EXHIBIT 13

                              FINANCIAL STATEMENTS


<PAGE>

                                AJS BANCORP, INC.
                              Midlothian, Illinois

                        CONSOLIDATED FINANCIAL STATEMENTS

                                    CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM...................   F-2

CONSOLIDATED FINANCIAL STATEMENTS

     CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION.......................   F-3

     CONSOLIDATED STATEMENTS OF INCOME....................................   F-4

     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY......................   F-5

     CONSOLIDATED STATEMENTS OF CASH FLOWS................................   F-6

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ..........................   F-8

All schedules are omitted as the required  information  either is not applicable
or is included in the consolidated financial statements or related notes.


                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
AJS Bancorp, Inc.
Midlothian, Illinois

We have audited the accompanying  consolidated statements of financial condition
of AJS  Bancorp,  Inc.  as of  December  31,  2004  and  2003,  and the  related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three  years in the period  ended  December  31,  2004.  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 the standards of the Public  Company
Accounting Oversight Board (United States). 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 consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of AJS Bancorp, Inc. as
of December 31, 2004 and 2003,  and the results of its  operations  and its cash
flows for each of the three years in the period  ended  December  31,  2004,  in
conformity with U.S. generally accepted accounting principles.

                                             /s/ Crowe Chizek and Company LLC

                                                 Crowe Chizek and Company LLC

Oak Brook, Illinois
March 14, 2005


                                      F-2
<PAGE>

                                AJS BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           December 31, 2004 and 2003
                             (Dollars in thousands)

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

<TABLE>
<CAPTION>
                                                                                2004          2003
                                                                                ----          ----
<S>                                                                          <C>           <C>
ASSETS
Cash and cash equivalents
    Cash and due from banks (interest-bearing:  2004 - $10,751;
      2003 - $9,956)                                                         $  13,717     $  19,801
    Federal funds sold                                                           3,314
                                                                             ---------     ---------
       Total cash and cash equivalents                                          17,031        19,801

Certificates of deposit                                                          9,783            --
Securities available for sale                                                   61,483        42,475
Securities held to maturity (fair value:  2004 - $134;
  2003 - $179)                                                                     132           177
Loans, net of allowance of $1,847 and $1,962                                   163,291       155,628
Federal Home Loan Bank stock                                                    12,459        13,612
Premises and equipment                                                           4,760         4,875
Accrued interest receivable                                                        969           967
Other assets                                                                       961           849
                                                                             ---------     ---------

    Total assets                                                             $ 270,869     $ 238,384
                                                                             =========     =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
    Deposits                                                                 $ 198,056     $ 183,847
    Federal Home Loan Bank advances                                             36,250        17,000
    Advance payments by borrowers for taxes and insurance                        1,795         1,651
    Other liabilities and accrued interest payable                               4,238         3,781
                                                                             ---------     ---------
       Total liabilities                                                       240,339       206,279

Stockholders' equity
    Preferred stock, $.01 par value, 20,000,000 shares authorized,
      none issued                                                                   --            --
    Common stock, $.01 par value, 50,000,000 shares authorized;
      2,444,521 shares issued                                                       24            24
    Additional paid in capital                                                  10,830        10,972
    Treasury stock, at cost (2004 - 177,464 shares; 2003 - 51,600 shares)       (4,075)       (1,075)
    Unearned RRP shares                                                           (682)         (924)
    Unearned ESOP shares                                                          (189)         (377)
    Retained earnings                                                           24,837        23,257
    Accumulated other comprehensive income (loss)                                 (215)          228
                                                                             ---------     ---------
       Total stockholders' equity                                               30,530        32,105
                                                                             ---------     ---------

          Total liabilities and stockholders' equity                         $ 270,869     $ 238,384
                                                                             =========     =========
</TABLE>

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

          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

                                AJS BANCORP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 2004, 2003, and 2002
                  (Dollars in thousands, except per share data)

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

                                                  2004         2003        2002
                                                  ----         ----        ----
Interest and dividend income
    Loans                                       $  9,405    $  9,346    $  9,745
    Securities                                     2,226       2,234       2,917
    Interest-bearing deposits and other            1,037         669         390
    Federal funds sold                                69          98          61
                                                --------    --------    --------
       Total interest income                      12,737      12,347      13,113

Interest expense
    Deposits                                       4,046       4,210       4,651
    Federal Home Loan Bank advances and other      1,132         859         775
                                                --------    --------    --------
       Total interest expense                      5,178       5,069       5,426
                                                --------    --------    --------

Net interest income                                7,559       7,278       7,687

Provision for loan losses                           (112)        (61)         20
                                                --------    --------    --------

Net interest income after provision
  for loan losses                                  7,671       7,339       7,667

Noninterest income
    Service fees                                     502         539         528
    Gain (loss) on sale of other real estate           2         (19)        143
    Insurance commissions                            232         314         392
    Gain on sale of loans                             --          53           6
    Gain on sale of securities                        --          34          --
    Rental income                                    109         108         158
    Correspondent fees                                26          13         290
    Other                                             62          49          82
                                                --------    --------    --------
       Total noninterest income                      933       1,091       1,599

Noninterest expense
    Compensation and employee benefits             3,621       3,632       3,278
    Occupancy expense                                781         868         803
    Data processing expense                          378         361         396
    Advertising and promotion                        372         309         293
    Professional                                     147         167         147
    Postage and supplies                             175         212         197
    Bank security                                    124         118          81
    Amortization of mortgage servicing rights          2          14          22
    Other                                            591         574         638
                                                --------    --------    --------
       Total noninterest expense                   6,191       6,255       5,855
                                                --------    --------    --------

Income before income taxes                         2,413       2,175       3,411

Income taxes                                         833         782       1,296
                                                --------    --------    --------

Net income                                      $  1,580    $  1,393    $  2,115
                                                ========    ========    ========

Earnings per share
    Basic                                       $    .70    $    .60    $    .90
    Diluted                                          .69         .60         .90

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

          See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

                                AJS BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years ended December 31, 2004, 2003, and 2002
                  (Dollars in thousands, except per share data)

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

<TABLE>
<CAPTION>
                                                                                                               Accumulated
                                                                                                                  Other
                                                         Additional            Unearned   Unearned            Comprehensive
                                                 Common   Paid-in   Treasury    Stock       ESOP     Retained    Income
                                                 Stock    Capital    Stock      Awards     Shares    Earnings    (Loss)     Total
                                                -------   --------  --------   --------   --------   --------   --------   --------
<S>                                             <C>       <C>       <C>        <C>        <C>        <C>        <C>        <C>
Balance at January 1, 2002                           24   $ 11,220  $     --   $     --       (755)  $ 19,749   $  1,010   $ 31,248

ESOP shares earned                                   --         88        --         --        189         --         --        277
Comprehensive income
    Net income                                       --         --        --         --         --      2,115         --      2,115
    Change in unrealized gain on securities
      available for sale, net of taxes               --         --        --         --         --         --          6          6
                                                                                                                           --------
       Total comprehensive income                                                                                             2,121
                                                -------   --------  --------   --------   --------   --------   --------   --------
Balance at December 31, 2002                         24     11,308        --         --       (566)    21,864      1,016     33,646

Purchase of 73,000 shares of treasury stock          --         --    (1,459)        --         --         --         --     (1,459)
Allocation of stock awards                           --        722       384     (1,106)        --         --         --         --
ESOP shares earned                                   --        188        --         --        189         --         --        377
Reclassification due to changes in fair value
  of common stock in ESOP subject to contingent
  repurchase obligation                              --     (1,246)       --         --         --         --         --     (1,246)
Stock awards earned                                  --         --        --        182         --         --         --        182
Comprehensive income
    Net income                                       --         --        --         --         --      1,393         --      1,393
    Change in unrealized gain on securities
      available for sale, net of taxes               --         --        --         --         --         --       (788)      (788)
                                                                                                                           --------
       Total comprehensive income                                                                                               605
                                                -------   --------  --------   --------   --------   --------   --------   --------
Balance at December 31, 2003                         24     10,972    (1,075)      (924)      (377)    23,257        228     32,105

Purchase of 125,864 shares of treasury stock         --         --    (3,000)        --         --         --         --     (3,000)
ESOP shares earned                                   --        272        --         --        188         --         --        460
Reclassification due to changes in fair value
  of common stock in ESOP subject to contingent
  repurchase obligation                              --       (438)       --         --         --         --         --       (438)
Stock awards earned                                  --         24        --        242         --         --         --        266
Comprehensive income
    Net income                                       --         --        --         --         --      1,580         --      1,580
    Change in unrealized gain on securities
      available for sale, net of taxes                                                                              (443)      (443)
                                                                                                                           --------
       Total comprehensive income                                                                                             1,137
                                                -------   --------  --------   --------   --------   --------   --------   --------
Balance at December 31, 2004                    $    24   $ 10,830  $ (4,075)  $   (682)  $   (189)  $ 24,837   $   (215)  $ 30,530
                                                =======   ========  ========   ========   ========   ========   ========   ========

</TABLE>

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

          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                                AJS BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2004, 2003, and 2002
                             (Dollars in thousands)

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

<TABLE>
<CAPTION>
                                                                 2004        2003        2002
                                                                 ----        ----        ----
<S>                                                            <C>         <C>         <C>
Cash flows from operating activities
     Net income                                                $  1,580    $  1,393    $  2,115
     Adjustments to reconcile net income to net cash
       provided by operating activities
         Depreciation                                               310         299         415
         Provision for loan losses                                 (112)        (61)         20
         Deferred income taxes                                     (248)        364         107
         Discount accretion on securities, net                       89          84         (39)
         Stock award compensation expense                           266         182          --
         ESOP compensation expense                                  460         377         277
         Amortization and impairment of mortgage
           servicing rights                                           2          14          22
         Federal Home Loan Bank stock dividends                    (847)       (635)       (163)
         Dividend reinvestments                                    (124)       (106)         --
         Gain on sale of securities                                  --         (34)         --
         Changes in
              Accrued interest receivable                            (2)        328         172
              Other assets                                          392         163        (490)
              Accrued interest payable                               59          (6)        (19)
              Other liabilities                                     (40)         84         136
                                                               --------    --------    --------
                  Net cash provided by operating activities       1,785       2,446       2,553

Cash flows from investing activities
     Securities available for sale
         Purchases                                              (35,706)    (22,713)    (20,399)
         Maturities and principal payments                       16,009      26,994      22,351
         Proceeds from sales                                         --       3,915          --
     Securities held to maturity
         Purchases                                                   --          --          --
         Maturities and principal payments                           45         183         572
     Purchase of certificates of deposit                         (9,783)         --          --
     Maturities of certificates of deposit                           --          --       1,000
     Loan originations, net                                      (7,549)    (19,413)     (7,876)
     Proceeds from sale of other real estate                         21          --         488
     Purchase of equipment                                         (195)       (579)     (2,077)
     Proceeds from the sale of Federal Home Loan Bank stock       2,000          --          --
     Purchase of Federal Home Loan Bank stock                        --      (8,500)     (3,000)
                                                               --------    --------    --------
         Net cash used in investing activities                  (35,158)    (20,113)     (8,941)
</TABLE>

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

                                   (Continued)


                                      F-6
<PAGE>

                                AJS BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2004, 2003, and 2002
                             (Dollars in thousands)

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

<TABLE>
<CAPTION>
                                                               2004        2003        2002
                                                               ----        ----        ----
<S>                                                          <C>         <C>         <C>
Cash flows from financing activities
     Net change in deposits                                  $ 14,209    $ 14,839    $ (2,801)
     Purchases of Federal Home Loan Bank advances              23,450       3,000      10,500
     Maturities of Federal Home Loan Bank advances             (4,200)     (2,000)     (7,500)
     Purchase of treasury stock                                (3,000)     (1,459)         --
     Net change in advance payments by borrowers
       for taxes and insurance                                    144         192          76
                                                             --------    --------    --------
         Net cash provided by financing activities             30,603      14,572         275
                                                             --------    --------    --------

Net change in cash and cash equivalents                        (2,770)     (3,095)     (6,113)

Cash and cash equivalents at beginning of year                 19,801      22,896      29,009
                                                             --------    --------    --------

Cash and cash equivalents at end of year                     $ 17,031    $ 19,801    $ 22,896
                                                             ========    ========    ========

Supplemental disclosures of cash flow information
     Cash paid during the year for
         Interest                                            $  5,119    $  5,075    $  5,440
         Income taxes                                             616         755       1,319

     Noncash investing and financing activities
         Other real estate acquired in settlement of loans         --           8         227
</TABLE>

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

          See accompanying notes to consolidated financial statements.


                                      F-7
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation:  The consolidated  financial statements include the
accounts of AJS Bancorp,  Inc. ("the Company") and its wholly owned  subsidiary,
A. J. Smith Federal  Savings Bank ("the  Bank").  All  significant  intercompany
balances and transactions have been eliminated.  The Company is 54.1% owned by a
mutual  holding  company,  AJS  Bancorp,   MHC.  These  consolidated   financial
statements  do not  include  AJS  Bancorp,  MHC and  its  results  or  financial
condition.

Nature of Operations: The only business of the Company is ownership of the Bank.
The Bank is a  federally  chartered  savings  bank with  operations  located  in
Midlothian  and  Orland  Park,   Illinois.   The  Bank  provides   single-family
residential and home equity loans and commercial  loans to and accepts  deposits
from  customers   located  in  the  southern   suburbs  of  Chicago,   Illinois.
Substantially  all of the loans are  secured  by  specific  items of  collateral
including business assets,  consumer assets, and commercial and residential real
estate.  Commercial  loans are  expected  to be  repaid  from  cash  flows  from
operations of businesses.  There are no significant  concentrations  of loans to
any one industry or  customer.  However,  the ability of the  customers to repay
their loans is dependent on the real estate and general  economic  conditions in
the area.

Use of  Estimates:  To prepare  financial  statements  in  conformity  with U.S.
generally  accepted  accounting  principles,   management  makes  estimates  and
assumptions  based on available  information.  These  estimates and  assumptions
affect the amounts  reported in the financial  statements,  and the  disclosures
provided and future results could differ. The allowance for loan losses and fair
values of financial instruments are particularly subject to change.

Cash  Flows:  Cash  and cash  equivalents  include  cash,  deposits  with  other
financial  institutions  with  original  maturities  of less  than 90 days,  and
federal  funds  sold.   Net  cash  flows  are  reported  for  loan  and  deposit
transactions.

Securities:  Debt  securities  are classified as held to maturity and carried at
amortized cost when  management has the positive intent and ability to hold them
to maturity.  Debt  securities  are  classified  as available for sale when they
might be sold before maturity.  Equity securities with readily determinable fair
values are classified as available for sale.  Securities  available for sale are
carried at fair value,  with  unrealized  holding  gains and losses  reported in
other  comprehensive  income.  Other  securities  such as Federal Home Loan Bank
stock are carried at cost.

Interest income includes amortization of purchase premium or discount. Gains and
losses on sales are based on the amortized cost of the security sold. Securities
are written down to fair value when a decline in fair value is not temporary.

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

                                   (Continued)


                                      F-8
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company evaluates securities for other-than-temporary impairment on at least
a quarterly basis and more  frequently when economic or market concerns  warrant
such evaluation.  Consideration is given to the length of time and the extent to
which the fair  value  has been less than  cost,  the  financial  condition  and
near-term  prospects of the issuer, and the intent and ability of the Company to
retain its investment in the issuer for a period of time sufficient to allow for
any  anticipated  recovery in fair value.  In  analyzing  an issuer's  financial
condition,  the Company may consider  whether the  securities  are issued by the
federal  government or its agencies,  whether downgrades by bond rating agencies
have occurred, and the results of reviews of the issuer's financial condition.

Loans Held for Sale:  Loans  originated  and intended for sale in the  secondary
market  are  carried  at the  lower  of cost or  market  in the  aggregate.  Net
unrealized losses, if any, are recorded as a valuation  allowance and charged to
earnings.

Loans:  Loans  that  management  has the  intent  and  ability  to hold  for the
foreseeable  future or until  maturity or payoff are  reported at the  principal
balance outstanding, net of unearned interest, deferred loan fees and costs, and
an allowance for loan losses.

Interest income is reported on the interest method and includes  amortization of
net deferred loan fees and costs over the contractual loan term. Interest income
is not reported when full loan repayment is in doubt, typically when the loan is
impaired or payments are past due over 90 days.

All interest accrued but not received for loans placed on nonaccrual is reversed
against interest income. Interest received on such loans is accounted for on the
cash-basis or  cost-recovery  method,  until  qualifying  for return to accrual.
Loans are returned to accrual status when all the principal and interest amounts
contractually  due are  brought  current  and  future  payments  are  reasonably
assured.

Allowance  for Loan  Losses:  The  allowance  for  loan  losses  is a  valuation
allowance for probable  incurred  credit losses,  increased by the provision for
loan losses and decreased by charge-offs less recoveries.  Management  estimates
the  allowance  balance  required  using  past loan loss  experience;  known and
inherent losses in the nature and volume of the portfolio that are both probable
and estimable;  information  about specific borrower  situations;  and estimated
collateral values,  economic conditions,  and other factors.  Allocations of the
allowance may be made for specific loans,  but the entire allowance is available
for any loan that, in management's judgment,  should be charged off. Loan losses
are  charged   against  the  allowance  where   management   believes  that  the
uncollectiblity of a loan balance is confirmed.

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

                                   (Continued)


                                      F-9
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

A loan is  impaired  when full  payment  under the loan  terms is not  expected.
Impairment  is evaluated in total for  smaller-balance  loans of similar  nature
such as residential  mortgage and consumer loans and on an individual loan basis
for other loans. If a loan is impaired,  a portion of the allowance is allocated
so that the loan is reported, net, at the present value of estimated future cash
flows  using the  loan's  existing  rate or at the fair value of  collateral  if
repayment is expected solely from the collateral.

Premises and  Equipment:  Land is carried at cost.  Premises and  equipment  are
stated at cost less accumulated  depreciation.  Depreciation is calculated using
primarily the  straight-line  method and is provided  over the estimated  useful
lives of 15 to 50 years for premises and 1 to 10 years for equipment.

Servicing  Rights:  Servicing  rights are recognized as assets for the allocated
value of retained servicing rights on loans sold.  Servicing rights are expensed
in  proportion  to and over the  period of  estimated  net  servicing  revenues.
Impairment is evaluated  based on the fair value of the rights,  using groupings
of the underlying loans as to interest rates and prepayment characteristics. Any
impairment of a grouping is reported as a valuation allowance.

Servicing fee income is recorded for fees earned for servicing  loans.  The fees
are based on a contractual  percentage of the  outstanding  principal or a fixed
amount per loan and are  recorded as income when  earned.  The  amortization  of
mortgage servicing rights is netted against loan servicing fee income.

Other Real Estate Owned: Real estate  properties  acquired through or in lieu of
loan  foreclosure are recorded at the lower of cost or fair value less estimated
costs to sell.  Costs  relating  to  improvement  of property  are  capitalized,
whereas costs relating to holding property are expensed.

Valuations are periodically performed by management, and an allowance for losses
is established by a charge to income if the carrying value of a property exceeds
its estimated fair value less estimated costs to sell.

Income Taxes: Income tax expense is the total of the current year income tax due
or refundable  and the change in deferred tax assets and  liabilities.  Deferred
tax assets and liabilities are the expected future tax amounts for the temporary
differences  between  carrying  amounts and tax bases of assets and liabilities,
computed  using enacted tax rates.  A valuation  allowance,  if needed,  reduces
deferred tax assets to the amount expected to be realized.

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

                                   (Continued)


                                      F-10
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loan Commitments and Related Financial Statements: Financial instruments include
off-balance-sheet  credit  instruments,  such as  commitments  to make loans and
commercial letters of credit,  issued to meet customer financing needs. The face
amount for these  items  represents  the  exposure to loss,  before  considering
customer collateral or ability to repay. Such financial instruments are recorded
when they are funded.  Instruments that are considered  financial  guarantees in
accordance with FASB Interpretation No. 45 are recorded at fair value.

Fair Value of Financial  Instruments:  Fair values of financial  instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed in a separate note. Fair value  estimates  involve  uncertainties  and
matters  of  significant   judgment  regarding  interest  rates,   credit  risk,
prepayments,  and other factors,  especially in the absence of broad markets for
particular  items.   Changes  in  assumptions  or  in  market  conditions  could
significantly affect the estimates.

Earnings Per Common Share: Basic earnings per common share is net income divided
by the weighted average number of common shares  outstanding  during the period.
Employee  stock  ownership  plan  shares  are  considered  outstanding  for this
calculation  unless  unearned.  Diluted  earnings per common share  includes the
dilutive  effect of  additional  potential  common shares  issuable  under stock
options and the vesting of stock  awards.  Earnings and  dividends per share are
restated  for all stock  splits and  dividends  through the date of issue of the
financial statements.

Comprehensive  Income:  Comprehensive  income  consists  of net income and other
comprehensive  income.  Other comprehensive income includes unrealized gains and
losses on securities  available for sale,  which are also recognized as separate
components of stockholders' equity.

Employee Stock  Ownership  Plan ("ESOP"):  The cost of shares issued to the ESOP
but not yet allocated to participants is presented in the  consolidated  balance
sheet as a reduction of stockholders'  equity.  Compensation expense is recorded
based on the market price of the shares as they are committed to be released for
allocation to participant accounts.  The difference between the market price and
the cost of the shares  committed to be released is recorded as an adjustment to
paid-in  capital.  Dividends on allocated ESOP shares reduce retained  earnings;
dividends  on  unallocated  ESOP  shares  reduce  debt.  Shares  are  considered
outstanding in the earnings per share  calculations  as they are committed to be
released;   unallocated   shares  are  not   considered   outstanding.   Because
participants  may  require  the  Company  to  purchase  their ESOP  shares  upon
termination of their employment,  the fair value of all allocated ESOP shares is
reclassified from stockholder's equity and included in other liabilities.

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

                                   (Continued)


                                      F-11
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock  Compensation:  Employee  compensation  expense  under  stock  options  is
reported using the intrinsic value method.  No stock-based  compensation cost is
reflected in net income,  as all options  granted had an exercise price equal to
or  greater  than the market  price of the  underlying  common  stock at date of
grant. The following table illustrates the effect on net income and earnings per
share if expense were measured  using the fair value  recognition  provisions of
FASB Statement No. 123, Accounting for Stock-Based Compensation.

                                                               2004       2003
                                                               ----       ----

Net income as reported                                       $ 1,580    $ 1,393
Deduct:  Stock-based compensation expense determined under
  fair value based method                                        (24)       (25)
                                                             -------    -------

    Pro forma net income                                     $ 1,556    $ 1,368
                                                             =======    =======

Basic earnings per share as reported                         $   .70    $   .60
Pro forma basic earnings per share                               .69        .59

Diluted earnings per share as reported                           .69        .60
Pro forma diluted earnings per share                             .68        .59

The pro forma  effects  are  computed  using  option  pricing  models  using the
following  weighted-average  assumptions as of grant date for options granted in
2003. No options were granted in 2004 or prior to 2003.

                                                                        2003
                                                                        ----

     Risk-free interest rate                                             2.37%
     Expected option life                                                5 years
     Expected stock price volatility                                    15.03%
     Dividend yield                                                      0%

Effect of Newly Issued But Not Yet Effective Accounting Standards:  During 2004,
FASB Statement 123R, Accounting for Stock-Based Compensation, was approved. This
statement  will require the expensing of stock options  beginning  July 1, 2005.
The future impact of adopting of this standard  cannot be predicted and is based
on the future granting of options and the values of these options.

Dividend  Restriction:  Banking  regulations require maintaining certain capital
levels and may limit the dividends paid by the bank to the holding company or by
the holding company to the

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

                                   (Continued)


                                      F-12
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

stockholders.  These  restrictions pose no practical limit on the ability of the
bank or the holding company to pay dividends at historical levels.

Operating  Segment:  Internal  financial  information is primarily  reported and
aggregated  in a  single  line of  business,  banking.  Accordingly,  all of the
financial  service  operations  are considered by management to be aggregated in
one reportable operating segment.

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

                                   (Continued)


                                      F-13
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Reclassifications:  Certain items on the prior year  financial  statements  have
been  reclassified  with no effect on net income to conform to the current  year
presentation.

NOTE 2 - SECURITIES

The fair value of securities available for sale and the related gross unrealized
gains and losses  recognized in accumulated  other  comprehensive  income (loss)
were as follows:

                                                           Gross        Gross
                                               Fair      Unrealized   Unrealized
                                               Value       Gains        Losses
                                               -----       -----        ------
December 31, 2004
-----------------
    U.S. governmental agencies               $ 20,897     $     17     $   (158)
    Mortgage-backed                            35,233          129         (324)
    Mutual fund                                 5,297           --          (71)
    Equity investment                              56           54           --
                                             --------     --------     --------

         Total                               $ 61,483     $    200     $   (553)
                                             ========     ========     ========

December 31, 2003
-----------------
    U.S. governmental agencies               $ 23,359     $    402     $   (100)
    Mortgage-backed                            13,854          149          (98)
    Mutual fund                                 5,209           --          (34)
    Equity investment                              53           52           --
                                             --------     --------     --------

         Total                               $ 42,475     $    603     $   (232)
                                             ========     ========     ========

The amortized cost, unrecognized gains and losses, and fair values of securities
held to maturity follow:

                                             Gross         Gross
                             Amortized    Unrecognized  Unrecognized      Fair
                                Cost         Gains        Losses          Value
                                ----         -----        ------          -----
December 31, 2004
-----------------
    Mortgage-backed           $    132      $      2      $     --      $    134
                              --------      --------      --------      --------

                              $    132      $      2      $     --      $    134
                              ========      ========      ========      ========

December 31, 2003
-----------------
    Mortgage-backed           $    177      $      2      $     --      $    179
                              --------      --------      --------      --------

                              $    177      $      2      $     --      $    179
                              ========      ========      ========      ========

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

                                   (Continued)


                                      F-14
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 2 - SECURITIES (Continued)

Contractual  maturities of securities  were as follows.  Securities not due at a
single maturity date, including mortgage-backed securities and mutual funds, are
shown separately.

                                              Available          Held to
                                              for Sale           Maturity
                                              --------     --------------------
                                                Fair       Amortized      Fair
                                                Value        Cost         Value
                                                -----        ----         -----
December 31, 2004
-----------------
   Due in one year or less                    $  5,022     $     --     $     --
   Due after one year through five years        15,875           --           --
   Due after five years                             --           --           --
   Mortgage-backed securities                   35,233          132          134
   Mutual fund                                   5,297           --           --
   Equity investment                                56           --           --
                                              --------     --------     --------

                                              $ 61,483     $    132     $    134
                                              ========     ========     ========

Securities  with a  carrying  value of  approximately  $11,036  and  $12,410  at
December 31, 2004 and 2003 were pledged to secure public  deposits and for other
purposes as required or permitted by law.

Proceeds from the sale of securities  available for sale were $0, $3,915, and $0
at December  31, 2004,  2003,  and 2002,  respectively.  Gross gains of $34 were
realized on those securities during 2003.

Securities  with  unrealized  losses at year-end not recognized in income are as
follows:

<TABLE>
<CAPTION>
                             Less than 12 Months       12 Months or More             Total
                             -------------------       -----------------             -----
                             Fair      Unrealized     Fair      Unrealized     Fair      Unrealized
Description of Securities    Value        Loss        Value        Loss        Value        Loss
-------------------------    -----        ----        -----        ----        -----        ----
<S>                         <C>         <C>          <C>         <C>          <C>         <C>
2004
----
U.S. government agencies    $ 14,893    $   (140)    $    982    $    (18)    $ 15,875    $   (158)
Mortgage-backed               24,764        (269)       3,705         (55)      28,469        (324)
Mutual fund                      170          (1)       5,127         (70)       5,297         (71)
                            --------    --------     --------    --------     --------    --------
    Total temporarily
      impaired              $ 39,827    $   (410)    $  9,814    $   (143)    $ 49,641    $   (553)
                            ========    ========     ========    ========     ========    ========

2003
----
U.S. government agencies    $  7,920    $   (100)    $     --    $     --     $  7,920    $    (10)
Mortgage-backed                9,724         (98)          --          --        9,724         (98)
Mutual fund                    5,209         (34)          --          --        5,209         (34)
                            --------    --------     --------    --------     --------    --------
    Total temporarily
      impaired              $ 22,853    $   (232)    $     --    $     --     $ 22,853    $   (232)
                            ========    ========     ========    ========     ========    ========
</TABLE>

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

                                   (Continued)


                                      F-15
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 2 - SECURITIES (Continued)

Unrealized  losses have not been  recognized  into income  because the  issuer's
bonds are of high credit quality and/or they are backed by the government,  such
as FNMA or FHLMC bonds and mortgage-backed  securities. In addition,  management
has the  intent  and  ability  to hold them for the  foreseeable  future and the
decline in fair value is largely due to increases in market interest rates.  The
fair value is expected to recover as the securities approach their maturity date
and/or market rates change.

NOTE 3 - LOANS

Loans consist of:
                                                           2004          2003
                                                           ----          ----
      Mortgage loans:
        Secured by one-to-four-family residences        $ 115,598     $ 120,810
        Multi-family and other loans secured by other
          properties                                       32,713        24,066
        Home equity loans                                  16,126        12,056
      Consumer and other loans                                649           696
                                                        ---------     ---------
                                                          165,086       157,628
      Allowance for loan losses                            (1,847)       (1,962)
      Deferred loan (fees) costs and other                     52           (38)
                                                        ---------     ---------

        Loans, net                                      $ 163,291     $ 155,628
                                                        =========     =========

The Bank's mortgage loan portfolio  includes  "subprime" loans made to borrowers
with  weakened  credit  characteristics,  such as prior  payment  delinquencies,
foreclosures,  bankruptcies,  or diminished  repayment  ability.  These subprime
loans totaled $12,538 and $18,272 at December 31, 2004 and 2003.

Changes in the allowance for loan losses follow:

                                               2004         2003         2002
                                               ----         ----         ----

      Beginning balance                      $  1,962     $  2,082     $  2,508
      Provision for loan losses                  (112)         (61)          20
      Charge-offs                                (115)        (120)        (446)
      Recoveries                                  112           61           --
                                             --------     --------     --------

          Ending balance                     $  1,847     $  1,962     $  2,082
                                             ========     ========     ========

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

                                   (Continued)


                                      F-16
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 3 - LOANS (Continued)

Impaired loans were as follows:
                                                     2004       2003       2002
                                                     ----       ----       ----
    Impaired loans with no allocated allowance
      for loan losses                              $    70    $   164    $    --
                                                   =======    =======    =======

    Average of impaired loans during the year          216        281        586
    Interest income recognized during impairment        28         24         --
    Cash-basis interest income recognized               28         20          9

Nonperforming loans were as follows:
                                                     2004       2003
                                                     ----       ----

    Loans past due over 90 days still on accrual   $    --    $    --
    Nonaccrual loans                                   983      1,136

Nonperforming loans and impaired loans are defined  differently.  Some loans may
be included in both categories,  whereas other loans may only be included in one
category.  There were no impaired  loans with an  allocated  allowance  for loan
losses.

Certain  directors and executive  officers of the Bank and companies  with which
they are affiliated  have obtained loans from the Bank on various  occasions.  A
summary of such loans made by the Bank is as follows:

                                                    2004         2003
                                                    ----         ----

      Beginning balance                           $  1,735     $  1,313
      New loans                                        410        2,170
      Effect of changes in related parties            (128)         124
      Repayments                                      (454)      (1,872)
                                                  --------     --------

          Ending balance                          $  1,563     $  1,735
                                                  ========     ========

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

                                   (Continued)


                                      F-17
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 3 - LOANS (Continued)

Mortgage  loans  serviced  for  others  are  not  included  in the  accompanying
consolidated statements of financial condition. The unpaid principal balances of
these loans follows:

                                                              2004        2003
                                                              ----        ----
      Mortgage loan portfolios serviced for:
          FNMA                                              $  5,319    $  8,518
          FHLMC                                                  114         161
          Other investors                                         --         513
                                                            --------    --------

      Balance, end of year                                  $  5,433    $  9,192
                                                            ========    ========

Custodial escrow balances maintained in connection with the foregoing loan
servicing were approximately $309 and $258 at December 31, 2004 and 2003. The
carrying value of mortgage servicing rights is immaterial.

NOTE 4 - PREMISES AND EQUIPMENT

Premises and equipment consist of:
                                                               2004        2003
                                                               ----        ----

      Land                                                  $  1,351    $  1,351
      Office buildings and improvements                        5,227       5,159
      Furniture, fixtures, and equipment                       1,713       1,666
                                                            --------    --------
                                                               8,291       8,176
      Less accumulated depreciation                            3,531       3,301
                                                            --------    --------

                                                            $  4,760    $  4,875
                                                            ========    ========

Depreciation expense was $310, $299, and $415 for 2004, 2003, and 2002.

NOTE 5 - DEPOSITS

Certificates  of deposit in  denominations  of $100,000 or more were $30,389 and
$24,600 at December 31, 2004 and 2003. Deposit amounts in excess of $100,000 are
not federally insured.

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

                                   (Continued)


                                      F-18
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 5 - DEPOSITS (Continued)

Deposit accounts are summarized as follows:
                                                             2004         2003
                                                             ----         ----

      Passbook accounts                                   $  50,651    $  51,755
      NOW accounts                                           23,784       23,210
      Money market accounts                                  10,575        7,514
      Certificates of deposit                               113,046      101,368
                                                          ---------    ---------

           Total deposits                                 $ 198,056    $ 183,847
                                                          =========    =========

Scheduled maturities of time certificates are as follows:

              Year                                     December 31, 2004
              ----                                     -----------------

              2005                                        $  63,645
              2006                                           15,132
              2007                                           21,669
              2008                                            7,206
              2009                                            5,364
              Therefore                                          30
                                                          ---------
                                                          $ 113,046
                                                          =========

Interest expense on deposits is summarized as follows:

                                                  2004        2003        2002
                                                  ----        ----        ----

      NOW                                       $     58    $     66    $     91
      Money market                                    80          75         137
      Passbook                                       407         518         652
      Certificates of deposit                      3,501       3,551       3,771
                                                --------    --------    --------

                                                $  4,046    $  4,210    $  4,651
                                                ========    ========    ========

Non-interest-bearing  deposits  (NOW  accounts)  totaled  $12,708 and $11,598 at
December 31, 2004 and 2003.

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

                                   (Continued)


                                      F-19
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 6 - FEDERAL HOME LOAN BANK ADVANCES

Advances from the Federal Home Loan Bank consist of:

                                       Frequency of
   Maturity Date          Rate        Rate Adjustment         2004        2003
   -------------          ----        ---------------         ----        ----

January 27, 2004          1.73%            Fixed          $      --    $     600
May 6, 2004               6.00%            Fixed                 --        2,000
July 22, 2004             2.91%            Fixed                 --          500
July 27, 2004             1.86%            Fixed                 --          600
November 15, 2004         2.35%            Fixed                 --          500
January 24, 2005          1.55%            Fixed                500           --
January 27, 2005          2.12%            Fixed                500          500
March 23, 2005            1.47%            Fixed                500           --
May 6, 2005               6.10%            Fixed              2,000        2,000
July 22, 2005             3.56%            Fixed                500          500
November 14, 2005         2.90%            Fixed                500          500
January 23, 2006          2.02%            Fixed                500           --
January 27, 2006          2.71%            Fixed                500          500
March 23, 2006            1.93%            Fixed                500           --
April 26, 2006            2.61%            Fixed              1,000           --
May 8, 2006               2.91%            Fixed                500           --
July 24, 2006             3.69%            Fixed                500          500
November 13, 2006         3.43%            Fixed                500          500
January 23, 2007          2.69%            Fixed                500           --
January 29, 2007          3.26%            Fixed                400          400
March 23, 2007            2.53%            Fixed                500           --
April 26, 2007            3.35%            Fixed              1,000           --
May 7, 2007               3.57%            Fixed              1,000           --
July 23, 2007             4.06%            Fixed                500          500
November 13, 2007         3.74%            Fixed                500          500
November 27, 2007         5.28%            Fixed              1,000        1,000
January 23, 2008          3.21%            Fixed                500            -
January 28, 2008          3.68%            Fixed                400          400
March 24, 2008            2.96%            Fixed                625           --
April 28, 2008            3.84%            Fixed              1,000           --
May 7, 2008               4.08%            Fixed              1,000           --
June 18, 2008             4.33%            Fixed              1,000           --
July 22, 2008             4.41%            Fixed                500          500
November 13, 2008         4.16%            Fixed                500          500
November 17, 2008         3.64%            Fixed                400           --
November 27, 2008         5.48%            Fixed              1,000        1,000
March 20, 2009            5.63%            Fixed              3,000        3,000
March 23, 2009            3.35%            Fixed                625           --

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

                                   (Continued)


                                      F-20
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 6 - FEDERAL HOME LOAN BANK ADVANCES (Continued)

                                       Frequency of
   Maturity Date          Rate        Rate Adjustment         2004        2003
   -------------          ----        ---------------         ----        ----

June 17, 2009             4.40%            Fixed          $   1,000    $      --
June 22, 2009             4.67%            Fixed              1,000           --
June 25, 2009             4.61%            Fixed              1,000           --
July 1, 2009              4.54%            Fixed              1,000           --
August 10, 2009           3.88%            Fixed                650           --
September 16, 2009        3.68%            Fixed                600           --
September 28, 2009        3.79%            Fixed              2,000           --
March 23, 2010            3.71%            Fixed                250           --
July 2, 2010              4.69%            Fixed              1,000           --
October 25, 2010          4.16%            Fixed              1,000           --
July 7, 2011              4.61%            Fixed                800           --
October 26, 2011          4.02%            Fixed                400           --
November 17, 2011         4.31%            Fixed              1,100           --
                                                          ---------    ---------
                                                          $  36,250    $  17,000
                                                          =========    =========

The advances are secured by a blanket lien on qualifying first mortgage loans in
an amount  equal to at least 170% of the  amount of  outstanding  advances.  The
advances are also subject to a prepayment penalty.

Maturities over the next five years and thereafter are as follows:

                  2005                             $  4,500
                  2006                                4,000
                  2007                                5,400
                  2008                                6,925
                  2009                               10,875
                  2010 and thereafter                 4,550
                                                   --------
                                                   $ 36,250
                                                   ========

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

                                   (Continued)


                                      F-21
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 7 - INCOME TAXES

Income tax expense was as follows:
                                                  2004        2003        2002
                                                  ----        ----        ----
      Current
         Federal                                $    483    $    374    $  1,098
         State                                        52          43          91
      Deferred                                       298         365         107
                                                --------    --------    --------

         Total                                  $    833    $    782    $  1,296
                                                ========    ========    ========

Effective  tax rates differ from federal  statutory  rates  applied to financial
statement income due to the following.

                                                 2004        2003        2002
                                                 ----        ----        ----

      Income tax at federal statutory rate     $    820    $    740    $  1,160
      Effect of
         State taxes, net of federal benefit         73          52          67
         Other, net                                 (60)        (10)         69
                                               --------    --------    --------

      Total                                    $    833    $    782    $  1,296
                                               ========    ========    ========

      Effective tax rate                           34.5%       35.9%       38.0%
                                               ========    ========    ========

The net  deferred  tax  assets  included  in other  assets  in the  consolidated
statements of financial condition are as follows:

                                                              2004        2003
                                                              ----        ----

      Deferred tax assets
         Allowance for loan losses                          $    763   $    818
         Accrued expenses                                        696        682
         Unrealized loss on securities available for sale        138         --
         Other                                                    24         --
                                                            --------   --------
                                                               1,621      1,500
      Deferred tax liabilities
         Premises and equipment                                 (340)      (119)
         Unrealized gain on securities available for sale         --       (143)
         Federal Home Loan Bank stock dividends                 (650)      (413)
         Deferred loan fees                                     (139)      (117)

         Other                                                    --       (199)
                                                            --------   --------
                                                              (1,129)      (991)
                                                            --------   --------

      Net deferred tax asset                                $    492   $    509
                                                            ========   ========

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

                                   (Continued)


                                      F-22
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 7 - INCOME TAXES (Continued)

Federal  income tax laws provided  additional bad debt  deductions  through 1987
totaling $2,372. Accounting standards do not require a deferred tax liability to
be  recorded  on this  amount,  which  liability  otherwise  would total $906 at
December 31, 2004. If the Bank were liquidated or otherwise  ceased to be a bank
or if tax laws were to change, this amount would be expensed.

NOTE 8 - EMPLOYEE BENEFITS

The Bank maintains a contributory  profit sharing plan for its employees.  To be
eligible to participate, an employee must have completed one year of service, be
credited with 1,000 hours of service  during that period,  and have attained the
age of 18. Bank  contributions to the plan are  discretionary  and determined by
the Board of  Directors.  Profit  sharing  expense  was $10 for the years  ended
December 31, 2004, 2003 and 2002.

The Bank sponsors  nonqualified  unfunded retirement plans for certain directors
and  officers,   which  provide  annual  benefit   payments  to  directors  upon
retirement.  The Bank's  liability  for the plans  totaled  $1,793 and $1,757 at
December 31, 2004 and 2003.  Expense related to the plans totaled $94, $104, and
$83 for the years ended December 31, 2004, 2003, and 2002.

NOTE 9 - EMPLOYEE STOCK OWNERSHIP PLAN

As part of the conversion  transaction,  the Company established an ESOP for the
benefit of substantially all employees.  The ESOP borrowed $944 from the Company
and used those funds to acquire 94,352 shares of the Company's  stock at $10 per
share.

Shares issued to the ESOP are allocated to ESOP participants  based on principal
and interest repayments made by the ESOP on the loan from the Company.  The loan
is secured by shares  purchased with the loan proceeds and will be repaid by the
ESOP with funds from the Company's  discretionary  contributions to the ESOP and
earnings on the ESOP's assets.  Principal payments are scheduled to occur over a
ten-year period.  However, in the event the Company's  contributions  exceed the
minimum debt service requirements, additional principal payments will be made.

Participants  receive the shares at the end of  employment.  A  participant  may
require  stock  received  to be  repurchased  unless  the  stock is traded on an
established market.

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

                                   (Continued)


                                      F-23
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 9 - EMPLOYEE STOCK OWNERSHIP BENEFITS (Continued)

During 2004, 2003, and 2002,  approximately 18,870 shares per year of stock with
an average fair value of $24.38,  $19.98, and $14.70 per share were committed to
be released,  resulting in ESOP  compensation  expense of $460,  $377, and $277.
Shares held by the ESOP at December 31 are as follows:

                                                               2004       2003
                                                               ----       ----

     Allocated shares                                          70,092     54,162
     Shares distributed from plan                               5,390      2,450
     Unallocated shares                                        18,870     37,740
                                                             --------   --------

         Total ESOP shares                                     94,352     94,352
                                                             ========   ========

     Fair value of unallocated shares                        $    453   $    868
                                                             ========   ========

     Fair value of allocated shares subject to repurchase
       obligation                                            $  1,684   $  1,246
                                                             ========   ========

NOTE 10 - EMPLOYEE STOCK BENEFITS

The  Company  adopted a stock  option  plan in May 2003 under the terms of which
options  for  114,685  shares of the  Company's  common  stock  were  granted to
directors,  officers, and employees.  Exercise price is the market price at date
of  grant,  so  there  is no  compensation  expense  recognized  in  the  income
statement. The options become exercisable in equal installments over a five-year
period  from the date of grant.  The  options  expire ten years from the date of
grant.  No option  may be  exercised  if such  exercise  would  cause the mutual
holding  company  to own fewer  than a  majority  of the total  number of shares
outstanding. The Company did not grant any options in 2004. There are a total of
5,256 options available for future grant under the stock option plan,  including
2,000 options forfeited that can be reissued at the then current market value.

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

                                   (Continued)


                                      F-24
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 10 - EMPLOYEE STOCK BENEFITS (Continued)

A summary of the activity in the plan for 2004 is as follows:

<TABLE>
<CAPTION>
                                                                2004                    2003
                                                                ----                    ----
                                                                    Weighted                 Weighted
                                                                    Average                  Average
                                                                    Exercise                 Exercise
                                                         Shares      Price       Shares       Price
                                                         ------      -----       ------       -----
<S>                                                      <C>        <C>          <C>        <C>
      Outstanding at beginning of year                   114,685    $  18.75          --    $     --
      Granted                                                 --          --     114,685       18.75
      Exercised                                               --          --          --          --
      Forfeited                                            2,000       18.75          --          --
                                                        --------    --------    --------    --------
      Outstanding at end of year                         112,685    $  18.75     114,685    $  18.75
                                                        ========    ========    ========    ========
      Options exercisable at year end                                 27,337                      --

      Weighted-average fair value of options granted
        during year                                                 $     --                $   2.82
</TABLE>

At December 31,  2004,  112,685  options  outstanding  had an exercise  price of
$18.75 with a weighted average remaining life of 8.4 years.

Pursuant to its 2003  stock-based  incentive  plan,  the Company  awarded 58,971
shares  of  restricted  stock in May 2003.  These  shares  normally  vest over a
five-year  period,  unless  certain  circumstances  occur that  trigger  earlier
vesting  according to the approved  Recognition and Retention Plan ("RRP").  The
unamortized cost of shares not yet earned (vested) is reported as a reduction of
stockholders' equity.

A summary of the activity in the RRP for is as follows:

                                                            2004         2003
                                                            ----         ----

      RRP remaining to be vested at beginning of year       56,171           --
      Granted                                                   --       58,971
      Vested                                               (13,235)      (2,800)
      Forfeited                                                 --           --
                                                          --------     --------

      RRP remaining to be vested at end of year             42,936       56,171
                                                          ========     ========

Compensation  expense for restricted  stock awards totaled $266 and $182 for the
years ended December 31, 2004 and 2003, respectively.

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

                                   (Continued)


                                      F-25
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 11 - FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying  amount and estimated fair value of financial  instruments  were as
follows.

<TABLE>
<CAPTION>
                                               --December 31, 2004--       --December 31, 2003--
                                                 -----------------           -----------------
                                               Carrying        Fair        Carrying        Fair
                                                Amount         Value        Amount         Value
                                                ------         -----        ------         -----
<S>                                           <C>           <C>           <C>           <C>
      Financial assets
         Cash and cash equivalents            $   17,031    $   17,031    $   19,801    $   19,801
         Certificates of deposit                   9,783         9,783            --            --
         Securities available for sale            61,483        61,483        42,475        42,475
         Securities held to maturity                 132           134           177           179
         Loans                                   163,291       164,169       155,628       157,823
         Federal Home Loan Bank stock             12,459        12,459        13,612        13,612
         Accrued interest receivable                 969           969           967           967

      Financial liabilities
         Deposits                               (198,056)     (199,221)     (183,847)     (186,736)
         Advances from Federal Home Loan
           Bank                                  (36,250)      (36,402)      (17,000)      (17,659)
         Advances from borrowers for taxes
           and insurance                          (1,795)       (1,795)       (1,651)       (1,651)
         Accrued interest payable                   (143)         (143)          (84)          (84)
</TABLE>

The  methods  and  assumptions  used to  estimate  fair value are  described  as
follows.

Carrying  amount is the  estimated  fair  value  for cash and cash  equivalents,
short-term borrowings, Federal Home Loan Bank stock, accrued interest receivable
and payable,  demand  deposits,  short-term  debt,  and  variable  rate loans or
deposits  that reprice  frequently  and fully.  Security  fair value is based on
market prices or dealer quotes and, if no such information is available,  on the
rate and term of the security and information  about the issuer.  For fixed rate
loans or  deposits  and for  variable  rate loans or  deposits  with  infrequent
repricing  or repricing  limits,  fair value is based on  discounted  cash flows
using current market rates applied to the estimated  life and credit risk.  Fair
values for impaired loans are estimated  using  discounted cash flow analysis or
underlying  collateral  values.  Fair  value of loans  held for sale is based on
market  quotes.  Fair  value of debt is  based  on  current  rates  for  similar
financing. Fair value of off-balance-sheet items is based on the current fees or
cost that would be charged to enter into or terminate such arrangements.

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

                                   (Continued)


                                      F-26
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 12 - REGULATORY CAPITAL

The Bank is subject to regulatory capital  requirements  administered by federal
banking  agencies.  Capital  adequacy  guidelines and,  additionally  for banks,
prompt corrective action regulations  involve  quantitative  measures of assets,
liabilities,  and certain  off-balance-sheet  items  calculated under regulatory
accounting  practices.  Capital amounts and  classifications are also subject to
qualitative  judgments by regulators.  Failure to meet capital  requirements can
initiate regulatory action.

Prompt  corrective  action  regulations  provide  five   classifications:   well
capitalized,    adequately    capitalized,    undercapitalized,    significantly
undercapitalized, and critically undercapitalized,  although these terms are not
used to  represent  overall  financial  condition.  If  adequately  capitalized,
regulatory   approval   is   required   to   accept   brokered   deposits.    If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion, and capital restoration plans are required.

The Bank's actual and required capital amounts and ratios are presented below:

<TABLE>
<CAPTION>
                                                                                           To Be Well
                                                                                        Capitalized Under
                                                                      For Capital       Prompt Corrective
                                                  Actual           Adequacy Purposes    Action Provisions
                                            ------------------    -------------------   ----------------
                                             Amount     Ratio      Amount      Ratio     Amount     Ratio
                                             ------     -----      ------      -----     ------     ------
<S>                                         <C>          <C>      <C>           <C>     <C>          <C>
As of December 31, 2004
-----------------------
   Total capital to risk-weighted assets    $ 30,005     22.7%    $ 10,695      8.0%    $ 13,244     10.0%
   Tier I (core) capital to risk-
     weighted assets                          28,347     21.4        5,297      4.0%       7,946      6.0
   Tier I (core) capital to
     adjusted total assets                    28,347     10.4       10,866      4.0%      13,583      5.0

As of December 31, 2003
-----------------------
   Total capital to risk-weighted assets    $ 30,595     24.0%    $ 10,214      8.0%    $ 12,767     10.0%
   Tier I (core) capital to risk-
     weighted assets                          28,995     22.7        5,107      4.0        7,660      6.0
   Tier I (core) capital to
     adjusted total assets                    28,995     12.2        9,535      4.0       11,919      5.0
</TABLE>

The  Qualified  Thrift  Lender  test  requires  that at least  65% of  assets be
maintained in housing-related finance and other specified areas. If this test is
not met, limits are placed on growth,  branching, new investments,  Federal Home
Loan Bank advances,  and dividends or the Bank must convert to a commercial bank
charter. Management believes that this test is met.

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

                                   (Continued)


                                      F-27
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 12 - REGULATORY CAPITAL (Continued)

As of December 31, 2004, the most recent  notification from the Office of Thrift
Supervision  ("the  OTS")  categorized  the Bank as well  capitalized  under the
regulatory  framework for prompt correction  action.  There are no conditions or
events since that notification that management  believes have changed the Bank's
category. The Bank can dividend a maximum amount of $5.1 million at December 31,
2004 to the Company without OTS approval.

NOTE 13 - EARNINGS PER COMMON SHARE

A  reconciliation  of the numerator and  denominator  of the earnings per common
share computation for the year ended December 31 follows:

<TABLE>
<CAPTION>
                                                                  2004           2003
                                                                  ----           ----
<S>                                                           <C>            <C>
Basic
    Net income                                                $     1,580    $     1,393
                                                              ===========    ===========
         Weighted average common shares outstanding             2,276,918      2,373,562
         Less:  average unallocated ESOP shares                    28,305         47,177
                                                              -----------    -----------
    Average shares                                              2,248,613      2,326,385
                                                              ===========    ===========
    Basic earnings per common share                           $       .70    $       .60
                                                              ===========    ===========
Diluted
    Net income                                                $     1,580    $     1,393
                                                              ===========    ===========
         Weighted average common shares
           outstanding for basic earnings per common share      2,248,613      2,326,385
         Add:  dilutive effects of assumed exercises of
           stock options and stock awards                          30,587          4,759
                                                              -----------    -----------
         Average shares and dilutive potential
           common shares                                        2,279,200      2,331,144
                                                              ===========    ===========
Diluted earnings per common share                             $       .69    $       .60
                                                              ===========    ===========
</TABLE>

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

                                   (Continued)


                                      F-28
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 14 - OFF-BALANCE-SHEET ACTIVITIES

Some financial instruments,  such as loan commitments,  credit lines, letters of
credit, and overdraft  protection,  are issued to meet customer financing needs.
These are  agreements to provide  credit or to support the credit of others,  as
long as  conditions  established  in the  contract  are met,  and  usually  have
expiration dates.  Commitments may expire without being used.  Off-balance-sheet
risk to credit loss exists up to the face amount of these instruments,  although
material losses are not  anticipated.  The same credit policies are used to make
such  commitments  as are used for  loans,  including  obtaining  collateral  at
exercise of the commitment.

The contractual amount of financial instruments with  off-balance-sheet risk was
as follows at year end:

                                            2004                    2003
                                            ----                    ----
                                      Fixed     Variable      Fixed     Variable
                                      Rate        Rate        Rate        Rate
                                      ----        ----        ----        ----

      Commitments to make loans     $  5,222    $  1,247    $  8,026    $  3,686
      Unused lines of credit and
        letters of credit                 --      13,412          --      13,112

Commitments  to make loans are  generally  made for periods of 120 days or less.
The fixed rate loan commitments have interest rates ranging from 4.625% to 6.25%
and the commitments are to extend credit ranging from 1 year to 30 years.

The Bank has  previously  sold fixed rate  mortgages  to FNMA and FHLMC with and
without recourse. Recourse obligations on sold loans are recorded at fair value.

                                           2004                     2003
                                           ----                     ----
                                   Contract    Carrying     Contract    Carrying
                                    Amount       Value       Amount       Value
                                    ------       -----       ------       -----

      Loans sold with recourse       $208        $208         $483         $483

In the normal  course of  business,  there are  various  outstanding  contingent
liabilities  such as claims  and legal  actions  that are not  reflected  in the
financial  statements.  In the opinion of  management,  no  material  losses are
anticipated as a result of these actions or claims.

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

                                   (Continued)


                                      F-29
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2004 and 2003
                  (Dollars in thousands, except per share data)

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

NOTE 15 - OTHER COMPREHENSIVE INCOME

Other comprehensive income components and related taxes were as follows:

<TABLE>
<CAPTION>
                                                       2004         2003         2002
                                                       ----         ----         ----
<S>                                                  <C>          <C>          <C>
      Unrealized holding gains and losses
        on securities available for sale             $   (724)    $ (1,254)    $      9
      Less reclassification adjustments for gains
        and losses later recognized in income              --          (34)          --
                                                     --------     --------     --------
          Net unrealized gains and losses                (724)      (1,288)           9

      Tax effect                                          281          500           (3)
                                                     --------     --------     --------
          Other comprehensive income                 $   (443)    $   (788)    $      6
                                                     ========     ========     ========
</TABLE>

NOTE 16 - PARENT COMPANY CONSOLIDATED FINANCIAL STATEMENTS

The following are the condensed balance sheets and statements of income and cash
flows for AJS Bancorp, Inc. without subsidiary.

                            CONDENSED BALANCE SHEETS
                           December 31, 2004 and 2003

                                                              2004        2003
                                                              ----        ----
      ASSETS
      Cash and cash equivalents                             $  3,894    $  3,759
      ESOP loan                                                  189         377
      Investment in bank subsidiary                           28,133      29,223
                                                            --------    --------

                                                            $ 32,216    $ 33,359
                                                            ========    ========

      LIABILITIES AND SHAREHOLDERS' EQUITY
      Liabilities                                           $  1,686    $  1,254
      Shareholders' equity                                    30,530      32,105
                                                            --------    --------

                                                            $ 32,216    $ 33,359
                                                            ========    ========

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

                                   (Continued)


                                      F-30
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in thousands, except per share data)

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

NOTE 16 - PARENT COMPANY CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                         CONDENSED STATEMENTS OF INCOME
              For the years ended December 31, 2004, 2003, and 2002

<TABLE>
<CAPTION>
                                                              2004        2003        2002
                                                              ----        ----        ----
<S>                                                         <C>         <C>         <C>
      Income
           ESOP loan                                        $     17    $     23    $     35
           Deposits in financial institutions                     31          46          83
           Other operating income                                 --          --          33
                                                            --------    --------    --------
                                                                  48          69         151
      Other expenses
           Other operating expenses                              121         120         106
                                                            --------    --------    --------

      Income before income taxes and equity in
        undistributed earnings                                   (73)        (51)         45

      Income taxes                                               (27)        (19)         18
                                                            --------    --------    --------

      Income before equity in undistributed
        earnings of bank subsidiary                              (46)        (32)         27

      Equity in undistributed earnings of bank subsidiary      1,626       1,425       2,088
                                                            --------    --------    --------

      Net income                                            $  1,580    $  1,393    $  2,115
                                                            ========    ========    ========
</TABLE>

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

                                   (Continued)


                                      F-31
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in thousands, except per share data)

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

NOTE 16 - PARENT COMPANY CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                       CONDENSED STATEMENTS OF CASH FLOWS
              For the years ended December 31, 2004, 2003, and 2002

<TABLE>
<CAPTION>
                                                           2004        2003        2002
                                                           ----        ----        ----
<S>                                                     <C>         <C>         <C>
      Operating activities
           Net income                                   $  1,580    $  1,393    $  2,115
           Adjustments to reconcile net income to net
             cash provided by operating activities
            Equity in undistributed earnings of
              bank subsidiary                             (1,626)     (1,425)     (2,088)
            Dividend from bank subsidiary                  3,000          --          --
            Change in other assets and liabilities            (8)        (10)         18
                                                        --------    --------    --------
               Net cash from operating activities          2,946         (42)         45

      Financing activities
           Payment received on loan to ESOP                  189         189         378
           Purchase of common stock                       (3,000)     (1,459)         --
                                                        --------    --------    --------
               Net cash from financing activities         (2,811)     (1,270)        378
                                                        --------    --------    --------

      Net change in cash and cash equivalents                135      (1,312)        423

      Cash and cash equivalents at beginning of year       3,759       5,071       4,648
                                                        --------    --------    --------

      Cash and cash equivalents at end of year          $  3,894    $  3,759    $  5,071
                                                        ========    ========    ========
</TABLE>

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

                                   (Continued)


                                      F-32
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in thousands, except per share data)

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

NOTE 16 - QUARTERLY FINANCIAL DATA (UNAUDITED)

                                                                     Earnings
                                                                    Per Shares
                                 Interest   Net Interest    Net     Basic and
                                  Income       Income     Income     Diluted
                                 --------   ------------  ------    ----------
2004
----
   First quarter                  $ 3,039     $ 1,894    $   359    $    .16
   Second quarter                   3,160       1,917        348         .15
   Third quarter                    3,236       1,878        442         .20
   Fourth quarter                   3,301       1,869        431         .20/.19

2003
----
   First quarter                  $ 3,153     $ 1,865    $   470    $    .20
   Second quarter                   3,079       1,774        313         .13
   Third quarter                    3,087       1,830        331         .14
   Fourth quarter                   3,028       1,809        279         .12

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

                                      F-33