UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.
20549  FORM  10-K  ý
  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934  For the Fiscal Year Ended December 31, 2001  o
  TRANSITION
  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the Transition Period
from                 
to
                 .  Commission File Number: 1-13605  EFC BANCORP, INC. (Exact name of registrant as specified in its
charter)  Delaware
  36-4193304(State
  or other jurisdiction of incorporation or organization)
  (IRS
  employer identification no.)1695 Larkin Avenue, Elgin, Illinois
  60123(Address
  of principal executive offices)
  (zip
  code)Registrants
  telephone number, including area code: (847)
  741-3900Securities
  registered pursuant to Section 12(b) of the Act: NoneSecurities
  registered pursuant to Section 12(g) of the Act:Common Stock, par value $.01 per share
  The American Stock Exchange(Title
  of Class)
  (Name
  of Exchange on which registered)  Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yesý  No o.  Indicate by check mark if disclosure of delinquent filers in response
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Park III of this Form 10-K
or any amendment to this Form 10-K.o  The aggregate market value of voting stock held by non-affiliates of
the registrant, i.e., persons other than directors and executive officers of
the registrant was $55,900,000 based upon the last sales price on the American
Stock Exchange for March 8, 2002.  The number of shares of Common Stock outstanding as of March 8, 2002 is
4,609,761.  DOCUMENTS INCORPORATED BY REFERENCE  Portions of the Proxy Statement for the 2002 Annual
Meeting of Stockholders are incorporated by reference into Part III of this
Form 10-K. 
  5 
   INDEX  PART I
  
  7Item
  1.
  Business
  7Additional
  Item
  Executive
  Officers of the Registrant
  33Item
  2.
  Properties
  34Item 3.
  Legal Proceedings
  35Item
  4.
  Submission
  of Matters to a Vote of Security Holders
  35PART II
  
  35Item
  5.
  Market
  for the Companys Common Equity and Related Stockholder Matters
  35Item 6.
  Selected Financial
  Data
  35Item
  .7
  Managements
  Discussion and Analysis of Financial Condition and Results of Operations
  35Item
  7A.
  Quantitative
  and Qualitative Disclosures About Market Risk
  45Item
  8.
  Financial
  Statements and Supplementary Data
  45Item
  9.
  Changes
  In and Disagreements With Accountants on Accounting and Financial Disclosures
  46PART III
  
  46Item
  10.
  Directors
  and Executive Officers of the Registrant
  46Item 11.
  Executive Compensation
  46Item
  12.
  Security
  Ownership of Certain Beneficial Owners and Management
  46Item
  13.
  Certain
  Relationships and Related Transactions
  46PART IV
  
  47Item
  14.
  Exhibits,
  Financial Statement Schedules, and Reports on Form 8-K
  47SIGNATURES   6 
   PART I  Item 1.
Business.  General  EFC Bancorp, Inc. (also referred to as the Company or Registrant),
was incorporated under Delaware law in October 1997.  The Registrant was formed to acquire Elgin Financial Savings Bank
and subsidiaries, Elgin, Illinois, (the Bank) as part of the Banks
conversion from a mutual to a stock form of organization (the Conversion).  In connection with the Conversion, the
Company issued an aggregate of 7,491,434 shares of its common stock, par value
$0.01 per share (Common Stock) at a purchase price of $10 per share, of which
6,936,513 shares were issued in a subscription offering and 554,921 shares were
issued to the Elgin Financial Foundation (the Foundation), a charitable
foundation established by the Bank.  The
Company received approval to become a savings and loan holding company and is
subject to regulation by the Office of Thrift Supervision (OTS) and the
Securities and Exchange Commission (SEC). 
The Companys acquisition of the Bank occurred on April 3, 1998.  The Bank is a community-oriented savings institution which was
originally organized in 1924 as a federally-chartered mutual savings and loan
association.  The Bank reorganized in
the 1980s to become Elgin Federal Financial Center, a federally-chartered
mutual savings association, and again in 1996 to become Elgin Financial Center,
S.B., an Illinois state-chartered mutual savings bank.  In 1998, the Bank changed its name to Elgin
Financial Savings Bank.  The Banks
principal business consists of the acceptance of retail deposits from the
general public in the areas surrounding its full-service branch offices and the
investment of those deposits, together with funds generated from operations and
borrowings, primarily in one- to four-family residential mortgage loans and, to
a lesser extent, multi-family and commercial real estate loans,  construction and land loans, commercial
business loans, home equity loans, and automobile and passbook savings
loans.  The Bank generally originates
all of its loans for investment.  The
Bank also invests primarily in government insured or guaranteed
mortgage-backed  securities and U.S.
Government obligations.  The Banks
revenues are derived principally from the interest on its mortgage, consumer
and commercial business loans and securities and from servicing fees.  The Banks primary sources of funds are
retail savings deposits and, to a lesser extent, advances from the Federal Home
Loan Bank of Chicago (the FHLB-Chicago).  Market Area  Headquartered in largely suburban Kane County, Illinois, the Bank has
been, and intends to continue to be, a communityoriented financial institution
offering a variety of financial services to meet the needs of the communities
it serves.  The Bank currently operates
four full-service banking facilities in Elgin and three full service facilities
located in West Dundee, East Dundee and Huntley, Illinois.  The Banks primary lending and deposit
gathering area is concentrated around the areas where its full-service banking
facilities are located which the Bank generally considers to be its primary
market area.  Elgin is located on U.S. Interstate 90 (the Northwest tollway) in the
Fox River Valley approximately 38 miles northwest of downtown Chicago and 25
miles west of OHare International Airport. 
Interstate 90 provides easy access to the City of Chicago and is a major
corridor of suburban growth for Chicago. 
As the Chicago suburbs have expanded into Kane County, western Cook
County and southern McHenry County, Elgin has experienced a positive influx of
new residents and employers.  The
economy in the Banks primary market area has also historically benefitted from
the presence of well-known companies such as First USA; Panasonic; Sears; Elgin
Sweeper; Illinois Tool Works and Ameritech Corp.  Other employment and economic activity is provided by a variety
of wholesale and retail trade, hospitals and a riverboat gambling facility
located on the Fox River in Elgin.  Competition  The Bank faces significant competition both in making loans and in
attracting deposits.  The State of
Illinois has a high density of financial institutions, many of which are branches
of significantly larger institutions which have greater financial resources
than the Bank, all of which are competitors of the Bank to varying
degrees.  The Banks competition for
loans comes principally from savings banks, savings and loan associations,
commercial banks, mortgage banking companies, credit unions, insurance
companies and other financial service companies.  Its most direct competition for deposits has historically come
from savings and loan associations, savings banks, commercial banks and credit
unions.  The Bank faces additional
competition for deposits from non-depository competitors such as the mutual
fund industry, securities and brokerage firms and insurance  7 
   companies.  Competition may also
increase as a result of the lifting of restrictions on the interstate
operations of financial institutions. 
There are approximately 15 financial institutions with operations in
Elgin and approximately 30 financial institutions with operations in the Banks
primary market area.  Lending Activities  Loan Portfolio Composition.The types of
loans that the Bank may originate are subject to federal and state laws and
regulations.  Interest rates charged by
the Bank on loans are affected principally by the demand for such loans, the
supply of money available for lending purposes and the rates offered by its
competitors.  These factors are, in
turn, affected by general and economic conditions, monetary policies of the
federal government, including the Federal Reserve Board (FRB), legislative
tax policies and governmental budgetary matters.  The Banks loan portfolio primarily consists of first mortgage loans
secured by one- to four-family residences most of which are located in its
primary market area.  At December 31,
2001, the Banks gross loan portfolio totaled $539.6 million, of which $375.5
million were one- to four-family residential mortgage loans, or 69.6% of total
loans.  At such date, the remainder of
the loan portfolio consisted of $58.1 million of multi-family loans, or 10.8%
of total loans; $42.8 million of commercial real estate loans, or 7.9% of total
loans; $16.3 million of construction and land loans, or 3.0% of total loans;
$30.0 million of commercial loans, or 5.6% of total loans; and $17.0 million of
consumer  loans, or 3.1% of total loans,
consisting of $14.7 million of home equity lines of credit, $1.5 million of
secured and unsecured personal loans and $764,000 of automobile loans.  The Bank sold loans totaling $10.3 million during
the year ended December 31, 2001.  There
were no other loan sales during the period 1997 through 2000.  At December 31, 2001, 43.4% of the Banks
mortgage loans had adjustable interest rates, most of which were indexed to the
one year Constant Maturity Treasury (CMT) Index.  8 
   The following table sets forth the composition of the Banks loan
portfolio in dollar amounts and in percentages of the respective portfolios at
the dates indicated.  At December
  31,2001
  
  2000
  
  1999
  
  1998
  
  1997Amount
  
  Percent
  of Total
  
  Amount
  
  Percent
  of Total
  
  Amount
  
  Percent
  of Total
  
  Amount
  
  Percent
  of Total
  
  Amount
  
  Percent
  of Total(Dollars
  in thousands)Mortgage loans:One- to four-family
  
  $
  375,452
  
  69.6
  %
  $
  326,739
  
  70.7
  %
  $
  283,300
  
  71.2
  %
  $
  233,689
  
  75.2
  %
  $
  191,622
  
  77.2
  %Multi-family
  
  58,093
  
  10.8
  
  50,965
  
  11.0
  
  44,843
  
  11.3
  
  27,184
  
  8.7
  
  19,845
  
  8.0Commercial real estate
  
  42,813
  
  7.9
  
  29,729
  
  6.5
  
  30,870
  
  7.8
  
  20,407
  
  6.6
  
  11,257
  
  4.5Construction and land
  
  16,285
  
  3.0
  
  16,025
  
  3.5
  
  13,981
  
  3.5
  
  13,716
  
  4.4
  
  13,793
  
  5.5Total mortgage loans
  
  492,643
  
  91.3
  
  423,458
  
  91.7
  
  372,994
  
  93.8
  
  294,996
  
  94.9
  
  236,517
  
  95.2Other loans:Home equity loans
  
  14,689
  
  2.7
  
  11,972
  
  2.6
  
  10,002
  
  2.5
  
  9,014
  
  2.9
  
  7,520
  
  3.0Commercial
  
  30,046
  
  5.6
  
  25,240
  
  5.5
  
  13,320
  
  3.4
  
  5,606
  
  1.8
  
  3,166
  
  1.3Auto loans
  
  764
  
  .1
  
  615
  
  .1
  
  484
  
  .1
  
  510
  
  .2
  
  585
  
  .3Loans on savings accounts
  
  335
  
  .1
  
  216
  
  
  
  421
  
  .1
  
  477
  
  .2
  
  456
  
  .2Other
  
  1,160
  
  .2
  
  455
  
  .1
  
  556
  
  .1
  
  86
  
  
  
  88
  
  Total other loans
  
  46,994
  
  8.7
  
  38,498
  
  8.3
  
  24,783
  
  6.2
  
  15,693
  
  5.1
  
  11,815
  
  4.8Total loans receivable
  
  539,637
  
  100.0
  %
  461,956
  
  100.0
  %
  397,777
  
  100.0
  %
  310,689
  
  100.0
  %
  248,332
  
  100.0
  %Less:Deferred loan fees
  
  311
  
  
  
  280
  
  
  
  225
  
  
  
  326
  
  
  
  511Allowance for loan losses
  
  2,255
  
  
  
  1,881
  
  
  
  1,545
  
  
  
  1,3
  73
  
  
  
  1,126Loans receivable, net
  
  $
  537,071
  
  
  
  $
  459,795
  
  
  
  $
  396,007
  
  
  
  $
  308,990
  
  
  
  $
  246,695  9 
   Loan Originations.The Banks
mortgage lending activities are conducted by its loan personnel operating at
its seven branch offices as well as through participation and loan acquisition
programs.  All loans originated by the
Bank are underwritten by the Bank pursuant to the Banks policies and
procedures.  The Bank originates both
adjustable-rate and fixed-rate mortgage loans, commercial loans and consumer
loans.  The Banks ability to originate
fixed- or adjustable-rate loans is dependent upon the relative customer demand
for such loans, which is affected by the current and expected future level of
interest rates.  It is the general
policy of the Bank to retain loans originated in its portfolio.  During
the years ended December 31, 2001 and 2000, the Bank originated $90.8 million
and $21.3 million of fixed-rate one- to four-family residential mortgage loans,
respectively, and for the years ended December 31, 2001 and 2000, the Bank
originated $16.6 million and $24.4 million of adjustable-rate one- to
four-family residential mortgage loans, respectively, all of which were
retained by the Bank.  Based upon the
Banks investment needs and market opportunities, the Bank participates and
purchases  loans, consisting primarily
of one-to-four family and multi-family real estate mortgage loans, secured by
property located in Illinois, southern Wisconsin and, to a lesser extent, in
Minnesota, and had $107.9 million of purchased loan participation interests at
December 31, 2001.  See Multi-Family
and Commercial Real Estate Lending.  The
following tables set forth the Banks loan originations, purchases and
principal repayments for the periods indicated.  All loans originated by the Bank are generally held for
investment.  For theYear Ended December 31,2001
  
  2000
  
  1999(In thousands)Gross loans (1):Balance outstanding at beginning of period
  
  $
  461,956
  
  $
  397,777
  
  $
  310,689Loans originated (2):One-to four-family residential
  
  107,360
  
  45,721
  
  81,712Multi-family
  
  6,792
  
  2,330
  
  938Commercial real estate
  
  14,932
  
  740
  
  8,027Construction and land
  
  30,821
  
  16,486
  
  10,430Home equity
  
  13,231
  
  8,379
  
  6,582Commercial business
  
  28,932
  
  19,502
  
  12,657Auto loans
  
  549
  
  484
  
  402Loans on savings accounts
  
  423
  
  396
  
  371Other
  
  3,545
  
  728
  
  725Total loans originated
  
  206,585
  
  94,766
  
  121,844Loans purchased
  
  65,161
  
  46,690
  
  38,996Total loans originated and purchased
  
  271,746
  
  141,456
  
  160,840Less:Principal repayments
  
  (189,972
  )
  (73,882
  )
  (76,629
  )Loans sold
  
  (10,349
  )
  
  
  Transfers to real estate owned
  
  
  
  (540
  )
  (168
  )Change in loans in process
  
  6,256
  
  (2,855
  )
  3,045Total loans receivable at end of period
  
  $
  539,637
  
  $
  461,956
  
  $
  397,777  
 (1)   Gross loans exclude unearned
discounts, deferred loan fees and the allowance for loan losses. (2)   Amounts for each period
include loans in process at period end.  10 
   Loan Maturity and Repricing.  The
following table shows the contractual maturity of the Banks loan portfolio at
December 31, 2001.  The table does not
include prepayments or scheduled principal amortization.  Prepayments and scheduled principal amortization
on mortgage loans totaled $190.0 million, $73.9 million and $76.6 million
for the years ended December 31, 2001, 2000 and 1999, respectively.  At December 31, 2001One- toFour-Family
  
  Multi-Family
  
  CommercialReal Estate
  
  Constructionand Land
  
  HomeEquity
  
  CommercialBusiness
  
  AutoLoans
  
  Loans onSavingsAccounts
  
  Other
  
  TotalLoansReceivable(In thousands)Amounts due:Within one year
  
  $
  226
  
  $
  3,578
  
  $
  5,189
  
  $
  5,993
  
  $
  458
  
  $
  15,014
  
  $
  44
  
  $
  134
  
  $
  516
  
  $
  31,152After one year:More than one
  year tothree years
  
  590
  
  622
  
  5,136
  
  8,011
  
  888
  
  3,483
  
  400
  
  165
  
  191
  
  19,486More than three
  years tofive years
  
  2,727
  
  15,751
  
  7,228
  
  1,021
  
  2,548
  
  8,485
  
  301
  
  
  
  149
  
  38,210More than five
  years to 10years
  
  15,166
  
  21,403
  
  11,290
  
  450
  
  3,166
  
  2,144
  
  19
  
  36
  
  20
  
  53,694More than 10
  years to 20  years
  
  77,855
  
  5,190
  
  8,979
  
  810
  
  7,629
  
  682
  
  
  
  
  
  284
  
  101,429More than 20
  years
  
  278,888
  
  11,549
  
  4,991
  
  
  
  
  
  238
  
  
  
  
  
  
  
  295,666Total due afterDecember 31, 2001
  
  375,226
  
  54,515
  
  37,624
  
  10,292
  
  14,231
  
  15,032
  
  720
  
  201
  
  644
  
  508,485Total amount due
  (gross)
  
  $
  375,452
  
  $
  58,093
  
  $
  42,813
  
  $
  16,285
  
  $
  14,689
  
  $
  30,046
  
  $
  764
  
  $
  335
  
  $
  1,160
  
  539,637Less:Deferred loan
  fees, net
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  311Allowance for
  loan losses
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  2,255Total loans, net
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  $
  537,071  The
following table sets forth at December 31, 2001, the dollar amount of gross
loans receivable contractually due after December 31, 2002, and whether such
loans have fixed interest rates or adjustable interest rates.  Due After December 31, 2002Fixed
  
  Adjustable
  
  Total((In thousands)Mortgage loans:One- to four-family
  
  $
  232,234
  
  $
  142,992
  
  $
  375,226Multi-family
  
  3,208
  
  51,307
  
  54,515Commercial real estate
  
  10,083
  
  27,541
  
  37,624Construction and land
  
  9,230
  
  1,062
  
  10,292Total mortgage loans
  
  254,755
  
  222,902
  
  477,657Home equity
  
  20
  
  14,211
  
  14,231Commercial
  
  14,414
  
  618
  
  15,032Auto loans
  
  713
  
  7
  
  720Loans on savings accounts
  
  201
  
  
  
  201Other
  
  644
  
  
  
  644Total loans
  
  $
  270,747
  
  $
  237,738
  
  $
  508,485  One- to Four-Family Lending.The Bank currently offers both fixed-rate and
adjustable-rate mortgage (ARM) loans with maturities up to 30 years secured
by one- to four-family residences substantially all of which are located in the
Banks primary market area. One- to four-family mortgage loan originations are
generally obtained from the Banks in-house loan representatives, from existing
or past customers, through advertising, and through referrals from local
builders, real estate brokers and attorneys. 
At December 31, 2001, the Banks one- to four-family mortgage loans
totaled $375.5 million, or 69.6%, of total loans.  Of the one- to four-family mortgage loans outstanding at that
date, 61.8% were fixed-rate mortgage loans and 38.2% were  11 
   ARM loans.  The Bank currently offers fixed-rate mortgage loans with terms from 10
to 30 years.  These loans have generally
been priced at current market rates for such loans.  The Bank currently offers a number of ARM loans with terms of up
to 30 years and interest rates which adjust every one, two or three years from
the outset of the loan or which adjust annually after a three, five or
seven  year initial fixed period.  The interest rates for the Banks ARM loans
are indexed to the one year CMT Index. 
The Bank originates ARM loans with initially discounted rates, often
known as teaser rates.  The Banks ARM
loans generally provide for periodic (not more than 2%) and overall (not more
than 6%) caps on the increase or decrease in the interest rate at any
adjustment date and over the life of the loan. 
However, interest rates on the Banks residential ARM loans may never
adjust to be less than the initial rate of interest charged on any such loan.  The origination of adjustable-rate residential mortgage loans, as
opposed to fixed-rate residential mortgage loans, helps reduce the Banks
exposure to increases in interest rates. 
However, adjustable-rate loans generally pose credit risks not inherent
in fixed-rate loans, primarily because as interest rates rise, the underlying
payments of the borrower rise, thereby increasing the potential for
default.  Periodic and lifetime caps on
interest rate increases help to reduce the risks associated with adjustable-rate
loans but also limit the interest rate sensitivity of such loans.  The Bank has also purchased one-to-four family first mortgage
loans.  As of December 31, 2001, the
Bank had $57.5 million of these loans.  Multi-Family and Commercial Real
Estate Lending.The Bank originates multi-family and
commercial real estate loans that are generally secured by five or more unit
apartment buildings and properties used for business purposes such as small
office buildings or retail facilities located in the Banks primary market
area.  The Banks multi-family and
commercial real estate underwriting policies provide that such real estate
loans may be made in amounts up to 80% of the appraised value of the property,
subject to the Banks current loans-to-one-borrower limit, which at December
31, 2001 was $13.3 million.  The Banks
multi-family and commercial real estate loans may be made with terms up to 25
years and are offered with interest rates that adjust periodically.  In reaching its decision on whether to make
a multi-family or commercial real estate loan, the Bank considers the net
operating income of the property, the borrowers expertise, credit history and
profitability and the value of the underlying property.  The Bank has generally required that the
properties securing these real estate loans have debt service coverage ratios
(the ratio of earnings before debt service to debt service) of at least
1.20x.  Environmental impact surveys are
generally required for all commercial real estate loans.  Generally, all multi-family and commercial
real estate loans made to corporations, partnerships and other business
entities require personal guarantees by the principals.  On an exception basis, the Bank may not
require a personal guarantee on such loans depending on the creditworthiness of
the borrower and the amount of the downpayment and other mitigating
circumstances.  The Banks multi-family
real estate loan portfolio at December 31, 2001 was $58.1 million, or 10.8% of
total loans, and the Banks commercial real estate loan portfolio at such date
was $42.8 million, or 7.9% of total loans. 
The largest multi-family or commercial real estate loan in the Banks
portfolio (excluding loan participation interests) at December 31, 2001 was a
$4.5 million commercial real estate loan secured by a multi-tenant
industrial/office building located in East Dundee, Illinois.  The Bank also purchases up to 90% participation interests in
multi-family loans secured by real estate, most of which is located outside of
the Banks primary market area in southern Wisconsin and Minnesota.  When determining whether to participate in
such loans, the Bank will underwrite its participation interest according to
its own underwriting standards.  The
Bank will generally hedge against participating in problematic loans by
participating in those loans which have been in existence for at least one to
two years and, accordingly, possess an established payment history.  At December 31, 2001, the Bank had
$40.3 million in multi-family real estate loan participation interests, or
69.4% of multi-family loans and 7.5% of total loans.  In addition, the Bank had $10.1 million in commercial real estate
loan participation interests as of the same date.  Loans secured by multi-family and commercial real estate properties
generally involve larger principal amounts and a greater degree of risk than
one- to four-family residential mortgage loans. Because payments on loans
secured by multi-family and commercial real estate properties are often
dependent on successful operation or management of the properties, repayment of
such loans may be subject to adverse conditions in the real estate market or
the economy.  The Bank seeks to minimize
these risks through its underwriting standards.  Construction and Land Lending.The Bank originates fixed-rate construction
loans for the development of residential  12 
   property
primarily located in the Banks market area. 
Construction loans are offered primarily to experienced local developers
operating in the Banks primary market area and, to a lesser extent, to
individuals for the construction of their residence.  The majority of the Banks construction loans are originated
primarily to finance the construction of one- to four-family, owner-occupied
residential real estate and, to a lesser extent, multi-family  real estate properties located in the Banks
primary market area.  Construction loans
are generally offered with terms up to 12 months and may be made in amounts up
to 80% of the appraised value of the property, as improved.  Construction loan proceeds are disbursed
periodically in increments as construction progresses and as inspections by the
Banks lending personnel warrant.  The Bank also originates fixed-rate land loans to local developers for
the purpose of developing the land for sale. 
Such loans are secured by a lien on the property, are limited to 75% of
the appraised value of the secured property and have terms of up to three years.  The principal of the loan is reduced as lots
are sold and released.  The Banks land
loans are generally secured by properties located in its primary market
area.  Generally, if the borrower is a
corporation, partnership or other business entity, personal guarantees by the
principals are required.  The Bank originated $30.8 million, $16.5 million and $10.4 million of
construction and land loans for the years ended December 31, 2001, 2000 and
1999, respectively.  At December 31,
2001, the Banks largest construction or land loan was a performing loan with a
$1.1 million carrying balance secured by land for the development of a
healthcare facility in East Dundee, Illinois. 
At December 31, 2001, the Bank had $16.3 million of construction and
land loans which amounted to 3.0% of the Banks total loans.  Construction and land financing is generally considered to involve a
higher degree of credit risk than long-term financing on improved,
owner-occupied real estate.  Risk of
loss on a construction loan is dependent largely upon the accuracy of the initial
estimate of the propertys value at completion of construction or development
compared to the estimated cost (including interest) of construction and other
assumptions, including the estimated time to sell residential properties.  If the estimate of value proves to be
inaccurate, the Bank may be confronted with a project, when completed, having a
value which is insufficient to assure full repayment.  Commercial BusinessLending.The Bank also originates commercial business
loans in the forms of term loans and lines of credit to small- and medium-sized
businesses operating in the Banks primary market area.  Such loans are generally secured by
equipment, leases, inventory, accounts receivable and marketable securities;
however, the Bank also makes unsecured commercial business loans.  The maximum amount of a commercial business
loan is limited by the Banks loans-to-one-borrower limit which, at December
31, 2001, was $13.3 million.  Depending
on the collateral used to secure the loans, commercial loans are made in
amounts up to 80% of the value of the property securing the loan.  Term loans are generally offered with fixed
rates of interest and terms of up to 10 years. 
All term loans fully amortize during the term of such loan.  Business lines of credit have adjustable
rates of interest and terms of up to one year. 
Business lines of credit adjust on a daily basis and are indexed to the
prime rate as published in The Wall Street
Journal.  The Bank also
issues both secured and unsecured letters of credit to business customers of
the Bank.  Acceptable collateral
includes an assigned deposit account with the Bank, real estate or marketable
securities.  Letters of credit have a
maximum term of 36 months.  In making commercial business loans, the Bank considers primarily the
financial resources of the borrower, the borrowers ability to repay the loan
out of net operating income, the Banks lending history with the borrower and
the value of the collateral.  Generally,
if the borrower is a corporation, partnership or other business entity,
personal guarantees by the principals are required.  However, personal guarantees may not be required on such loans
depending on the creditworthiness of the borrower and other mitigating circumstances.  The Banks largest commercial loan at
December 31, 2001 was $1.6 million.  At
such date, the Bank had $10.2 million of unadvanced commercial lines of
credit.  At December 31, 2001, the Bank
had $30.0 million of commercial business loans which amounted to 5.6% of the
Banks total loans.  The Bank originated
$28.9 million, $19.5 million and $12.7 million in commercial business loans for
the years ended December 31, 2001, 2000 and 1999, respectively.  Unlike mortgage loans, which generally are made on the basis of the
borrowers ability to make repayment from his or her employment or other
income, and are secured by real property which value tends to be more easily
ascertainable, commercial loans are of higher risk and typically are made on
the basis of the borrowers ability to make repayment from the cash flow of the
borrowers business.  As a result, the
availability of funds for the repayment of commercial loans may be
substantially dependent on the success of the business itself.  Further, any collateral securing such loans
may depreciate over time, may be  13 
   difficult
to appraise and may fluctuate in value.  Consumer Lending.Consumer loans at December 31, 2001 amounted
to $16.9 million, or 3.1% of the Banks total loans, and consisted
primarily of home equity lines of credit and, to a significantly lesser extent,
secured and unsecured personal loans and new and used automobile loans.  Such loans are generally originated in the
Banks primary market area and generally are secured by real estate, deposit
accounts, personal property and automobiles.  Substantially all of the Banks home equity lines of credit are secured
by second mortgages on owner-occupied single-family residences located in the
Banks primary market area.  At December
31, 2001, these loans totaled $14.7 million, or 2.7% of the Banks total loans
and 86.7% of consumer loans.  Home
equity lines of credit generally have adjustable-rates of interest which adjust
on a monthly basis.  The unused home
equity lines of credit totaled $17.0 million at December 31, 2001.  The adjustable-rate of interest charged on
such loans is indexed to the prime rate as reported in The Wall Street Journal.  Home equity lines of credit generally have
an 18% lifetime limit on interest rates. 
Generally, the maximum combined LTV ratio on home equity lines of credit
is 89.9%.  The underwriting standards
employed by the Bank for home equity lines of credit include a determination of
the applicants credit history and an assessment of the applicants ability to
meet existing obligations and payments on the proposed loan and the value of
the collateral securing the loan.  The
stability of the applicants monthly income may be determined by verification
of gross monthly income from primary employment and, additionally, from any
verifiable secondary income. 
Creditworthiness of the applicant is of primary consideration.  The Bank also originates other types of consumer loans consisting of
secured and unsecured personal loans and new and used automobile loans.  Secured personal loans are generally secured
by deposit accounts.  Unsecured personal
loans generally have a maximum borrowing limitation of $25,000 and generally
require a debt ratio of 38%.  Automobile
loans have a maximum borrowing limitation of 80% of the sale price of the
automobile, except that existing customers of the Bank who meet certain
underwriting criteria may borrow up to 100% of the sale price of the
automobile.  At December 31, 2001,
personal loans (both secured and unsecured) totaled $1.5 million or 0.3% of the
Banks total loans and 8.8% of consumer loans; and automobile loans totaled
$764,000, or 0.1% of total loans and 4.5% of consumer loans.  With respect to automobile loans, full-time employees of the Bank,
other than executive officers and directors, who satisfy certain lending
criteria and the general underwriting standards of the Bank receive an interest
rate 1% less than that which is offered to the general public; provided,
however, that the discounted interest rate is at no time less than 75 basis
points above the Banks overall cost of funds, rounded to the highest quarter
percentage point.  Loans secured by rapidly depreciable assets such as automobiles or that
are unsecured entail greater risks than one- to four-family residential
mortgage loans.  In such cases,
repossessed collateral for a defaulted loan may not provide an adequate source
of repayment of the outstanding loan balance, since there is a greater
likelihood of damage, loss or depreciation of the underlying collateral.  Further, consumer loan collections on these
loans are dependent on the borrowers continuing financial stability and,
therefore, are more likely to be adversely affected by job loss, divorce,
illness or personal bankruptcy. 
Finally, the application of various federal and state laws, including
federal and state bankruptcy and insolvency laws, may limit the amount which
can be recovered on such loans in the event of a default.  Loans-to-One Borrower Limitations.The Illinois
Savings Bank Act imposes limitations on the aggregate amount of loans that an
Illinois chartered savings bank can make to any one borrower.  Under the Illinois Savings Bank Act the
permissible amount of loans-to-one borrower is the greater of $500,000 (for a
savings bank meeting its minimum capital requirements) or 20% of a savings
banks total capital plus general loan loss reserves.  In addition, a savings bank may make loans in an amount equal to
an additional 10% of the savings banks capital plus general loan loss reserves
if the loans are 100% secured by readily marketable collateral.  Under Illinois law, a savings banks capital
consists of capital stock and noncumulative perpetual preferred stock, related
paid-in capital, retained earnings and other forms of capital deemed to be
qualifying capital by the Federal Deposit Insurance Corporation (the
FDIC).  Illinois law also permits an
institution with capital in excess of 6% of assets to request permission of the
Illinois Commissioner of Banks and Real Estate (the Commissioner) to lend up
to 30% of the institutions total capital and general loan loss reserves to one
borrower for the development of residential housing properties within
Illinois.  At December 31, 2001, the
Banks ordinary limit on loans-to-one borrower under the Illinois Savings Bank
Act was $13.3 million.  The 30%
limitation equaled $19.9 million at that date. 
At December 31, 2001, the Banks five largest groups of loans-to-one
borrower ranged from $4.5 million to $9.9 million, with the largest single loan
in such groups being a $4.5 million loan secured by a multi-tenant
industrial/office building located in East Dundee, Illinois.  At December 31, 2001, there were no loans  14 
   exceeding
the 20% limitation.  A substantial
portion of each large group of loans is secured by real estate.  Loan Approval Procedures and
Authority.The Board of Directors establishes the
lending policies and loan approval limits of the Bank.  The Board of Directors has established the
Loan Committee (the Committee) of the Board which considers and approves all
loans within its designated authority as established by the Board.  In addition, the Board of Directors has
authorized certain officers of the Bank (the designated officers) to consider
and approve all loans within their designated authority as established by the
Board.  Underwriting.With respect to loans originated by the Bank,
it is the general policy of the Bank to retain such loans in its
portfolio.  The Bank does not have a
policy of underwriting its loans in conformance with the Federal National
Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation
(FHLMC) guidelines.  Upon receipt of a
completed loan application from a prospective borrower, a credit report is
ordered and certain other information is verified by an independent credit
agency.  If necessary, additional
financial information may be required. 
An appraisal of real estate intended to secure a proposed loan generally
is required to be performed by the Banks in-house appraisers or outside
appraisers approved by the Bank.  For
proposed mortgage loans, the Board annually approves independent appraisers
used by the Bank and approves the Banks appraisal policy.  The Banks policy is to obtain title and
hazard insurance on all mortgage loans and flood insurance when necessary and
the Bank may require borrowers to make payments to a mortgage escrow account
for the payment of property taxes.  At December 31, 2001, the Banks ratio of nonperforming loans to total
loans was 0.48%, and its ratio of nonperforming assets to total assets was
0.38%.  The Bank had no real estate
owned or real estate in judgment at December 31, 2001.  Net charge-offs amounted to $126,000 and
$27,000 in 2001 and 2000, respectively. 
See Delinquent Loans, Classified Assets and Real Estate Owned.  The Banks one- to four-family lending policy permits the investment in
mortgage loans where the borrowers monthly mortgage and prorated real estate
tax payments were less than 32% of the borrowers gross income, and where the
borrowers total monthly obligations did not exceed 43% of the borrowers gross
income.  It is also the general practice
of the Bank not to require private mortgage insurance, though the Bank retains
the right to require such insurance on any loan with a loan to value ratio in
excess of 80.0%.  All loans with loan to
value ratios in excess of 89.9% must have private mortgage insurance, with the
exception of its First-Time Home Buyer and American Dream Loan
programs.  In addition, the Bank had
historically priced its one- to four- family loans with loan to value ratios of
between 80.0% and 89.9% at 25 basis points higher than loans with loan to value
ratios of less than 80.0%, again in an effort to control the origination of
such loans.  The Bank has eliminated the
price differential on adjustable-rate loans with loan to value ratios of less
than 80.0% and between 80.0% and 89.90% as a means of attracting more borrowers.  The Bank believes that its underwriting
standards are sufficient to allow it to adequately assess the creditworthiness
of prospective borrowers.  There can be
no assurances, however, that increasing the permissible debt coverage ratios
and loan-to-value ratios permitted for borrowers will not result in the Bank
experiencing increased delinquencies and defaults on loans.  Delinquent Loans, Classified Assets and Real Estate
Owned  Delinquencies, Classified Assets and
Real Estate Owned.Reports listing all delinquent accounts are
generated and reviewed by management on a monthly basis and the Board of
Directors performs a monthly review of all loans or lending relationships
delinquent 45 days or more.  The
procedures taken by the Bank with respect to delinquencies vary depending on
the nature of the loan, period and cause of delinquency and whether the
borrower is habitually delinquent.  When
a borrower fails to make a required payment on a loan, the Bank takes a number
of steps to have the borrower cure the delinquency and restore the loan to
current status.  The Bank generally
sends the borrower a written notice of non-payment after the loan is first past
due.  The Banks guidelines provide that
telephone, written correspondence and/or face-to-face contact will be attempted
to ascertain the reasons for delinquency and the prospects of repayment.  When contact is made with the borrower at
any time prior to foreclosure, the Bank will attempt to obtain full payment,
offer to work out a repayment schedule with the borrower to avoid foreclosure
or, in some instances, accept a deed in lieu of foreclosure.  In the event payment is not then received or
the loan not otherwise satisfied, additional letters and telephone calls
generally are made.  If the loan is
still not brought current or satisfied and it becomes necessary for the Bank to
take legal action, which typically occurs after a loan is 90 days or more
delinquent, the Bank will commence foreclosure proceedings against any real
property that secured the loan.  If a
foreclosure action is instituted and the loan is not brought current, paid in
full, or refinanced before the foreclosure sale, the property securing the loan
generally  15 
   is
sold at foreclosure and, if purchased by the Bank, becomes real estate owned.  Federal regulations and the Banks internal policies require that the
Bank utilize an internal asset classification system as a means of reporting
problem and potential problem assets. 
The Bank currently classifies problem and potential problem assets as
Substandard, Doubtful or Loss assets. 
An asset is considered Substandard if it is inadequately protected by
the current net worth and paying capacity of the obligor or of the collateral
pledged, if any.  Substandard assets
include those characterized by the distinct possibility that the Bank will
sustain some loss if the deficiencies are not corrected.  Assets classified as Doubtful have all of
the weaknesses inherent in those classified Substandard with the added
characteristic that the weaknesses present make collection or liquidation in
full, on the basis of currently existing facts, conditions and values, highly
questionable and improbable.  Assets
classified as Loss are those considered uncollectible and of such little value
that their continuance as assets, without the establishment of a specific loss
reserve, is not warranted.  Assets which
do not currently expose the Bank to a sufficient degree of risk to warrant
classification in one of the aforementioned categories but possess weaknesses
are required to be designated Special Mention.  When the Bank classifies one or more assets, or portions thereof, as
Substandard or Doubtful, it establishes a specific allowance for loan losses in
an amount deemed prudent by management unless the loss of principal appears to
be remote.  When the Bank classifies one
or more assets, or portions thereof, as Loss, it either establishes a specific
allowance for losses equal to 100% of the amount of the assets so classified or
charges off such amount.  The Banks determination as to the classification of its assets and the
amount of its allowances for loan losses is subject to review by the FDIC and
Commissioner, which can order the establishment of additional general or
specific loss allowances.  The FDIC, in
conjunction with the other federal banking agencies, adopted an interagency
policy statement on the allowance for loan and lease losses.  The policy statement provides guidance for
financial institutions on both the responsibilities of management for the
assessment and establishment of adequate allowances and guidance for banking
agency examiners to use in determining the adequacy of general valuation
guidelines.  Generally, the policy
statement recommends that institutions have effective systems and controls to
identify, monitor and address asset quality problems; that management has
analyzed all significant factors that affect the collectibility of the
portfolio in a reasonable manner; and that management has established
acceptable allowance evaluation processes that meet the objectives set forth in
the policy statement.   While the Bank
believes that it has established an adequate allowance for loan losses, there
can be no assurance that regulators, in reviewing the Banks loan portfolio,
will not request the Bank to materially increase at that time its allowance for
loan losses, thereby negatively affecting the Banks financial condition and
earnings at that time.  Although
management believes that adequate specific and general loan loss allowances
have been established, future provisions are dependent upon future events such
as loan growth and portfolio diversification and, as such, further additions to
the level of the allowance for loan losses may become necessary.  The Bank reviews and classifies its assets on a quarterly basis and the
Board of Directors reviews the results of the reports on a quarterly
basis.  The Bank classifies its assets
in accordance with the management guidelines described above.  At December 31, 2001, the Bank had $957,000
of loans, representing 0.18% of loans receivable, or 0.14%, of assets,
designated as Substandard.  No loans
were classified as Doubtful or Loss.  In
addition, a $1.6 million commercial real estate loan has been classified
Special Mention.  Loans classified
Special Mention may have been delinquent in the past or had other weaknesses,
however, have no risk of loss to the Bank. 
This classification represents a watch list of loans for management to
closely monitor.  16 
   The following tables set
forth delinquencies in the Banks loan portfolio past due 60 days or more:  At
  December 31, 2001
  At
  December 31, 200060-89
  Days
  
  90 Days
  or Moree
  
  60-89
  Days
  
  90 Days
  or MorNumberof
  Loans
  
  PrincipalBalanceof Loans
  
  NumberofLoans
  
  PrincipalBalanceof Loans
  
  NumberofLoans
  
  PrincipalBalanceof Loans
  
  NumberofLoans
  
  PrincipalBalanceof Loans(Dollars
  in thousands)One- to four-family
  
  11
  
  $
  1,026
  
  7
  
  $
  620
  
  5
  
  $
  251
  
  9
  
  $
  864Commercial real estate
  
  
  
  
  
  1
  
  1,623
  
  
  
  
  
  1
  
  3,505Consumer
  
  3
  
  12
  
  
  
  
  
  
  
  
  
  1
  
  15Home equity
  
  3
  
  118
  
  1
  
  35
  
  2
  
  44
  
  
  
  Commercial business
  
  2
  
  39
  
  1
  
  363
  
  
  
  
  
  4
  
  148Total
  
  19
  
  $
  1,195
  
  10
  
  $
  2,641
  
  7
  
  $
  295
  
  15
  
  $
  4,532Delinquent loans to total loans (1)
  
  
  
  0.22
  %
  
  
  0.49
  %
  
  
  0.06
  %
  
  
  0.98
  %  At
  December 31, 199960-89
  Days
  
  90 Days
  or MoreNumberof
  Loans
  
  PrincipalBalanceof Loans
  
  Numberof Loans
  
  PrincipalBalanceof Loans(Dollars
  in thousands)One- to four-family
  
  
  
  $
  
  
  9
  
  $
  1,042Commercial real estate
  
  
  
  
  
  1
  
  226Consumer
  
  
  
  
  
  1
  
  2Home equity
  
  3
  
  42
  
  
  
  Commercial business
  
  
  
  
  
  
  
  Total
  
  3
  
  $
  42
  
  11
  
  $
  1,270Delinquent loans to total loans (1)
  
  
  
  0.01
  %
  
  
  0.32
  %  
 (1)   Total loans represent gross loans receivable
less deferred loan fees and unearned 
discounts.  Nonperforming Assets. The
following table sets forth information regarding nonperforming loans, REO and
RIJ.  At December 31, 2001, the Bank had
no REO or RIJ.  It is the general policy
of the Bank to cease accruing interest on loans 90 days or more past due and to
fully reserve for all previously accrued interest.  For each of the five years ended December 31, 2001, the amount of
additional interest income that would have been recognized on non-accrual loans
if such loans had continued to perform in accordance with their contractual
terms was $187,000, $89,000, $46,000, $71,000, and $49,000, respectively.  17 
   At December 31,2001
  
  2000
  
  1999
  
  1998
  
  1997(Dollars in thousands)Nonperforming loans:Mortgage loans:One to four-family
  
  $
  547
  
  $
  864
  
  $
  1,042
  
  $
  724
  
  $
  757Multi-family
  
  
  
  
  
  
  
  
  
  1,171Commercial real estate
  
  1,623
  
  3,505
  
  226
  
  203
  
  Total  mortgage loans
  
  2,170
  
  4,369
  
  1,268
  
  927
  
  1,928Other loans:Home equity
  
  
  
  
  
  
  
  
  
  24Commercial business loans
  
  402
  
  148
  
  
  
  79
  
  Auto loans
  
  8
  
  15
  
  
  
  
  
  Other
  
  
  
  
  
  2
  
  
  
  Total other loans
  
  410
  
  163
  
  2
  
  79
  
  24Total nonperforming loans
  
  2,580
  
  4,532
  
  1,270
  
  1,006
  
  1,952Real estate owned, and in judgment net (1)
  
  
  
  540
  
  168
  
  193
  
  98Total nonperforming assets
  
  $
  2,580
  
  $
  5,072
  
  $
  1,438
  
  $
  1,199
  
  $
  2,050Nonperforming loans as a percent of loans (2)
  
  0.48
  %
  0.99
  %
  0.32
  %
  0.32
  %
  0.79
  %Nonperforming assets as a percent of total assets (3)
  
  0.38
  %
  0.87
  %
  0.28
  %
  0.28
  %
  0.62
  %  
 (1)REO balances are shown net of related loss
allowances. (2)Loans receivable, net, excluding the allowance
for loan losses. (3)Nonperforming assets consist of nonperforming
loans and REO.  Nonperforming
loans totaled $2.6 million as of December 31, 2001, and included six one- to
fourfamily loans, with an aggregate balance of $547,000, one commercial
real estate loan with a balance of $1.6 million, three commercial business
loans totaling $402,000 and one automobile loan with a balance of $8,000.  Allowance for Loan Losses  The
allowance for loan losses is considered by management to be a critical
accounting policy.  The allowance for
loan losses is maintained through provisions for loan losses based on
managements on-going evaluation of the risks inherent in its loan portfolio in
consideration of the trends in its loan portfolio, the national and regional
economies and the real estate market in the Banks primary lending area. The
allowance for loan losses is maintained at an amount management considers
adequate to cover estimated losses in its loan portfolio which are deemed
probable and estimable based on information currently known to management. The
Banks loan loss allowance determinations also incorporate factors and analyses
which consider the potential principal loss associated with the loan, costs of
acquiring the property securing the loan through foreclosure or deed in lieu
thereof, the periods of time involved with the acquisition and sale of such
property, and costs and expenses associated with maintaining and holding the
property until sale and the costs associated with the Banks inability to
utilize funds for other income producing activities during the estimated
holding period of the property.  Management
calculates a loan loss allowance sufficiency analysis quarterly based upon the
loan portfolio composition, asset classifications, loan-to-value ratios,
impairments in the loan portfolio and other factors.  The analysis is compared to actual losses, peer group comparisons
and economic conditions.  As of December
31, 2001, the Banks allowance for loan losses was $2.3 million, or 0.42%, of
total loans and 87.4% of nonperforming loans as compared to $1.9 million, or
0.41%, of total loans and 41.5% of nonperforming loans as of December 31,
2000.  The Bank had total nonperforming
loans of $2.6 million at December 31, 2001 as compared to $4.5 million at
December 31, 2000 and nonperforming loans to total loans of 0.48% and 0.99%  at December 31, 2001 and 2000,
respectively.  The Bank will continue to
monitor and modify its allowance for loan losses as conditions dictate.  Management believes that, based on
information available at December 31, 2001, the Banks allowance for loan
losses was adequate to cover probable losses inherent in its loan portfolio at
that time.  Based upon the Banks plan
to  18 
   increase its emphasis on
non-one- to four-family mortgage lending, the Bank may further increase its
allowance for loan losses over future periods depending upon the then current
conditions.  However, no assurances can
be given that the Banks level of allowance for loan losses will be sufficient
to cover loan losses incurred by the Bank or that future adjustments to the
allowance for loan losses will not be necessary if economic and other
conditions differ substantially from the economic and other conditions used by
management to determine the current level of the allowance for loan
losses.  In addition, the FDIC and the
Commissioner, as an integral part of their examination processes, periodically
review the Banks allowance for loan losses. 
Such agencies may require the Bank to make additional provisions for
estimated loan losses based upon judgments different from those of management.  The
following table sets forth activity in the Banks allowance for loan losses for
the periods set forth in the table.  At or For the Year Ended December 31,2001
  
  2000
  
  1999
  
  1998
  
  1997(Dollars in thousands)Balance at beginning of period
  
  $
  1,881
  
  $
  1,545
  
  $
  1,373
  
  $
  1,126
  
  $
  808Provision for loan losses
  
  500
  
  363
  
  211
  
  293
  
  354Recoveries
  
  
  
  1
  
  2
  
  
  
  Total charge-offs
  
  (126
  )
  (28
  )
  (41
  )
  (46
  )
  (36
  )Balance at end of period
  
  $
  2,255
  
  $
  1,881
  
  $
  1,545
  
  $
  1,373
  
  $
  1,126Allowance for loan losses as a percent of loans (1)
  
  0.42
  %
  0.41
  %
  0.39
  %
  0.44
  %
  0.46
  %Allowance for loan losses as a percent of nonperforming loans
  
  87.4
  %
  41.5
  %
  112.7
  %
  136.5
  %
  57.7
  %  
 (1)Loans receivable, net, excluding the allowance
for loan losses.  19 
   The following tables set
forth the Banks percent of allowance for loan losses to total allowance and
the percent of loans to total loans in each of the categories listed at the
dates indicated.  At December 31,2001
  
  2000
  
  1999Amount
  
  Percent of
  Allowanceto TotalAllowance
  
  Percent ofLoans inEachCategory toTotal Loans
  
  Amount
  
  Percent of
  Allowance
  to Total
  Allowance
  
  Percent ofLoans inEachCategory to Total Loans
  
  Amount
  
  Percent ofAllowanceto TotalAllowance
  
  Percent ofLoans inEachCategory toTotal Loans(Dollars in thousands)One to four-family
  
  $
  765
  
  33.9
  %
  69.6
  %
  $
  676
  
  35.9
  %
  70.7
  %
  $
  592
  
  38.4
  %
  71.2
  %Multi-family
  
  158
  
  7.0
  
  10.8
  
  154
  
  8.2
  
  11.0
  
  147
  
  9.5
  
  11.3Commercial real estate
  
  352
  
  15.6
  
  7.9
  
  437
  
  23.2
  
  6.5
  
  318
  
  20.6
  
  7.8Construction and land
  
  131
  
  5.8
  
  3.0
  
  158
  
  8.4
  
  3.5
  
  127
  
  8.3
  
  3.5Home equity
  
  147
  
  6.5
  
  2.7
  
  120
  
  6.4
  
  2.6
  
  100
  
  6.5
  
  2.5Commercial business loans
  
  575
  
  25.5
  
  5.6
  
  276
  
  14.7
  
  5.5
  
  147
  
  9.6
  
  3.4Auto loans
  
  17
  
  0.8
  
  0.1
  
  15
  
  0.8
  
  0.1
  
  10
  
  0.2
  
  0.1Loans on savings accounts
  
  
  
  
  
  0.1
  
  
  
  
  
  
  
  
  
  
  
  Other
  
  24
  
  1.1
  
  0.2
  
  9
  
  0.5
  
  0.1
  
  47
  
  3.1
  
  0.2Unallocated
  
  86
  
  3.8
  
  
  
  36
  
  1.9
  
  
  
  57
  
  3.8
  
  Total allowance forloan losses
  
  $
  2,255
  
  100.0
  %
  100.0
  %
  $
  1,881
  
  100.0
  %
  100.0
  %
  $
  1,545
  
  100.0
  %
  100.0
  %  At December 31,1998
  
  1997Amount
  
  Percent ofAllowanceto TotalAllowance
  
  Percent ofLoans inEachCategory toTotal Loans
  
  Amount
  
  Percent ofAllowanceto TotalAllowance
  
  Percent ofLoans inEachCategory toTotal Loans(Dollars in thousands)One- to four-family
  
  $
  493
  
  35.9
  %
  75.2
  %
  $
  404
  
  35.9
  %
  77.2
  %Multi-family
  
  82
  
  6.0
  
  8.7
  
  103
  
  9.1
  
  8.0Commercial real estate
  
  204
  
  14.9
  
  6.6
  
  114
  
  10.1
  
  4.5Construction and land
  
  135
  
  9.8
  
  4.4
  
  185
  
  16.4
  
  5.5Home equity
  
  90
  
  6.5
  
  2.9
  
  77
  
  6.8
  
  3.0Commercial business loans
  
  74
  
  5.4
  
  1.8
  
  48
  
  4.3
  
  1.3Auto loans
  
  10
  
  0.7
  
  0.2
  
  12
  
  1.1
  
  0.3Loans on savings accounts
  
  
  
  
  
  0.2
  
  
  
  
  
  0.2Other
  
  44
  
  3.2
  
  
  
  29
  
  2.6
  
  Unallocated
  
  241
  
  17.6
  
  
  
  154
  
  13.7
  
  Total allowance forloan losses
  
  $
  1,373
  
  100.0
  %
  100.0
  %
  $
  1,126
  
  100.0
  %
  100.0
  %  20 
   Real Estate Owned and Real Estate In
Judgment.At December 31, 2001, the Bank had no REO or
RIJ in its portfolio.  When the Bank
acquires property through foreclosure or deed in lieu of foreclosure, it is
initially recorded at the lower of the recorded investment in the corresponding
loan or the fair value of the related assets at the date of foreclosure, less
costs to sell.  Thereafter, if there is
a further deterioration in value, the Bank provides for a specific valuation
allowance and charges operations for the diminution in value.  Investment Activities  The
Board of Directors sets the investment policy and procedures of the Bank.  This policy generally provides that investment
decisions will be made based on the safety of the investment, liquidity
requirements of the Bank and, to a lesser extent, potential return on the
investments.  In pursuing these
objectives, the Bank considers the ability of an investment to provide earnings
consistent with factors of quality, maturity, marketability and risk
diversification.  While the Board of
Directors has final authority and responsibility for the securities investment
portfolio, the Bank has established an Investment Committee comprised of five
Directors to supervise the Banks investment activities.  The Banks Investment Committee meets at
least quarterly and evaluates all investment activities for safety and
soundness, adherence to the Banks investment policy, and assurance that
authority levels are maintained.  The
Bank currently does not participate in hedging programs, interest rate swaps,
or other activities involving the use of derivative financial instruments.  Similarly, the Bank does not invest in
mortgage-related securities which are deemed to be high risk, or purchase
bonds which are not rated investment grade.  Mortgage-Backed Securities.The Bank currently purchases mortgage-backed
securities in order to:  (i) generate
positive interest rate spreads with minimal administrative expense; and (ii)
lower its credit risk as a result of the guarantees provided by FHLMC, FNMA,
and the Government National Mortgage Association (GNMA).  The Bank invests in mortgage-backed securities
insured or guaranteed by FNMA, FHLMC and GNMA. 
At December 31, 2001, mortgage-backed securities totalled $13.9 million,
or 2.1%, of total assets and 2.2% of total interest earning assets, all of
which was classified as available-for-sale. 
At December 31, 2001, 59.8% of the mortgage-backed securities were
backed by adjustable-rate loans and 40.2% were backed by fixed-rate loans.  The mortgage-backed securities portfolio had
coupon rates ranging from 5.39% to 10.00% and had a weighted average yield of 5.47%
at December 31, 2001.  Mortgage-backed
securities are created by the pooling of mortgages and issuance of a security
with an interest rate which is less than the interest rate on the underlying
mortgages.  Mortgage-backed securities
typically represent a participation interest in a pool of single-family or
multi-family mortgages, although the Bank focuses its investments on
mortgage-backed securities backed by single-family mortgages.  The issuers of such securities (generally
U.S. Government agencies and government sponsored enterprises, including FNMA,
FHLMC and GNMA) pool and resell the participation interests in the form of
securities to investors such as the Bank and guarantee the payment of principal
and interest to investors. 
Mortgage-backed securities generally yield less than the loans that
underlie such securities because of the cost of payment guarantees and credit
enhancements.  In addition,
mortgage-backed securities are usually more liquid than individual mortgage
loans and may be used to collateralize certain liabilities and obligations of
the Bank.  Investments in
mortgage-backed securities involve a risk that actual prepayments will be
greater than estimated prepayments over the life of the security, which may
require adjustments to the amortization of any premium or accretion of any
discount relating to such instruments thereby reducing the net yield on such
securities.  There is also reinvestment
risk associated with the cash flows from such securities or in the event such
securities are redeemed by the issuer. 
In addition, the market value of such securities may be adversely
affected by changes in interest rates. 
The Bank estimates prepayments for its mortgage-backed securities at
purchase to ensure that prepayment assumptions are reasonable considering the
underlying collateral for the mortgage-backed securities at issue and current
mortgage interest rates and to determine the yield and estimated maturity of
its mortgage-backed security portfolio. 
Of the Banks $13.9 million mortgage-backed securities portfolio at
December 31, 2001, $956,000 with a weighted average yield of 6.27% had
contractual maturities within five years and $12.9 million with a weighted
average yield of 5.42% had contractual maturities over five years.  However, the actual maturity of a
mortgage-backed security may be less than its stated maturity due to
prepayments of the underlying mortgages. 
Prepayments that are faster than anticipated may shorten the life of the
security and may result in a loss of any premiums paid and thereby reduce the
net yield on such securities.  Although
prepayments of underlying mortgages depend on many factors, the difference
between the interest rates on the underlying mortgages and the prevailing
mortgage interest rates generally is the most significant determinant of the rate
of prepayments.  During periods of
declining mortgage interest rates, refinancing generally increases and
accelerates the prepayment of the underlying mortgages and the related
security.  21 
   Under such circumstances,
the Bank may be subject to reinvestment risk because, to the extent that the
Banks mortgage-backed securities prepay faster than anticipated, the Bank may
not be able to reinvest the proceeds of such repayments and prepayments at a comparable
rate.  U.S. Government Obligations.At December 31, 2001, the Banks U.S.
Government securities portfolio totaled $38.3 million, all of which were
classified as available-for-sale.  Such
portfolio primarily consists of 
medium-term (maturities of three to fifteen years) securities.  Municipal Securities.  At
December 31, 2001, the Banks municipal security portfolio totalled $23.1
million and was classified available-for-sale. 
This portfolio consists of general obligations issued by municipalities.  Equity Investments.At December 31, 2001, the Banks equity
investment portfolio totaled $7.3 million, all of which were classified
available-for-sale.  The portfolio
consists of $100,000 of common stock and $200,000 of preferred stock in a small
privately held company specializing in interest rate risk management and web
site design consulting and $2.0 million and $5.0 million of FNMA and FHLMC
preferred stock, respectively.  The
following table sets forth the composition of the carrying value of the Banks
investment and mortgage-backed and mortgage-related securities portfolios in
dollar amounts and in percentages at the dates indicated:  At
  December 31,2001
  
  2000
  
  1999Amount
  
  Percent 
  of 
  Total
  
  Amount
  
  Percent 
  of 
  Total
  
  Amount
  
  Percent 
  of 
  Total(Dollars
  in thousands)Investment securities:U.S. Government obligations
  
  $
  38,288
  
  46.4
  %
  $
  62,893
  
  85.5
  %
  $
  60,780
  
  83.3
  %Equity investments
  
  7,277
  
  8.8
  
  300
  
  0.4
  
  300
  
  0.4Municipal securities
  
  23,050
  
  28.0
  
  878
  
  1.2
  
  
  
  Total investment securities
  
  68,615
  
  83.2
  
  64,071
  
  87.1
  
  61,080
  
  83.7Mortgage-backed securities:FHLMC
  
  5,730
  
  7.0
  
  1,795
  
  2.5
  
  2,245
  
  3.1GNMA
  
  4,641
  
  5.6
  
  4,865
  
  6.6
  
  6,072
  
  8.3FNMA
  
  3,485
  
  4.2
  
  2,794
  
  3.8
  
  3,565
  
  4.9Total mortgage-backed securities
  
  13,856
  
  16.8
  
  9,454
  
  12.9
  
  11,882
  
  16.3Total securities
  
  $
  82,471
  
  100.0
  %
  $
  73,525
  
  100.0
  %
  $
  72,962
  
  100.0
  %  22 
   The
following table sets forth the Banks securities activities for the periods
indicated.  All investment securities in
the Banks portfolio are classified as available-for-sale.  For the YearEnded December 31,2001
  
  2000
  
  1999(In thousands)Beginning balance
  
  $
  73,525
  
  $
  72,962
  
  $
  75,517Investment securities purchased
  
  40,602
  
  13,139
  
  29,137Mortgage-backed securities purchased
  
  10,436
  
  
  
  Less:Sale of investment securities
  
  4,033
  
  7,063
  
  11,713Principal repayments on mortgage-backed securities
  
  5,979
  
  2,542
  
  5,796Maturities of investment securities
  
  32,414
  
  5,064
  
  11,084Gain on sale of investment securities
  
  (33
  )
  (150
  )
  (103
  )Net amortization of premium
  
  151
  
  36
  
  84Change in net unrealized gains (losses) on available-for-sale
  securities
  
  (452
  )
  (1,979
  )
  3,118Ending balance
  
  $
  82,471
  
  $
  73,525
  
  $
  72,962  The
following table sets forth at the dates indicated certain information regarding
the amortized cost and market values of the Banks investment and mortgagebacked
and mortgage-related securities, all of which were classified as
available-for-sale.  At
  December 31,2001
  
  2000
  
  1999Amortized 
  Cost
  
  Fair 
  Value
  
  Amortized 
  Cost
  
  Fair 
  Value
  
  Amortized 
  Cost
  
  Fair 
  Value(In
  thousands)Investment securities:U.S. Government obligations
  
  $
  37,519
  
  $
  38,288
  
  $
  62,930
  
  $
  62,893
  
  $
  62,634
  
  $
  60,780Equity investments
  
  7,313
  
  7,277
  
  300
  
  300
  
  300
  
  300Municipal securities
  
  23,488
  
  23,050
  
  878
  
  878
  
  
  
  Total investment securities
  
  68,320
  
  68,615
  
  64,108
  
  64,071
  
  62,934
  
  61,080Mortgage-backed securities:GNMA
  
  4,611
  
  4,641
  
  4,892
  
  4,865
  
  6,162
  
  6,072FNMA
  
  3,453
  
  3,485
  
  2,808
  
  2,794
  
  3,642
  
  3,565FHLMC
  
  5,708
  
  5,730
  
  1,789
  
  1,795
  
  2,275
  
  2,245Total mortgage-backed securities
  
  13,772
  
  13,856
  
  9,489
  
  9,454
  
  12,079
  
  11,882Total securities
  
  $
  82,092
  
  $
  82,471
  
  $
  73,597
  
  $
  73,525
  
  $
  75,013
  
  $
  72,962  23 
   The
table below sets forth certain information regarding the carrying value,
weighted average yields and contractual maturities of the Banks securities
portfolio, excluding equity securities, all of which were classified as
available-for-sale, as of December 31, 2001.  At
  December 31, 2001One Year
  or Less
  
  More than
  One Year to Five Years
  
  More than
  Five Years to Ten Years
  
  More than
  Ten Years
  
  TotalCarrying Value
  
  Weighted Average 
  Yield
  
  Carrying 
  Value
  
  Weighted
  Average 
  Yield
  
  Carrying 
  Value
  
  Weighted
  Average 
  Yield
  
  Carrying 
  Value
  
  Weighted
  Average 
  Yield
  
  Carrying 
  Value
  
  Weighted
  Average 
  Yield(Dollars
  in thousands)Mortgage-backed securities:FHLMC
  
  $
  172
  
  5.88
  %
  $
  250
  
  6.02
  %
  $
  570
  
  7.18
  %
  $
  4,738
  
  4.51
  %
  $
  5,730
  
  4.88
  %GNMA
  
  
  
  
  
  
  
  
  
  90
  
  10.13
  
  4,551
  
  5.58
  
  4,641
  
  5.67FNMA
  
  
  
  
  
  535
  
  6.51
  
  
  
  
  
  2,950
  
  6.13
  
  3,485
  
  6.19Total mortgage-backedsecurities
  
  172
  
  5.88
  
  785
  
  6.35
  
  660
  
  7.58
  
  12,239
  
  5.30
  
  13,856
  
  5.48Municipal securities
  
  
  
  
  
  
  
  
  
  
  
  
  
  23,050
  
  4.80
  
  23,050
  
  4.80U.S. Government obligations
  
  
  
  
  
  10,806
  
  4.94
  
  22,444
  
  6.50
  
  5,038
  
  8.00
  
  38,288
  
  6.26Total securities
  
  $
  172
  
  5.88
  
  $
  11,591
  
  5.04
  
  $
  23,104
  
  6.53
  
  $
  40,327
  
  5.35
  
  $
  75,194
  
  5.67  Sources of Funds  General.Deposits,
repayments and prepayments of loans, cash flows generated from operations and
FHLB advances are the primary sources of the Banks funds for use in lending,
investing and for other general purposes.  Deposits.The Bank
offers a variety of deposit accounts with a range of interest rates and
terms.  The Banks deposit accounts
consist of savings, retail checking/NOW accounts, commercial checking accounts,
money market accounts, club accounts and certificate of deposit accounts.  The Bank offers certificate of deposit
accounts with balances in excess of $100,000 at preferential rates (jumbo
certificates) and also offers Individual Retirement Accounts (IRAs) and other
qualified plan accounts.  At
December 31, 2001, the Banks deposits totaled $420.1 million, or 70.6%, of
interest-bearing liabilities.  For the
year ended December 31, 2001, the average balance of core deposits (savings,
NOW, money market and non-interest-bearing checking accounts) totaled $202.7
million, or 52.0% of total average deposits. 
At December 31, 2001, the Bank had a total of $174.4 million in
certificates of deposit, of which $119.3 million had maturities of one year or
less reflecting the shift in deposit accounts from savings accounts to
shorter-term certificate accounts that has occurred in recent years.  For the year ended December 31, 2001, the
average balance of core deposits represented approximately 48.3% of total
deposits and average certificate accounts represented 44.5%, as compared to
core deposits representing 41.7% of total deposits and average certificate
accounts representing 53.1% of deposits for the year ended December 31,
2000.  Although the Bank has a
significant portion of its deposits in core deposits, management monitors
activity on the Banks core deposits and, based on historical experience and the
Banks current pricing strategy, believes it will continue to retain a large
portion of such accounts.  The Bank is
not limited with respect to the rates it may offer on deposit products.  The
flow of deposits is influenced significantly by general economic conditions,
changes in money market rates, prevailing interest rates and competition.  The Banks deposits are obtained
predominantly from the areas in which its branch offices are located.  The Bank relies primarily on customer
service and long-standing relationships with customers to attract and retain
these deposits; however, market interest rates and rates offered by competing
financial institutions affect the Banks ability to attract and retain
deposits.  The Bank uses traditional
means of advertising its deposit products, including radio and print media and
generally does not solicit deposits from outside its market area.  While certificate accounts in excess of
$100,000 are accepted by the Bank, and may be subject to preferential rates,
the Bank does not actively solicit such deposits as such deposits are more
difficult to retain than core deposits.  24 
   At
December 31, 2001, the Bank had outstanding $38.1 million in certificate of
deposit accounts in amounts of $100,000 or more, maturing as follows:  Maturity
  Period
  
  Amount
  
  WeightedAverageRate(Dollars in thousands)Three months or less
  
  $
  9,745
  
  5.38
  %Over three through six
  months
  
  6,124
  
  4.98Over six through 12 months
  
  12,112
  
  4.36Over 12 months
  
  10,087
  
  4.56Total
  
  $
  38,068
  
  4.77  The
following table sets forth the distribution of the Banks deposit accounts for
the periods indicated and the weighted average interest rates on each category
of deposits presented.  AtDecember 31, 2001
  
  AtDecember 31, 2000Balance
  
  Percentof TotalDeposits
  
  WeightedAverageRate
  
  Balance
  
  Percentof TotalDeposits
  
  WeightedAverageRate(Dollars in thousands)Money market accounts
  
  $
  106,850
  
  25.44
  %
  4.00
  %
  $
  40,098
  
  10.85
  %
  3.83
  %Passbook savings accounts
  
  84,889
  
  20.21
  
  3.11
  
  75,802
  
  20.51
  
  3.76NOW accounts
  
  30,646
  
  7.29
  
  1.07
  
  31,019
  
  8.40
  
  1.59Non interest-bearing accounts
  
  23,286
  
  5.54
  
  
  
  19,728
  
  5.34
  
  Total
  
  245,671
  
  58.48
  
  2.80
  
  166,647
  
  45.10
  
  2.72Certificates of deposit
  
  174,413
  
  41.52
  
  5.76
  
  202,886
  
  54.90
  
  5.79Total deposits
  
  $
  420,084
  
  100.00
  %
  4.49
  
  $
  369,533
  
  100.00
  %
  4.78  AtDecember 31, 1999Balance
  
  Percentof TotalDeposits
  
  WeightedAverageRate(Dollars in thousands)Money market accounts
  
  $
  31,340
  
  9.67
  %
  3.53
  %Passbook savings accounts
  
  73,675
  
  22.75
  
  3.35NOW accounts
  
  28,044
  
  8.66
  
  1.80Non interest-bearing accounts
  
  15,539
  
  4.80
  
  Total
  
  148,598
  
  45.88
  
  2.75Certificates of deposit
  
  175,281
  
  54.12
  
  5.34Total deposits
  
  $
  323,879
  
  100.00
  %
  4.15  25 
   The following table
presents, by various rate categories, the amount of certificate of deposit
accounts outstanding at the dates indicated.  Period
  to Maturityfrom December 31, 2001LessthanOneYear
  
  One toTwoYears
  
  Two toThreeYears
  
  Threeto FourYears
  
  Four
  to FiveYears
  
  Total 
  December 31,
  2001At
  December 31,2000
  
  1999(In
  thousands)Certificate accounts:4.00% or less
  
  $
  31,794
  
  $
  18,572
  
  $
  44
  
  $
  3,542
  
  $
  53
  
  $
  54,005
  
  $
  931
  
  $
  6144.01 to 5.00%
  
  30,473
  
  9,871
  
  1,112
  
  6,019
  
  214
  
  47,689
  
  16,226
  
  48,8525.01 to 6.00%
  
  39,296
  
  6,070
  
  2,117
  
  912
  
  329
  
  48,724
  
  38,591
  
  105,0796.01 to 7.00%
  
  17,651
  
  3,293
  
  165
  
  2,346
  
  
  
  23,455
  
  140,525
  
  20,6367.01 to 8.00%
  
  112
  
  328
  
  
  
  100
  
  
  
  540
  
  6,613
  
  100Total at December 31, 2001
  
  $
  119,326
  
  $
  38,134
  
  $
  3,438
  
  $
  12,919
  
  $
  596
  
  $
  174,413
  
  $
  202,886
  
  $
  175,281  Borrowed Funds.The following
table sets forth certain information regarding the Banks borrowed funds at or
for the years ended on the dates indicated:  At or
  For the Year EndedDecember 31,2001
  
  2000
  
  1999(Dollars
  in thousands)FHLB advances:Average balance outstanding
  
  $
  164,783
  
  $
  129,783
  
  $
  85,983Maximum amount outstanding at any month-endduring the year
  
  $
  175,200
  
  $
  155,200
  
  $
  115,200Balance outstanding at end of year
  
  $
  175,200
  
  $
  140,200
  
  $
  115,200Weighted average interest rate during the year
  
  5.45
  %
  5.78
  %
  5.20
  %Weighted average interest rate at end of year
  
  5.28
  %
  5.83
  %
  5.38
  %  Subsidiary Activities  Fox Valley Service Corporation of
Elgin.Fox Valley Service Corporation of Elgin (Fox
Valley) is the Banks wholly-owned subsidiary which was incorporated in 1974
for the purpose of entering into joint venture real estate development
projects.  Fox Valley currently owns a
single parcel of real estate valued at $92,000.  Fox Valley Financial Services, Inc. Elgin
Agency, Inc. was renamed Fox Valley Financial Services, Inc. (FVFS) in April,
1999 and is the wholly-owned subsidiary of Fox Valley.  FVFS is a service corporation that offers a
wide variety of financial products and services for individuals and businesses,
which includes various investment and insurance products.  FVFS has two salespeople who are employed on
a commission basis.  Planned Business Expansion  Computer Services Dynamics,
Inc.Computer Services Dynamics, Inc. (CSDI) is
the Companys majority owned subsidiary, which was purchased on January 7,
2002, at a cost of $420,000.  CSDI is an
information technology consulting/services company with main offices in West
Chicago, Illinois, and generally services clients located in the Chicago
metropolitan area.  Personnel  As
of December 31, 2001, the Bank had 106 full-time employees and 52 part-time
employees.  The employees are not
represented by a collective bargaining unit and the Bank considers its
relationship with its employees to be good.  26 
   REGULATION AND SUPERVISION  General  The
Bank is an Illinois State chartered savings bank and its deposit accounts are
insured up to applicable limits by the FDIC under the Savings Association
Insurance Fund (SAIF).  The Bank is
subject to extensive regulation by the Commissioner, as its chartering
authority, and by the FDIC, as the deposit insurer.  The Bank must file reports with the Commissioner and the FDIC
concerning its activities and financial condition, in addition to obtaining
regulatory approvals prior to entering into certain transactions such as
establishing branches and mergers with, or acquisitions of, other depository
institutions.  There are periodic
examinations by the Commissioner and the FDIC to assess the Banks compliance
with various regulatory requirements and financial condition.  This regulation and supervision establishes
a framework of activities in which a savings bank can engage and is intended
primarily for the protection of the insurance fund and depositors.  The regulatory structure also gives the
regulatory authorities extensive discretion in connection with their
supervisory and enforcement activities and examination policies, including
policies with respect to the classification of assets and the establishment of
adequate loan loss reserves for regulatory purposes.  Any change in such regulation, whether by the Commissioner, the
FDIC or through legislation, could have a material adverse impact on the
Company and the Bank and their operations and stockholders.  The Holding Company is also required to file
certain reports with, and otherwise comply with the rules and regulations, of
the OTS, the Commissioner and of the Securities and Exchange Commission (SEC)
under the federal securities laws. 
Certain of the regulatory requirements applicable to the Bank and to the
Holding Company are referred to below or elsewhere herein.  The
Commissioner has established a schedule for the assessment of supervisory
fees upon all Illinois savings banks to fund the operations of the
Commissioner.  These supervisory fees
are computed on the basis of each savings banks total assets (including
consolidated subsidiaries) and are payable at the end of each calendar
quarter.  A schedule of fees has also
been established for certain filings made by Illinois savings banks with the
Commissioner.  The Commissioner also
assesses fees for examinations conducted by the Commissioners staff, based
upon the number of hours spent by the Commissioners staff performing the examination.  During the year ended December 31, 2001, the
Bank paid approximately $75,000 in supervisory fees and expenses.  Regulations  Capital Requirements.Under the Illinois law and the regulations of
the Commissioner, an Illinois savings bank must maintain a minimum level of
capital equal to the higher of 3% of total assets or the amount required to
maintain insurance of deposits by the FDIC. 
The Commissioner has the authority to require an Illinois savings bank
to maintain a higher level of capital if deemed necessary based on the savings
banks financial condition, history, management or earnings prospects.  The
FDIC has also adopted risk-based capital guidelines to which the Bank is
subject.  The Bank is required to
maintain certain levels of regulatory capital in relation to regulatory risk-weighted
assets.  Risk-based capital ratios are
determined by allocating assets and specified off-balance sheet items to four
risk-weighted categories ranging from 0% to 100%, with higher levels of capital
being required for the categories perceived as representing greater risk.  The guidelines divide a savings banks
capital into two tiers.  The first tier
(Tier I) includes common equity, retained earnings, certain non-cumulative
perpetual preferred stock (excluding auction rate issues) and minority interests
in equity accounts of consolidated subsidiaries, less goodwill and other
intangible assets (except mortgage servicing rights and purchased credit card
relationships subject to certain limitations). 
Recent regulatory amendments require the deduction from Tier 1 capital
of a percentage of the carrying value of investments in equity securities of
non-financial companies acquired after March 13, 2000.  Supplementary (Tier II) capital includes,
among other items, cumulative perpetual and long-term limited-life preferred
stock, mandatory convertible securities, certain hybrid capital instruments,
term subordinated debt and the allowance for loan losses, subject to certain
limitations, less required deductions.  Savings
banks are required to maintain a total risk-based capital ratio of 8%, of which
at least 4% must be Tier I capital.  27 
   In addition, the FDIC has
established regulations prescribing a minimum Tier I leverage ratio.  These regulations provide for a minimum Tier
I leverage ratio of 3% for banks that meet certain specified criteria,
including that they have the highest examination rating and are not
experiencing or anticipating significant growth.  All other banks are required to maintain a Tier I leverage ratio
of 3% plus an additional cushion of at least 4%.  The FDIC may, however, set higher leverage and risk-based capital
requirements on individual institutions when particular circumstances warrant.  The following is a summary of the Banks regulatory capital at December
31:  2001
  
  2000Total Capital to Total
  Assets
  
  9.58%
  
  11.54%Total Capital to
  Risk-Weighted Assets
  
  14.58%
  
  16.88%Tier I Leverage Ratio
  
  9.53%
  
  10.50%Tier I to Risk-Weighted
  Assets
  
  14.09%
  
  16.38%
  The FDIC and the other federal banking agencies, have adopted a
regulation providing that the agencies will take account of the exposure of a
banks capital and economic value to changes in interest rate risk in assessing
a banks capital adequacy.  Standards for Safety and
Soundness.The federal banking agencies have adopted
final regulations and Interagency Guidelines Establishing Standards for Safety
and Soundness to implement safety and soundness standards.  The Guidelines set forth the safety and
soundness standards that the federal banking agencies use to identify and
address problems at insured depository institutions before capital becomes
impaired.  If the appropriate federal
banking agency determines that an institution fails to meet any standard
prescribed by the Guidelines, the agency may require the institution to submit
to the agency an acceptable plan to achieve compliance with the standard.  Lending Restrictions.The Bank is prohibited by Illinois from
making secured or unsecured loans for business, corporate, commercial or
agricultural purposes representing in the aggregate an amount in excess of 15%
of its total assets, unless the Commissioner authorizes in writing a higher
percentage limit for such loans upon the request of an institution.  The Bank is also subject to a loans-to-one borrower limitation.  Under the Illinois law, the total loans and
extensions of credit by the Bank to any person outstanding at one time must not
exceed the greater of $500,000 or 20% of the Banks total capital plus general
loan loss reserves.  In addition, the
Bank may make loans in an amount equal to an additional 10% of the Banks
capital plus general loan loss reserves if secured by readily marketable
collateral.  Dividend Limitations.Under the
ISBA, dividends may only be declared when the total capital of the Bank is
greater than that required by Illinois law. 
Dividends may be paid by the Bank out of its net profits.  The written approval of the Commissioner
must be obtained, however, before a savings bank having total capital of less
than 6% of total assets may declare dividends in any year in an amount in
excess of 50% of its net profits for that year.  A savings bank may not declare dividends in excess of its net
profits in any year without the approval of the Commissioner.  Finally, the Bank will be unable to pay
dividends in an amount which would reduce its capital below the greater of (i)
the amount required by the FDIC capital regulations or otherwise specified by
the FDIC, (ii) the amount required by the Commissioner or (iii) the amount
required for the liquidation account to be established by the Bank in
connection with the Banks conversion. 
The Commissioner and the FDIC also have the authority to prohibit the
payment of any dividends by the Bank if the Commissioner or the FDIC determines
that the distribution would constitute an unsafe or unsound practice.  Prompt Corrective Regulatory Action  Federal law requires, among other things, that federal bank regulatory
authorities take prompt corrective action with respect to banks that do not
meet minimum capital requirements.  For
these purposes, the law establishes various capital categories.  The FDIC has adopted regulations to
implement the prompt corrective action legislation.  Under the regulations, an institution is deemed to be
undercapitalized if it has a total risk-based capital ratio of less than 8%,
a Tier I risk-based capital ratio of less than 4%, or generally a leverage
ratio of less than 4%.  An institution
is deemed to be significantly undercapitalized  28 
   if it has a total risk-based capital ratio of less than 6%, a Tier I
risk-based capital ratio of less than 3%, or a leverage ratio of less than
3%.  An institution is deemed to be critically
undercapitalized if it has a ratio of tangible equity (as defined in the
regulations) to total assets that is equal to or less than 2%.  Undercapitalized banks are subject to growth, capital distribution
(including dividend) and other limitations and are required to submit a capital
restoration plan.  A banks compliance
with such plan must be guaranteed by any company that controls the
undercapitalized institution in an amount equal to the lesser of 5.0% of the
Banks total assets when deemed undercapitalized or the amount necessary to
achieve the status of adequately capitalized. 
If an undercapitalized bank fails to submit an acceptable plan, it is
treated as if it is significantly undercapitalized.  Significantly undercapitalized banks are subject to one or more
of a number of additional restrictions, including but not limited to an order
by the FDIC to sell sufficient voting stock to become adequately capitalized,
requirements to reduce total assets and cease receipt of deposits from correspondent
banks or dismiss directors or officers. 
Critically undercapitalized institutions also may not make any payment
of principal or interest on certain subordinated debt or extend credit for a
highly leveraged transaction or enter into any material transaction outside the
ordinary course of business.  In
addition, subject to a narrow exception, the appointment of a receiver or
conservator is required for a critically undercapitalized institution within
270 days after it obtains such status.  Transactions with Affiliates  Transactions between depository institutions and their affiliates are
governed by federal law.  An affiliate
of a savings bank is any company or entity that controls, is controlled by, or
is under common control with the savings bank, other than a subsidiary.  In a holding company context, at a minimum,
the parent holding company of a savings bank and any companies which are
controlled by such parent holding company are affiliates of the savings
bank.  Generally, the extent to which
the savings bank or its subsidiaries may engage in covered transactions,
including loans, with any one affiliate is limited to 10% of such savings
banks capital stock and surplus, and there is an aggregate limit on all such
transactions with all affiliates of 20% of such capital stock and surplus.  Federal law also establishes specific
collateral requirements for loans or extensions of credit to, or guarantees,
acceptances on letters of credit issued on behalf of an affiliate.  Covered transactions and a broad list of
other specified transactions also must be on terms substantially the same, or
no less favorable, to the savings bank or its subsidiary as similar
transactions with nonaffiliates.  Federal law also restricts a savings bank with respect to loans to
directors, executive officers, and principal stockholders.  Loans to directors, executive officers and
stockholders who control, directly or indirectly, 10% or more of voting
securities of a savings bank, and certain related interests of any of the
foregoing, may not exceed the savings banks total capital and surplus.  Loans to directors, executive officers and
principal shareholders must be made on terms substantially the same as offered
in comparable transactions to other persons, except that such insiders may
receive preferential loans  made
pursuant to a benefit or compensation program that is widely available to the
Banks employees and does not give preference to the insider over the
employees.  Federal law also establishes
board of director approval requirements for loans exceeding a certain
amount.  There are additional
limitations on loans to executive officers.  Enforcement  The Commissioner and FDIC have extensive enforcement authority over
Illinois-chartered savings banks, including the Bank.  This enforcement authority includes, among other things, the
ability to assess civil money penalties, to issue cease and desist orders and
to remove directors and officers.  In
general, these enforcement actions may be initiated in response to violations
of laws and regulations and to unsafe or unsound practices.  The Commissioner is given authority by Illinois law to appoint a
conservator or receiver for an Illinois savings bank under certain
circumstances including, but not limited to, insolvency, a substantial
dissipation of assets due to violation of law, regulation, order of the
Commissioner or an unsafe or unsound practice. 
The FDIC also has authority under federal law to appoint a conservator
or receiver for an insured savings bank under certain circumstances.  29 
   Insurance
of Deposit Accounts  Deposits of the Bank are presently insured by the SAIF.  The FDIC maintains a risk-based assessment
system by which institutions are assigned to one of three categories based on
their capitalization and one of three subcategories based on examination
ratings and other supervisory information. 
An institutions assessment rate depends upon the categories to which it
is assigned.  Assessment rates for SAIF
member institutions are determined semiannually by the FDIC and currently range
from zero basis points for the healthiest institutions to 27 basis points of
assessable deposits for the riskiest.  In addition to the assessment for deposit insurance, institutions are
required to make payments on bonds issued in the late 1980s by the Financing
Corporation (FICO) to recapitalize the predecessor to the SAIF.  During 2001, FICO payments for SAIF members
approximated 1.895 basis points of assessable deposits.  The Banks assessment rate for 2001 was zero.  Payments toward the FICO bonds amounted to $70,000.  The FDIC has authority to increase insurance
assessments.  A significant increase in
SAIF insurance premiums would likely have an adverse effect on the operating
expenses and results of operations of the Bank.  Management cannot predict what insurance assessment rates will be
in the future.  Insurance of deposits may be terminated by the FDIC upon a finding that
the institution has engaged in unsafe or unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order or condition imposed by the FDIC or the OTS.  The management of the Bank does not know of
any practice, condition or violation that might lead to termination of deposit
insurance.  Federal Reserve System  The Federal Reserve Board regulations require depository institutions
to maintain noninterestearning reserves against their transaction
accounts (primarily NOW and regular checking accounts).  The Federal Reserve Board regulations
generally require that reserves be maintained against aggregate transaction
accounts as follows:  for that portion of
transaction accounts aggregating $41.3 million or less (subject to adjustment
by the Federal Reserve Board) the reserve requirement is 3%; and for accounts
greater than $41.3 million, the reserve requirement is $1.239 million plus 10%
(subject to adjustment by the Federal Reserve Board between 8% and 14%) against
that portion of total transaction accounts in excess of $41.3 million.  The first $5.7 million of otherwise
reservable balances (subject to adjustments by the Federal Reserve Board) are
exempted from the reserve requirements. 
The Bank is in compliance with the foregoing requirements.  Federal Home Loan Bank System  The Bank is a member of the FHLB System, which consists of 12 regional
FHLBs.  The FHLB provides a central
credit facility primarily for member institutions.  The Bank, as a member of the FHLB, is required to acquire and
hold shares of capital stock in the FHLB in an amount at least equal to 1% of
the aggregate principal amount of its unpaid residential mortgage loans and
similar obligations at the beginning of each year, or 1/20 of its advances
(borrowings) from the FHLB, whichever is greater.  The Bank was in compliance with this requirement with an
investment in FHLB stock at December 31, 2001 of $8.9 million.  The FHLBs are required to provide funds for the resolution of insolvent
thrifts and to contribute funds for affordable housing programs.  These requirements could reduce the amount
of dividends that the FHLBs pay to their members and could also result in the
FHLBs imposing a higher rate of interest on advances to their members.  For the years ended December 31, 2001, 2000
and 1999, dividends from the FHLB to the Bank amounted to approximately
$539,000, $508,000 and $285,000, respectively.  Holding Company Regulation  Federal law allows a state savings bank that qualifies as a qualified
thrift lender to elect to be treated as a savings association for purposes of
the savings and loan holding company provisions of federal law.  Such election results in its holding company
being regulated as a savings and loan holding company by the OTS rather than as
a bank holding company by the Federal Reserve Board.  The Bank has made such election and has received approval from
the OTS to become a savings and loan  30 
   holding company.  The Company
has registered with the OTS and is subject to OTS regulations, examinations,
supervision and reporting requirements. 
In addition, the OTS has enforcement authority over the Company and its
nonsavings institution subsidiaries. 
Among other things, this authority permits the OTS to restrict or
prohibit activities that are determined to be a serious risk to the subsidiary
savings institution.  Additionally, the
Bank is required to notify the OTS at least 30 days before declaring any dividend
to the Company.  Because the Bank is
chartered under Illinois law, the Company is also subject to registration with
and regulation by the Commissioner.  As a unitary savings and loan holding company, the Company is generally
not restricted under existing laws as to the types of business activities in
which it may engage.  The
Gramm-Leach-Bliley Act of 1999 provided that no company may acquire control of
a savings association after May 4, 1999 unless it engages only in the financial
activities permitted for financial holding companies under the law or for
multiple savings and loan holding companies as described below.  Further, the Gramm-Leach-Bliley Act
specifies that existing savings and loan holding companies may only engage in
such activities.  The Gramm-Leach-Bliley
Act, however, grandfathered the unrestricted authority for activities with
respect to unitary savings and loan holding companies existing prior to May 4,
1999, such as the Company, so long as the Bank continues to comply with the
qualified thrift lender test.  Upon any
nonsupervisory acquisition by the Company of another savings association
as a separate subsidiary, the Company would become a multiple savings and loan
holding company and would be subject to limitations on the types of business
activities in which it could engage. 
Federal law limits the activities of a multiple savings and loan holding
company and its noninsured institution subsidiaries primarily to
activities permissible for bank holding companies under Section 4(c)(8) of the
Bank Holding Company Act, subject to the prior approval of the OTS, to those
permissible for financial holding companies and to other activities authorized
by OTS regulation.  Multiple savings and
loan holding companies are prohibited from acquiring or retaining, with certain
exceptions, more than 5% of a nonsubsidiary company engaged in
activities other than those permitted by federal law.  Federal law prohibits a savings and loan holding company, directly or
indirectly, or through one or more subsidiaries, from merging with or acquiring
more than 5% of the voting stock of another savings institution or holding
company thereof without prior written approval of the OTS.  In evaluating applications by holding
companies to acquire savings institutions, the OTS must consider the financial
and managerial resources and future prospects of the company and institution
involved, the effect of the acquisition on the risk to the insurance funds, the
convenience and needs of the community and competitive factors.  The OTS is prohibited from approving any acquisition that would result
in a multiple savings and loan holding company controlling savings institutions
in more than one state, except: 
(i) interstate supervisory acquisitions by savings and loan holding
companies; and (ii) the acquisition of a savings institution in another
state if the laws of the state of the target savings institution specifically
permit such acquisitions.  The states
vary in the extent to which they permit interstate savings and loan holding
company acquisitions.  In order to elect and continue to be regulated as a savings and loan
holding company by the OTS, the Bank must continue to qualify as a qualified
thrift lender.  This requires the Bank
to maintain compliance with the test for a domestic building and loan
association, as defined in the Internal Revenue Code, or with a Qualified
Thrift Lender Test.  Under the Test, a
savings institution is required to maintain at least 65% of its portfolio
assets (total assets less: (i) specified liquid assets up to 20% of total assets;
(ii) intangibles, including goodwill; and (iii) the value of property used to
conduct business) in certain qualified thrift investments (primarily
residential mortgages and related investments, including certain
mortgage-backed and related securities) in at least 9 months out of each 12
month period.  A holding company of a
savings institution that fails to qualify as a qualified thrift lender must
either convert to a bank holding company and thereby become subject to the
regulation and supervision of the Federal Reserve Board or operate under
certain restrictions.  As of December
31, 2001, the Bank maintained in excess of 65% of its portfolio assets in
qualified thrift investments.  The Bank
also met the test in each of the prior 12 months and, therefore, is a qualified
thrift lender.  Recent legislative
amendments have broadened the scope of qualified thrift investments that go
toward meeting the test to fully include credit card loans, student loans and
small business loans.  Federal Securities Laws  Shares purchased by an affiliate of the Company will be subject to the
resale restrictions of Rule 144 under the Securities Act.  If the Company meets the current public
information requirements of Rule 144 under the Securities Act, each affiliate
of the Company who complies with the other conditions of Rule 144 (including
those that require the affiliates sale to be aggregated with those of certain
other persons) would be able to sell in the public market, without
registration, a number of shares not to exceed, in any threemonth
period, the greater of (i) 1% of the outstanding shares of the Company or (ii)
the average weekly  31 
   volume of trading in such shares during the preceding four calendar weeks.  Provision may be made in the future by the
Company to permit affiliates to have their shares registered for sale under the
Securities Act under certain circumstances.  FEDERAL AND STATE INCOME TAXATION  Federal Taxation  General.  The
Company files a consolidated federal income tax return.  To the extent a member incurs a loss which
is utilized to reduce the consolidated federal tax liability, that member will
be reimbursed for the tax benefit utilized from the member(s) incurring federal
tax liabilities.  Amounts provided for income tax expense are based upon income reported
for financial statement purposes and do not necessarily represent amounts
currently payable to federal and state tax authorities.  Deferred income taxes, which principally
arise from the temporary difference related to the recognition of certain
income and expense items for financial reporting purposes and the period in
which they affect federal and state taxable income, are included in the amounts
provided for income taxes.  Bad Debt Reserves.The Small
Business Job Protection Act of 1996 (the 1996 Act), which was enacted on
August 20, 1996, made significant changes to provisions of the Code relating to
a savings institutions use of bad debt reserves for federal income tax purposes
and requires such institutions to recapture (i.e. take into income) certain
portions of their accumulated bad debt reserves.  Prior to the enactment of the 1996 Act, the Bank was permitted to
establish tax reserves for bad debts and to make annual additions thereto,
which additions, within specified formula limits, were deducted in arriving at
the Banks taxable income.  The Banks
deduction with respect to qualifying loans, which are generally loans secured
by certain interests in real property, could be computed using an amount based
on a six-year moving average of the Banks actual loss experience (the
Experience Method), or a percentage equal to 8% of the Banks taxable income
(the PTI Method), computed without regard to this deduction and with
additional modifications and reduced by the amount of any permitted addition to
the non-qualifying reserve.    The
Banks deduction with respect to non-qualifying loans was required to be
computed under the Experience Method.  The 1996 Act.Under the 1996
Act, for its current and future taxable years, as a Small Bank, the Bank is
permitted to make additions to its tax bad debt reserves under an Experience
Method based on total loans.  However,
the Bank is required to recapture (i.e. take into income) over a six year
period the excess of the balance of its tax bad debt reserves as of
December 31, 1996 over the balance of such reserves as of
December 31, 1987.   As of
December 31, 1995, the Banks tax bad debt reserve exceeded the balance of
such reserve as of December 31, 1987 by $2.2 million.  However, the Bank will not incur an
additional tax liability related to its tax bad debt reserves since the Bank
has previously provided deferred taxes on the recapture amount.  Distributions.Under the 1996
Act, if the Bank makes non-dividend distributions to the Company, such
distributions will be considered to have been made from the Banks unrecaptured
tax bad debt reserves (including the balance of its reserves as of
December 31, 1987) to the extent thereof, and an amount based on the
amount distributed (but not in excess of the amount of such reserves) will be
included in the Banks income.  The term
non-dividend distributions is defined as distributions in excess of the
Banks current and accumulated earnings and profits, as calculated for federal
income tax purposes, distributions in redemption of stock, and distributions in
partial or complete liquidation. 
Dividends paid out of the Banks current or accumulated earnings and
profits will not cause this pre1988 reserve to be included in the Banks
income.  The amount of additional taxable income created from a non-dividend
distribution is an amount that, when reduced by the tax attributable to the
income, is equal to the amount of the distribution.  Thus, if the Bank makes a non-dividend distribution to the
Company, approximately one and one-half times the amount of such distribution
(but not in excess of the amount of such reserves) would be includable in
income for federal income tax purposes, assuming a 35% federal corporate income
tax rate.  The Bank does not intend to
pay dividends that would result in a recapture of any portion of its tax bad
debt reserves.  Dividends Received Deduction and
Other Matters.The Company may exclude from its income 100%
of dividends received from the Bank as a member of the same affiliated group of
corporations.  The corporate dividends
received deduction is generally 70% in the case of dividends received from
unaffiliated corporations with which the Company and the Bank will not file a
consolidated tax return, except that if the Company and the Bank own more than
20% of the stock of a corporation distributing a dividend, then 80% of any
dividends received may be excluded.  32 
   State
Taxation  Illinois State Taxation.  The
Bank and its subsidiaries are required to file Illinois income tax returns and
pay tax at an effective tax rate of 7.18% of Illinois taxable income.  For these purposes, Illinois taxable income
generally means federal taxable income subject to certain modifications the
primary one of which is the exclusion of interest income on United States
obligations.  The Bank and its subsidiaries file one combined corporation return for
State of Illinois income tax purposes.  Delaware State Taxation.As a Delaware
holding company not earning income in Delaware, the Company is exempt from
Delaware Corporate income tax but is required to file an annual report with and
pay an annual franchise tax to the State of Delaware.  Additional Item. 
Executive Officers of the Registrant.  The following table sets forth certain information regarding the
executive officers of the Company and the Bank who are not also directors or
Named Executive Officers.  Each of the
following executive officers have been employed at the Bank for at least five
years except where noted.  The executive
officers are elected annually and hold office until their successors have been
elected and qualified or until they are removed or are replaced.  Name
  
  Age at 12/31/01
  
  PositionRandy C. Blackburn
  
  42
  
  Senior Vice President/Information Technology  Employed by Bank since
  1997.  Prior to joining the Bank Mr.
  Blackburn was Director of Operations at Computer Dynamics Group in West
  Chicago, Illinois.Stephen P. DuBois
  
  52
  
  Senior Vice President/Marketing  Employed by Bank since 2000.  Prior to joining the Bank Mr. DuBois was
  Account Executive at WJZI FM Radio in Milwaukee, Wisconsin.Jerry L. Gosse
  
  66
  
  Vice President/Compliance Officer  Employed by Bank since 1993.Sandra L. Sommers
  
  59
  
  Senior Vice President/Savings  Employed by Bank since 1960.Joseph E. Stanczak
  
  49
  
  Senior Vice President  Employed by Bank since 1974.Nancy L. Topalovich
  
  47
  
  Senior Vice President  Employed by Bank since 1999.  Prior to joining the Bank Ms. Topalovich
  was President and Chief Executive Officer of Harris Bank in Huntley,
  Illinois.  33 
   Item 2. Properties.  The Bank conducts its business through an executive and full-service
branch office located in Elgin and six other full-service branch offices.  The Bank began construction on its seventh
full-service branch, which is located in neighboring Carpentersville, Illinois,
in November 2001.  In addition, the current
downtown Elgin, Illinois branch will be relocated to a larger downtown facility
in 2002.  The Company believes that the
Banks facilities are adequate to meet the present and immediately foreseeable
needs of the Bank and the Company.  Location
  
  LeasedorOwned
  
  OriginalYearLeasedorAcquired
  
  Date ofLeaseExpiration
  
  Net Book Valueof Property orLeaseholdImprovements atDecember 31, 
  2001(In thousands)Executive/Main/Branch
  Office:1695 Larkin Avenue
  Elgin, Illinois  60123
  
  Owned
  
  1973
  
  
  
  $
  1,087Branch
  Offices:850 Summit Street
  Elgin, Illinois 60120
  
  Owned
  
  1983
  
  
  
  396176 East Chicago Avenue
  Elgin, Illinois 60120
  
  Owned
  
  1953
  
  
  
  1601000 S. McLean Boulevard
  Elgin, Illinois 60123
  
  Leased
  
  1996
  
  2011
  
  144390 South Eighth Street
  Route 31 & Village
  Quarter Road
  West Dundee, Illinois
  60118
  
  Owned
  
  1980
  
  
  
  1,04413300 Route 47
  Huntley, Illinois 60142
  
  Owned
  
  1998
  
  
  
  2,787543 East Main Street
  East Dundee, Illinois 60118
  
  Leased
  
  2000
  
  2015
  
  222Other
  Properties:44 South Lyle Street
  Elgin, Illinois 60123 (1)
  
  Owned
  
  1986
  
  
  
  741665 Larkin Avenue
  Elgin, Illinois 60123 (2)
  
  Owned
  
  1996
  
  
  
  1,17528 North Grove Street.
  Elgin, Illinois 60123 (3)
  
  Owned
  
  2001
  
  
  
  6102429 Randall Road.
  Carpentersville, Illinois
  60110 (4)
  
  Owned
  
  2001
  
  
  
  1,627  
  (1)The property consists of one commercial retail
unit and a parking lot.  The property is
located across the street from the Banks main office and the parking lot is
utilized by Bank customers and employees. (2)The property is located immediately adjacent
to the Banks main office and consists of commercial office space and a parking
lot.  The Lifestyle Advantage and
Information Technology Departments are also located in this property. (3)The current downtown Elgin branch will be
relocated to this building in 2002. (4)This property is currently under construction
and will be the Banks seventh full-service branch when completed in 2002.  34 
   Item 3. Legal Proceedings.  The
Company is not involved in any pending legal proceedings other than routine
legal proceedings occurring in the ordinary course of business.  Such routine legal proceedings, in the aggregate,
are believed by management to be immaterial to the financial condition and
results of operations of the Company.  Item 4. Submission of Matters to a Vote of Security Holders.  None.  PART II  Item 5.  Market for
the Companys Common Equity and Related Stockholder Matters.  The
Common Stock of the Company is traded on the American Stock Exchange under the
symbol EFC.  The stock began trading
on April 3, 1998.  During 2001, the
Company declared dividends to its shareholders amounting to $0.50 per share.  As of March 8, 2002, there were
approximately 2,440 shareholders of the Common Stock of the Company, which
includes shares held in street name. 
The following table sets forth for the quarters indicated the range of
high and low sale price information for the Common Stock of the Company as
reported on the American Stock Exchange.  Year Ended December 31, 20014th Quarter
  
  3rd Quarter
  
  2nd Quarter
  
  1st QuarterHigh
  
  $
  14.50
  
  $
  12.39
  
  $
  11.70
  
  $
  11.25Low
  
  12.10
  
  11.50
  
  10.35
  
  10.25  Year Ended December 31, 20004th Quarter
  
  3rd Quarter
  
  2nd Quarter
  
  1st QuarterHigh
  
  $
  10.375
  
  $
  9.938
  
  $
  10.25
  
  $
  10.625Low
  
  8.75
  
  8.875
  
  8.625
  
  8.50  Item 6.
Selected Financial Data.  See
Selected Consolidated Financial and Other Data of the Company on the fourth
page hereof.  In the electronic version
of the Form 10-K the above-captioned information appears in Exhibit 13.  Item 7.  Managements
Discussion and Analysis of Financial Condition and Results of Operations.  Forward-Looking Statements  This report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.  The Company intends such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995,
and is including this statement for purposes of these safe harbor
provisions.  Forward-looking statements,
which are based on certain assumptions and describe future plans, strategies
and expectations of the Company, are generally identifiable by use of the words
believe, expect, intend, anticipate, estimate, project, or similar
expressions.  The Companys ability to
predict results or the actual effect of future plans or strategies is
inherently uncertain.  Factors which
could have a material adverse effect on the operations and future prospects of
the Company and the subsidiaries include, but are not limited to, changes in:
interest rates, general economic conditions, legislative/regulatory changes,
monetary and fiscal policies  35 
   of the U.S. Government, including policies of the U.S. Treasury and the
Federal Reserve Board, the quality or composition of the loan or investment
portfolios, demand for loan products, deposit flows, competition, demand for
financial services in the Companys market area and accounting principles,
policies and guidelines.  These risks
and uncertainties should be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements.  Further information concerning the Company
and its business, including additional factors that could materially affect the
Companys financial results, is included in the Companys filings with the SEC.  The Company does not undertake  and specifically disclaims any
obligation  to publicly release the result of any revisions which may be made
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.  Management of Interest Rate Risk and Market Risk Analysis  The
principal objective of the Companys interest rate risk management is to
evaluate the interest rate risk inherent in certain balance sheet accounts,
determine the level of risk appropriate given the Banks business strategy,
operating environment, capital and liquidity requirements and performance
objectives, and manage the risk consistent with the Board of Directors
approved guidelines.  Through such
management, the Company seeks to reduce the vulnerability of its operations to
changes in interest rates.  The Banks
Board of Directors reviews the Banks interest rate risk position on a
quarterly basis.  The Banks
Asset/Liability Committee is comprised of the Banks entire Board of Directors
and members of senior management.  The
Committee is responsible for reviewing the Banks activities and strategies,
the effect of those strategies on the Banks net interest margin, the market
value of the portfolio and the effect that changes in the interest rates will
have on the Banks portfolio and the Banks exposure limits.  In
recent years, the Bank has  emphasized
the origination, purchase and retention of adjustable-rate mortgage loans and
shorter-term fixed-rate mortgage loans, consumer loans consisting primarily of
home equity lines of credit and short-term commercial business loans to
strategically manage interest rate risk. 
The Bank currently does not participate in hedging programs, interest
rate swaps or other activities involving the use of derivative financial
instruments.  In
the event of sharply rising interests rates, the Bank has, with retention in
mind, competitively priced deposits. 
During 2001, the Bank focused on attracting money market accounts as
well as time deposits.  As necessary,
the Bank has offered competitive special products to increase retention.  Historically, the Bank has retained
significant levels of maturing time deposits based on the above practice, as
well as effective customer service and long-standing relationships with
customers.  From January 1, 2001 to
December 31, 2001, the Bank retained 89.0% of funds maturing from time
deposits.  Analysis of Net Interest Income  Net interest income represents the difference between income on
interestearning assets and expense on interestbearing
liabilities.  Net interest income
depends on the relative amounts of interestearning assets and interestbearing
liabilities and the interest rate earned or paid on them.  Average Balance Sheet.The following
table sets forth certain information relating to the Bank for the years ended
December 31, 2001, 2000 and 1999.  The
average yields and costs are derived by dividing income or expense by the
average balance of interest-earning assets or interest-bearing liabilities,
respectively, for the periods shown and reflect annualized yields and
costs.  Average balances are derived
from average monthly balances. The yields and costs include fees which are
considered adjustments to yields.  Tax
exempt income has not been calculated on a tax equivalent basis.  36 
   For the
  Year Ended December 31,2001
  
  2000
  
  1999AverageBalance
  
  Interest
  
  AverageYield/Cost
  
  AverageBalance
  
  Interest
  
  AverageYield/Cost
  
  AverageBalance
  
  Interest
  
  Average
  Yield/Cost(Dollars
  in thousands)Assets:Interest-earning assets:Short-term deposits
  
  $28,416
  
  $751
  
  2.64
  %
  $17,511
  
  $693
  
  3.96
  %
  $19,339
  
  $632
  
  3.27
  %Investment securities
  
  61,201
  
  3,807
  
  6.22
  
  65,744
  
  4,550
  
  6.92
  
  57,909
  
  3,738
  
  6.46Mortgage-backed and mortgagerelated securities
  
  12,874
  
  827
  
  6.42
  
  10,519
  
  835
  
  7.94
  
  13,734
  
  971
  
  7.07Mortgage loans, net
  
  445,761
  
  33,632
  
  7.54
  
  402,871
  
  30,362
  
  7.54
  
  332,331
  
  24,901
  
  7.49Other loans
  
  55,127
  
  4,285
  
  7.77
  
  31,693
  
  2,866
  
  9.04
  
  17,964
  
  1,457
  
  8.11FHLB stock
  
  8,541
  
  539
  
  6.31
  
  6,835
  
  508
  
  7.43
  
  4,320
  
  285
  
  6.60Total interest-earning assets
  
  611,920
  
  43,841
  
  7.16
  
  535,173
  
  39,814
  
  7.44
  
  445,597
  
  31,984
  
  7.18Noninterest-earning assets
  
  21,466
  
  
  
  
  
  20,579
  
  
  
  
  
  19,197Total assets
  
  $633,386
  
  
  
  
  
  $555,752
  
  
  
  
  
  $464,794Liabilities and Equity:Interest-bearing liabilities:Deposits:Money market accounts
  
  $76,406
  
  $3,057
  
  4.00
  %
  $32,921
  
  $1,261
  
  3.83
  %
  $29,379
  
  $1,037
  
  3.53
  %Passbook savings accounts
  
  74,726
  
  2,325
  
  3.11
  
  74,560
  
  2,807
  
  3.76
  
  70,260
  
  2,356
  
  3.35NOW accounts
  
  28,848
  
  309
  
  1.07
  
  28,724
  
  457
  
  1.59
  
  27,414
  
  493
  
  1.80Certificates of deposit
  
  186,883
  
  10,764
  
  5.76
  
  196,301
  
  11,374
  
  5.79
  
  150,680
  
  7,946
  
  5.27Total deposits
  
  366,863
  
  16,455
  
  4.49
  
  332,506
  
  15,899
  
  4.78
  
  277,733
  
  11,832
  
  4.26FHLB advances
  
  164,783
  
  8,978
  
  5.45
  
  129,783
  
  7,502
  
  5.78
  
  85,983
  
  4,469
  
  5.20Total interest-bearing liabilities
  
  531,646
  
  25,433
  
  4.78
  
  462,289
  
  23,401
  
  5.06
  
  363,716
  
  16,301
  
  4.48Noninterest-bearing liabilities
  
  33,778
  
  
  
  
  
  27,927
  
  
  
  
  
  24,051Total liabilities
  
  565,424
  
  
  
  
  
  490,216
  
  
  
  
  
  387,767Total equity
  
  67,962
  
  
  
  
  
  65,536
  
  
  
  
  
  77,027Total liabilities and equity
  
  $633,386
  
  
  
  
  
  $555,752
  
  
  
  
  
  $464,794Net interest income
  
  
  
  $18,408
  
  
  
  
  
  $16,413
  
  
  
  
  
  $15,683Interest rate spread
  
  
  
  
  
  2.38
  %
  
  
  
  
  2.38
  %
  
  
  
  
  2.70
  %Net interest margin as a percent of interest-earning assets
  
  
  
  
  
  3.01
  %
  
  
  
  
  3.07
  %
  
  
  
  
  3.52
  %Ratio of interest-earning assets to interest-bearing liabilities
  
  
  
  
  
  115.10
  %
  
  
  
  
  115.77
  %
  
  
  
  
  122.51
  %  37 
  Rate/Volume Analysis.The following
table presents the extent to which changes in interest rates and changes in the
volume of interestearning assets and interestbearing liabilities
have affected the Banks interest income and interest expense during the periods
indicated.  Information is provided in
each category with respect to: 
(i) changes attributable to changes in volume (changes in volume
multiplied by prior rate); (ii) changes attributable to changes in rate
(changes in rate multiplied by prior volume); (iii) changes due to a
combination of volume and rate; and (iv) the net change.  The change in interest, not solely due to
changes in volume or rates, has been consistently allocated in proportion to
the absolute dollar amount of the change in each.  Year Ended
  December 31, 2001
  Compared to
  Year Ended
  December 31, 2000
  
  Year Ended
  December 31, 2000
  Compared to
  Year Ended
  December 31, 1999Increase (Decrease)
  Due to
  
  
  
  Increase (Decrease ) 
  Due toVolume
  
  Rate
  
  Vol./Rate
  
  Net
  
  Volume
  
  Rate
  
  Vol./Rate
  
  Net(In thousands)Interest-earning assets:Short-term deposits
  
  $432
  
  $(231
  )
  $(143
  )
  $58
  
  $(60
  )
  $133
  
  $(12
  )
  $61Investment securities
  
  (314
  )
  (460
  )
  31
  
  (743
  )
  509
  
  267
  
  36
  
  812Mortgage-backed and mortgage-related securities, net
  
  187
  
  (160
  )
  (35
  )
  (8
  )
  (227
  )
  119
  
  (28
  )
  (136
  )Mortgage loans, net
  
  3,270
  
  
  
  
  
  3,270
  
  5,262
  
  165
  
  35
  
  5,462Other loans
  
  2,118
  
  (402
  )
  (297
  )
  1,419
  
  1,113
  
  167
  
  129
  
  1,409FHLB stock
  
  127
  
  (77
  )
  (19
  )
  31
  
  166
  
  36
  
  21
  
  223Total interest-earning assets
  
  5,820
  
  (1,330
  )
  (463
  )
  4,027
  
  6,763
  
  887
  
  181
  
  7,831Interest-bearing liabilities:Money market accounts
  
  1,666
  
  56
  
  74
  
  1,796
  
  125
  
  88
  
  11
  
  224Passbook savings accounts
  
  6
  
  (487
  )
  (1
  )
  (482
  )
  144
  
  288
  
  19
  
  451NOW accounts
  
  2
  
  (149
  )
  (1
  )
  (148
  )
  24
  
  (58
  )
  (2
  )
  (36
  )Certificates of deposit
  
  (548
  )
  (59
  )
  (3
  )
  (610
  )
  2,406
  
  785
  
  237
  
  3,428FHLB advances
  
  2,019
  
  (427
  )
  (116
  )
  1,476
  
  2,280
  
  499
  
  254
  
  3,033Total interest-
  bearing
  liabilities
  
  3,145
  
  (1,066
  )
  (47
  )
  2,032
  
  4,979
  
  1,602
  
  519
  
  7,100Net change in net interest income
  
  $2,675
  
  $(264
  )
  $(416
  )
  $1,995
  
  $1,784
  
  $(715
  )
  $(338
  )
  $731  Comparison of Financial Condition For the Years Ended
December 31, 2001 and December 31, 2000  Total assets at December 31, 2001 were $673.4 million, which
represented an increase of $90.2 million, or 15.5%, compared to $583.2 million
at December 31, 2000.  The change in total
assets was primarily due to increases in loans receivable, investment
securities, mortgage-backed securities and other assets.  Loans receivable, net, increased by $77.3
million, or 16.8%, to $537.1 million at December 31, 2001 as compared to $459.8
million at December 31, 2000.  The
increase in loans receivable was attributable to a $48.7 million increase in
the Banks one- to four-family mortgage loan portfolio; a $7.1 million increase
in the multi-family mortgage loan portfolio; a $13.1 million increase in the
commercial real estate loan portfolio; and a $4.8 million increase in the
commercial business loan portfolio during the year ended December 31,
2001.  Investment securities increased
by $4.5 million to $68.6 million at December 31, 2001 as compared to $64.1
million at December 31, 2000.  This
increase was due to a $22.1 million increase in municipal securities and a $7.0
million increase in FNMA/FHLMC preferred stock, which was partially offset by a
$24.6 million decrease in U.S. Government obligations.  Mortgage-backed securities increased by $4.4
million to $13.9 million at December 31, 2001 as compared to $9.5 million at
December 31, 2000.  Other assets
increased by $10.3 million to $12.1 million at December 31, 2001 as compared to
$1.8 million at December 31, 2000.  The
increase in other assets is primarily attributed to the purchase of $10.8
million of bank owned life insurance. 
These increases were partially offset by a decrease in cash and cash
equivalents of $8.8 million to $18.2 million at December 31, 2001 as compared
to $27.0 million at December 31, 2000. 
The growth in total assets was funded by increases in borrowed money and
savings deposits.  Borrowed money,
representing FHLB advances, increased by $35.0 million to $175.2 million at December
31, 2001 as compared to $140.2  38 
   million at December 31, 2000. 
Savings deposits increased $50.6 million, or 13.7%, to $420.1 million at
December 31, 2001 from $369.5 million at December 31, 2000.  The increase in deposits is largely due to
increased  advertising and a new branch
office.  Stockholders equity increased
by $1.3 million to $68.6 million at December 31, 2001 as compared to $67.3
million at December 31, 2000.  This
increase is primarily the result of the Companys net income during the year
and a $276,000 increase in the Companys accumulated other comprehensive income
relating to its available-for-sale investment portfolio, offset by stock
repurchases and dividends paid.  Comparison of Operating Results for the Years Ended
December 31, 2001 and December 31, 2000  General. The Companys net income increased $774,000,
to $4.6 million for the year ended December 31, 2001, from $3.9 million for the
year ended December 31, 2000.  Interest Income.Interest income increased $4.0 million, or
10.1%, to $43.8 million for the year ended December 31, 2001, compared with the
year ended December 31, 2000.  This
increase resulted from an increase in average interest-earning assets offset by
a decrease in average yield.  The
largest component was an increase of $3.3 million in mortgage loan interest
income for the year ended December 31, 2001. 
This resulted from an increase in average balance of $42.9 million, the
average yield remained unchanged at 7.54% for both year end periods.  This was partially offset by a decrease of
$693,000 in interest income on investment and mortgage-backed securities
available-for-sale and short-term deposits. 
This resulted from an increase in average balance of $8.7 million offset
by a decrease in average yield of 123 basis points.  Overall, the average yield on the Banks interest-earning assets
decreased by 28 basis points to 7.16% for the year ended December 31, 2001 from
7.44% for the year ended December 31, 2000.  The decrease in average yield is due to a general decline in
interest rates.  The average balance of
interest-earning assets increased $76.7 million, or 14.3%, to $611.9 million
for the year ended December 31, 2001 from $535.2 million for the comparable period
in 2000.  Interest Expense.Interest expense increased by $2.0 million,
or 8.7%, to $25.4 million for the year ended December 31, 2001, from $23.4
million for the year ended December 31, 2000. 
This increase resulted from the increase in the average balance of
interest-bearing liabilities, the effect of which was partially offset by an
overall decrease in the average rate paid on those interest-bearing
liabilities.  The average rate paid on
total deposits decreased 29 basis points to 4.49% for the year ended December
31, 2001 from 4.78% for the year ended December 31, 2000.  The average balance of deposits  increased $34.4 million, or 10.3%, to $366.9
million for the year ended December 31, 2001 from $332.5 million for the year
ended December 31, 2000.  The resulting
increase in interest expense totaled $556,000 for the year ended December 31,
2001.  Interest expense resulting from
borrowed money increased by $1.5 million. 
The average rate paid on borrowed money decreased 33 basis points to
5.45% for the year ended December 31, 2001 from 5.78% for the year ended
December 31, 2000.  This decrease in
average rate was offset by an increase of $35.0 million in the average balance
of borrowed money to $164.8 million for the year ended December 31, 2001 from $129.8
million for the year ended December 31, 2000.  Net Interest Income Before Provision
for Loan Losses.Net
interest income before provision for loan losses increased $2.0 million, or
12.2%, to $18.4 million for the year ended December 31, 2001 from $16.4 million
for the year ended December 31, 2000. 
This increase was primarily attributed to a $76.7 million increase in
average interest-earning assets, at an average yield of 7.16%, offset by an
increase in the average balance of interest-bearing liabilities of $69.4
million, at an average cost of 4.78%. 
The interest rate spread remained unchanged at 2.38% for both year end
periods.  The net interest margin as a
percent of interest-earning assets decreased 6 basis points to 3.01% for the
year ended December 31, 2001 as compared to 3.07% for the comparable period in
2000.  Provision for Loan Losses.The Banks provision for loan losses
increased $137,000 to $500,000 for the year ended December 31, 2001 from
$363,000 in 2000.  At December 31, 2001
and 2000, non-performing loans totaled $2.6 million and $4.5 million,
respectively.  At December 31, 2001,
$1.6 million of the $2.6 million in non-performing loans was secured by a first
mortgage on a commercial building located in Elgin, Illinois.  At December 31, 2001 and 2000 the balance of
the allowance for loan losses totaled $2.3 million and $1.9 million,
respectively.  At December 31, 2001, the
ratio of the allowance for loan losses to non-performing loans was 87.4% compared
to 41.5% at December 31, 2000.  The
ratio of the allowance to total loans was 0.42% and 0.41% at December 31, 2001
and 2000, respectively.  Net charge-offs
totaled $126,000 and $27,000 in 2001 and 2000, respectively. Management
periodically calculates an allowance sufficiency analysis based upon the
portfolio composition, asset classifications, loan-to-value ratios, impairments
in the current loan portfolio, and other factors.  This analysis  is designed
to reflect credit losses for specifically identified loans, as well as credit
losses in the remainder of the loan portfolio. 
The reserve methodology employed by management reflects the difference
in degree of risk between the various categories of loans in the Banks
portfolio.  The reserve methodology also
critically assesses those loans adversely classified in the portfolio by
management as doubtful, substandard or special mention.  These allowance  39 
   components are set at a higher factor than the non-classified one- to
four-family loans in the portfolio to reflect the greater level of risk to
which management believes the Bank is exposed. 
Management believes that the provision for loan losses and the allowance
for loan losses are currently adequate to cover probable losses in the existing
loan portfolio.  While management
estimates loan losses using the best available information, no assurance can be
given that future additions to the allowance will not be necessary based on
changes in economic and real estate market conditions, further information
obtained regarding problem loans, identification of additional problem loans
and other factors, both within and outside of managements control.  Noninterest Income.Noninterest income totaled $1.8 million and
$1.3 million for the years ended December 31, 2001 and 2000, respectively.  Service fees increased $268,000 to $1.2
million for the year ended December 31, 2001 from $953,000 for the comparable
period in 2000.  In addition, real
estate and insurance commissions increased $152,000 to $319,000 for the year
ended December 31, 2001 from $167,000 for the year ended December 31,
2000.  Gains on sale of loans totaled
$171,000 for the year ended December 31, 2001. 
There were no loan sales for the year ended December 31, 2000.  These increases were partially offset by a
$117,000 decrease to $33,000 in gains on the sales of securities for the year
ended December 31, 2001 from $150,000 for the comparable period in 2000.  Noninterest Expense.Noninterest expense increased by $1.2
million, to $12.6 million for the year ended December 31, 2001 from $11.4
million for the comparable period in 2000. 
Compensation and benefits increased by $760,000, or 12.0%, to $7.1
million for the year ended December 31, 2001 compared to $6.3 million for the
year ended December 31, 2000.  This
increase was primarily due to a combination of annual salary increases and the
addition of staff.  The additional staff
expenses are partially attributed to the opening of the Banks newest branch in
June 2000.  All other operating expenses,
including advertising, depreciation and repairs, marketing, postage,
communications, data processing and other office expense increased by a
combined $437,000, or 8.7% to $5.5 million for the year ended December 31, 2001
compared to $5.1 million for the comparable period in 2000.  Of this increase, $142,000 is related to
depreciation and repairs; $14,000 of office building expenses; and $62,000 of
data processing expense.  The efficiency
ratio improved to 62.2% for the year ended December 31, 2001 from 64.2% for the
comparable prior year period.  In
addition, the noninterest expense to average total asset ratio decreased 6
basis points to 1.99% at December 31, 2001 from 2.05% for the prior year
period.  Management continues to
emphasize the importance of expense management and control in order to continue
to provide expanded banking services to a growing market base.  Income Tax Expense.Income tax expense totaled $2.5 million for
the year ended December 31, 2001 compared to $2.1 million for the comparable
period in 2000.  The increase in the
provision for income taxes was the result of an increase in pretax income of
$1.1 million to $7.1 million for the year ended December 31, 2001 from $6.0
million for the same period in 2000. 
The effective tax rate decreased to 35.1% for the year ended December
31, 2001 from 35.6% for the preceding year.  Comparison of Operating Results for the Years Ended
December 31, 2000 and December 31, 1999  General. The Companys net income decreased $159,000,
to $3.9 million for the year ended December 31, 2000, from $4.0 million for the
year ended December 31, 1999.  Interest Income.  
Interest income increased $7.8 million, or 24.5%, to $39.8 million for
the year ended December 31, 2000, compared with 1999.  This increase resulted from an increase in average
interest-earning assets and an increase in average yield.  The largest component was an increase of
$5.5 million in mortgage loan interest income for the year ended December 31, 2000.  This resulted from an increase in average
balance of $70.5 million and a slight increase in average yield of 5 basis
points.  Another large component was an
increase of $1.4 million in other loan interest income for the year ended
December 31, 2000.  This resulted from
an increase in average balance of $13.7 million and an increase in average
yield of 93 basis points.  Overall, the
average yield on the Banks interest-earning assets increased by 26 basis
points to 7.44% for the year ended December 31, 2000 from 7.18% for the year
ended December 31, 1999.  The increase
in average yield is due to a general increase in loan rates in the Banks local
market area.  The average balance of
interest-earning assets increased by $89.6 million, or 20.1%, to $535.2 million
for the year ended December 31, 2000 from $445.6 million in 1999.  Interest Expense.  
Interest expense increased by $7.1 million, or 43.6%, to $23.4 million
for the year ended December 31, 2000, from $16.3 million for the year ended
December 31, 1999.  This increase
resulted from the increase in the average balance of interest-bearing
liabilities and an overall increase in the average rate paid on those
interest-bearing liabilities.  The
average rate paid on total deposits increased 52 basis points to 4.78% for the
year ended December 31, 2000 from 4.26% for the year ended December 31,
1999.  The related average balance of
deposits increased $54.8 million, or 19.7%, to $332.5 million for the year
ended December 31, 2000 from $277.7 million for the comparable period in
1999.  The resulting  40 
   increase in interest expense on deposits amounted to $4.1 million for
the year ended December 31, 2000. 
Interest expense resulting from borrowed money increased by $3.0
million.  The average rate paid on
borrowed money increased by 58 basis points to 5.78% for the year ended
December 31, 2000 from 5.20% for the year ended December 31, 1999.  This increase in average rate paid was in
addition to an increase of $43.8 million in the average balance of borrowed
money to $129.8 million for the year ended December 31, 2000 from $86.0 million
for the year ended December 31, 1999.  Net Interest Income Before Provision
for Loan Losses.  Net interest income before provision for
loan losses increased $731,000, or 4.7%, to $16.4 million for the year ended
December 31, 2000 from $15.7 million for 1999. 
This increase was primarily attributable to a $89.6 million increase in
average interest-earning assets, at an average yield of 7.44%, offset by an
increase in the average balance of interest-bearing liabilities of $98.6
million, at an average cost of 5.06%. 
This combination resulted in a decline on interest rate spread of 32
basis points to 2.38% for the year ended December 31, 2000, as compared to
2.70% for the year ended December 31, 1999. 
The decrease in interest rate spread is due to a general increase in
rates in the Banks local market area as well as deposits repricing faster than
loans.  The net interest margin as a
percent of interest-earning assets decreased by 45 basis points to 3.07% for
the year ended December 31, 2000 as compared to 3.52% for the comparable period
in 1999.  This decrease is due to
increases in both interest-earning assets and noninterest-bearing liabilities
and a decrease in interest rate spread.  Provision for Loan Losses.   The
Banks provision for loan losses increased by $152,000 to $363,000 for the year
ended December 31, 2000 from $211,000 in 1999. 
At December 31, 2000 and 1999, non-performing loans totaled $4.5 million
and $1.3 million, respectively,  At
December 31, 2000 and 1999 the balance of the allowance for loan losses totaled
$1.9 and $1.5 million, respectively.  At
December 31, 2000, the ratio of the allowance for loan losses to non-performing
loans was 41.5% compared to 121.7% at December 31, 1999.  The increase in nonperforming loans is
primarily due to one $3.5 million first mortgage loan secured by a commercial
office building located in St. Charles, Illinois.  This loan had a valuation reserve of $175,000 at December 31,
2000.  There were no impaired loans at
December 31, 1999.  The ratio of the
allowance to total loans was 0.41% and 0.39% at December 31, 2000 and 1999,
respectively.  Net charge-offs totaled
$27,000 and $39,000 in 2000 and 1999, respectively.  Noninterest Income. 
Noninterest income totalled $1.3 million and $1.2 million for the years
ended December 31, 2000 and 1999, respectively.  Insurance and brokerage commissions increased $40,000 to $167,000
for the year ended December 31, 2000 from $127,000 for the comparable period in
1999.  Gains on sale of securities
increased $47,000 to $150,000 for the year ended December 31, 2000 from
$103,000 for the comparable period in 1999. 
Other income increased by $14,000 to $68,000 for the year ended December
31, 2000 from $54,000 for the year ended December 31, 1999.  These increases were partially offset by a
loss on the sale of foreclosed real estate of $7,000 in 2000; there were no
sales in 1999.  Noninterest Expense.  
Noninterest expense increased by $936,000, to $11.4 million for the year
ended December 31, 2000 from $10.5 million for the comparable period in
1999.  Compensation and benefits
increased by $404,000, or 6.8%, to $6.3 million for the year ended December 31,
2000 compared to $5.9 million for the year ended December 31, 1999.  This increase was primarily due to a
combination of annual salary increases, the addition of staff due in part to
two new branch offices and an increase in employee health insurance costs.  The additional staff expenses are primarily
attributed to the opening of two new branch offices and the hiring of marketing
and human resource personnel.  All other
operating expenses, including advertising, depreciation and repairs, marketing,
insurance, postage, communications, data processing and other office expense
increased by a combined $532,000, or 11.8%, to $5.0 million for the year ended
December 31, 2000 compared to $4.5 million for the comparable period in
1999.  Of this increase, $157,000 is
related to additional imaging expenses for NOW accounts and $156,000 of
marketing and advertising expenses relating to two new branch offices and
increased advertising for Fox Valley Financial Services, Inc., the Banks
wholly owned subsidiary, which offers a full range of investment products.  Income Tax Expense. 
Income tax expense totaled $2.1 million for the year ended December 31,
2000 compared to $2.2 million for the comparable period in 1999.  The decrease in the provision for income
taxes was the result of a decrease in pretax income of $266,000, to $6.0
million for the year ended December 31, 2000 from $6.3 million for the same
period in 1999.  The effective income
tax rate decreased to 35.6% for the year ended December 31, 2000 from 35.8% for
the preceding year.  41 
   Contractual Obligations and Commercial Commitments  The Bank has certain obligations and commitments to make future
payments under contracts.  At December
31, 2001, the aggregate contractual obligations and commercial commitments are:  Period
  to Maturity
  from December 31, 2001Less
  than
  One
  Year
  
  One
  to
  Two
  Years
  
  Two to
  ThreeYears
  
  Three
  to Four
  Years
  
  Four
  to FiveYears
  
  More
  than
  FiveYears
  
  Total  December 
  31, 2001(In
  thousands)Contractual obligations:Certificates of deposit
  
  $
  119,326
  
  $
  38,134
  
  $
  3,438
  
  $
  12,919
  
  $
  596
  
  $
  
  
  $
  174,413Federal home loan bank advances
  
  3,500
  
  5,000
  
  32,700
  
  15,000
  
  5,000
  
  114,000
  
  175,200Operating leases
  
  104
  
  105
  
  106
  
  86
  
  65
  
  323
  
  789Total at December 31, 2001
  
  $
  122,930
  
  $
  43,239
  
  $
  36,244
  
  $
  28,005
  
  $
  5,661
  
  $
  114,323
  
  $
  350,402  Period
  to Maturityfrom December 31, 2001Less
  than
  One
  Year
  
  One to
  Two
  Years
  
  Two to
  Three
  Years
  
  Three
  to Four
  Years
  
  Four
  to FiveYears
  
  More
  than
  Five
  Years
  
  Total  December 
  31, 2001(In
  thousands)Other commercial commitments:Lines of credit
  
  $
  9,512
  
  $
  1,749
  
  $
  1,562
  
  $
  452
  
  $
  1,474
  
  $
  12,464
  
  $
  27,213Loan commitments
  
  15,746
  
  
  
  
  
  
  
  
  
  
  
  15,746Letters of credit
  
  613
  
  2,179
  
  
  
  171
  
  
  
  
  
  2,963Total at December 31, 2001
  
  $
  25,871
  
  $
  3,928
  
  $
  1,562
  
  $
  623
  
  $
  1,474
  
  $
  12,464
  
  $
  45,922  Liquidity and Capital Resources  The
Banks primary sources of funds are savings deposits, proceeds from the
principal and interest payments on loans and proceeds from the maturation of
securities and, to a lesser extent, borrowings from FHLB-Chicago.  While maturities and scheduled amortization
of loans and securities are predictable sources of funds, deposit outflows and
mortgage prepayments are greatly influenced by general interest rates, economic
conditions and competition.  The
primary investing activities of the Bank are the origination of primarily
residential one-to four-family loans and, to a lesser extent, multi-family and
commercial real estate, construction and land, commercial and consumer loans
and the purchase of mortgage-backed and mortgage-related securities.  During the years ended December 31,
2001, 2000, and 1999, the Banks loan originations totaled $206.6 million,
$94.8 million and $121.8 million, respectively.  In addition, the Bank purchased loans totaling $65.2 million,
$46.7 million and $39.0 million for the same time periods.  These activities were funded primarily by
deposit growth, FHLB advances and principal repayments on loans and
mortgage-backed securities.  The Bank
experienced a net increase in total deposits of $50.6 million, $45.7 million
and $54.3 million for the years ended December 31, 2001, 2000, and 1999,
respectively.  In addition, FHLB
advances increased $35.0 million, $25.0 million and $58.2 million, respectively  for the same time periods.  Deposit flows are affected by the level of
interest rates, the interest rates and products offered by the local
competitors and the Bank, and other factors.  The
Banks most liquid assets are cash and interest-bearing demand accounts.  The levels of these assets are dependent on
the Banks operating, financing, lending and investing activities during any
given period.  At December 31, 2001,
cash and interest-bearing demand accounts totaled $18.2 million, or 2.7% of
total assets.  The Bank closely monitors
its liquidity position on a daily basis. 
On a longer-term basis, the Bank maintains a strategy of investing in
various lending  42 
   products as described in
greater detail under Item 1 to this Annual Report.  In the event the Bank should require funds beyond its ability to
generate them internally, additional sources of funds are available through
FHLB advances.  At December 31,
2001,  the Bank had $175.2 million of
outstanding FHLB borrowings.  Outstanding
commitments to originate first mortgage loans totaled $15.7 million at December
31, 2001.  Management of the Bank
anticipates that it will have sufficient funds available to meet its current
loan commitments.  Certificates of
deposit which are scheduled to mature in one year or less from December 31,
2001 totaled $119.3 million.  From
December 31, 2000 to December 31, 2001, the Bank experienced an 89.0% retention
rate of funds maturing from certificates of deposit. It has been and will
continue to be a priority of management to retain time deposits.  The Bank relies primarily on competitive
rates, customer service, and long-standing relationships with customers to
retain deposits.  From time to time, the
Bank will also offer competitive special products to its customers to increase
retention.  Based upon the Banks
experience with deposit retention and current retention strategies, management
believes that, although it is not possible to predict future terms and
conditions upon renewal, a significant portion of such deposits will remain
with the Bank.  At
December 31, 2001, the Bank exceeded all of its regulatory capital requirements
with a leverage capital level of $64.0 million, or 9.53% of adjusted assets,
which is above the required level of $26.9 million, or 4.00%, and risk-based
capital of $66.3 million, or 14.58% of adjusted assets, which is above the
required level of $36.4 million, or 8.00%.  The
capital injection resulting from the Conversion in 1998 of $72.8 million
significantly increased liquidity and capital resources.  A portion of the net proceeds were invested
in marketable securities.  The initial
level of liquidity has been reduced as net proceeds are utilized for general
corporate purposes, including the funding of lending activities and expansion
of facilities and to a greater degree the repurchase of the Companys common
stock.  During 2001, the Company
repurchased 227,708 shares of the Companys common stock at an average price
per share of $11.41.  The Company
believes that stock repurchases are a good way to manage its excess capital and
a sound investment decision.  The
primary source of funding for the Company is dividend payments from the Bank,
sales and maturities of investment securities and, to a lesser extent, earnings
on investments and deposits held by the Company.  Dividend payments by the Bank have primarily been used to fund
stock repurchase programs and pay dividends on Company stock.  These repurchases totaled $33.6 million as
of December 31, 2001.  The Banks
ability to pay dividends and other capital distributions to the Company is
generally limited by the provisions of the Illinois state banking regulations
and the Federal Deposit Insurance Corporation. 
Additionally, the Illinois State Banking Commissioner and Federal
Deposit Insurance Corporation may prohibit the payment of dividends which are
otherwise permissible by regulation for safety and soundness reasons.  Under Illinois banking law, an Illinois
state chartered stock savings bank may declare and pay dividends out of its net
profits, unless there is an impairment of capital, but approval of the
Commissioner is required if the total of all dividends declared in a calendar
year would exceed 50% of the Banks net profits for that year if the Bank has
total capital of less than 6% of total assets. 
A savings bank may not declare dividends in excess of its net profits in
any year without the approval of the Commissioner.  To the extent the Bank were to apply to pay a dividend or capital
distribution to the Company in excess of the regulatory permitted dividend
amounts, no assurances can be made such application would be approved by the
regulatory authorities.  See also
Regulation and Supervision on page 27.  Impact of Inflation and Changing Prices  The
Consolidated Financial Statements and Notes thereto presented in this Annual
Report have been prepared in accordance with accounting principles generally
accepted in the United States of America, which generally require the
measurement of financial position and operating results in terms of historical
dollar amounts without considering the changes in the relative purchasing power
of money over time due to inflation. 
The impact of inflation is reflected in the increased cost of the Banks
operations.  Unlike industrial
companies, nearly all of the assets and liabilities of the Bank are monetary in
nature.  As a result, interest rates
have a greater impact on the Banks performance than do the effects of general
levels of inflation.  Interest rates do
not necessarily move in the same direction or to the same extent as the price
of goods and services.  43 
   Impact of Accounting Standards  SFAS No. 140 Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, was issued by the FASB
in September 2000.  SFAS No. 140
supercedes and replaces FASB SFAS No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities.  Accordingly, SFAS No. 140 is now the
authoritative accounting literature for transfers and servicing of financial
assets and extinguishments of liabilities. 
SFAS No. 140 also includes several additional disclosure requirements in
the area of securitized financial assets and collateral arrangements.  The provisions of SFAS No. 140 related to
transfers of financial assets are to be applied to all transfers of assets
occurring after March 31, 2001.  The
collateral recognition and disclosure provisions in SFAS No. 140 were effective
for fiscal years ending December 31, 2000. 
The adoption of SFAS No. 140 did not have a material impact on the
Companys results of operations or financial condition.  In July 2001, the FASB issued SFAS No. 141, Business Combinations (SFAS No. 141) and SFAS No. 142, Goodwill and Other Intangible Assets
(SFAS No. 142).  SFAS No. 141 requires
that all business combinations initiated after June 30, 2001 be accounted for
under the purchase method and addresses the initial recognition and measurement
of goodwill and other intangible assets acquired in a business
combination.  SFAS No. 142 addresses the
initial recognition and measurement of intangible assets acquired outside of a
business combination and the accounting for goodwill and other intangible
assets subsequent to their acquisition. 
SFAS No. 142 provides that intangible assets with finite useful lives be
amortized and that goodwill and intangible assets with indefinite lives will
not be amortized, but will rather be tested at least annually for
impairment.  SFAS No. 142 is effective
January 1, 2002 for calendar year companies, however, any acquired goodwill or
intangible assets recorded in transactions closed subsequent to June 30, 2001
will be subject immediately to the nonamortization and amortization provisions
of SFAS No. 142.  The Company
anticipates that the adoption of SFAS No. 141 and No. 142 on January 1, 2002
will not have a material impact on the Companys results of operations or
financial condition.  44 
   Item 7A. Quantitative and Qualitative Disclosure About Market
Risk  The Banks interest rate sensitivity is monitored by management through
the use of a Net Portfolio Value Model which generates estimates of the change
in the Banks net portfolio value (NPV) over a range of interest rate
scenarios.  NPV is the present value of
expected cash flows from assets, liabilities, and off-balance sheet
contracts.  The NPV ratio, under any
interest rate scenario, is defined as the NPV in that scenario divided by the
market value of assets in the same scenario. The model assumes estimated loan
prepayment rates, reinvestment rates and deposit decay rates similar to the
assumptions utilized for the Gap Table. 
The Sensitivity Measure is the decline in the NPV ratio, in basis points,
caused by a 2% increase or decrease in rates, whichever produces a larger
decline.  The higher the institutions
Sensitivity Ratio, the greater its exposure to interest rate risk is considered
to be.  The following NPV Table sets
forth the Banks NPV as of December 31, 2001.  Change in
  Interest  Rates In Basis Points
  (Rate  Shock)Net Portfolio Value
  
  NPV as % of Portfolio
  Value of AssetsAmount
  
  $ Change
  
  % Change
  
  NPV
  Ratio
  
  % Change(Dollars in thousands)300
  
  $
  53,605
  
  $
  (41,524
  )
  (43.65
  )%
  8.15
  %
  (39.72
  )%200
  
  68,338
  
  (26,791
  )
  (28.16
  )
  10.14
  
  (25.00
  )100
  
  82,238
  
  (12,891
  )
  (13.55
  )
  11.94
  
  (11.69
  )Static
  
  95,129
  
  
  
  
  
  13.52
  
  (100)
  
  102,004
  
  6,875
  
  7.23
  
  14.32
  
  5.92(200)
  
  106,419
  
  11,290
  
  11.87
  
  14.82
  
  9.62(300)
  
  112,241
  
  17,112
  
  17.99
  
  15.47
  
  14.42  Certain shortcomings are inherent in the methodology used in the above
interest rate risk measurements. 
Modeling changes in NPV require certain assumptions which may or may not
reflect the manner in which actual yields and costs respond to changes in
market interest rates.  In this regard,
the NPV Table presented assumes that the composition of the Banks interest
sensitive assets and liabilities existing at the beginning of a period remains
constant over the period being measured and also assumes that a particular
change in interest rates is reflected uniformly across the yield curve
regardless of the duration to maturity or repricing of specific assets and
liabilities.  Accordingly, although the
NPV Table provides an indication of the Banks interest rate risk exposure at a
particular point in time, such measurements are not intended to and do not
provide a precise forecast of the effect of changes in market interest rates on
the Banks net interest income and will differ from actual results.  For a further discussion regarding Quantitative and Qualitative
Disclosure about Market Risk, see Item 7 of this Form 10-K, Managements
Discussion and Analysis of Financial Condition and Results of Operations 
Management of Interest Rate Risk and Market Risk Analysis.  Item 8. Financial Statements and Supplementary Data.  45


EFC BANCORP, INC. AND SUBSIDIARIES  Consolidated Financial
Statements  December 31, 2001, 2000, and
1999  (With Independent Auditors 
Report Thereon)  
   Independent
Auditors  Report  The Board of Directors EFC Bancorp, Inc.:  We have audited the accompanying consolidated balance sheets of EFC
Bancorp, Inc. and subsidiaries (the Company) as of December 2001 and 2000, and
the related consolidated statements of income, changes in stockholders  equity, and cash flows for each of the years
in the three-year period ended December 31, 2001. These consolidated financial
statements are the responsibility of the Company s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.  We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 EFC
Bancorp, Inc. and subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America.    Chicago, Illinois March 4, 2002  
   EFC
BANCORP, INC. AND
SUBSIDIARIES  Consolidated Balance Sheets  December 31, 2001 and 2000  Assets
  
  2001
  
  2000Cash and cash equivalents:On hand and in banks
  
  $
  3,186,966
  
  2,668,094Interest bearing deposits
  with financial institutions
  
  14,988,324
  
  24,354,577Total cash and cash
  equivalents
  
  18,175,290
  
  27,022,671Loans receivable, net
  
  537,070,664
  
  459,794,835Mortgage-backed securities
  available-for-sale, at fair value
  
  13,855,715
  
  9,453,560Investment securities
  available-for-sale, at fair value
  
  68,615,462
  
  64,070,927Foreclosed real estate
  
  
  
  539,792Stock in Federal Home Loan
  Bank of Chicago, at cost
  
  8,891,900
  
  7,760,000Accrued interest
  receivable
  
  3,682,120
  
  3,723,849Office properties and
  equipment, net
  
  10,990,206
  
  9,004,320Other assets
  
  12,162,083
  
  1,831,034Total assets
  
  $
  673,443,440
  
  583,200,988Liabilities and Stockholders EquityLiabilities:Deposits
  
  $
  420,084,289
  
  369,533,355Borrowed money
  
  175,200,000
  
  140,200,000Advance payments by
  borrowers for taxes and insurance
  
  1,226,614
  
  958,652Income taxes payable
  
  419,125
  
  470,865Accrued expenses and other
  liabilities
  
  7,884,849
  
  4,753,014Total liabilities
  
  604,814,877
  
  515,915,886Stockholders equity:Preferred stock, par value
  $.01 per share, authorized 2,000,000 shares; no shares issued
  
  
  
  Common stock, par value
  $.01 per share, authorized 25,000,000 shares; issued 7,491,434 shares at
  December 31, 2001 and 2000
  
  74,914
  
  74,914Additional paid-in capital
  
  71,663,695
  
  71,761,626Treasury stock, at cost,
  2,884,873 and 2,657,165 shares at December 31, 2001 and 2000, respectively
  
  (35,584,5574
  )
  (30,987,317
  )Unearned employee stock
  ownership plan (ESOP), 439,498 and 479,452 shares at December 31, 2001 and
  2000, respectively
  
  (6,571,619
  )
  (7,196,039
  )Unearned stock award plan,
  107,943 and 164,896 shares at December 31, 2001 and 2000, respectively
  
  (1,200,866
  )
  (1,834,468
  )Retained earnings,
  substantially restricted
  
  38,015,742
  
  35,483,689Accumulated other
  comprehensive income (loss)
  
  231,251
  
  (44,303
  )Total stockholders equity
  
  68,628,563
  
  67,285,102Commitments and
  contingenciesTotal liabilities and
  stockholders equity
  
  $
  673,443,440
  
  583,200,988  See accompanying notes to consolidated financial statements.   F-2 
   EFC BANCORP, INC. AND SUBSIDIARIES  Consolidated
Statements of Income  Years
ended December 31, 2001, 2000, and 1999  2001
  
  2000
  
  1999Interest income:Loans secured by real
  estate
  
  $
  33,631,702
  
  30,362,061
  
  24,900,473Other loans
  
  4,285,273
  
  2,866,475
  
  1,457,010Mortgage-backed securities
  available-for-sale
  
  826,999
  
  835,232
  
  971,192Investment securities
  available-for-sale and interest bearing deposits with financial institutions
  
  5,096,809
  
  5,750,686
  
  4,655,066Total interest income
  
  43,840,783
  
  39,814,454
  
  31,983,741Interest expense:Deposits
  
  16,454,916
  
  15,898,933
  
  11,832,427Borrowed money
  
  8,978,165
  
  7,502,220
  
  4,468,830Total interest expense
  
  25,433,081
  
  23,401,153
  
  16,301,257Net interest income before
  provision for loan losses
  
  18,407,702
  
  16,413,301
  
  15,682,484Provision for loan losses
  
  500,000
  
  363,000
  
  211,000Net interest income after
  provision for loan losses
  
  17,907,702
  
  16,050,301
  
  15,471,484Noninterest income:Service fees
  
  1,220,059
  
  952,551
  
  955,937Real estate and insurance
  commissions
  
  318,698
  
  166,862
  
  126,656Gain (loss) on sale of
  foreclosed real estate
  
  8,014
  
  (7,413
  )
  Gain on sale of securities
  
  32,812
  
  150,057
  
  102,940Gain on sale of loans
  
  170,723
  
  
  
  Other
  
  70,392
  
  67,718
  
  53,357Total noninterest income
  
  1,820,698
  
  1,329,775
  
  1,238,890Noninterest expense:Compensation and benefits
  
  7,105,704
  
  6,345,253
  
  5,564,294Office building, net
  
  391,623
  
  377,328
  
  392,158Depreciation and repairs
  
  1,096,792
  
  954,314
  
  790,122Data processing
  
  520,837
  
  458,895
  
  449,453Federal insurance premiums
  
  70,180
  
  68,084
  
  161,663NOW account operating
  expenses
  
  571,484
  
  471,956
  
  285,298Other
  
  2,828,769
  
  2,712,534
  
  2,809,297Total noninterest expense
  
  12,585,389
  
  11,388,364
  
  10,452,285Income before income taxes
  
  7,143,011
  
  5,991,712
  
  6,258,089Income tax expense
  
  2,507,811
  
  2,130,043
  
  2,237,295Net income
  
  $
  4,635,200
  
  3,861,669
  
  4,020,794Earnings per share:Basic
  
  $
  1.09
  
  0.87
  
  0.72Diluted
  
  1.08
  
  0.87
  
  0.72  See accompanying notes to consolidated financial statements.  F-3 
   EFC BANCORP,
INC. AND
SUBSIDIARIES  Consolidated Statements of
Changes in Stockholders Equity  Years ended December 31,
2001, 2000, and 1999  Number of
  common stock shares
  
  Common
  stock
  
  Additional
  paid-in capital
  
  Treasury
  stock
  
  Unearned
  ESOP
  plan
  shares
  
  Unearned
  stock award
  plan shares
  
  Retained
  earnings
  
  Accumulated
  other comprehensive
  income (loss)
  
  TotalBalance at December 31, 1998
  
  
  
  $
  74,914
  
  72,213,277
  
  (4,355125
  )
  (8,363,878
  )
  (3,222,561
  )
  31,757,826
  
  650,816
  
  88,755,269Treasury stock purchased
  
  (1,956,684
  )
  
  
  
  
  (23,316,599
  )
  
  
  
  
  
  
  
  
  (23,316,599
  )ESOP shares committed to be
  released
  
  39,954
  
  
  
  (173,680
  )
  
  
  597,419
  
  
  
  
  
  
  
  423,739Stock award plan  shares
  allocated
  
  67,444
  
  
  
  
  
  
  
  
  
  750,319
  
  
  
  
  
  750,319Dividends declared ($.40 per
  share)
  
  
  
  
  
  
  
  
  
  
  
  
  
  (2,309,196
  )
  
  
  (2,309,196
  )Comprehensive income:Net income
  
  
  
  
  
  
  
  
  
  
  
  
  
  4,020,794
  
  
  
  4,020,794Change in net unrealized
  gain (loss) on securities available-for-sale, less reclassification
  adjustment for realized gains included in net income of $102,940
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  (3,118,422
  )
  (3,118,422
  )Income tax effect
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  1,216,185
  
  1,216,185Total comprehensive income
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  2,118,557Balance at December 31, 1999
  
  
  
  74,914
  
  72,039,597
  
  (27,671,724
  )
  (7,766,459
  )
  (2,472,242
  )
  33,469,424
  
  (1,251,421
  )
  66,422,089Treasury stock purchased
  
  (325,981
  )
  
  
  
  
  (3,315,593
  )
  
  
  
  
  
  
  
  
  (3,315,593
  )ESOP shares committed to be
  released
  
  39,954
  
  
  
  (216,931
  )
  
  
  597,420
  
  
  
  
  
  
  
  380,489Stock award plan  shares
  allocated
  
  57,328
  
  
  
  (61,040
  )
  
  
  
  
  637,774
  
  
  
  
  
  576,734Dividends declared ($.48 per
  share)
  
  
  
  
  
  
  
  
  
  
  
  
  
  (1,847,404
  )
  
  
  (1,847,404
  )Comprehensive income:Net income
  
  
  
  
  
  
  
  
  
  
  
  
  
  3,861,669
  
  
  
  3,861,669Change in net unrealized
  gain (loss) on securities available-for-sale, less reclassification
  adjustment for realized gains included in net income of $150,057
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  1,978,884
  
  1,978,884Income tax effect
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  (771,766
  )
  (771,766
  )Total comprehensive income
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  5,068,787Balance at December 31, 2000
  
  
  
  74,914
  
  71,761,626
  
  (30,987,317
  )
  (7,169,039
  )
  (1,834,468
  )
  35,483,689
  
  (44,303
  )
  67,285,102Treasury stock purchased
  
  (227,708
  )
  
  
  
  
  (2,597,237
  )
  
  
  
  
  
  
  
  
  (2,597,237
  )ESOP shares committed to be
  released
  
  39,954
  
  
  
  (128,832
  )
  
  
  597,420
  
  
  
  
  
  
  
  468,588Stock award plan  shares
  allocated
  
  56,953
  
  
  
  30,901
  
  
  
  
  
  633,602
  
  
  
  
  
  664,503Dividends declared ($.50 per
  share)
  
  
  
  
  
  
  
  
  
  
  
  
  
  (2,103,147
  )
  
  
  (2,103,147Comprehensive income:Net income
  
  
  
  
  
  
  
  
  
  
  
  
  
  4,635,200
  
  
  
  4,635,200Change in net unrealized
  gain (loss) on securities available-for-sale, less reclassification
  adjustment for realized gains included in net income of $32,812
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  451,728
  
  451,728Income tax effect
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  (176,174
  )
  (176,174
  )Total comprehensive income
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  4,910,754Balance at December 31, 2001
  
  
  
  $
  74,914
  
  71,663,695
  
  (33,584,554
  )
  (6,571,619
  )
  (1,200,866
  )
  38,015,742
  
  231,251
  
  68,628,563  See accompanying notes to consolidated financial statements.  F-4 
   EFC BANCORP,
INC. AND
SUBSIDIARIES  Consolidated Statements of
Cash Flows  Years ended December 31,
2001, 2000, and 1999  2001
  
  2000
  
  1999Cash flows from operating
  activities:Net income
  
  $
  4,635,200
  
  3,861,669
  
  4,020,794Adjustments to reconcile
  net income to net cash provided by (used in) operating activities:Amortization of premiums
  and discounts, net
  
  151,481
  
  36,244
  
  83,619Provision for loan losses
  
  500,000
  
  363,000
  
  211,000FHLB of Chicago stock
  dividends
  
  (538,300
  )
  (507,800
  )
  Deferred income tax expense
  (benefit)
  
  192,517
  
  108,909
  
  (278,308
  )Stock award plan shares
  allocated, net of tax effect
  
  664,503
  
  576,734
  
  750,319ESOP shares committed to be
  released
  
  597,420
  
  597,420
  
  597,419Change in fair value of
  ESOP shares
  
  (128,832
  )
  (216,931
  )
  173,680
  )Depreciation and
  amortization of office properties and equipment
  
  738,071
  
  687,620
  
  565,274(Gain)/loss on sale of
  foreclosed real estate
  
  (8,014
  )
  7,413
  
  Gain on sale of investment
  securities
  
  (32,812
  )
  (150,057
  )
  (102,940
  )Gain on sale of loans
  
  (170,723
  )
  
  
  Increase in accrued
  interest receivable and other assets, net Increase in income taxes payable,
  accruedexpenses and other liabilities, net
  
  3,327,567
  
  648,074
  
  910,196Net cash provided by (used
  in) operating activities
  
  (721,488
  )
  4,837,792
  
  4,839,581Cash flows from investing
  activities:Net increase in loans
  receivable
  
  (26,520,097
  )
  (22,051,226
  )
  (48,291,349
  )Purchases of loans
  receivable
  
  (65,161,386
  )
  (42,639,630
  )
  (38,95,788
  )Proceeds from the sale of
  loans
  
  10,519,267
  
  
  
  Purchases of
  mortgage-backed securities available-for-sale
  
  (10,435,957
  )
  
  
  Principal payments on
  mortgage-backed securities available-for-sale
  
  5,978,113
  
  2,542,344
  
  5,796,437Maturities of investment
  securities available-for-sale
  
  32,413,522
  
  5,063,818
  
  11,084,307Proceeds from sale of
  investment securities available-for-sale
  
  4,032,812
  
  7,063,076
  
  11,712,628Purchases of investment
  securities available-for-sale
  
  (40,602,120
  )
  13,139,252
  )
  (29,137,525
  )Purchases of office
  properties and equipment
  
  (2,723,957
  )
  (1,051,530
  )
  (2,675,950
  )Purchases of stock in the
  Federal Home Loan Bank of Chicago
  
  (593,600
  )
  (1,492,200
  )
  (2,910,160
  )Proceeds from sale of
  foreclosed real estate
  
  4,104,916
  
  160,732
  
  83,980Net cash used in investing
  activities
  
  (88,988,487
  )
  (65,543,868
  )
  (93,333,420
  )Cash flows from financing
  activities:Purchase of treasury stock
  
  (2,597,237
  )
  (3,315,593
  )
  (23,316,599
  )Net increase in deposits
  
  50,550,934
  
  45,654,062
  
  54,297,298Cash dividends paid
  
  (2,091,103
  )
  (1,783,317
  )
  (1,793,171
  )Proceeds from borrowed
  money
  
  60,000,000
  
  119,000,000
  
  100,200,000Repayments on borrowed
  money
  
  (25,000,000
  )
  (94,000,000
  )
  (42,000,000
  )Net cash provided by
  financing activities
  
  80,862,594
  
  65,555,152
  
  87,387,528Net increase (decrease) in
  cash and cash equivalents
  
  (8,847,381
  )
  4,849,076
  
  (1,106,311
  )Cash and cash equivalents
  at beginning of year
  
  27,022,671
  
  22,173,595
  
  23,279,906Cash and cash equivalents
  at end of year
  
  $
  18,175,290
  
  27,022,671
  
  22,173,595Supplemental disclosures of
  cash flow information:Cash paid during the year
  for:Interest
  
  $
  25,366,680
  
  23,153,805
  
  15,976,039Income taxes
  
  2,207,500
  
  2,030,000
  
  2,560,000Noncash investing activities
   transfer of loans to foreclosed real estate
  
  3,557,110
  
  539,792
  
  168,145  See accompanying notes to consolidated financial statements.   F-5 
    EFC BANCORP, INC. AND SUBSIDIARIES  Notes
to Consolidated Financial Statements  December
31, 2001, 2000, and 1999  (1)           Summary
of Significant Accounting Policies  The following describes the
more significant policies which EFC Bancorp, Inc. (the Company) follows in
preparing and presenting its consolidated financial statements.  Principles of Consolidation  The consolidated financial
statements include the accounts of EFC Bancorp, Inc. and its wholly owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.  The accounting and reporting
policies of the Company conform to accounting principles generally accepted in
the United States of America and to general practice within the banking
industry. In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the consolidated balance sheet and
revenues and expenses for the period. Actual results could differ from these
estimates.  Financial Reporting of Segments  Statement of Financial
Accounting Standards No. 131 (SFAS 131), Disclosures
about Segments of an Enterprise and Related Information, establishes
standards for the way public business enterprises report information about
operating segments in annual financial statements. Operating segments are
components of an enterprise for which separate financial information is
available, and is evaluated regularly by management in deciding how to allocate
resources and in assessing performance. SFAS 131 establishes standards for
related disclosures about products, services, geographic areas, and major
customers. The Company operates as a single segment.  Elgin Financial Savings Bank
(the Savings Bank) is principally engaged in the business of attracting
deposits and investing these funds, together with borrowings, to originate
primarily one-to-four family residential mortgages and construction loans and
to purchase securities.  Loans Receivable  Loans receivable are stated
at unpaid principal balances less deferred loan fees and the allowance for loan
losses. Premiums and discounts on purchased loans are amortized and accreted to
interest income using the level-yield method over the remaining period to
contractual maturity.  Loan origination fees and
certain direct costs associated with loan originations are deferred. Net
deferred fees are amortized as yield adjustments over the contractual life of
the related loans using the level-yield method.  The allowance for loan
losses is provided by charges to operations. The balance of the allowance is
based on management s estimate of probable losses in the loan portfolio and
current economic conditions. Regulatory examiners may require the Company to
recognize additions to the allowance based upon their judgments about
information available to them at the time of their examination.  (Continued) F-6 
   A provision for losses on
specific loans and real estate owned is charged to operations when any permanent
decline reduces the market value to less than the loan principal balance or
carrying value less estimated costs to sell foreclosed real estate.  Management, considering
current information and events regarding the borrower s ability to repay their
obligations, considers a loan to be impaired when it is probable that the
Company will be unable to collect all amounts due according to the contractual
terms of the note agreement, including principal and interest.  A loan is generally
classified as non-accrual when collectibility is in doubt and the loan is
contractually past due three months or more. When a loan is placed on
non-accrual status, previously accrued, but unpaid interest is reversed against
interest income. Income on such loans is subsequently recorded to the extent
that cash is received and where future collection of principal is probable.
Loans past due three months or more are considered impaired. The amount of
impairment for individual loans is measured based on the fair value of the collateral,
if the loan is collateral dependent, or alternatively, on the present value of
expected future cash flows discounted at the loan s effective interest rate.
Certain groups of small balance homogenous loans represented by installment and
consumer credit and residential real estate loans are excluded from the
impairment provisions.  Investment Securities and Mortgage-backed Securities  The Company classifies its
investment and mortgage-backed securities in one of three categories: trading,
available-for-sale, or held-to-maturity. Securities which the Company has the
positive intent and ability to hold to maturity are classified as
held-to-maturity and measured at amortized cost. Securities purchased for the
purpose of being sold in the near term are classified as trading securities and
measured at fair value with any change in fair value included in earnings. All
other securities that are not classified as held-to-maturity or trading are
classified as available-for-sale. Securities classified as available-for-sale
are measured at fair value with any changes in fair value reflected as a
separate component of stockholders 
equity, net of related tax effects. Gains and losses on the sale of such
securities are determined using the specific identification method. The Company
has classified all investment securities as available-for-sale at December 31,
2001 and 2000.  Discounts and premiums on
mortgage-backed securities purchased are accreted and amortized to maturity,
using a method which approximates the effective interest method. For investment
securities, the straight-line method based upon the contractual life of the
security is principally used, which approximates the effective interest method.  Office Properties and Equipment  Office properties and equipment
are stated at cost less accumulated depreciation and amortization. Depreciation
and amortization is computed for financial reporting purposes principally on
the straight-line basis over the estimated useful lives (5 to 20 years) of the
respective assets.  (Continued) F-7 
   Income Taxes  Deferred income taxes arise
from the recognition of certain items of income and expense for tax purposes in
years different from those in which they are recognized in the consolidated
financial statements. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases (temporary differences).  Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which the temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized as income in the period that includes the
enactment date.  Foreclosed Real Estate  Foreclosed real estate
represents real estate acquired through foreclosure, and is recorded at the
lower of cost (principal balance of the former first mortgage loan plus costs
of obtaining title and possession) or net realizable value, at the date of
foreclosure. After foreclosure, additional reserves are recorded as necessary
to reflect further impairment of the estimated net realizable value.  Employee Stock Ownership Plan (ESOP)  Compensation expense under
the ESOP is equal to the fair value of common shares released or committed to
be released annually to participants in the ESOP. The difference between the fair
value of the shares committed to be released and the cost of those shares to
the ESOP will be charged or credited to additional paid-in capital. Common
stock purchased by the ESOP and not committed to be released to participants is
included in the consolidated balance sheet at cost as a reduction of
stockholders  equity. Dividends on
allocated ESOP shares are recorded as a reduction of stockholders  equity; dividends on unallocated ESOP shares
are used to pay debt service, and recorded as a reduction of debt and accrued
interest.  Earnings per Share  Basic earnings per share is
calculated by dividing income available to common stockholders by the weighted
average number of common shares outstanding. Diluted earnings per share is
calculated by dividing net income by the weighted average number of common
shares adjusted for the dilutive effect of outstanding stock options. ESOP
shares are only considered outstanding for earnings per share calculations when
they are committed to be released.  Cash and Cash Equivalents  For purposes of the
consolidated statements of cash flows, cash and cash equivalents are considered
to include cash on hand and in banks and interest bearing deposits with
financial institutions.  Comprehensive Income  Comprehensive income consists
of net income and net unrealized gains (losses) on available-for-sale
securities and is presented in the consolidated statements of changes in
stockholders  equity.  (Continued) F-8 
    Basis of Presentation  Certain amounts for prior
years have been reclassified to conform to the current year presentation.  (2)           Preferred
Stock  The Company had authorized
2,000,000 shares of preferred stock with a par value of $.01 per share. The
Company s Board of Directors is authorized, subject to any limitations by law,
to provide for the issuance of the shares of preferred stock in series, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences, and rights of the
shares of each such series and any qualifications, limitations or restriction
thereof.  As of December 31, 2001, there
were no shares of preferred stock issued.  (3)           Earnings
Per Share  The following table sets
forth the computation of basic and diluted earnings per share for the periods
indicated.  ESOP shares are only
considered outstanding for earnings per share calculations when they are
committed to be released.  Years
  ended December 31,2001
  
  2000
  
  1999Basic:Net income
  
  $
  4,635,200
  
  3,861,669
  
  4,020,794Weighted average common
  shares outstanding
  
  4,249,640
  
  4,422,427
  
  5,571,247Basic earnings per share
  
  $
  1.09
  
  0.87
  
  0.72Diluted:Net income
  
  $
  4,635,200
  
  3,861,669
  
  4,020,794Weighted average common
  shares outstanding
  
  4,249,640
  
  4,422,427
  
  5,571,247Effect of dilutive stock
  options outstanding
  
  47,134
  
  61
  
  Diluted weighted average
  common shares outstanding
  
  4,296,774
  
  4,422,488
  
  5,571,247Diluted earnings per share
  
  $
  1.08
  
  0.87
  
  0.72  (Continued) F-9 
    (4)Loans Receivable, Net  Loans receivable, net are
summarized as follows:  December
  31,2001
  
  2000Mortgage loans:One-to-four family
  residential
  
  $
  375,451,938
  
  326,739,417Multifamily
  
  58,093,093
  
  50,964,796Commercial
  
  42,813,519
  
  29,728,398Construction and land
  
  16,285,096
  
  16,025,077Total mortgage loans
  
  492,643,646
  
  423,457,688Other loans:Home equity loans
  
  14,689,288
  
  11,971,558Commercial
  
  30,045,720
  
  25,239,646Auto loans
  
  763,688
  
  615,538Loans on savings accounts
  
  334,800
  
  216,321Other
  
  1,159,973
  
  455,017Total other loans
  
  46,993,469
  
  38,498,080Total loans receivable
  
  539,637,115
  
  461,955,768Less:Deferred loan fees
  
  311,305
  
  279,849Allowance for loan losses
  
  2,255,146
  
  1,881,084Loans receivable, net
  
  $
  537,070,664
  
  459,794,835  Activity
in the allowance for loan losses is summarized as follows:  Years
  ended December 31,2001
  
  2000
  
  1999Balance at beginning of
  year
  
  $
  1,881,084
  
  1,544,577
  
  1,372,837Provision for loan losses
  
  500,000
  
  363,000
  
  211,000Charge-offs
  
  (125,959
  )
  (27,951
  )
  (40,984
  )Recoveries
  
  21
  
  1,458
  
  1,724Balance at end of year
  
  $
  2,255,146
  
  1,881,084
  
  1,544,577  (Continued) F-10 
   Loans receivable in arrears three months or more and on non-accrual
status or in the process of foreclosure are as follows:  Number of
  loans
  
  Amount
  
  Percent of
  
  gross loans 
  receivableDecember 31, 2001
  
  10
  
  $2,641,085
  
  .49
  %December 31, 2000
  
  15
  
  4,531,637
  
  .98December 31, 1999
  
  11
  
  1,269,999
  
  .32  Interest income foregone that would have been recognized on non-accrual
loans if such loans had performed in accordance with their contractual terms
was $187,000, $89,000, and $46,000 for the years ended December 31, 2001, 2000,
and 1999, respectively.  There were no impaired loans at December 31, 2001.  The Savings Bank had one impaired loan of
$3,505,000 at December 31, 2000. The loan had a valuation reserve of $175,000
at December 31, 2000.  There were no
impaired loans at or for the year ended December 31, 1999.  The Savings Bank offers to its employees, officers, and directors
adjustable-rate mortgage loans for the purchase or refinance of the individual
s owner-occupied primary residence with interest rates which may be up to 1%
below the rates offered to the Savings Bank s other customers.  Loans to officers and directors under the
program totaled approximately $2,457,000 and $2,381,000 as of December 31, 2001
and 2000, respectively.  All other loans
to officers, directors and to associates of such persons are made in the
ordinary course of business, on substantially the same terms, including
collateral, as those prevailing at the time for comparable transactions with
other customers and do not involve more than a normal risk.  As of December 31, 2001 and 2000, the
outstanding balance on such loans was approximately $4,404,000 and $4,266,000,
respectively. Loan origination and repayments for the year ended December 31,
2001 were $1,126,000 and $1,145,000, respectively.  (Continued) F-11 
   (5)           Mortgage-backed
Securities and Investment Securities Available-for-Sale  The amortized cost and
estimated fair value of mortgage-backed securities and investment securities
available-for-sale are summarized as follows:  December
  31, 2001Amortized 
  cost
  
  Gross
  unrealized
  gains
  
  Gross 
  unrealized 
  losses
  
  Estimated
  fair valueMortgage-backed
  securities:Federal Home Loan Mortgage
  Corporation
  
  $
  5,707,530
  
  37,920
  
  (15,510
  )
  5,729,940Federal National Mortgage
  Association
  
  3,453,241
  
  33,582
  
  (1,546
  )
  3,485,277Government National Mortgage
  Association
  
  4,611,404
  
  40,863
  
  (11,769
  )
  4,640,49813,772,175
  
  112,365
  
  (28,825
  )
  13,855,715Investment securities:United States Government
  obligations
  
  37,518,864
  
  897,353
  
  (128,248
  )
  38,287,969Municipal securities
  
  23,488,194
  
  33,439
  
  (470,929
  )
  23,050,704Equity securities
  
  7,312,843
  
  28,000
  
  (64,054
  )
  7,276,78968,319,901
  
  958,792
  
  (663,231
  )
  68,615,462$
  82,092,076
  
  1,071,157
  
  (692,056
  )
  82,471,177  (Continued) F-12 
   December
  31, 2000Amortized 
  cost
  
  Gross 
  unrealized
  gains
  
  Gross 
  unrealized
  losses
  
  Estimated 
  fair valueMortgage-backed
  securities:Federal Home Loan Mortgage
  Corporation
  
  $
  1,788,841
  
  11,624
  
  (5,902
  )
  1,794,563Federal National Mortgage
  Association
  
  2,808,327
  
  8,015
  
  (22,781
  )
  2,793,561Government National
  Mortgage Association
  
  4,892,460
  
  12,052
  
  (39,076
  )
  4,865,4369,489,628
  
  31,691
  
  (67,759
  )
  9,453,560Investment securities:United States Government
  obligations
  
  62,929,827
  
  518,858
  
  (555,417
  )
  62,893,268Municipal securities
  
  877,659
  
  
  
  
  
  877,659Equity securities
  
  300,000
  
  
  
  
  
  300,00064,107,486
  
  518,858
  
  (555,417
  )
  64,070,927$
  73,597,114
  
  550,549
  
  (623,176
  )
  73,524,487  There were no sales of mortgage-backed securities available-for-sale
for the years ended December 31, 2001, 2000, and 1999. During the years ended
December 31, 2001, 2000, and 1999 sales of investment securities
available-for-sale totaled $4,032,812, $7,063,076, and $11,712,628,
respectively. These sales resulted in gross gains of $32,812, $150,057, and
$102,940, for the respective years.  The amortized cost and estimated fair value of investment securities
available-for-sale at December 31, 2001 by contractual maturity are shown
below. Expected maturities may differ from contractual maturities because
borrowers may have the right to prepay obligations.  Amortized
  cost
  
  Estimated
  fair
  valueDue in one year or less
  
  $
  
  
  Due after one year through
  five years
  
  10,697,993
  
  10,806,145Due after five years
  through ten years
  
  21,820,871
  
  22,444,261Due after ten years
  
  28,488,194
  
  28,088,267Equity securities
  
  7,312,843
  
  7,276,789$
  68,319,901
  
  68,615,462  (Continued) F-13 
   (6)           Accrued
Interest Receivable  Accrued interest receivable is summarized as
follows:  December 31,2001
  
  2000Loans receivable
  
  $
  2,621,878
  
  2,210,906Mortgage-backed securities
  
  98,453
  
  60,811Investment securities
  
  961,789
  
  1,452,132$
  3,682,120
  
  3,723,849  (7)           Office
Properties and Equipment  Office
properties and equipment at cost is summarized as follows:  December
  31,2001
  
  2000Land
  
  $
  2,693,644
  
  1,509,185Land improvements
  
  299,061
  
  299,061Office buildings
  
  7,481,266
  
  6,940,469Leasehold improvements
  
  454,860
  
  415,464Furniture, fixtures, and
  equipment
  
  3,955,443
  
  3,654,372Construction in progress
  
  658,234
  
  15,542,508
  
  12,818,551Less accumulated
  depreciation and amortization
  
  (4,552,302
  )
  (3,814,231
  )$
  10,990,206
  
  9,004,320  Depreciation and
amortization expense totaled $738,071, $687,620, and $565,274 for the years
ended December 31, 2001, 2000, and 1999, respectively.  (Continued) F-14 
   (8)           Deposits  Deposit
balances are summarized as follows:  December
  31, 2001
  
  Stated or
  weighted 
  average 
  rate
  
  December
  31, 2000
  
  Stated or
  weighted 
  average
  rateAmount
  
  Percent
  
  
  Amount
  
  PercentCommercial checking
  accounts
  
  $
  14,387,774
  
  3.4
  %
  
  %
  $
  11,648,274
  %
  3.1
  %
  
  %NOW accounts noninterest
  bearing
  
  8,898,504
  
  2.1
  
  
  
  8,105,591
  
  2.2
  
  NOW accounts interest
  bearing
  
  30,646,178
  
  7.3
  
  1.07
  
  30,992,709
  
  8.4
  
  1.59Passbook
  
  84,888,698
  
  20.2
  
  3.11
  
  75,802,417
  
  20.5
  
  3.76Money market accounts
  
  106,850,171
  
  25.5
  
  4.00
  
  40,098,473
  
  10.9
  
  3.83Certificate accounts:Fixed rates
  
  112,431,729
  
  26.8
  
  4.57
  
  138,985,290
  
  37.6
  
  6.25Individual retirement
  accounts18-48 month fixed and variable rate
  
  45,532,141
  
  10.8
  
  5.01
  
  43,241,076
  
  11.7
  
  5.88Jumbo certificates (with a
  minimum denomination of $100,000)
  
  16,449,094
  
  3.9
  
  4.68
  
  20,659,525
  
  5.6
  
  6.60$
  420,084,289
  
  100.0
  %
  4.78
  %
  $
  369,533,355
  
  100.0
  %
  4.78
  %Contractual
  maturity of certificate accounts($100,000 or greater):Under 3 months
  
  $
  9,745,052
  
  25.6
  %
  
  
  $
  10,925,465
  
  25.7
  %Over 3 months through 6
  months
  
  6,123,529
  
  16.1
  
  
  
  6,708,522
  
  15.8Over 6 months through 12
  months
  
  12,112,330
  
  31.8
  
  
  
  18,321,362
  
  43.0Over 12 months
  
  10,086,727
  
  26.5
  
  
  
  6,588,602
  
  15.5$
  38,067,638
  
  100.0
  %
  
  
  $
  42,543,951
  
  100.0
  %  The aggregate maturities of certificate
accounts at December 31, 2001 are as follows (in thousands):  2002
  
  $
  119,3262003
  
  38,1342004
  
  3,4382005
  
  12,9192006
  
  596$
  174,413
  (Continued) F-15 
    Interest expense on deposits
is summarized as follows for the years ended December 31:  2001
  
  2000
  
  1999Passbook accounts
  
  $
  2,324,594
  
  2,806,378
  
  2,355,677NOW accounts
  
  308,862
  
  457,244
  
  493,374Money market accounts
  
  3,057,400
  
  1,261,297
  
  1,036,713Certificate accounts
  
  10,764,060
  
  11,374,014
  
  7,946,663$
  16,454,916
  
  15,898,933
  
  11,832,427   (9)           Borrowed
Money Borrowed
money is summarized as follows:  December
  31, 2001
  
  December
  31, 2000Maturity
  
  Weighted 
  interest 
  rate
  
  Outstanding
  
  balance
  
  Weighted 
  interest rate
  
  Outstanding
  
  balance(in
  thousands)Advances from the Federal
  Home Loan Bank of Chicago:
  
  2001
  
  
  %
  $
  
  
  6.21
  %
  $
  25,0002002
  
  5.52
  
  3,500
  
  5.52
  
  3,5002003
  
  4.65
  
  5,000
  
  
  
  2004
  
  4.82
  
  32,700
  
  5.51
  
  17,7002005
  
  6.17
  
  15,000
  
  6.17
  
  15,0002006
  
  4.30
  
  5,000
  
  
  
  2008
  
  4.78
  
  14,000
  
  5.20
  
  14,0002010
  
  5.85
  
  65,000
  
  5.85
  
  65,0002011
  
  4.66
  
  35,000
  
  
  
  5.28%
  
  $
  175,200
  
  5.83
  %
  $
  140,200   At December 31, 2001, $5,000,000 of the advances due in 2008 have
adjustable interest rates. All other advances have fixed interest rates. At
December 31, 2001, $134,000,000 in advances are callable by the Federal Home
Loan Bank of Chicago (FHLB) beginning in 2002.  The Savings Bank adopted a collateral pledge agreement whereby it has
agreed to at all times keep on hand, free of all other pledges, liens, and
encumbrances, performing first mortgage loans with unpaid principal balances
aggregating no less than 167% of the outstanding secured advances from the
FHLB. The carrying value of the collateral was approximately $367,086,000 at
December 31, 2001. All stock in the FHLB is also pledged as additional
collateral for these advances.  (Continued) F-16 
    (10)         Income
Taxes Income tax expense (benefit)
for the years ended December 31, 2001, 2000, and 1999, is as follows:  Years
  ended December 31,2001
  
  2000
  
  1999Current:Federal
  
  $
  2,071,628
  
  1,914,316
  
  2,312,771State
  
  243,666
  
  106,818
  
  202,8322,315,294
  
  2,021,134
  
  2,515,603Deferred:Federal
  
  168,966
  
  95,586
  
  (226,726
  )State
  
  23,551
  
  13,323
  
  (51,582
  )192,517
  
  108,909
  
  (278,308
  )Total income tax expense
  
  $
  2,507,811
  
  2,130,043
  
  2,237,295  The actual Federal income tax expense for
2001, 2000, and 1999 differs from the 
expected  income tax expense for
those periods (computed by applying the statutory U.S. Federal corporate tax
rate of 34% to earnings before income taxes) as follows:  2001
  
  2000
  
  1999Tax expense based on the
  statutory U.S. federal corporate tax rate
  
  $
  2,428,624
  
  2,037,182
  
  2,127,750State income taxes, net of
  federal impact
  
  169,537
  
  82,256
  
  130,177Tax exempt interest income
  
  (163,688
  )
  (1,743
  )Other, net
  
  73,338
  
  12,348
  
  (20,632
  )$
  2,507,811
  
  2,130,043
  
  2,237,295  (Continued) F-17 
    The tax effects of existing temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax liabilities at
December 31, 2001 and 2000 are as follows:  2001
  
  2000Deferred tax assets:Allowance for loan losses
  
  $
  873,616
  
  729,709Charitable contribution
  carryforward
  
  1,193,930
  
  1,438,180Unrealized loss on
  securities available-for-sale
  
  
  
  28,324Gross deferred tax assets
  
  2,067,546
  
  2,196,213Less valuation allowance
  
  (122,500
  )
  1,945,046
  
  2,196,213Deferred tax liabilities:FHLB stock dividends
  
  (532,037
  )
  (323,506
  )Loan fees
  
  39,510
  
  (113,994
  )Depreciation
  
  (479,792
  )
  (439,795
  )Tax bad debt reserve in
  excess of base year amount
  
  (288,868
  )
  (430,912
  )Unrealized gain or
  securities available for sale
  
  (147,850
  )
  Other, net
  
  (26,224
  )
  (9,533
  )Gross deferred tax
  liabilities
  
  (1,435,261
  )
  (1,317,740
  )Net deferred tax asset
  
  $
  509,785
  
  878,473   Retained earnings at
December 31, 2001 include approximately $2,328,000 of tax bad debt reserves for
which no provision for Federal or state income tax has been made. If, in the
future this amount, or a portion thereof, is used for certain purposes, then a
Federal and state tax liability, at the then-current corporate income tax
rates, will be imposed on the amounts so used.  For financial reporting
purposes, a valuation allowance has been established at December 31, 2001 to
offset the portion of the deferred tax asset, charitable contribution
carryforward, that may not be recognized upon 
expiration of the carryforward period in 2003.  (11)        
Employee Benefit Plans  401(k) Plan and Trust  The
Savings Bank adopted the Elgin Federal Financial Center 401(k) Employee Benefit
Plan and Trust (Plan), effective November 1, 1986, for the exclusive benefit of
eligible employees and their beneficiaries. The Plan is a qualified plan
covering all employees of the Savings Bank who have completed at least six
months of service for the Savings Bank and are age 20 or older. The Plan also
provides benefits in the event of death, disability, or other termination of
employment. Participants may make contributions to the Plan from 2% to 10% of
their earnings, subject to Internal Revenue Service limitations. Matching
contributions can be made at the Savings Bank s discretion each Plan year.
There were no contributions by the Savings Bank during 2001, 2000, and 1999.  (Continued) F-18 
    Employee Stock Ownership Plan (ESOP)  In conjunction with the
Savings Bank s conversion, the Company formed an ESOP. The ESOP covers
substantially all employees that are age 21 or over and with at least 1,000
hours of service. The ESOP borrowed $8,961,298 from the Company and purchased
599,314 common shares issued in the Conversion. The loan has a 15 year term,
with an interest rate of 8.50%. The Savings Bank intends to make discretionary
contributions to the ESOP sufficient to service the requirements of the loan
over a period of 15 years. During the years ended December 31, 2001, 2000, and
1999, 39,954 shares were allocated annually. ESOP expense for the years ended
December 31, 2001, 2000, and 1999 totaled $468,596, $380,489, and $423,739,
respectively. The fair value of unallocated shares totaled $6,087,000 and
$4,974,000 at December 31, 2001 and 2000, respectively.  Stock Award Plan (SAP)  On October 27, 1998, the
Company adopted a SAP which may grant up to 4%, or 299,657 shares of the common
stock issued in the Company s initial public offering to eligible directors,
officers, and certain key employees of the Company. All shares available under
the SAP were granted on October 27, 1998. Shares vest as follows: 20% per year
for five (5) years of continuous service. Deferred compensation relating to the
shares granted under the SAP totaled $3,333,684, the fair value of the shares
on the date of grant, and is being recognized as compensation expense as the
participants vest in those shares. For the years ended December 31, 2001, 2000,
and 1999, the Company recorded compensation expense of $633,602, $637,774, and $750,319,
respectively.  During 1998, 299,657 shares
of the Company s common stock were purchased by the SAP in the open market at a
weighted average price of $12.37 per share. The aggregate purchase price of all
nonvested shares acquired by the SAP is reflected as a reduction of
stockholders  equity as deferred
compensation and additional paid-in capital.  (12)         Stock
Option Plans  On
October 27, 1998, the Company adopted a stock option plan (the Stock Option
Plan) pursuant to which the Company s Board of Directors may grant stock
options to directors, officers, and employees of the Company and the Savings
Bank. The number of common shares authorized under the Stock Option Plan is
749,143, equal to 10% of the total number of shares issued in the initial stock
offering. A similar second plan, consisting of 254,256 shares, was approved by
the stockholders on April 25, 2000. Stock options granted under the plans will
vest at a rate of 20% per year beginning on the first anniversary date of the
respective grant. Exercise prices are equal to the fair value of the common
stock at the date of grant. Option terms cannot exceed ten years from the
commencement date of the plans of October 27, 1998 and October 27, 2000,
respectively. (Continued) F-19 
   The Company follows the disclosure provisions of FASB Statement No.
123, Accounting for Stock-Based Compensation.
The fair value of each option granted is estimated on the grant date using the
Black-Scholes option-pricing model. The following assumptions were used in
estimating the fair value of options granted in 2000 and 1999.  There were no options granted during 2001.  2001
  
  2000
  
  1999Dividend yield
  
  
  
  4.63
  %
  4.00
  %Risk-free interest rate
  
  
  
  5.28
  
  6.19Weighted average expected
  life
  
  
  
  10 yrs
  
  9 yrsExpected volatility
  
  
  
  3.75
  %
  5.43
  %  The weighted average per share fair values of options granted in 2000
and 1999 totaled $0.77 and $0.78, respectively.  Under Statement 123, the Company is required to disclose pro forma net
income and earnings per share as if compensation expense relative to the fair
value of options granted had been included in earnings. Had the Company
determined compensation cost based on the fair value at the grant date of its
stock options under Statement 123, the Company s net income would have been
reduced to the pro forma amounts indicated below:  Years
  ended December 31,2001
  
  2000
  
  1999Net income:As reported
  
  $
  4,635,200
  
  3,861,669
  
  4,020,794Pro forma
  
  4,182,981
  
  3,399,060
  
  3,560,865Earnings per share:Basic:As reported
  
  $
  1.09
  
  0.87
  
  0.72Pro forma
  
  0.98
  
  0.77
  
  0.64Diluted:As reported
  
  1.08
  
  0.87
  
  0.72Pro forma
  
  0.97
  
  0.77
  
  0.64  (Continued) F-20 
   A summary of the status of the Company s stock option transactions
under the Plans for the years ended December 31, 2001, 2000, and 1999, is
presented below:   2001
  
  
  
  2000
  
  
  
  1999Shares
  
  Weighted
  average
  exercise
  price
  
  Shares
  
  Weighted
  average
  exercise
  price
  
  Shares
  
  Weighted
  average
  exercise
  priceOutstanding at beginning of
  year
  
  793,500
  
  $
  11.01
  
  749,000
  
  $
  11.09
  
  $
  749,000
  
  11.125Forfeitures
  
  (22,000
  )
  11.125
  
  
  
  
  
  (33,000
  )
  11.125Granted
  
  
  
  
  
  44,500
  
  9.75
  
  33,000
  
  10.375Exercised
  
  
  
  
  
  
  
  
  
  
  
  Outstanding at end of year
  
  771,500
  
  11.01
  
  793,500
  
  11.01
  
  749,000
  
  11.09Exercisable at end of year
  
  443,300
  
  $
  11.07
  
  293,000
  
  $
  11.11
  
  $
  143,200
  
  11.125  (13)         Regulatory Capital Requirements The Savings Bank is subject
to regulatory capital requirements administered by state and federal regulatory
agencies. Failure to meet minimum capital requirements can initiate certain
mandatory and possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on the Savings Bank s financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Savings Bank must meet specific capital
guidelines that involve quantitative measures of the Savings Bank s assets,
liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. The Savings Bank s capital amounts and classification are
also subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.  Quantitative measures
established by regulation to ensure adequacy require the Savings Bank to
maintain minimum amounts and ratios as set forth below. Management believes, as
of December 31, 2001, that the Savings Bank meets all capital adequacy
requirements to which it is subject.  As of December 31, 2001 and
2000, the most recent notification from the Federal Deposit Insurance
Corporation categorized the Savings Bank as well capitalized under the
regulatory framework for prompt corrective action. At December 31, 2001, there
are no conditions or events since the most recent notification that management
believes have changed the institution's category.  (Continued) F-21 
   The Savings Bank s actual
capital amounts and ratios are as follows:  Actual
  
  For
  capital adequacy 
  purposes
  
  To be well
  capitalized 
  under prompt corrective
  actionAmount
  
  Ratio
  
  Amount
  
  Ratio
  
  Amount
  
  RatioDecember 31, 2001:Total capital (to risk
  weighted assets)
  
  $
  66,271,000
  
  14.58
  %
  $
  36,354,000
  
  8.0
  %
  $
  45,443,000
  
  10.0
  %Tier I capital (to risk
  weighted assets)
  
  64,015,000
  
  14.09
  
  18,177,000
  
  4.0
  
  27,266,000
  
  6.0Tier I capital (to average
  assets)
  
  64,015,000
  
  9.53
  
  26,878,000
  
  4.0
  
  33,597,000
  
  5.0December 31, 2000:Total capital (to risk
  weighted assets)
  
  63,137,000
  
  16.88
  
  29,915,000
  
  8.0
  
  37,394,000
  
  10.0Tier I capital (to risk
  weighted assets)
  
  61,256,000
  
  16.38
  
  14,958,000
  
  4.0
  
  22,436,000
  
  6.0Tier I capital (to average
  assets)
  
  61,256,000
  
  10.50
  
  23,342,000
  
  4.0
  
  29,177,000
  
  5.0  (14)         Concentrations of Credit Risk and
Financial Instruments with Off-balance Sheet Risk  A
majority of the Savings Bank s mortgage loans are secured by single-family
homes in Kane County. For loans originated, the Savings Bank evaluates each
customer s creditworthiness on a case-by-case basis. Management believes the
Savings Bank has a diversified loan portfolio and concentration of lending
activities that does not result in an acute dependency upon the economic
conditions of its lending area. Purchased participation loans are secured by
properties primarily in the southern Wisconsin area and to a lesser extent by
properties in the Chicagoland area.  The
Savings Bank is party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
Those financial instruments primarily include commitments to extend credit.
Commitments to extend credit are agreements to lend to a customer so long as
there is no violation of any condition established in the contract. The Savings
Bank evaluates each customer s creditworthiness on a case-by-case basis. The
amount of collateral obtained is based on management s credit evaluation of the
customer. The Savings Bank s exposure to credit loss in the event of
nonperformance by the customer is represented by the contractual amount of
those financial instruments. At December 31, 2001 and 2000, the Savings Bank
had the following commitments:  (Continued) F-22 
    2001
  
  2000First mortgage loans
  
  $
  14,331,000
  
  3,946,000Construction loans
  
  1,415,000
  
  2,067,000Unused lines of credit
  
  27,213,000
  
  16,943,000Letters of credit
  
  2,963,000
  
  993,000  There
are various matters of litigation pending against the Company that have arisen
during the normal course of business. Based upon discussions with legal
counsel, management believes that the liability, if any, resulting from these
matters will not be material to the consolidated financial position or results
of operations of the Company. (15)         Fair Value of Financial Instruments  FASB
Statement No. 107, Disclosures about Fair
Value of Financial Instruments (Statement 107), requires the
disclosure of estimated fair values of all asset, liability, and off-balance
sheet financial instruments. The estimated fair value amounts under Statement
No. 107 have been determined as of a specific point in time utilizing various
available market information, assumptions, and appropriate valuation
methodologies. Accordingly, the estimated fair values presented herein are not
necessarily representative of the underlying value of the Company. Rather, the
disclosures are limited to reasonable estimates of the fair value of only the
Company s financial instruments. The use of assumptions and various valuation
techniques, as well as the absence of secondary markets for certain financial
instruments, will likely reduce the comparability of fair value disclosures
between financial institutions. The Company does not plan to sell most of its
assets or settle most of its liabilities at these fair values.  The
estimated fair values of the Company s financial instruments are set forth in
the following table.   December
  31,2001
  
  2000Carrying
  amount
  
  Fair
  value
  
  Carrying
  amount
  
  Fair
  value(in
  thousands)Financial assets:Cash and cash equivalents
  
  $
  18,175
  
  18,175
  
  27,023
  
  27,023Investment securities
  
  68,615
  
  68,615
  
  64,071
  
  64,071Mortgage-backed securities
  
  13,856
  
  13,856
  
  9,454
  
  9,454Loans receivable
  
  539,637
  
  543,974
  
  461,956
  
  462,529Accrued interest
  receivable
  
  3,682
  
  3,682
  
  3,724
  
  3,724Stock in FHLB of Chicago
  
  8,892
  
  8,892
  
  7,760
  
  7,760Financial liabilities:Nonmaturing deposits
  
  $
  245,671
  
  245,671
  
  166,647
  
  166,647Deposits with stated
  maturities
  
  174,413
  
  176,993
  
  202,886
  
  203,123Borrowed money
  
  175,200
  
  176,315
  
  140,200
  
  139,642Accrued interest payable
  
  988
  
  988
  
  918
  
  918   (Continued) F-23 
    The following methods and
assumptions are used by the Company in estimating the fair value amounts for
its financial instruments.  Cash and Cash Equivalents  The carrying value of cash
and cash equivalents approximates fair value due to the short period of time
between origination of the instrument and its expected realization.  Investment Securities, Mortgage-backed Securities, and FHLB Stock  The fair value of investment
securities and mortgage-backed securities are estimated using quoted market
prices. The fair value of FHLB stock is based on its redemption value.  Loans Receivable  The fair value of loans
receivable is based on contractual cash flows adjusted for prepayment
assumptions, discounted using the current rate at which similar loans would be
made to borrowers with similar credit ratings and remaining terms to maturity.  Accrued Interest Receivable and Payable  The carrying value of
accrued interest receivable and payable approximates fair value due to the
relatively short period of time between accrual and expected realization.  Deposits  The fair value of deposits
with no stated maturity, such as commercial checking, passbook savings, NOW,
and money market accounts are disclosed as the amount payable on demand.  The fair value of
fixed-maturity deposits is the present value of the contractual cash flows
discounted using interest rates currently being offered for deposits with
similar remaining terms to maturity. If the fair value estimate is less than
the amount payable on demand at December 31, the fair value disclosed is the
amount payable on demand as per Statement 107.  Borrowed Funds  The fair value of fixed rate
FHLB advances is the present value of the contractual cash flows discounted by
the current rate offered for similar remaining maturities. For variable rate
advances, the carrying value approximates fair value.   (Continued) F-24 
   (16)Condensed Parent Company
Only Financial Information Presented below is the
condensed balance sheets as of December 31, 2001 and 2000 and statements of
income and cash flows for each of the years in the three-year period ended
December 31, 2001 for EFC Bancorp, Inc. These statements should be read in
conjunction with the consolidated financial statements and the notes thereto.   December
  31,2001
  
  2000Balance SheetsAssets:Cash and cash equivalents
  
  $
  1,388,622
  
  676,435Mortgage-backed securities
  available-for-sale, at fair value
  
  894,940
  
  1,571,318Investment securities
  available-for-sale, at fair value
  
  300,000
  
  2,276,428Equity investment in the
  Savings Bank
  
  64,244,687
  
  61,233,467Accrued interest
  receivable
  
  6,164
  
  27,741Other assets
  
  2,544,559
  
  2,194,605Total assets
  
  $
  69,378,972
  
  67,979,994Liabilities  other
  liabilities
  
  750,409
  
  694,892Total stockholders  equity
  
  68,628,563
  
  67,285,102Total liabilities and
  stockholders  equity
  
  $
  69,378,972
  
  67,979,994   (Continued) F-25 
   Years
  ended December 31,2001
  
  2000
  
  1999Statements of IncomeDividend income from
  Savings Bank
  
  $
  2,091,103
  
  1,783,317
  
  12,493,171Equity in undistributed
  earnings of the Savings Bank
  
  2,771,076
  
  2,186,058
  
  Dividend income in excess
  of earnings of the Savings Bank
  
  
  
  
  
  (8,492,628)Interest income
  
  811,547
  
  968,897
  
  1,341,607Noninterest expense
  
  (1,126,808
  )
  (1,153,245
  )
  (1,400,395
  )Income before income taxes
  
  4,546,918
  
  3,785,027
  
  3,941,755Income tax benefit
  
  88,282
  
  76,642
  
  79,039Net income
  
  $
  4,635,200
  
  3,861,669
  
  4,020,794Statements of Cash FlowsOperating activities:Net income
  
  $
  4,635,200
  
  3,861,669
  
  4,020,794Equity in undistributed
  earnings of the Savings Bank
  
  (277,1076
  )
  (2,186,058
  )Dividend income in excess
  of earnings of the Savings Bank
  
  
  
  
  
  8,492,628Amortization of premiums
  
  11,908
  
  13,552
  
  37,022ESOP plan shares allocated
  
  597,420
  
  934,094
  
  858,165Stock award plan shares
  allocated
  
  664,503
  
  576,734
  
  750,319Change in fair value of
  ESOP shares
  
  (128,832
  )
  (216,931
  )
  (173,680
  )Decrease/(increase) in
  other assets
  
  (349,954
  )
  383,907
  
  (74,980
  )Decrease/(increase) in
  accrued interest receivable
  
  21,577
  
  721,094
  
  (109,981
  )Increase/(decrease) in
  other liabilities
  
  40,580
  
  111,385
  
  (387,121
  )Net cash provided by
  operating activities
  
  2,721,326
  
  4,199,446
  
  13,413,166Investing activities:Principal repayments on
  mortgage-backedsecurities
  available-for-sale
  
  679,201
  
  642,200
  
  1,256,399Purchases of investment
  securities available-for-sale
  
  
  
  
  
  (300,000
  )Maturities of investment
  securities available-for-sale
  
  2,000,000
  
  
  
  2,000,000Net cash provided by
  investing activities
  
  2,679,201
  
  642,200
  
  2,956,399Financing activities:Cash dividends paid
  
  (2,091,103
  )
  (1,783,317
  )
  (1,793,171
  )Purchase of treasury stock
  
  (2,597,237
  )
  (3,315,593
  )
  (23,316,599
  )Net cash used in financing
  activities
  
  (4,688,340
  )
  (5,098,910
  )
  (25,109,770
  )Net increase (decrease) in
  cash and cash equivalents
  
  712,187
  
  (257,264
  )
  (8,740,205
  )Cash and cash equivalents
  at beginning of year
  
  676,435
  
  933,699
  
  9,673,904Cash and cash equivalents
  at end of year
  
  $
  1,388,622
  
  676,435
  
  933,699   F-26 
   (17) Selected Quarterly Financial Data (unaudited)  A summary of consolidatedoperating results on a quarterly basis is as follows:  Three
  months endedMarch 31, 
  2001
  
  June 30, 
  2001
  
  September
  30, 2001
  
  December
  31,
  2001(In
  thousands, except per share data)Interest income
  
  $
  10,677
  
  10,755
  
  11,138
  
  11,271Interest expense
  
  6,489
  
  6,389
  
  6,437
  
  6,118Net interest income before
  provision for loan losses
  
  4,188
  
  4,366
  
  4,701
  
  5,153Provision for loan losses
  
  90
  
  105
  
  135
  
  170Net interest income after
  provision for loan losses
  
  4,098
  
  4,261
  
  4,566
  
  4,983Noninterest income
  
  342
  
  399
  
  433
  
  647Noninterest expense
  
  3,034
  
  3,202
  
  3,193
  
  3,157Income before income tax
  expense
  
  1,406
  
  1,458
  
  1,806
  
  2,473Income tax expense
  
  505
  
  497
  
  637
  
  869Net income
  
  $
  901
  
  961
  
  1,169
  
  1,604Earnings per share:Basic
  
  $
  0.21
  
  0.23
  
  0.27
  
  0.38Diluted
  
  0.21
  
  0.23
  
  0.27
  
  0.37  (Continued) F-27 
   Three
  months endedMarch 31, 
  2001
  
  June 30, 
  2001
  
  September
  30, 2001
  
  December
  31,
  2001(In
  thousands, except per share data)Interest income
  
  $
  9,189
  
  9,737
  
  10,165
  
  10,723Interest expense
  
  5,108
  
  5,578
  
  6,131
  
  6,584Net interest income before
  provision for loan losses
  
  4,081
  
  4,159
  
  4,034
  
  4,139Provision for loan losses
  
  60
  
  96
  
  111
  
  96Net interest income after
  provision for loan losses
  
  4,021
  
  4,063
  
  3,923
  
  4,043Noninterest income
  
  266
  
  359
  
  386
  
  319Noninterest expense
  
  2,818
  
  2,837
  
  2,828
  
  2,905Income before income tax
  expense
  
  1,469
  
  1,585
  
  1,481
  
  1,457Income tax expense
  
  506
  
  586
  
  523
  
  515Net income
  
  $
  963
  
  999
  
  958
  
  942Earnings per share:Basic
  
  $
  0.21
  
  0.23
  
  0.22
  
  0.21Diluted
  
  0.21
  
  0.23
  
  0.22
  
  0.21  F-28 
    Item 9. Changes in and Disagreements with
Accoutants on Accounting and Financial Disclosures.  None. PART
III  Item 10. 
Directors and Executive Officers of the Registrant.  The information
relating to Directors and Executive Officers of the Registrant is incorporated
herein by reference to the Registrants Proxy Statement for the Annual Meeting
of Stockholders to be held on April 23, 2002, at pages 4 through 6 and 15.  Item
11. Executive Compensation.  The
information relating to director and executive compensation is incorporated
herein by reference to the Registrants Proxy Statement for the Annual Meeting
of Stockholders to be held on April 23, 2002, at pages 8 through 10.  Item 12. Security Ownership of Certain
Beneficial Owners and Management.  The
information relating to security ownership of certain beneficial owners and
management is incorporated herein by reference to the Registrants Proxy
Statement for the Annual Meeting of Stockholders to be held on April 23, 2002,
at pages 3 and 4.  Item 13. Certain Relationships and Related
Transactions.  The
information relating to certain relationships and related transactions is
incorporated herein by reference to the Registrants Proxy Statement for the
Annual Meeting of Stockholders to be held on April 23, 2002, at page 15.  46 
   PART IV  Item 14.
Exhibits, Financial Statement Schedules, and Reports on Form 8-K.  (a) 1.
  
  Financial
  StatementsConsolidated Financial
  Statements of the Company are listed in the index and appear in this report
  under Item 8.  Financial Statements
  and Supplementary Data.(a) 2.
  
  Financial
  Statement SchedulesFinancial Statement
  Schedules have been omitted because they are not applicable or the required
  information is shown in the Consolidated Financial Statements or notes
  thereto.(b)
  
  Reports
  on Form 8K filed during the last quarter of 2001None.(c)
  
  Exhibits
  Required by Securities and Exchange Commission Regulation SKExhibitNumber3.1
  Certificate of
  Incorporation of EFC Bancorp, Inc. (1 )3.2
  ByLaws of EFC
  Bancorp, Inc. (1 )4.0
  Stock Certificate of EFC
  Bancorp, Inc. (1)10.1
  EFC Bancorp, Inc. 2000
  Stock Option Plan (3 )10.2
  Amended and Restated EFC
  Bancorp, Inc. 1998 Stock Based Incentive Plan (2 )10.3
  Form of Employment
  Agreement between Elgin Financial Savings Bank and certain executive
  officers (1 )10.4
  Form of Employment
  Agreement between EFC Bancorp, Inc. and certain executive officers (1
  )10.5
  Form of Change in Control
  Agreement between Elgin Financial Savings Bank and certain executive
  officers (1 )10.6
  Form of Change in Control
  Agreement between EFC Bancorp, Inc. and certain executive officers (1
  )10.8
  Form of Elgin Financial
  Savings Bank Supplemental Executive Retirement Plan  (1 )10.9
  Form of Elgin Financial
  Savings Bank Management Supplemental Executive Retirement Plan  (1
  )11.0
  Statement Re:  Computation of Per Share Earnings
  Incorporated herein by reference to Footnote 3 on page F-9 of this document13.0
  Selected Consolidated
  Financial and Other Data (filed herewith )21.0
  Subsidiary information
  incorporated herein by reference to Part 1 - Subsidiaries23.0
  Consent of the Companys
  Independent Auditors (filed herewith)99.1
  Proxy Statement, dated
  April 23, 2002, for the 2002 Annual Meeting of Stockholders (filed herewith
  )  
 (1)   Incorporated by reference
into this document from the Exhibits filed with the Registration Statement on
Form S-1, and any amendments thereto, Registration No. 333-38637. (2)   Incorporated by reference into this document
from the Proxy Statement for the Annual Meeting of Stockholders filed on March
26, 1999. (3)   Incorporated by reference into this document
from the Appendix to the Proxy Statement for the Annual Meeting of Stockholders
filed on March 23, 2000.  47 
   Signatures  Pursuant of
the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.   EFC Bancorp, Inc(Registrant)  March 19, 2002  /s/ Barrett J. O'ConnorBarrett J. O'Connor, President & Chief Executive Officer  Pursuant ot
the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indiacted:  NAME
  
  TITLE
  
  DATE/s/ Barrett
  J. O'Connor
  
  President,
  Chief Executive Officer
  
  March 19,
  2002Barrett J.
  O'Connor
  
  and Director(principal
  executive officer)/s/ James J.
  Kovae
  
  Executive
  Vice President, Chief
  
  March 19,
  2002James J.
  Kovae
  
  Financial
  Officer and Director(principal
  accountnig and financialofficer)/s/ Leo M.
  Flanagan, Jr.
  
  Director and
  Chairman of the Board
  
  March 19,
  2002Leo M.
  Flanagan, Jr./s/ Thomas
  I. Anderson
  
  Director
  
  March 19,
  2002Thomas I.
  Anderson/s/ Vincent
  C. Norton
  
  Director
  
  March 19,
  2002Vincent C.
  Norton/s/ Ralph W.
  Helm
  
  Director
  
  March 19,
  2002Ralph W.
  Helm/s/ Peter A.
  Traeger
  
  Director
  
  March 19,
  2002Peter A.
  Traeger/s/ James A.
  Alpeter
  
  Director
  
  March 19,
  2002James A.
  Alpeter/s/ Larry M.
  Narum
  
  Director
  
  March 19,
  2002Larry M.
  Narum