##### 



Exhibit 13
 ANNUAL REPORT TO SECURITY HOLDERS




---



##### 



Corporate Profile
  Table of Contents
 Letter to Shareholders
    
    
    2Financial Highlights
    
    
    3Selected Consolidated Financial
Information
    
    
    4Managements Discussion and Analysis
    
    
    6Independent Auditors Report
    
    
    22Consolidated Statements of
Financial Condition
    
    
    23Consolidated Statements of Income
    
    
    24Consolidated Statements of Changes in
Stockholders Equity
    
    
    25Consolidated Statements of Cash Flows
    
    
    26Notes to Consolidated Financial
Statements
    
    
    27




---



##### 



To Our Shareholders,
      Paul Zogas
Chairman and President
  2




---



##### 



FINANCIAL HIGHLIGHTS
 Year Ended June 30,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(Dollars in Thousands)Total assets
    
    $
    124,893
    
    
    
    130,817
    
    
    
    138,979
    
    
    
    153,560
    
    
    
    159,976Loans receivable, net
    
    
    84,857
    
    
    
    92,545
    
    
    
    94,829
    
    
    
    94,543
    
    
    
    93,300Mortgage-backed securities
    
    
    1,475
    
    
    
    1,684
    
    
    
    1,920
    
    
    
    2,942
    
    
    
    6,272Cash and cash equivalents
    
    
    13,456
    
    
    
    11,260
    
    
    
    36,710
    
    
    
    50,497
    
    
    
    49,421Investment securities
    
    
    21,127
    
    
    
    21,022
    
    
    
    1,311
    
    
    
    1,234
    
    
    
    6,389Deposits
    
    
    109,745
    
    
    
    115,971
    
    
    
    124,836
    
    
    
    140,437
    
    
    
    147,490Stockholders equity
    
    
    13,710
    
    
    
    13,296
    
    
    
    12,697
    
    
    
    11,742
    
    
    
    11,056For the Period:Net interest income
    
    $
    4,726
    
    
    
    5,170
    
    
    
    5,135
    
    
    
    4,635
    
    
    
    4,554Net income
    
    
    698
    
    
    
    1,011
    
    
    
    1,203
    
    
    
    1,043
    
    
    
    690Per Common Share:Book value per share
outstanding
    
    $
    36.80
    
    
    
    35.68
    
    
    
    34.08
    
    
    
    31.51
    
    
    
    29.67Earnings per share outstandingbasic
    
    $
    1.87
    
    
    
    2.71
    
    
    
    3.23
    
    
    
    2.80
    
    
    
    1.88diluted
    
    $
    1.87
    
    
    
    2.71
    
    
    
    3.23
    
    
    
    2.80
    
    
    
    1.88Financial Ratios:Stockholders equity to
total assets
    
    
    10.98
    %
    
    
    10.16
    
    
    
    9.14
    
    
    
    7.65
    
    
    
    6.91Non-performing assets to
total assets
    
    
    .41
    %
    
    
    .25
    
    
    
    .27
    
    
    
    .04
    
    
    
    .30Net charge-offs to total loans
    
    
    
    
    
    
    .04
    
    
    
    .01
    
    
    
    .02
    
    
    
    Net interest margin
    
    
    3.92
    %
    
    
    4.06
    
    
    
    3.71
    
    
    
    3.13
    
    
    
    3.05Operating expenses to
average assets
    
    
    3.52
    %
    
    
    3.41
    
    
    
    3.07
    
    
    
    2.93
    
    
    
    2.96Return on average assets
    
    
    .56
    %
    
    
    .76
    
    
    
    .83
    
    
    
    .67
    
    
    
    .44Return on average
stockholders equity
    
    
    5.15
    %
    
    
    7.78
    
    
    
    9.89
    
    
    
    9.05
    
    
    
    6.41
  3




---



##### 



SELECTED CONSOLIDATED FINANCIAL INFORMATION
 SELECTED FINANCIAL CONDITION DATA:
 At June 30,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In Thousands)Total assets
    
    $
    124,893
    
    
    
    130,817
    
    
    
    138,379
    
    
    
    153,560
    
    
    
    159,976Loans receivable, net
    
    
    84,857
    
    
    
    92,545
    
    
    
    94,829
    
    
    
    94,543
    
    
    
    93,300Mortgage-backed securities
    
    
    1,475
    
    
    
    1,684
    
    
    
    1,920
    
    
    
    2,942
    
    
    
    6,272Cash and cash equivalents
    
    
    13,456
    
    
    
    11,260
    
    
    
    36,710
    
    
    
    50,497
    
    
    
    49,421Investment securities
    
    
    21,127
    
    
    
    21,022
    
    
    
    1,311
    
    
    
    1,234
    
    
    
    6,389Deposits
    
    
    109,745
    
    
    
    115,971
    
    
    
    124,836
    
    
    
    140,437
    
    
    
    147,490Stockholders equity
    
    $
    13,710
    
    
    
    13,296
    
    
    
    12,697
    
    
    
    11,742
    
    
    
    11,056
 SELECTED OPERATIONS DATA:
 Year Ended June 30,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In Thousands)Total interest income
    
    $
    6,803
    
    
    
    6,821
    
    
    
    6,506
    
    
    
    6,340
    
    
    
    7,278Total interest expense
    
    
    2,077
    
    
    
    1,651
    
    
    
    1,371
    
    
    
    1,706
    
    
    
    2,724Net interest income
    
    
    4,726
    
    
    
    5,170
    
    
    
    5,135
    
    
    
    4,554
    
    
    
    4,448Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    60Net interest income after
provision for loan losses
    
    
    4,726
    
    
    
    5,170
    
    
    
    5,135
    
    
    
    4,574
    
    
    
    4,494Non-interest income:Loan related fees and charges
    
    
    171
    
    
    
    250
    
    
    
    239
    
    
    
    399
    
    
    
    542Deposit related fees
    
    
    337
    
    
    
    446
    
    
    
    432
    
    
    
    473
    
    
    
    512Commission income
    
    
    67
    
    
    
    51
    
    
    
    56
    
    
    
    70
    
    
    
    70Gain on sale of loans
    
    
    99
    
    
    
    64
    
    
    
    26
    
    
    
    102
    
    
    
    27Gain on sale of investment
    
    
    
    
    
    
    35
    
    
    
    329
    
    
    
    
    
    
    
    Gain on satisfaction of
foreclosure judgments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    433
    
    
    
    Other income
    
    
    82
    
    
    
    53
    
    
    
    62
    
    
    
    86
    
    
    
    57Total non-interest income
    
    
    756
    
    
    
    899
    
    
    
    1,144
    
    
    
    1,563
    
    
    
    1,208Non-interest expense:Staffing costs
    
    
    2,555
    
    
    
    2,614
    
    
    
    2,578
    
    
    
    2,635
    
    
    
    2,627Occupancy and equipment expense
    
    
    676
    
    
    
    654
    
    
    
    635
    
    
    
    729
    
    
    
    773Deposit insurance premiums
    
    
    14
    
    
    
    16
    
    
    
    20
    
    
    
    22
    
    
    
    24Advertising expense
    
    
    68
    
    
    
    65
    
    
    
    66
    
    
    
    70
    
    
    
    58Data processing fees
    
    
    187
    
    
    
    198
    
    
    
    204
    
    
    
    213
    
    
    
    207Legal, audit and examination
    
    
    135
    
    
    
    147
    
    
    
    136
    
    
    
    161
    
    
    
    141Other expense
    
    
    790
    
    
    
    848
    
    
    
    813
    
    
    
    744
    
    
    
    820Total non-interest expense
    
    
    4,425
    
    
    
    4,542
    
    
    
    4,452
    
    
    
    4,574
    
    
    
    4,650Income before income taxes
    
    
    1,057
    
    
    
    1,527
    
    
    
    1,827
    
    
    
    1,563
    
    
    
    1,052Provision for income taxes
    
    
    359
    
    
    
    516
    
    
    
    624
    
    
    
    520
    
    
    
    362Net income
    
    $
    698
    
    
    
    1,011
    
    
    
    1,203
    
    
    
    1,043
    
    
    
    690
  4




---



##### 



SELECTED CONSOLIDATED FINANCIAL INFORMATION
 SELECTED FINANCIAL RATIOS:
 At or For the Year Ended June 30,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Performance Ratios:Return on average assets
    
    
    .56
    %
    
    
    .76
    
    
    
    .83
    
    
    
    .67
    
    
    
    .44Return on average stockholders
equity
    
    
    5.15
    %
    
    
    7.78
    
    
    
    9.89
    
    
    
    9.05
    
    
    
    6.41Interest rate spread during
period
    
    
    3.58
    %
    
    
    3.80
    
    
    
    3.55
    
    
    
    2.98
    
    
    
    2.85Net interest margin (1)
    
    
    3.92
    %
    
    
    4.06
    
    
    
    3.71
    
    
    
    3.13
    
    
    
    3.05Ratio of operating expenses to
average total assets
    
    
    3.52
    %
    
    
    3.41
    
    
    
    3.07
    
    
    
    2.93
    
    
    
    2.96Ratio of average interest-earning assets to average
interest-bearing liabilities
    
    
    119.94
    %
    
    
    119.67
    
    
    
    116.91
    
    
    
    112.56
    
    
    
    111.07Asset Quality Ratios:Non-performing assets to
total assets
    
    
    .41
    %
    
    
    .25
    
    
    
    .27
    
    
    
    .04
    
    
    
    .30Allowance for loan losses to
non-performing loans
    
    
    82.22
    %
    
    
    127.27
    
    
    
    120.06
    
    
    
    829.00
    
    
    
    84.80Allowance for loan losses to
total loans
    
    
    .49
    %
    
    
    .45
    
    
    
    .48
    
    
    
    .49
    
    
    
    .44Capital Ratios:Stockholders equity to
total assets
    
    
    10.98
    %
    
    
    10.16
    
    
    
    9.14
    
    
    
    7.65
    
    
    
    6.91Average stockholders equity to
average assets
    
    
    10.79
    %
    
    
    9.76
    
    
    
    8.40
    
    
    
    7.37
    
    
    
    6.85
 (1)
    
    Net interest income divided by average interest-earning assets.  5




---



##### 



MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Forward-Looking Statements
   GENERAL
     6




---



##### 



MANAGEMENT OF INTEREST RATE RISK
       7




---



##### 



NET PORTFOLIO VALUE
    
    
    NPV AS % OF ASSETSChange in Rates
    
    $ Amount
    
    
    $ Change
    
    
    % Change
    
    
    NPV Ratio
    
    
    Change(Basis Points)
    
    (Thousands)+300 bp
    
    
    11,649
    
    
    
    -6,085
    
    
    
    -34
    %
    
    
    9.31
    %
    
    -415 bp+200 bp
    
    
    16,667
    
    
    
    -4,067
    
    
    
    -23
    %
    
    
    10.74
    %
    
    -272 bp+100 bp
    
    
    15,730
    
    
    
    -2,004
    
    
    
    -11
    %
    
    
    12.14
    %
    
    -132 bp0 bp
    
    
    17,734
    
    
    
    
    
    
    
    
    
    
    
    13.46
    %-100 bp
    
    
    19,341
    
    
    
    1,607
    
    
    
    9
    %
    
    
    14.49
    %
    
    +102 bp-200 bp
    
    
    20,129
    
    
    
    2,395
    
    
    
    14
    %
    
    
    14.97
    %
    
    +150 bp
 FINANCIAL CONDITION AT JUNE 30, 2007
     8




---



##### 



RESULTS OF OPERATIONS
   9




---



##### 



10




---



##### 



Year Ended June 30,2007
    
    
    2006
    
    
    2005Interest
    
    
    Yield
    
    
    
    
    
    
    Interest
    
    
    Yield
    
    
    
    
    
    
    Interest
    
    
    YieldAverage
    
    
    Earned/
    
    
    and
    
    
    Average
    
    
    Earned/
    
    
    and
    
    
    Average
    
    
    Earned/
    
    
    andBalance
    
    
    Paid
    
    
    Rates
    
    
    Balance
    
    
    Paid
    
    
    Rates
    
    
    Balance
    
    
    Paid
    
    
    Rates(Dollars in Thousands)Interest-Earning
Assets:Loans receivable(1)
    
    $
    87,841
    
    
    
    5,149
    
    
    
    5.86
    %
    
    $
    94,098
    
    
    
    5,435
    
    
    
    5.78
    %
    
    $
    95,816
    
    
    
    5,510
    
    
    
    5.75
    %Mortgage-backed
securities
    
    
    1,563
    
    
    
    89
    
    
    
    5.66
    %
    
    
    1,788
    
    
    
    82
    
    
    
    4.59
    
    
    
    2,267
    
    
    
    88
    
    
    
    3.88Investment and other
securities
    
    
    20,930
    
    
    
    1,071
    
    
    
    5.12
    %
    
    
    17,597
    
    
    
    741
    
    
    
    4.21
    
    
    
    1,280
    
    
    
    76
    
    
    
    5.93Interest-bearing
deposits
    
    
    8,985
    
    
    
    459
    
    
    
    5.11
    %
    
    
    12,801
    
    
    
    521
    
    
    
    4.07
    
    
    
    37,845
    
    
    
    770
    
    
    
    2.03FHLB stock
    
    
    1,148
    
    
    
    35
    
    
    
    3.03
    
    
    
    1,143
    
    
    
    42
    
    
    
    3.68
    
    
    
    1,096
    
    
    
    62
    
    
    
    5.64Total interest-earning assets
    
    
    120,467
    
    
    
    6,803
    
    
    
    5.65
    
    
    
    127,427
    
    
    
    6,821
    
    
    
    5.35
    
    
    
    138,304
    
    
    
    6,506
    
    
    
    4.71Non-interest earning
assets
    
    
    5,071
    
    
    
    
    
    
    
    
    
    
    
    5,817
    
    
    
    
    
    
    
    
    
    
    
    6,509Total assets
    
    $
    125,538
    
    
    
    
    
    
    
    
    
    
    $
    133,244
    
    
    
    
    
    
    
    
    
    
    $
    144,813Interest-Bearing
Liabilities:Certificates of
deposit
    
    $
    40,859
    
    
    
    1,604
    
    
    
    3.92
    %
    
    $
    38,726
    
    
    
    1,105
    
    
    
    2.85
    %
    
    $
    43,437
    
    
    
    792
    
    
    
    1.82
    %Passbook accounts
    
    
    45,392
    
    
    
    347
    
    
    
    0.76
    
    
    
    50,121
    
    
    
    379
    
    
    
    0.76
    
    
    
    55,367
    
    
    
    418
    
    
    
    0.75Money market and
NOW accounts
    
    
    14,189
    
    
    
    126
    
    
    
    0.89
    
    
    
    17,631
    
    
    
    167
    
    
    
    0.95
    
    
    
    19,495
    
    
    
    161
    
    
    
    0.82Total interest-bearing
liabilities
    
    
    100,440
    
    
    
    2,077
    
    
    
    2.07
    
    
    
    106,478
    
    
    
    1,651
    
    
    
    1.55
    
    
    
    118,299
    
    
    
    1,371
    
    
    
    1.16Non-interest bearing
Deposits
    
    
    10,251
    
    
    
    
    
    
    
    
    
    
    
    12,185
    
    
    
    
    
    
    
    
    
    
    
    12,721Other liabilities
    
    
    1,306
    
    
    
    
    
    
    
    
    
    
    
    1,581
    
    
    
    
    
    
    
    
    
    
    
    1,631Total liabilities.
    
    
    111,997
    
    
    
    
    
    
    
    
    
    
    
    120,244
    
    
    
    
    
    
    
    
    
    
    
    132,651Stockholders equity
    
    
    13,541
    
    
    
    
    
    
    
    
    
    
    
    13,000
    
    
    
    
    
    
    
    
    
    
    
    12,162Liabilities and
stockholders
equity
    
    $
    125,538
    
    
    
    
    
    
    
    
    
    
    $
    133,244
    
    
    
    
    
    
    
    
    
    
    $
    144,813Net earning assets
    
    $
    20,027
    
    
    
    
    
    
    
    
    
    
    $
    20,949
    
    
    
    
    
    
    
    
    
    
    $
    20,005Net-interest income
    
    
    
    
    
    $
    4,726
    
    
    
    
    
    
    
    
    
    
    $
    5,170
    
    
    
    
    
    
    
    
    
    
    $
    5,135Net-interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.58
    %
    
    
    
    
    
    
    
    
    
    
    3.80
    %
    
    
    
    
    
    
    
    
    
    
    3.55
    %Net-interest margin
    
    
    
    
    
    
    
    
    
    
    3.92
    %
    
    
    
    
    
    
    
    
    
    
    4.06
    %
    
    
    
    
    
    
    
    
    
    
    3.71
    %Average interest-earning
assets to average
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    119.94
    %
    
    
    
    
    
    
    
    
    
    
    119.67
    %
    
    
    
    
    
    
    
    
    
    
    116.91
    %
 (1)
    
    Calculated net of deferred yield adjustments, loan discounts, loans in process and loss
reserves.  11




---



##### 



Year Ended June 30,2007 vs. 2006
    
    
    2006 vs. 2005Increase (decrease) due to
    
    
    Increase (decrease) due toRate/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rate/Volume
    
    
    Rate
    
    
    Volume
    
    
    Net
    
    
    Volume
    
    
    Rate
    
    
    Volume
    
    
    Net(In Thousands)Interest-Earning
Assets:Loans Receivable
    
    $
    (361
    )
    
    $
    81
    
    
    $
    (5
    )
    
    $
    (285
    )
    
    $
    (99
    )
    
    $
    24
    
    
    $
    
    
    
    $
    (75
    )Mortgage-backed
securities
    
    
    (10
    )
    
    
    19
    
    
    
    (2
    )
    
    
    7
    
    
    
    (19
    )
    
    
    16
    
    
    
    (3
    )
    
    
    (6
    )Investment and other
securities
    
    
    140
    
    
    
    159
    
    
    
    30
    
    
    
    329
    
    
    
    969
    
    
    
    (22
    )
    
    
    (282
    )
    
    
    665Interest-bearing
deposits
    
    
    (155
    )
    
    
    133
    
    
    
    (40
    )
    
    
    (62
    )
    
    
    (509
    )
    
    
    770
    
    
    
    (510
    )
    
    
    (249
    )FHLB stock
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    (7
    )
    
    
    3
    
    
    
    (22
    )
    
    
    (1
    )
    
    
    (20
    )Total interest-earning assets
    
    $
    (386
    )
    
    $
    385
    
    
    $
    (17
    )
    
    $
    (18
    )
    
    $
    345
    
    
    $
    766
    
    
    $
    (796
    )
    
    $
    315Interest-Bearing
Liabilities:Certificates of
deposit
    
    $
    61
    
    
    $
    415
    
    
    $
    23
    
    
    $
    499
    
    
    $
    (86
    )
    
    $
    448
    
    
    $
    (49
    )
    
    $
    313Passbook accounts
    
    
    (36
    )
    
    
    4
    
    
    
    
    
    
    
    (32
    )
    
    
    (40
    )
    
    
    1
    
    
    
    
    
    
    
    (39
    )Money market and
NOW accounts
    
    
    (33
    )
    
    
    (10
    )
    
    
    2
    
    
    
    (41
    )
    
    
    (15
    )
    
    
    23
    
    
    
    (2
    )
    
    
    6Total interest-
bearing liabilities
    
    $
    (8
    )
    
    $
    409
    
    
    $
    25
    
    
    $
    426
    
    
    $
    (141
    )
    
    $
    472
    
    
    $
    (51
    )
    
    $
    280Net change in net
interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (444
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    35
  12




---



##### 



COMPARISON OF OPERATING RESULTS
FOR THE FISCAL YEARS ENDED
JUNE 30, 2007 AND JUNE 30, 2006
   INTEREST INCOME
       13




---



##### 



INTEREST EXPENSE
  PROVISIONS FOR LOSSES ON LOANS
   NON-INTEREST INCOME
  NON-INTEREST EXPENSE
   14




---



##### 



INCOME TAXES
  COMPARISON OF OPERATING RESULTS
FOR THE FISCAL YEARS ENDED
JUNE 30, 2006 AND JUNE 30, 2005
   INTEREST INCOME
      15




---



##### 



INTEREST EXPENSE
  PROVISIONS FOR LOSSES ON LOANS
   NON-INTEREST INCOME
   16




---



##### 



NON-INTEREST EXPENSE
  INCOME TAXES
  LIQUIDITY AND CAPITAL RESOURCES
     17




---



##### 



For the YearEnded June 30,2007
    
    
    2006(Dollars in Thousands)Net income
    
    $
    698
    
    
    $
    1,011Adjustments to reconcile net income
to net cash provided for
operating activities
    
    
    (768
    )
    
    
    (1,092
    )Net cash provided for
operating activities
    
    
    (70
    )
    
    
    (81
    )Net cash provided by (for)
investing activities
    
    
    8,979
    
    
    
    (16,243
    )Net cash provided for
financing activities
    
    
    (6,713
    )
    
    
    (9,126
    )Net change in cash and
cash equivalents
    
    
    2,196
    
    
    
    (25,450
    )Cash and cash equivalents at
beginning of year
    
    
    11,260
    
    
    
    36,710Cash and cash equivalents at
end of year
    
    $
    13,456
    
    
    $
    11,260
    18




---



##### 



IMPACT OF NEW ACCOUNTING STANDARDS
  Separately Recognized Servicing Assets and Servicing Liabilities.
 Income Taxes.
   19




---



##### 



Fair Value Measurements.
 Fair Value.
 IMPACT OF INFLATION AND CHANGING PRICES
   20




---



##### 



COMMON STOCK
   Quarter ended
    
    High
    
    
    Low
    
    
    Cash dividends declaredSeptember 30, 2005
    
    $
    44.00
    
    
    $
    38.60
    
    
    $
    0.22December 31, 2005
    
    
    45.00
    
    
    
    41.30
    
    
    
    0.22March 31, 2006
    
    
    44.00
    
    
    
    41.50
    
    
    
    0.22June 30, 2006
    
    
    42.25
    
    
    
    40.60
    
    
    
    0.22September 30, 2006
    
    $
    42.50
    
    
    $
    41.50
    
    
    $
    0.24December 31, 2006
    
    
    43.00
    
    
    
    43.00
    
    
    
    0.24March 31, 2007
    
    
    43.50
    
    
    
    42.05
    
    
    
    0.24June 30, 2007
    
    
    43.50
    
    
    
    41.35
    
    
    
    0.24
   21




---



##### 



Cobitz, Vandenberg & Fennessy  CERTIFIED PUBLIC ACCOUNTANTS
9944 S. Roberts Road  Suite 202
Palos Hills, Illinois 60453
 (708) 430-4106  Fax (708) 430-4499
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
  22




---



##### 



AND SUBSIDIARIES
  June 30,2007
    
    
    2006AssetsCash and amounts due from depository institutions
    
    $
    2,224,076
    
    
    
    2,204,602Interest-bearing deposits
    
    
    11,231,760
    
    
    
    9,055,302Total cash and cash equivalents
    
    
    13,455,836
    
    
    
    11,259,904Investment securities available for sale, at fair value (note 2)
    
    
    21,019,975
    
    
    
    21,021,975Stock in Federal Home Loan Bank of Chicago, at cost
    
    
    1,148,087
    
    
    
    1,148,087Mortgage-backed securities, held to maturity (fair value: 2007 - $1,482,977; 2006 - $1,688,292) (note 3)
    
    
    1,474,504
    
    
    
    1,684,228Loans receivable (net of allowance for loan losses:2007 - $420,089; 2006 - $415,666) (note 4)
    
    
    83,844,418
    
    
    
    91,701,483Loans receivable held for sale (note 5)
    
    
    1,012,200
    
    
    
    843,090Other investments available for sale, at fair value (note 6)
    
    
    106,633
    
    
    
    1,104Accrued interest receivable (note 7)
    
    
    333,666
    
    
    
    370,190Office properties and equipment  net (note 8)
    
    
    2,071,621
    
    
    
    2,240,702Prepaid expenses and other assets (note 9)
    
    
    425,814
    
    
    
    546,586Total assets
    
    
    124,892,754
    
    
    
    130,817,349Liabilities and Stockholders EquityLiabilitiesDeposits (note 10)
    
    
    109,744,662
    
    
    
    115,971,229Advance payments by borrowers for taxes and insurance
    
    
    998,142
    
    
    
    1,127,293Other liabilities (note 11)
    
    
    439,476
    
    
    
    422,743Total liabilities
    
    
    111,182,280
    
    
    
    117,521,265Stockholders EquityPreferred stock, $.01 par value: authorized
50,000 shares; none outstanding
    
    
    
    
    
    
    Common stock, $.01 par value: authorized 600,000 shares;
issued and outstanding 372,600 shares at June 30, 2007 and 2006
    
    
    3,726
    
    
    
    3,726Additional paid-in capital
    
    
    3,395,580
    
    
    
    3,395,580Retained earnings  substantially restricted
    
    
    10,104,065
    
    
    
    9,764,211Accumulated other comprehensive income, net of tax
    
    
    207,103
    
    
    
    132,567Total stockholders equity (notes 15 and 16)
    
    
    13,710,474
    
    
    
    13,296,084Commitments and contingencies (notes 17 and 18)Total liabilities and stockholders equity
    
    $
    124,892,754
    
    
    
    130,817,349
   23




---



##### 



AND SUBSIDIARIES
  Years Ended June 30,2007
    
    
    2006
    
    
    2005Interest income:Interest on loans
    
    $
    5,149,056
    
    
    
    5,434,886
    
    
    
    5,510,360Interest on mortgage-backed securities
    
    
    88,488
    
    
    
    81,798
    
    
    
    87,888Interest on investment securities
    
    
    1,071,271
    
    
    
    741,166
    
    
    
    75,958Interest on interest-bearing deposits
    
    
    459,275
    
    
    
    520,883
    
    
    
    769,701Dividends on FHLB stock
    
    
    34,741
    
    
    
    42,024
    
    
    
    61,815Total interest income
    
    
    6,802,831
    
    
    
    6,820,757
    
    
    
    6,505,722Interest expense:Interest on deposits (note 10)
    
    
    2,076,906
    
    
    
    1,650,610
    
    
    
    1,370,963Total interest expense
    
    
    2,076,906
    
    
    
    1,650,610
    
    
    
    1,370,963Net interest income
    
    
    4,725,925
    
    
    
    5,170,147
    
    
    
    5,134,759Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    Net interest income after provision for loan losses
    
    
    4,725,925
    
    
    
    5,170,147
    
    
    
    5,134,759Non-interest income:Loan fees and service charges
    
    
    170,807
    
    
    
    249,914
    
    
    
    238,848Deposit related fees
    
    
    336,738
    
    
    
    446,271
    
    
    
    432,390Commission income
    
    
    67,124
    
    
    
    51,176
    
    
    
    56,561Gain on sale of loans (note 5)
    
    
    99,709
    
    
    
    64,501
    
    
    
    25,627Gain on sale of other assets (note 9)
    
    
    
    
    
    
    34,778
    
    
    
    328,880Other income
    
    
    81,784
    
    
    
    52,669
    
    
    
    61,790Total non-interest income
    
    
    756,162
    
    
    
    899,309
    
    
    
    1,144,096Non-interest expense:Staffing costs (notes 12 and 13)
    
    
    2,555,663
    
    
    
    2,613,424
    
    
    
    2,578,126Advertising
    
    
    67,680
    
    
    
    65,356
    
    
    
    66,261Occupancy and equipment expenses (note 8)
    
    
    676,580
    
    
    
    654,176
    
    
    
    635,299Data processing
    
    
    186,750
    
    
    
    197,843
    
    
    
    203,759Federal deposit insurance premiums
    
    
    14,104
    
    
    
    16,305
    
    
    
    19,815Legal, audit and examination services
    
    
    134,801
    
    
    
    147,216
    
    
    
    136,152Other
    
    
    789,774
    
    
    
    848,118
    
    
    
    812,780Total non-interest expense
    
    
    4,425,352
    
    
    
    4,542,438
    
    
    
    4,452,192Income before income taxes
    
    
    1,056,735
    
    
    
    1,527,018
    
    
    
    1,826,663Provision for income taxes (note 14)
    
    
    359,185
    
    
    
    515,722
    
    
    
    624,114Net income
    
    $
    697,550
    
    
    
    1,011,296
    
    
    
    1,202,549Earnings per share  basic
    
    $
    1.87
    
    
    
    2.71
    
    
    
    3.23Earnings per share  diluted
    
    $
    1.87
    
    
    
    2.71
    
    
    
    3.23
   24




---



##### 



AND SUBSIDIARIES
  AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid-In
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance at June 30, 2004
    
    $
    3,726
    
    
    
    3,395,580
    
    
    
    8,176,334
    
    
    
    166,674
    
    
    
    11,742,314Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    1,202,549
    
    
    
    
    
    
    
    1,202,549Other comprehensive income,
net of tax:Unrealized holding gain
during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,899
    
    
    
    49,899Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    1,202,549
    
    
    
    49,899
    
    
    
    1,252,448Dividends declared on
common stock ($.80 per share)
    
    
    
    
    
    
    
    
    
    
    (298,080
    )
    
    
    
    
    
    
    (298,080
    )Balance at June 30, 2005
    
    
    3,726
    
    
    
    3,395,580
    
    
    
    9,080,803
    
    
    
    216,573
    
    
    
    12,696,682Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    1,011,296
    
    
    
    
    
    
    
    1,011,296Other comprehensive income,
net of tax:Unrealized holding loss
during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84,006
    )
    
    
    (84,006
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    1,011,296
    
    
    
    (84,006
    )
    
    
    927,290Dividends declared on
common stock ($.88 per share)
    
    
    
    
    
    
    
    
    
    
    (327,888
    )
    
    
    
    
    
    
    (327,888
    )Balance at June 30, 2006
    
    
    3,726
    
    
    
    3,395,580
    
    
    
    9,764,211
    
    
    
    132,567
    
    
    
    13,296,084Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    697,550
    
    
    
    
    
    
    
    697,550Other comprehensive income,
net of tax:Unrealized holding gain
during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,536
    
    
    
    74,536Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    697,550
    
    
    
    74,536
    
    
    
    772,086Dividends declared on
common stock ($.96 per share)
    
    
    
    
    
    
    
    
    
    
    (357,696
    )
    
    
    
    
    
    
    (357,696
    )Balance at June 30, 2007
    
    $
    3,726
    
    
    
    3,395,580
    
    
    
    10,104,065
    
    
    
    207,103
    
    
    
    13,710,474
   25




---



##### 



AND SUBSIDIARIES
  Years Ended June 30,2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    697,550
    
    
    
    1,011,296
    
    
    
    1,202,549Adjustments to reconcile net income
to net cash from operating activities:Depreciation
    
    
    224,437
    
    
    
    213,911
    
    
    
    213,761Amortization of premiums and discounts on securities
    
    
    (995,133
    )
    
    
    (665,817
    )
    
    
    (2,227
    )Federal Home Loan Bank stock dividend
    
    
    
    
    
    
    (24,587
    )
    
    
    (61,700
    )Proceeds from sale of loans held for sale
    
    
    7,957,267
    
    
    
    5,144,722
    
    
    
    1,823,050Origination of loans held for sale
    
    
    (8,046,800
    )
    
    
    (5,695,343
    )
    
    
    (1,492,050
    )Gain on sale of loans
    
    
    (99,709
    )
    
    
    (64,501
    )
    
    
    (25,627
    )Gain on sale of other assets
    
    
    
    
    
    
    (34,778
    )
    
    
    (328,880
    )Decrease (increase) in accrued interest receivable
    
    
    36,524
    
    
    
    (2,839
    )
    
    
    (7,649
    )Increase in accrued interest payable
    
    
    945
    
    
    
    115
    
    
    
    409Increase (decrease) in deferred income on loans
    
    
    36,927
    
    
    
    3,933
    
    
    
    (2,529
    )Decrease (increase) in other assets
    
    
    102,505
    
    
    
    (4,415
    )
    
    
    54,908Increase (decrease) in other liabilities
    
    
    15,788
    
    
    
    37,342
    
    
    
    (42,207
    )Net cash provided (for) by operating activities
    
    
    (69,699
    )
    
    
    (80,961
    )
    
    
    1,331,808Cash flows from investing activities:Proceeds from repayments of mortgage-backed
securities, held to maturity
    
    
    209,724
    
    
    
    235,993
    
    
    
    1,022,565Proceeds from maturities of investment securities,
available for sale
    
    
    40,000,000
    
    
    

    20,000,000

    
    
    
    Purchase of investment securities, available for sale
    
    
    (38,995,461
    )
    
    
    (39,172,503
    )
    
    
    Loan disbursements
    
    
    (9,211,102
    )
    
    
    (17,124,431
    )
    
    
    (20,872,954
    )Loan repayments
    
    
    17,031,240
    
    
    
    19,997,825
    
    
    
    20,258,033Proceeds from sale of other assets
    
    
    
    
    
    
    34,778           34
    
    
    
    3,880Property and equipment expenditures
    
    
    (55,356
    )
    
    
    (214,222
    )
    
    
    (78,127
    )Net cash provided by (for) investing activities
    
    
    8,979,045
    
    
    
    (16,242,560
    )
    
    
    673,397Cash flows from financing activities:Net decrease in deposits
    
    
    (6,226,567
    )
    
    
    (8,864,903
    )
    
    
    (15,600,572
    )Payment of dividends
    
    
    (357,696
    )
    
    
    (327,888
    )
    
    
    (298,080
    )(Decrease) increase in advance payments
by borrowers for taxes and insurance
    
    
    (129,151
    )
    
    
    66,623
    
    
    
    106,411Net cash provided for financing activities
    
    
    (6,713,414
    )
    
    
    (9,126,168
    )
    
    
    (15,792,241
    )Net change in cash and cash equivalents
    
    
    2,195,932
    
    
    
    (25,449,689
    )
    
    
    (13,787,036
    )Cash and cash equivalents at beginning of year
    
    
    11,259,904
    
    
    
    36,709,593
    
    
    
    50,496,629Cash and cash equivalents at end of year
    
    $
    13,455,836
    
    
    
    11,259,904
    
    
    
    36,709,593Cash paid during the year for:Interest
    
    $
    2,075,961
    
    
    
    1,650,495
    
    
    
    1,370,554Income taxes
    
    
    326,661
    
    
    
    496,593
    
    
    
    630,297
   26




---



##### 



AND SUBSIDIARIES
  1)
    
    Summary of Significant Accounting PoliciesMidland Capital Holdings Corporation (the Company) is a Delaware corporation incorporated
in April, 1998 for the purpose of becoming the unitary thrift holding company for Midland
Federal Savings and Loan Association (the Association). The reorganization transaction was
completed pursuant to a Merger Agreement and Plan of Reorganization adopted by the
Associations Board of Directors on March 19, 1998 and approved by the Associations
shareholders on July 15, 1998. The effective date of the reorganization was July 23, 1998. As
a result of the reorganization transaction, each outstanding share of common stock of the
Association became, by operation of law, one share of common stock of the Company.Principles of ConsolidationThe accompanying consolidated financial statements include the accounts of the Company, and
its wholly owned subsidiary, Midland Federal Savings and Loan Association and the
Associations wholly-owned subsidiaries, Midland Federal Service Corporation, Midland
Insurance Services, Inc. and Bridgeview Development Company. Significant intercompany
transactions and balances have been eliminated in consolidation.Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.Statement of Cash FlowsFor the purposes of reporting cash flows, the Company has defined cash and cash equivalents
to include cash on hand, amounts due from depository institutions, interest-bearing deposits
in other financial institutions and federal funds sold.Industry SegmentsThe Company operates principally in the thrift industry through its subsidiary savings and
loan. As such, substantially all of the Companys revenues, net income, identifiable assets
and capital expenditures are related to thrift operations.Investment Securities, Available for SaleInvestment securities available for sale are recorded in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115 Accounting for Certain Investments in Debt
and Equity Securities. SFAS No. 115 requires the use of fair value accounting for securities
available for sale or trading and retains the use of the amortized cost method for securities
the Company has the positive ability and intent to hold to maturity.SFAS No. 115 requires the classification of debt and equity securities into one of three
categories: held to maturity, available for sale, or trading. Held to maturity securities
are measured at amortized cost. Unrealized gains and losses for trading securities are
included in income. Unrealized holding gains and losses on available for sale securities are
excluded from income and reported net of taxes as a separate component of stockholders
equity.The Company has designated certain investments in U.S. Government securities and equity
securities as available for sale, and has recorded these investments at their current fair
value. Premiums and discounts are amortized and accreted into income over the remaining life
of the security using the level yield method. Unrealized gains and losses are recorded in a
valuation account which is included, net of income taxes, as a separate component of
stockholders equity. Gains and losses on the sale of these securities are determined using
the specific identification method and are reflected in earnings when realized.
  27




---



##### 



1)
    
    Summary of Significant Accounting Policies (continued)Mortgage-Backed Securities, Held to MaturityThese securities are carried at cost, adjusted for amortization of premiums and accretion of
discounts over the term of the security using the level yield method. These securities are
not carried at fair value because the Company has both the ability and the intent to hold
them to maturity.Loans Receivable and Related FeesLoans are stated at the principal amount outstanding, net of loans in process, net deferred
yield adjustments and the allowance for losses. Interest on loans is credited to income as
earned and accrued only if deemed collectible. Loans are placed on nonaccrual status when, in
the opinion of management, the full timely collection of principal or interest is in doubt.
As a general rule, the accrual of interest is discontinued when principal or interest
payments become 90 days past due or earlier if conditions warrant. When a loan is placed on
nonaccrual status, previously accrued but unpaid interest is charged against current income.Loan origination fees and certain direct loan origination costs are deferred in accordance
with SFAS No. 91 Accounting for Nonrefundable Fees and Costs Associated with Originating or
Acquiring Loans and Initial Direct Costs of Leases. This statement requires that loan
origination fees and direct loan origination costs for a completed loan be netted and then
deferred and recognized as an adjustment to yield over the contractual life of the loan.The Company has adopted the provisions of SFAS No. 114 Accounting by Creditors for
Impairment of a Loan and SFAS No. 118 Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures. These statements apply to all loans that are identified
for evaluation except for large groups of smaller-balance homogeneous loans that are
collectively evaluated for impairment. These loans include, but are not limited to, credit
card, residential mortgage and consumer installment loans. Of the loans which are to be
evaluated for impairment, management has determined that there were no loans at June 30, 2007
and 2006, nor during the years ended June 30, 2007 and 2006, which met the definition of an
impaired loan. A loan is considered impaired when it is probable that a creditor will be
unable to collect contractual principal and interest due according to the contractual terms
of the loan agreement.Loans Receivable Held for SaleThat portion of loans receivable designated as held for sale are recorded at the lower of
cost or fair value in accordance with SFAS No. 65 Accounting for Certain Mortgage Banking
Activities. Unrealized declines in fair value are reflected as a charge to current earnings.Allowance for Loan LossesThe determination of the allowance for loan losses involves material estimates that are
susceptible to significant change in the near term. The allowance for loan losses is
maintained at a level adequate to provide for losses through charges to operating expense.
The allowance is based upon past loss experience and other factors which, in managements
judgment, deserve current recognition in estimating losses. Such factors considered by
management include growth and composition of the loan portfolio, the relationship of the
allowance for losses to outstanding loans and economic conditions.Management believes that the allowance is adequate. While management uses available
information to recognize losses on loans, future additions to the allowance may be necessary
based on changes in economic conditions. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the Companys allowance for
loan losses. Such agencies may require the Company to recognize additions to the allowance
based on their judgments about information available to them at the time of their
examination.
  28




---



##### 



1)
    
    Summary of Significant Accounting Policies (continued)Mortgage Servicing RightsThe Company generally retains the right to service mortgage loans sold to others. The cost
allocated to mortgage servicing rights has been recognized as a separate asset and is being
amortized in proportion to and over the period of estimated net servicing income, using a
method that approximates a level yield and taking into consideration prepayment of the
underlying loans. Mortgage servicing rights are periodically evaluated for impairment based
on the fair value of those rights. Fair values are estimated using discounted cash flows
based on current market rates of interest. The carrying value of the Companys mortgage
serving rights, in relation to estimated servicing values, and the related amortization is
reviewed by management on a quarterly basis. See Note 5 for a discussion of the current year
impact on financial position and results of operations.Office Properties and EquipmentLand is carried at cost. Depreciation of office properties and equipment is accumulated on
the straight line basis over estimated lives of the various assets. Useful lives are 25 to 40
years for office properties, 5 to 15 years for leasehold improvements and 3 to 10 years for
furniture, fixtures and equipment.Income TaxesThe Company files a consolidated federal income tax return with its subsidiaries. The
provision for federal and state taxes on income is based on earnings reported in the
financial statements. 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 estimated future tax consequences attributable to differences between the
financial statement carrying amount of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using tax rates in effect for the
year in which those 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 in income in
the period that includes the enactment date.Earnings Per ShareEarnings per share is determined by dividing net income for the period by the weighted
average number of shares outstanding. Stock options are regarded as future common stock and
are considered in the earnings per share calculations, and are the only adjustments made to
average shares outstanding in computing diluted earnings per share.Weighted average shares used in calculating earnings per share are summarized below.
 Years Ended June 30,2007
    
    
    2006
    
    
    2005Weighted average number of common shares
outstanding used in basic EPS calculation
    
    
    372,600
    
    
    
    372,600
    
    
    
    372,600Add common stock equivalents for shares
issuable under Stock Option Plans
    
    
    
    
    
    
    
    
    
    
    Weighted average number of shares
outstanding adjusted for common
stock equivalents
    
    
    372,600
    
    
    
    372,600
    
    
    
    372,600Net income
    
    $
    697,550
    
    
    
    1,011,296
    
    
    
    1,202,549Diluted earnings per share
    
    $
    1.87
    
    
    
    2.71
    
    
    
    3.23Diluted earnings per share
    
    $
    1.87
    
    
    
    2.71
    
    
    
    3.23
 ReclassificationsCertain 2005 and 2006 amounts have been reclassified to conform with the 2007 presentation.
  29




---



##### 



2)
    
    Investment Securities, Available for SaleThe amortized cost and fair value of investment securities available for sale are as follows:
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueJune 30, 2007United States Treasury bills
    
    $
    19,826,998
    
    
    
    13,602
    
    
    
    
    
    
    
    19,840,600United States Treasury bond
    
    
    984,714
    
    
    
    194,661
    
    
    
    
    
    
    
    1,179,375$
    20,811,712
    
    
    
    208,263
    
    
    
    
    
    
    
    21,019,975Weighted average interest rate/yield
    
    
    5.24
    %June 30, 2006United States Treasury bills
    
    $
    19,837,361
    
    
    
    1,622
    
    
    
    133
    
    
    
    19,838,850United States Treasury bond
    
    
    983,756
    
    
    
    199,369
    
    
    
    
    
    
    
    1,183,125$
    20,821,117
    
    
    
    200,991
    
    
    
    133
    
    
    
    21,021,975Weighted average interest rate/yield
    
    
    4.87
    %
 The Company did not have any investment securities classified as held to maturity or trading
at June 30, 2007 or 2006.The contractual maturity of investment securities available for sale are summarized as
follows:
 June 30, 2007
    
    
    June 30, 2006Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairTerm to Maturity
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueDue in one year or less
    
    $
    19,826,998
    
    
    
    19,840,600
    
    
    
    19,837,361
    
    
    
    19,838,850Due after five years through
ten years
    
    
    984,714
    
    
    
    1,179,375
    
    
    
    
    
    
    
    Due after ten years through
fifteen years
    
    
    
    
    
    
    
    
    
    
    983,756
    
    
    
    1,183,125$
    20,811,712
    
    
    
    21,019,975
    
    
    
    20,821,117
    
    
    
    21,021,975
 There were no sales of investment securities available for sale during any of the periods
presented. The change in net unrealized gains and losses during the current year of $7,405,
net of the tax effect of $2,518, resulted in a $4,887 credit to stockholders equity.
  30




---



##### 



3)
    
    Mortgage-Backed Securities, Held to MaturityMortgage-backed securities, held to maturity, are summarized as follows:
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueJune 30, 2007Participation certificates:FHLMC - Adjustable rate
    
    $
    897,916
    
    
    
    6,463
    
    
    
    
    
    
    
    904,379FNMA - Adjustable rate
    
    
    576,588
    
    
    
    2,010
    
    
    
    
    
    
    
    578,598$
    1,474,504
    
    
    
    8,473
    
    
    
    
    
    
    
    1,482,977Weighted average interest rate
    
    
    5.94
    %June 30, 2006Participation certificates:FHLMC - Adjustable rate
    
    $
    1,064,803
    
    
    
    4,523
    
    
    
    1,379
    
    
    
    1,067,947FNMA   - Adjustable rate
    
    
    611,303
    
    
    
    902
    
    
    
    
    
    
    
    612,205FNMA   - Fixed rate
    
    
    4,159
    
    
    
    18
    
    
    
    
    
    
    
    4,177GNMA   - Fixed rate
    
    
    3,963
    
    
    
    
    
    
    
    
    
    
    
    3,963$
    1,684,228
    
    
    
    5,443
    
    
    
    1,379
    
    
    
    1,688,292Weighted average interest rate
    
    
    5.01
    %
  31




---



##### 



4)
    
    Loans ReceivableLoans receivable are summarized as follows:
 June 30,2007
    
    
    2006Mortgage loans:One-to-four family
    
    $
    79,748,795
    
    
    
    88,617,507Multi-family
    
    
    1,609,943
    
    
    
    1,641,650Non-residential
    
    
    1,839,406
    
    
    
    750,365Total mortgage loans
    
    
    83,198,144
    
    
    
    91,009,522Other loans:Loans on deposit accounts
    
    
    126,104
    
    
    
    187,778Auto loans
    
    
    295,827
    
    
    
    354,970Education loans
    
    
    107,769
    
    
    
    161,186Credit card loans
    
    
    188,206
    
    
    
    149,221Other
    
    
    600
    
    
    
    2,084Total other loans
    
    
    718,506
    
    
    
    855,239Commercial business loans
    
    
    5,410
    
    
    
    37,869Total loans receivable
    
    
    83,922,060
    
    
    
    91,902,630Less:Loans in process
    
    
    7,445
    
    
    
    172,300Net deferred yield adjustments
    
    
    (363,563
    )
    
    
    (406,581
    )Allowance for uncollected interest
    
    
    13,671
    
    
    
    19,762Allowance for loan losses
    
    
    420,089
    
    
    
    415,666Loans receivable, net
    
    $
    83,844,418
    
    
    
    91,701,483Weighted average interest rate
    
    
    5.95
    %
    
    
    5.87
    %
 Activity in the allowance for loan losses is summarized as follows:
 Years Ended June 30,2007
    
    
    2006
    
    
    2005Balance, beginning of year
    
    $
    415,666
    
    
    
    456,550
    
    
    
    459,472Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    Recoveries previously charged-off
    
    
    6,254
    
    
    
    1,881
    
    
    
    Charge-offs
    
    
    (1,831
    )
    
    
    (42,765
    )
    
    
    (2,922
    )Balance, end of year
    
    $
    420,089
    
    
    
    415,666
    
    
    
    456,550
 Delinquent loans (loans having payments past due ninety days or more) at June 30, 2007
amounted to $510,929 or .6% of total loans in force. Comparable figures for 2006 were
$326,591 or .4% of total loans.Loans to directors and executive officers aggregated $776,973 at June 30, 2007 and $637,127
at June 30, 2006. Such loans are made on substantially the same terms as those for other loan
customers.
  32




---



##### 



5)
    
    Loans Receivable Held for SaleThe Company sells loans in the secondary market to the Illinois Housing Development Authority
(IHDA) and private investors under various programs. During the years ended June 30, 2007,
2006 and 2005, the Company sold first mortgage loans totaling $7,957,267, $5,144,722 and
$1,823,050 in the secondary market. The Company retains the servicing on loans sold to IHDA.
Proceeds from the sale of loans during the years ended June 30, 2007, 2006 and 2005 were
$7,957,267, $5,144,722 and $1,823,050 with gains of $79,577 and $41,969 realized on those
sales during the years ended June 30, 2007 and 2006 and no gain or loss realized on those
sales for the year ended June 30, 2005. In addition, the Company recorded a gain of $20,132,
$22,532 and $25,627 for the years ended June 30, 2007, 2006 and 2005 on loan sales from the
establishment of a mortgage servicing right asset. During the years ended June 30, 2007, 2006
and 2005, the Company amortized $15,111, $13,701 and $24,255 of mortgage servicing rights
against current servicing fee income.As of June 30, 2007, $1,012,200 of newly originated fixed rate thirty year original term
loans qualifying for sale into the secondary market were classified in this portfolio. Loans
held for sale are valued at the lower of cost or fair value in accordance with accounting
principles generally accepted in the United States of America. There were no recognized, but
unrealized, losses at June 30, 2007 and 2006.At June 30, 2007, 2006 and 2005, loans serviced for others amounted to $7,404,096, $6,741,245
and $5,905,383, respectively.6)
    
    Other Investments, Available for SaleOther investment securities available for sale at June 30, 2007 and 2006 consist of
investments in common stock equity securities. These securities are recorded at fair value in
accordance with SFAS No. 115. There were no sales of other investment securities available
for sale during any of the periods presented. The change in net unrealized gains and losses
during the current year of $105,529, net of the tax effect of $35,880, resulted in a $69,649
credit to stockholders equity.7)
    
    Accrued Interest ReceivableAccrued interest receivable is summarized as follows:
 June 30,2007
    
    
    2006Interest-bearing deposits
    
    $
    14,463
    
    
    
    496Investment securities
    
    
    9,375
    
    
    
    9,375Mortgage-backed securities
    
    
    11,598
    
    
    
    11,541Loans receivable
    
    
    298,230
    
    
    
    348,778$
    333,666
    
    
    
    370,190
  33




---



##### 



8)
    
    Office Properties and EquipmentOffice properties and equipment are summarized as follows:
 June 30,2007
    
    
    2006Land
    
    $
    439,935
    
    
    
    439,935Buildings
    
    
    2,365,311
    
    
    
    2,365,311Easement for parking lot and driveway
    
    
    223,050
    
    
    
    223,050Leasehold improvements  Homer Glen
    
    
    596,698
    
    
    
    596,698Furniture, fixtures and equipment
    
    
    3,134,506
    
    
    
    3,079,1506,759,500
    
    
    
    6,704,144Less accumulated depreciation
    
    
    4,687,879
    
    
    
    4,463,442$
    2,071,621
    
    
    
    2,240,702
 Depreciation of office properties and equipment for the years ended June 30, 2007, 2006 and
2005 amounted to $224,437, $213,911 and $213,761, respectively.The Association is obligated under a non-cancelable operating lease for office space at the
Homer Glen, Illinois branch facility. Rent expense for the years ended June 30, 2007, 2006
and 2005 amounted to $54,336, $52,016 and $50,565, respectively. Rent expense includes
charges for real estate taxes and insurance, and other costs of occupancy relating to common
areas shared with other tenants.Minimum rental commitments under the above leases, exclusive of future escalation charges for
real estate taxes, insurance and occupancy costs are approximately as follows:
 Year ended June 30, 2008
    
    $
    45,704Year ended June 30, 2009
    
    
    46,440
  34




---



##### 



9)
    
    Prepaid Expenses and Other AssetsPrepaid expenses and other assets consist of the following:
 June 30,2007
    
    
    2006Prepaid federal insurance premiums
    
    $
    3,242
    
    
    
    3,704Prepaid insurance
    
    
    62,723
    
    
    
    82,942Prepaid income taxes
    
    
    
    
    
    
    26,777Prepaid pension charges
    
    
    57,569
    
    
    
    Other prepaid expenses
    
    
    112,810
    
    
    
    119,391Mortgage servicing rights
    
    
    71,466
    
    
    
    66,445Deferred federal income tax benefit  net (a)
    
    
    93,798
    
    
    
    132,329Accounts receivable and other assets (b)
    
    
    24,206
    
    
    
    114,998$
    425,814
    
    
    
    546,586
 (a)
    
    Significant components of the deferred tax assets and liabilities are as follows:
 June 30,2007
    
    
    2006Deferred tax assets:Tax basis of office building in excess of book basis
    
    $
    331,523
    
    
    
    351,850Accelerated book depreciation
    
    
    37,459
    
    
    
    14,592Book allowance for loan losses
    
    
    142,830
    
    
    
    141,326Total deferred tax assets
    
    
    511,812
    
    
    
    507,768Deferred tax liabilities:Loan fees deferred for financial
reporting purposes, net of costs
    
    
    133,498
    
    
    
    150,601FHLB stock dividends
    
    
    133,956
    
    
    
    133,956Mortgage servicing rights
    
    
    24,298
    
    
    
    22,591Pension expense
    
    
    19,573
    
    
    
    Unrealized gain on securities available for sale
    
    
    106,689
    
    
    
    68,291Total deferred tax liabilities
    
    
    418,014
    
    
    
    375,439Net deferred tax benefit
    
    $
    93,798
    
    
    
    132,329
 (b)
    
    In March 2005, the shareholders of Intrieve Incorporated, the Associations data
processing provider, approved the sale and merger of Intrieve into Harland Financial
Solutions, Inc., a wholly owned subsidiary of John H. Harland Company. This transaction
closed in April 2005. As a shareholder of Intrieve, the Association received $343,880 in
cash on its $15,000 investment, resulting in a gain of $328,880 for the year ended June
30, 2005. During the year ended June 30, 2006, the Association received additional funds
of $34,778 from this investment which represented the net proceeds of amounts held back
to cover expenses of the transaction.
  35




---



##### 



10)
    
    DepositsDeposit accounts are summarized as follows:
 June 30,2007
    
    
    2006Passbook accounts
    
    $
    43,693,665
    
    
    
    48,439,352NOW accounts
    
    
    10,031,942
    
    
    
    10,854,884Money market accounts
    
    
    3,750,782
    
    
    
    5,105,750Non-interest bearing demand deposit accounts
    
    
    9,971,042
    
    
    
    11,783,52967,447,431
    
    
    
    76,183,515Certificates of deposit by interest rate:1.01 - 2.00%
    
    
    
    
    
    
    817,6422.01 - 3.00
    
    
    2,141,816
    
    
    
    8,212,1993.01 - 4.00
    
    
    20,536,103
    
    
    
    21,533,1664.01 - 5.00
    
    
    5,961,289
    
    
    
    6,768,2995.01 - 6.00
    
    
    13,658,023
    
    
    
    2,456,40842,297,231
    
    
    
    39,787,714$
    109,744,662
    
    
    
    115,971,229
 The weighted average rate on deposit accounts at June 30, 2007 and 2006 was 1.99% and 1.63%,
respectively.The aggregate amount of certificates of deposit with a minimum denomination of $100,000 was
$10,901,000 and $9,102,000 at June 30, 2007 and 2006, respectively.A summary of certificates of deposit by maturity is as follows:
 June 30,2007
    
    
    2006Within 12 months
    
    $
    38,254,499
    
    
    
    33,301,07312 months to 24 months
    
    
    3,537,820
    
    
    
    5,682,25224 months to 36 months
    
    
    504,912
    
    
    
    804,389Total
    
    $
    42,297,231
    
    
    
    39,787,714
 Interest expense on deposits consists of the following:
 Years Ended June 30,2007
    
    
    2006
    
    
    2005Passbook accounts
    
    $
    347,099
    
    
    
    378,442
    
    
    
    418,495Certificate accounts
    
    
    1,603,563
    
    
    
    1,104,838
    
    
    
    791,675NOW and money market accounts
    
    
    126,244
    
    
    
    167,330
    
    
    
    160,793Total
    
    $
    2,076,906
    
    
    
    1,650,610
    
    
    
    1,370,963
  36




---



##### 



11)
    
    Other LiabilitiesOther liabilities consist of the following:
 June 30,2007
    
    
    2006Accrued interest on deposits
    
    $
    9,437
    
    
    
    8,492Accrued real estate taxes
    
    
    132,032
    
    
    
    136,470Accrued federal income taxes payable
    
    
    5,614
    
    
    
    Other accrued expenses
    
    
    143,142
    
    
    
    161,085Outstanding bank drafts
    
    
    44,969
    
    
    
    34,034Other accounts payable
    
    
    104,282
    
    
    
    82,662$
    439,476
    
    
    
    422,743
 12)
    
    Retirement Plans and Other Employee BenefitsThe Association participates in a defined benefit multi-employer retirement plan which covers
all full-time employees who have attained at least 21 years of age and completed one year of
service. The Plan is administered by the Financial Institutions Retirement Fund. Calculations
to determine full-funding status are made annually as of June 30. Contributions to the Plan
for the Plan years ended June 30, 2007, 2006 and 2005 amounted to $328,460, $314,701 and
$291,038, respectively. Pension expense for the years ended June 30, 2007, 2006 and 2005
amounted to $270,891, $314,701 and $291, 038, respectively. Information regarding the
Associations share of assets and liabilities and plan benefit information of this Plan is
not available on an individual basis.In addition, the Association established a qualified defined contribution plan (401(k) Plan)
which covers all full-time employees having a minimum of twelve months of service and who are
at least twenty-one years of age. Eligible employees may contribute from 2% to 15% of their
monthly salaries. The Association will contribute an amount equal to 50%, 75% or 100% of the
monthly contribution up to 3% of salary, depending upon years of employment. Employer
contributions to the Plan amounted to $37,493, $40,361 and $43,205 for the years ended June
30, 2007, 2006 and 2005, respectively.
  37




---



##### 



13)
    
    Stock Option PlanIn conjunction with the Conversion, the Company adopted the 1993 Stock Option and Incentive
Plan (the Stock Option Plan) for the benefit of the senior officers and directors of the
Company. The number of shares of common stock authorized under the Stock Option Plan was
34,500, equal to 10.0% of the total number of shares issued in the Conversion. Future grants
are determined by the Board of Directors at option prices that are not less than the fair
market value of the stock at the grant date and expire no later than ten years from the date
of grant. All options granted under the Stock Option Plan become exercisable immediately.
There was no option activity in any of the years in the three year period ended June 30,
2007. There were no outstanding options at June 30, 2007, however, there were 6,900 options
available for future grants.Prior to July 1, 2006 the Company elected to account for stock options using the intrinsic
value method under the provisions of Accounting Principles Board (APB) Opinion No. 25 and
provided pro forma net income and pro forma earnings per share disclosures for employee stock
option grants as if the fair value based method, defined in SFAS No. 123, Accounting for
Stock Based Compensation, had been applied. Pursuant to the guidance in these
pronouncements, the Company did not record compensation expense related to stock options.On July 1, 2006, the Company adopted Statement of Financial Standards No. 123(R),
Share-Based Payments. SFAS No. 123(R) requires that stock option awards, as well as other
equity based compensation, be recognized as compensation expense in the income statement
based on their fair values determined at the date of grant. The Company elected to apply SFAS
No. 123(R) on a modified prospective method, which recognizes compensation cost (a) based
on the requirements of SFAS No. 123(R) for all share-based payments granted after the
effective date, and (b) based on the requirements of SFAS No. 123 for all awards granted to
employees prior to the effective date of SFAS No. 123(R) that remain unvested on the
effective date.A summary of activity under the Companys stock option plans for the three years ended June
30, 2007 is as follows:
 Years Ended June 30,2007
    
    
    2006
    
    
    2005Net income, as reported
    
    $
    697,550
    
    
    
    1,011,296
    
    
    
    1,202,549Deduct: Total stock based employee compensation
expense determined under the fair value based
method, net of related tax effects
    
    
    
    
    
    
    
    
    
    
    Pro forma net income
    
    $
    697,550
    
    
    
    1,011,296
    
    
    
    1,202,549Diluted earnings per share, as reported
    
    
    1.87
    
    
    
    2.71
    
    
    
    3.23Pro forma diluted earnings per share
    
    
    1.87
    
    
    
    2.71
    
    
    
    3.23
  38




---



##### 



14)
    
    Income Taxes
  Years Ended June 30,2007
    
    
    2006
    
    
    2005Current
    
    $
    359,052
    
    
    
    476,686
    
    
    
    596,697Deferred
    
    
    133
    
    
    
    39,036
    
    
    
    27,417$
    359,185
    
    
    
    515,722
    
    
    
    624,114
   Years Ended June 30,2007
    
    
    2006
    
    
    2005Statutory federal income tax rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %Other
    
    
    
    
    
    
    (.2
    )

    

    
    .2Effective income tax rate
    
    
    34.0
    %
    
    
    33.8
    %
    
    
    34.2
    %
  Years Ended June 30,2007
    
    
    2006
    
    
    2005Loan fees net of costs
    
    $
    (17,103
    )
    
    
    (4,527
    )
    
    
    1,863Depreciation
    
    
    (2,540
    )
    
    
    18,300
    
    
    
    3,296Pension expense
    
    
    19,573
    
    
    
    
    
    
    
    FHLB stock dividends
    
    
    
    
    
    
    8,360
    
    
    
    20,978Loan loss deduction (less than)
in excess of loan loss recovery
    
    
    (1,504
    )
    
    
    13,901
    
    
    
    813Mortgage servicing rights
    
    
    1,707
    
    
    
    3,002
    
    
    
    467$
    133
    
    
    
    39,036
    
    
    
    27,417
  39




---



##### 



15)
    
    Regulatory Capital Requirements
     To Be Well-Capitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioJune 30, 2007Tangible
    
    $
    11,090,618
    
    
    
    8.85
    %
    
    $
    1,880,000
    
    
    
    1.50
    %
    
    $
    N/A
    
    
    
    N/A
    %Core
    
    
    11,090,618
    
    
    
    8.85
    
    
    
    3,760,000
    
    
    
    3.00
    
    
    
    6,266,000
    
    
    
    5.00Risk-based
    
    
    11,557,091
    
    
    
    21.30
    
    
    
    4,340,000
    
    
    
    8.00
    
    
    
    5,425,000
    
    
    
    10.00June 30, 2006Tangible
    
    $
    11,157,648
    
    
    
    8.51
    %
    
    $
    1,968,000
    
    
    
    1.50
    %
    
    $
    N/A
    
    
    
    N/A
    %Core
    
    
    11,157,648
    
    
    
    8.51
    
    
    
    3,935,000
    
    
    
    3.00
    
    
    
    6,558,000
    
    
    
    5.00Risk-based
    
    
    11,572,210
    
    
    
    19.58
    
    
    
    4,729,000
    
    
    
    8.00
    
    
    
    5,911,000
    
    
    
    10.00
  40




---



##### 



15)
    
    Regulatory Capital Requirements (continued)
 Tangible
    
    
    Core
    
    
    Risk-basedCapital
    
    
    Capital
    
    
    CapitalJune 30, 2007Stockholders equity
    
    $
    11,304,868
    
    
    
    11,304,868
    
    
    
    11,304,868Unrealized gain on securities
available for sale, net of taxes
    
    
    (207,103
    )
    
    
    (207,103
    )
    
    
    (207,103
    )Allowable gain on available for sale
equity securities
    
    
    
    
    
    
    
    
    
    
    47,488Direct equity investment
    
    
    
    
    
    
    
    
    
    
    (1,104
    )Retained mortgage servicing rights
    
    
    (7,147
    )
    
    
    (7,147
    )
    
    
    (7,147
    )General loss allowances
    
    
    
    
    
    
    
    
    
    
    420,089Regulatory capital computed
    
    $
    11,090,618
    
    
    
    11,090,618
    
    
    
    11,557,091
  Stockholders equity
    
    $
    13,710,474Less Company stockholders equity not available
for regulatory capital
    
    
    (2,405,606
    )Stockholders equity of the Association
    
    $
    11,304,868
 Tangible
    
    
    Core
    
    
    Risk-basedCapital
    
    
    Capital
    
    
    CapitalJune 30, 2006Stockholders equity
    
    $
    11,296,859
    
    
    
    11,296,859
    
    
    
    11,296,859Unrealized gain on securities
available for sale, net of taxes
    
    
    (132,567
    )
    
    
    (132,567
    )
    
    
    (132,567
    )Direct equity investment
    
    
    
    
    
    
    
    
    
    
    (1,104
    )Retained mortgage servicing rights
    
    
    (6,644
    )
    
    
    (6,644
    )
    
    
    (6,644
    )General loss allowances
    
    
    
    
    
    
    
    
    
    
    415,666Regulatory capital computed
    
    $
    11,157,648
    
    
    
    11,157,648
    
    
    
    11,572,210
  Stockholders equity
    
    $
    13,296,084Less Company stockholders equity not available
for regulatory capital
    
    
    (1,999,225
    )Stockholders equity of the Association
    
    $
    11,296,859
  41




---



##### 



16)
    
    Stockholders EquityAs part of the Conversion, the Association established a liquidation account for the benefit
of all eligible depositors who continue to maintain their deposit accounts in the
Association after conversion. In the unlikely event of a complete liquidation of the
Association, each eligible depositor will be entitled to receive a liquidation distribution
from the liquidation account, in the proportionate amount of the then current adjusted
balance for deposit accounts held, before distribution may be made with respect to the
Associations capital stock. The Association may not declare or pay a cash dividend on, or
repurchase any of, its capital stock if the effect thereof would cause the retained earnings
of the Association to be reduced below the amount required for the liquidation account.
Except for such restrictions, the existence of the liquidation account does not restrict the
use or application of retained earnings.In addition, the Association may not declare or pay cash dividends on or repurchase any of
its shares of common stock if the effect thereof would cause stockholders equity to be
reduced below applicable regulatory capital maintenance requirements or if such declaration
and payment would otherwise violate regulatory requirements.Unlike the Association, the Company is not subject to these regulatory restrictions on the
payment of dividends to its stockholders. However, the Companys source of funds for future
dividends may depend upon dividends received by the Company from the Association.17)
    
    Financial Instruments with Off-Balance Sheet RiskThe Association is a party to various transactions with off-balance sheet risk in the normal
course of business. These transactions are primarily commitments to originate loans and to
extend credit on previously approved unused lines of credit. These financial instruments
carry varying degrees of credit and interest-rate risk in excess of amounts recorded in the
consolidated financial statements.Commitments to originate mortgage loans of $525,350 at June 30, 2007 represents an amount
which the Association plans to fund within the normal commitment period of 60 to 90 days.
All of the commitments are fixed rate with rates ranging from 6.25% to 6.75%. Because the
credit worthiness of each customer is reviewed prior to extension of the commitment, the
Association adequately controls their credit risk on these commitments, as it does for loans
recorded on the balance sheet. The Association conducts all of its lending activities in the
Chicagoland area. Management believes the Association has a diversified loan portfolio and
the concentration of lending activities in these local communities does not result in an
acute dependency upon economic conditions of the lending region.The Association has approved, but unused, equity lines of credit of approximately $3,300,000
at June 30, 2007. In addition, the Association has approved, but unused, credit card lines
of credit amounting to approximately $589,000. The Association has also issued outstanding
letters of credit totaling $45,000.18)
    
    ContingenciesThe Association is, from time to time, a party to certain lawsuits arising in the ordinary
course of its business, wherein it enforces its security interest. Management believes that
the Company and the Association are not engaged in any legal proceedings of a material
nature at the present time.19)
    
    Subsequent EventAt the July, 2007 Board of Directors meeting, the Company declared a quarterly dividend of
$.24 per share, totaling $89,424, payable August 16, 2007 to shareholders of record as of
August 6, 2007.
  42




---



##### 



20)
    
    Disclosures About the Fair Value of Financial InstrumentsThe following methods and assumptions were used to estimate the fair value of each class of
financial instruments for which it is practicable to estimate that value:Cash and cash equivalents: For cash and interest-bearing deposits, the carrying
amount is a reasonable estimate of fair value.Investment securities: Fair values for securities are based on quoted market prices
as published in financial publications or on quotes from third-party brokers.Mortgage-backed securities: Fair values for mortgage-backed securities are based on
the lower of quotes received from various third-party brokers.Loans receivable: The fair value for fixed and adjustable rate mortgage loans are
estimated using discounted cash flow analyses, using interest rates currently being offered
for loans with similar terms and collateral to borrowers of similar credit quality.Accrued interest receivable and payable: The carrying value of accrued interest
receivable, net of the allowance for uncollected interest, and accrued interest payable
approximates fair value due to the relatively short period of time between accrual and
expected realization.Deposit liabilities: The fair value of demand deposits, savings accounts and money
market deposits is the amount payable on demand at the reporting date. The fair value of
fixed maturity certificates of deposit is estimated by discounting the future cash flows
using the rates currently offered for deposits of similar original maturities.The fair value of the Associations off-balance-sheet instruments is nominal.The estimated fair value of the Associations financial instruments as of June 30, 2007 and
2006 are as follows:
 June 30, 2007Carrying
    
    
    FairAmount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    13,455,836
    
    
    
    13,455,836Investment securities, available for sale
    
    
    21,019,975
    
    
    
    21,019,975Mortgage-backed securities, held to maturity
    
    
    1,474,504
    
    
    
    1,482,977Loans receivable, gross
    
    
    84,934,350
    
    
    
    82,645,000Other investments, available for sale
    
    
    106,633
    
    
    
    106,633Accrued interest receivable
    
    
    333,666
    
    
    
    333,666Financial liabilities:Deposits
    
    
    109,744,662
    
    
    
    109,561,000Accrued interest payable
    
    
    9,437
    
    
    
    9,437
 June 30, 2006Carrying
    
    
    FairAmount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    11,259,904
    
    
    
    11,259,904Investment securities, available for sale
    
    
    21,021,975
    
    
    
    21,021,975Mortgage-backed securities, held to maturity
    
    
    1,684,228
    
    
    
    1,688,292Loans receivable, gross
    
    
    92,745,720
    
    
    
    89,835,000Other investments, available for sale
    
    
    1,104
    
    
    
    1,104Accrued interest receivable
    
    
    370,190
    
    
    
    370,190Financial liabilities:Deposits
    
    
    115,971,229
    
    
    
    115,615,000Accrued interest payable
    
    
    8,492
    
    
    
    8,492
  43




---



##### 



21)
    
    Condensed Parent Company Only Financial Statements
   June 30,2007
    
    
    2006AssetsCash and cash equivalents
    
    $
    2,412,821
    
    
    
    2,002,108Equity investment in the Association
    
    
    11,304,868
    
    
    
    11,296,859Prepaid expenses and other assets
    
    
    
    
    
    
    15913,717,689
    
    
    
    13,299,126Liabilities and Stockholders EquityLiabilities:Accrued taxes and other liabilities
    
    
    7,215
    
    
    
    3,042Stockholders Equity:Common stock
    
    
    3,726
    
    
    
    3,726Additional paid-in capital
    
    
    3,395,580
    
    
    
    3,395,580Retained earnings
    
    
    10,104,065
    
    
    
    9,764,211Accumulated other comprehensive income, net of tax
    
    
    207,103
    
    
    
    132,567Total stockholders equity
    
    
    13,710,474
    
    
    
    13,296,084$
    13,717,689
    
    
    
    13,299,126
  Years Ended June 30,2007
    
    
    2006
    
    
    2005Interest income
    
    $
    21,303
    
    
    
    14,585
    
    
    
    10,460Non-interest income
    
    
    
    
    
    
    
    
    
    
    29Non-interest expense
    
    
    75,732
    
    
    
    79,284
    
    
    
    70,345Net loss before income tax benefit
and equity in earnings of subsidiaries
    
    
    (54,429
    )
    
    
    (64,699
    )
    
    
    (59,856
    )Benefit from income taxes
    
    
    18,506
    
    
    
    21,998
    
    
    
    20,351Net loss before equity in earnings
of subsidiaries
    
    
    (35,923
    )
    
    
    (42,701
    )
    
    
    (39,505
    )Equity in earnings of subsidiaries
    
    
    733,473
    
    
    
    1,053,997
    
    
    
    1,242,054Net income
    
    $
    697,550
    
    
    
    1,011,296
    
    
    
    1,202,549
  44




---



##### 



21)
    
    Condensed Parent Company Only Financial Statements (continued)
  Years Ended June 30,2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    697,550
    
    
    
    1,011,296
    
    
    
    1,202,549Equity in earnings of the Association
    
    
    (733,473
    )
    
    
    (1,053,997
    )
    
    
    (1,242,054
    )Decrease (increase) in prepaid expenses
and other assets
    
    
    159
    
    
    
    (153
    )
    
    
    1,553Increase (decrease) in other liabilities
    
    
    4,173
    
    
    
    (1,155
    )
    
    
    2,033Net cash provided for operating activities
    
    
    (31,591
    )
    
    
    (44,009
    )
    
    
    (35,919
    )Cash flows from investing activities:Loan disbursements
    
    
    
    
    
    
    
    
    
    
    Loan repayments
    
    
    
    
    
    
    5,343
    
    
    
    9,550Net cash provided by investing activities
    
    
    
    
    
    
    5,343
    
    
    
    9,550Cash flows from financing activities:Dividends received from Association
    
    
    800,000
    
    
    
    800,000
    
    
    
    750,000Dividends paid on common stock
    
    
    (357,696
    )
    
    
    (327,888
    )
    
    
    (298,080
    )Net cash provided by financing activities
    
    
    442,304
    
    
    
    472,112
    
    
    
    451,920Net change in cash and cash equivalents
    
    
    410,713
    
    
    
    433,446
    
    
    
    425,551Cash and cash equivalents at beginning of year
    
    
    2,002,108
    
    
    
    1,568,662
    
    
    
    1,143,111Cash and cash equivalents at end of year
    
    $
    2,412,821
    
    
    
    2,002,108
    
    
    
    1,568,662
  45




---



##### 



Officers and Directors
 Officers
    
    DirectorsPaul Zogas
    
    Paul ZogasPresident,
    
    President, Chief Executive Officer,Chief Executive Officer
and Chief Financial Officer of
the Company and the Association
    
    Chief Financial Officer and
Chairman of the Board for
the Company and the AssociationCharles Zogas
    
    Charles ZogasExecutive Vice President, 
Chief Operating Officer,
    
    Executive Vice President,
Chief Operating Officer,Secretary and Treasurer of
the Company and the Association
    
    Secretary and TreasurerRichard Taylor
    
    Richard TaylorVice President, Trust Officer
and Assistant Secretary of
the Company and the Association
    
    Vice President, Trust Officer
and Assistant SecretaryJanice Cecott
    
    Michael KukanzaController of the Company
and the Association
    
    Self-employed private investorDonna Chmiel
    
    Jonas VaznelisInternal Auditor of the
Company and the Association
    
    Retired businessmanLinda KoleckiAssistant Vice President
of the Association
  46




---



##### 



Corporate Information
 Investor Information
  Annual Report on Form 10-KSB
  Annual Meeting of Shareholders
  Stock Transfer Agent
  
 Corporate Counsel/Washington, D.C.
 
 Corporate Counsel/Chicago, Illinois
 
 Independent Auditors
 
  47