EXHIBIT 13

                              FINANCIAL STATEMENTS

<PAGE>
                                AJS BANCORP, INC.
                              Midlothian, Illinois

                        CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004

                                    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.

<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,  2005  and  2004,  and the  related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three  years in the period  ended  December  31,  2005.  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, 2005 and 2004,  and the results of its  operations  and its cash
flows for each of the three years in the period  ended  December  31,  2005,  in
conformity with U.S. generally accepted accounting principles.


                                             /s/ Crowe Chizek and Company LLC
                                                 Crowe Chizek and Company LLC

Oak Brook, Illinois
February 17, 2006


                                      F-2
<PAGE>

                                AJS BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           December 31, 2005 and 2004
                             (Dollars in thousands)

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

<TABLE>
<CAPTION>
                                                                         2005         2004
                                                                         ----         ----
<S>                                                                   <C>          <C>
ASSETS
Cash and cash equivalents
     Cash and due from banks (interest-bearing:  2005 - $11,477;
       2004 - $10,751)                                                $  14,776    $  13,717
     Federal funds sold                                                     454        3,314
                                                                      ---------    ---------
         Total cash and cash equivalents                                 15,230       17,031

Certificates of deposit                                                   8,584        9,783
Securities available for sale                                            71,239       61,483
Securities held to maturity (fair value:  2005 - $295;
  2004 - $134)                                                              295          132
Loans, net of allowance of $1,701 and $1,847                            151,768      163,291
Federal Home Loan Bank stock                                              3,416       12,459
Premises and equipment                                                    4,541        4,760
Accrued interest receivable                                                 960          969
Other assets                                                              1,872          961
                                                                      ---------    ---------

     Total assets                                                     $ 257,905    $ 270,869
                                                                      =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
     Deposits                                                         $ 190,407    $ 198,056
     Federal Home Loan Bank advances                                     32,750       36,250
     Advance payments by borrowers for taxes and insurance                1,746        1,795
     Other liabilities and accrued interest payable                       4,750        4,238
                                                                      ---------    ---------
         Total liabilities                                              229,653      240,339

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                                          10,839       10,830
     Treasury stock, at cost (2005 - 296,714 shares;
       2004 - 177,464 shares)                                            (6,931)      (4,075)
     Unearned RRP shares                                                   (486)        (682)
     Unearned ESOP shares                                                    --         (189)
     Retained earnings                                                   25,820       24,837
     Accumulated other comprehensive loss                                (1,014)        (215)
                                                                      ---------    ---------
         Total stockholders' equity                                      28,252       30,530
                                                                      ---------    ---------

              Total liabilities and stockholders' equity              $ 257,905    $ 270,869
                                                                      =========    =========
</TABLE>

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

          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

                                AJS BANCORP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 2005, 2004, and 2003
                  (Dollars in thousands, except per share data)

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

                                                 2005        2004        2003
                                                 ----        ----        ----
Interest and dividend income
    Loans                                      $  9,127    $  9,405    $  9,346
    Securities                                    2,682       2,226       2,234
    Interest-earning deposits and other           1,075       1,037         669
    Federal funds sold                               64          69          98
                                               --------    --------    --------
       Total interest income                     12,948      12,737      12,347

Interest expense
    Deposits                                      4,606       4,046       4,210
    Federal Home Loan Bank advances and other     1,417       1,132         859
                                               --------    --------    --------
       Total interest expense                     6,023       5,178       5,069
                                               --------    --------    --------

Net interest income                               6,925       7,559       7,278

Provision for loan losses                          (130)       (112)        (61)
                                               --------    --------    --------

Net interest income after provision
  for loan losses                                 7,055       7,671       7,339

Noninterest income
    Service fees                                    514         502         539
    Gain (loss) on sale of other real estate          6           2         (19)
    Insurance commissions                           195         232         314
    Gain on sale of loans                            27          --          53
    Gain on sale of securities                       --          --          34
    Rental income                                   124         109         108
    Correspondent fees                               15          26          13
    Other                                            55          62          49
                                               --------    --------    --------
       Total noninterest income                     936         933       1,091

Noninterest expense
    Compensation and employee benefits            3,481       3,621       3,632
    Occupancy expense                               897         781         868
    Data processing expense                         392         378         361
    Advertising and promotion                       404         372         309
    Professional                                    224         147         167
    Postage and supplies                            163         175         212
    Bank security                                   130         124         118

    Other                                           509         593         588
                                               --------    --------    --------
       Total noninterest expense                  6,200       6,191       6,255
                                               --------    --------    --------

Income before income taxes                        1,791       2,413       2,175

Income taxes                                        694         833         782
                                               --------    --------    --------

Net income                                     $  1,097    $  1,580    $  1,393
                                               ========    ========    ========

Earnings per share
    Basic                                      $    .51    $    .70    $    .60
    Diluted                                         .50         .69         .60

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

          See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

                                AJS BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years ended December 31, 2005, 2004, and 2003
                  (Dollars in thousands, except per share data)

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

<TABLE>
<CAPTION>
                                                              Additional               Unearned     Unearned
                                                     Common     Paid-In    Treasury      Stock        ESOP      Retained
                                                      Stock     Capital      Stock       Awards      Shares     Earnings
                                                      -----     -------      -----       ------      ------     --------
<S>                                                  <C>        <C>         <C>         <C>         <C>         <C>
Balance at January 1, 2003                           $     24   $ 11,308    $     --    $     --    $   (566)   $ 21,864
Purchase of 73,000 shares treasury stock                   --         --      (1,459)         --          --          --
Allocation of stock awards                                 --        722         384      (1,106)         --          --
ESOP shares earned                                         --        188          --          --         189          --
Reclassification due to changes in fair value
  of common stock is ESOP subject to contingent
  repurchase obligation                                    --     (1,246)         --          --          --          --
Stock awards earned                                        --         --          --         182          --          --
Comprehensive income
    Net income                                             --         --          --          --          --       1,393
    Change in unrealized gain on securities
      available for sale, net of taxes                     --         --          --          --          --          --
                                                     --------   --------    --------    --------    --------    --------
       Total comprehensive income

Balance at December 31, 2003                               24     10,972      (1,075)       (924)       (377)     23,257
Purchase of 125,864 shares of treasury stock               --         --      (3,000)         --          --          --
ESOP shares earned                                         --        272          --          --         188          --
Reclassification due to changes in fair value
  of common stock in ESOP subject to contingent
  repurchase obligation                                    --       (438)         --          --          --          --
Stock awards earned                                        --         24          --         242          --          --
Comprehensive income
    Net income                                             --         --          --          --          --       1,580
    Change in unrealized gain (loss) on securities
      available for sale, net of taxes                     --         --          --          --          --          --
                                                     --------   --------    --------    --------    --------    --------
       Total comprehensive income

Balance at December 31, 2004                               24     10,830      (4,075)       (682)       (189)     24,837
Purchase of 124,950 shares of treasury stock               --         --      (2,976)         --          --          --
Allocation of stock awards                                 --          2          --          (2)         --          --
ESOP shares earned                                         --        258          --          --         189          --
Reclassification due to changes in fair value
  of common stock in ESOP subject to contingent
  repurchase obligation                                    --       (298)         --          --          --          --
Stock awards earned                                        --         55          --         198          --          --
Stock options exercised                                    --         (8)        120          --          --          --
Cash dividend ($0.10 per share)                            --         --          --          --          --        (114)
Comprehensive income
    Net income                                             --         --          --          --          --       1,097
    Change in unrealized gain (loss) on securities
      available for sale, net of taxes                     --         --          --          --          --          --
                                                     --------   --------    --------    --------    --------    --------
       Total comprehensive income

Balance at December 31, 2005                         $     24   $ 10,839    $ (6,931)   $   (486)   $     --    $ 25,820
                                                     ========   ========    ========    ========    ========    ========
</TABLE>
<TABLE>
<CAPTION>

                                                         Accumulated
                                                             Other
                                                         Comprehensive
                                                         Income (Loss)       Total
                                                         -------------       -----
<S>                                                       <C>               <C>
Balance at January 1, 2003                                $  1,016          $ 33,646
Purchase of 73,000 shares treasury stock                        --            (1,459)
Allocation of stock awards                                      --                --
ESOP shares earned                                              --               377
Reclassification due to changes in fair value
  of common stock is ESOP subject to contingent
  repurchase obligation                                         --            (1,246)
Stock awards earned                                             --               182
Comprehensive income
    Net income                                                  --             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                                   228            32,105
Purchase of 125,864 shares of treasury stock                    --            (3,000)
ESOP shares earned                                              --               460
Reclassification due to changes in fair value
  of common stock in ESOP subject to contingent
  repurchase obligation                                         --              (438)
Stock awards earned                                             --               266
Comprehensive income
    Net income                                                  --             1,580
    Change in unrealized gain (loss) on securities
      available for sale, net of taxes                        (443)             (443)
                                                          --------          --------
       Total comprehensive income                                              1,137
                                                                            --------

Balance at December 31, 2004                                  (215)           30,530
Purchase of 124,950 shares of treasury stock                    --            (2,976)
Allocation of stock awards                                      --                --
ESOP shares earned                                              --               447
Reclassification due to changes in fair value
  of common stock in ESOP subject to contingent
  repurchase obligation                                         --              (298)
Stock awards earned                                             --               253
Stock options exercised                                         --               112
Cash dividend ($0.10 per share)                                 --              (114)
Comprehensive income
    Net income                                                  --             1,097
    Change in unrealized gain (loss) on securities
      available for sale, net of taxes                        (799)             (799)
                                                          --------          --------
       Total comprehensive income                                                298
                                                                            --------

Balance at December 31, 2005                              $ (1,014)         $ 28,252
                                                          ========          ========
</TABLE>

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

          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                                AJS BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2005, 2004, and 2003
                             (Dollars in thousands)

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

<TABLE>
<CAPTION>
                                                         2005        2004        2003
                                                         ----        ----        ----
<S>                                                    <C>         <C>         <C>
Cash flows from operating activities
     Net income                                        $  1,097    $  1,580    $  1,393
     Adjustments to reconcile net income to net cash
       provided by operating activities
         Depreciation                                       298         310         299
         Provision for loan losses                         (130)       (112)        (61)
         Deferred income taxes                              205        (248)        364
         Discount accretion on securities, net               83          89          84
         Stock award compensation expense                   253         266         182
         ESOP compensation expense                          447         460         377
         Federal Home Loan Bank stock dividends            (457)       (847)       (635)
         Dividend reinvestments                          (3,288)       (124)       (106)
         Gain on sale of securities                          --          --         (34)
         Gain on sale of loans                              (27)         --         (53)
         Changes in
              Accrued interest receivable                     9          (2)        328
              Other assets                                 (609)        394         177
              Accrued interest payable                        5          59          (6)
              Other liabilities                             209         (40)         84
                                                       --------    --------    --------
                  Net cash (used in) provided by
                    operating activities                 (1,905)      1,785       2,393

Cash flows from investing activities
     Securities available for sale
         Purchases                                      (20,484)    (35,706)    (22,713)
         Maturities and principal payments               12,627      16,009      26,994
         Proceeds from sales                                 --          --       3,915
     Securities held to maturity
         Purchases                                         (200)         --          --
         Maturities and principal payments                   37          45         183
     Purchase of certificates of deposit                 (1,195)     (9,783)         --
     Maturities of certificates of deposit                2,394          --          --
     Loan originations, net                              11,680      (7,549)    (19,360)
     Proceeds from sale of other real estate                 --          21          --
     Purchase of equipment                                  (79)       (195)       (579)
     Proceeds from the sale of Federal Home Loan
         Bank stock                                       9,500       2,000          --
     Purchase of Federal Home Loan Bank stock                --          --      (8,500)
                                                       --------    --------    --------
         Net cash provided by (used in) investing
           activities                                    14,280     (35,158)    (20,060)
</TABLE>

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

          See accompanying notes to consolidated financial statements.

                                  (Continued)


                                      F-6
<PAGE>

                                AJS BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2005, 2004, and 2003
                             (Dollars in thousands)

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

<TABLE>
<CAPTION>
                                                               2005        2004        2003
                                                               ----        ----        ----
<S>                                                          <C>         <C>         <C>
Cash flows from financing activities
     Dividends paid                                          $   (114)   $     --    $     --
     Net change in deposits                                    (7,649)     14,209      14,839
     Purchases of Federal Home Loan Bank advances               1,000      23,450       3,000
     Maturities of Federal Home Loan Bank advances             (4,500)     (4,200)     (2,000)
     Purchase of common stock                                  (2,976)     (3,000)     (1,459)
     Proceeds from exercise of stock options                      112          --          --
     Net change in advance payments by borrowers
       for taxes and insurance                                    (49)        144         192
                                                             --------    --------    --------
         Net cash provided by (used in) financing
           activities                                         (14,176)     30,603      14,572
                                                             --------    --------    --------

Net change in cash and cash equivalents                        (1,801)     (2,770)     (3,095)

Cash and cash equivalents at beginning of year                 17,031      19,801      22,896
                                                             --------    --------    --------

Cash and cash equivalents at end of year                     $ 15,230    $ 17,031    $ 19,801
                                                             ========    ========    ========

Supplemental disclosures of cash flow information
     Cash paid during the year for
         Interest                                            $  6,018    $  5,119    $  5,075
         Income taxes                                           1,069         616         755

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

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

          See accompanying notes to consolidated financial statements.


                                      F-7
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (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 57.2% 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 customers 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, 2005 and 2004
                  (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:  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
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, 2005 and 2004
                  (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 rights
are  not  material  and are  included  with  other  assets  on the  consolidated
statement of financial condition.

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, 2005 and 2004
                  (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 statement
of  financial  condition 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 ESOP shares reduce
retained  earnings;  dividends  on unearned  ESOP shares are used to reduce debt
service.   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 and certain predetermined
dates  according  to the ESOP  plan  document,  the fair  value of the  put-able
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, 2005 and 2004
                  (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.

<TABLE>
<CAPTION>
                                                                2005           2004          2003
                                                                ----           ----          ----
<S>                                                          <C>           <C>           <C>
     Net income as reported                                  $    1,097    $    1,580    $    1,393
     Deduct:  Stock-based compensation
       expense determined under fair value based method             (24)          (24)          (25)
                                                             ----------    ----------    ----------

         Pro forma net income                                $    1,073    $    1,556    $    1,368
                                                             ==========    ==========    ==========

     Basic earnings per share as reported                    $     .51     $      .70    $      .60
     Pro forma basic earnings per share                            .50            .69           .59

     Diluted earnings per share as reported                        .50            .69           .60
     Pro forma diluted earnings per share                          .49            .68           .59
</TABLE>

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 since 2003.

                                                                 2003
                                                                 ----

     Risk-free interest rate                                     2.37%
     Expected option life                                        5.0 years
     Expected stock price volatility                            15.03%
     Dividend yield                                              0.0%

Effect of Newly  Issued But Not Yet  Effective  Accounting  Standards:  FAS 123,
Revised,  requires  companies  to record  compensation  cost for  stock  options
provided to employees in return for employment service.  The cost is measured at
the fair value of the options when  granted,  and this cost is expensed over the
employment service period,  which is normally the vesting period of the options.
This will apply to awards granted beginning in 2006. Compensation cost will also
be recorded  for prior option  grants that vest after the date of adoption.  The
effect on results of operations will depend on the level of future option grants
and the calculation of fair value of the options granted at such future date, as
well as the vesting periods provided, and so

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

                                  (Continued)


                                      F-12
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

cannot  currently be predicted.  Existing  options that will vest after adoption
date are expected to result in additional  compensation expense of approximately
$24 in 2006 and $25 in 2007.

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  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.

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:

<TABLE>
<CAPTION>
                                                          Gross           Gross
                                           Fair        Unrealized      Unrealized
                                           Value          Gains          Losses
                                           -----          -----          ------
<S>                                     <C>            <C>            <C>
     December 31, 2005
     -----------------
         U.S. governmental agencies     $    26,580    $         1    $      (410)
         Mortgage-backed                     36,130             36         (1,159)
         Mutual fund                          8,473             --           (183)
         Equity investment                       56             55             --
                                        -----------    -----------    -----------

              Total                     $    71,239    $        92    $    (1,752)
                                        ===========    ===========    ===========

     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)
                                        ===========    ===========    ===========
</TABLE>

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

                                  (Continued)


                                      F-13
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 2 - SECURITIES (Continued)

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

<TABLE>
<CAPTION>
                                                        Gross             Gross
                                     Amortized      Unrecognized      Unrecognized         Fair
                                       Cost             Gains            Losses            Value
                                       ----             -----            ------            -----
<S>                                <C>              <C>               <C>              <C>
     December 31, 2005
     -----------------
         Mortgage-backed           $        95      $        --       $        --      $        95
         State and Municipal               200               --                --              200
                                   -----------      -----------       -----------      -----------

                                   $       295      $        --       $        --      $       295
                                   ===========      ===========       ===========      ===========

     December 31, 2004
     -----------------
         Mortgage-backed           $       132      $         2       $        --      $       134
                                   ===========      ===========       ===========      ===========
</TABLE>

Contractual  maturities  of  securities  at  December  31, 2005 were as follows.
Securities  not  due  at  a  single  maturity  date,  including  mortgage-backed
securities and mutual funds, are shown separately.

<TABLE>
<CAPTION>
                                                    Available                   Held to
                                                    for Sale                   Maturity
                                                      Fair           Amortized           Fair
                                                      Value            Cost              Value
                                                      -----            ----              -----
<S>                                               <C>               <C>              <C>
     Due in one year or less                      $    12,910       $       200      $       200
     Due after one year through five years             13,670                --               --
     Due after five years                                  --                --               --
     Mortgage-backed securities                        36,130                95               95
     Mutual fund                                        8,473                --               --
     Equity investment                                     56                --               --
                                                  -----------       -----------      -----------

                                                  $    71,239       $       295      $       295
                                                  ===========       ===========      ===========
</TABLE>

Securities with a carrying value of approximately $9,879 and $11,036 at December
31, 2005 and 2004 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 $3,915 during 2003.
Gross gains of $34 were realized on those sales.  No sales were recorded  during
2005 or 2004.

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

                                  (Continued)


                                      F-14
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 2 - SECURITIES (Continued)

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
                                Value          Loss            Value        Loss           Value        Loss
                                -----          ----            -----        ----           -----        ----
2005
----
<S>                          <C>            <C>             <C>          <C>            <C>          <C>
U.S. government agencies     $  12,821      $    (165)      $  12,757    $    (245)     $  25,578    $    (410)
Mortgage-backed                 11,575           (251)         23,523         (908)        35,098       (1,159)
Mutual fund                      3,191            (41)          5,226         (142)         8,417         (183)
                             ---------      ---------       ---------    ---------      ---------    ---------

    Total temporarily
      impaired               $  27,587      $    (457)      $  41,506    $  (1,295)     $  69,093    $  (1,752)
                             =========      =========       =========    =========      =========    =========

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)
                             =========      =========       =========    =========      =========    =========
</TABLE>

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 Fannie Mae or Freddie Mac 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:

<TABLE>
<CAPTION>
                                                                 2005            2004
                                                                 ----            ----
<S>                                                          <C>             <C>
     Mortgage loans:
         Secured by one-to-four-family residences            $    101,325    $    115,598
         Multi-family and other loans secured by other
           properties                                              38,317          32,713
         Home equity loans                                         13,279          16,126
     Consumer and other loans                                         502             649
                                                             ------------    ------------
                                                                  153,423         165,086
     Allowance for loan losses                                     (1,701)         (1,847)
     Deferred loan (fees) costs and other                              46              52
                                                             ------------    ------------

         Loans, net                                          $    151,768    $    163,291
                                                             ============    ============
</TABLE>

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

                                  (Continued)


                                      F-15
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 3 - LOANS (Continued)

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 $7,755 and $12,538 at December 31, 2005 and 2004.

Changes in the allowance for loan losses follow:

<TABLE>
<CAPTION>
                                                               2005           2004          2003
                                                               ----           ----          ----
<S>                                                         <C>           <C>           <C>
     Beginning balance                                      $    1,847    $    1,962    $    2,082
     Provision for loan losses                                    (130)         (112)          (61)
     Charge-offs                                                   (71)         (115)         (120)
     Recoveries                                                     55           112            61
                                                            ----------    ----------    ----------

         Ending balance                                     $    1,701    $    1,847    $    1,962
                                                            ==========    ==========    ==========
</TABLE>

Impaired loans were as follows:

<TABLE>
<CAPTION>
                                                                2005          2004           2003
                                                                ----          ----           ----
<S>                                                          <C>           <C>           <C>
     Impaired loans with no allocated allowance
       for loan losses                                       $       98    $       70    $      164
                                                             ==========    ==========    ==========

     Average of impaired loans during the year                      161           216           281
     Interest income recognized during impairment                     7            28            24
     Cash-basis interest income recognized                            7            28            20
</TABLE>

Nonperforming loans were as follows:

<TABLE>
<CAPTION>
                                                               2005           2004          2003
                                                               ----           ----          ----
<S>                                                          <C>           <C>           <C>
     Nonaccrual loans                                        $      394    $      983    $   1,136
     Loans past due over 90 days still on accrual                    --            --           --
</TABLE>

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.

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

                                  (Continued)


                                      F-16
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 3 - LOANS (Continued)

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:

<TABLE>
<CAPTION>
                                                     2005          2004          2003
                                                     ----          ----          ----
<S>                                               <C>           <C>           <C>
     Beginning balance                            $    1,563    $    1,735    $   1,313
     New loans                                           583           410        2,170
     Effect of changes in related parties                 --          (128)         124
     Repayments                                         (594)         (454)      (1,872)
                                                  ----------    ----------    ---------

         Ending balance                           $    1,552    $    1,563    $   1,735
                                                  ==========    ==========    =========
</TABLE>

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

                                                     2005           2004
                                                     ----           ----
     Mortgage loan portfolios serviced for:
         Fannie Mae                               $     5,736    $     5,319
         Freddie Mac                                       95            114
                                                  -----------    -----------

     Balance, end of year                         $     5,831    $     5,433
                                                  ===========    ===========

The carrying  value of mortgage  servicing  rights is $20 and $0 at December 31,
2005 and 2004.  Custodial  escrow  balances  maintained in  connection  with the
foregoing loan servicing were  approximately  $310 and $309 at December 31, 2005
and 2004.

NOTE 4 - PREMISES AND EQUIPMENT

Premises and equipment consist of:

                                                           2005         2004
                                                           ----         ----

     Land                                              $    1,351    $    1,351
     Office buildings and improvements                      5,233         5,227
     Furniture, fixtures, and equipment                     1,700         1,713
                                                       ----------    ----------
                                                            8,284         8,291
     Less accumulated depreciation                          3,743         3,531
                                                       ----------    ----------

                                                       $    4,541    $    4,760
                                                       ==========    ==========

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

                                  (Continued)


                                      F-17
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 5 - DEPOSITS

Certificates  of deposit in  denominations  of  $100,000  or more were  $29,699,
$30,389,  and $24,600 at December 31, 2005,  2004, and 2003.  Deposit amounts in
excess of $100,000 are not federally insured.

Deposit accounts are summarized as follows:
                                                     2005            2004
                                                     ----            ----

         Passbook accounts                      $     46,854     $     50,651
         NOW and checking accounts                    22,220           23,784
         Money market accounts                         8,446           10,575
         Certificates of deposit                     112,887          113,046
                                                ------------     ------------

              Total deposits                    $    190,407     $    198,056
                                                ============     ============

Scheduled maturities of time certificates are as follows:

           Year                              December 31, 2005
           ----                              -----------------

           2006                                  $  57,272
           2007                                     32,675
           2008                                     10,639
           2009                                      4,758
           2010                                      7,543
                                                 ---------

                                                 $ 112,887
                                                 =========

Interest expense on deposits is summarized as follows:

                                        2005           2004         2003
                                        ----           ----         ----

     NOW                             $       77    $       58    $       66
     Money market                           170            80            75
     Passbook                               621           407           518
     Certificates of deposit              3,738         3,501         3,551
                                     ----------    ----------    ----------

                                     $    4,606    $    4,046    $    4,210
                                     ==========    ==========    ==========

Non-interest-bearing  deposits  (NOW  accounts)  totaled  $11,808 and $12,708 at
December 31, 2005 and 2004.  Deposit  accounts  held by directors  and executive
officers totaled $852 and $1,287 at December 31, 2005 and 2004.

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

                                  (Continued)


                                      F-18
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 6 - FEDERAL HOME LOAN BANK ADVANCES

Advances from the Federal Home Loan Bank consist of:

                                      Fixed
    Maturity Date                      Rate         2005           2004
    -------------                      ----         ----           ----

    January 24, 2005                   1.55%     $       --     $       500
    January 27, 2005                   2.12              --             500
    March 23, 2005                     1.47              --             500
    May 6, 2005                        6.10              --           2,000
    July 22, 2005                      3.56              --             500
    November 14, 2005                  2.90              --             500
    January 23, 2006                   2.02             500             500
    January 27, 2006                   2.71             500             500
    March 23, 2006                     1.93             500             500
    April 26, 2006                     2.61           1,000           1,000
    May 8, 2006                        2.91             500             500
    July 24, 2006                      3.69             500             500
    November 13, 2006                  3.43             500             500
    January 23, 2007                   2.69             500             500
    January 29, 2007                   3.26             400             400
    March 23, 2007                     2.53             500             500
    April 26, 2007                     3.35           1,000           1,000
    May 7, 2007                        3.57           1,000           1,000
    July 23, 2007                      4.06             500             500
    November 13, 2007                  3.74             500             500
    November 27, 2007                  5.28           1,000           1,000
    January 23, 2008                   3.21             500             500
    January 28, 2008                   3.68             400             400
    March 24, 2008                     2.96             625             625
    April 28, 2008                     3.84           1,000           1,000
    May 7, 2008                        4.08           1,000           1,000
    June 18, 2008                      4.33           1,000           1,000
    July 22, 2008                      4.41             500             500
    November 13, 2008                  4.16             500             500
    November 17, 2008                  3.64             400             400
    November 27, 2008                  5.48           1,000           1,000
    March 20, 2009                     5.63           3,000           3,000
    March 23, 2009                     3.35             625             625
    June 17, 2009                      4.40           1,000           1,000
    June 22, 2009                      4.67           1,000           1,000

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

                                  (Continued)


                                      F-19
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 6 - FEDERAL HOME LOAN BANK ADVANCES (Continued)

                                Fixed
     Maturity Date               Rate         2005           2004
     -------------               ----         ----           ----

     June 25, 2009               4.61%     $    1,000     $     1,000
     July 1, 2009                4.54           1,000           1,000
     August 10, 2009             3.88             650             650
     September 16, 2009          3.68             600             600
     September 28, 2009          3.79           2,000           2,000
     March 23, 2010              3.71             250             250
     July 2, 2010                4.69           1,000           1,000
     October 25, 2010            4.16           1,000           1,000
     July 7, 2011                4.61             800             800
     October 26, 2011            4.02             400             400
     November 17, 2011           4.31           1,100           1,100
     January 10, 2012            4.36           1,000              --
                                           ----------     -----------

                                           $   32,750     $    36,250
                                           ==========     ===========

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  equivalent  to the unpaid
interest cash flows at rates effective at the time of the prepayment.

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

             2006                                       $  4,000
             2007                                          5,400
             2008                                          6,925
             2009                                         10,875
             2010                                          2,250
             2011 and thereafter                           3,300
                                                        --------

                                                        $ 32,750
                                                        ========

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

                                  (Continued)


                                      F-20
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 7 - INCOME TAXES

Income tax expense was as follows:

                                        2005            2004           2003
                                        ----            ----           ----
     Current
         Federal                     $       971    $       483    $       374
         State                               126             52             43
     Deferred                               (403)           298            365
                                     -----------    -----------    -----------

         Total                       $       694    $       833    $       782
                                     ===========    ===========    ===========

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

<TABLE>
<CAPTION>
                                                    2005            2004           2003
                                                    ----            ----           ----

<S>                                              <C>            <C>            <C>
     Income tax at federal statutory rate        $       609    $       820    $       740
     Effect of
         State taxes, net of federal benefit              50             73             52
         Other, net                                       35            (60)           (10)
                                                 -----------    -----------    -----------

     Total                                       $       694    $       833    $       782
                                                 ===========    ===========    ===========

     Effective tax rate                                38.7%           34.5%          35.9%
                                                 ==========     ===========    ===========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                    2005         2004
                                                                    ----         ----
<S>                                                             <C>           <C>
     Deferred tax assets
         Allowance for loan losses                              $      695    $      763
         Accrued expenses                                              729           696
         Unrealized loss on securities available for sale              644           138
         Other                                                          34            24
                                                                ----------    ----------
                                                                     2,102         1,621
     Deferred tax liabilities
         Premises and equipment                                       (321)         (340)
         Federal Home Loan Bank stock dividends                       (259)         (650)
         Deferred loan fees                                           (121)         (139)
                                                                ----------    ----------
                                                                      (701)       (1,129)
                                                                ----------    ----------

     Net deferred tax asset                                     $    1,401    $      492
                                                                ==========    ==========
</TABLE>


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

                                  (Continued)


                                      F-21
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (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 $921 at
December 31, 2005. 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, 2005, 2004 and 2003.

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  $1,877 and $1,793 at
December 31, 2005 and 2004.  Expense  related to the plans totaled $97, $94, and
$104 for the years ended December 31, 2005, 2004, and 2003.

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
was secured by shares  purchased  with the loan  proceeds  and was repaid by the
ESOP with funds from the Company's  discretionary  contributions to the ESOP and
earnings on the ESOP's assets. Principal payments were scheduled to occur over a
ten-year  period;  however,  the  Company  elected  to prepay the loan and as of
December 31, 2005, the loan is paid in full. There are no plans to adopt another
Employee Stock Option Plan at this time.

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-22
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 9 - EMPLOYEE STOCK OWNERSHIP PLAN (Continued)

During 2005, 2004, and 2003,  approximately 18,870 shares per year of stock with
an average fair value of $23.65,  $24.38, and $19.98 per share were committed to
be released,  resulting in ESOP  compensation  expense of $447,  $460, and $377.
Shares held by the ESOP at December 31 are as follows:

                                                               2005      2004
                                                               ----      ----

      Allocated shares                                        86,152    70,092
      Shares distributed from plan                             8,200     5,390
      Unallocated shares                                          --    18,870
                                                             -------   -------

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

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

      Fair value of allocated shares subject to repurchase
        obligation                                           $ 1,981   $ 1,684
                                                             =======   =======

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.  There are a total of 6,256 options  available for future grant under the
stock option plan.

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

                                  (Continued)



                                      F-23
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 10 - EMPLOYEE STOCK BENEFITS

A summary of the activity in the plan for 2005 is as follows:

<TABLE>
<CAPTION>
                                                 2005                    2004
                                                 ----                    ----
                                                     Weighted                Weighted
                                                      Average                 Average
                                                     Exercise                Exercise
                                          Shares       Price      Shares       Price
                                          ------       -----      ------       -----
<S>                                        <C>       <C>           <C>       <C>
      Outstanding at beginning of year     112,685   $   18.75     114,685   $   18.75
      Granted                                   --          --          --          --
      Exercised                              6,000       18.75          --          --
      Forfeited                              1,000       18.75       2,000       18.75
                                         ---------   ---------   ---------   ---------

      Outstanding at end of year           105,685       18.75     112,685   $   18.75
                                         =========   =========   =========   =========

      Options exercisable at year end       42,274                  27,337
</TABLE>

At December 31,  2005,  105,685  options  outstanding  had an exercise  price of
$18.75 with a weighted average remaining life of 7.4 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:


                                                          2005       2004
                                                          ----       ----

      RRP remaining to be vested at beginning of year    42,936     56,171
      Granted                                               100         --
      Vested                                            (10,634)   (13,235)
      Forfeited                                            (400)        --
                                                        -------    -------

      RRP remaining to be vested at end of year          32,002     42,936
                                                        =======    =======

Compensation expense for restricted stock awards totaled $198, $242 and $182 for
the years ended December 31, 2005, 2004 and 2003.

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

                                  (Continued)


                                      F-24
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (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, 2005                 December 31, 2004
                                                          -----------------                 -----------------
                                                        Carrying       Fair              Carrying       Fair
                                                         Amount        Value              Amount        Value
                                                         ------        -----              ------        -----
<S>                                                   <C>          <C>                  <C>          <C>
    Financial assets
       Cash and cash equivalents                      $   15,230   $   15,230           $   17,031   $   17,031
       Certificates of deposit                             8,584        8,584                9,783        9,783
       Securities available for sale                      71,239       71,239               61,483       61,483
       Securities held to maturity                           295          295                  132          134
       Loans, net                                        151,768      150,458              163,291      164,169
       Federal Home Loan Bank stock                        3,416        3,416               12,459       12,459
       Accrued interest receivable                           960          960                  969          969

    Financial liabilities
       Deposits                                         (190,407)    (190,341)            (198,056)    (199,221)
       Advances from Federal Home
         Loan Bank                                       (32,750)     (32,258)             (36,250)     (36,402)
       Advances from borrowers for taxes
         and insurance                                    (1,746)      (1,746)              (1,795)      (1,795)
       Accrued interest payable                             (148)        (148)                (143)        (143)
</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-25
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (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, 2005
-----------------------
   Total capital to risk-weighted assets    $  30,333     23.1%      $ 10,483       8.0%       $  13,104    10.0%
   Tier I (core) capital to risk-
     weighted assets                           28,695     21.9          5,241       4.0%           7,862     6.0
   Tier I (core) capital to
     adjusted total assets                     28,695     11.1         10,379       4.0%          12,974     5.0

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
</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-26
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 12 - REGULATORY CAPITAL (Continued)

As of December 31, 2005, 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 has  obtained OTS approval to dividend up to $1.5 million to
the holding company by August 11, 2006.

During  2005,  the  Company  paid a cash  dividend  of $0.10 per share.  The OTS
approved a waiver of dividends on the shares held by the mutual holding company.
The amount of  dividends  waived,  totaling  $98, is a  restriction  on retained
earnings of the Company.

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>
                                                                      2005         2004
                                                                      ----         ----
<S>                                                                <C>          <C>
      Basic
          Net income                                               $    1,097   $    1,580
                                                                   ==========   ==========

               Weighted average common shares outstanding           2,168,196    2,276,918
               Less:  average unallocated ESOP shares                   9,435       28,305
                                                                   ----------   ----------

          Average shares                                            2,158,761    2,248,613
                                                                   ==========   ==========

          Basic earnings per common share                          $      .51   $      .70
                                                                   ==========   ==========

      Diluted
          Net income                                               $    1,097   $    1,580
                                                                   ==========   ==========

               Weighted average common shares
                 outstanding for basic earnings per common share    2,158,761    2,248,613
               Add:  dilutive effects of assumed exercises of
                 stock options and stock awards                        24,989       30,587
                                                                   ----------   ----------

               Average shares and dilutive potential
                 common shares                                      2,183,750    2,279,200
                                                                   ==========   ==========

      Diluted earnings per common share                            $      .50   $      .69
                                                                   ==========   ==========
</TABLE>

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

                                  (Continued)


                                      F-27
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (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:

<TABLE>
<CAPTION>
                                             2005                        2004
                                             ----                        ----

                                      Fixed       Variable        Fixed       Variable
                                      Rate          Rate          Rate          Rate
                                      ----          ----          ----          ----
<S>                                <C>           <C>           <C>           <C>
      Commitments to make loans    $     2,438   $       907   $     5,222   $     1,247
      Unused lines of credit and
        letters of credit                   --        14,725            --        13,412
</TABLE>

Commitments  to make loans are  generally  made for periods of 120 days or less.
The fixed rate loan commitments have interest rates ranging from 4.875% to 8.10%
and the commitments are to extend credit ranging from 1 year to 30 years.

The Bank has previously  sold fixed rate mortgages to Fannie Mae and Freddie Mac
with and without  recourse.  Recourse  obligations on sold loans are recorded at
fair value.

                                           2005                  2004
                                           ----                  ----
                                    Contract   Carrying   Contract  Carrying
                                     Amount      Value     Amount     Value
                                     ------      -----     ------     -----
     Loans sold with recourse         $191       $191       $208       $208

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-28
<PAGE>

                                AJS BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004
                  (Dollars in thousands, except per share data)

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

NOTE 15 - OTHER COMPREHENSIVE INCOME

Other comprehensive income components and related taxes were as follows:

<TABLE>
<CAPTION>
                                                      2005        2004        2003
                                                      ----        ----        ----
<S>                                                 <C>         <C>         <C>
      Unrealized holding gains and losses
        on securities available for sale            $ (1,306)   $   (724)   $ (1,254)
      Less reclassification adjustments for gains
        and losses later recognized in income             --          --         (34)
                                                    --------    --------    --------
          Net unrealized gains and losses             (1,306)       (724)     (1,288)

      Tax effect                                         507         281         500
                                                    --------    --------    --------

          Other comprehensive income                $   (799)   $   (443)   $   (788)
                                                    ========    ========    ========
</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, 2005 and 2004

                                                         2005         2004
                                                         ----         ----
ASSETS
Cash and cash equivalents                              $   2,522    $  3,894
ESOP loan                                                     --         189
Investment in bank subsidiary                             27,680      28,133
                                                       ---------    --------

                                                       $  30,202    $ 32,216
                                                       =========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities                                            $   1,950    $  1,686
Stockholders' equity                                      28,252      30,530
                                                       ---------    --------

                                                       $  30,202    $ 32,216
                                                       =========    ========

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

                                  (Continued)


                                      F-29
<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, 2005, 2004, and 2003

<TABLE>
<CAPTION>

                                                        2005        2004        2003
                                                        ----        ----        ----
<S>                                                   <C>         <C>         <C>
Income
     ESOP loan                                        $     12    $     17    $     23
     Deposits in financial institutions                     68          31          46
     Dividends from subsidiary                           1,500       3,000          --
                                                      --------    --------    --------

                                                         1,580       3,048          69
Other expenses
     Other operating expenses                              162         121         120
                                                      --------    --------    --------

Income before income taxes and equity in
  undistributed earnings                                 1,418       2,927         (51)

Income taxes                                               (32)        (27)        (19)
                                                      --------    --------    --------

Income before equity in undistributed
  earnings of bank subsidiary                            1,450       2,954         (32)

Equity in undistributed earnings of bank subsidiary         --          --       1,425
Dividends in excess of earnings                           (353)     (1,374)         --
                                                      --------    --------    --------

Net income                                            $  1,097    $  1,580    $  1,393
                                                      ========    ========    ========
</TABLE>

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

                                  (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 CASH FLOWS
              For the years ended December 31, 2005, 2004, and 2003

<TABLE>
<CAPTION>
                                                          2005       2004       2003
                                                          ----       ----       ----
<S>                                                      <C>        <C>        <C>
Operating activities
     Net income                                          $ 1,097    $ 1,580    $ 1,393
     Adjustments to reconcile net income to net
       cash provided by (used in) operating activities
     Equity in undistributed earnings of
       bank subsidiary                                       353      1,374     (1,425)
     Change in other assets and liabilities                  (33)        (8)       (10)
                                                         -------    -------    -------
         Net cash provided by (used in)
           operating activities                            1,417      2,946        (42)

Financing activities
     Dividends paid                                         (114)        --         --
     Payment received on loan to ESOP                        189        189        189
     Purchase of common stock                             (2,976)    (3,000)    (1,459)
     Proceeds for exercising stock options                   112         --         --
                                                         -------    -------    -------
         Net cash used in financing activities            (2,789)    (2,811)    (1,270)
                                                         -------    -------    -------

Net change in cash and cash equivalents                   (1,372)       135     (1,312)

Cash and cash equivalents at beginning of year             3,894      3,759      5,071
                                                         -------    -------    -------

Cash and cash equivalents at end of year                 $ 2,522    $ 3,894    $ 3,759
                                                         =======    =======    =======
</TABLE>

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

                                  (Continued)


                                      F-31
<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
                         ------      ------      ------       -------
2005
----
    First quarter       $  3,276     $  1,837    $   371      $   .17
    Second quarter         3,218        1,723        329          .15
    Third quarter          3,237        1,717        253          .12
    Fourth quarter         3,216        1,647        144          .07

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

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


                                      F-32