##### 



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




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##### 



To Our Shareholders,
     Sincerely,/s/ Paul ZogasPaul ZogasChairman and President
 3




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##### 



FINANCIAL HIGHLIGHTS
 Year Ended June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in Thousands)Total assets
    
    $
    138,979
    
    
    
    153,560
    
    
    
    159,976
    
    
    $
    150,589
    
    
    
    142,496Loans receivable, net
    
    
    94,829
    
    
    
    94,543
    
    
    
    93,300
    
    
    
    86,087
    
    
    
    68,486Mortgage-backed securities
    
    
    1,920
    
    
    
    2,942
    
    
    
    6,272
    
    
    
    10,360
    
    
    
    17,310Cash and cash equivalents
    
    
    36,710
    
    
    
    50,497
    
    
    
    49,421
    
    
    
    32,921
    
    
    
    20,719Investment securities
    
    
    1,311
    
    
    
    1,234
    
    
    
    6,389
    
    
    
    16,306
    
    
    
    31,338Deposits
    
    
    124,836
    
    
    
    140,437
    
    
    
    147,490
    
    
    
    138,444
    
    
    
    131,504Stockholders equity
    
    
    12,697
    
    
    
    11,742
    
    
    
    11,056
    
    
    
    10,397
    
    
    
    9,662For the Period:Net interest income
    
    $
    5,135
    
    
    
    4,635
    
    
    
    4,554
    
    
    
    4,448
    
    
    
    3,661Net income
    
    
    1,203
    
    
    
    1,043
    
    
    
    690
    
    
    
    866
    
    
    
    379Per Common Share:Book value per share
outstanding
    
    $
    34.08
    
    
    
    31.51
    
    
    
    29.67
    
    
    
    28.56
    
    
    
    26.55Earnings per share outstandingbasic
    
    $
    3.23
    
    
    
    2.80
    
    
    
    1.88
    
    
    
    2.38
    
    
    
    1.04diluted
    
    $
    3.23
    
    
    
    2.80
    
    
    
    1.88
    
    
    
    2.36
    
    
    
    1.03Financial Ratios:Stockholders equity to
total assets
    
    
    9.14
    %
    
    
    7.65
    
    
    
    6.91
    
    
    
    6.90
    
    
    
    6.78Non-performing assets to
total assets
    
    
    .27
    %
    
    
    .04
    
    
    
    .30
    
    
    
    .11
    
    
    
    .16Net charge-offs to total loans
    
    
    .01
    %
    
    
    .02
    
    
    
    
    
    
    
    .03
    
    
    
    .04Net interest margin
    
    
    3.71
    %
    
    
    3.13
    
    
    
    3.05
    
    
    
    3.19
    
    
    
    2.73Operating expenses to
average assets
    
    
    3.07
    %
    
    
    2.93
    
    
    
    2.96
    
    
    
    2.88
    
    
    
    2.84Return on average assets
    
    
    .83
    %
    
    
    .67
    
    
    
    .44
    
    
    
    .59
    
    
    
    .27Return on average
Stockholders equity
    
    
    9.89
    %
    
    
    9.05
    
    
    
    6.41
    
    
    
    8.64
    
    
    
    3.99
 4




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##### 



SELECTED CONSOLIDATED FINANCIAL INFORMATION
 SELECTED FINANCIAL CONDITION DATA:
 At June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In Thousands)Total assets
    
    $
    138,979
    
    
    
    153,560
    
    
    
    159,976
    
    
    
    150,589
    
    
    
    142,496Loans receivable, net
    
    
    94,829
    
    
    
    94,543
    
    
    
    93,300
    
    
    
    86,087
    
    
    
    68,486Mortgage-backed securities
    
    
    1,920
    
    
    
    2,942
    
    
    
    6,272
    
    
    
    10,360
    
    
    
    17,310Cash and cash equivalents
    
    
    36,710
    
    
    
    50,497
    
    
    
    49,421
    
    
    
    32,921
    
    
    
    20,719Investment securities
    
    
    1,311
    
    
    
    1,234
    
    
    
    6,389
    
    
    
    16,306
    
    
    
    31,338Deposits
    
    
    124,836
    
    
    
    140,437
    
    
    
    147,490
    
    
    
    138,444
    
    
    
    131,504Stockholders equity
    
    $
    12,697
    
    
    
    11,742
    
    
    
    11,056
    
    
    
    10,397
    
    
    
    9,662
 SELECTED OPERATIONS DATA:
 Year Ended June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In Thousands)Total interest income
    
    $
    6,506
    
    
    
    6,340
    
    
    
    7,278
    
    
    
    8,282
    
    
    
    8,975Total interest expense
    
    
    1,371
    
    
    
    1,706
    
    
    
    2,724
    
    
    
    3,834
    
    
    
    5,314Net interest income
    
    
    5,135
    
    
    
    4,634
    
    
    
    4,554
    
    
    
    4,448
    
    
    
    3,661Provision for loan losses
    
    
    
    
    
    
    60
    
    
    
    60
    
    
    
    15
    
    
    
    Net interest income after
provision for loan losses
    
    
    5,135
    
    
    
    4,574
    
    
    
    4,494
    
    
    
    4,433
    
    
    
    3,661Non-interest income:Loan related fees and charges
    
    
    239
    
    
    
    399
    
    
    
    542
    
    
    
    429
    
    
    
    269Deposit related fees
    
    
    432
    
    
    
    473
    
    
    
    512
    
    
    
    514
    
    
    
    481Commission income
    
    
    56
    
    
    
    70
    
    
    
    70
    
    
    
    74
    
    
    
    73Profit on sale of loans
    
    
    26
    
    
    
    102
    
    
    
    27
    
    
    
    44
    
    
    
    7Profit on sale of investment
    
    
    329
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain on satisfaction of
foreclosure judgments
    
    
    
    
    
    
    433
    
    
    
    
    
    
    
    
    
    
    
    Other income
    
    
    62
    
    
    
    86
    
    
    
    57
    
    
    
    67
    
    
    
    88Total non-interest income
    
    
    1,144
    
    
    
    1,563
    
    
    
    1,208
    
    
    
    1,128
    
    
    
    918Non-interest expense:Staffing costs
    
    
    2,578
    
    
    
    2,635
    
    
    
    2,627
    
    
    
    2,381
    
    
    
    2,163Occupancy and equipment expense
    
    
    635
    
    
    
    729
    
    
    
    773
    
    
    
    745
    
    
    
    713Deposit insurance premiums
    
    
    20
    
    
    
    22
    
    
    
    24
    
    
    
    24
    
    
    
    26Advertising expense
    
    
    66
    
    
    
    70
    
    
    
    58
    
    
    
    57
    
    
    
    82Data processing fees
    
    
    204
    
    
    
    213
    
    
    
    207
    
    
    
    209
    
    
    
    195Legal, audit and examination
    
    
    136
    
    
    
    161
    
    
    
    141
    
    
    
    125
    
    
    
    139Other expense
    
    
    813
    
    
    
    744
    
    
    
    820
    
    
    
    707
    
    
    
    686Total non-interest expense
    
    
    4,452
    
    
    
    4,574
    
    
    
    4,650
    
    
    
    4,248
    
    
    
    4,004Income before income taxes
    
    
    1,827
    
    
    
    1,563
    
    
    
    1,052
    
    
    
    1,313
    
    
    
    575Provision for income taxes
    
    
    624
    
    
    
    520
    
    
    
    362
    
    
    
    447
    
    
    
    196Net income
    
    $
    1,203
    
    
    
    1,043
    
    
    
    690
    
    
    
    866
    
    
    
    379
 5




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##### 



SELECTED CONSOLIDATED FINANCIAL INFORMATION
 SELECTED FINANCIAL RATIOS:
 At or For the Year Ended June 30,2005
    
    2004
    
    2003
    
    2002
    
    2001Performance Ratios:Return on average assets
    
    
    .83
    %
    
    
    .67
    
    
    
    .44
    
    
    
    .59
    
    
    
    .27Return on average stockholders
equity
    
    
    9.89
    %
    
    
    9.05
    
    
    
    6.41
    
    
    
    8.64
    
    
    
    3.99Interest rate spread during
period
    
    
    3.55
    %
    
    
    2.98
    
    
    
    2.85
    
    
    
    2.89
    
    
    
    2.30Net interest margin (1)
    
    
    3.71
    %
    
    
    3.13
    
    
    
    3.05
    
    
    
    3.19
    
    
    
    2.73Ratio of operating expenses to
average total assets
    
    
    3.07
    %
    
    
    2.93
    
    
    
    2.96
    
    
    
    2.88
    
    
    
    2.84Ratio of average interest-
earning assets to average
interest-bearing liabilities
    
    
    116.91
    %
    
    
    112.56
    
    
    
    111.07
    
    
    
    110.76
    
    
    
    110.86Asset Quality Ratios:Non-performing assets to
total assets
    
    
    .27
    %
    
    
    .04
    
    
    
    .30
    
    
    
    .11
    
    
    
    .16Allowance for loan losses to
non-performing loans
    
    
    120.06
    %
    
    
    829.00
    
    
    
    84.80
    
    
    
    213.29
    
    
    
    104.63Allowance for loan losses to
total loans
    
    
    .48
    %
    
    
    .49
    
    
    
    .44
    
    
    
    .41
    
    
    
    .52Capital Ratios:Stockholders equity to
total assets
    
    
    9.14
    %
    
    
    7.65
    
    
    
    6.91
    
    
    
    6.90
    
    
    
    6.78Average stockholders equity to
average assets
    
    
    8.40
    %
    
    
    7.37
    
    
    
    6.85
    
    
    
    6.80
    
    
    
    6.74
 
 (1)
    
    Net interest income divided by average interest-earning assets. 6




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##### 



MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Forward-Looking Statements
   GENERAL
   7




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##### 



MANAGEMENT OF INTEREST RATE RISK
    8




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##### 



NET PORTFOLIO VALUE
    
    NPV AS % OF ASSETSChange in Rates
    
    $ Amount
    
    $ Change
    
    % Change
    
    NPV Ratio
    
    Change(Basis Points)
    
    (Thousands)+300 bp
    
    13,783
    
    -6,846
    
    -33%
    
    9.73%
    
    -415 bp+200 bp
    
    16,183
    
    -4,446
    
    -22%
    
    11.23%
    
    -265 bp+100 bp
    
    18,637
    
    -1,992
    
    -10%
    
    12.71%
    
    -117 bp0 bp
    
    20,629
    
    
    
    
    
    13.88%-100 bp
    
    20,505
    
    -124
    
    - 1%
    
    13.79%
    
    -  9 bp-200 bp
    
    19,357
    
    -1,272
    
    - 6%
    
    13.10%
    
    - 78 bp
 FINANCIAL CONDITION AT JUNE 30, 2005
   9




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##### 



10




---



##### 



RESULTS OF OPERATIONS
   11




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##### 



Year Ended June 30,2005
    
    
    2004
    
    
    2003Interest
    
    
    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)
    
    $
    95,816
    
    
    
    5,510
    
    
    
    5.75
    %
    
    $
    93,096
    
    
    
    5,503
    
    
    
    5.91
    %
    
    $
    90,852
    
    
    
    5,738
    
    
    
    6.32
    %Mortgage-backed
securities
    
    
    2,267
    
    
    
    88
    
    
    
    3.88
    
    
    
    4,274
    
    
    
    205
    
    
    
    4.80
    
    
    
    7,947
    
    
    
    448
    
    
    
    5.63Investment and other
securities
    
    
    1,280
    
    
    
    76
    
    
    
    5.93
    
    
    
    2,521
    
    
    
    118
    
    
    
    4.69
    
    
    
    11,384
    
    
    
    518
    
    
    
    4.55Interest-bearing
deposits
    
    
    37,845
    
    
    
    770
    
    
    
    2.03
    
    
    
    47,229
    
    
    
    448
    
    
    
    0.95
    
    
    
    38,071
    
    
    
    523
    
    
    
    1.37FHLB stock
    
    
    1,096
    
    
    
    62
    
    
    
    5.64
    
    
    
    1,032
    
    
    
    66
    
    
    
    6.38
    
    
    
    931
    
    
    
    51
    
    
    
    5.51Total interest-
earning assets
    
    
    138,304
    
    
    
    6,506
    
    
    
    4.71
    
    
    
    148,152
    
    
    
    6,340
    
    
    
    4.28
    
    
    
    149,185
    
    
    
    7,278
    
    
    
    4.88Non-interest earning
assets
    
    
    6,509
    
    
    
    
    
    
    
    
    
    
    
    8,170
    
    
    
    
    
    
    
    
    
    
    
    8,067Total assets
    
    $
    144,813
    
    
    
    
    
    
    
    
    
    
    $
    156,322
    
    
    
    
    
    
    
    
    
    
    $
    157,252Interest-Bearing
Liabilities:Certificates of
deposit
    
    $
    43,437
    
    
    
    792
    
    
    
    1.82
    %
    
    $
    53,542
    
    
    
    1,013
    
    
    
    1.89
    %
    
    $
    59,052
    
    
    
    1,540
    
    
    
    2.61
    %Passbook accounts
    
    
    55,367
    
    
    
    418
    
    
    
    0.75
    
    
    
    57,163
    
    
    
    509
    
    
    
    0.89
    
    
    
    53,651
    
    
    
    849
    
    
    
    1.58Money market and
NOW accounts
    
    
    19,495
    
    
    
    161
    
    
    
    0.82
    
    
    
    20,911
    
    
    
    184
    
    
    
    0.88
    
    
    
    21,609
    
    
    
    335
    
    
    
    1.55Total interest-
bearing
liabilities
    
    
    118,299
    
    
    
    1,371
    
    
    
    1.16
    
    
    
    131,616
    
    
    
    1,706
    
    
    
    1.30
    
    
    
    134,312
    
    
    
    2,724
    
    
    
    2.03Non-interest bearing
Deposits
    
    
    12,721
    
    
    
    
    
    
    
    
    
    
    
    11,793
    
    
    
    
    
    
    
    
    
    
    
    10,554Other liabilities
    
    
    1,631
    
    
    
    
    
    
    
    
    
    
    
    1,397
    
    
    
    
    
    
    
    
    
    
    
    1,615Total liabilities
    
    
    132,651
    
    
    
    
    
    
    
    
    
    
    
    144,806
    
    
    
    
    
    
    
    
    
    
    
    146,481Stockholders equity
    
    
    12,162
    
    
    
    
    
    
    
    
    
    
    
    11,516
    
    
    
    
    
    
    
    
    
    
    
    10,771Liabilities and
stockholders
equity
    
    $
    144,813
    
    
    
    
    
    
    
    
    
    
    $
    156,322
    
    
    
    
    
    
    
    
    
    
    $
    157,252Net earning assets
    
    $
    20,005
    
    
    
    
    
    
    
    
    
    
    $
    16,536
    
    
    
    
    
    
    
    
    
    
    $
    14,873Net-interest income
    
    
    
    
    
    $
    5,135
    
    
    
    
    
    
    
    
    
    
    $
    4,634
    
    
    
    
    
    
    
    
    
    
    $
    4,554Net-interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.55
    %
    
    
    
    
    
    
    
    
    
    
    2.98
    %
    
    
    
    
    
    
    
    
    
    
    2.85
    %Net-interest margin
    
    
    
    
    
    
    
    
    
    
    3.71
    %
    
    
    
    
    
    
    
    
    
    
    3.13
    %
    
    
    
    
    
    
    
    
    
    
    3.05
    %Average interest-earning
assets to average
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    116.91
    %
    
    
    
    
    
    
    
    
    
    
    112.56
    %
    
    
    
    
    
    
    
    
    
    
    111.07
    %
 
 (1)
    
    Calculated net of deferred yield adjustments, loan discounts, loans in process and loss
reserves. 12




---



##### 



Year Ended June 30,2005 vs. 2004
    
    

2004
vs. 2003Increase (decrease) due to
    
    
    Increase (decrease) due toRate/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rate/Volume
    
    
    Rate
    
    
    Volume
    
    
    Net
    
    
    Volume
    
    
    Rate
    
    
    Volume
    
    
    Net(Dollars in Thousands)Interest-Earning
Assets:Loans Receivable
    
    $
    161
    
    
    $
    (154
    )
    
    $
    
    
    
    $
    7
    
    
    $
    142
    
    
    $
    (368
    )
    
    $
    (9
    )
    
    $
    (235
    )Mortgage-backed
securities
    
    
    (96
    )
    
    
    (39
    )
    
    
    18
    
    
    
    (117
    )
    
    
    (207
    )
    
    
    (66
    )
    
    
    30
    
    
    
    (243
    )Investment and other
securities
    
    
    (58
    )
    
    
    32
    
    
    
    (16
    )
    
    
    (42
    )
    
    
    (403
    )
    
    
    16
    
    
    
    (13
    )
    
    
    (400
    )Interest-bearing
deposits
    
    
    (89
    )
    
    
    512
    
    
    
    (101
    )
    
    
    322
    
    
    
    126
    
    
    
    (162
    )
    
    
    (39
    )
    
    
    (75
    )FHLB stock
    
    
    4
    
    
    
    (8
    )
    
    
    
    
    
    
    (4
    )
    
    
    6
    
    
    
    8
    
    
    
    1
    
    
    
    15Total interest-
earning assets
    
    $
    (78
    )
    
    $
    343
    
    
    $
    (99
    )
    
    $
    166
    
    
    $
    (336
    )
    
    $
    (572
    )
    
    $
    (30
    )
    
    $
    (938
    )Interest-Bearing
Liabilities:Certificates of
deposit
    
    $
    (191
    )
    
    $
    (37
    )
    
    $
    7
    
    
    $
    (221
    )
    
    $
    (144
    )
    
    $
    (422
    )
    
    $
    39
    
    
    $
    (527
    )Passbook accounts
    
    
    (16
    )
    
    
    (77
    )
    
    
    2
    
    
    
    (91
    )
    
    
    56
    
    
    
    (372
    )
    
    
    (24
    )
    
    
    (340
    )Money market and
NOW accounts
    
    
    (12
    )
    
    
    (11
    )
    
    
    
    
    
    
    (23
    )
    
    
    (10
    )
    
    
    (146
    )
    
    
    5
    
    
    
    (151
    )Total interest-
bearing liab-
ilities
    
    $
    (219
    )
    
    $
    (125
    )
    
    $
    9
    
    
    $
    (335
    )
    
    $
    (98
    )
    
    $
    (940
    )
    
    $
    20
    
    
    $
    (1,018
    )Net change in net
interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    501
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    80
 13




---



##### 



COMPARISON OF OPERATING RESULTS
FOR THE FISCAL YEARS ENDED
JUNE 30, 2005 AND JUNE 30, 2004
   INTEREST INCOME
      14




---



##### 



INTEREST EXPENSE
  PROVISIONS FOR LOSSES ON LOANS
   NON-INTEREST INCOME
  15




---



##### 



NON-INTEREST EXPENSE
  INCOME TAXES
  COMPARISON OF OPERATING RESULTS
FOR THE FISCAL YEARS ENDED
JUNE 30, 2004 AND JUNE 30, 2003
   INTEREST INCOME
   16




---



##### 



INTEREST EXPENSE
  17




---



##### 



PROVISIONS FOR LOSSES ON LOANS
   NON-INTEREST INCOME
  NON-INTEREST EXPENSE
  INCOME TAXES
  18




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
     For the YearEnded June 30,2005
    
    
    2004(Dollars in Thousands)Net income
    
    $
    1,203
    
    
    $
    1,043Adjustments to reconcile net income
to net cash provided by (for)
operating activities
    
    
    129
    
    
    
    (162
    )Net cash provided by
operating activities
    
    
    1,332
    
    
    
    881Net cash provided by
investing activities
    
    
    673
    
    
    
    7,546Net cash provided for
financing activities
    
    
    (15,792
    )
    
    
    (7,351
    )Net change in cash and
cash equivalents
    
    
    (13,787
    )
    
    
    1,076Cash and cash equivalents at
beginning of year
    
    
    50,497
    
    
    
    49,421Cash and cash equivalents at
end of year
    
    $
    36,710
    
    
    $
    50,497
   19




---



##### 



IMPACT OF NEW ACCOUNTING STANDARDS
  Other-Than-Temporary Impairment.
   Stock Based Compensation.
 20




---



##### 



Accounting Changes and Error Corrections.
 IMPACT OF INFLATION AND CHANGING PRICES
  21




---



##### 



COMMON STOCK
    Quarter ended
    
    High
    
    
    Low
    
    
    Cash dividends declaredSeptember 30, 2003
    
    $
    32.25
    
    
    $
    28.00
    
    
    $
    0.17December 31, 2003
    
    
    35.75
    
    
    
    30.30
    
    
    
    0.17March 31, 2004
    
    
    40.00
    
    
    
    34.25
    
    
    
    0.17June 30, 2004
    
    
    38.00
    
    
    
    35.75
    
    
    
    0.17September 30, 2004
    
    $
    41.55
    
    
    $
    37.35
    
    
    $
    0.20December 31, 2004
    
    
    44.00
    
    
    
    44.00
    
    
    
    0.20March 31, 2005
    
    
    43.00
    
    
    
    41.10
    
    
    
    0.20June 30, 2005
    
    
    44.00
    
    
    
    40.00
    
    
    
    0.20
  22




---



##### 



Cobitz, Vandenberg & Fennessy
CERTIFIED PUBLIC ACCOUNTANTS
9944 SOUTH ROBERTS ROAD  SUITE 202
PALOS HILLS, ILLINOIS 60465
(708) 430-4106       Fax (708) 430-4499
 INDEPENDENT AUDITORS REPORT
 23




---



##### 



24




---



##### 



AND SUBSIDIARIES
  June 30,2005
    
    
    2004AssetsCash and amounts due from depository institutions
    
    $
    2,640,369
    
    
    
    3,786,039Interest-bearing deposits
    
    
    34,069,224
    
    
    
    46,710,590Total cash and cash equivalents
    
    
    36,709,593
    
    
    
    50,496,629Investment securities available for sale,
at fair value (note 2)
    
    
    1,310,937
    
    
    
    1,234,375Mortgage-backed securities, held to maturity (fair value:2005 - $1,938,460; 2004 - $2,980,932) (note 3)
    
    
    1,920,221
    
    
    
    2,941,517Loans receivable (net of allowance
for loan losses: 2005 - $456,550;
2004 - $459,472) (note 4)
    
    
    94,578,810
    
    
    
    93,961,360Loans receivable held for sale (note 5)
    
    
    250,500
    
    
    
    581,500Stock in Federal Home Loan Bank of Chicago
    
    
    1,123,500
    
    
    
    1,061,800Accrued interest receivable (note 6)
    
    
    367,351
    
    
    
    359,702Office properties and equipment  net (note 7)
    
    
    2,240,391
    
    
    
    2,376,025Prepaid expenses and other assets (note 8)
    
    
    477,467
    
    
    
    547,453Total assets
    
    
    138,978,770
    
    
    
    153,560,361Liabilities and Stockholders EquityLiabilities:Deposits (note 9)
    
    
    124,836,132
    
    
    
    140,436,704Advance payments by borrowers for taxes
and insurance
    
    
    1,060,670
    
    
    
    954,259Other liabilities (note 10)
    
    
    385,286
    
    
    
    427,084Total liabilities
    
    
    126,282,088
    
    
    
    141,818,047Stockholders Equity:Preferred 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, 2005 and 2004
    
    
    3,726
    
    
    
    3,726Additional paid-in capital
    
    
    3,395,580
    
    
    
    3,395,580Retained earnings  substantially restricted
    
    
    9,080,803
    
    
    
    8,176,334Accumulated other comprehensive income,
net of income taxes
    
    
    216,573
    
    
    
    166,674Total stockholders equity (notes 14 and 15)
    
    
    12,696,682
    
    
    
    11,742,314Commitments and contingencies (notes 16 and 17)Total liabilities and stockholders equity
    
    $
    138,978,770
    
    
    
    153,560,361
  25




---



##### 



AND SUBSIDIARIES
  Years Ended June 30,2005
    
    
    2004
    
    
    2003Interest income:Interest on loans
    
    $
    5,510,360
    
    
    
    5,502,835
    
    
    
    5,738,429Interest on mortgage-backed securities
    
    
    87,888
    
    
    
    205,278
    
    
    
    447,705Interest on investment securities
    
    
    75,958
    
    
    
    118,257
    
    
    
    517,552Interest on interest-bearing deposits
    
    
    769,701
    
    
    
    447,894
    
    
    
    523,067Dividends on FHLB stock
    
    
    61,815
    
    
    
    65,824
    
    
    
    51,330Total interest income
    
    
    6,505,722
    
    
    
    6,340,088
    
    
    
    7,278,083Interest expense:Interest on deposits (note 9)
    
    
    1,370,963
    
    
    
    1,705,562
    
    
    
    2,724,478Total interest expense
    
    
    1,370,963
    
    
    
    1,705,562
    
    
    
    2,724,478Net interest income
    
    
    5,134,759
    
    
    
    4,634,526
    
    
    
    4,553,605Provision for loan losses
    
    
    
    
    
    
    60,000
    
    
    
    60,000Net interest income after
provision for loan losses
    
    
    5,134,759
    
    
    
    4,574,526
    
    
    
    4,493,605Non-interest income:Loan fees and service charges
    
    
    238,848
    
    
    
    398,685
    
    
    
    541,800Deposit related fees
    
    
    432,390
    
    
    
    472,890
    
    
    
    512,245Commission income
    
    
    56,561
    
    
    
    70,282
    
    
    
    70,254Gain on sale of loans (notes 4 and 5)
    
    
    25,627
    
    
    
    101,769
    
    
    
    27,128Gain on satisfaction of
foreclosure judgments (note 4)
    
    
    
    
    
    
    433,285
    
    
    
    Gain on sale of other assets (note 8)
    
    
    328,880
    
    
    
    
    
    
    
    Other income
    
    
    61,790
    
    
    
    86,160
    
    
    
    56,938Total non-interest income
    
    
    1,144,096
    
    
    
    1,563,071
    
    
    
    1,208,365Non-interest expense:Staffing costs (notes 11 and 12)
    
    
    2,578,126
    
    
    
    2,634,908
    
    
    
    2,627,468Advertising
    
    
    66,261
    
    
    
    69,620
    
    
    
    58,195Occupancy and equipment expenses (note 7)
    
    
    635,299
    
    
    
    729,604
    
    
    
    772,573Data processing
    
    
    203,759
    
    
    
    212,688
    
    
    
    206,745Federal deposit insurance premiums
    
    
    19,815
    
    
    
    22,450
    
    
    
    23,753Legal, audit and examination services
    
    
    136,152
    
    
    
    160,976
    
    
    
    141,113Other
    
    
    812,780
    
    
    
    744,159
    
    
    
    819,667Total non-interest expense
    
    
    4,452,192
    
    
    
    4,574,405
    
    
    
    4,649,514Income before income taxes
    
    
    1,826,663
    
    
    
    1,563,192
    
    
    
    1,052,456Provision for income taxes (note 13)
    
    
    624,114
    
    
    
    520,524
    
    
    
    362,273Net income
    
    $
    1,202,549
    
    
    
    1,042,668
    
    
    
    690,183Earnings per share  basic
    
    $
    3.23
    
    
    
    2.80
    
    
    
    1.88Earnings per share  diluted
    
    $
    3.23
    
    
    
    2.80
    
    
    
    1.88
  26




---



##### 



AND SUBSIDIARIES
  AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid-In
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance at June 30, 2002
    
    $
    3,640
    
    
    
    3,276,855
    
    
    
    6,917,305
    
    
    
    198,755
    
    
    
    10,396,555Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    690,183
    
    
    
    
    
    
    
    690,183Other comprehensive income,
net of tax:Unrealized holding gain
during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,052
    
    
    
    71,052Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    690,183
    
    
    
    71,052
    
    
    
    761,235Exercise of stock options
    
    
    86
    
    
    
    96,945
    
    
    
    
    
    
    
    
    
    
    
    97,031Tax benefit related to
stock options exercised
    
    
    
    
    
    
    21,780
    
    
    
    
    
    
    
    
    
    
    
    21,780Dividends declared on
common stock ($.60 per share)
    
    
    
    
    
    
    
    
    
    
    (220,454
    )
    
    
    
    
    
    
    (220,454
    )Balance at June 30, 2003
    
    
    3,726
    
    
    
    3,395,580
    
    
    
    7,387,034
    
    
    
    269,807
    
    
    
    11,056,147Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    1,042,668
    
    
    
    
    
    
    
    1,042,668Other comprehensive income,
net of tax:Unrealized holding loss
during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103,133
    )
    
    
    (103,133
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    1,042,668
    
    
    
    (103,133
    )
    
    
    939,535Dividends declared on
common stock ($.68 per share)
    
    
    
    
    
    
    
    
    
    
    (253,368
    )
    
    
    
    
    
    
    (253,368
    )Balance 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
    
    
    
    12,696,682
  27




---



##### 



AND SUBSIDIARIES
  Years Ended June 30,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income
    
    $
    1,202,549
    
    
    
    1,042,668
    
    
    
    690,183Adjustments
to reconcile net income to net cash from operating activities:Depreciation
    
    
    213,761
    
    
    
    270,315
    
    
    
    316,663Amortization of premiums and
discounts on securities
    
    
    (2,227
    )
    
    
    (13,564
    )
    
    
    7,427Federal Home Loan Bank stock dividend
    
    
    (61,700
    )
    
    
    (65,600
    )
    
    
    (51,100
    )Provision for loan losses
    
    
    
    
    
    
    60,000
    
    
    
    60,000Proceeds from sale of loans held for sale
    
    
    1,823,050
    
    
    
    1,054,750
    
    
    
    1,902,945Origination of loans held for sale
    
    
    (1,492,050
    )
    
    
    (1,268,950
    )
    
    
    (1,530,439
    )Gain on sale of loans
    
    
    (25,627
    )
    
    
    (101,769
    )
    
    
    (27,128
    )Gain on sale of other assets
    
    
    (328,880
    )
    
    
    
    
    
    
    (Increase) decrease in accrued
interest receivable
    
    
    (7,649
    )
    
    
    89,060
    
    
    
    201,094Increase (decrease) in accrued
interest payable
    
    
    409
    
    
    
    (6,653
    )
    
    
    (10,666
    )Decrease in deferred income on loans
    
    
    (2,529
    )
    
    
    (244,135
    )
    
    
    (23,163
    )Decrease in other assets
    
    
    54,908
    
    
    
    62,579
    
    
    
    281(Decrease) increase in other liabilities
    
    
    (42,207
    )
    
    
    1,883
    
    
    
    (299,980
    )Net cash provided by operating activities
    
    
    1,331,808
    
    
    
    880,584
    
    
    
    1,236,117Cash flows from investing activities:Proceeds from repayments of mortgage-backed
securities, held to maturity
    
    
    1,022,565
    
    
    
    3,342,775
    
    
    
    4,104,875Proceeds from maturities of investment
securities, held to maturity
    
    
    
    
    
    
    
    
    
    
    10,000,000Proceeds from maturities and early
redemption of investment securities,
available for sale
    
    
    
    
    
    
    5,000,000
    
    
    
    Purchase of Federal Home Loan Bank stock
    
    
    
    
    
    
    
    
    
    
    (48,500
    )Loan disbursements
    
    
    (20,872,954
    )
    
    
    (41,776,527
    )
    
    
    (54,341,935
    )Loan repayments
    
    
    20,258,033
    
    
    
    40,615,105
    
    
    
    46,720,391Proceeds from sale of non-performing loan
    
    
    
    
    
    
    403,366
    
    
    
    Proceeds from sale of other assets
    
    
    343,880
    
    
    
    
    
    
    
    Property and equipment expenditures
    
    
    (78,127
    )
    
    
    (38,951
    )
    
    
    (107,468
    )Net cash provided by investing activities
    
    
    673,397
    
    
    
    7,545,768
    
    
    
    6,327,363Cash flows from financing activities:Net (decrease) increase in deposits
    
    
    (15,600,572
    )
    
    
    (7,052,900
    )
    
    
    9,045,935Proceeds from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    97,031Payment of dividends
    
    
    (298,080
    )
    
    
    (253,368
    )
    
    
    (220,454
    )Increase (decrease) in advance payments
by borrowers for taxes and insurance
    
    
    106,411
    
    
    
    (44,520
    
    
    
    13,635Net cash provided (for) by financing activities
    
    
    (15,792,241
    )
    
    
    (7,350,788
    )
    
    
    8,936,147
    )Net change in cash and cash equivalents
    
    
    (13,787,036
    )
    
    
    1,075,564
    
    
    
    16,499,627Cash and cash equivalents at beginning of year
    
    
    50,496,629
    
    
    
    49,421,065
    
    
    
    32,921,438Cash and cash equivalents at end of year
    
    $
    36,709,593
    
    
    
    50,496,629
    
    
    
    49,421,065Cash paid during the year for:Interest
    
    $
    1,370,554
    
    
    
    1,712,215
    
    
    
    2,735,144Income taxes
    
    
    630,297
    
    
    
    528,318
    
    
    
    580,143
  28




---



##### 



AND SUBSIDIARIES
  1)
    
    Summary of Significant Accounting Policies
   Principles of Consolidation
  Industry Segments
  Investment Securities, Available for Sale
    1)
    
    Summary of Significant Accounting Policies (continued)
 Investment Securities and Mortgage-Backed Securities, Held to Maturity
  29




---



##### 



Loans Receivable and Related Fees
    Loans Receivable Held for Sale
  Mortgage Servicing Rights
  30




---



##### 



1)
    
    Summary of Significant Accounting Policies (continued)
 Allowance for Loan Losses
   Depreciation
  Income Taxes
  Consolidated Statements of Cash Flows
  31




---



##### 



1)
    
    Summary of Significant Accounting Policies (continued)
 Earnings Per Share
   Years Ended June 30,2005
    
    
    2004
    
    
    2003Weighted average number of common shares
outstanding used in basic EPS calculation
    
    
    372,600
    
    
    
    372,600
    
    
    
    367,283Add 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
    
    
    
    367,283Net income
    
    $
    1,202,549
    
    
    
    1,042,668
    
    
    
    690,183Basic earnings per share
    
    $
    3.23
    
    
    
    2.80
    
    
    
    1.88Diluted earnings per share
    
    $
    3.23
    
    
    
    2.80
    
    
    
    1.88
 32




---



##### 



2)
    
    Investment Securities, Available for Sale
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueJune 30, 2005United States Treasury bond
    
    $
    982,797
    
    
    
    328,140
    
    
    
    
    
    
    
    1,310,937Weighted average interest rate
    
    
    7.60
    %June 30, 2004United States Treasury bond
    
    $
    981,839
    
    
    
    252,536
    
    
    
    
    
    
    
    1,234,375Weighted average interest rate
    
    
    7.60
    %
  June 30, 2005
    
    
    June 30, 2004Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    ValueTerm to MaturityDue after ten years through
fifteen years
    
    $
    982,797
    
    
    
    1,310,937
    
    
    
    981,839
    
    
    
    1,234,375
  33




---



##### 



3)
    
    Mortgage-Backed Securities, Held to Maturity
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueJune 30, 2005Participation certificates:FHLMC  Adjustable rate
    
    $
    1,219,356
    
    
    
    10,762
    
    
    
    
    
    
    
    1,230,118FNMA   Adjustable rate
    
    
    666,572
    
    
    
    7,122
    
    
    
    
    
    
    
    673,694FNMA   Fixed rate
    
    
    13,477
    
    
    
    355
    
    
    
    
    
    
    
    13,832GNMA   Fixed rate
    
    
    20,816
    
    
    
    
    
    
    
    
    
    
    
    20,816$
    1,920,221
    
    
    
    18,239
    
    
    
    
    
    
    
    1,938,460Weighted average interest rate
    
    
    4.04
    %June 30, 2004Participation certificates:FHLMC  Adjustable rate
    
    $
    1,707,372
    
    
    
    17,058
    
    
    
    
    
    
    
    1,724,430FNMA   Adjustable rate
    
    
    921,361
    
    
    
    11,308
    
    
    
    
    
    
    
    932,669FHLMC  Fixed rate
    
    
    178,240
    
    
    
    3,734
    
    
    
    
    
    
    
    181,974FNMA   Fixed rate
    
    
    90,551
    
    
    
    7,315
    
    
    
    
    
    
    
    97,866GNMA   Fixed rate
    
    
    43,993
    
    
    
    
    
    
    
    
    
    
    
    43,993$
    2,941,517
    
    
    
    39,415
    
    
    
    
    
    
    
    2,980,932Weighted average interest rate
    
    
    3.88
    %
 34




---



##### 



4)
    
    Loans Receivable
  June 30,2005
    
    
    2004Mortgage loans:One-to-four family
    
    $
    91,558,168
    
    
    
    90,636,479Multi-family
    
    
    1,125,007
    
    
    
    1,118,995Non-residential
    
    
    804,748
    
    
    
    821,322Total mortgage loans
    
    
    93,487,923
    
    
    
    92,576,796Other loans:Loans on deposit accounts
    
    
    268,637
    
    
    
    311,128Auto loans
    
    
    448,442
    
    
    
    464,871Education loans
    
    
    247,060
    
    
    
    587,107Credit card loans
    
    
    189,060
    
    
    
    159,061Other
    
    
    11,883
    
    
    
    17,021Total other loans
    
    
    1,165,082
    
    
    
    1,539,188Commercial business loans
    
    
    17,053
    
    
    
    25,815Total loans receivable
    
    
    94,670,058
    
    
    
    94,141,799Less:Loans in process
    
    
    25,450
    
    
    
    109,190Net deferred yield adjustments
    
    
    (404,924
    )
    
    
    (397,787
    )Allowance for uncollected interest
    
    
    14,172
    
    
    
    9,564Allowance for loan losses
    
    
    456,550
    
    
    
    459,472Loans receivable, net
    
    $
    94,578,810
    
    
    
    93,961,360Weighted average interest rate
    
    
    5.80
    %
    
    
    5.78
    %
  Years Ended June 30,2005
    
    
    2004
    
    
    2003Balance, beginning of year
    
    $
    459,472
    
    
    
    409,560
    
    
    
    350,260Provision for loan losses
    
    
    
    
    
    
    60,000
    
    
    
    60,000Recoveries previously charged-off
    
    
    
    
    
    
    8,215
    
    
    
    Charge-offs
    
    
    (2,922
    )
    
    
    (18,303
    )
    
    
    (700
    )Balance, end of year
    
    $
    456,550
    
    
    
    459,472
    
    
    
    409,560
   35




---



##### 



4)
    
    Loans Receivable (continued)The Association had held forbearance agreements since 1996 to resolve non-performance on
three loans that were cross-collateralized by a multi-family residential property located in
Chicago, Illinois. As a result of the agreements, excess cash flow from the Chicago
multi-family property was used to reduce the amounts due on the three loans. The Association
also held $433,285 in deficiency judgments stemming from various foreclosure actions on
residential properties located in Florida that were also cross-collateralized by the Chicago
multi-family property under the agreements. This amount was expensed and charged-off in a
prior period. During the year ended June 30, 2004, the Chicago multi-family property was sold
and the proceeds were sufficient to repay the existing mortgage on that property in full, the
remaining obligations due on the three loans and the deficiency judgments, all in
satisfaction of the forbearance agreements.Loans to directors and executive officers aggregated $646,032 at June 30, 2005 and $676,888
at June 30, 2004. Such loans are made on substantially the same terms as those for other loan
customers.5)
    
    Loans Receivable Held for SaleThe Company sells loans in the secondary market under various programs. During the years
ended June 30, 2005, 2004 and 2003, the Company sold first mortgage loans totaling
$1,823,050, $1,054,750 and $1,902,945 in the secondary market. The Company retained the
servicing on these loans. Proceeds from the sale of these loans during the years ended June
30, 2005, 2004 and 2003 were $1,823,050, $1,054,750 and $1,902,945 with no gain or loss
realized on those sales. In addition, the Company recorded a gain of $25,627, $14,853 and
$27,128 for the years ended June 30, 2005, 2004 and 2003 on loan sales from the establishment
of a mortgage servicing right asset. During the years ended June 30, 2005, 2004 and 2003, the
Company amortized $24,255, $56,402 and $42,322 of mortgage servicing rights against current
servicing fee income.As of June 30, 2005, $252,500 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, 2005 and 2004.At June 30, 2005, 2004 and 2003, loans serviced for others amounted to $5,905,383,
$6,014,542 and $9,398,448, respectively.6)
    
    Accrued Interest ReceivableAccrued interest receivable is summarized as follows:
 June 30,2005
    
    
    2004Investment securities
    
    $
    9,723
    
    
    
    9,375Mortgage-backed securities
    
    
    10,392
    
    
    
    14,665Loans receivable
    
    
    347,236
    
    
    
    335,662$
    367,351
    
    
    
    359,702
 36




---



##### 



7)
    
    Office Properties and EquipmentOffice properties and equipment are summarized as follows:
 June 30,2005
    
    
    2004Land
    
    $
    439,935
    
    
    
    416,595Buildings
    
    
    2,365,311
    
    
    
    2,365,311Easement for parking lot and driveway
    
    
    223,050
    
    
    
    223,050Leasehold improvements  Homer Glen
    
    
    579,253
    
    
    
    579,253Furniture, fixtures and equipment
    
    
    2,882,373
    
    
    
    2,827,5866,489,922
    
    
    
    6,411,795Less accumulated depreciation
    
    
    4,249,531
    
    
    
    4,035,770$
    2,240,391
    
    
    
    2,376,025
     Year ended June 30, 2006
    
    $
    41,480Year ended June 30, 2007
    
    
    43,536Year ended June 30, 2008
    
    
    45,704Year ended June 30, 2009
    
    
    46,440
 37




---



##### 



8)
    
    Prepaid Expenses and Other AssetsPrepaid expenses and other assets consist of the following:
 June 30,2005
    
    
    2004Prepaid federal insurance premiums
    
    $
    4,256
    
    
    
    5,158Prepaid insurance
    
    
    38,384
    
    
    
    59,057Other prepaid expenses
    
    
    123,901
    
    
    
    126,711Mortgage servicing rights
    
    
    57,614
    
    
    
    56,242Deferred federal income tax benefit  net (a)
    
    
    128,089
    
    
    
    181,211Accounts receivable and other assets (b)
    
    
    125,223
    
    
    
    119,074$
    477,467
    
    
    
    547,453
  (a)
    
    Significant components of the deferred tax assets and liabilities are as follows:
 June 30,2005
    
    
    2004Deferred tax assets:Tax basis of office building in
excess of book basis
    
    $
    372,178
    
    
    
    392,505Accelerated book depreciation
    
    
    12,564
    
    
    
    Book allowance for loan losses
    
    
    155,227
    
    
    
    156,040Total deferred tax assets
    
    
    539,969
    
    
    
    548,545Deferred tax liabilities:Loan fees deferred for financial
reporting purposes, net of costs
    
    
    155,128
    
    
    
    153,265Accelerated tax depreciation
    
    
    
    
    
    
    4,467FHLB stock dividends
    
    
    125,596
    
    
    
    104,618Mortgage servicing rights
    
    
    19,589
    
    
    
    19,122Unrealized gain on securities
available for sale
    
    
    111,567
    
    
    
    85,862Total deferred tax liabilities
    
    
    411,880
    
    
    
    367,334Net deferred tax benefit
    
    $
    128,089
    
    
    
    181,211
 (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.
 38




---



##### 



9)
    
    DepositsDeposit accounts are summarized as follows:
 June 30,2005
    
    
    2004Passbook accounts
    
    $
    52,859,335
    
    
    
    59,697,411NOW accounts
    
    
    12,028,751
    
    
    
    12,982,903Money market accounts
    
    
    6,108,339
    
    
    
    7,497,335Non-interest bearing demand deposit accounts
    
    
    13,528,200
    
    
    
    12,097,02084,524,625
    
    
    
    92,274,669Certificates of deposit by interest rate:0.75 - 1.00%
    
    
    
    
    
    
    3,209,5981.01 - 2.00
    
    
    14,588,839
    
    
    
    32,082,8452.01 - 3.00
    
    
    23,221,114
    
    
    
    10,075,3393.01 - 4.00
    
    
    2,501,554
    
    
    
    2,794,25340,311,507
    
    
    
    48,162,035$
    124,836,132
    
    
    
    140,436,704
    June 30,2005
    
    
    2004Within 12 months
    
    $
    37,501,893
    
    
    
    45,384,44012 months to 24 months
    
    
    1,851,765
    
    
    
    2,121,27424 months to 36 months
    
    
    957,849
    
    
    
    656,321Total
    
    $
    40,311,507
    
    
    
    48,162,035
  Years Ended June 30,2005
    
    
    2004
    
    
    2003Passbook accounts
    
    $
    418,495
    
    
    
    508,804
    
    
    
    849,284Certificate accounts
    
    
    791,675
    
    
    
    1,013,354
    
    
    
    1,539,654NOW and money market accounts
    
    
    160,793
    
    
    
    183,404
    
    
    
    335,540Total
    
    $
    1,370,963
    
    
    
    1,705,562
    
    
    
    2,724,478
 39




---



##### 



10)
    
    Other LiabilitiesOther liabilities consist of the following:
 June 30,2005
    
    
    2004Accrued interest on deposits
    
    $
    8,377
    
    
    
    7,968Accrued real estate taxes
    
    
    137,511
    
    
    
    134,600Accrued federal income taxes
    
    
    
    
    
    
    26,755Other accrued expenses
    
    
    144,535
    
    
    
    176,089Outstanding bank drafts
    
    
    35,174
    
    
    
    30,153Other accounts payable
    
    
    59,689
    
    
    
    51,519$
    385,286
    
    
    
    427,084
 11)
    
    Retirement Plans and Other Employee BenefitsThe Association participates in the Financial Institutions Retirement Fund, a tax-qualified
pension trust, which covers all eligible employees. The Plan meets the criteria of a
multiemployer pension plan as defined in Financial Accounting Standards Board Statement No.
87, Employers Accounting for Pensions and as such, does not make separate actuarial
valuations with respect to each employer, nor does it segregate plan assets. The practice
with respect to multiemployer plans has been to accept employers contributions that are paid
as its expense for accounting purposes. Contributions of $291,038, $211,753 and $157,362 were
paid and expensed by the Association for the years ended June 30, 2005, 2004 and 2003,
respectively.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 $43,205, $43,077 and $37,734 for the years ended June
30, 2005, 2004 and 2003, respectively.
 40




---



##### 



12)
    
    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. The
following is an analysis of the stock option activity for each of the years in the three year
period ended June 30, 2005 and the stock options outstanding at the end of the respective
periods:
 Number
    
    
    Exercise PriceOptions
    
    of Shares
    
    
    Per Share
    
    
    TotalOutstanding at June 30, 2002
    
    
    8,625
    
    
    
    10.00-16.25
    
    
    
    97,031Granted
    
    
    0Exercised
    
    
    (8,625
    )
    
    
    (10.00-16.25
    )
    
    
    (97,031
    )Outstanding at June 30, 2003
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    0Exercised
    
    
    0Outstanding at June 30, 2004
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    0Exercised
    
    
    0Outstanding at June 30, 2005
    
    
    
    
    
    $
    
    
    
    $
    Options available for future
grants at June 30, 2005
    
    
    6,900
    Years Ended June 30,2005
    
    
    2004
    
    
    2003Net income (as reported)
    
    $
    1,202,549
    
    
    
    1,042,668
    
    
    
    690,183Pro forma net income
    
    
    1,202,549
    
    
    
    1,042,668
    
    
    
    690,183Earnings per share  diluted (as reported)
    
    $
    3.23
    
    
    
    2.80
    
    
    
    1.88Pro forma diluted earnings per share
    
    
    3.23
    
    
    
    2.80
    
    
    
    1.88
  41




---



##### 



13)
    
    Income TaxesSavings and loan associations are required to account for bad debts for federal income tax
purposes on the same basis as commercial banks for tax years beginning after December 31,
1995. The pre-1988 reserve provisions are subject to recapture requirements if the
Association no longer qualifies as a savings and loan association. Tax bad debt deductions
accumulated prior to 1988 by the Association and included in retained earnings total
approximately $1,100,000. No deferred income taxes have been provided for these bad debt
deductions and no recapture of these amounts is anticipated.
 Years Ended June 30,2005
    
    
    2004
    
    
    2003Current
    
    $
    596,697
    
    
    
    529,072
    
    
    
    362,448Deferred
    
    
    27,417
    
    
    
    (8,548
    )
    
    
    (175
    )$
    624,114
    
    
    
    520,524
    
    
    
    362,273
  Years Ended June 30,2005
    
    
    2004
    
    
    2003Statutory federal income tax rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %Other
    
    
    .2
    
    
    
    (.7
    )
    
    
    .4Effective income tax rate
    
    
    34.2
    %
    
    
    33.3
    %
    
    
    34.4
    %
  Years Ended June 30,2005
    
    
    2004
    
    
    2003Loan fees net of costs
    
    $
    1,863
    
    
    
    3,216
    
    
    
    14,397Depreciation
    
    
    3,296
    
    
    
    (2,971
    )
    
    
    5,374FHLB stock dividends
    
    
    20,978
    
    
    
    22,304
    
    
    
    17,374Book loan loss provision less than
(in excess of) tax deduction
    
    
    813
    
    
    
    (16,970
    )
    
    
    (20,162
    )Recapture of bad debt reserve
    
    
    
    
    
    
    
    
    
    
    (11,992
    )Mortgage servicing rights
    
    
    467
    
    
    
    (14,127
    )
    
    
    (5,166
    )$
    27,417
    
    
    
    (8,548
    )
    
    
    (175
    )
 42




---



##### 



14)
    
    Regulatory Capital RequirementsThe Association is subject to various regulatory capital requirements administered by the
federal banking agencies. Failure to meet minimum total requirements can initiate certain
mandatory and possible additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Associations financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt correction action, the
Association must meet specific capital guidelines that involve quantitative measures of the
Associations assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Associations capital amounts and classification are
also subject to quantitative judgments by the regulators about components, risk weightings,
and other factors.Quantitative measures established by regulation to ensure capital adequacy require all
savings institutions to maintain minimum amounts and ratios, set forth in the table below of
the total risk-based, tangible and core capital, as defined in the regulations. Management
believes, as of June 30, 2005, that the Association meets all capital adequacy requirements
to which it is subject.The Association, according to federal regulatory standards, is well-capitalized under the
regulatory framework for prompt corrective action. To be categorized as adequately
capitalized, the Association must maintain minimum total risk-based, tangible, and core
ratios as set forth in the table. There are no conditions or events since that notification
that management believes have changed the institutions category.At June 30, 2005 and 2004, the Associations actual capital amounts and ratios, minimum
amounts and ratios required for capital adequacy purposes and minimum amounts and ratios to
meet the well-capitalized criteria under prompt corrective action provisions, are as follows:
 To Be Well-Capitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioJune 30, 2005Tangible
    
    $
    10,904,534
    
    
    
    7.83
    %
    
    $
    2,088,000
    
    
    
    1.50
    %
    
    $
    N/A
    
    
    
    N/A
    %Core
    
    
    10,904,534
    
    
    
    7.83
    
    
    
    4,176,000
    
    
    
    3.00
    
    
    
    6,960,000
    
    
    
    5.00Risk-based
    
    
    11,361,084
    
    
    
    14.27
    
    
    
    6,371,000
    
    
    
    8.00
    
    
    
    7,963,000
    
    
    
    10.00June 30, 2004Tangible
    
    $
    10,412,617
    
    
    
    6.77
    %
    
    $
    2,307,000
    
    
    
    1.50
    %
    
    $
    N/A
    
    
    
    N/A
    %Core
    
    
    10,412,617
    
    
    
    6.77
    
    
    
    4,614,000
    
    
    
    3.00
    
    
    
    7,689,000
    
    
    
    5.00Risk-based
    
    
    10,857,089
    
    
    
    13.35
    
    
    
    6,505,000
    
    
    
    8.00
    
    
    
    8,131,000
    
    
    
    10.00
 43




---



##### 



14)
    
    Regulatory Capital Requirements (continued)
 Tangible
    
    
    Core
    
    
    Risk-basedCapital
    
    
    Capital
    
    
    CapitalJune 30, 2005Stockholders equity
    
    $
    11,126,868
    
    
    
    11,126,868
    
    
    
    11,126,868Unrealized gain on securities
available for sale, net of taxes
    
    
    (216,573
    )
    
    
    (216,573
    )
    
    
    (216,573
    )Retained mortgage servicing rights
    
    
    (5,761
    )
    
    
    (5,761
    )
    
    
    (5,761
    )General loss allowances
    
    
    
    
    
    
    
    
    
    
    456,550Regulatory capital computed
    
    $
    10,904,534
    
    
    
    10,904,534
    
    
    
    11,361,084
  Stockholders equity
    
    $
    12,696,682Less Company stockholders equity not available
for regulatory capital
    
    
    (1,569,814
    )Stockholders equity of the Association
    
    $
    11,126,868
 Tangible
    
    
    Core
    
    
    Risk-basedCapital
    
    
    Capital
    
    
    CapitalJune 30, 2004Stockholders equity
    
    $
    10,584,915
    
    
    
    10,584,915
    
    
    
    10,584,915Unrealized gain on securities
available for sale, net of taxes
    
    
    (166,674
    )
    
    
    (166,674
    )
    
    
    (166,674
    )Retained mortgage servicing rights
    
    
    (5,624
    )
    
    
    (5,624
    )
    
    
    (5,624
    )General loss allowances
    
    
    
    
    
    
    
    
    
    
    459,472Direct equity investments
    
    
    
    
    
    
    
    
    
    
    (15,000
    )Regulatory capital computed
    
    $
    10,412,617
    
    
    
    10,412,617
    
    
    
    10,857,089
  Stockholders equity
    
    $
    11,742,314Less Company stockholders equity not available
for regulatory capital
    
    
    (1,157,399
    )Stockholders equity of the Association
    
    $
    10,584,915
 44




---



##### 



15)
    
    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.16)
    
    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 $2,834,450 at June 30, 2005 represents an amount
which the Association plans to fund within the normal commitment period of 60 to 90 days. Of
this amount, $1,863,250 are fixed rate commitments with rates ranging from 5.25% to 6.00% and
$971,200 are in adjustable rate commitments. 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 $3,605,000
at June 30, 2005. In addition, the Association has approved, but unused, credit card lines of
credit amounting to approximately $524,000. The Association has also issued outstanding
letters of credit totaling $85,330.17)
    
    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.18)
    
    Subsequent EventAt the July, 2005 Board of Directors meeting, the Company declared a quarterly dividend of
$.22 per share, totaling $81,972, payable August 18, 2005 to shareholders of record as of
August 8, 2005.
 45




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##### 



19)
    
    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, 2005 and
2004 are as follows:
 June 30, 2005Carrying
    
    
    FairAmount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    36,709,593
    
    
    
    36,709,593Investment securities, available for sale
    
    
    1,310,937
    
    
    
    1,310,937Mortgage-backed securities, held to maturity
    
    
    1,920,221
    
    
    
    1,938,460Loans receivable, gross
    
    
    94,920,558
    
    
    
    96,109,000Accrued interest receivable
    
    
    367,351
    
    
    
    367,351Financial liabilities:Deposits
    
    
    124,836,132
    
    
    
    124,601,000Accrued interest payable
    
    
    8,377
    
    
    
    8,377
 June 30, 2004Carrying
    
    
    FairAmount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    50,496,629
    
    
    
    50,496,629Investment securities, available for sale
    
    
    1,234,375
    
    
    
    1,234,375Mortgage-backed securities, held to maturity
    
    
    2,941,517
    
    
    
    2,980,932Loans receivable, gross
    
    
    94,723,299
    
    
    
    94,995,000Accrued interest receivable
    
    
    359,702
    
    
    
    359,702Financial liabilities:Deposits
    
    
    140,436,704
    
    
    
    140,396,000Accrued interest payable
    
    
    7,968
    
    
    
    7,968
 46




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##### 



20)
    
    Condensed Parent Company Only Financial StatementsThe following condensed statements of financial condition, as of June 30, 2005 and 2004 and
condensed statements of income and cash flows for the years ended June 30 2005, 2004 and 2003
for Midland Capital Holdings Corporation should be read in conjunction with the consolidated
financial statements and the notes thereto.
  June 30,2005
    
    
    2004AssetsCash and cash equivalents
    
    $
    1,568,662
    
    
    
    1,143,111Loans receivable
    
    
    5,343
    
    
    
    14,893Equity investment in the Association
    
    
    10,895,835
    
    
    
    10,403,781Prepaid expenses and other assets
    
    
    6
    
    
    
    1,55912,469,846
    
    
    
    11,563,344Liabilities and Stockholders EquityLiabilities:Accrued taxes and other liabilities
    
    
    4,197
    
    
    
    2,164Stockholders Equity:Common stock
    
    
    3,726
    
    
    
    3,726Additional paid-in capital
    
    
    3,381,120
    
    
    
    3,381,120Retained earnings
    
    
    9,080,803
    
    
    
    8,176,334Total stockholders equity
    
    
    12,465,649
    
    
    
    11,561,180$
    12,469,846
    
    
    
    11,563,344
  Years Ended June 30,2005
    
    
    2004
    
    
    2003Interest income
    
    $
    10,460
    
    
    
    11,281
    
    
    
    18,399Non-interest income
    
    
    29
    
    
    
    
    
    
    
    Non-interest expense
    
    
    70,345
    
    
    
    76,147
    
    
    
    88,124Net loss before income tax benefit
and equity in earnings of subsidiaries
    
    
    (59,856
    )
    
    
    (64,866
    )
    
    
    (69,725
    )Benefit from income taxes
    
    
    20,351
    
    
    
    22,054
    
    
    
    23,706Net loss before equity in earnings
of subsidiaries
    
    
    (39,505
    )
    
    
    (42,812
    )
    
    
    (46,019
    )Equity in earnings of subsidiaries
    
    
    1,242,054
    
    
    
    1,085,480
    
    
    
    736,202Net income
    
    $
    1,202,549
    
    
    
    1,042,668
    
    
    
    690,183
 47




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##### 



20)
    
    Condensed Parent Company Only Financial Statements (continued)
  Years Ended June 30,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income
    
    $
    1,202,549
    
    
    
    1,042,668
    
    
    
    690,183Equity in earnings of the Association
    
    
    (1,242,054
    )
    
    
    (1,085,480
    )
    
    
    (736,202
    )Decrease in prepaid expenses
and other assets
    
    
    1,553
    
    
    
    6,544
    
    
    
    20,343Increase (decrease) in accrued taxes
and other liabilities
    
    
    2,033
    
    
    
    (1,177
    )
    
    
    (1,399
    )Net cash provided for
operating activities
    
    
    (35,919
    )
    
    
    (37,445
    )
    
    
    (27,075
    )Cash flows from investing activities:Loan disbursements
    
    
    
    
    
    
    (15,000
    )
    
    
    Loan repayments
    
    
    9,550
    
    
    
    107
    
    
    
    Net cash provided by (for)
investing activities
    
    
    9,550
    
    
    
    (14,893
    )
    
    
    Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    97,031Dividends received from Association
    
    
    750,000
    
    
    
    100,000
    
    
    
    610,000Dividends paid on common stock
    
    
    (298,080
    )
    
    
    (253,368
    )
    
    
    (220,454
    )Net cash provided by (for)
financing activities
    
    
    451,920
    
    
    
    (153,368
    )
    
    
    486,577Net change in cash and cash equivalents
    
    
    425,551
    
    
    
    (205,706
    )
    
    
    459,502Cash and cash equivalents at
beginning of year
    
    
    1,143,111
    
    
    
    1,348,817
    
    
    
    889,315Cash and cash equivalents at
end of year
    
    $
    1,568,662
    
    
    
    1,143,111
    
    
    
    1,348,817
 48




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##### 



Officers and Directors
 Officers
    
    DirectorsPaul Zogas
    
    Paul ZogasPresident,
Chief Executive Officer
and Chief Financial Officer of
the Company and the Association
    
    President, Chief Executive Officer,
Chief Financial Officer and
Chairman of the Board for
the Company and the AssociationCharles Zogas
    
    Charles ZogasExecutive Vice President,
Chief Operating Officer,
Secretary and Treasurer of
the Company and the Association
    
    Executive Vice President,
Chief Operating Officer,
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
    
    Algerd BrazisController of the Company
and the Association
    
    Retired businessman and
Director, Knights of Lithuania
Mid-America DistrictDonna Chmiel
    
    Michael J. KukanzaInternal Auditor of the
Company and the Association
    
    Self-employed private investorLois Gajdorus
Assistant Vice President
of the Association
    
    Jonas Vaznelis
Retired businessman and Committee
member of the Board of Zoning Appeals
for Beverly Shores, Indiana.Linda Kolecki
Assistant Vice President
of the Association
 49




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##### 



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