursements of counsel for
the Underwriters not to exceed $15,000) incurred by the
Underwriters in connection with qualifying or registering all or
any part of the Shares for offer and sale under blue sky laws,
including the preparation of a blue sky memorandum relating to
the Shares and clearance of such offering with the NASD; and
(iii) all fees and expenses of the Company's transfer agent,
printing of the certificates for the Shares and all transfer
taxes, if any, with respect to the sale and delivery of the
Shares to the several Underwriters.
SECTION 7. CONDITIONS OF THE OBLIGATIONS OF THE
UNDERWRITERS. The obligations of the several Underwriters to
purchase and pay for the Firm Shares on the First Closing Date
and the Option Shares on the Second Closing Date shall be subject
to the accuracy of the representations and warranties on the part
of the Company herein set forth as of the date hereof and as of
the First Closing Date or the Second Closing Date, as the case
may be, to the accuracy of the statements of officers of the
Company made pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder, and to
the following additional conditions:
(a) The Registration Statement shall have become
effective either prior to the execution of this Agreement or
not later than 1:00 P.M., Chicago Time, on the first full
business day after the date of this Agreement, or such later
time as shall have been consented to by you but in no event
later than 1:00 P.M., Chicago Time, on the third full
business day following the date hereof; and prior to the
First Closing Date or the Second Closing Date, as the case
may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or
shall be pending or, to the knowledge of the Company or you,
shall be contemplated by the Commission. If the Company has
elected to rely upon Rule 430A and/or Rule 434, the
information concerning the initial

<PAGE>

public offering price of the Shares and price-related
information shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) within the prescribed period
and the Company will provide evidence satisfactory to the
Representative of such timely filing (or a post-effective
amendment providing such information shall have been filed and
declared effective in accordance with the requirements of
Rules 430A and 424(b)). If a Rule 462(b) Registration
Statement is required, such Registration Statement shall have
been transmitted to the Commission for filing and become
effective within the prescribed time period and, prior to the
First Closing Date, the Company shall have provided evidence
of such filing and effectiveness in accordance with Rule
462(b).
(b) The Shares shall have been qualified for sale
under the blue sky laws of such states as shall have been
specified by the Representative.
(c) The legality and sufficiency of the authorization,
issuance and sale or transfer and sale of the Shares
hereunder, the validity and form of the certificates
representing the Shares, the execution and delivery of this
Agreement and the Pricing Agreement, and all corporate
proceedings and other legal matters incident thereto, and
the form of the Registration Statement and the Prospectus
(except financial statements) shall have been approved by
counsel for the Underwriters exercising reasonable judgment.
(d) You shall not have advised the Company that the
Registration Statement or the Prospectus or any amendment or
supplement thereto, contains an untrue statement of fact,
which, in the opinion of counsel for the Underwriters, is
material or omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated
therein or necessary to make the statements therein not
misleading.
(e) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred any change, or any
development involving a prospective change, in or affecting
particularly the business or properties of the Company or
its subsidiaries, whether or not arising in the ordinary
course of business, which, in the judgment of the
Representative, makes it impractical or inadvisable to
proceed with the public offering or purchase of the Shares
as contemplated hereby.
(f) There shall have been furnished to you, as
Representative of the Underwriters, on the First Closing
Date or the Second Closing Date, as the case may be, except
as otherwise expressly provided below:
(i) An opinion of Lord, Bissell & Brook, counsel
for the Company addressed to the Underwriters and dated
the First Closing Date or the Second Closing Date, as
the case may be, to the effect that:
(1) the Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the State of
___________ with corporate power and authority to
own its properties and conduct its business as
described in the Prospectus; and the Company has
been duly qualified to do business as a foreign
corporation under the corporation law of, and is
in good standing as such in, every jurisdiction
where the ownership or leasing of property, or the
conduct of its business requires such
qualification except where

<PAGE>

the failure so to qualify would not have a material
adverse effect upon the condition (financial or
otherwise) or results of operations of the Company
and its subsidiaries taken as a whole;
(2) an opinion to the same general effect as
clause (1) of this subparagraph (i) in respect of
each direct and indirect subsidiary of the
Company;
(3) all of the issued and outstanding
capital stock of each subsidiary of the Company
has been duly authorized, validly issued and is
fully paid and nonassessable, and, except as
disclosed in the Registration Statement, the
Company owns directly or indirectly 100 percent of
the outstanding capital stock of each subsidiary,
and to the best knowledge of such counsel, such
stock is owned free and clear of any claims,
liens, encumbrances or security interests except
as disclosed in the Registration Statement;
(4) the authorized capital stock of the
Company, of which there is outstanding the amount
set forth in the Registration Statement and
Prospectus (except for subsequent issuances, if
any, pursuant to stock options or other rights
referred to in the Prospectus), conforms as to
legal matters in all material respects to the
description thereof in the Registration Statement
and Prospectus;
(5) the issued and outstanding capital stock
of the Company has been duly authorized and
validly issued and is fully paid and
nonassessable;
(6) the certificates for the Shares to be
delivered hereunder are in due and proper form,
and when duly countersigned by the Company's
transfer agent and delivered to you or upon your
order against payment of the agreed consideration
therefor in accordance with the provisions of this
Agreement and the Pricing Agreement, the Shares
represented thereby will be duly authorized and
validly issued, fully paid and nonassessable;
(7) the Registration Statement has become
effective under the 1933 Act, and, to the best
knowledge of such counsel, no stop order
suspending the effectiveness of the Registration
Statement has been issued and no proceedings for
that purpose have been instituted or are pending
or contemplated under the 1933 Act, and the
Registration Statement (including the information
deemed to be part of the Registration Statement at
the time of effectiveness pursuant to Rule 430A(b)
and/or Rule 434, if applicable), the Prospectus
and each amendment or supplement thereto (except
for the financial statements and other statistical
or financial data included therein as to which
such counsel need express no opinion) comply as to
form in all material respects with the
requirements of the 1933 Act; such counsel have no
reason to believe that either the Registration
Statement (including the information deemed to be
part of the Registration Statement at the time

<PAGE>

of effectiveness pursuant to Rule 430A(b) and/or
Rule 434, if applicable) or the Prospectus, or the
Registration Statement or the Prospectus as amended
or supplemented (except as aforesaid), as of their
respective effective or issue dates, contained any
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading or that the Prospectus as amended or
supplemented, if applicable, as of the First
Closing Date or the Second Closing Date, as the
case may be, contained any untrue statement of a
material fact or omitted to state any material fact
necessary to make the statements therein not
misleading in light of the circumstances under
which they were made; the statements in the
Registration Statement and the Prospectus
summarizing statutes, rules and regulations are
accurate and fairly and correctly present the
information required to be presented by the 1933
Act or the rules and regulations thereunder, in
all material respects and such counsel does not
know of any statutes, rules and regulations
required to be described or referred to in the
Registration Statement or the Prospectus that are
not described or referred to therein as required;
and such counsel does not know of any legal or
governmental proceedings pending or threatened
required to be described in the Prospectus which
are not described as required, nor of any
contracts or documents of a character required to
be described in the Registration Statement or
Prospectus or to be filed as exhibits to the
Registration Statement which are not described or
filed, as required;
(8) the statements under the captions
["STOCK OWNERSHIP PLAN"] "SUPERVISION AND
REGULATION," "DESCRIPTION OF CAPITAL STOCK" AND
"SHARES ELIGIBLE FOR FUTURE SALE" in the
Prospectus, insofar as such statements constitute
a summary of documents referred to therein or
matters of law, are accurate summaries and fairly
and correctly present, in all material respects,
the information called for with respect to such
documents and matters;
(9) this Agreement and the Pricing Agreement
and the performance of the Company's obligations
hereunder have been duly authorized by all
necessary corporate action and this Agreement and
the Pricing Agreement have been duly executed and
delivered by and on behalf of the Company, and are
legal, valid and binding agreements of the
Company, except as enforceability of the same may
be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting creditors' rights and by the exercise of
judicial discretion in accordance with general
principles applicable to equitable and similar
remedies and except as to those provisions
relating to indemnities for liabilities arising
under the 1933 Act as to which no opinion need be
expressed; and no approval, authorization or
consent of any public board, agency, or
instrumentality of the United States or of any
state or

<PAGE>

other jurisdiction is necessary in connection with
the issue or sale of the Shares pursuant to this
Agreement (other than under the 1933 Act,
applicable blue sky laws and the rules of the NASD)
or the consummation by the Company of any other
transactions contemplated hereby;
(10) the execution and performance of this
Agreement will not contravene any of the
provisions of, or result in a default under, any
agreement, franchise, license, indenture,
mortgage, deed of trust, or other instrument known
to such counsel, of the Company or any of its
subsidiaries or by which the property of any of
them is bound and which contravention or default
would be material to the Company and its
subsidiaries taken as a whole; or violate any of
the provisions of the charter or bylaws of the
Company or any of its subsidiaries or, so far as
is known to such counsel, violate any statute,
order, rule or regulation of any regulatory or
governmental body having jurisdiction over the
Company or any of its subsidiaries;
(11) to such counsel's knowledge, all offers
and sales of capital stock by the Company since
July 1, 1993 were exempt from the registration
requirements of the 1933 Act and were duly
registered or the subject of an available
exemption from the registration requirements of
the applicable state securities or blue sky laws;
and
(12) the Company is not an "investment
company" or a person "controlled by" an
"investment company" within the meaning of the
Investment Company Act.
In rendering such opinion, such counsel may state
that they are relying upon the certificate of
___________________________, the transfer agent for the
Common Stock, as to the number of shares of Common
Stock at any time or times outstanding, and that
insofar as their opinion under clause (7) above relates
to the accuracy and completeness of the Prospectus and
Registration Statement, it is based upon a general
review with the Company's representatives and
independent accountants of the information contained
therein, without independent verification by such
counsel of the accuracy or completeness of such
information. Such counsel may also rely upon the
opinions of other competent counsel and, as to factual
matters, on certificates of officers of the Company and
of state officials, in which case their opinion is to
state that they are so doing and copies of said
opinions or certificates are to be attached to the
opinion unless said opinions or certificates (or, in
the case of certificates, the information therein) have
been furnished to the Representative in other form.
(ii) Such opinion or opinions of Chapman and
Cutler, counsel for the Underwriters, dated the First
Closing Date or the Second Closing Date, as the case
may be, as to such matters as you may reasonably
require, and the Company shall have furnished to such
counsel such documents and shall have exhibited to them
such papers and records as they request for the purpose
of

<PAGE>

enabling them to pass upon such matters.
(iii) A certificate of the chief executive officer
and the principal financial officer of the Company,
dated the First Closing Date or the Second Closing
Date, as the case may be, to the effect that:
(1) the representations and warranties of
the Company set forth in Section 2 of this
Agreement are true and correct as of the date of
this Agreement and as of the First Closing Date or
the Second Closing Date, as the case may be, and
the Company has complied with all the agreements
and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing
Date; and
(2) the Commission has not issued an order
preventing or suspending the use of the Prospectus
or any preliminary prospectus filed as a part of
the Registration Statement or any amendment
thereto; no stop order suspending the
effectiveness of the Registration Statement has
been issued; and to the best knowledge of the
respective signers, no proceedings for that
purpose have been instituted or are pending or
contemplated under the 1933 Act.
The delivery of the certificate provided for in
this subparagraph shall be and constitute a
representation and warranty of the Company as to the
facts required in the immediately foregoing clauses (1)
and (2) of this subparagraph to be set forth in said
certificate.
(iv) At the time the Pricing Agreement is executed
and also on the First Closing Date or the Second
Closing Date, as the case may be, there shall be
delivered to you a letter addressed to you, as
Representative of the Underwriters, from Grant Thornton
LLP, independent accountants, the first one to be dated
the date of the Pricing Agreement, the second one to be
dated the First Closing Date and the third one (in the
event of a second closing) to be dated the Second
Closing Date, to the effect set forth in Schedule B.
There shall not have been any change or decrease
specified in the letters referred to in this
subparagraph which makes it impractical or inadvisable
in the judgment of the Representative to proceed with
the public offering or delivery of the Shares as
contemplated hereby or to attempt to enforce contracts
for purchase of the Shares.
(v) Such further certificates and documents as
you may reasonably request.
All such opinions, certificates, letters and documents
shall be in compliance with the provisions hereof only if they
are satisfactory to you and to Chapman and Cutler, counsel for
the Underwriters, which approval shall not be unreasonably
withheld. The Company shall furnish you with such manually
signed or conformed copies of such opinions, certificates,
letters and documents as you request.
If any condition to the Underwriters' obligations hereunder
to be satisfied prior to or at the First Closing Date is not so
satisfied, this Agreement at your election will terminate upon
notification to the Company without liability on the part of any
Underwriter or the Company, except for the expenses to be paid or
reimbursed by the Company pursuant to Sections 6 and

<PAGE>

8 hereof and except to the extent provided in Section 10 hereof.
SECTION 8. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the
sale to the Underwriters of the Shares on the First Closing Date
is not consummated because any condition of the Underwriters'
obligations hereunder is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, unless
such failure to satisfy such condition or to comply with any
provision hereof is due to the default or omission of any
Underwriter, the Company agrees to reimburse you and the other
Underwriters upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that
shall have been reasonably incurred by you and them in connection
with the proposed purchase and the sale of the Shares. Any such
termination shall be without liability of any party to any other
party except that the provisions of this Section, Section 6 and
Section 10 shall at all times be effective and shall apply.
SECTION 9. EFFECTIVENESS OF REGISTRATION STATEMENT. You
and the Company will use your and its best efforts to cause the
Registration Statement to become effective, if it has not yet
become effective, and to prevent the issuance of any stop order
suspending the effectiveness of the Registration Statement and,
if such stop order be issued, to obtain as soon as possible the
lifting thereof.
SECTION 10. INDEMNIFICATION. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of the 1933
Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such
controlling person may become subject under the 1933 Act, the
Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise (including in settlement
of any litigation if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement,
including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A
and/or Rule 434, if applicable, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will
reimburse each Underwriter and each such controlling person for
any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company will not
be liable in any such case to the extent that (i) any such loss,
claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with
written information furnished to the Company by or on behalf of
any Underwriter through the Representative, specifically for use
therein; or (ii) if such statement or omission was contained or
made in any preliminary prospectus and corrected in the
Prospectus and (1) any such loss, claim, damage or liability
suffered or incurred by any Underwriter (or any person who
controls any Underwriter) resulted from an action, claim or

<PAGE>

suit by any person who purchased Shares which are the subject
thereof from such Underwriter in the offering and (2) such
Underwriter failed to deliver or provide a copy of the Prospectus
to such person at or prior to the confirmation of the sale of such
Shares in any case where such delivery is required by the 1933
Act. In addition to its other obligations under this Section
10(a), the Company agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission,
or any alleged statement or omission, described in this Section
10(a), it will reimburse the Underwriters on a quarterly basis for
all reasonable legal and other expenses incurred in connection
with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse the
Underwriters for such expenses and the possibility that such
payments might later be held to have been improper by a court of
competent jurisdiction. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) Each Underwriter will severally indemnify and hold
harmless the Company, each of its directors, each of its officers
who signed the Registration Statement and each person, if any,
who controls the Company within the meaning of the 1933 Act or
the Exchange Act, against any losses, claims, damages or
liabilities to which the Company, or any such director, officer
or controlling person may become subject under the 1933 Act, the
Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise (including in settlement
of any litigation, if such settlement is effected with the
written consent of such Underwriter), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Registration
Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the
Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto in reliance
upon any written information furnished to the Company by such
Underwriter through the Representative specifically for use in
the preparation thereof; and will reimburse any legal or other
expenses reasonably incurred by the Company, or any such
director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in
addition to any liability which such Underwriter may otherwise
have.
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section, notify the
indemnifying party of the commencement thereof; but the omission
so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to
the extent that the indemnifying party was prejudiced by such
failure to notify. In case any such action is brought against
any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled
to participate in, and, to the

<PAGE>

extent that it may wish, jointly with all other indemnifying
parties similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party; PROVIDED, HOWEVER,
if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are
different from or additional to those available to the
indemnifying party, or the indemnified and indemnifying parties
may have conflicting interests which would make it inappropriate
for the same counsel to represent both of them, the indemnified
party or parties shall have the right to select separate counsel
to assume such legal defense and otherwise to participate in the
defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to
such indemnified party of its election so to assume the defense of
such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such
counsel in connection with the assumption of legal defense in
accordance with the proviso to the next preceding sentence (it
being understood, however, that the indemnifying party shall not
be liable for the expenses of more than one separate counsel,
approved by the Representative in the case of paragraph (a)
representing all indemnified parties not having different or
additional defenses or potential conflicting interest among
themselves who are parties to such action), (ii) the indemnifying
party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action or
(iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the
indemnifying party. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of
such indemnified party from all liability arising out of such
proceeding.
(d) If the indemnification provided for in this Section is
unavailable to an indemnified party under paragraphs (a) or (b)
hereof in respect of any losses, claims, damages or liabilities
referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company and the Underwriters from the offering of
the Shares or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Company
and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The respective relative benefits received by the
Company and the Underwriters shall be deemed to be in the same
proportion in the case of the Company as the total price paid to
the Company for the Shares by the Underwriters (net of
underwriting discount but before deducting expenses), and in the
case of the Underwriters as the

<PAGE>

underwriting discount received by them bears to the total of such
amounts paid to the Company and received by the Underwriters as
underwriting discount in each case as contemplated by the
Prospectus. The relative fault of the Company and the
Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by
the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this
Section were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section, no
Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section are several in proportion
to their respective underwriting commitments and not joint.
(e) The provisions of this Section shall survive any
termination of the Agreement.
SECTION 11. DEFAULT OF UNDERWRITERS. It shall be a
condition to the agreement and obligation of the Company to sell
and deliver the Shares hereunder, and of each Underwriter to
purchase the Shares hereunder, that, except as hereinafter in
this paragraph provided, each of the Underwriters shall purchase
and pay for all Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Representative of all such Shares in
accordance with the terms hereof. If any Underwriter or
Underwriters default in their obligations to purchase Shares
hereunder on the First Closing Date and the aggregate number of
Shares which such defaulting Underwriter or Underwriters agreed
but failed to purchase does not exceed 10 percent of the total
number of Shares which the Underwriters are obligated to purchase
on the First Closing Date, the Representative may make
arrangements satisfactory to the Company for the purchase of such
Shares by other persons, including any of the Underwriters, but
if no such arrangements are made by such date the nondefaulting
Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Shares which
such defaulting Underwriters agreed but failed to purchase on
such date. If any Underwriter or Underwriters so default and the
aggregate number of Shares with respect to which such default or
defaults occur is more than the above percentage and arrangements
satisfactory to the Representative and the Company for the
purchase of such Shares by other persons are not made within 36
hours after such default, this Agreement will terminate without
liability on the part of any nondefaulting Underwriter or the

<PAGE>

Company, except for the expenses to be paid by the Company
pursuant to Section 6 hereof and except to the extent provided in
Section 10 hereof.
In the event that Shares to which a default relates are
to be purchased by the nondefaulting Underwriters or by another
party or parties, the Representative or the Company shall have
the right to postpone the First Closing Date for not more than
seven business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected. As used in this
Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
SECTION 12. EFFECTIVE DATE. This Agreement shall become
effective immediately as to Sections 6, 8, 10 and 13 and as to
all other provisions at 10:00 A.M., Chicago Time, on the day
following the date upon which the Pricing Agreement is executed
and delivered, unless such a day is a Saturday, Sunday or holiday
(and in that event this Agreement shall become effective at such
hour on the business day next succeeding such Saturday, Sunday or
holiday); but this Agreement shall nevertheless become effective
at such earlier time after the Pricing Agreement is executed and
delivered as you may determine on and by notice to the Company or
by release of any Shares for sale to the public. For the
purposes of this Section, the Shares shall be deemed to have been
so released upon the release for publication of any newspaper
advertisement relating to the Shares or upon the release by you
of telegrams (i) advising Underwriters that the Shares are
released for public offering, or (ii) offering the Shares for
sale to securities dealers, whichever may occur first.
SECTION 13. TERMINATION. Without limiting the right to
terminate this Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by
notice to you or by you by notice to the Company at any time
prior to the time this Agreement shall become effective as
to all its provisions, and any such termination shall be
without liability on the part of the Company to any
Underwriter (except for the expenses to be paid or
reimbursed pursuant to Section 6 hereof and except to the
extent provided in Section 10 hereof) or of any Underwriter
to the Company.
(b) This Agreement may also be terminated by you prior
to the First Closing Date, and the option referred to in
Section 4, if exercised, may be cancelled at any time prior
to the Second Closing Date, if (i) trading in securities on
the New York Stock Exchange shall have been suspended or
minimum prices shall have been established on such exchange,
or (ii) a banking moratorium shall have been declared by
Illinois, New York, or United States authorities, or (iii)
there shall have been any material adverse change in
financial markets or in political, economic or financial
conditions from the date hereof which, in the opinion of the
Representative, either renders it impracticable or
inadvisable to proceed with the offering and sale of the
Shares on the terms set forth in the Prospectus or
materially and adversely affects the market for the Shares,
or (iv) there shall have been an outbreak of major armed
hostilities between the United States and any foreign power
which in the opinion of the Representative makes it
impractical or inadvisable to offer or sell the Shares. Any
termination pursuant to this paragraph (b) shall be without
liability on the part of any Underwriter to the Company or
on the part of the Company to any Underwriter

<PAGE>

(except for expenses to be paid or reimbursed pursuant to
Section 6 hereof and except to the extent provided in Section
10 hereof).
SECTION 14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE
DELIVERY. The respective indemnities, agreements,
representations, warranties and other statements of the Company,
of its officers and of the several Underwriters set forth in or
made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, as the case may
be, and will survive delivery of and payment for the Shares sold
hereunder.
SECTION 15. NOTICES. All communications hereunder will be
in writing and, if sent to the Underwriters will be mailed,
delivered or telegraphed and confirmed to you c/o Daniel E.
Coughlin, Howe Barnes Investments, Inc., 135 South LaSalle
Street, Chicago, Illinois 60603, with a copy to Matthew C. Boba,
Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois
60603; and if sent to the Company will be mailed, delivered or
telegraphed and confirmed to the Company at its corporate
headquarters with a copy to Kurt W. Florian, Jr., Lord, Bissell &
Brook, 115 South LaSalle Street, Chicago, Illinois 60603.
SECTION 16. SUCCESSORS. This Agreement and the Pricing
Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors, personal
representatives and assigns, and to the benefit of the officers
and directors and controlling persons referred to in Section 10,
and no other person will have any right or obligation hereunder.
The term "successors" shall not include any purchaser of the
Shares as such from any of the Underwriters merely by reason of
such purchase.
SECTION 17. REPRESENTATION OF UNDERWRITERS. You will act as
Representative for the several Underwriters in connection with
this financing, and any action under or in respect of this
Agreement taken by you will be binding upon all the Underwriters.
SECTION 18. PARTIAL UNENFORCEABILITY. If any section,
paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, such determination
shall not affect the validity or enforceability of any other
section, paragraph or provision hereof.
SECTION 19. APPLICABLE LAW. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois.

<PAGE>

If the foregoing is in accordance with your
understanding of our agreement, kindly sign and return to us the
enclosed duplicates hereof, whereupon it will become a binding
agreement among the Company and the several Underwriters
including you, all in accordance with its terms.

Very truly yours,
BEVERLY BANCORPORATION, INC.
By
President and Chief
Executive Officer
The foregoing Agreement is
hereby confirmed and
accepted as of the date
first above written.
HOWE BARNES INVESTMENTS, INC.
Acting as Representative
of the several
Underwriters named in
Schedule A.
By
Senior Vice President

<PAGE>

SCHEDULE A
<TABLE>
<CAPTION>
Number of Firm
Shares to be
Underwriter Purchased
----------- --------------
<S> <C>
Howe Barnes Investments, Inc. . . . . . . . . . . .

---------
TOTAL . . . . . . . . . . . . 1,000,000
---------
---------
</TABLE>

<PAGE>

SCHEDULE B
COMFORT LETTER OF GRANT THORNTON LLP

(1) They are independent public accountants with respect to
the Company and its subsidiaries within the meaning of the 1933
Act.
(2)In their opinion the consolidated financial statements and
schedules of the Company and its subsidiaries included in the
Registration Statement and the consolidated financial statements of
the Company from which the information presented under the caption
"Selected Consolidated Financial Data" has been derived which are
stated therein to have been examined by them comply as to form in
all material respects with the applicable accounting requirements
of the 1933 Act.

(3)On the basis of specified procedures (but not an
examination in accordance with generally accepted auditing
standards), including inquiries of certain officers of the Company
and its subsidiaries responsible for financial and accounting
matters as to transactions and events subsequent to December 31,
1995, a reading of minutes of meetings of the stockholders and
directors of the Company and its subsidiaries since December 31,
1995, a reading of the latest available interim unaudited
consolidated financial statements of the Company and its
subsidiaries (with an indication of the date thereof) and other
procedures as specified in such letter, nothing came to their
attention which caused them to believe that (i) the unaudited
consolidated financial statements of the Company and its
subsidiaries included in the Registration Statement do not comply
as to form in all material respects with the applicable accounting
requirements of the 1933 Act or that such unaudited consolidated
financial statements are not fairly presented in accordance with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements included in the Registration Statement, and
(ii) at a specified date not more than five days prior to the date
thereof in the case of the first letter and not more than two
business days prior to the date thereof in the case of the second
and third letters, there was any change in the capital stock or
long-term debt or short-term debt (other than normal payments) of
the Company and its subsidiaries on a consolidated basis or any
decrease in the total assets or shareholder's equity or allowance
for loan losses of the Company and its subsidiaries on a
consolidated basis as compared with amounts shown on the latest
unaudited balance sheet of the Company included in the Registration
Statement or for the period from the date of such balance sheet to
a date not more than five days prior to the date thereof in the
case of the first letter and not more than two business days prior
to the date thereof in the case of the second and third letters,
there were any decreases, as compared with the corresponding period
of the prior year, in net interest income, total other income,
income before income tax expense and minority interest, net income
and net income per share of the Company and its subsidiaries on a
consolidated basis except, in all instances, for changes or
decreases which the Prospectus discloses have occurred or may occur
or which are set forth in such letter.

(4)They have carried out specified procedures, which have been
agreed to by the Representative, with respect to certain
information in the Prospectus specified by the Representative, and
on the basis of such procedures, they have found such information
to be in agreement with the general accounting records of the
Company, its subsidiaries or other entities.

<PAGE>

EXHIBIT A
BEVERLY BANCORPORATION, INC.
1,000,000 Shares Common Stock(2)
PRICING AGREEMENT
July ____, 1996
Howe Barnes Investments, Inc.
As Representative of the Several
Underwriters
135 South LaSalle Street
Chicago, Illinois 60603
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated
July ___, 1996 (the "UNDERWRITING AGREEMENT") relating to the
sale by the Company and the purchase by the several Underwriters
for whom Howe Barnes Investments, Inc. is acting as
Representative (the "REPRESENTATIVE"), of the above Shares. All
terms herein shall have the definitions contained in the
Underwriting Agreement except as otherwise defined herein.
Pursuant to Section 4 of the Underwriting Agreement, the
Company agrees with the Representative as follows:
1. The initial public offering price per share for the
Shares shall be $__________.
2. The purchase price per share for the Shares to be paid
by the several Underwriters shall be $__________, being an amount
equal to the initial public offering price set forth above less
$__________ per share.
Schedule A is amended as follows:
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed
duplicates hereof, whereupon it will become a binding agreement
among the Company and the several Underwriters, including you,
all in accordance with its terms.
Very truly yours,

BEVERLY BANCORPORATION, INC.
By
President and Chief
Executive Officer
The foregoing Agreement is
hereby confirmed and
accepted as of the date
first above written.
HOWE BARNES INVESTMENTS, INC.
Acting as Representative
of the Several
Underwriters.
By
Senior Vice President

---------------------
(2) Plus an option to acquire up to 150,000 additional shares to
cover overallotments.

<PAGE>
AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger ("Merger Agreement") is made as of June
__, 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 1,000,000
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) 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 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

<PAGE>

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 and attested by their respective
officers thereunto duly authorized.

BEVERLY CORPORATION, INC.,
an Illinois corporation

By:________________________________
John D. Van Winkle, President

Attest:

____________________________
BEVERLY BANCORPORATION, INC.,
a Delaware corporation

By:________________________________
John D. Van Winkle, President

Attest:

____________________________

<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

<PAGE>

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 (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.

<PAGE>

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, 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.

<PAGE>

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.

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

<PAGE>

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 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

<PAGE>

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.

(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

<PAGE>

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.

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.

____________________________________
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

<PAGE>

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 communication equipment by means of which all of the
members of the board or committee participating may hear one another shall not
require notice if a quorum 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.

<PAGE>

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.

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 be officers of the
corporation.

<PAGE>

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.

SECTION 3. The salaries of all officers of the corporation shall be fixed
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.

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. In the absence of the
president or in the event of his or her inability to act, the vice-president (or
in the event there be more than one vice-president, the vice-presidents in

<PAGE>

the order designated, or in the absence of any designation, then in the order
of their election) 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.

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.

<PAGE>

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 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

<PAGE>

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 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.

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.

<PAGE>

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 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.

<PAGE>

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.

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>

PROMISSORY NOTE

Chicago, Illinois
December 22, 1995

$11,000,000.00

ON DEMAND, FOR VALUE RECEIVED, the undersigned BEVERLY BANCORPORATION,
INC., an Illinois corporation (the "BORROWER") promises to pay to the order of
Harris Trust and Savings Bank (the "BANK") at the Bank's office at 111 West
Monroe Street, Chicago, Illinois, the principal sum of Eleven Million Dollars
($11,000,000.00).

The Borrower promises to pay interest on the balance of principal remaining
from time to time unpaid hereon at the rates and times set forth in this Note.

If more than one party constitutes the Borrower, the term Borrower as used
herein shall mean and include all such parties collectively, and, also, each
individually, with all promises and other agreements by the Borrower herein to
constitute joint and several promises and agreements by such parties.

SECTION 1. INTEREST AND CHANGE IN CIRCUMSTANCES.

SECTION 1.1. INTEREST RATE OPTIONS. (a) Subject to all of the terms and
conditions of this Section 1, portions of the principal indebtedness evidenced
by this Note (all of the principal indebtedness evidenced by this Note bearing
interest at the same rate for the same period of time being hereinafter referred
to as a "PORTION") may, at the option of the Borrower, bear interest with
reference to the Prime Rate (the "PRIME RATE PORTION") or with reference to the
Adjusted LIBOR ("LIBOR PORTIONS"), and Portions may be converted from time to
time from one basis to another. All of the indebtedness evidenced by this Note
which is not part of a LIBOR Portion shall constitute a single Prime Rate
Portion, and all of the indebtedness evidenced by this Note which bears interest
with reference to a particular Adjusted LIBOR for a particular Interest Period
shall constitute a single LIBOR Portion. Anything contained herein to the
contrary notwithstanding, there shall not be more than two (2) LIBOR Portion(s)
applicable to this Note outstanding at any one time. The Borrower promises to
pay interest on each Portion at the rates and times specified in Section 1.

(b) PRIME RATE PORTION. The Prime Rate Portion shall bear interest at the
rate per annum determined by subtracting .3% to the Prime Rate as in effect from
time to time, provided that if the Prime Rate Portion or any part thereof is not
paid when due (whether by demand or otherwise), such Portion shall bear
interest, whether before or after judgment, until payment in full thereof at the
rate per annum determined by adding 3% to the Prime Rate as from time to time in
effect. Interest on the Prime Rate Portion shall be payable in arrears on the
last day of each December, March, June and September (commencing March 31, 1996)
and upon demand.

<PAGE>

(c) LIBOR PORTIONS. Each LIBOR Portion shall bear interest for each
Interest Period selected therefor at a rate per annum determined by adding 2% to
Adjusted LIBOR for such Interest Period, provided that if any LIBOR Portion is
not paid when due (whether by demand or otherwise), such Portion shall bear
interest, whether before or after judgment, until payment in full thereof
through the end of the Interest Period then applicable thereto at the rate per
annum determined by adding 2% to the interest rate which would otherwise be
applicable thereto, and effective at the end of such Interest Period such LIBOR
Portion shall automatically be converted into and added to the Prime Rate
Portion and shall thereafter bear interest at the interest rate applicable to
the Prime Rate Portion after the same is due. Interest on each LIBOR Portion
shall be due and payable on the last day of the Interest Period applicable
thereto and upon demand. Anything contained herein to the contrary
notwithstanding, no LIBOR Portion shall be created, continued or effected by
conversion if at such time any Default or Event of Default shall occur or be
continuing. Each LIBOR Portion shall be in the amount of $1,000.000 or such
greater amount which is an integral multiple of $1,000,000.

SECTION 1.2. COMPUTATION OF INTEREST. All interest on this Note shall be
computed on the basis of a year of 360 days for the actual number of days
elapsed.

SECTION 1.3. MANNER OF RATE SELECTION. The Borrower shall notify the
Bank by 10:00 a.m. (Chicago time) at least three (3) Business Days prior to
the date upon which it requests that any LIBOR Portion be created or that any
part of the Prime Rate Portion be converted into a LIBOR Portion (each such
notice to specify in each instance the amount thereof and the Interest Period
selected therefor). If the Borrower fails to notify the Bank on or before
10:00 a.m. (Chicago time) on the fourth Business Day preceding the end of an
Interest Period applicable to a LIBOR Portion whether such LIBOR Portion is
to continue as a LIBOR Portion and the new Interest Period selected therefor,
unless the Bank makes demand for repayment of this Note, such LIBOR Portion
shall automatically be converted into and added to the Prime Rate Portion as
of and on the last day of such Interest Period. All requests for the
creation, continuance or conversion of Portions under this Note shall be
irrevocable. Such requests may be written or oral and the Bank is hereby
authorized to honor requests for creations, continuances and conversions
received by it from any person the Bank in good faith believes to be the
Borrower (or any person the Bank in good faith believes authorized to make
such request on behalf of the Borrower, and in the event more than one party
constitutes the Borrower, any person the Bank in good faith believes to be
any one of such parties or any person authorized to make such request on
behalf of any one of such parties), the Borrower hereby agreeing to indemnify
the Bank from any liability or loss ensuing from so acting.

SECTION 1.4. CHANGE OF LAW. Notwithstanding any other provisions of this
Note, if at any time the Bank shall determine in good faith that any change in
applicable laws, treaties or regulations or in the interpretation thereof makes
it unlawful for the Bank to create or continue to maintain any LIBOR Portion,
the Bank shall promptly so notify the Borrower and at the Bank's option make
demand for repayment of this Note or only the affected LIBOR Portion and even
absent such demand, no LIBOR Portion shall be created, continued or maintained
after the date of such determination until it is no longer unlawful for the Bank

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to create, continue or maintain such LIBOR Portion. Upon such a demand by the
Bank for payment of the affected LIBOR Portion, the Borrower shall thereupon pay
the outstanding principal amount of such affected LIBOR Portion, together with
all interest accrued thereon and all other amounts payable to the Bank with
respect thereto under this Note (including without limitation any amount due the
Bank under Section 1.7 hereof); PROVIDED, HOWEVER, that unless the Bank makes
demand for repayment of this Note in full, the Borrower may elect to convert the
principal amount of the affected Portion into the Prime Rate Portion available
hereunder, subject to the terms and conditions of this Note (including without
limitation the payment of such interest and other amounts so payable to the Bank
under this Note).

SECTION 1.5. UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN LIBOR.
Notwithstanding any other provision of this Note, if prior to the commencement
of any Interest Period, the Bank shall determine that deposits in the amount of
any LIBOR Portion scheduled to be outstanding during such Interest Period are
not readily available to the Bank in the relevant market or by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining LIBOR, then the Bank shall promptly give notice
thereof to the Borrower and at the Bank's option make demand for repayment of
this Note and even absent such demand, no LIBOR Portion shall be created,
continued or effected by conversion, as the case may be, in such amount and for
such Interest Period until deposits in such amount and for the Interest Period
selected by the Borrower shall again be readily available in the relevant market
and adequate and reasonable means exist for ascertaining LIBOR.

SECTION 1.6. TAXES AND INCREASED COSTS. With respect to any LIBOR
Portion, if the Bank shall determine in good faith that any change in any
applicable law, treaty, regulation or guideline (including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or any new
law, treaty, regulation or guideline, or any interpretation of any of the
foregoing by any governmental authority charged with the administration thereof
or any central bank or other fiscal, monetary or other authority having
jurisdiction over the Bank or its lending branch or the LIBOR Portions
contemplated by this Note (whether or not having the force of law) shall;

(i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in
or for the account of, or loans by, or any other acquisition of funds
or disbursements by, the Bank which is not in any instance already
accounted for in computing the interest rate applicable to such LIBOR
Portion;

(ii) subject the Bank, and LIBOR Portion or this Note to the
extent it evidences such Portion, to any tax (including, without
limitation, any United States interest equalization tax or similar tax
however named applicable to the acquisition or holding of debt
obligations and any interest or penalties with respect thereto), duty,
charge, stamp tax, fee, deduction or withholding in respect of any
LIBOR Portion or this Note to the extent it evidences such Portion,
except such taxes as may be measured by the overall net income or
gross receipts of the Bank or its lending branches and

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<PAGE>

imposed by the jurisdiction, or any political subdivision or taxing
authority thereof, in which the Bank's principal executive office or
its lending branch is located;

(iii) change the basis of taxation of payments of principal and
interest due from the Borrower to the Bank under this Note to the
extent it evidences any LIBOR Portion (other than by a change in
taxation of the overall net income or gross receipts of the Bank); or

(iv) impose on the Bank any penalty with respect to the foregoing
or any other condition regarding its disbursement, any LIBOR Portion
or this Note to the extent it evidences any LIBOR Portion;

and the Bank shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to the Bank
of creating or maintaining any LIBOR Portion hereunder or to reduce the amount
of principal or interest received or receivable by the Bank (without benefit of,
or credit for, any prorations, exemption, credits or other offsets available
under any such laws, treaties, regulations, guidelines or interpretations
thereof), then the Borrower shall pay (which the Borrower hereby agrees to pay)
on demand (which need not but may at the Bank's option be combined with a demand
for repayment of this Note) to the Bank from time to time as specified by the
Bank such additional amounts as the Bank shall reasonable determine are
sufficient to compensate and indemnify it for such increased cost or reduced
amount. If the Bank makes such a claim for compensation, it shall provide to
the Borrower a certificate setting forth the computation of the increased cost
or reduced amount as a result of any event mentioned herein in reasonable detail
and such certificate shall be conclusive if reasonably determined.

SECTION 1.7. FUNDING INDEMNITY. In the event the Bank shall incur any
loss, cost or expense (including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired or contracted to be acquired by the Bank to fund or maintain any LIBOR
Potion or the relending or reinvesting of such deposits or other funds or
amounts paid or prepaid to the BANK) as a result of:

(i) any payment of a LIBOR Portion on a date other than the last
day of the then applicable Interest Period for any reason, whether
before or after default or demand, and whether or not such payment is
required by any provisions of this Agreement; or

(ii) any failure by the Borrower to create, borrow, continue or
effect by conversion a LIBOR Portion on the date specified in a notice
given pursuant to this Note;

then upon the demand of the BANK (which need not but may at the Bank's option be
combined with a demand for repayment of this Note), the Borrower shall pay
(which the Borrower hereby agrees to pay) to the Bank such amount as will
reimburse the Bank for such loss, cost or expense. If the Bank requests such a
reimbursement, it shall provide the

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<PAGE>

Borrower with a certificate setting forth the computation of the loss, cost or
expense giving rise to the request for reimbursement in reasonable detail and
such certificate shall be conclusive if reasonably determined.

SECTION 1.8. LENDING BRANCH. The Bank may, at its option, elect to make,
fund or maintain Portions of the loan hereunder at such of its branches or
offices as the Bank may from time to time elect.

SECTION 1.9. DISCRETION OF BANK AS TO MANNER OF FUNDING. Notwithstanding
any provision of this Note to the contrary, the Bank shall be entitled to fund
and maintain its funding of all or any part of this Note in any manner it sees
fit, it being understood, however, that for the purposes of this Note all
determinations hereunder shall be made as if the Bank had actually funded and
maintained each LIBOR Portion during each Interest Period applicable thereto
through the purchase of deposits in the relevant market in the amount of such
LIBOR Portion, having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the applicable LIBOR for such Interest Period.

SECTION 2. PAYMENTS; PREPAYMENTS; NOTATIONS.

SECTION 2.1. PLACE AND APPLICATION OF PAYMENTS. All payments of
principal, interest and all other amounts payable hereunder shall be paid to the
Bank at its principal office in Chicago, Illinois. All such payments shall be
made in lawful money of the United States of America, in immediately available
funds at the place of payment, without setoff or counterclaim. Unless the
Borrower otherwise directs, principal payments made prior to the Bank's demand
for repayment of this Note, shall be first applied to the Prime Rate Portion
until payment in full thereof, with any balance applied to the LIBOR Portions in
the order in which their Interest Periods expire. No amount paid or prepaid on
this Note may be borrowed again.

SECTION 2.2. VOLUNTARY PREPAYMENTS. (a) PRIME RATE PORTION. The Borrower
shall have the privilege of prepaying without premium or penalty and in whole or
in part (but, if in part, then in an amount not less than $10,000) the Prime
Rate Portion of this Note at any time upon notice to the Bank prior to 10:00
a.m. (Chicago time) on the date fixed for prepayment, such prepayment to be made
by the payment of the principal amount to be prepaid and accrued interest
thereon to the date of prepayment.

(b) LIBOR PORTIONS. The Borrower may prepay any LIBOR Portion of this
Note only on the last date of the then applicable Interest Period, in whole or
in part (but, if in part, then in an amount not less than $100,000 or such
greater amount which is an integral multiple of $100,000) upon three (3)
Business Days' prior notice to the Bank (which notice shall be irrevocable once
given, must be received by the Bank no later than 10:00 a.m. (Chicago time) on
the fourth Business Day preceding the date of such prepayment and shall specify
the principal amount to repaid); PROVIDED, HOWEVER, that the outstanding
principal amount of any LIBOR Portion of this Note prepaid in part shall not be
less than $1,000,000 after giving effect to such prepayment. Any such
prepayment shall be effected by payment

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<PAGE>

of the principal amount to be prepaid and accrued interest thereon to the end of
the applicable Interest Period.

SECTION 2.3. NOTATIONS AND REQUESTS. The loan made against this Note,
the status of all amounts evidenced by this Note as constituting part of the
Prime Rate Portion or a LIBOR Portion, and the rates of interest and Interest
Periods applicable to such Portions shall be recorded by the Bank on its books
and records or, at its option in any instance, endorsed on a schedule to this
Note and the unpaid principal balance and status, rates and Interest Periods so
recorded or endorsed by the Bank shall be PRIMA FACIE evidence in any course or
other proceeding brought to enforce this Note of the principal amount remaining
unpaid thereon, the status of the loan evidenced thereby and the interest rates
and Interest Periods applicable thereto; PROVIDED, HOWEVER, that the failure of
the Bank to record any of the foregoing shall not limit or otherwise affect the
obligation of the Borrower to repay on demand the principal amount of this Note
together with accrued interest thereon. Prior to any negotiation of this Note,
the Bank shall record on a schedule thereto the status of all amounts evidenced
thereby as constituting part of the Prime Rate Portion or LIBOR Portion and the
rates of interest and the INTEREST Periods applicable thereto.

SECTION 3. EVENTS OF DEFAULT AND REMEDIES.

SECTION 3.1. EVENTS OF DEFAULT. Any one or more of the following shall
constitute an "EVENT OF DEFAULT" hereunder: (a) default in the payment when due
of any principal of or interest of this Note or any other indebtedness or
liabilities (whether direct, contingent or otherwise) of the Borrower owing to
the Bank; (b) any representation or warranty contained herein or in any document
furnished pursuant hereto shall prove to be false; (c) default in the observance
or performance of any other provision hereof; (d) any event occurs or condition
exists which is specified as a default or an event of default under the Security
Agreement, or the Security Agreement shall for any reason not be or cease to be
in full force and effect, or the Security Agreement is declared to be null and
void, or the Borrower takes any action for the purpose of repudiating or
rescinding the Security Agreement or its obligations thereunder; (e) any
judgment or judgments, writ or writs, or warrant or warrant of attachment, or
any similar process or processes shall be entered or filed against the Borrower
or any of its property and which remains unvacated, unbonded, unstayed, or
unsatisfied for a period of thirty (30) days; (f) the dissolution or termination
of the existence of the Borrower or any banking subsidiary; or (g) the
institution by or against the Borrower of any proceeding under any bankruptcy,
arrangement, reorganization, insolvency, or similar law, or the application for
the appointment of a custodian (including, without limitation, a receiver or
trustee) of any part of the property of the Borrower, or the making by the
Borrower of an assignment for the benefit of creditors, or the Borrower become
insolvent.

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<PAGE>

SECTION 3.2. REMEDIES. When any event of Default has occurred and is
continuing, unless the Bank shall otherwise elect, this Note, including both
principal and interest, shall be and become immediately due and payable
without demand, presentment, protest or notice of any kind. Also in any such
event the Bank shall have the right to proceed to foreclose against any
collateral under the Security Agreement, take any other action or exercise
any other remedy under the Security Agreement, or exercise any other action,
right, power of remedy permitted by law.

SECTION 3.3 NO IMPAIRMENT OF DEMAND CHARACTER OF THE NOTE. Borrower
acknowledges that this Note is payable upon demand and that nothing herein
contained shall in any manner affect or impair the right of Bank to demand
payment of this Note at any time it deems fit irrespective of whether or not any
Default or Event of Default has occurred or is continuing and whether or not the
Borrower is in compliance with the terms of this Note and that upon so doing the
Bank shall be entitled to invoke the remedies upon default herein and by
applicable law provided for.

SECTION 4. DEFINITIONS.

As used in this Note, the following terms shall have the following
meanings:

"ADJUSTED LIBOR" shall mean a rate per annum determined pursuant to the
following formula:

Adjusted LIBOR = LIBOR
-------------------------
100%- Reserve Percentage

"BUSINESS DAY" means a day on which the Bank is open for business in
Chicago, Illinois other than a Saturday or Sunday and, when used with respect to
LIBOR Portions, a day on which the Bank is also dealing in United States dollar
deposits in London, England and Nassau, Bahamas.

"DEFAULT" means an event which with the passage of time, giving of notice
or both would constitute an Event of Default under this Note.

"INTEREST PERIOD" shall mean, with respect to any LIBOR Portion, the period
commencing on, as the case may be, the creation, continuation or conversion date
with respect to such LIBOR Portion and ending one (1), two (2), three (3) or six
(6) months thereafter as selected by the Borrower in its notice as provided
herein; PROVIDED that, all of the foregoing provisions relating to Interest
Periods are subject to the following:

(i) if any Interest Period would otherwise end on a day which is not
a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be to
carry such Interest Period into the

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<PAGE>

next calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;

(ii) the interest rate to be applicable to each Portion for each
Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof; and

(iii) no Interest Period may be selected if after giving effect to it,
the Borrower will be unable to make a principal prepayment scheduled to be
made during such Interest Period absent the Bank's prior demand (if any
such prepayments scheduled) without paying part of a LIBOR Portion on a
date other than the last day of the Interest Period applicable to that
LIBOR Portion.

For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month; PROVIDED, HOWEVER, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.

"LIBOR" shall mean for an Interest Period for a Borrowing of Eurodollar
Loans (a) the LIBOR Index Rate for such Interest Period, if such rate is
available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic
average of the rate of interest per annum (rounded upward, if necessary, to the
nearest 1/100th of 1%) at which deposits in U.S. dollars in immediately
available funds are offered to the Agent at 11:00 a.m. (London, England time)
two (2) Business Days before the beginning of such Interest Period by major
banks in the interbank eurodollar market for a period equal to such Interest
Period and in an amount equal or comparable to the principal amount of the
Eurodollar Loan scheduled to be made by the Agent as part of such Borrowing.

"LIBOR INDEX RATE" means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a period equal to such
Interest Period, which appear on the Telerate Page 3750 as of 11:00 a.m.
(London, England time) on the day two Business Days before the commencement of
such Interest Period.

"LIBOR PORTIONS" is defined in Section 1.1(a) hereof.

"PORTION" is defined in Section 1.1(a) hereof.

"PRIME RATE" means a fluctuating interest rate per annum at all time equal
to the rate of interest announced by Harris Trust and Savings Bank from time to
time as its prime commercial rate, with any change in such rate resulting from a
change in said prime commercial rate to be effective as of the date of the
relevant change in said prime commercial rate.

"PRIME RATE PORTION" is defined in Section 1.1(a) hereof.

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<PAGE>

"RESERVED PERCENTAGE" shall mean, for the purpose of computing Adjusted
LIBOR, the maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental or other special reserves)
imposed by the Board of Governors of the Federal Reserve System (or any
successor) on "eurocurrency liabilities" (as such term is defined in such
Board's Regulation D) for the applicable Interest Period as of the first day of
such Interest Period, but subject to any amendments to such reserve requirement
by such Board or its successor, and taking into account any transitional
adjustments thereto becoming effective during such INTEREST Period.

"SECURITY AGREEMENT" means that certain Pledge and Security Agreement dated
December 22, 1995 and any amendments executed and delivered by the Borrower to
the Bank.

"TELERATE PAGE 3750" means the display designated as "PAGE 3750" on the
Telerate Service (or such other page as may replace Page 3750 on that service or
such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for U.S. Dollar deposits).

SECTION 5. MISCELLANEOUS.

SECTION 5.1. NO WAIVER OF RIGHTS. No delay or failure on the part of the
Bank or on the part of the holder or holders of this Note in the exercise of any
power or right shall operate as a waiver thereof or as an acquiescence in any
Default or Event of Default, nor shall nay single or partial exercise of any
power or right preclude any other or further exercise thereof, or the exercise
of any other power or right, and the rights and remedies hereunder of the Bank
and of the holder or holders of this Note are cumulative to, and not exclusive
of, any rights or remedies which any of them would otherwise have.

SECTION 5.2. AMENDMENTS. No amendment, modification or waiver of any
provision of this Note, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Bank.

SECTION 5.3. HOLIDAYS. If any payment hereunder becomes due an payable
on a day which is not a Business Day, the due date of such payment shall be
extended to the next succeeding Business Day on which date such payment shall be
due and payable. In the case of any payment of principal falling due on a day
which is not Business Day, interest on such principal amount shall continue to
accrue during such extension at the rate per annum then in effect, which accrued
amount shall be due and payable on the next scheduled date for the payment of
interest.

SECTION 5.4. COSTS AND EXPENSES. The Borrower agrees to pay on demand
all of the costs and expenses of the Bank in connection with the negotiation,
preparation, execution and delivery of this Note and the other instruments and
documents to be delivered hereunder or

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in connection with the transaction contemplated hereby, including the reasonable
fees and out-of-pocket expenses of Messrs. Chapman and Cutler, special counsel
to the Bank; all costs and expenses of the Bank (including attorneys' fees)
incurred in connection with any consents or waivers hereunder or amendments
hereto which requires any change in the documentation relating to this Note or
any collateral Security therefor; and all costs and expenses (including
attorneys' fees), if any, incurred by the Bank or any other holders of the Note
in connection with the enforcement of this Note and other instruments and
documents to be delivered hereunder and any collateral Security therefor.

SECTION 5.5. SURVIVAL OF INDEMNITIES. All indemnities and other
provisions relative to reimbursement to the Bank of amounts sufficient to
protect the yield of the Bank with respect to the indebtedness evidenced by this
Note, including, but not limited to, Sections 1.6 and 1.7 hereof, shall survive
the termination and the payment of this Note.

SECTION 5.6. SECURITY. Payment of this Note is secured by, among other
things, that certain Pledge and Security Agreement as heretofore defined. This
Note and the holder hereof are entitled to all of the benefits and security
afforded by such Security Agreement and any other security documents from time
to time granted as collateral security for this Note, to which reference is
hereby made for a statement thereof. In addition, any indebtedness due from the
legal holder hereof to the Borrower may be appropriated and applied hereon at
any time, as will before as after the maturity hereof.

SECTION 5.7. NOTICES. All notices and communications provided for herein
shall be in writing, except as otherwise specifically provided for hereinabove,
and shall be deemed to have been given or made when served personally or when
deposited in the United States mail addressed if to the Borrower at 1357 West
103rd Street, Chicago, Illinois 60643, attention Mr. John D. Van Winkle, or if
to the Bank at 111 West Monroe Street, Chicago, Illinois 60690, Attention: Mr.
Michael S. Cameli, Financial Institutions Division or at such other address as
shall be designated by any party thereto in a written notice given to each party
pursuant to this Section 5.7.

SECTION 5.8. SEVERABILITY OF PROVISIONS. Any provision of this Note
which is unprohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition of enforceability
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

SECTION 5.9. MAXIMUM INTEREST. In no contingency or event whatsoever
shall the aggregate of all amounts deemed interest hereunder and charged or
collected pursuant to the terms of this Note exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a court
determines that the Bank has charged or received interest hereunder in excess of
the highest applicable rate, the rate in effect hereunder shall automatically be
reduced to the maximum rate permitted by applicable law and the Bank shall
promptly refund to the Borrower any interest received by the BANK in excess of
the maximum lawful

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<PAGE>

rate or, if so requested by the Borrower, shall apply such excess to the
principal balance of this Note. It is the intent hereof that the Borrower not
pay or contract to pay, and that the Bank not receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be paid by the Borrower under applicable law.

SECTION 5.10. SETOFF. The Borrower authorizes the Bank to charge the
principal of and the interest on this Note against amounts on deposit in the
Borrower's accounts with the Bank; but the inadequacy of such deposits shall not
impair or otherwise affect the Borrowers obligation to pay such amounts, which
is absolute and unconditional.

SECTION 5.11. BINDING NATURE; GOVERNING LAW; WAIVERS. This Note shall be
binding upon the Borrower and upon its heirs, legal representatives, successors
and assigns, and shall inure to the benefit of the Bank and the benefit of its
successors and assigns, including any subsequent holder of this Note. THIS NOTE
SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. The
Borrower hereby waives presentment for payment and demand.

BEVERLY BANCORPORATION, INC.

By: /s/ John O'Neill
------------------------------------

Its: Exec Vice President
-----------------------------------

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<PAGE>
EXHIBIT 10(b)

BEVERLY BANCORPORATION, INC.

PLEDGE AND SECURITY AGREEMENT

FOR VALUE RECEIVED, the undersigned, Beverly Bancorporation, Inc., an
Illinois corporation (the "PLEDGOR"), hereby pledges and deposits with, and
reaffirms its pledge and deposit with, HARRIS TRUST AND SAVINGS BANK, Chicago,
Illinois (the "BANK"), and hereby grants to, and reaffirms its grant to, the
Bank a continuing security interest in and to (i) the securities listed on
Schedule A attached hereto and made a part hereof, now owned or hereafter
acquired by the Pledgor, (ii) all substitutions and additions to such shares,
(iii) all dividends, distributions and sums distributable or payable from, upon
or in respect of such shares, (iv) all other rights or privileges incident to
such shares and (v) all proceeds and products of any of the foregoing (all of
the foregoing being hereinafter referred to collectively as the "COLLATERAL").

This Agreement, and the pledge and security interest herein granted and
provided for, are made and given to secure, and shall secure, the prompt payment
and performance in full when due (whether by lapse of time, acceleration or
otherwise) (including, without limitation, interest which but for the filing of
a petition in bankruptcy with respect to the Pledgor would accrue on such
obligations) of (i) any and all indebtedness, obligations and liabilities of
whatsoever kind and nature of the Pledgor to the Bank, whether direct or
indirect, absolute or contingent, due or to become due, and whether now existing
or hereafter arising and howsoever evidenced or acquired, and whether several,
joint or joint and several and (ii) all expenses and charges, legal or
otherwise, suffered or incurred by the Bank in collecting any of such
indebtedness, obligations or liabilities or realizing upon, protecting or
preserving the pledge and security interest herein granted and provided for (all
of the foregoing described indebtedness, obligations, liabilities, expenses and
charges being hereinafter referred to collectively as the "OBLIGATIONS").

1. COVENANTS, REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
covenants with, and represents and warrants to, the Bank as follows:

(a) The certificate for all shares of stock now or at any time
constituting the Collateral shall be delivered to the Bank duly endorsed in
bank for transfer or accompanied by an appropriate assignment or
assignments or an appropriate undated stock power or powers, in every case
sufficient to transfer title thereto. The Bank may at any time after the
occurrence of an event of default hereunder cause to be transferred into
its name or the name of its nominee or nominees any and all of the
Collateral hereunder. The Bank shall at all times have the right to
exchange the certificates representing the Collateral for certificates of
smaller or larger denominations.

(b) The Pledgor is and will be the sole and lawful legal and
equitable owner of all of the Collateral deposited by Pledgor hereunder,
and has full right, power and authority to pledge the same to the Bank to
secure the Obligations and to perform each and all of its obligations
hereunder. The Pledgor will not sell, assign, pledge or otherwise dispose
of the Collateral or any interest therein. The Collateral is and will be
free and clear of all transfer restrictions as well as all security
interests, liens, rights, claims, attachments, levies and encumbrances of
every kind, nature and description and whether voluntary or involuntary,
except for the pledge to the Bank hereunder. The Pledgor will warrant and
defend the Collateral against any claims and demands of all persons at any
time claiming the same or any interest therein adverse to the Bank.

<PAGE>

(c) The shares of stock representing the Collateral have been validly
issued and are fully paid and non-assessable. There are no outstanding
commitments or other obligations of the issuer of the Collateral to issue,
and no options, warrants or other rights of any individual or entity to
acquire, any share of any class or series of capital stock of such issuer.
The shares of stock representing the Collateral listed and described on
Schedule A attached hereto constitute all of the issued and outstanding
capital stock of the issuer owned, legally or beneficially, by the Pledgor.
The Pledgor further agrees that in the event that any such issuer shall
issue any additional capital stock of any class or series, the Pledgor will
forthwith pledge and deposit hereunder or cause to be pledged and deposited
hereunder, all such additional shares of such capital stock.

(d) The Pledgor will pay promptly when due all taxes, assessments and
governmental charges and levies upon or against the Collateral in each case
before the same become delinquent and before penalties accrue thereon,
unless and to the extent that the same are being contested in good faith by
appropriate proceedings which prevent foreclosure on or other realization
upon any of the Collateral and the Pledgor shall have established adequate
reserves therefor.

(e) On failure of the Pledgor to perform any of the agreements and
covenants herein contained, the Bank may perform the same and in so doing
may expend such sums as Bank may deem advisable in the performance thereof,
including without limitation the payment of any taxes, liens and
encumbrances, expenditures made in defending against any adverse claim or
demand and all other expenditures which the Bank may be compelled to make
by operation of law or which Bank may make by agreement or otherwise for
the protection of the security hereof. All such sums and amounts so
expended shall be repayable by the Pledgor immediately without notice or
demand, shall constitute additional obligations hereby secured together
with interest thereon at the rate per annum (computed on the basis of a
year of 360 days for the actual number of days elapsed) determined by
adding 3% to the rate per annum from time to time announced by the Bank as
its prime commercial rate with any change in such rate per annum as so
determined by reason of a change in such prime commercial rate to be and
become effective as of and on the date of such change in said prime
commercial rate (such rate per annum as so determined being hereinafter
referred to as the "DEFAULT RATE"). No such performance of any covenant or
agreement by the Bank on behalf of the Pledgor, and no such advancement or
expenditure therefor, shall relieve the Pledgor of any default under the
terms of this Agreement or in any way obligate the Bank to take any further
or future action with respect thereto. The Bank, in making any payment
hereby authorized, may do so according to any bill, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale forfeiture, tax
lien or title or claim. The Bank, in performing any act hereunder, shall
be the sole judge of whether the Pledgor is required and has failed to
perform same under the terms of this Agreement. The Bank is authorized to
charge any depository account of the Pledgor maintained with the Bank for
the amount of such sums and amounts so expended.

(f) None of the Collateral constitutes margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any loan made by the Bank to the
Pledgor will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin
stock. The Pledgor is not in the business of extending credit for the
purpose of purchasing or carrying margin stock.

<PAGE>

2. VOTING RIGHTS AND DIVIDENDS. Unless and until an event of default
hereunder has occurred and is continuing:

(a) The Pledgor shall be entitled to exercise all voting and/or
consensual powers pertaining to the Collateral or any part thereof, for all
purposes not inconsistent with the terms of this Agreement or any other
document evidencing or otherwise relating to any Obligations, it being
understood and agreed that the Bank may not exercise any such voting rights
unless and until the Bank has sold or otherwise realized upon the
Collateral pursuant to the terms hereof either to a third party or to the
Bank itself.

(b) The Pledgor shall be entitled to receive and retain by all
dividends which are paid in cash out of earned surplus of the issuer of the
Collateral; but except for such dividends, all dividends paid upon or in
respect of the Collateral and all stock or property representing stock or
liquidating dividends or a distribution or return of capital upon or in
respect of the Collateral or any part thereof or resulting from a split-up,
revision or reclassification of the Collateral or any part thereof or
received in addition to, in substitution of or in exchange for the
Collateral or any part thereof as a result of a merger, consolidation or
otherwise, shall be paid, delivered or transferred, as appropriate,
directly to the Bank immediately upon the receipt thereof by the Pledgor
and may, in the case of cash, be applied by the Bank to the satisfaction of
the Obligations (in whatever order the Bank elects) whether or not the same
way then be due or otherwise adequately secured and shall, in the case of
all other property, together with any cash received by the Bank and not
applied as aforesaid, be held by the Bank pursuant hereto as part of the
Collateral as additional Collateral pledged under and subject to the terms
of this Agreement.

(c) In order to permit the Pledgor to exercise such voting and/or
consensual powers which it is entitled to exercise under clause (a) above
and to receive such distributions which the Pledgor is entitled to receive
and retain under clause (b) above, the Bank shall, if necessary, upon the
written request of the Pledgor, from time to time execute and delver to the
Pledgor appropriate proxies and dividend orders.

(d) In order to permit the Bank to receive all cash and other
property to which it may be entitled under clause (b) above, the Pledgor
shall, if necessary, upon the written request of the Bank, from time to
time execute and deliver to the Bank appropriate dividend orders.

3. FURTHER ASSURANCES. The Pledgor will at any time and from time to
time upon request of the Bank make, do, execute, acknowledge and deliver such
further instruments and documents as the Bank from time to time require in order
to more effectively vest in and secure to it the benefits and security intended
to be afforded hereby. The Pledgor agrees to mark its books and records to
reflect the pledge to the Bank of the Collateral hereunder.

4. POWER OF ATTORNEY. The Pledgor does hereby irrevocably constitute and
appoint the Bank its true and lawful attorney in fact, with full power of
substitution, for it and in its name, place and stead, to ask, demand, collect,
receive receipt for, sue for, compound and give acquittance for any and all sums
or properties which may be or become due, payable or distributable on or in
respect of the Collateral or which constitute a part thereof, with full power to
settle, adjust or compromise any claim thereunder or therefor as fully as the
Pledgor could itself do, and to endorse or sign the name of the Pledgor on all
commercial paper given in payment or in partial payment thereof and on all
documents of satisfaction, discharge or receipt required or requested in
connection therewith, and in its discretion, to file any claim or take any other
action or proceeding, either in its own name or in the name of the Pledgor, or
otherwise, which the Bank may deem necessary or appropriate to collect or
otherwise realize upon any and all of the

<PAGE>

Collateral, or effect a transfer thereof, or which may be necessary or
appropriate to protect and preserve the right, title and interest of the Bank in
and to such Collateral and the security intended to be afforded hereby. This
power of attorney, being coupled with an interest, is irrevocable until the
Obligations have been fully paid and satisfied and any commitment of the Bank to
extend credit to the Pledgor has terminated.

5. DEFAULTS AND REMEDIES.

(a) The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT" hereunder, viz:

(i) any default in the payment when due (whether by lapse of
time, acceleration or otherwise) of any Obligations secured hereby; or

(ii) any event occurs or condition exists which is specified as
an event of default under any agreement setting forth the terms and
conditions applicable to any Obligations secured hereby (including,
without limitation, that certain Promissory Note bearing event date
herewith between the Pledgor and the Bank) or under any other
instrument or document securing or relating to any part of the
Obligations secured hereby.

(b) Upon the occurrence of any event of default hereunder, all rights
of the Pledgor to exercise the voting and/or consensual powers which it is
entitled to receive and retain the distributions which it is entitled to
receive and retain pursuant to Section 2(b) hereof, shall, at the option of
the Bank, cease and thereupon become vested in the Bank, which, in addition
to all other rights provided herein or by law, shall then be entitled
solely and exclusively to exercise all voting and other consensual powers
pertaining to the Collateral and/or to receive and retain the distributions
which the Pledgor would otherwise have been authorized to retain pursuant
to Section 2(b) hereof and shall then be entitled solely and exclusively to
exercise any and all rights of conversion, exchange or subscription or any
other rights, privileges or options pertaining to any shares of the
Collateral as if the Bank the absolute owner thereof including, without
limitation, the rights to exchange, at its discretion, any and all of the
Collateral upon the merger, consolidation, reorganization, recapitalization
or other readjustment of the respective issuer thereof or upon the exercise
by or on behalf of any such issuer or the Bank of any right, privilege or
option pertaining to any shares of the Collateral and, in connection
therewith, to deposit and deliver any and all of the Collateral with any
committee, depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as the Bank may determine.

(d) Upon the occurrence of any event of default hereunder, the Bank
shall have, in addition to all other rights provided herein or by law, the
rights and remedies of a secured party under the Uniform Commercial Code of
Illinois (the "CODE") in respect to the Collateral (regardless of whether
such Code is the law of the jurisdiction where the rights or remedies are
asserted and regardless of whether such Code applies to the affected
Collateral) and further, the Bank may, without demand and without
advertisement or notice, all of which the Pledgor waives, at any time or
times, sell and deliver any or all of the Collateral held by or for it at
public or private sale, at any securities exchange or broker's board or at
any of the Bank's offices or elsewhere, for cash, upon credit or otherwise,
at such prices and upon such terms as the Bank deems advisable, in its sole
discretion. In the exercise of any such remedies, the Bank may sell all
the Collateral as a unit even though the sales price thereof may be in
excess of the amount remaining unpaid on the Obligations. The Bank is
authorized at any sale or other disposition of the Collateral, if it deems
it advisable so to do,

<PAGE>

to restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing for their own account for
investment, and not with a view to the distribution or resale of any of the
Collateral. The Bank may be the purchaser at any sale or other disposition
of the Collateral. The Pledgor hereby waives all of its rights of
redemption from any sale or other disposition of the Collateral. Any
requirement of reasonable notice shall be met if such notice is personally
served on or mailed, postage prepaid, to the Pledgor in accordance with
Section 7(g) hereof at least (10) days before the time of sale or other
event giving rise to the requirement of such notice; however, no
notification need be given to the Pledgor if the Pledgor has signed, after
an event of default hereunder has occurred, a statement renouncing any
right to notification of sale or other intended disposition. The Bank
shall not be obligated to make any sale or other disposition of the
Collateral regardless of notice having been given. The Bank may postpone
or cause the postponement of the sale of all or any portion of the
Collateral by announcement at the time and place of such sale, and such
sale may, without further notice, be made at the time and place to which
the sale was postponed or the Bank may further postpone such sale by
announcement made at such time and place. The proceeds of sale shall be
applied first to all costs and expenses of sale, including attorneys' fees
and court costs, and second to the payment (in whatever order the Bank
elects) of the Obligations. The Bank will return any excess to the Pledgor
or to whomsoever the Bank believes may be lawfully entitled thereto. The
Pledgor shall remain liable to the Bank for any deficiency.

(d) No delay or omission on the part of the Bank in the exercise of
any right or remedy hereunder shall operate as a waiver of such right or
remedy, nor shall the exercise of any such right or remedy preclude the
later or further exercise thereof. All rights and remedies of the Bank on
account of the collateral or on account of any of the Obligations hereby
secured whether arising under this Agreement, any other instrument or
document, or at law or in equity, shall be cumulative and not exclusive of
each other, and may be exercised by the Bank as such times and in such
order as the Bank may determine. All rights and remedies of the Bank
hereunder shall be in addition to and not in substitution for any rights it
may have under applicable law or under any note or other instrument or
document at any time executed by the Pledgor and delivered to the Bank.
The Pledgor agrees to pay all costs and expenses (including court costs and
attorneys' fees) incurred by the Bank in enforcing or collecting any of the
Obligations secured hereby, in enforcing any of the terms hereof or in
retaking, holding, preparing for sale, selling, collecting or otherwise
realizing upon any Collateral, including, without limitation, any of the
foregoing arising in, arising under or related to a case under the United
States Bankruptcy Code (or any successor statute thereto); and all such
costs and expenses shall constitute additional Obligations hereby secured
which shall be payable on demand together with interest thereon at the
Default Rate. Neither the Bank, nor any party acting as its attorney,
shall be liable to any acts or omissions or for any error of judgment or
mistake of fact or law other than their gross negligence or willful
misconduct.

6. CONTINUING AGREEMENT. This Agreement shall be a continuing agreement
in every respect and shall remain in full force and effect until all of the
Obligations secured hereby, both for principal and interest, have been fully
paid and satisfied and any commitment of the Bank to extend credit to the
Pledgor has terminated. Upon such termination of this Agreement, the Bank
shall, upon the request at the expense of the Pledgor, forthwith release its
security interest hereunder.

7. MISCELLANEOUS.

<PAGE>

(a) The Pledgor agrees to pay to the Bank upon demand the cost and
expense incurred by the Bank in connection with the filing of any
financing statements or any other steps thaken by the Bank in connection
with the perfection or protection of the Collateral hereunder and in
connection with releasing the pledge and security interest herein granted
and provided for upon termination hereof.

(b) No waiver or modification or amendment to the terms of this
Agreement shall be effective as against the Bank unless the same is in
writing and signed by an officer of the Bank. No such waiver, modification
or amendment shall in any way affect any of the rights or remedies of the
Bank hereunder except to the extent that such waiver, modification or
amendment specifically provides. This Agreement constitutes an assignment
of rights only and not an assignment of any duties or obligations of the
Pledgor in any way related to the Collateral. The Bank shall have no duty
or obligation to discharge any of such duties and responsibilities.

(c) This Agreement and all of the rights, privileges, remedies and
options given to the Bank hereunder and in and to any of the Collateral
hereunder shall inure to the benefit of the Bank and its successors and
assigns; and all the terms, conditions, promises, covenants,
representations and warranties of and in this Agreement shall bind the
Pledgor and its legal representatives, successors and assigns, provided
that the Pledgor may not assign its rights or delegate that the Pledgor may
not assign its rights or delegate its duties hereunder without the Bank's
prior written consent. The Pledgor hereby releases the Bank from any
liability for any act or omission relating to the Collateral or this
Agreement, except the Bank's gross negligence or willful misconduct.

(d) In the event that any provision hereof shall be deemed to be
invalid by reason of the operation of any law or by reason of the
interpretation placed hereon by any court, this Agreement shall be
construed as not containing such provision, but only as to such locations
where such law or interpretation is operative, and the invalidity of such
provision shall not affect the validity of any remaining provision hereof,
and any all other provisions hereof which are otherwise lawful and valid
shall remain in full force and effect.

(e) This Agreement shall be deemed to have been made in the State of
Illinois. This Agreement and all rights and obligations hereunder,
including matters of construction, validity and performance shall be
governed by the laws of the State of Illinois without regard to principles
of conflicts of laws. All terms which are used in this Agreement which are
defined in the Uniform Commercial Code of Illinois shall have the same
meanings herein as said terms do in such Uniform Commercial Code unless
this Agreement shall otherwise specifically provide. The headings in this
instrument are for convenience of reference only and shall not limit or
otherwise affect the meaning of any provision hereof.

(f) This Agreement may be executed in any number of counterparts,
each constituting an original, but all together one and the same
instrument. The Pledgor acknowledges that this Agreement is and shall be
effective upon its execution and delivery by the Pledgor to the Bank, and
it shall not be necessary for the Bank to execute this Agreement or any
other acceptance hereof or otherwise to signify or express its acceptance
hereof.

(g) All notices and communications provided for herein shall be in
writing, except as otherwise specifically provided for hereinabove, and
shall be deemed to have been given or made when served personally or when
deposited in the United States mail addressed if to the Pledgor in c/o
Beverly Bancorporation, Inc., 1357 West 103rd Street, attention Mr. John D.
Van Winkle or if to the Bank at 111 West Monroe Street, P.O. Box 755,
Chicago Illinois

<PAGE>

60690, Attention: Special Industries Group, or at such other address as
shall be designated by any party hereto in a written notice given to each
party pursuant to this Section 7(g).

IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
executed and delivered at Chicago, Illinois as of this 22nd day of December,
1995.

BEVERLY BANCORPORATION, INC.

By: /s/ John O'Neill
------------------------------------

Its: Exec VP
-----------------------------------

<PAGE>

SCHEDULE A

THE COLLATERAL

Beverly Bank 167,587

First National Bank 80,000
Wilmington, Illinois

Matteson Richton Bank 64,345
Matteson, Illinois

First Wilmington Corp 1

<PAGE>

January 31, 1996

Beverly Bancorporation, Inc.
1357 West 103rd Street
Chicago, Illinois 60643

Attention: Mr. John D. Van Winkle

Gentlemen:

We are pleased to advise you that we have approved extending $500,000 of
demand loans to you on a revolving basis, which will, subject to the terms of
this letter, be available to you over the period ending January 1, 1997. All
loans shall be evidenced by your demand promissory note in the form attached to
that certain Floating Rate Loan-Procedures Letter bearing even date herewith
between us (the "PROCEDURES LETTER") as Exhibit B (the "NOTE"). Without regard
to the principal amount of the Note stated on its face, the actual principal
amount at any one time outstanding and owing by you on account of the Note shall
be the sum of all loans made by us under this authorization less all payments of
principal actually received by us. All such disbursements and payments shall be
recorded by us on our books and records or, at our option, endorsed on the
reverse side of the Note and the unpaid principal balance at any time so
recorded of endorsed shall be prima facie evidence in any court or other
proceedings brought to enforce the Note of the principal amount remaining unpaid
thereon. We will not transfer or assign the Note without first stamping thereon
a statement of the actual principal amount evidenced thereby.

All loans under this authorization shall bear interest prior to demand at
the rate per annum which is equal to 30 basis points less than the rate of
interest announced by us from time to time as our prime commercial rate (the
"PRIME RATE ") (with any change in the interest rate thereon by reason of a
change in said prime commercial rate to be effective on the date of the relevant
change in said prime commercial rate).

Each loan shall be due on demand, but if no demand, then six months
after such borrowing. In the event you shall fail to pay any loan when due
(whether by demand or otherwise), such unpaid amount shall bear interest,
which you hereby promise to pay at our offices in Chicago, Illinois at the
rate per annum determined by adding 3% to the Prime Rate as from time to time
in effect. Interest on all loans shall be computed on the basis of a year of
360 days and actual days elapsed. Interest prior to demand shall be payable
quarterly on the last day of each March, June, September and December,
commencing March 31, 1996. Interest after demand shall be payable on demand.

In addition, we are to receive a facility fee so long as this line is
available to you equal to .25 of 1% per annum of the undrawn amount of the
line, such fee to be payable quarter annually in arrears, beginning March 31,
1996.

You may, without premium or penalty, prepay the Note at any time.

The proceeds of the loans will be made available to you at our offices
in Chicago, Illinois by crediting the same to your general deposit account
with us. Requests for loans may be made in accordance with the Procedures
Letter and we are authorized to rely on telephone borrowing and repayment
requests received from persons authorized to request borrowings thereunder,
including requests to transfer funds to other banks. We shall incur no
liability to you for relying on telephonic

<PAGE>

instructions received by us from any person purporting to be an authorized
person provided that we have acted in good faith in connection therewith. You
shall confirm all telephonic borrowing requests in writing, but you shall be
obligated to repay all sums so borrowed notwithstanding our failure to receive
such written request therefor or confirmation thereof.

You represent and warrant that no part of the proceeds of the loans will be
used to purchase or carry any margin stock (within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System), or to extend credit to
others for the purpose of purchasing or carrying any margin stock.

The continued availability of the credit authorization provided for herein
is, of course, conditioned upon the continued satisfactory condition (financial
and otherwise) of yourself, the Subsidiary, the guarantors and the collateral
and upon our timely receipt of such information respecting such condition as we
shall from time to time request, including quarterly regulatory financial
statements.

Such continued availability is also subject to the terms of our letter to
you dated December 20, 1995.

Your obligations to us shall continue at all times to be secured with a
first priority perfected lien on and security interest in all of the issued and
outstanding shares of stock owned by you of First Wilmington Corporation, First
National Bank of Wilmington, Beverly Bank-Matteson, and Beverly Bank-Chicago,
now owned or hereafter acquired.

The loans hereunder will be on a demand basis and nothing contained herein
or in any of the loan or security documents shall be deemed to impair the demand
character of the loans.

This arrangement shall be construed in accordance with and governed by the
laws of Illinois and shall become effective upon receipt at our offices in
Chicago, Illinois of an accepted copy of this agreement, together with such
documentation as we deem necessary or appropriate to provide for the collateral
security and guarantees contemplated hereby and with the accomplishment of the
steps necessary to perfect the liens to be granted to us.

This agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which when so
executed shall be an original but all of which to constitute one and the same
instrument. This agreement shall be construed in accordance with and governed
by the laws of the State of Illinois.

Dated as of January 31, 1996.

Very truly yours,

HARRIS TRUST AND SAVINGS BANK

By: /s/
-----------------------------------
Its: Vice President
-----------------------------------

<PAGE>

Accepted and agreed to as of the date first above written

BEVERLY BANCORPORATION, INC.

By: /s/
--------------------------
Its: Executive Vice President
--------------------------

<PAGE>

FLOATING RATE LOAN - PROCEDURES LETTER

Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690

Gentlemen:

BEVERLY BANCORPORATION, INC., an Illinois corporation (the "COMPANY") hereby
requests that borrowings under its $500,000 revolving line of credit from Harris
Trust and Savings Bank be made and documented upon the following terms
and conditions. You agree, until further notice, that upon oral advice by
telephone received by you from time to time from authorized persons listed in
this letter that we wish to borrow money, you will deposit the proceeds of same
to our general account with you (the "ACCOUNT"). We agree to confirm such
borrowings in writing by mailing on the same day a letter in the form attached
hereto as Exhibit A signed by any one of the following:

JOHN VAN WINKLE PRESIDENT
JOHN O'NEILL EXECUTIVE VICE PRESIDENT

It is understood, however, that pending receipt of such letter by you in the
ordinary course of the mails, that any sums of money borrowed by telephone on
advice of an authorized person or a person purporting to be an authorized person
in accordance with the foregoing arrangement shall immediately be credited to
the Account, and we shall be obligated to repay to you the sums so borrowed at
the time and with the interest set forth in this letter notwithstanding that any
such borrowing is not confirmed as contemplated above.

All such borrowings shall be repaid by us upon your demand, but they may,
at our election in any instance, be repaid at any time upon telephonic advice to
you.

All borrowings made by us from you under the subject facility shall bear
interest prior to maturity (whether by demand or otherwise) at the rate per
annum announced by you as your prime commercial rate, with any change in the
interest rate on such borrowings by virtue of a change in such prime commercial
rate to be effective on the date of the relevant change in such prime commercial
rate. Interest shall be computed on the basis of a year of 360 days and actual
days elapsed. Interest shall be payable on the last day of each March, June,
September and December (commencing March 31, 1996) and upon demand.

All borrowings hereunder shall be made against and evidenced by our
promissory note payable to your order in the aggregate principal amount of
$500,000, such note to mature as set forth in, and to be otherwise in the form
of Exhibit B attached hereto (the "NOTE"), You agree that notwithstanding the
fact that the Note is in the principal amount of $500,000, it shall evidence
only the actual principal amount of borrowings made by us from time to time
under the subject facility and you agree that if you transfer or assign the Note
you will stamp thereon a statement of the actual principal amount evidenced
thereby at the time of transfer. We agree that in any action or proceeding
instituted to collect or enforce collection of the Note, the amount shown as
owing you on your records shall be prima facie evidence of the Unpaid balance of
principal and interest on the Note.

<PAGE>

The persons authorized to give you telephonic instructions to lend money
and repay borrowings in accordance with the foregoing are

JOHN VAN WINKLE PRESIDENT
JOHN O'NEILL EXECUTIVE VICE PRESIDENT

In accepting telephonic advices from any of such persons in accordance with the
terms of this Agreement, you shall be entitled to rely on advices given by any
person purporting to be any one of such persons and you shall have no liability
to us on account of any action taken by you pursuant to such telephonic advices
provided you have acted in good faith in connection therewith. You are, of
course, authorized to lend money to us upon the written instructions of any
officers and/or employees authorized to borrow funds by telephonic advice.

This Agreement and the arrangements and authorizations herein contemplated
shall remain in full force and effect, and shall be applicable to any renewals
of, or replacements or substitutions for, our present loan facility, unless and
until you have received written notice from us of the termination or
modification of this Agreement at your office in Chicago, Illinois or unless and
until the we have received such a notice at its address as shown on your records
from you; provided that no such termination or modification by us shall affect
any transaction which occurred prior to the receipt of such notice by you nor
shall any such termination or modification become effective without your written
consent unless and until all amounts which shall have been borrowed hereunder
shall have been repaid in full. This Agreement and your acceptance of this
Agreement is hereinafter, contemplated do not constitute any commitment on your
part to make any credit available to us, it being understood that this Agreement
is only intended to set forth the procedures which shall be applicable to such
loans as the Bank may in its discretion elect to make available to us from time
to time. This Agreement and the rights and remedies of the parties hereto shall
be governed by the laws of Illinois.

If you are in agreement with the foregoing, please sign in the appropriate
place on the enclosed counterpart and return such counterpart to us, whereupon
this letter shall become a binding agreement between you and us.

Dated as of the 31st day of January, 1996.

Very truly yours,
BEVERLY BANCORPORATION, INC.

By: /s/ John O'Neill
------------------------------------
Its: Exec Vice President
-----------------------------------

Accepted as of the date last above written.

HARRIS TRUST AND SAVINGS BANK

By: /s/ Michael S. Cameli
------------------------------------
Michael S. Cameli, Vice President

<PAGE>

EXHIBIT A

CONFIRMATION

,19
---------- --

Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690

Attention: Michael S. Cameli
Financial Institutions

Gentlemen:

This will confirm the telephone conversation Ms./Mr.__________had with your
office today whereby we arranged under the Letter Agreement currently in effect
between us to increase/decrease our demand loan with you from $________________
_______to $_________________________effective today, an increase/decrease of
$_____________. We promise to pay such loan on demand.

It is our understanding that the amount of the increase/decrease shown
in the above paragraph was deposited/withdrawn from our account with you today.

Very truly yours,

BEVERLY BANCORPORATION, INC.

By:
------------------------------------
Its:
-----------------------------------

<PAGE>

EXHIBIT B

SECURED

DEMAND NOTE

$500,000 January 30, 1996

ON DEMAND, for value received, the undersigned, BEVERLY BANCORPORATI0N,
INC., an Illinois corporation (the "COMPANY"), promises to pay to the order of
HARRIS TRUST AND SAVINGS BANK (the "BANK") at its offices at 111 West Monroe
Street, Chicago, Illinois, the principal sum of Five Hundred Thousand Dollars
($500,000) or, if less, the amount outstanding under the letter agreement
referred to below together with interest (computed on the basis of a year of 360
days and actual days elapsed) on the principal amount from time to time
remaining unpaid hereon from the date hereof to the maturity thereof (whether by
demand or otherwise) at the rate per annum announced from time to time by Harris
Trust and Savings Bank as its prime commercial rate (with any change in the
interest rate hereon by reason of a change in said prime commercial rate to be
and become effective as of and on the date of the relevant change in said prime
commercial rate) and after the maturity thereof until paid at the rate per annum
of three percent (3%) above the interest rate applicable to this Note
(determined as aforesaid) at such maturity. Interest shall be payable on the
last day of each March, June, September and December (commencing March 31, 1996)
and upon demand.

This Note evidences borrowings by the Company under that certain Floating
Rate Loan-Procedures Letter dated as of even date herewith between the Company
and the Bank and is secured by various liens and security interests granted or
to be granted to the Bank from time to time and this Note and the holder hereof
are entitled to all the benefits provided for under the Letter Agreement, to
which reference is hereby made for a statement thereof.

This Note may be prepaid at any time without premium or penalty.

In the event of the insolvency or dissolution of the Borrower or in the
event of the institution by or against the Borrower of any bankruptcy,
liquidation or similar proceeding for the relief of debtors, or the appointment
of any receiver for the Borrower or any of their respective properties or the
making by the Borrower of an assignment for the benefit of creditors, then this
Note shall, unless the holder hereof shall otherwise elect, immediately become
due and payable without presentment, demand or notice of any kind.

<PAGE>

The Company hereby waives presentment and notice of dishonor. The Company
agrees to pay to the holder hereof all expenses incurred or paid by such holder,
including attorney's fees and court costs, in connection with the collection of
this Note. It is agreed that this Note and the rights and remedies of the
holder hereof shall be construed in accordance with and governed by the laws of
Illinois.

BEVERLY BANCORPORATION, INC.

By: /s/ John O'Neill
------------------------------------
Its: Exec Vice President
-----------------------------------

<PAGE>

BEVERLY BANCORPORATION

STOCK OPTION PLAN

1. PURPOSE

The purpose of this Plan is to align the interests of the Company's
stockholders and the recipients of Options under this Plan by increasing the
proprietary interest of such recipients in the Company's growth and success and
to advance the interests of the Company by attracting and retaining officers,
other key employees and directors. This Plan provides for the grant of Options
in accordance with the terms and conditions set forth below. References to
employment by the Company shall also mean employment by a Subsidiary.

2. DEFINITIONS

Unless otherwise required by the context:

2.01. "Board" shall mean the Board of Directors of the Company.

2.02. "Change in Control" shall mean

(a) the acquisition, including pursuant to a
reorganization, merger or consolidation involving the Company, by
any individual, entity or group (a "Person"), including any
"person" within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of
beneficial ownership within the meaning of Rule 13d-3 promulgated
under the Exchange Act, of 40% or more of the then outstanding
shares of Common Stock (the "Outstanding Company Common

<PAGE>

Stock"); provided that the following acquisitions shall not
constitute a Change in Control: (A) any acquisition directly from
the Company (excluding any acquisition resulting from the
exercise of a conversion or exchange privilege in respect of
outstanding convertible or exchangeable securities) or (B) any
acquisition by the Company; and provided further, that for
purposes of clause (B), if any Person shall become the beneficial
owner of 40% or more of the outstanding Company Common Stock by
reason of an acquisition by the Company, and such Person shall,
after such acquisition by the Company, become the beneficial
owner of any additional shares of the Outstanding Company Common
Stock, such additional beneficial ownership shall constitute a
Change in control; or

(b) approval by the stockholders of the Company of (i) a
plan of complete liquidation or dissolution of the Company or
(ii) the sale or other disposition of all or substantially all of
the assets of the Company.

2.03. "Committee" shall mean the Stock Option Plan Committee, which
consists of 3 members of the Board appointed by the Board.

2.04. "Common Stock" shall mean the Common Stock, $2.50 par value, of
the Company.

-2-

<PAGE>

2.05. "Company" shall mean Beverly Bancorporation, an Illinois
corporation.

2.06. "Code" shall mean the Internal Revenue Code of 1986, as amended.

2.07. "Incentive Stock Option" shall mean an Option to purchase shares
of Common Stock that meets the requirements of Section 422 of the
Code, or any successor provision, and that is intended by the
Committee to constitute an Incentive Stock Option.

2.08. "Option" shall mean a right to purchase Common Stock granted
pursuant to this Plan, including an Incentive Stock Option.

2.09. "Option Price" shall mean the purchase price per share of Common
Stock subject to an option.

2.10. "Participant" shall mean anyone to whom an option is granted
under this Plan.

2.11. "Plan" shall mean the Beverly Bancorporation Stock Option Plan.

2.12. "Subsidiary" shall mean any corporation or other entity of which
more than 50% of the equity is owned beneficially, directly or
indirectly, by the Company.

3. ADMINISTRATION

The Committee shall, subject to the terms of this Plan, select eligible
officers, other key employees and directors for participation in this Plan and,
with respect to each such Participant, shall determine the number of shares of
Common Stock

-3-

<PAGE>

subject to each Option granted hereunder, the Option Price of such Option, the
time and conditions of exercise of such Option and all other terms and
conditions of such Option, including, without limitation, the form of the Option
agreement. The Committee shall, subject to the terms of this Plan, have the
authority to interpret this Plan, establish rules and regulations for the
administration of this Plan and may impose, incidental to the grant of an
Option, conditions with respect to the grant, competitive employment or other
activities. All such interpretations, rules and regulations shall be conclusive
and binding on all parties. Each Option hereunder shall be evidenced by a
written agreement (an "Agreement") between the Company and the Participant
setting forth the terms and conditions of such option.

No member of the Board of Directors or Committee shall be liable for any
act, omission, interpretation, construction or determination made in connection
with this Plan in good faith, and the members of the Board of Directors and the
Committee shall be entitled to indemnification and reimbursement by the Company
in respect of any claim, loss, damage or expense (including attorneys' fees)
arising therefrom to the full extent permitted by law and under any directors'
and officers' liability insurance that may be in effect from time to time.

A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a

-4-

<PAGE>

Majority of the Committee without a meeting, shall be the acts of the Committee.

4. ELIGIBILITY

The Committee may grant options to any officer, other key employee or
director of the Company. Options may be awarded at any time and from time to
time to new Participants, or to then Participants, or to a greater or lesser
number of Participants, and may include or exclude previous Participants, as the
Committee shall determine. Options granted at different times need not contain
similar provisions.

5. SHARES AVAILABLE

Subject to adjustment as provided in Section 10 of this Plan, 80,000 shares
of Common Stock shall be available for grants of Options under this Plan. To
the extent an outstanding Option expires or terminates unexercised or is
canceled or forfeited, the shares of Common Stock subject to the expired,
unexercised, cancelled or forfeited portion of such Option shall again be
available for grants of Options under this Plan.

Shares of Common Stock to be delivered under this Plan shall be authorized
and unissued shares of Common Stock.

6. GRANTS OF OPTION

The Committee may, in its discretion, grant Options to such eligible
persons as may be selected by the Committee. Each Incentive Stock Option shall
be granted within ten years of the effective date of this Plan. To the extent
that the aggregate Fair Market Value (as defined below and determined as of the
date of grant) of shares of Common Stock with respect to which Options

-5-

<PAGE>

designated as Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year (under this Plan or any other plan of the
Company) exceeds $100,000, such Options shall constitute non-qualified Options.

7. TERMS OF OPTIONS

Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:

(a) NUMBER OF SHARES AND OPTION PRICE. The number of shares of Common
Stock subject to an Option and the Option Price shall be determined by the
Committee; provided, that the Option Price of an Incentive Stock Option shall
not be less than 100% of the Fair Market Value of a share of Common Stock on the
date of grant of such Incentive Stock option; provided, further, that if an
Incentive Stock Option shall be granted to any person who, at the time such
option is granted, owns capital stock of the Company possessing more than 10% of
the total combined voting power of all classes of capital stock of the Company
(or any parent or Subsidiary) (a "Ten Percent Holder"), the Option Price shall
be the price (currently 110% of Fair Market Value) required by the Code in order
to constitute an Incentive Stock Option. For purposes of this Plan, "Fair
Market Value" shall be determined by the Committee by whatever means or method
as the Committee, in the good faith exercise of its discretion, shall at such
time deem appropriate.

-6-

<PAGE>

(b) OPTION PERIOD AND EXERCISABILITY. Except as provided in sections 7(d)
and 8(a), an Option granted under this Plan shall not be exercisable during the
first year following its date of grant. Thereafter, such option may be
exercised: (i) on and after the first anniversary of its date of grant, for up
to one-fifth of the shares of Common Stock subject to such Option on its date of
grant, (ii) on and after the second anniversary of its date of grant, for up to
an additional one- fifth (40% on a cumulative basis) of the shares of Common
Stock subject to such Option on its date of grant, (iii) on and after the third
anniversary of its date of grant, for up to an additional one-fifth (60% on a
cumulative basis) of the shares of Common Stock subject to such option on its
date of grant, (iv) on and after the fourth anniversary of its date of the
grant, for up to an additional one-fifth (80% on a cumulative basis) of the
shares of Common Stock subject to such option on its date of grant, and (v) on
and after the fifth anniversary of its date of the grant, for up to the
remaining one-fifth (100% on a cumulative basis) of the shares of Common Stock
subject to such option on its date of grant.) No Option shall be exercised later
than ten years after its date of grant; provided, that if an Incentive Stock
Option shall be granted to a Ten Percent Holder, such option shall be exercised
within five years of its date of grant. An exercisable Option, or portion
thereof, may be exercised only with respect to whole shares of Common Stock.

-7-

<PAGE>

whole shares of Common Stock to be purchased and accompanied by payment therefor
in full either (A) in cash or (B) in previously owned whole shares of Common
Stock (which the Participant has held for at least six months prior to delivery
of such shares and for which the Participant has good title, free and clear of
all liens and encumbrances) having a Fair Market Value determined as of the date
of exercise. The Committee shall have sole discretion to disapprove of an
election pursuant to clause (B).

(d) CHANGE IN CONTROL. Notwithstanding Section 7(b) above, in the event
of a Change in control, all outstanding options shall immediately become
exercisable in full.

In the event of a Change in Control in connection with which the holders of
Common Stock receive shares of common stock of another person, there shall be
substituted for each share of common Stock available under this Plan, whether or
not then subject to an outstanding Option, the number and class of shares into
which each outstanding share of Common Stock shall be converted pursuant to such
Change in Control. In the event of any such substitution, the Option Price per
share of each Option shall be appropriately adjusted without a change in the
aggregate purchase price.

In the event of a Change in Control in connection with which the holders of
Common Stock receive consideration other than shares of common stock of another
person, each outstanding Option shall be surrendered to the Company by the
holder thereof, and each such Option shall immediately be cancelled by the
Company, and the holder shall receive within ten days of the occurrence of

-8-

<PAGE>

the Change in Control, a cash payment from the Company in an amount equal to the
number of shares of Common Stock then subject to such Option, multiplied by the
excess, if any, of (i) the greater of (A) the highest per share price offered to
stockholders of the Company in any transaction whereby the Change in Control
takes place or (B) the Fair Market Value of a share of Common Stock on the date
of occurrence of the Change in Control over (ii) the Option Price per share
subject to the Option.

8. TERMINATION OF EMPLOYMENT

(a) Notwithstanding Section 7(b) above, if a Participant's employment by
the Company terminates by reason of Permanent and Total Disability, each Option
held by such Participant shall become fully exercisable and may thereafter be
exercised by such Participant (or such Participant's guardian, legal
representative or similar person) for a period of six months after the effective
date of such Participant's termination of employment, but in no event after the
expiration of the term of such Option.

Notwithstanding Section 7(b) above, if a Participant's employment by the
Company terminates by reason of death, each Option held by such Participant
shall become fully exercisable and may thereafter be exercised by such
Participant's executor, administrator, legal representative, beneficiary or
similar person, as the case may be, for a period of one year after the date of
such Participant's death, but in no event after the expiration of the term of
such Option.

If a Participant's employment by the Company terminates for any reason
other than Permanent and Total Disability or death,

-9-

<PAGE>

each Option held by such Participant shall be exercisable only to the extent
that such option is exercisable on the effective date of such Participant's
termination of employment and may thereafter be exercised by such Participant
(or such Participant's guardian, legal representative or similar person) for a
period of 30 days after the effective date of such Participant's termination of
employment, but in no event after the expiration of the term of such Option;
provided that if such Participant's employment is terminated for Cause, all
options held by such Participant shall terminate automatically on the effective
date of such Participant's termination of employment. For purposes of this
Plan, "Cause" shall mean a termination of employment resulting from, or caused
by, the Participant's theft or embezzlement from the Company, or other act of
dishonesty, the violation of a material term or condition of the Participant's
employment, the conviction of the Participant of a crime involving moral
turpitude, the violation by the Participant of any statutory or common law duty
of loyalty to the Company or the Participant's engagement in acts or conduct
which, in the opinion of the Board of Directors, are harmful to the interests of
the Company.

If a Participant dies during the six-month period following termination of
employment by reason of Permanent and Total Disability each Option held by such
Participant shall be exercisable only to the extent that such option is
exercisable on the date of such Participant's death and may thereafter be
exercised by such Participant's executor, administrator, legal

-10-

<PAGE>

representative, beneficiary or similar person, as the case may be, until the
date which is six months after the effective date of such Participant's
termination of employment, but in no event after the expiration of the term of
such Option.

If a Participant dies during the 30-day period following termination of
employment for any reason other than Permanent and Total Disability or death,
each Option held by such Participant shall be exercisable only to the extent
that such Option is exercisable on the date of such participant's death and may
thereafter be exercised by such Participant's executor, administrator, legal
representative, beneficiary or similar person, as the case may be, until the
date which is 30 days after such Participant's death, but in no event after the
expiration of the term of such Option.

(b) The Committee shall determine whether a leave of absence shall
constitute a termination of employment. Any such determination of the Committee
shall be final and conclusive, unless overruled by the Board.

(c) Notwithstanding any other provision of this Plan, if the employment of
a Participant terminates for any reason other than Permanent and Total
Disability or death, no Option held by such Participant shall be exercisable
after the effective date of such Participant's termination of employment to an
extent greater than such Option is exercisable on such effective date; provided,
however, that the termination of such Participant's employment for Cause shall
have the effect set forth in Section 8(a).

-11-

<PAGE>

9. NO OBLIGATIONS TO EXERCISE OPTION

The granting of an Option shall impose no obligation upon the Participant
to exercise such Option.

10. EFFECT OF CHANGE IN COMMON STOCK

In the event of any stock split, stock dividend, recapitalization,
reorganization, merger, consolidation, combination, exchange of shares,
liquidation, spin-off or other similar change in capitalization or event
effected without receipt of consideration by the Company, or any distribution to
holders of Common Stock other than a regular cash dividend, the number and class
of securities available under this Plan, the number and class of securities
subject to each outstanding Option and the purchase price per security shall be
appropriately adjusted by the Committee, such adjustments to be made in the case
of outstanding Options without a change in the aggregate purchase price. If any
adjustment would result in a fractional security being (i) available under this
Plan, such fractional security shall be disregarded, or (ii) subject to an
Option under this Plan, the Company shall pay the Participant, in connection
with the first exercise of the Option in whole or in part, occurring after such
adjustment, an amount in cash determined by multiplying (A) the fraction of such
security (rounded to the nearest hundredth) by (B) the excess, if any, of (x)
the Fair Market Value on the exercise date over (y) the exercise price of the
Option.

-12-

<PAGE>

11. AMENDMENT AND TERMINATION

The Board, by resolution, may terminate, amend, or revise this Plan with
respect to any shares as to which Options have not been granted. Neither the
Board nor the Committee may, without the consent of the holder of an Option,
alter or impair any Option previously granted under this Plan, except as
authorized herein. Unless sooner terminated by the Board, this Plan shall
remain in effect for a period of ten years after its effective date.
Termination of this Plan shall not affect any Option previously granted.

12. AMENDMENT

No Option shall be effective until an Agreement has been executed by the
Company and the Participant and, upon execution by the Company and the
Participant and delivery of the Agreement to the Company, such Option shall be
effective as of the effective date set forth in the Agreement.

13. NON-TRANSFERABILITY

No Option hereunder shall be transferable other than by will
or the laws of descent and distribution and shall be exercisable during the
Participant's lifetime only by the Participant or the Participant's guardian,
legal representative or similar person. Except as permitted by the preceding
sentence, no Option hereunder shall be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise

-13-

<PAGE>

dispose of any Option hereunder, such Option and all rights thereunder shall
immediately become null and void.

14. TAX WITHHOLDING

The Company shall have the right to require, prior to the issuance or
delivery of any shares of Common Stock, payment by the Participant of any
Federal, state, local or other taxes which may be required to be withheld or
paid in connection with an Option hereunder. An Agreement may provide that the
Participant may satisfy any such obligation by: (A) a cash payment to the
Company or (B) delivery to the Company of previously owned whole shares of
Common Stock (which the Participant has held at least six months prior to
delivery of such shares and for which the Participant has good title, free and
clear of all liens and encumbrances) having a Fair Market Value determined as of
the date the obligation to withhold or pay taxes arises in connection with an
Option (the "Tax Date"); provided that the Committee shall have sole discretion
to disapprove of an election pursuant to clause (B). An Agreement may provide
for shares of Common Stock to be delivered having a Fair Market Value in excess
of the minimum amount required to be withheld, but not in excess of the amount
determined by applying the Participant's maximum marginal tax rate. Any
fraction of a share of Common Stock which would be required to satisfy such an
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Participant.

-14-

<PAGE>

15. RESTRICTIONS ON SHARES

Each Option hereunder shall be subject to the requirement that if any time
the Company determines that the listing, registration or qualification of the
shares of Common Stock subject to such Option upon any securities exchange or
under any law, the consent or approval of any governmental body, or the taking
of any other action is necessary or desirable as a condition of, or in
connection with, the delivery of shares thereunder, such shares shall not be
delivered unless such listing, registration, qualification, consent, approval or
other action shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company may require that certificates evidencing
shares of Common Stock delivered pursuant to any Option hereunder bear a legend
indicating that the sale, transfer or other disposition thereof by the holder is
prohibited except in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations thereunder.

16. AGREEMENT AND REPRESENTATION

As a condition to the exercise of any portion of an Option, the Company may
require the person exercising such Option to represent and warrant at the
time of such exercise that any shares Of Common Stock acquired at exercise are
being acquired only for investment and without any present intention to sell or
distribute such shares, if, in the opinion of counsel for the Company, such a
representation is required under the Securities

-15-

<PAGE>

Act or any other applicable law, regulation, or rule of any governmental agency.

17. RESERVATION OF SHARES OF COMMON STOCK

The Company, during the term of this Plan, will at all times reserve and
keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite authority necessary to issue and to sell, the number
of shares of Common Stock that shall be sufficient to satisfy the requirements
of this Plan. The inability of the Company to obtain from any regulatory body
having jurisdiction the authority deemed necessary by counsel for the Company
for the lawful issuance and sale of Common Stock hereunder shall relieve the
Company of any liability in respect of the failure to issue or sell Common Stock
as to which the requisite authority has not been obtained.

18. DESIGNATION OF BENEFICIARY

Each Participant shall file with the Committee a written designation of one
or more persons as such Participant's beneficiary or beneficiaries (both primary
and contingent) who, in the event of the Participant's death, shall be entitled
to exercise such Option.

Each beneficiary designation shall become effective only when filed in
writing with the Committee during the Participant's lifetime on a form
prescribed by the Committee. The filing with the Committee of a new beneficiary
designation shall cancel all previously filed beneficiary designations.

If a Participant fails to designate a beneficiary under this Plan, or if
all designated beneficiaries of a Participant

-16-

<PAGE>

predecease the Participant, then each outstanding Option hereunder held by such
Participant, to the extent exercisable, may be exercised by such Participant's
executor, administrator, legal representative, beneficiary or similar person, as
the case may be.

19. NO RIGHT OF PARTICIPATION OR EMPLOYMENT

No person shall have any right to participate in this Plan. Neither this
Plan nor Option awarded hereunder shall confer upon any person any right to
continued employment by the Company or any affiliate of the Company or affect in
any manner the right of the Company or any affiliate of the Company to terminate
the employment of any person at any time without liability hereunder.

20. RIGHTS AS STOCKHOLDER

No person shall have any right as a stockholder of the Company with respect
to any shares of Common Stock which are subject to an Option hereunder until
such person becomes a stockholder of record with respect to such shares of
Common Stock.

21. GOVERNING LAW

This Plan, each Option hereunder and the related Agreement, and all
determinations made and actions taken pursuant thereto, to the extent not
otherwise governed by the Code or the laws of the United States, shall be
governed by the laws of the State of Illinois and construed in accordance
therewith without giving effect to principles of conflicts of laws.

-17-

<PAGE>

22. EFFECTIVE DATE OF PLAN

This Plan shall be submitted to the stockholders of the Company for
approval and, if approved, shall become effective as of the date that the Plan
is approved by the Board. In the event that this Plan is not approved by the
stockholders of the Company within 12 months of the date of adoption of this
Plan by the Board, this Plan and any Options granted hereunder shall be null and
void. This Plan shall terminate ten years after its effective date, unless
terminated earlier by the Board. Options may be granted hereunder at any time on
or after the effective date and prior to termination of this Plan.

-18-

<PAGE>
EXHIBIT 21

SUBSIDIARIES OF THE COMPANY

In the following list of subsidiaries of the Company, those companies
which are indented represent subsidiaries of the corporation under which they
are indented. 100% of the voting stock of each of the subsidiaries listed
below is owned of record or beneficially by its indicated parent.

STATE OR OTHER
JURISDICTION OF
NAME INCORPORATION
- ---- ---------------
<S> <C>
BEVERLY BANCORPORATION, INC. Delaware
Beverly Bank Illinois
Beverly Bank Matteson Illinois
Beverly Trust Company Illinois
Beverly Bank Lockport Illinois
First Wilmington Corporation Illinois
First National Bank of Wilmington National
</TABLE>

<PAGE>

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 March 29, 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
June 21, 1996

<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 26,657
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 10,175
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 201,880
<INVESTMENTS-CARRYING> 31,919
<INVESTMENTS-MARKET> 31,671
<LOANS> 311,405
<ALLOWANCE> 3,930
<TOTAL-ASSETS> 601,810
<DEPOSITS> 544,452
<SHORT-TERM> 11,701
<LIABILITIES-OTHER> 4,776
<LONG-TERM> 0
0
0
<COMMON> 40
<OTHER-SE> 40,841
<TOTAL-LIABILITIES-AND-EQUITY> 601,810
<INTEREST-LOAN> 6,710
<INTEREST-INVEST> 3,184
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<INTEREST-TOTAL> 10,253
<INTEREST-DEPOSIT> 4,525
<INTEREST-EXPENSE> 4,768
<INTEREST-INCOME-NET> 5,485
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<EXPENSE-OTHER> 5,477
<INCOME-PRETAX> 2,090
<INCOME-PRE-EXTRAORDINARY> 2,090
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,443
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
<YIELD-ACTUAL> 4.13
<LOANS-NON> 1,482
<LOANS-PAST> 237
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,524
<CHARGE-OFFS> 179
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<ALLOWANCE-CLOSE> 3,930
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</TABLE>