U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549FORM 10-KSB/A

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
        For the Fiscal Year Ended June 30, 2001

OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the transition period from ________________to________________





PART I

Item 1.      Description of Business
GeneralSobieski Bancorp, Inc.

The loan committee, comprised of three Bank's directors serving on a three-month rotating basis, has authority of the Bank's board of directors to approve loans up to $250,000; any loans over $250,000 must be approved by the entire Board of Directors.
     Under regulations of the Office of Thrift Supervision (the "OTS"), the Bank's loans-to-one-borrower limit is generally limited to the greater of 15% of unimpaired capital and surplus or $500,000.  See "Regulation - Federal Regulation of Savings Associations".  At June 30, 2001, the maximum amount which the Bank could loan to any one borrower and the borrower's related entities was $1,577,000.  At June 30, 2001, the Bank had no loans with aggregate outstanding balances in excess of this amount.  At that date, the Bank's largest lending relationship to a single borrower or group of related borrowers totaled $1,346,000.  As of June 30, 2001, this loan was performing in accordance with its terms.
     All of the Bank's lending is subject to its written underwriting standards and loan origination procedures.  Decisions on loan applications are made on the basis of detailed applications and property valuations.  Properties securing real estate loans made by Sobieski Bank are generally appraised by Board-approved independent appraisers.  In the loan approval process, Sobieski Bank assesses the borrower's ability to repay the loan, the adequacy of the proposed collateral, the employment stability of the borrower, the credit worthiness of the borrower as well as the strength of the personal guarantor of business loan requests.
     The Bank requires evidence of marketable title and lien position or appropriate title insurance (except on certain home equity loans) on all loans secured by real property.  The Bank also requires fire and extended coverage casualty insurance in amounts at least equal to the lesser of the principal amount of the loan or the value of improvements on the property, depending on the type of loan.  As required by federal regulations, the Bank also requires flood insurance to protect the property securing its interest if property is located in a designated flood area.



|                          | At June 30,
|------------------------- | -----------
|                          | 2001       
|                          | Amount     
|(Dollars in Thousands)   
|One-to-four family        | $62,283    
|Commercial loans          | 19,894     
|Home equity               | 3,933      
|Other consumer loans      | 2,731      
|                          |            
|Total loans               | $88,841    
|                          |            
|                          |            
|Allowance for loan losses | (340)      
|                          |            
|Total loans, net          | $88,501    
|                          |            
|                          |            

The following table shows the composition of the Company's loan portfolio by fixed and adjustable-rate loans at the dates indicated.

|                               | At June 30,
|------------------------------ | -----------
|                               | 2001       
|                               | Amount     
|(Dollars in Thousands)        
|Fixed-Rate Loans:             
|One-to-four-family             | $54,812    
|Consumer loans                 | 1,565      
|Commercial loans               | 3,455      
|                               |            
|Total fixed-rate loans         | $59,832    
|                               |            
|Adjustable-Rate Loans:         |            
|One-to-four-family             | 7,471      
|Commercial loans               | 16,439     
|Home equity and other consumer | 5,099      
|                               |            
|Total adjustable-rate loans    | 29,009     
|                               |            
|Total loans                    | $88,841    
|                               |            
|Allowance for loan losses      | (340)      
|                               |            
|Total loans, net               | $88,501    

The following schedule illustrates the amortization schedule by contractual maturity of the Company's loan portfolio at June 30, 2001.  Loans which have adjustable or renegotiable interest rates are shown as maturing in the period during which the contract is due.  The schedule does reflect scheduled principal amortization but does not reflect the effects of possible prepayments or enforcement of due-on-sale clauses.

|Real Estate                                 |                 |                           |                                     
|------------------------------------------- | --------------- | ------------------------- | ------------------------------------
|                                            | One-Four Family | Multi-Family & Commercial | Home Equity Consumer & Deposit Loans
|                                            |                 | (Dollars in Thousands)    |                                     
|Due during the twelvemonths ending June 30, |                 |                           |                                     
|2002(1)                                     | $  1,856        | $    868                  | $   624                             
|2003                                        | 2,003           | 935                       | 677                                 
|2004                                        | 2,159           | 777                       | 736                                 
|2005 and 2006                               | 4,736           | 1,240                     | 1,540                               
|2007 to 2011                                | 15,062          | 4,020                     | 2,500                               
|2012 to 2031                                | 36,467          | -0-                       | 587                                 
|                                            |                 |                           |                                     
|Total                                       | $62,283         | $7,840                    | $6,664                              
|                                            |                 |                           |                                     
|Weighted average interest rate              | 7.44%           | 7.92%                     | 8.19%                               



The following table shows the amount of non-mortgage commercial loans outstanding as of June 30, 2001, based on remaining scheduled repayments of principal due in the periods indicated, classified according to sensitivity to changes in interest rates.



|Maturing                             | FixedRate | VariableRate | Total 
|------------------------------------ | --------- | ------------ | ------
|Within  one year                     | 599       | 3,080        | 3,679 
|After one year but within five years | 1,311     | 5,205        | 6,516 
|After five years                     | -0-       | 1,859        | 1,859 
|                                     | 1,910     | 10,144       | 12,054

The total amount of loans due after June 30, 2002 that have predetermined interest rates is $59.3 million.

One-to-Four Family Residential Mortgage and Home Equity Lending.  Residential loan originations are generated by the Bank's marketing efforts, its present customers, walk-in customers and referrals from real estate brokers.  Historically, the Bank has focused its lending efforts primarily on the origination of fixed-rate loans secured by first mortgages on owner-occupied, single-family residences in its market area.  In September 1994, the Bank began to originate adjustable rate mortgage ("ARM") loans.  At June 30, 2001, the Company's one-to-four family residential mortgage loan portfolio totaled $62.3 million, or 70.1% of the Company's gross loan portfolio.
     The Bank currently offers fixed-rate and adjustable rate mortgage and home equity loans.  For the year ended June 30, 2001, the Bank originated $15.4 million of one-to-four family real estate related loans.  At June 30, 2001, the Bank had $7.5 million of one-to-four family adjustable-rate mortgage loans, and $54.8 million of one-to-four family fixed-rate mortgage loans.
     The Bank currently originates fixed-rate loans with terms of maturity up to 30 years.  Interest rates charged on these fixed-rate loans are priced on a regular basis according to market conditions.  The Bank also offers adjustable-rate mortgage loans at rates and on terms determined in accordance with market and competitive factors.  The Bank currently originates one-to-five year ARM loans, with up to a 30-year amortization schedule, with a stated interest rate margin over the one-year Constant Maturity Treasury Index.  These loans provide for a 1.5% maximum annual cap and a cap over the life of the loan of 4.50%.  As a consequence of using caps, the interest rates on these loans may not be as rate sensitive as is the Bank's cost of funds.  Currently, all ARM loans originated provide for an interest rate floor below which the interest rate charged may not fall.
     Borrowers with adjustable-rate mortgage loans are qualified at the fully indexed rate.  Adjustable-rate loans decrease the risk to the Bank associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower may rise to the extent permitted by the terms of the loan, thereby increasing the potential for default.  At the same time, the market value of the underlying property may be adversely affected by higher interest rates.
     
     Currently, Sobieski Bank will loan up to 80% of the appraised value on fixed-rate conventional mortgages of the security property without private mortgage insurance ("PMI") on owner occupied, one-to-four family loans and up to 97% with PMI on the sale price of such security properties.  Sobieski will also loan up to 85% of the appraised value on adjustable rate mortgages on the security property without private mortgage insurance.  Residential loans do not include prepayment penalties, are not assumable and do not produce negative amortization.  Real estate loans originated by the Bank contain a "due on sale" clause allowing the Bank to declare the unpaid principal balance due and payable upon the sale of the security property.
     The loans currently originated by the Bank are typically underwritten and documented pursuant to the guidelines of Freddie Mac.  The Bank currently retains some loans originated in its portfolio for selling originated-for-sale loans to primarily Freddie Mac.

The Bank also originates second mortgage and home equity lines of credit.  At June 30, 2001, the Bank's second mortgage loans and home equity loans totaled $325,000 and $3.9 million, respectively.  Second mortgage loans have fixed or variable rates of interest and have terms up to 15 years.  Home equity loans have adjustable interest rates and terms of up to 12 years.  These loans are underwritten using similar guidelines as for single family mortgage lending.
     Residential Construction Lending.  To a limited extent, the Bank also originates loans for the construction of one-to-four family residences.  At June 30, 2001, the Bank's construction loan portfolio totaled $0.8 million, or 0.9% of its gross loan portfolio.  As of that date, all of these loans were secured by property located within the Bank's market area.
     All of the construction loans to individuals for their residences are structured to be converted to permanent loans at the end of the construction phase, which typically runs from four to six months.  These construction loans have rates and terms comparable to one-to-four family loans offered by the Bank, except that during the construction phase, the borrower pays interest only.  The maximum loan-to-value ratio of owner occupied single-family construction loans is 80% without PMI and 95% with PMI.  Residential construction loans are generally underwritten pursuant to the same guidelines for originating permanent residential loans.
     Construction loans are obtained primarily from walk-in customers and builder and realtor referrals.  The application process includes submission to the Bank of plans and costs of the project to be constructed.  These items are used to determine the appraised value of the subject property.  Loans are based on the lesser of current appraised value or the cost of construction (land plus building).
     The Bank's construction loan agreements generally provide that loan proceeds are disbursed in increments as construction progresses.  The Bank periodically reviews the progress of the underlying dwelling before disbursements are made.  Nevertheless, construction lending is generally considered to involve a higher level of credit risk than one-to-four family residential lending since the risk of loss on construction loans is dependent largely upon the accuracy of the initial estimate of the individual property's value upon completion of the project and the estimated cost (including interest) of the project.
     Consumer Lending.  Currently, the Bank is making consumer loans.  The product line includes personal lines of credit, overdraft protection, automobile, marine, motorcycle, and recreational vehicle loans.  The revolving and overdraft lines of credit feature variable rates of interest with the remaining product lines featuring fixed rates having repayment terms of one to six years.  As of June 30, 2001, consumer loans including home equity loans referred to above totaled $6.7 million.  
     The underwriting standards employed by the Bank for consumer loans include a determination of the applicant's payment history on other debts and an assessment of the borrower's ability to meet payments on the proposed loan along with their existing obligations.  In addition to the creditworthiness of the applicant, the underwriting process also includes a comparison of the value of the security, if any, in relation to the proposed loan amount.
     Consumer loans may entail greater risk than residential mortgage loans, particularly in the case of consumer loans which are unsecured or secured by rapidly depreciable assets such as automobiles.  In such cases, any repossessed collateral for defaulted consumer loans may not provide adequate sources of repayment for the outstanding loan balances as a result of the greater likelihood of damage, loss, or depreciation.  In addition, consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse personal circumstances.  Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.
     Commercial Business Lending.Commercial adjustable-rate loans at June 30, 2001 totaled $16.4 million or 18.5% of the Company's gross loan portfolio.  These loans consist of participation certificates guaranteed by the SBA, participations with other financial institutions in commercial real estate and non-real estate loans and internally originated commercial real estate and non-real estate loans.  Unlike residential mortgage loans, which generally are made on the basis of the borrower's ability to make repayment from his or her employment and other income, and which are secured by real property whose value tends to

be more easily ascertainable, commercial business loans are generally of higher risk and typically are made on the basis of the borrower's ability to make repayment from the cash flow of the borrower's business.  As a result, the ability of funds for the repayment of commercial business loans may be substantially dependent on the success of the business itself (which, in turn, may be dependent upon the general economic environment.)
     Fixed-rate commercial business loans at June 30, 2001 totaled $3.5 million or 3.9% of the Company's gross loan portfolio.  These loans are originated internally or purchased participations originated by other financial institutions.
     Commercial loans are predominately set to re-price on a basis that ranges from monthly through 5 years.  Due to the nature of fixed-asset commercial lending and larger dollar amounts associated with this type of transaction, adjustable rate agreements commonly utilized are mutually beneficial to the borrower, by paying interest rates that reflect current market climate, and to the lending institution, particularly in regard to interest rate risk management.Originations and Purchases of Loans     Loan originations are developed from continuing business with depositors and borrowers, soliciting realtors, builders, walk-in customers and small business entities.
     While the Bank originates both adjustable-rate and fixed-rate loans, its ability to originate loans to a certain extent is dependent upon the relative customer demand for loans in its market, which is affected by the interest rate environment, among other factors.  For the year ended June 30, 2001, the Bank originated $18.1 million in loans, as compared to $28.0 million for the year ended June 30, 2000.  Originations during fiscal 2001 consisted of $15.4 million of one-to-four family real estate loans, and $2.7 million in nonresidential real estate and commercial loans.
     Loan originations during the year ended June 30, 2001 were lower than the prior year.  The Bank believes the decrease was caused by a very volatile interest rate environment throughout the period and particularly the higher rate environment experienced for the first half of the current fiscal period.  Historically, the Bank generally retained all its loan originations in its portfolio with the exception of a $5.3 million loan sale in the secondary market during fiscal 2000.  During the fiscal year, sales of loans to Freddie Mac totaled $11.3 million.  Both the current and prior year loan sales are part of interest risk management strategy.

In order to supplement its lending activities, the Bank invests funds in mortgage-backed securities.  See Note 3 of the Notes to Consolidated Financial Statements.  Virtually all of the mortgage-backed securities purchased by the Bank have adjustable interest rate features.  See "Business-Investment Activities".
     The following table shows the loan origination and purchase activities of the Bank for the periods indicated.

|                                                 | Year Ended June 30,
|------------------------------------------------ | -------------------
|                                                 | 2001               
|                                                 |                    
|Originations:                                    |                    
|One-to-four family real estate and home equity   | $15,418            
|Deposit loans                                    | 197                
|Non-residential real estate and commercial loans | 2,489              
|                                                 |                    
|Total originations                               | 18,104             
|                                                 |                    
|Purchases:                                       |                    
|Purchases of commercial business loans           | -0-                
|                                                 |                    
|Sales:                                           |                    
|One-to-four family loans                         | (11,339)           
|                                                 |                    
|Repayments:                                      |                    
|Loans                                            | (11,005)           
|Other, net                                       | (540)              
|                                                 |                    
|Total repayments                                 | 11,545             
|                                                 |                    
|Net (decrease) increase                          | (4,780)            

Asset Quality
     General.When a borrower fails to make a required payment on a loan, the Bank attempts to cause the delinquency to be cured by contacting the borrower.  In the case of loans secured by real estate, a reminder notice is sent to the borrower on all loans over 15 days delinquent.  When a loan becomes 15 days delinquent, late charges are assessed and a notice of late charges is sent to the borrower.  An additional late notice is sent to the borrower if the delinquency is not cured within 30 days of the required payment date.  If the loan becomes 60 days delinquent and the borrower has not attempted to contact the Bank to arrange an acceptable plan to bring the loan current, the borrower is contacted by telephone.  If the borrower contacts the Bank with a reasonable explanation for the delinquency, the Bank generally will attempt to reach workable accommodations with the borrower to bring the loan current.  All proposed workout arrangements are evaluated on a case by case basis, based on the best judgement of the Bank's management, considering, among other things, the borrower's past credit history, current financial status, cooperativeness, future prospects and

the reason for the delinquency.  If the loan is more than 90 days delinquent, the loan will be referred to the Bank's legal counsel for collection.  In all cases, if the Bank believes that its collateral is at risk and added delay would place the collectibility of the balance of the loan in further question, management may refer loans for collection even sooner than the 90 days described above.
     
     When a loan becomes delinquent 90 days or more, the Bank will place the loan on non-accrual status.  The loan will remain on a non-accrual status as long as the loan is 90 days delinquent.
     The following table sets forth the Bank's delinquencies by type, by amount and by percentage of type as of June 30, 2001.

|Loans Delinquent For:
|---------------------
|                     
|                     
|                     
|Real estate:         
|One-to four family   
|Home equity          
|Commercial           
|                     
|Total                
|                     

Non-Performing Assets.  The table below sets forth the amounts and categories of non-performing assets.  Loans are placed on non-accrual status when the collection of principal and/or interest becomes doubtful.  Foreclosed assets include assets acquired in settlement of loans.  The Bank had no accruing loans more than 90 days delinquent at June 30, 2001.

|                                           | At June 30,
|------------------------------------------ | -----------
|                                           | 2001       
|                                           |            
|Non-accruing loans:                        |            
|One-to-four family                         | $   121    
|Commercial loans                           | -0-        
|Consumer                                   | 2          
|                                           |            
|Total                                      | 123        
|                                           |            
|Restructured loans                         | $1,097     
|                                           |            
|Accruing over 90 days past due             | -0-        
|                                           |            
|Foreclosed assets:                         |            
|One-to-four family                         | 68         
|Other                                      | 958        
|                                           |            
|Total                                      | 1,026      
|                                           |            
|Total non-performing and foreclosed assets | $2,246     
|                                           |            
|Total as a percentage of total assets      | 1.75%      

For the year ended June 30, 2001 gross interest income which would have been recorded had the non-accruing loans been current in accordance with their original terms amounted to $3,700.  The amounts of interest income included in net income on these loans was $7,700.

Other Loans of Concern.During the quarter ended June 30, 2000, the Company became aware of certain circumstances related to a loan to a single borrower in which the Bank had purchased a participation interest.  The borrower has discontinued principal and interest payments on the loan and had filed for Chapter 11 bankruptcy protection.  Under the terms of a plan, which had been accepted by the lead participants, borrower and the bankruptcy court, the collateral of this loan was surrendered to the lead participant to be sold. At June 30, 2000, management had classified this loan, totaling $1,013,175, as impaired.  On July 25, 2001, the collateral for this loan was sold.  Under terms of the sale, the Company participated in financing and will  recover the full outstanding principal balance.

At June 30, 2001, management classified a loan participation interest in the amount of $1,097,113 as impaired due to the restructuring of the payments due from the borrower.  The  Company became aware of subsequent events occurring on August 22, 2001 when the borrower filed for Chapter 11 bankruptcy protection.  Management does not expect any losses on this loan as the collateral is currently in use to support debt payments and appears to have sufficient market value to cover the outstanding loan balance.
     Classified Assets.Federal regulations provide for the classification of loans and other assets, such as debt and equity securities considered by the OTS to be of lesser quality, as "substandard", "doubtful" or "loss".  An asset is considered "substandard" if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.  "Substandard" assets include those characterized by the "distinct possibility" that the insured institution will sustain "some loss" if the deficiencies are not corrected.  Assets classified as "doubtful" have all of the weaknesses inherent in those classified "substandard" with the added characteristic that the weaknesses present make "collection or liquidation in full" on the basis of currently existing facts, conditions and values, "highly questionable and improbable."  Assets classified as "loss" are those considered "uncollectable" and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.
     When an insured institution classifies problem assets as either substandard or doubtful, it may establish specific allowances for loan losses in an amount deemed prudent by management.  General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets.  When an insured institution classifies problem assets as "loss", it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset as classified or to charge-off such amount.  An institution's determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, who may order the establishment of additional general or specific loss allowances.
     In connection with the filing of its periodic reports with the OTS and in accordance with its classification of assets policy, the Bank regularly reviews problem loans and real estate acquired through foreclosure to determine whether such assets require classification in accordance with applicable regulations.  On the basis of management's review of its loans, at June 30, 2001, the Bank had classified a total of $123,000 of its loans as substandard, none as doubtful and none as loss.  At June 30, 2001, total classified loans comprised $123,000 or 0.9% of the Company's capital and 0.10% of the Company's total assets.

Allowance for Loan Losses.The allowance for loan losses is established through a provision for loan losses based on management's evaluation of the risk inherent in its loan portfolio and changes in the nature and volume of its loan activity, including those loans which are being specifically monitored by management.  Such evaluation, which includes a review of loans for which full collectibility may not be reasonably assured, considers, among other matters, the loan classifications, discussed above, the estimated fair value of the underlying collateral, economic conditions, historical loan loss experience, the amount of loans outstanding and other factors that warrant recognition in providing for an adequate loan loss allowance.  A significant factor considered in the unallocated allowance was the historically low level of loans other than one-to-four family real estate loans.  Management recognizes that as loan growth continues additional provisions to the allowance may be required.
     Real estate acquired in settlement of loans is initially recorded at fair market value at the date of acquisition, establishing a new cost basis by a charge to the allowance for loan losses, and is subsequently carried at the lower of cost or net realizable value.  Costs of improvements made to facilitate sales are capitalized; costs of holding the property are charged to expense.  It is Sobieski's policy to provide valuation allowances for estimated losses whenever, based upon management's evaluation, a significant and permanent decline in value occurs.
     Although management believes that it uses the best information available to determine the allowance, unforeseen market conditions could result in adjustments and net earnings could be significantly affected if circumstances differ substantially from the assumptions used in making the final determination.  Future additions to the Bank's allowance for loan losses will be the result of periodic loan, property and collateral reviews and thus cannot be predicted in advance.  In addition, federal regulatory agencies, as an integral part of the examination process, periodically review the Bank's allowance for loan losses.  Such agencies may require the Bank to recognize additions to the allowance level based upon their judgement of the information available to them at the time of their examination.  At June 30, 2001, the Bank had a total allowance for losses on loans of $340,000 representing 27.86% of total non-performing loans and .38% of the Bank's gross loans.  See Note 4 of the Notes to Consolidated Financial Statements.

The following table sets forth an analysis of the Bank's allowance for loan  losses.

|                                                                              | Year Ended June 30,
|----------------------------------------------------------------------------- | -------------------
|                                                                              | 2001               
|                                                                              |                    
|Balance at beginning of period                                                | $   395            
|                                                                              |                    
|Charge-offs:                                                                  |                    
|Commercial Loans                                                              | 88                 
|One-to-four family                                                            | 17                 
|                                                                              |                    
|Recoveries                                                                    | -0-                
|                                                                              |                    
|Provision charged to operations                                               | 50                 
|                                                                              |                    
|Balance at end of period                                                      | $   340            
|                                                                              |                    
|Ratio of net charge-offs to average
   loans outstanding during the period    | 0.12%              
|                                                                              |                    
|Ratio of net charge-offs to average
   non-perfoming assets during the period | 7.9%               

The distribution of the Company's allowance for loan losses at the dates indicated is summarized as follows:

|                     | At June 30,
|-------------------- | -----------
|                     | 2001       
|                     | Allowance  
|One-to-four family   | $  168     
|Commercial loans     | 98         
|Home equity          | 10         
|Other consumer loans | 26         
|Unallocated          | 38         
|                     |            
|Total  (2)           | $  340     



Investment Activities
     General.

As of June 30, 2001, all of the Bank's mortgage-backed securities were backed by government sponsored agency programs.  Accordingly, management believes that the Bank's mortgage-backed securities are generally resistant to credit problems.
     The Bank's mortgage-backed securities portfolio consists of securities issued under government-sponsored agency programs, including those of Fannie Mae, Freddie Mac and the Government National Mortgage Bank ("GNMA"). Fannie Mae, Freddie Mac and GNMA certificates are modified pass-through mortgage-backed securities that represent undivided interests in underlying pools of fixed-rate, or certain types of adjustable rate, predominantly single-family and, to a lesser extent, multi-family residential mortgages issued by those government-sponsored entities.  As a result, the interest rate risk characteristics of the underlying pool of mortgages, i.e., fixed rate or adjustable rate, as well as prepayment risk, are passed on to the certificate holder.  Fannie Mae and Freddie Mac generally provide the certificate holder a guarantee of timely payments of interest and ultimate collection of principal, whether or not collected.  GNMA's guarantee to the holder is timely payments of principal and interest, backed by the full faith and credit of the U.S. Government.
     Mortgage-backed securities generally yield less than the loans that underlie such securities, because of the cost of payment guarantees or credit enhancements that reduce credit risk to holders.  Since federal agency mortgage-backed securities generally carry a yield approximately 50 to 100 basis points below that of the corresponding type of residential loan (due to the implied federal agency guarantee fee and the retention of a servicing spread by the loan servicer), in the event that the proportion of the Bank's assets consisting of mortgage-backed investments increase in the future, the Bank's assets yields would be adversely affected.  Mortgage-backed securities are also more liquid than individual mortgage loans and may be used to collateralize obligations of the Bank.  In general, mortgage-backed securities issued or guaranteed by Fannie Mae and Freddie Mac are weighted at no more than 20% for risk-based capital purposes, and mortgage-backed securities issued or guaranteed by GNMA are weighted at 0% for risk-based capital purposes, compared to an assigned risk weighing of 50% to 100% for whole residential mortgage loans.
     While mortgage-backed securities carry a reduced credit risk as compared to whole loans, such securities remain subject to the risk that a fluctuating interest rate environment, along with other factors such as the geographic distribution of the underlying mortgage loans, may alter the prepayment rate of such mortgage loans and so affect the prepayment speed, and value, of such securities.  Mortgage-backed securities involve a risk that actual prepayments will differ from estimated prepayments over the life of the security which may require adjustments to the amortization of any premium or accretion of any discount relating to such instruments, thereby changing the net yield on such securities.  There is also reinvestment risk associated with the cash flows from such securities.  In addition, the market value of such securities may be adversely affected by changes in interest rates.  The adjustable rate and/or short maturity of the Bank's portfolio is designed to minimize that risk.

Investment Securities and Other Interest-Earning Assets.  At June 30, 2001, Sobieski Bank's interest-bearing deposits with financial institutions totaled $1.2 million, or .9% of total assets and certificates of deposit of other federally insured institutions totaled $1.4 million or 1.1% of total assets.
Other investment securities, consisting of U.S. Government Treasury notes, agency, municipal, and corporate debt securities, totaled $6.1 million, or 4.8% of total assets.  In addition, as of such date, the Bank had an investment of $1.8 million in FHLB stock, satisfying its requirement for membership in the FHLB of Indianapolis.  It is the Bank's general policy to purchase securities which are U.S. Government securities or federal agency obligations or other issues that are rated investment grade.  At June 30, 2001, the weighted average maturity of the securities portfolio (excluding FHLB stock) was 4.8 years.
     The Bank also invested in collateralized mortgage obligations and certain participating interests in real estate mortgage investment conduits ("REMICs") (hereinafter collectively referred to as "CMOs).  CMOs are special types of pass-through certificates in which the stream of principal and interest payments on the underlying mortgages or mortgage-backed securities is used to create classes with different maturities and, in some cases, amortization schedules, as well as a residual interest, with each such class possessing different risk characteristics.
The CMO instruments the Bank purchased are most like debt instruments because these CMO instruments have stated principal amounts and traditionally defined interest-rate terms.  Purchasers of certain other CMO instruments are entitled to the excess, if any, of the issuer's cash inflows, including reinvestment earnings, over the cash outflows for debt service and administrative expenses.  These CMO instruments may include instruments designated as residual interests and are thought to be "high risk" in that these CMO instruments could result in the loss of a portion of the original investment.  Cash flows from residual interests are extremely sensitive to prepayments and, thus, contain a high degree of interest-rate risk.

The following table sets forth the maturities of the Bank's investment portfolio at June 30, 2001.

|                                                       |                 | Maturities (In Thousands)           |                                      |               
|------------------------------------------------------ | --------------- | ----------------------------------- | ------------------------------------ | --------------
|                                                       | Within One Year | After One Year
But WithinFive Years | After Five Years
But WithinTen Years | AfterTen Years
|U.S. Treasury and U.S. Government Agency securities(1) | 434             | 786                                 | 1,294                                | 793           
|Obligations of states and political Subdivision(2)     | -0-             | 294                                 | 457                                  | 250           
|Mortgage-backed securities(3)                          | 494             | 2,314                               | 3,821                                | 15,647        
|Corporate obligations                                  | -0-             | 1,774                               | -0-                                  | -0-           
|Equity securities                                      | -0-             | -0-                                 | -0-                                  | 25            
|                                                       |                 |                                     |                                      |               
|                                                       | 928             | 5,168                               | 5,572                                | 16,715        
|                                                       |                 |                                     |                                      |               
|Weighted average yield(2)                              | 6.18%           | 6.02%                               | 6.06%                                | 6.23%         



The following table sets forth the composition of the Bank's investment and mortgage-backed securities at the dates indicated.

|                                                      | At June 30,
|----------------------------------------------------- | -----------
|                                                      | 2001       
|                                                      | BookValue  
|                                                      |            
|Investment securities:                                |            
|U.S. Government securities                            | $  1,0007  
|U.S. agency securities                                | 2,300      
|Municipal securities                                  | 1,001      
|Corporate Obligations                                 | 1,774      
|Equity securities                                     | 25         
|Subtotal                                              | 6,107      
|FHLB stock                                            | 1,776      
|Total investment securities and FHLB stock            | 7,883      
|                                                      |            
|Other interest-earning assets:                        |            
|Interest-bearing deposits with financial institutions | $   1,249  
|Certificates of Deposit                               | 1,388      
|Total other interest-earning assets                   | 2,637      
|                                                      |            
|Mortgage-backed securities:                           |            
|GNMA                                                  | $   4,876  
|FNMA                                                  | 4,068      
|FHLMC                                                 | 1,630      
|CMO's                                                 | 11,638     
|Subtotal                                              | 22,212     
|                                                      |            
|Unamortized premium, net                              | 64         
|Total mortgage-backed securities                      | $  22,276  

Sources of Funds
     General.



|                     | 2001     | 2000     | 1999    
|-------------------- | -------- | -------- | --------
|Opening balance      | $73,928  | $64,231  | $60,517 
|New deposits         | 4,661    | 9,236    | 3,061   
|Interest credited(1) | 406      | 461      | 653     
|                     |          |          |         
|Ending balance       | $78,995  | $73,928  | $64,231 
|                     |          |          |         
|Net increase         | $  5,067 | $  9,697 | $  3,714
|                     |          |          |         
|Percent increase     | 6.85%    | 15.10%   | 6.14%   

(1) Includes interest credited to passbook, NOW and money market deposit accounts, but not certificates of deposit.

The following table sets forth the dollar amount of average savings deposits and the average weighted rate paid in the various types of deposit programs offered by the Bank for the years indicated.

|                                  | 2001          | 2000            | 1999            
|--------------------------------- | ------------- | --------------- | ----------------
|                                  | AverageAmount | Percentof Total | AverageRate Paid
|Transaction and Savings Deposits: |               |                 |                 
|NOW and MMDA accounts             | $  6,504      | 8.6%            | 1.68%           
|Savings deposits                  | 12,924        | 17.2%           | 2.28%           
|                                  |               |                 |                 
|Total non-certificates            | 19,428        | 25.8%           | 2.08%           
|                                  |               |                 |                 
|Certificates                      | 55,870        | 74.2%           | 6.06%           
|                                  |               |                 |                 
|Total average deposits            | $75,298       | 100.0%          | 5.03%           

The following table shows rate and maturity information for the Bank's certificates of deposit as of June 30, 2001.



|                                  | Total                  | Percentof Total
|--------------------------------- | ---------------------- | ---------------
|                                  | (Dollars in Thousands)
|Certificate accounts maturing in: |                        |                
|12 months or less                 | $   42,550,710         | 70.7%          
|Over 12 months to 36 months       | 16,892,359             | 28.1           
|Over 36 months                    | 740,587                | 1.2            
|                                  |                        |                
|Total                             | $  60,183,656          | 100.0%         

The following table indicates the amount of the Bank's certificates of deposit of $100,000 and over by time remaining until maturity as of June 30, 2001.

|                                                 |                 | Maturity          |                    |              
|------------------------------------------------ | --------------- | ----------------- | ------------------ | -------------
|                                                 |                 | (In Thousands)    |                    |              
|                                                 | 3 monthsor less | Over 3 to6 months | Over 6 to12 months | Over 12months
|Certificates of deposit of $100,000 
    or more | 8,847           | 2,556             | 5,486              | 3,380        

Borrowings.Although deposits are the Bank's primary source of funds, the Bank may utilize FHLB advances or other borrowings to support lending activities and to assist the Banks's asset/liability management strategy when they are a less costly source of funds and may be invested at a positive interest rate spread or when the Bank desires additional capacity to fund loan demand.  At  June 30, 2001, the Bank had borrowings of $34.0 million.

The following table sets forth the primary short term borrowings for the bank.

|              | At June 30, 2001 |              | FiscalPeriod borrowings           
|------------- | ---------------- | ------------ | ----------------------------------
|              | Amount           | WeightedRate | Weighted AverageRemaining Maturity
|FHLB advances | $8,000,000       | 4.04%        | 121 days                          

Earnings, Stockholders' Equity and Dividend Information.The following table sets forth earnings, earnings related data and per share data:

|                                       | 2001                                 | 2000      | 1999     
|-------------------------------------- | ------------------------------------ | --------- | ---------
|                                       | (In thousands except per share data)
|Average stockholders' equity           | $12,916                              | $12,710   | $12,695  
|Net Income                             | $     607                            | $     667 | $     597
|Return on average assets               | .52%                                 | .60%      | .58%     
|Average equity to average total assets | 11.02%                               | 11.37%    | 12.44%   
|Return on average stockholders' equity | 4.70%                                | 5.25%     | 4.70%    
|Basic earnings per share               | $      .94                           | $    1.00 | $    0.86
|Cash dividends declared per share      | $      .32                           | $    0.32 | $    0.32
|Dividend payout percentage             | 34%                                  | 32%       | 37%      

Service Corporation Activities

Banks on a case-by-case basis.
     The capital regulations require tangible capital of at least 1.5% of adjusted total assets (as defined by regulation).  Tangible capital generally includes common stockholders' equity and retained income, and certain noncumulative perpetual preferred stock and related income and excludes unrealized appreciation or depreciation on securities available for sale.  In addition, all intangible assets, other than a limited amount of purchased mortgage-servicing rights, must be deducted from tangible capital.  At June 30, 2001, the Bank did not have any intangible assets.
     The OTS regulations establish special capitalization requirements for savings Banks that own subsidiaries.  Under these regulations certain subsidiaries are consolidated for capital purposes and others are excluded from assets and capital.  In determining compliance with the capital  requirements, all subsidiaries engaged solely in activities permissible for national banks or engaged in certain other activities solely as agent for its customers are "includable" subsidiaries that are consolidated for capital purposes in proportion to the Bank's level of ownership, including the assets of includable subsidiaries in which the Bank has a minority interest that is not consolidated for GAAP purposes.  For excludable subsidiaries, the debt and equity investments in such subsidiaries are deducted from assets and capital.  At June 30, 2001, the Bank did not have any active subsidiaries.
     At June 30, 2001, the Bank had tangible capital of $10.1 million, or 8.0% of adjusted total assets, which is approximately $8.3 million above the minimum requirement of 1.5% of adjusted total assets in effect on that date.
     The capital standards also require core capital equal to at least 3% of adjusted total assets (as defied by regulation).  Core capital generally consists of tangible capital plus certain intangible assets, including supervisory goodwill (which is phased-out over a five-year period) and a limited amount of purchased credit card relationships.  As a result of the prompt corrective action provisions of FDICIA discussed below, however, a savings Bank must maintain a core capital ratio of at least 4% to be considered adequately capitalized unless its supervisory condition is such to allow it to maintain a 3% ratio.  At June 30, 2001, the Bank had no intangible assets, which were subject to these tests.
     At June 30, 2001, the Bank had core capital of $10.1 million, or 8.0% of adjusted total assets, which is $5.1 million above the minimum leverage ratio requirement of 4% as in effect on that date.
     The OTS risk-based requirement requires savings Banks to have total capital of at least 8% of risk-weighted assets.  Total capital consists of core capital, as defined above and supplementary capital.  Supplementary capital consists of certain permanent and maturing capital instruments that do not qualify as core capital and general valuation loan and lease loss allowances up to a maximum of 1.25% or risk-weighted assets.  Supplementary capital may be used to satisfy the risk-based requirement only to the extent of core capital.  At June 30, 2001, the Bank had no capital instruments that qualify as supplementary capital and $340,000 of general loss reserves, which was less than 1.25% of risk-weighted assets.
     In determining the amount of risk-weighted assets, all assets, including certain off-balance

sheet items, will be multiplied by a risk weight, ranging from 0% to 100%, based on the risk inherent in the type of asset.  For example, the OTS has assigned a risk weight of 50% for prudently underwritten permanent one-to-four family first lien mortgage loans not more than 90 days delinquent and having a loan to value ratio of not more than 80% at origination unless insured to such ratio by an insurer approved by the FNMA or FHLMC.
     On June 30, 2001, the Bank had risk-based capital of $10.5 million (including $10.1 million in core capital and $340,000 in general loss reserves) and risk-weighted assets of $67.7 million or total capital of 15.5% of risk-weighted assets.  This amount was $5.1 million above the 8% requirement in effect on that date.
     The OTS and the FDIC are authorized and, under certain circumstances required, to take certain actions against Banks that fail to meet their capital requirements.  The OTS is generally required to take action to restrict the activities of an "undercapitalized Bank" (generally defined to be one with less than either a 4% core capital ratio, a 4% Tier 1 risk-based capital ratio or an 8% risk-based capital ratio).  Any such Bank must submit a capital restoration plan and until such plan is approved by the OTS may not increase its assets, acquire another institution, establish a branch or engage in any new activities, and generally may not make capital distributions.  The OTS is authorized to impose the additional restrictions, discussed below, that are applicable to significantly undercapitalized Banks.
     As a condition to the approval of the capital restoration plan, any company controlling an undercapitalized Bank must agree that it will enter into a limited capital maintenance guarantee with respect to the institution's achievement of its capital requirements.
     Any savings Bank that fails to comply with its capital plan or is "significantly undercapitalized" (i.e. Tier 1 risk-based or core capital ratios of less than 3% or a risk-based capital ratio of less than 6%) must be made subject to one or more of additional specified actions and operating restrictions mandated by FDICIA.  These actions and restrictions include requiring the issuance of additional voting securities; limitations on asset growth; mandated asset reduction; changes in senior management; divestiture, merger or acquisition of the Bank; restrictions on executive compensation; and any other action the OTS deems appropriate.  A Bank that becomes "critically undercapitalized"(i.e., a tangible capital ratio of 2% or less) is subject to further mandatory restrictions on its activities in addition to those applicable to significantly undercapitalized Banks.  In addition, the OTS must appoint a receiver (or conservator with the concurrence of the FDIC) for a savings Bank, with certain limited exceptions, within 90 days after it becomes critically undercapitalized.
     Any undercapitalized Bank is also subject to other possible enforcement actions by the OTS or the FDIC.  Such actions could include a capital directive, a cease-and-desist order, civil money penalties, the establishment of restrictions on all aspects of the Bank's operations or the appointment of a receiver or conservator or a forced merger into another institution.
     The OTS is also generally authorized to reclassify an Bank into a lower capital category and impose the restrictions applicable to such category if the institution is engaged in unsafe or unsound practices or is in an unsafe or unsound condition.



The imposition by the OTS or the FDIC of any of these measures on Sobieski Bank may have a substantial adverse effect on the Bank's operations and profitability.

Limitations on Dividends and Other Capital Distributions
     OTS regulations impose various restrictions on savings institutions with respect to their ability to make distributions of capital, which include dividends, stock redemptions or repurchases, cash-out mergers and other transactions charged to the capital account.
     Generally, savings institutions, such as the Bank, that before and after the proposed distribution remain well-capitalized, may make capital distributions during any calendar year equal to the greater of 100% of net income for the year-to date period plus retained net income for the two preceding years.  However, an institution deemed to be in need of more than normal supervision by the OTS may have its dividend authority restricted by OTS.  The Bank may pay dividends in accordance with this general authority.
     Savings institutions proposing to make any capital distribution need not submit written notice to the OTS prior to such distribution unless they are, as is the Bank, a subsidiary of a holding company, or would not remain well-capitalized following the distribution.  Savings institutions that do not, or would not meet their current minimum capital requirements following a proposed capital distribution or propose to exceed these net income limitations must obtain OTS approval prior to making such distribution.  The OTS may object to the distribution during that 30-day period based on safety and soundness concerns.Liquidity     Federal regulations require the Bank to maintain sufficient liquidity to maintain its safe and sound operation.  Management believes that the level of the bank liquid assets as well as loan repayments and other sources of funds will be adequate to meet the Company's foreseeable liquidity needs. Qualified Thrift Lender TestAll savings Banks, including Sobieski Bank, are required to meet a qualified thrift lender ("QTL") test to avoid certain restrictions on their operations.  This test requires a savings Bank to have at least 65% of its portfolio assets (as defined by regulation) in qualified thrift investments on a monthly average for nine out of every 12 months on a rolling basis.  As an alternative, the savings bank may maintain 60% of its assets in those assets specified in Section 7701(a)(19) of the Internal Revenue Code.  Under either test, such assets primarily consist of residential housing related loans and investments.  At June 30, 2001, the Bank met the test and has always met the QTL test since its effectiveness.
     Any savings association that fails to meet the QTL test must convert to a national bank charter, unless it requalifies as a QTL and thereafter remains a QTL.  If a Bank does not requalify and converts to a national bank charter, it must remain SAIF-insured until the FDIC permits it to transfer to the Bank Insurance Fund.  If a bank that fails the test has not yet requalified and has not converted to a national bank, its new investments and activities are limited to those permissible for both a savings bank and a national bank, and it is limited to national bank branching rights in its home state.  In addition, the bank is immediately ineligible to receive any new FHLB borrowings and is subject to national bank limits for payment of dividends.

If such bank has not requalified or converted to a national bank within three years after the failure, it must divest of all investments and cease all activities not permissible for a national bank.  In addition, it must repay promptly any outstanding FHLB borrowings, which may result in pre-payment penalties.  If any bank that fails the QTL test is controlled by a holding company, then within one year after the failure, the holding company must register as a bank holding company and become subject to all restrictions on bank holding companies.  See "Regulation-Holding Company Regulation".Community Reinvestment ActUnder the Community Reinvestment Act ("CRA"), every FDIC insured institution has a continuing and affirmative obligation consistent with safe and sound banking practices to help meet the credit needs of its entire community, including low and moderate-income neighborhoods.  The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA.  The CRA requires the OTS, in connection with the examination of the Bank, to assess the institution's record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications, such as a merger or the establishment of a branch, by Sobieski Federal.  An unsatisfactory rating may be used as the basis for the denial of an application by the OTS.
     Due to the heightened attention being given to the CRA in recent years, the Bank may be required to devote additional funds for investment and lending in its local community. The Bank was examined for CRA compliance in September 1999 and received a rating of satisfactory.Transactions with AffiliatesGenerally, transactions between a savings bank or its subsidiaries and its affiliates are required to be on terms as favorable to the bank as transactions with non-affiliates.  In addition, certain of these transactions are restricted to a percentage of the bank's capital.  Affiliates of the Bank include the Company and any company which is under common control with the Bank.  In addition, a savings bank may not lend to any affiliate engaged in activities not permissible for a bank holding company or acquire the securities of most affiliates.  The Bank's subsidiaries are not deemed affiliates; however, the OTS has the discretion to treat subsidiaries of savings banks as affiliates on a case by case basis.
     Certain transactions with directors, officers or controlling persons are also subject to conflict of interest regulations enforced by the OTS.  These conflict of interest regulations and other statutes also impose restrictions on loans to such persons and their related interests.  Among other things, such loans must be made on terms substantially the same as for loans to unaffiliated individuals.Holding Company Regulation     The Company is a unitary savings and loan holding company subject to regulatory over-sight by the OTS.  As such, the Company is required to register and file reports with the OTS and is subject to regulation and examination by the OTS.  In addition, the OTS has enforcement authority over the Holding Company and its non-savings Bank subsidiary which also permits the OTS to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings Bank.
     As a unitary savings and loan holding company, the Company generally is not subject to activity restrictions.  If the Company acquires control of another savings bank as a separate subsidiary, it would become a multiple savings and loan holding company, and the activities of the company and any of its subsidiaries (other than the Bank or any other SAIF-insured savings bank) would become subject to such restrictions unless such other banks each qualify as a QTL and were acquired in a supervisory acquisition.
     If the Bank fails the QTL test, the Company must obtain the approval of the OTS prior to continuing after such failure, directly or through its other subsidiaries, any business activity other than those approved for multiple savings and loan holding companies or their subsidiaries.  In addition, within one year of such failure the Company must register as, and will become subject to, the restrictions applicable to bank holding companies.  The activities authorized for a bank holding company are more limited than are the activities authorized for a unitary or multiple savings and loan holding company.  See "Regulation-Qualified Thrift Lender Test".
     The Company must obtain approval from the OTS before acquiring control of any other SAIF-insured bank.  Such acquisitions are generally prohibited if they result in a multiple savings and loan holding company controlling savings banks in more than one state.  However, such interstate acquisitions are permitted based on specific state authorization or in a supervisory acquisition of a failing savings bank.Federal Securities LawThe common stock of the Company is registered with the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act").  The Company is subject to the information, proxy solicitation, insider trading restrictions and other requirements of the SEC under the Exchange Act.
     Company stock held by persons who are affiliates (generally officers, directors and principal stockholders) of the Company may not be resold without registration or unless sold in accordance with certain resale restrictions.  If the Company meets specified current public information requirements, each affiliate of the Company is able to sell in the public market, without registration, a limited number of shares in any three-month period.Federal Reserve SystemThe Federal Reserve Board requires all depository institutions to maintain non-interest bearings reserves at specified levels against their transaction accounts (primarily checking, NOW and Super NOW checking accounts).  At June 30, 2001, the Bank was in compliance with these reserve requirements.  The balances maintained to meet the reserve requirements imposed by the Federal Reserve Board may be used to satisfy liquidity requirements that may be imposed by the OTS.  See "Regulation-Liquidity".
     Savings banks are authorized to borrow from the Federal Reserve Bank "discount window", but Federal Reserve Board regulations require banks to exhaust other reasonable alternative sources of funds, including FHLB borrowings, before borrowing from the Federal Reserve Bank.Federal Home Loan Bank SystemThe Bank is a member of the FHLB of Indianapolis, which is one of 12 regional FHLB's that administer the home financing credit function of savings banks.  Each FHLB serves as a reserve or central bank for its members within its assigned region.  It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB system.  It makes loans to members (i.e. advances) in accordance with policies and procedures established by the board of directors of the FHLB.  These policies and procedures are subject to the regulation and oversight of the Federal Housing Finance Board.  All advances from the FHLB are required to be fully secured by sufficient collateral as determined by the FHLB.  In addition, all long-term advances are required to provide funds for residential home financing.
     As a member, the Bank is required to purchase and maintain stock in the FHLB of Indianapolis.  At June 30, 2001, the Bank had $1.8 million of FHLB stock, which was in compliance with this requirement.  During fiscal 2001 and prior years, the Bank

received substantial dividends on its FHLB stock.  The dividends averaged 8.2% for fiscal year 2001.  For the years ended June 30, 2001 and 2000, dividends paid by the FHLB of Indianapolis to the Bank totaled $126,000 and $116,000, respectively.
     Under federal law, the FHLB's are required to provide funds for the resolution of troubled savings Banks and to contribute to low and moderately priced housing programs through direct loans or interest subsidies or other advantages targeted for community investment and low and moderate-income housing projects.  These contributions have affected adversely the level of FHLB dividends paid and could continue to do so in the future.  A reduction in value of the Bank's FHLB stock may result in a corresponding reduction in the Bank's capital.Federal and State TaxationIn addition to the regular income tax, corporations, including savings banks such as the Bank, generally are subject to a minimum tax.  An alternative minimum tax is imposed at a minimum tax rate of 20% on alternative minimum taxable income, which is the sum of a corporation's regular taxable income (with certain adjustments) and tax preference items, less any available exemption.  The alternative minimum tax is imposed to the extent it exceeds the corporation's regular income tax and net operating losses can offset no more than 90% of alternative minimum taxable income.  For taxable years beginning after 1986 and before 1996, corporations, including savings Banks such as the Bank, are also subject to an environmental tax equal to 0.12% of the excess of alternative minimum taxable income for the taxable year (determined without regard to net operating losses and the deduction for the environmental tax) over $2 million.
     The Bank files federal income tax returns on a fiscal year basis using the accrual method of accounting.  The Company files consolidated federal income tax returns with the Bank and its subsidiaries.  Savings banks, such as the Bank, that file federal income tax returns as part of a consolidated group are required by applicable Treasury regulations to reduce their taxable income for purposes of computing the percentage bad debt deduction for losses attributable to activities of the non-savings bank members of the consolidated group that are functionally related to the activities of the savings bank member.
     The Bank has not been audited by the IRS with respect to federal income tax returns through June 30, 2001.  With respect to years examined by the IRS, either all deficiencies have been satisfied or sufficient reserves have been established to satisfy asserted deficiencies.  In the opinion of management, any examination of still open returns (including returns of subsidiaries and predecessors of, or entities merged into, the Bank) would not result in a deficiency which could have a material adverse effect on the financial condition of the Bank and its consolidated subsidiaries.
     Indiana Taxation.  The Company and the Bank are subject to an 8.5% franchise tax, imposed by the State of Indiana, on the net income of financial (including thrift) institutions, exempting them from the current gross income, supplemental net income and intangible taxes.  Net income for franchise tax purposes will constitute federal taxable income before net operating loss deductions and special deductions, adjusted for certain items, including Indiana income taxes, charitable contributions, tax exempt interest and bad

debt.  Other applicable Indiana taxes include sales, use and property taxes.
     Delaware Taxation.  As a Delaware holding company, the Company is exempt from Delaware corporate income tax but is required to file an annual report with and pay an annual fee to the State of Delaware.  The Company is also subject to an annual franchise tax imposed by the State of Delaware.Item 2. Description of Property     The Bank conducts its business through its main office and two branch offices located in South Bend, Indiana.  The following table sets forth information relating to each of the Bank's offices as of June 30, 2001.  The total net book value of the Bank's premises and equipment (including land, buildings and leasehold improvements and furniture, fixtures and equipment) at June 30, 2001 was approximately $1,825,000.  See Note 5 of the "Notes to Consolidated Financial Statements".

|Location                                                | Year
Leasedor Acquired | Total
Approximate
SquareFootage | Net Book Value atJune 30, 2000
|------------------------------------------------------- | ---------------------- | ------------------------------- | ------------------------------
|                                                        |                        |                                 | (In Thousands)                
|Main Office:                                            |                        |                                 |                               
|2930 West Cleveland Road
     South Bend, Indiana 46628 | 1995                   | 10,080                          | $1,419                        
|Branch Offices:                                         |                        |                                 |                               
|4606 W. Western Ave.
     Belleville Shopping Center    | 1978                   | 1,600                           | $  -0-                        
|                                                        |                        |                                 |                               
|740 S. Walnut Street                                    | 1952                   | 1,900                           | $   11                        

Sobieski Bank believes that its current facilities including its main office facilities are adequate to meet the present and foreseeable needs of the Bank and the Company.
     The Bank maintains an on-line database with a service bureau servicing financial institutions.  The net book value of the data processing and computer equipment utilized by the Bank at June 30, 2001 was $119,000.Item 3.  Legal Proceedings
     The Company and Sobieski Bank are involved, from time to time, as plaintiff or defendant in various legal actions arising in the normal course of their businesses.  While the ultimate outcome of these proceedings cannot be predicted with certainty, it is the opinion of management, after consultation with counsel representing Sobieski Bank and the Company in the proceedings, that the resolution of these proceedings should not have a material effect on the Company's financial position or results of operations on a consolidated basis.

Item 4.  Submission of Matters to a Vote of Security Holders
     No matter was submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the quarter ended June 30, 2001.
                                                         PART II
Item 5.  Market for common equity and Related Stockholder Matters
     Page 48 of the attached 2001 Annual Report to Stockholders is herein incorporated by reference.Item 6.  Management's Discussion and Analysis of Financial Condition and Results of              Operation
     Pages 6 to 15 of the attached 2001 Annual Report to Stockholders are herein incorporated by reference.Item 7.  Financial Statements
     The following pages of the attached 2001 Annual Report to Stockholders are herein incorporated by reference.



|Report of Independent Accountants                                                                        | Page 16   
|-------------------------------------------------------------------------------------------------------- | ----------
|Consolidated Statements of Financial Condition at 
   June 30, 2001 and 2000                             | Page 17   
|Consolidated Statement of Income for the years
   ended June 30, 2001 and 2000                           | Page 18   
|Consolidated Statements of Comprehensive Income for
   years ended June 30, 2001 and 2000                | Page 19   
|Consolidated Statements of Changes in Stockholders' Equity
   for the years ended June 30, 2001 and 2000 | Page 20   
|Consolidated Statements of Cash Flows for the years
   ended June 30, 2001 and 2000                      | Page 21-22
|Notes to Consolidated Financial Statements                                                               | Page 23-47

Item 8.  Changes in and Disagreements with Accountants on Accounting and Financial              Disclosure     The information required by Item 304 of regulation S-B (regarding the change in the Company's accountants) was previously reported in a current report on Form 8-K filed on April 26, 2000.

Item 9.  Directors, Executive Officers, Promoters and Control Persons; Compliance              with Section 16(a) of the Exchange ActDirectors     Information concerning directors of the Company is incorporated herein by reference from the Company's definitive Proxy Statement for the 2001 Annual Meeting of Shareholders, a copy of which has been filed with the Securities and Exchange Commission.Executive Officers
     Information concerning the executive officers of the Company is incorporated herein by reference from "Executive Officers of the Company" contained in Part I of this Form 10-KSB.Section 16(a) Beneficial Ownership Reporting Compliance     Section 16(a) of the Exchange Act requires the Company's officers and directors, and persons owning more than 10% of a registered class of the Company's equity securities, to file periodic reports of ownership and changes in ownership with the Securities and Exchange Commission and to provide the Company with copies of such reports.  Based soley upon information provided to the Company by the directors and officers subject to Section 16(a), all Section 16(a) filing requirements applicable to such persons were complied with during fiscal 2001.Item 10.  Executive Compensation     Information concerning executive compensation is incorporated herein by reference from the Company's definitive Proxy Statement for the 2001 Annual Meeting of Shareholders, a copy of which has been filed with the Securities and Exchange Commission.Item 11.  Security Ownership of Certain Beneficial Owners and Management     Information concerning security ownership of certain beneficial owners and management is incorporated herein by reference from the Company's definitive Proxy Statement for the 2001 Annual Meeting of Shareholders, a copy of which has been filed with the Securities and Exchange Commission.Item 12.  Certain Relationship and Related Transactions     Information concerning certain relationships and transactions is incorporated herein by reference from the Company's definitive Proxy Statement for the 2001 Annual Meeting of Shareholders, a copy of which has been filed with the Securities and Exchange Commission.

Item 13.  Exhibits and Reports on Form 8-K               (a)  Exhibits:

|Regulation S-BExhibit Number | Document | Reference to
Prior Filing or
Exhibit NumberAttached Hereto                  
|---------------------------- | -------- | ----------------------------------------------------------------------------
|2                            |          | Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession 
|4.1                          |          | Certificate of Incorporation                                                
|4.2                          |          | Bylaws                                                                      
|9                            |          | Voting Trust Agreement                                                      
|10                           |          | Executive Compensation Plans and Arrangements:                              
|                             |          | Employee Stock Ownership Plan                                               
|                             |          | Stock Option and Incentive Plan                                             
|                             |          | Recognition and Retention Plan                                              
|                             |          | Sobieski Bancorp, Inc. Fee Continuation Plan for
          Retired Directors
|                             |          | Sobieski Bank Bank Fee
          Continuation Plan for Retired Directors    
|                             |          | Sobieski Bank Bank
          Supplemental Executive Retirement Plan         
|                             |          | Employment contract with Thomas F. Gruber                                   
|11                           |          | Statement re: computation of per share earnings                             
|13                           |          | Annual Report to Security Holders                                           
|16                           |          | Letter re: change in certifying accountant                                  
|18                           |          | Letter re: change in accounting principles                                  
|21                           |          | Subsidiaries of Registrant                                                  
|22                           |          | Published report regarding matter submitted to vote                         
|23                           |          | Consent of Crowe, Chizek and Company LLP                                    
|24                           |          | Power of Attorney                                                           
|                             |          |                                                                             

_______________

SIGNATURES
     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                                                                                                                                                                                                              | SOBIESKI BANCORP, INC.                                                                                           
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------
|Date: September 24, 2001                                                                                                                                                                                      | By: /s/Thomas F. Gruber                                                                                          
|                                                                                                                                                                                                              | Thomas F. Gruber
        (President and Chief Executive
        Officer)
        (Duly Authorized Representative)
|Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
|                                                                                                                                                                                                              |                                                                                                                  
|/s/Robert J. UrbanskiRobert J. Urbanski, Chairman of the Board                                                                                                                                                | /s/Joseph A. GornyJoseph A. Gorny, Director                                                                      
|Date: September 24, 2001                                                                                                                                                                                      | Date: September 24, 2001                                                                                         
|                                                                                                                                                                                                              |                                                                                                                  
|/s/Joseph F. NagyJoseph F. Nagy, Director                                                                                                                                                                     | /s/Leonard J. DobosiewiczLeonard J. Dobosiewicz, Director                                                        
|Date: September 24, 2001                                                                                                                                                                                      | Date: September 24, 2001                                                                                         
|                                                                                                                                                                                                              |                                                                                                                  
|/s/Richard J. CullarRichard J. Cullar, Director                                                                                                                                                               | /s/Arthur Skale                                                                                                  
|Arthur Skale, Chief Financial Officer                                                                                                                                                                        
|Date: September 24, 2001                                                                                                                                                                                      | (Principal Financial and Accounting                                                                              
|                                                                                                                                                                                                              | Officer)                                                                                                         
|                                                                                                                                                                                                              | Date: September 24, 2001                                                                                         
|/s/Thomas F. GruberThomas F. Gruber, President and 
Chief Executive Officer and Director(Principal Executive Officer)                                                                                         |                                                                                                                  
|Date: September 24, 2001                                                                                                                                                                                      |                                                                                                                  

SIGNATURES
     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                                      | SOBIESKI BANCORP, INC.                                                                                           
|------------------------------------- | -----------------------------------------------------------------------------------------------------------------
|Date: November 28, 2001               | By: /s/Thomas F. Gruber                                                                                          
|                                      | Thomas F. Gruber
        (President and Chief Executive
        Officer)
        (Duly Authorized Representative)
|                                     
|                                      |                                                                                                                  
|                                      | /s/Arthur Skale                                                                                                  
|Arthur Skale, Chief Financial Officer
|                                      | (Principal Financial and Accounting                                                                              
|                                      | Officer)                                                                                                         
|                                      |                                                                                                                  
|                                      |                                                                                                                  
|                                      |                                                                                                                  

































INDEX TO EXHIBITS

|13 |  | Annual Report to Security Holders       
|-- |  | ----------------------------------------
|21 |  | Subsidiaries of the Registrant          
|23 |  | Consent of Crowe, Chizek and Company LLP

Exhibit 13

SOBIESKI BANCORP, INC
TABLE OF CONTENTS

|MESSAGE TO OUR STOCKHOLDERS                                                             | 1 
|--------------------------------------------------------------------------------------- | --
|                                                                                        |   
|CORPORATE PROFILE                                                                       | 3 
|                                                                                        |   
|SELECTED FINANCIAL INFORMATION                                                          | 4 
|                                                                                        |   
|MANAGEMENT'S DISCUSSION AND ANALYSIS OF
  FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 6 
|                                                                                        |   
|CONSOLIDATED FINANCIAL STATEMENTS                                                       |   
|REPORT OF INDEPENDENT ACCOUNTANTS                                                       | 16
|CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                                          | 17
|CONSOLIDATED STATEMENTS OF INCOME                                                       | 18
|CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                                         | 19
|CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY                              | 20
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                   | 21
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                              | 23
|                                                                                        |   
|STOCKHOLDER INFORMATION                                                                 | 48
|                                                                                        |   
|CORPORATE INFORMATION                                                                   | 49



























On behalf of the directors, officers and staff of Sobieski Bancorp, Inc., and its subsidiary Sobieski Federal Savings and Loan Association (now known as Sobieski Bank), I am pleased to report on the state of our company and fiscal performance for the year ending June 30, 2001.
     Fiscal 2001 represented a year of progress and growth as Sobieski continued to develop and implement its strategic plan of evolving from a traditional thrift into a viable community bank providing expanded products and personal customer service to residents and small businesses in the greater South Bend market area.
     Total assets increased by $17.6 million, or 15.9%, to $128.4 million at June 30, 2001.  Major steps were taken last year to restructure the company's balance sheet to better manage interest rate risk, liquidity, and profitability.
     Our investment portfolio increased $18 million from $10.4 million at June 30, 2000 to $28.4 million at June 30, 2001.
     Net loans decreased $4.8 million, or 5.1 %, to $88.5 million at June 30, 2001, primarily the result of a bulk sale of $7.4 million of fixed-rate mortgages out of the Company's loan portfolio and a reduction of participation interests in commercial loans from $8.84 million at the end of the previous fiscal year to$3.30 million at June 30, 2001.
     Locally originated commercial loans increased by $6.29 million, or 61%, to $16.59 million at June 30, 2001 from $10.30 million at the same date a year ago.  Consumer loans increased by $2.56 million, or 62%, from $4. 10 million at June 30, 2000 to $6.66 million at the end of the fiscal year 2001.
     Deposits increased $5.1 million., or 6.9%, to $79 million at June 30, 2001.
     This past fiscal year also proved challenging.  Net income decreased $60,000, or 9%, from $667,000 in FY00 to $607,000 in FY01. Net income was primarily affected by a decrease in net interest income caused by higher funding costs.  The higher costs were attributable to rising interest rates during the first six months of the past fiscal year and an interest rate risk management strategy of restructuring the balance sheet and extending maturities of some liabilities.
     During the past year, we continued to build value for our shareholders.  Stockholders' equity increased $252,000 to $13.1 million at June 30, 2001.  Dividends, annualized at $.32 a share, were paid quarterly and the company continued to repurchase stock during the year.  The company intends to actively continue to repurchase stock while our stock price remains attractive.
     We look forward to operating in Fiscal 02 with enthusiastic optimism.  Federal Reserve interest rate cuts during 2001 afford us the opportunity to realize improvements in the Company's net interest margin. Furthermore, we expect to see positive results from our commitment and emphasis on employee training and staff reorganization to reach existing and new customers with a wider selection of products, services and delivery systems.

Effective Sept 1, 2001, the Association's official name was changed to Sobieski Bank to better reflect our current operation and philosophy. In September, Sobieski also added telephone banking services in both English and Spanish and restructured savings and checking accounts to better serve our customers.  Additional changes are in process to expand small business banking services and our retail banking distribution network.
     And while we focus on a brighter future, in conclusion I must address the past in recognizing long-time Sobieski director George J. Aranowski who died unexpectedly on August 20, 2001. He served on the Sobieski board for 28 years, over 10 of those years as chairman.  A man of uncommon honesty and integrity, George was a public accountant who provided that area of expertise to the board and more.  He will be missed greatly by me and all associated with Sobieski.
     We appreciate your investment in Sobieski Bancorp and thank you for your continued support.
Sincerely,
Thomas F. Gruber
President and CEO

CORPORATE PROFILEBusiness Conducted by Sobieski Bancorp, Inc.

Sobieski Bancorp, Inc. (the "Company" or "Bancorp") is a Delaware corporation that was organized in December 1994.  Bancorp, as a unitary savings and loan holding company, generally is not restricted in the types of business activities in which it may engage, provided that its wholly-owned subsidiary, Sobieski Federal Savings and Loan Association of South Bend ("Sobieski Federal" or the "Association") retains a specified amount of its assets in housing-related investments.  Effective September 1, 2001, the Association changed its name to Sobieski Bank. The holding company structure facilitates diversification into non-banking activities. There are no present plans, however, regarding such activities.
The Company's activities to date have been limited to its investment in Sobieski Federal, the purchase of loans from Sobieski Federal, and a loan to the Company's Employee Stock Ownership Plan (the "ESOP") which enabled the ESOP to purchase shares of stock of the Company in its initial public offering.  The loans and transactions bear interest rates and have terms and conditions which prevailed in the market at the time of such transactions.Business Conducted by Sobieski Federal Savings and Loan Association of South BendSobieski Federal is a federally chartered stock savings and loan association located in South Bend, Indiana, conducting business through three full service offices in South Bend.  The Association was formed in 1893. Its deposits are insured up to the maximum allowable limit by the Federal Deposit Insurance Corporation (the "FDIC") under the Savings Association Insurance Fund (the "SAIF").
Sobieski Federal is a community-oriented financial institution offering selected financial products and services to meet the needs of the communities it serves.  The Association attracts deposits from the general public and uses such deposits, together with other funds, to originate primarily one-to-four family,fixed-rate and adjustable-rate residential mortgage loans for retention in its portfolio.  In addition, the Association originates construction loans, consumer loans and real estate-backed and other secured small business commercial loans.  During both fiscal 2001 and 2000, the Association purchased participation interests in commercial loans funded primarily by advances from the Federal Home Loan Bank ("FHLB") of Indianapolis.

SELECTED FINANCIAL INFORMATION

The following consolidated financial data does not purport to be complete and is qualified in its entirety by reference to the more detailed financial information contained elsewhere herein.  Such consolidated financial data should be read in conjunction with the consolidated financial statements, including notes thereto, included elsewhere in this Annual Report.

|At June 30,                                          
|-----------------------------------------------------
|                                                     
|(In thousands)                                       
|Selected Financial Condition Data:                   
|Total assets                                         
|Loans, net                                           
|Securities available for sale                        
|Securities held to maturity                          
|Deposits                                             
|Federal Home Loan Bank advances                      
|Stockholders' equity                                 
|Year Ended June 30,                                  
|                                                     
|(In thousands, except per share data)                
|Selected Operations Data:                            
|Total interest income                                
|Total interest expense                               
|Net interest income                                  
|Provision for loan losses                            
|Net interest income after provision
  for loan losses
|Total non interest income                            
|Total non-interest expense                           
|Income before income taxes                           
|Income taxes                                         
|Net income                                           
|Earnings per common share:                           
|Basic                                                
|Diluted                                              

SELECTED FINANCIAL INFORMATION

|Year Ended June 30,                                                                     
|----------------------------------------------------------------------------------------
|                                                                                        
|Selected Financial Ratios and Other Data:                                               
|Performance Ratios:                                                                     
|Return on assets (ratio of net
    income to average total assets                       
|Return on equity (ratio of net
    income to average equity                             
|Net interest rate spread                                                                
|Net interest margin (1)                                                                 
|Ratio of operating expense to
    average total assets                                  
|Ratio of average interest-earning
    assets to average interest-bearing
    liabilities
|Quality Ratios:                                                                         
|Non-performing loans to total
    loans at end of period                                
|Allowance for loan losses to
    non-performing loans at
    end of period              
|Allowance for loan losses to
    loans receivable, net,
    at end of period            
|Capital Ratios:                                                                         
|Equity to total assets at end of period                                                 
|Average equity to average assets                                                        
|Other Data:                                                                             
|Number of full service offices                                                          
|(1) Net interest income divided by average interest earning assets.                     

Management's Discussion and Analysis of
Financial Condition and Results of Operations

Forward-Looking StatementsWhen used in this Annual Report, in filings by the Company with the Securities and Exchange Commission, in the Company's press releases, in other public or shareholder communications or in oral statements made with the approval of an authorized executive officer, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "believe" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements are subject to certain risks and uncertainties including, among other things, changes in economic conditions, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market area, credit risks of lending activities and competition.  The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  The Company wishes to advise readers that the factors noted above could affect the  Company's financial performance and could cause the Company's actual results for future periods to differ materially from those anticipated or projected.
The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisionswhich may be made to "forward-looking statements" to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.General
The principal business of Company consists of attracting deposits from the general public and investing those funds in the origination of one-to-four family residential mortgage loans, consumer loans, construction loans and commercial loans.  The Company also invests in mortgage-backed securities, which are insured or guaranteed by federal agencies, investment securities, consisting primarily of obligations of the U.S. Government, municipal securities or U.S. agency obligations, corporate securities, financial institution certificates of deposit insured by the FDIC, and other liquid assets.  The Company's profitability depends primarily on its net interest income, which is the difference between interest income earned on its loans, investments and mortgage-backed securities and the interest expense incurred on its deposits, federal funds purchased and FHLB borrowings.  Net interest income is affected by rates received on and the amounts of interest-earning assets and the rates paid on and the amounts of interest-bearing liabilities.
The Company's profitability is also affected by its provision for loan losses, non-interest income and non-interest expense.  Non-interest income principally consists of fees and service charges and gains or losses on security and loan sales.  Non-interest expense is principally operating expenses, including compensationand benefits, federal deposit insurance premiums, advertising and promotion, service bureau data processing, and occupancy and equipment costs.  The Company's earnings are also affected significantly by general economic and competitive conditions, particularly changes in general interest rate levels.

Business Strategy

Sobieski Federal has concentrated its lendingefforts on the origination of one-to-four family mortgage loans along with home equity loans and mortgage-backed and other secured commercial loans for portfolio retention.  In addition, the Association continues to purchase participation interests in commercial loans. The participation interests are purchased according to the Association's established underwriting standards.  At June 30, 2001, the ratio of Sobieski Federal's nonperforming loans to total loans was <>% and the ratio of its allowance for loan losses to nonperforming loans was 27.86%. Historically, the loans originated by Sobieski Federal have been principally fixed-rate, one-to-four family mortgage loans, while its investments in mortgage-backed securities have been principally in adjustable rate products.  At June 30, 2001, $60.4 million, or 68.8%, of the Association's combined single-family mortgage loans, home equity loans and mortgage-backed securities portfolio had fixed rates of interest and $27.5 million, or 31.2%, had adjustable interest rates.  The Association's business strategy emphasizes retail deposits along with FHLB advances as its principal sources of funds.
The Association's primary objective is to remain an independent, community oriented financial institution serving customers in its primary market area. The Board of Directors has sought to accomplish this objective through the adoption of a strategy designed to maintain profitability, a strong capital position and high asset quality. This strategy has been implemented primarily by (i) emphasizing the origination of one-to-four family residential mortgage lending, home equity lending, consumer and commercial lending, (ii) purchasing participation interests in commercial loans funded by advances from FHLB, (iii) maintaining a substantial portfolio of adjustable-rate mortgage-backed securities and short to intermediate term investment securities, (iv) controlling operating expenses and (v) increasing fee income.Asset/Liability Management

Sobieski Federal, like other financial institutions, is vulnerable to increases in interest rates because interest-bearing liabilities reprice more quickly than interest-earning assets.  Historically, Sobieski Federal has invested in fixed-rate, long-term mortgage loans secured by one-to-four family residences and its primary source of funds has been deposits with much shorter terms to maturity. This mismatched position generally produces lower net interest income through compressed interest spreads during periods of rising interest rates and improved net interest income resulting from larger interest spreads during periods of declining interest rates.  Accordingly, increases in general market interest rates adversely impact the Association's interest rate spread and, therefore, have a negative impact on the Company's results of operations and financial condition.
To reduce interest rate risk through asset/liability management, Sobieski Federal has taken steps to mitigate the sensitivity of its interest-earning assets by investing in short to intermediate term investments and adjustable-rate mortgage-backed securities, which, although long-term in nature, adjust periodically in response to changes in general levels of interest rates. Additionally, to decrease interest rate sensitivity, Sobieski Federal originates variable-rate home equity products and adjustable mortgage-backed commercial loans along with purchased participation interests in adjustable rate commercial loans.  The funding for these originations and purchases has come primarily from deposits and advances from the FHLB.  At June 30, 2001, Sobieski Federal had $59.9 million in long-term fixed-rate loans and $28.9 million in adjustable-rate loans.  The Association's ability to generate adjustable-rate mortgage ("ARM") loans is dependent upon the interest rate environment and customer preferences.

Net Portfolio Analysis

The Office of Thrift Supervision ("OTS") provides a Net Portfolio Value ("NPV") approach to the quantification of interest rate risk.  This approach calculates the difference between the present value of expected cash flows from assets and the present value of expected cash flows from liabilities, as well as cash flows from off-balance-sheet contracts.
Presented below, as of June 30, 2001, is an analysis of the Association's interest rate risk as measured by changes in NPV for instantaneous and sustained parallel shifts in the yield curve, in 100 basis point increments, up and down 300 basis points in accordance with OTS regulations.  As illustrated in the table, NPV is more sensitive to rising rates than declining rates. This occurs principally because, as rates rise, the market value of fixed-rate loans decline due to the rate increase.  When rates decline, the Association does not experience as significant a rise in market value for these loans because borrowers prepay at relatively high rates.  The following table is based on assets and liabilities of the Association only.

|Change in      |  |                        |         
|-------------- |  | ---------------------- | --------
|Interest Rate  |  | Net Portfolio Value   
|(Basis Points) |  | $ Change               | % Change
|               |  | (Dollars in thousands)
|+300           |  | $(6,335)               | (56)%   
|+200           |  | (4,166)                | (37)    
|+100           |  | (1,990)                | (18)    
|0              |  | -                      | -       
|-100           |  | 1,337                  | 12      
|-200           |  | 2,022                  | 18      
|-300           |  | 2,742                  | 24      

Management reviews the NPV measurements on a quarterly basis.  In addition to monitoring selected measures of NPV, management also monitors effects on net interest income resulting from increases or decreases in rates. This measure is used in conjunction with NPV measures to identify excessive interest rate risk.
The change in the Association's NPV, based on a rise in interest rates of 2%, was a 37% decrease representing a dollar decrease in equity value of approximately $4.2 million at June 30, 2001. In contrast, based on a decline in interest rates of 2% the Association's NPV was estimated to increase 18% or approximately $2.0 million at June 30, 2001.  The most significant factor contributing to its liability sensitive position was the Association's balance of fixed rate mortgage loans.  At June 30, 2001, 63.8% of the Association's loan portfolio was comprised of long-term, fixed-rate mortgage loans.

As with any method of measuring interest rate risk, certain shortcomings are inherent in the method of analysis presented in the foregoing table.  For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates.  Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates.  Additionally, certain assets, such as ARM loans, have features which restrict changes in interest rates on a short-term basis and over the life of the asset.  Further, in the event of a change in interest rates, expected rates of prepayments on loans and early withdrawals from certificates could likely deviate significantly from those assumed in calculating the table.Impact Of Inflation And Changing Prices

The consolidated financial statements and notes thereto presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation.  The impact of inflation is reflected in the increased cost of the Company's operations.  Nearly all the assets and liabilities of the Company are financial in nature, unlike most industrial companies. As a result, the Company's performance is directly impacted by changes in interest rates, which are indirectly influenced by inflationary expectations.  The Company's ability to match the interest sensitivity of its financial assets to the interest sensitivity of its financial liabilities through its asset/liability management strategy may tend to minimize the effects of changes in interest rates on the Company's performance.  Changes in interest rates do not necessarily move to the same extent as changes in the prices of goods and services. In the current interest rate environment, liquidity and the maturity structure of the Company's assets and liabilities are critical to the maintenance of acceptable performance levels.

Net Interest Income AnalysisThe primary determinant of the Company's earnings is net interest income, which is the difference between interest income and interest expense.  Net interest income is affected by (1) rates received on interest-earning assets, (2) rates paid on interest-bearing liabilities, and (3) the relative amounts of interest-earning assets versus interest-bearing liabilities.  The following table presents for the periods indicated the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates.  No tax equivalent adjustments were made.  All average balances are monthly average balances.  Non-accruing loans have been included in the table as loans carrying a zero yield.

|Year Ended June 30,2000                                                   
|--------------------------------------------------------------------------
|                                                                          
|                                                                          
|Interest-earning assets                                                   
|Loans and loans held for sale (1)                                         
|Securities available for sale                                             
|Securities held to maturity                                               
|FHLB stock                                                                
|Total interest-earning assets (1)                                         
|Non interest-earning assets                                               
|Total assets                                                              
|                                                                          
|Interest-bearing liabilities:                                             
|Savings deposits                                                          
|NOW and MMDA accounts                                                     
|Certificate accounts                                                      
|FHLB advances and federal funds purchased                                 
|Total interest-bearing liabilities                                        
|Non interest-bearing liabilities                                          
|Total liabilities                                                         
|Stockholders' equity                                                      
|Total liabilities and stockholders' equity                                
|Net interest income                                                       
|                                                                          
|Net interest rate spread                                                  
|                                                                          
|Net earning assets                                                        
|Net yield on average interest-earning assets                              
|                                                                          
|Average interest-earning assets to average  interest-bearing liabilities  
|                                                                          
|                                                                          
|(1)   Calculated net of deferred loan fees and costs and loans in process.



The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities.  It distinguishes between the changes related to outstanding balances and those due to the changes in interest rates.  For each category of interest-earning asset and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume).  For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.

|                                          | Year Ended June 30,       
|----------------------------------------- | --------------------------
|                                          | 2001 vs. 2000             
|                                          | Increase
(Decrease)
Due to
|                                          | Volume                    
|Interest-earning assets:                  | $   (214)                 
|Loans                                     | 580                       
|Securities available for sale             | (140)                     
|Securities held to maturity               | 8                         
|FHLB stock                                |                           
|                                          |                           
|Total interest-earning assets             | $    234                  
|                                          |                           
|Interest-bearing liabilities:             |                           
|Savings deposits                          | $    (24)                 
|NOW and MMDA accounts                     | 7                         
|Certificate accounts                      | 212                       
|FHLB advances and federal funds purchased | 66                        
|                                          |                           
|Total interest-bearing liabilities        | $   261                   
|Net interest income                       |                           

Financial ConditionGeneralTotal assets increased $17.6 million or 15.9%, from $110.8 million at June 30, 2000 to $128.4 million at June 30, 2001.  The increase in total assets was primarily the result of a $19.4 million increase in certificates of deposits and securities, $1.0 million increase in cash and cash equivalents and $1.4 million increase in other assets, offset by a $4.8 million decrease in net loans.  Funding for the asset growth primarily came from $5.1 million of increased deposits and $12.5 million increase in FHLB advances offset by $1.4 million decrease in Federal funds purchased.Cash and Cash EquivalentsCash andcash equivalents, consisting of cash and interest-bearing deposits increased $1.0 million from $2.7 million at June 30, 2000 to $3.8 million at June 30, 2001 due to normal fluctuations in these accounts.SecuritiesSecurities available for sale and held to maturity increased $18.0 million or 173.5% from $10.4 million at June 30, 2000 to $28.4 million at June 30, 2001.  This increase was primarily due to $23.3 million of security purchases, reduced by $3.0 million of calls and maturities and principal repayments of $2.4 million.  At June 30, 2001, the Company had classified approximately $23.5 million or 83% of its securities as available for sale and approximately $4.9 million or 17% of its securities as held to maturity.Loans, NetNet loans decreased $4.8 million, or 5.1%, from $93.3 million at June 30, 2000 to $88.5 million at June 30, 2001.  The decrease in net loans is primarily the result of a bulk out of portfolio sale of $7.4 million along with $1.1 million in transfers to other real estate and other repossessed assets (see "results of operations -- provision for loan losses"). For the first time, the Company originated $4.2 million in loans to be sold.  Inventory of unsold loans at June 30, 2001 was $198,000.  Both the out of portfolio sale and the sale of loans originated for sale were a part of the Company's interest rate risk management strategy.  Prior to the aforementioned sales activity, net loans increased by $3.6 million.  The Company continues to experience increased demand and expanding market areas for residential mortgages in conjunction with continued origination of home equity and mortgage-backed commercial loans.Deposits
Deposits increased $5.1 million, or 6.9%, from $73.9 million at June 30, 2000 to $79.0 million at June 30, 2001.  The Association actively continues pursuing a deposit retention and growth program including public fund deposits.  The program offers more competitive special short-term and long-term certificates of deposit.  Monitoring of local market rates, special certificate offerings and wholesale alternatives will continue to be utilized as management focuses on viable funding sources.

Stockholders' EquityStockholders' equity increased $252,000 from $12.8 million at June 30, 2000 to $13.1 million at June 30, 2001.  This increase was primarily the result of net income of $607,000, employee benefit plan stock allocations and vesting offset by treasury stock purchases of $404,000 and cash dividends of $205,000.Results Of Operations2001 Compared with 2000GeneralNet income decreased $60,000 or 9.0% from $667,000 for 2000 to $607,000 for 2001. The decrease in net income is due primarily from decreased net interest income of $225,000 and increased non-interest expenses of $175,000 offset by lower loan loss provisions of $70,000, increased non-interest income of $226,000 and reduced income taxes of $44,000.Net interest incomeNet interest income decreased $225,000 from $3.32 million for 2000 to $3.09 million for 2001.  The decrease was due primarily to a 41 basis point increase in funding cost totaling $372,000 and higher outstanding balances totaling $261,000 offset by $408,000 of increased interest income generated by higher average interest-earning assets and increased yield.  Net interest spread decreased 32 basis points from 2.67% for the year end June 30, 2000 to 2.35% for the year end June 30, 2001.  The increase in funding costs was the result of increased deposit and FHLB advance interest cost primarily attributable to rising interest rates during the first six months of fiscal year 2001.  During the period, additional costs were incurred due to the Company extending maturities on some FHLB advances and deposits in order to mitigate interest rate risk.Interest Income
Interest income increased $408,000 from $8.08 million for 2000 to $8.49 million for 2001. The increase was the result of $6.74 million of higher average balances of securities and FHLB stock offset by $2.73 million of lower average loan balances. The increase in net volume added $234,000 to interest income while yield increases added $174,000. The yield on average interest-earning assets increased 9 basis points, from 7.54% in 2000 to 7.63% in 2001.Interest ExpenseInterest expense increased$633,000 from $4.76 million in 2000 to $5.40 million in 2001, primarily as a result of $506,000 of additional interest expense related to certificates of deposit increases and $186,000 of added expense related to increased FHLB advances.  The average rate paid for interest-bearing liabilities increased 41 basis points from 4.87% in 2000 to 5.28% in 2001.  The average balance of interest-bearing liabilities for fiscal 2001 was $102.14 million representing an increase of $4.25 million from $97.89 million for fiscal 2000.

Provision for Loan LossesProvision for loan losses was $50,000 for the year ended June 30, 2001 and $120,000 for the year ended June 30, 2000.  The Company maintains an allowance for loan losses based upon management's periodic evaluation of non-performing loans, inherent risks in the loan portfolio, economic conditions and past experience.  Management does expect that as loan growth continues, additional provision for loan losses may be required.
During the quarter ended June 30, 2000, the Company became aware of certain circumstances related to a loan to a single borrower in which the Association had purchased a participation interest.  The borrower had discontinued principal and interest payments on the loan and had filed for Chapter 11 bankruptcy protection.  Under terms of a plan, which had been accepted by the lead participant, borrower and the bankruptcy court, the collateral of this loan was surrendered to the lead participant to be sold.  At June 30, 2000, management had classified this loan, totaling $1,013,175, as impaired.  On July 25, 2001, the collateral for this loan was sold. Under terms of the sale, the Company participated in financing and will recover the full outstanding principal balance.
At June 30, 2001, management classified a loan participation interest in the amount of $1,097,113 as impaired due to the restructuring of the payments due from the borrower.  The Company became aware of subsequent events occurring on August 22, 2001 when the borrower filed for Chapter 11 bankruptcy protection.  Management does not expect any losses on this loan as the collateral is currently in use to support debt payments and appears to have sufficient market value to cover the outstanding loan balance.Non-interest IncomeNon-interest income increased $225,000 from $218,000 in 2000 to $443,000 in 2001 primarily resulting from increased loan sales gains of $180,000 and fees and service charges of $51,000.Non-interest ExpenseNon-interest expense increased $175,000 or 7.63% from $2.30 million in 2000 to $2.48 million in 2001. The increased expenditures are the result of: (a) $147,000 of compensation and benefits increases attributable to higher wages, staff increases and health and benefit program increases, (b) $16,000 of increased service bureau expenses to facilitate system upgrades, expanded product lines and higher ATM costs, (c) $11,000 of Federal Deposit insurance for primarily higher deposit levels, (d) $12,000 of advertising for primarily product promotions, (e) $50,000 of marketing consulting services, (f) $31,000 of higher corporate and sundry other expenses, offset by: (1) $42,000 of lower occupancy reflecting non-recurring prior year expenditure for building and site repairs, and (2) $42,000 of lower expenses for other  professional services.Income TaxesIncome tax expense decreased $45,000 from $449,000 in 2000 to $404,000 in 2001, principally as a result of the decrease in pretax income.  The effective tax rate for 2001 was 40.0% versus 40.2% in 2000.

Liquidity And Capital Resources
The Association's primary sources of funds consist of deposits, repayment and prepayment of loans and mortgage-backed securities, maturities of securities, FHLB Advances, temporary cash investments, and funds provided by operations.  While scheduled loan and mortgage-backed securities repayments and maturities of securities are predictable sources of funds, deposit flows and loan and mortgage-backed securities prepayments are significantly influenced by the general level of interest rates, economic conditions and competition.  Sobieski Federal uses its liquidity resources to fund existing and future loan commitments, purchase securities, fund maturing certificates of deposit and other savings deposit withdrawals to invest in other interest-earning assets, maintain liquidity, and meet operating expenses.  Management believes that loan and security repayments and other sources of funds will be adequate to meet Sobieski Federal's current liquidity needs.
The Association is required by the OTS to meet minimum capital requirements, which include tangible capital, core capital and risk-based capital requirements.  The Association's actual capital as reported to the OTS at June 30, 2001 exceeded all three requirements.  The following chart sets forth the actual and required minimum levels of regulatory capital for the Association under applicable OTS regulations as of June 30, 2001 (dollars in thousands):

|           | Actual    | Percent | Required | Percent | Excess  
|---------- | --------- | ------- | -------- | ------- | --------
|Core       | $  10,160 | 8.04%   | $  5,053 | 4.0%    | $  5,107
|Tangible   | 10,160    | 8.04    | 1,844    | 1.5     | 8,316   
|Risk-based | 10,500    | 15.52   | 5,412    | 8.0     | 5,088   

The OTS has proposed to increase the minimum required core capital ratio from the current 3% level to a range of 4% to 5% for all but the most highly rated financial institutions.  While the OTS has not taken final action on such proposal, it has adopted a prompt corrective action regulation that classifies any savings institution that maintains a core capital ratio of less than 4% (3% in the event the institution was assigned a composite 1 rating in its most recent report of examination) as "undercapitalized".  As of June 30, 2001, the Association met the requirement for a "well capitalized" institution.

REPORT OF INDEPENDENT ACCOUNTANTS

Stockholders and Board of Directors
Sobieski Bancorp, Inc.
South Bend, Indiana
We have audited the accompanying consolidated statements of financial condition of Sobieski Bancorp, Inc. and Subsidiary as of June 30, 2001 and 2000 and the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sobieski Bancorp, Inc. and Subsidiary as of June 30, 2001 and 2000 and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
As disclosed in Note 3, on October 1, 1999 the Company changed its method of accounting for derivative instruments and hedging activities to comply with new accounting guidance.

Crowe, Chizek and Company LLP

South Bend, Indiana
August 16, 2001

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 2001 and 2000

|ASSETS                                                                                                                                            | 2001         | 2000        
|------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ------------
|Cash and due from banks                                                                                                                           | $  2,507,386 | $  2,049,769
|Interest-bearing deposits in other financial institutions                                                                                         | 1,249,409    | 688,291     
|Total cash and cash equivalents                                                                                                                   | 3,756,795    | 2,738,060   
|Certificates of deposit in other financial institutions                                                                                           | 1,388,000    | -           
|Securities available for sale                                                                                                                     | 23,536,227   | 5,621,083   
|Securities held to maturity (fair value of
  $4,840,939 and $4,614,324, respectively)                                                             | 4,847,290    | 4,756,547   
|Loans held for sale, net of valuation allowance of $-0-                                                                                           | 197,700      | -           
|Loans, net of allowance for loan losses of $339,900
  in 2001 and $395,000 in 2000                                                                | 88,500,704   | 93,280,665  
|Federal Home Loan Bank stock, at cost                                                                                                             | 1,775,800    | 1,499,800   
|Accrued interest receivable                                                                                                                       | 739,182      | 589,198     
|Property and equipment, net                                                                                                                       | 1,825,003    | 1,868,802   
|Other assets                                                                                                                                      | 1,850,474    | 478,942     
|                                                                                                                                                  |              |             
|Total assets                                                                                                                                      | $128,417,175 | $110,833,097
|                                                                                                                                                  |              |             
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                              |              |             
|Liabilities                                                                                                                                       |              |             
|Deposits                                                                                                                                          | $ 78,995,030 | $ 73,928,167
|Federal funds purchased                                                                                                                           | -            | 1,400,000   
|Federal Home Loan Bank advances                                                                                                                   | 34,000,000   | 21,500,000  
|Advances from borrowers for taxes and insurance                                                                                                   | 337,959      | 337,294     
|Accrued interest payable                                                                                                                          | 1,188,454    | 388,354     
|Accrued expenses and other liabilities                                                                                                            | 828,285      | 463,675     
|Total liabilities                                                                                                                                 | 115,349,728  | 98,017,490  
|                                                                                                                                                  |              |             
|Stockholders' equity                                                                                                                              |              |             
|Preferred stock, $.01 par value: 500,000 shares authorized;
      none issued                                                                     | -            | -           
|Common stock, $.01 par value: 3,500,000 shares authorized;
      966,000 shares issued; 671,962 and 705,162 shares outstanding
      respectively | 9,660        | 9,660       
|Additional paid-in capital                                                                                                                        | 9,262,652    | 9,252,680   
|Retained earnings, substantially restricted                                                                                                       | 8,213,706    | 7,812,384   
|Accumulated other comprehensive loss                                                                                                              | (3,366)      | (100,744)   
|Treasury stock, at cost, 294,038 and 260,838 shares, respectively                                                                                 | (4,026,100)  | (3,621,842) 
|Unearned Recognition and Retention Plan (RRP)
      shares; 6,573 and 12,491 shares, respectively                                                 | (91,266)     | (173,438)   
|Unallocated Employee Stock Ownership Plan (ESOP)
      shares; 29,784 and 36,309 shares, respectively                                             | (297,839)    | (363,093)   
|Total stockholders' equity                                                                                                                        | 13,067,447   | 12,815,6    
|                                                                                                                                                  |              |             
|Total liabilities and stockholders' equity                                                                                                        | 128,417,17   | 110,833,097 

CONSOLIDATED STATEMENTS OF INCOME 
Years ended June 30, 2001 and 2000

|                                                    | 2001        | 2000       
|--------------------------------------------------- | ----------- | -----------
|Interest income                                     |             |            
|Loans                                               | $ 7,186,065 | $ 7,243,426
|Securities - taxable                                | 1,043,572   | 754,799    
|Securities  - tax exempt                            | 44,008      | 32,635     
|Interest-bearing deposits                           | 217,905     | 52,609     
|Total interest income                               | 8,491,550   | 8,083,469  
|                                                    |             |            
|Interest expense:                                   |             |            
|Interest on deposits                                | 3,788,822   | 3,341,665  
|Interest on borrowings                              | 1,609,039   | 1,423,265  
|Total interest expense                              | 5,397,861   | 4,764,930  
|                                                    |             |            
|Net interest income                                 | 3,093,689   | 3,318,539  
|                                                    |             |            
|Provision for loan losses                           | 50,000      | 120,000    
|                                                    |             |            
|Net interest income after provision for loan losses | 3,043,689   | 3,198,539  
|                                                    |             |            
|Non-interest income                                 |             |            
|Fees and service charges                            | 254,631     | 203,912    
|Gain (loss) on sales of securities                  | 3,125       | (16,823)   
|Gain on sale of loans                               | 191,348     | 11,703     
|Gain (loss) on sale of foreclosed assets            | (6,727)     | 14,652     
|Other income                                        | 982         | 4,430      
|Total non-interest income                           | 443,359     | 217,87     
|                                                    |             |            
|Non-interest expense                                |             |            
|Compensation and benefits                           | 1,362,308   | 1,214,817  
|Occupancy and equipment                             | 313,847     | 355,966    
|Federal deposit insurance premiums                  | 37,656      | 26,226     
|Advertising and promotion                           | 55,842      | 44,302     
|Service bureau expense                              | 172,026     | 156,052    
|Other operating expenses                            | 534,477     | 503,309    
|Total non-interest expense                          | 2,476,156   | 2,300,672  
|                                                    |             |            
|Income before income taxes                          | 1,010,892   | 1,115,741  
|                                                    |             |            
|Income taxes                                        | 404,088     | 448,512    
|                                                    |             |            
|Net income                                          | $ 606,804   | $ 667,229  
|                                                    |             |            
|Basic earnings per common share                     | $      .94  | $     1.00 
|                                                    |             |            
|Diluted earnings per common share                   | $      .94  | $     1.00 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended June 30, 2001 and 2000

|                                                                                         | 2001         | 2000        
|---------------------------------------------------------------------------------------- | ------------ | ------------
|Net income                                                                               | $    606,804 | $    667,229
|                                                                                         |              |             
|Other comprehensive income (loss):                                                       |              |             
|Unrealized gains (losses) on securities
      available for sale arising during the year | 150,890      | (114,849)   
|Net cumulative effect of adoption of SFAS 133                                            | -            | (18,424)    
|Reclassification adjustments for (gains)
      losses included in net income             | (3,125)      | 16,823      
|Tax effects                                                                              | (50,387)     | 46,126      
|Total other comprehensive income (loss)                                                  | 97,378       | (70,324)    
|                                                                                         |              |             
|Comprehensive income                                                                     | $   704,182  | $   596,905 

|                                                                    | CommonStock | Additional
Paid-inCapital | RetainedEarnings | Accumulated
Other
Comprehensive
(Loss) | TreasuryStock   | Unearned
RRPShares | Unallocated
Employee
Stock
Ownership
PlanShares | Total
StockholdersEquity
|------------------------------------------------------------------- | ----------- | ------------------------- | ---------------- | -------------------------------------- | --------------- | ------------------ | ----------------------------------------------- | ------------------------
|Balance, July 1, 1999                                               | $   9,660   | $   9,250,990             | $   7,318,955    | $   (30,420)                           | $   (3,297,405) | $   (247,734)      | (431,763)                                       | 12,572,283              
|                                                                    |             |                           |                  |                                        |                 |                    |                                                 |                         
|Net income                                                          | -           | -                         | 667,229          | -                                      | -               | -                  | -                                               | 667,229                 
|Cash dividends declared
    ($.32 per share)                        | -           | -                         | (173,800)        | -                                      | -               | -                  | -                                               | (173,800)               
|Purchase of treasury stock
    27,500 shares                        | -           | -                         | -                | -                                      | (324,437)       | -                  | -                                               | (324,437)               
|6,867 common shares
    committed to be released
    under the ESOP | -           | 8,823                     | -                | -                                      | -               | -                  | 68,670                                          | 77,493                  
|5,269 shares issued to vested
    RRP participants                  | -           | (7,133)                   | -                | -                                      | -               | 74,296             | -                                               | 67,163                  
|Net unrealized depreciation
    of available for sale securities    | -           | -                         | -                | (70,324)                               | -               | -                  | -                                               | (70,324)                
|                                                                    |             |                           |                  |                                        |                 |                    |                                                 |                         
|Balance, June 30, 2000                                              | 9,660       | 9,252,680                 | 7,812,384        | (100,744)                              | (3,621,842)     | (173,438)          | (363,093)                                       | 12,815,607              
|                                                                    |             |                           |                  |                                        |                 |                    |                                                 |                         
|Net income                                                          | -           | -                         | 606,804          | -                                      | -               | -                  | -                                               | 606,804                 
|Cash dividends declared
    ($.32 per share)                        | -           | -                         | (205,482)        | -                                      | -               | -                  | -                                               | (205,482)               
|Purchase of treasury stock,
    33,200 shares                       | -           | -                         | -                | -                                      | (404,258)       | -                  | -                                               | (404,258)               
|6,525 common shares committed to
    be released under the ESOP     | -           | 15,061                    | -                | -                                      | -               | -                  | 65,254                                          | 80,315                  
|5,918 shares issued to vested
    RRP participants                  | -           | (5,089)                   | -                | -                                      | -               | 82,172             | -                                               | 77,083                  
|Net unrealized appreciation of
    available for sale securities    | -           | -                         | -                | 97,378                                 | -               | -                  | -                                               | 97,378                  
|                                                                    |             |                           |                  |                                        |                 |                    |                                                 |                         
|Balance, June 30, 2001                                              | $   9,660   | $9,262,652                | $8,213,706       | $  (3,366)                             | $(4,026,100)    | $ (91,266)         | $ (297,839)                                     | $13,067,447             

CONSOLIDATED STATEMENTS OF CASH FLOWSYears ended June 30, 2001 and 2000

|                                                                              | 2001         | 2000        
|----------------------------------------------------------------------------- | ------------ | ------------
|Cash flows from operating activities                                          |              |             
|Net income                                                                    | $    606,804 | $    667,229
|Adjustments to reconcile net income to net
    cash from operating activities |              |             
|Depreciation                                                                  | 111,772      | 113,401     
|Provision for loan losses                                                     | 50,000       | 120,000     
|(Gain) loss on sales of foreclosed assets, net                                | 6,727        | (14,652)    
|(Gain) loss on sales and calls of securities                                  | (3,125)      | 16,823      
|Gain on sales of loans                                                        | (191,348)    | (11,703)    
|Deferred income taxes                                                         | (29,491)     | (40,634)    
|Release of Employee Stock Ownership Plan shares                               | 80,315       | 77,493      
|Vesting of Recognition and Retention Plan shares                              | 55,058       | 74,296      
|Amortization of premiums and accretion of
        discounts, net              | 85,784       | 104,074     
|Proceeds from sales of loans held for sale                                    | 3,979,963    | -           
|Loans originated for sale                                                     | (4,037,921)  | -           
|Net change in                                                                 |              |             
|Accrued interest receivable                                                   | (149,984)    | (10,513)    
|Other assets                                                                  | (378,382)    | (3,720)     
|Accrued interest payable                                                      | 800,100      | 273,592     
|Accrued expenses and other liabilities                                        | 386,635      | 218,990     
|Net cash from operating activities                                            | 1,372,907    | 1,584,676   
|                                                                              |              |             
|Cash flows from investing activities                                          |              |             
|Purchase of certificates of deposit                                           | (1,388,000)  | -           
|Proceeds from calls and maturity of securities                                | 3,003,125    | -           
|Proceeds from sales of securities                                             | -            | 973,369     
|Purchase of securities                                                        | (23,297,919) | (1,158,358) 
|Principal reductions of securities                                            | 2,354,013    | 1,657,561   
|Net increase in loans                                                         | (3,703,791)  | (12,288,583)
|Proceeds from sale of foreclosed assets                                       | 48,219       | 66,721      
|Proceeds from sales of loans                                                  | 7,416,366    | 5,338,224   
|Purchase of property and equipment                                            | (67,973)     | (95,034)    
|Purchase of Federal Home Loan Bank stock                                      | (276,000)    | (174,000)   
|Net cash from investing activities                                            | (15,911,960) | (5,680,100) 
|                                                                              |              |             
|Cash flows from financing activities                                          |              |             
|Net change in deposits                                                        | 5,066,863    | 9,697,114   
|Increase in advances from borrowers for taxes and insurance                   | 665          | 45,003      
|Increase (decrease) in federal funds purchased                                | (1,400,000)  | 400,000     
|Federal Home Loan Bank advances                                               | 19,000,000   | 10,000,000  
|Federal Home Loan Bank payments                                               | (6,500,000)  | (13,750,000)
|Purchase of treasury stock                                                    | (404,258)    | (324,437)   
|Cash dividends                                                                | (205,482)    | (173,800)   
|Net cash from financing activities                                            | 15,557,788   | 5,893,880   
|                                                                              |              |             
|Net change in cash and cash equivalents                                       | 1,018,735    | 1,798,456   
|Cash and cash equivalents at beginning of year                                | 2,738,060    | 939,604     
|Cash and cash equivalents at end of year                                      | 3,756,795    | 2,738,060   

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 2001 and 2000

|                                                             | 2001           | 2000        
|------------------------------------------------------------ | -------------- | ------------
|Supplemental disclosures of cash flow information            |                |             
|Cash paid for:                                               |                |             
|Interest                                                     | $    4,597,761 | $  4,492,338
|Income taxes                                                 | 424,000        | 490,000     
|                                                             |                |             
|Transfer of:                                                 |                |             
|Loans to real estate owned                                   | $       84,100 | $     80,229
|Loans, net to other assets                                   | 984,892        | -           
|Securities held to maturity to securities available for sale | -              | 2,599,416   
|Securities available for sale to securities held to maturity | -              | 554,389     



NOTE 1 -  ORGANIZATION AND ACCOUNTING POLICIES

The following is a summary of the significant accounting policies followed in the preparation of the consolidated financial statements of Sobieski Bancorp, Inc. ("Sobieski") and its subsidiary (collectively referred to as the "Company"), Sobieski Federal Savings and Loan Association of South Bend (the "Association").  Effective September 1, 2001, the Association changed its name to Sobieski Bank.Nature of Operations and Industry Segments:  Sobieski is a savings and loan holding company  and its business is concentrated in the banking industry segment.  The business of commercial and retail banking accounts for more than 90% of its revenues, operating income and assets.  While the Company's chief decision makers monitor the revenue stream of various company products and services, operations are managed and financial performance is evaluated on a company-wide basis.  Accordingly, all of the Company's banking operations are considered by management to be aggregated into one operating segment.  The Company offers individuals and businesses a full range of banking services primarily in St. Joseph County, Indiana and in the areas immediately surrounding known as Michiana.  The Company grants commercial, real estate and consumer loans to customers.  The majority of loans are secured by business assets, commercial and residential real estate and consumer assets.  There are no foreign loans.Organization:  The Association is a federally chartered stock savings and loan association and as a member of the Federal Home Loan Bank System ("FHLB") is required to maintain an investment in the capital stock of the FHLB equal to at least 5% of outstanding advances.  As of June 30, 2001 and 2000, the Association was in compliance with this requirement.Principles of Consolidation:  The consolidated financial statements include the accounts of Sobieski and its wholly-owned subsidiary.  All significant intercompany balances and transactions have been eliminated in consolidation.Use of Estimates in the Preparation of Financial Statements:  The 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 income and expenses during the reporting period. Actual results could differ from those estimates.  Certain estimates that are more susceptible to change in the near term include the allowance for loan losses and the fair value of securities and other financial instruments.

NOTE 1 -  ORGANIZATION AND ACCOUNTING POLICIES (Continued)Securities:  Management determines the appropriate classification of securities at the time of purchase.  If management has the intent and the Company has the ability at the time of purchase to hold securities until maturity, they are classified as held to maturity and carried at amortized historical cost.  Securities to be held for indefinite periods of time and not intended to be held to maturity are classified as available for sale and carried at fair value, with unrealized gains and losses reported in other comprehensive income (loss), net of tax.  Securities classified as available for sale include securities that management intends to use as part of its asset/liability management strategy and that may be sold in response to changes in interest rates, resultant prepayment risk and other factors.
Premiums and discounts on securities are recognized in interest income using the level yield method over the estimated life of the security.  Gains and losses on the sale of available for sale securities are determined using the specific identification method.  Securities are written down to fair value when a decline in fair value is not temporary.Loans:  Loans that management has the positive intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an allowance for loan losses.  Loans held for sale are reported at the lower of cost or market, on an aggregate basis.  Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term.  A majority of Sobieski's loan activity is with customers located in St. Joseph County in Northern Indiana with a concentration in single-family residential lending.  Single-family residential loans comprise approximately 70% of the net loan portfolio as of June 30, 2001.
Most loans are collateralized by real estate.  The loans are expected to be repaid from cash flow or proceeds from the sale of selected assets of the borrowers.  Sobieski's policy for requiring collateral is dependent upon management's credit evaluation of the borrower.
Interest income is not reported when full loan repayment is in doubt, typically when payments are past due over 90 days, unless the loan is both well secured and in the process of collection.  Payments received on such loans are reported as principal reductions.Allowance for Loan Losses:  The allowance for loan losses is a valuation allowance for probable, incurred credit losses, increased by the provision for loan losses and decreased by charge-offs less recoveries.  Estimating the risk of loss and the amount of loss on any loan is necessarily subjective.  Accordingly, management estimates the allowance balance required based on past loan loss experience, known and inherent risks in the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.  Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management's judgment, should be charged-off.  A problem loan is charged-off by management as a loss when deemed uncollectible, although collection efforts continue and future recoveries may occur.

NOTE 1 -  ORGANIZATION AND ACCOUNTING POLICIES (Continued)
Loan impairment is reported when full payment under the original loan terms is not expected.  Impairment is evaluated in total for smaller-balance loans of similar nature such as residential mortgage and consumer loans and on an individual loan basis for other loans.  If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected solely from the collateral.  Loans are evaluated for impairment when payments are delayed, typically 90 days or more, or when it is probable that all principal and interest amounts will not be collected according to the original terms of the loan.Property and Equipment:  Land is carried at cost.  Property andequipment are carried at cost less accumulated depreciation and amortization.  Depreciation and amortization are determined using the straight-line method based on the estimated useful lives of the applicable assets which range from 3 to 39 years.  These assets are reviewed for impairment when events indicate that their carrying value may not be recoverable from future undiscounted cash flows.  Maintenance, repairs and minor alterations are charged to expense.  Major improvements are capitalized.Foreclosed Assets:  Foreclosed assets acquired in settlement of loans are initially recorded at fair value at the date of acquisition, establishing a new cost basis by a charge to the allowance for loan losses.  If fair value declines, a valuation allowance is recorded through expenses.  Costs of improvements made to facilitate sale are capitalized; costs of holding the property are charged to expense.Income Taxes:  Sobieski and its subsidiary file consolidated federal and state income tax returns.  Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.  Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates.  A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.Earnings Per Share:  Basic earnings per common share is based on net income divided by the weighted average number of common shares outstanding during the period.  ESOP shares are considered outstanding for basic earnings per common share calculations as they are committed to be released; unearned shares are not considered outstanding.  RRP shares are considered outstanding for basic earnings per common share as they become vested.  Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock option plans and nonvested shares issued under the RRP.  Earnings and dividends per common shares are restated for all stock splits and dividends.

NOTE 1 -  ORGANIZATION AND ACCOUNTING POLICIES (Continued)Comprehensive Income (Loss):  Comprehensive income (loss) consists of net income and other comprehensive income (loss).  Other comprehensive income (loss) includes the net changes in net unrealized gains and losses on securities available for sale, net of tax, which is also recognized as a separate component of stockholders' equity.Stock Compensation:  Expense for employee compensation under stock option plans is based on Accounting Principles Board ("APB") Opinion 25, with expense reported only if options are granted below market price at grant date.  If applicable, disclosures of net income and earnings per share are provided as if the fair value method of Statement of Financial Accounting Standards (SFAS) No. 123 were used for stock-based compensation.Employee Stock Ownership Plan:  The Company accounts for its employee stock ownership plan (ESOP) in accordance with AICPA Statement of Position (SOP) 93-6.  Under SOP 93-6, the cost of shares issued to the ESOP, but not yet allocated to participants, is presented in the consolidated statements of financial condition as a reduction of stockholders' equity.  Compensation expense is recorded based on the market price of the shares as they are committed to be released for allocation to participant accounts.  The difference between the market price and the cost of shares committed to be released is recorded as an adjustment to additional paid-in capital.  Dividends on allocated ESOP shares reduce retained earnings; dividends on unearned ESOP shares reduce debt and accrued interest.Cash and Cash Equivalents:  For purposes of reporting cash flows, cash and cash equivalents is defined to include the Company's cash on hand and in other banks, federal funds sold, and interest-earning deposits in other financial institutions with original maturities of 90 days or less.  The Company reports net cash flows for customer loan and deposit transactions, federal funds and advances from borrowers for taxes and insurance.Fair Values of Financial Instruments:  Fair values of financial instruments are estimated using relevant market information and other assumptions.  Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items.  Changes in assumptions or in market conditions could significantly affect such estimates.Financial Instruments with Off-Balance Sheet Risk:  The Company, in the normal course of business, makes commitments to extend credit which are not reflected in the consolidated financial statements.

NOTE 1 -  ORGANIZATION AND ACCOUNTING POLICIES (Continued)Loss Contingencies:  Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.  Management does not believe there are now such matters that will have a material effect on the consolidated financial statements at June 30, 2001 and 2000.Derivatives:  Under SFAS No. 133, all derivative instruments are recorded at their fair values.  If derivative instruments are designated as hedges of fair values, both the change in the fair value of the hedge and the hedged item are included in current earnings.  Fair value adjustments related to cash flow hedges are recorded in other comprehensive income and reclassified to earnings when the hedged transactions are reflected in earnings.  Ineffective portions of hedges are reflected in income currently.Reclassifications:  Some items in the prior year consolidated financial statements have been reclassified to conform with the current year presentation.NOTE 2 - EARNINGS PER SHAREA reconciliation of the numerators and denominators used in the computation of the basic earnings per common share and diluted earnings per common share is presented below:

|                                                                                   | Year ended June 30,
|---------------------------------------------------------------------------------- | -------------------
|Basic earnings per common share                                                    | 2001               
|Numerator                                                                          |                    
|Net income                                                                         | $    606,804       
|                                                                                   |                    
|Denominator                                                                        |                    
|Weighted average common shares outstanding                                         | 686,932            
|Less:  Average unallocated ESOP shares                                             | (33,047)           
|Less:  Average non-vested RRP shares                                               | (8,462)            
|                                                                                   |                    
|Weighted average common shares outstanding
    for basic earnings per common share | 645,423            
|                                                                                   |                    
|Basic earnings per common share                                                    | $         .94      
|                                                                                   |                    

NOTE 2 - EARNINGS PER SHARE (Continued)

|Diluted earnings per common share                                                    | 2001         | 2000        
|------------------------------------------------------------------------------------ | ------------ | ------------
|Numerator                                                                            |              |             
|Net income                                                                           | $    606,804 | $    667,229
|                                                                                     |              |             
|Denominator                                                                          |              |             
|Weighted average common shares outstanding
      for basic earnings per common share | 645,423      | 668,466     
|Add:  Dilutive effects of assumed exercises
      of stock options                   | 1,723        | -           
|Add:  Dilutive effects of average non-vested RRP shares                              | 161          | -           
|                                                                                     |              |             
|Weighted average common shares anddilutive potential
      common shares outstanding | 647,307      | 668,466     
|                                                                                     |              |             
|Diluted earnings per common share                                                    | $        .94 | $1.00       

At June 30, 2001 and 2000, stock options not considered in computing diluted earnings per share because they were antidilutive totaled 68,130 and 80,130 and non-vested RRP shares not considered in computing diluted earnings per share because they were antidilutive totaled 3,973 and 12,491.NOTE 3 - SECURITIESThe amortized cost and estimated fair value of securities at June 30, 2001 are as follows:

|                                      | Available For Sale
|------------------------------------- | ------------------
|                                      | AmortizedCost     
|U.S. Government and agency securities | $  1,000,000      
|Mortgage-backed securities            | 9,108,337         
|Collateralized mortgage obligations   | 11,609,407        
|Corporate obligations                 | 1,771,727         
|Marketable equity securities          | 24,883            
|                                      |                   
|                                      | $23,514,354       

NOTE 3 - SECURITIES (Continued)

|                                      | Held To Maturity
|------------------------------------- | ----------------
|                                      | AmortizedCost   
|U.S. Government and agency securities | $  2,300,706    
|Municipal securities                  | 1,001,050       
|Mortgage-backed securities            | 1,545,534       
|                                      |                 
|                                      | $  4,847,290    

The amortized cost and estimated fair value of securities at June 30, 2001, by contractual maturity are shown in the following table.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

|                                                                     | Available For Sale | Held To Maturity   
|-------------------------------------------------------------------- | ------------------ | -------------------
|                                                                     | AmortizedCost      | EstimatedFair Value
|Due within one year                                                  | $       -          | $       -          
|Due after one year through five years                                | 1,771,727          | 1,774,095          
|Due after five years through ten years                               | 1,000,000          | 1,006,560          
|Due after ten years                                                  | -                  | -                  
|Mortgage-backed securities and
  collateralized mortgage obligations | 20,717,744         | 20,730,689         
|Marketable equity securities                                         | 24,883             | 24,883             
|                                                                     | $23,514,354        | $23,536,227        
|                                                                     |                    |                    

The amortized cost and estimated fair value of securities at June 30, 2000 are as follows:

|                                      | Available For Sale
|------------------------------------- | ------------------
|                                      | AmortizedCost     
|U.S. Government and agency securities | $  2,000,000      
|Mortgage-backed securities            | 3,718,880         
|Marketable equity securities          | 24,883            
|                                      |                   
|                                      | $  5,743,763      

NOTE 3 - SECURITIES (Continued)

|                                      | Held To Maturity
|------------------------------------- | ----------------
|                                      | AmortizedCost   
|U.S. Government and agency securities | $  1,912,287    
|Municipal securities                  | 1,003,608       
|Mortgage-backed securities            | 1,840,652       
|                                      |                 
|                                      | $  4,756,547    

Sales and calls of securities were as follows:

|                                                    | 2001      | 2000   
|--------------------------------------------------- | --------- | -------
|Proceeds for sales of securities available for sale | -         | 973,369
|Proceeds from calls of securities                   | 3,003,125 | -      
|Gross gains                                         | 3,125     | -      
|Gross losses                                        | -         | 16,823 

There were no sales of securities held to maturity during 2001 and 2000.
The mortgage-backed and collateralized mortgage obligations securities held by Sobieski consist primarily of FNMA, GNMA, SBA and FHLMC pass-through certificates which are issued by each of the respective agency programs, as sponsored by the United States Government.
On October 1, 1999, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." The Company does not have any derivative instruments nor does the Company have any hedging activities.  As permitted by SFAS No. 133, upon adoption, the Company transferred securities with an amortized cost of $2,599,416 and a fair value of $2,580,992 from the held to maturity portfolio to the available for sale portfolio.  None of these securities were sold within six months of the transfer.  The Company also transferred securities with an amortized cost of $577,512 and a fair value of $554,389 from the available for sale to the held to maturity portfolio.

NOTE 4 - LOANS, NETLoans consist of the following:

|                                         | June 30,     
|---------------------------------------- | -------------
|                                         |              
|                                         | 2001         
|Mortgage loans:                          |              
|Secured by one-to-four family properties | $  62,282,662
|Commercial and other properties          | 7,840,026    
|                                         | 70,122,688   
|Commercial loans:                        |              
|Commercial loans                         | 8,753,541    
|Commercial loans - participations        | 3,300,396    
|                                         | 12,053,937   
|Consumer loans:                          |              
|Home equity                              | 3,932,981    
|Other                                    | 2,730,998    
|                                         | 6,663,979    
|                                         | 88,840,604   
|                                         |              
|Less:  allowance for loan losses         | (339,900)    
|                                         |              
|                                         | $  88,500,704
|                                         |              

Certain directors and executive officers of the Company and the Association, including their associates and companies in which they are principal owners, were loan customers of the Association.  The following is a summary of loans exceeding $60,000 in the aggregate to these individuals and their associates.

|                   | 2001          | 2000         
|------------------ | ------------- | -------------
|Balance at July 1  | $     818,927 | $     785,544
|New loans          | 590,151       | 157,814      
|Repayments         | (432,795)     | (76,627)     
|Other changes, net | 43,026        | (47,804)     
|Balance at June 30 | $   1,019,309 | $     818,927
|                   |               |              

During 2001 and 2000, the Company sold certain loans with a principal balance of $7,364,760 and $5,326,521 out of portfolio on the secondary market as part of an overall asset/liability management strategy.  Proceeds from the sale of such loans were $7,416,366 and $5,338,224.

NOTE 4 - LOANS, NET (Continued)
The following is a summary of activity in the allowance for loan losses:

|                             | Years Ended.June 30,
|---------------------------- | --------------------
|                             | 2001                
|Balance, beginning of year   | 395,000             
|Provision charged to expense | 50,000              
|Gross charge-offs            | (105,100)           
|                             |                     
|Balance, end of year         | 339,900             
|                             |                     
|                             |                     

Nonaccrual loans totaled approximately $123,000 and $237,000 at June 30, 2001 and 2000.

|Information regarding impaired loans follows:              | 2001         | 2000      
|---------------------------------------------------------- | ------------ | ----------
|Year end loans with no allowance for loan losses allocated | $  1,097,113 | $1,013,175
|Year end loans with allowance for loan losses allocated    | 123,125      | 93,147    
|Total impaired loans                                       | $  1,220,238 | $1,106,322
|Amount of allowance allocated to these loans               | $     12,312 | 9,315     
|Average balance of impaired loans during the year          | $   560,687  | 276,581   
|Cash basis interest income recognized during impairment    | $       -    | -         
|Interest income recognized during impairment               | $       -    | 25,217    

During the quarter ended June 30, 2000, the Company became aware of certain circumstances related to a loan to a single borrower in which the Association had purchased a participation interest.  The borrower had discontinued principal and interest payments on the loan and had filed for Chapter 11 bankruptcy protection.  Under terms of a plan, which had been accepted by the lead participant, borrower and the bankruptcy court, the collateral of this loan was surrendered to the lead participant to be sold.  At June 30, 2000, management had classified this loan, totaling $1,013,175, as impaired.  On July 25, 2001, the collateral for this loan was sold. Under terms of the sale, the Company participated in financing and will recover the full outstanding principal balance.
At June 30, 2001, management classified a loan participation interest in the amount of $1,097,113 as impaired due to the restructuring of the payments due from the borrower.  The Company became aware of subsequent events occurring on August 22, 2001 when the borrower filed for Chapter 11 bankruptcy protection.  Management does not expect any losses on this loan as the collateral is currently in use to support debt payments and appears to have sufficient market value to cover the outstanding loan balance.

NOTE 5 - PROPERTY AND EQUIPMENT
Property and equipment and related accumulated depreciation and amortization consisted of the following:

|                                                | June 30, 
|----------------------------------------------- | ---------
|                                                | 2001     
|Land                                            | 121,787  
|Office buildings                                | 1,710,133
|Leasehold improvements                          | 71,481   
|Furniture and equipment                         | 766,407  
|                                                | 2,669,808
|Less: Accumulated depreciation and amortization | (844,805)
|                                                |          
|Property and equipment, net                     | 1,825,003

NOTE 6 - DEPOSITSDeposits consisted of the following:

|                                         | June 30,    
|---------------------------------------- | ------------
|                                         | 2001        
|                                         | Amount      
|NOW and money market accounts            | $  6,237,914
|Passbook accounts                        | 12,573,460  
|Certificates of deposit and IRA accounts | 60,183,656  
|                                         |             
|Total                                    | $78,995,030 
|                                         |             
|                                         |             

The aggregate amount of certificates of deposit and IRA accounts with a minimum denomination of $100,000 was approximately $20,269,300 and $15,290,600 at June 30, 2001 and 2000, respectively.

NOTE 6 - DEPOSITS (Continued)
At June 30, 2001, scheduled maturities of certificates of deposit and IRA accounts for the years ending June 30, are as follows:

|2002   | $  42,550,710
|------ | -------------
|2003   | 13,063,293   
|2004   | 3,829,066    
|2005   | 739,351      
|2006   | 1,236        
|       |              
|Totals | $  60,183,656

NOTE 7 - FEDERAL HOME LOAN BANK ADVANCESAt June 30, 2001, outstanding Federal Home Loan Bank advances consisted of fixed rate advances totaling $6,000,000 with interest rates ranging from 6.7% to 7.3% and variable rate advances totaling $28,000,000 with interest rates ranging from 4.0% to 6.7%.  Maturity dates range from 2001 to 2010.  At June 30, 2000, outstanding Federal Home Loan Bank advances consisted of fixed and variable rate advances aggregating $21,500,000 with interest rates ranging from 4.90% to 7.31% and maturity dates ranging from 2001 to 2009.
The advances are required to be repaid in the year ending June 30, as follows:

|2002       | $    8,000,000
|---------- | --------------
|2003       | 3,000,000     
|2004       | 3,000,000     
|2005       |               
|2006       | 20,000,000    
|Thereafter | $  34,000,000 
|           |               

The advances are collateralized by all qualifying mortgage loans totaling approximately $58,608,000 at June 30, 2001.

NOTE 8 - INCOME TAXES
Income taxes consist of the following:

|         | Years Ended June 30,
|-------- | --------------------
|         | 2001                
|Current: |                     
|Federal  | 357,543             
|State    | 76,036              
|         | 433,579             
|Deferred | (29,491)            
|         |                     
|Total    | 404,088             

The provision for income taxes differs from the expected amounts (computed by applying the federal statutory corporate income tax rate of 34% to income before income taxes) as follows:

|                                                      | Years Ended June 30,
|----------------------------------------------------- | --------------------
|                                                      | 2001                
|Computed statutory tax provision                      | $    343,703        
|State income taxes, net of federal income tax benefit | 61,300              
|Non-deductible portion of ESOP contributions          | 5,100               
|Tax-exempt interest                                   | (12,000)            
|Other, net                                            | 5,985               
|                                                      |                     
|                                                      | $    404,088        
|                                                      |                     
|Effective tax rate                                    | 40.0%               

NOTE 8 - INCOME TAXES (Continued)
The components of the net deferred tax asset at June 30, 2001 and 2000 were as follows:

|                                                                                  | June 30,    
|--------------------------------------------------------------------------------- | ------------
|                                                                                  | 2001        
|Deferred tax asset (liabilities):                                                 |             
|Deferred loan costs                                                               | $   (10,719)
|Allowance for loan losses                                                         | 134,634     
|Tax bad debt deductions                                                           | (16,867)    
|Depreciation and amortization                                                     | 7,178       
|Net unrealized (appreciation)/depreciation
      of available for sale securities | (8,675)     
|Originated mortgage servicing rights                                              | (56,702)    
|Deferred income                                                                   | 2,105       
|Accrued benefits                                                                  | 56,989      
|Other, net                                                                        | 6,667       
|                                                                                  |             
|Net deferred tax asset                                                            | $  114,610  

Federal income tax laws provided savings associations with additional bad debt deductions through 1987, totaling $875,000 for the Association.  Accounting standards do not require a deferred tax liability to be recorded on this amount, which liability otherwise would total $298,000  at June 30, 2001 and 2000.  If the Association was liquidated or otherwise ceased to be a savings association or if tax laws were to change, the $298,000 would be recorded as expense.NOTE 9 - BENEFIT PLANSDefined Contribution Plan:  
The Company has a defined contribution retirement plan under Section 401(k) of the Internal Revenue Code. Substantially all employees of the Company are eligible to participate in the plan. Under the plan, the Company matches a percentage of participating employee contributions and may also provide an additional annual discretionary contribution.  Plan expense for the years ended June 30, 2001 and 2000 was $8,415, and $12,367.

NOTE 9 - BENEFIT PLANS (Continued)Employee Stock Ownership Plan:
The Company has an ESOP for the benefit of Sobieski employees who meet certain eligibility requirements including having completed 1,000 hours of credited service within a twelve-month period.  The ESOP trust acquired 77,280 shares of Sobieski's common stock with proceeds from a loan from Sobieski.  The Association makes cash contributions to the ESOP on a semi-annual basis in amounts sufficient to enable the ESOP trustee to make its required debt service payments to Sobieski.
The promissory note payable to Sobieski by the ESOP trustee bears interest at 7.78% with interest and principal payments due in twenty-four (24) consecutive semi-annual installments on the last day of June and December continuing until December 31, 2006. The note is collateralized by the unallocated shares of Sobieski's common stock held by the ESOP.
As the ESOP promissory note is repaid, shares of Sobieski's common stock are released from collateral and allocated to qualified ESOP participants based on the proportion of debt service paid during the period to total debt service.  Sobieski accounts for the ESOP in accordance with AICPA Statement of Position 93-6.  Accordingly, the unallocated shares pledged as collateral are reported as a reduction of stockholders' equity in the consolidated statements of financial condition.  As shares are committed for release from collateral, the Company records expense equal to the average market value of the released shares, and the released shares become outstanding for earnings per common share computations.  ESOP expense was $80,315 and $77,493 for the years ended June 30, 2001 and 2000.  During 2000, participants withdrew 3,206 allocated shares from the plan.
Following is a summary of shares held by the ESOP trust as of June 30, 2001 and 2000:

|                                             | 2001        | 2000       
|-------------------------------------------- | ----------- | -----------
|                                             |             |            
|Allocated shares                             | 44,290      | 37,765     
|Unallocated shares                           | 29,784      | 36,309     
|                                             |             |            
|Total ESOP shares                            | 74,074      | 74,074     
|                                             |             |            
|Fair value of unallocated shares at year end | $   394,638 | $   390,321

NOTE 9 - BENEFIT PLANS (Continued)Supplemental Retirement Plans:
Effective July 1, 1998, the Company established supplemental retirement plans for its directors and certain of its officers.  These plans generally provide for the payment of supplemental retirement benefits over a period of ten (10) years, beginning with the later of (a) the officer's or director's attainment of a specified retirement age; or (b) upon termination of the officer's employment or the director's termination as a member of the Board of Directors subject to certain vesting conditions with payments to be made at the specified retirement age.  The Company has established a liability in the amount of the present value of vested officer and director benefits under these plans.  The Company also maintains life insurance contracts on the officers and directors. Compensation expense associated with these supplemental retirement plans aggregated $37,726 and $33,721 for the years ended June 30, 2001 and 2000.Recognition and Retention Plan (RRP):
Under the RRP, an aggregate of 38,640 shares of Sobieski's common stock have been reserved for the awarding to directors, officers and employees. Awards of common stock granted under the RRP vest in five equal annual installments beginning on the first anniversary of the date of award and are subject to forfeiture in the event the recipient terminates employment with the Company for any reason other than death or disability. RRP shares become free of all restrictions and are distributed to recipients on the date on which they vest.  As of June 30, 2001 and 2000, an aggregate of 30,502 shares of Sobieski's common stock, with a market value of $374,794 at the respective dates of grant, have been awarded under the RRP.  Expense recognized for the years ended June 30, 2001 and 2000 related to the awardof RRP shares was $55,058 and $74,296.Stock Option Plan:
Pursuant to the Stock Option Plan, an aggregate of 96,600 shares of Sobieski's common stock have been reserved for the granting of stock options and Stock Appreciation Rights (SARs) to the Company's directors, officers and employees. Incentive and non-qualified stock options may be granted under the Stock Option Plan at exercise prices of not less than the fair market value of Sobieski's common stock at the date of grant, become exercisable at the rate of 20% per year commencing on the first anniversary of the date of grant and have terms not exceeding ten years.  At June 30, 2001, no SARs have been granted.

NOTE 9  - BENEFIT PLANS (Continued)
The following is a summary of the activity with respect to the Stock Option Plan for the two years ended June 30, 2001.

|                           | Number ofShares | Weighted-Average
Exercise PricePer Share
|-------------------------- | --------------- | ----------------------------------------
|Outstanding, July 1, 1999  | 68,830          | 13.58                                   
|Granted                    | 12,000          | 11.63                                   
|Forfeited                  | (700)           | 12.63                                   
|                           |                 |                                         
|Outstanding, June 30, 2000 | 80,130          | 13.30                                   
|Granted                    | 7,500           | 10.63                                   
|                           |                 |                                         
|Outstanding, June 30, 2001 | 87,630          | 13.07                                   

Options outstanding and exercisable at June 30, 2001 were as follows:

|               |        | Outstanding                                |        | Exercisable                    |                                     
|-------------- | ------ | ------------------------------------------ | ------ | ------------------------------ | ------------------------------------
|Exercise Price | Number | Weighted
Average
Remaining
ContractualLife | Number | Weighted
Average
ExercisePrice | Weighted
Average
Fair Valueof Grants
|10.625         | 7,500  | 9.01                                       | 1,500  | $    10.63                     | 2.80                                
|11.625         | 12,000 | 8.33                                       | 2,400  | 11.63                          | 2.07                                
|12.500         | 19,320 | 5.18                                       | 15,456 | 12.50                          | 3.81                                
|12.625         | 32,480 | 4.32                                       | 32,480 | 12.63                          | 3.58                                
|13.125         | 4,830  | 7.56                                       | 1,932  | 13.13                          | 3.70                                
|18.125         | 7,500  | 6.33                                       | 4,500  | 18.13                          | 5.43                                
|21.250         | 4,000  | 6.73                                       | 2,400  | 21.25                          | 6.18                                
|               |        |                                            |        |                                |                                     
|               | 87,630 | 5.92                                       | 60,668 | $    13.27                     |                                     
|               |        |                                            |        |                                |                                     

The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option-PricingModel.  The following assumptions were used in the calculation of the fair value for options granted in the last two years.

NOTE 9  -  BENEFIT PLANS (Continued)

|Risk free interest rate: | 6.22% to 6.25% | Expected stock price volatility rate: | 20.59% to 21.30%
|------------------------ | -------------- | ------------------------------------- | ----------------
|Expected option life:    | 7 years        | Expected dividends:                   | 2.80% to 2.84%  

Pro forma net income and earnings per share, reported as if compensation expense had been recognized under the fair value provisions of SFAS No. 123, were as follows for the years ended June 30:

|                                       | 2001    | 2000   
|-------------------------------------- | ------- | -------
|Net income as reported                 | 606,804 | 667,229
|Pro forma net income                   | 562,847 | 619,223
|                                       |         |        
|Basic earnings per share as reported   | .94     | 1.00   
|Pro forma basic earnings per share     | .87     | .93    
|                                       |         |        
|Diluted earnings per share as reported | .94     | 1.00   
|Pro forma diluted earnings per share   | .87     | .93    
|                                       |         |        
|                                       |         |        

NOTE 10 -  REGULATORY MATTERS
The Association is subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective 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 qualitative judgments by the regulators about components, risk weightings, and other factors.
As of June 30, 2001, the most recent notification from the Office of Thrift Supervision categorized the Association as well capitalized under the regulatory framework for prompt corrective action.  To be categorized as well capitalized, the Association must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios.  There are no conditions or events since that notification that management believes have changed the Association's category.

NOTE 10 -  REGULATORY MATTERS (Continued)
The following are details of the Association's regulatory capital position and the related capital requirements.  The Company's consolidated amounts and ratios are not considered significant for this presentation.

|                          | Actual     | For CapitalAdequacy Purposes | To Be Well
Capitalized Under
Prompt CorrectiveAction Provisions
|------------------------- | ---------- | ---------------------------- | ---------------------------------------------------------------
|                          | Amount     | Ratio                        | Amount                                                         
|                          |            |                              | (Dollars in Thousands)                                         
|As of June 30, 2001       |            |                              |                                                                
|Risk-Based Capital        |            |                              |                                                                
|(to Risk-Weighted Assets) | $   10,500 | 15.52%                       | $   5,412                                                      
|Tier I Capital            |            |                              |                                                                
|(to Risk-Weighted Assets) | 10,160     | 15.02                        | 2,708                                                          
|Tier I Capital            |            |                              |                                                                
|(to Adjusted Assets)      | 10,160     | 8.04                         | 5,053                                                          
|As of June 30, 2000       |            |                              |                                                                
|Risk-Based Capital        |            |                              |                                                                
|(to Risk-Weighted Assets) | $   10,468 | 16.94%                       | $   4,945                                                      
|Tier I Capital            |            |                              |                                                                
|(to Risk-Weighted Assets) | 10,073     | 16.30                        | 2,472                                                          
|                          |            |                              |                                                                
|Tier I Capital            |            |                              |                                                                
|(to Adjusted Assets)      | 10,073     | 9.23                         | 4,367                                                          

The Qualified Thrift Lender (QTL) test requires that approximately 65% of assets be maintained in housing-related finance and other specified areas.  If the QTL test is not met, limits are placed on growth, branching, new investments, FHLB advances and dividends, or the Association must convert to a commercial bank charter.  Management believes that the QTL test has been met.
Under OTS regulations, limitations have been imposed on all "capital distributions" by savings institutions, including cash dividends.  The regulation establishes a three-tiered system of restrictions, with the greatest flexibility afforded to thrifts which are both well-capitalized and given favorable qualitative examination ratings by the OTS.  For example, a thrift which is given one of the two highest examination ratings and has "capital" equal to its fully phased-in regulatory capital requirements (a tier 1 institution) could make capital distributions in any year of 100% of its retained net income for the calendar year-to-date period plus net income for the previous two calendar years (less any dividends previously paid) as long as the thrift would remain "well capitalized", following the proposed distribution.  Other thrifts would be subject to more stringent procedural and substantive requirements, the most restrictive being prior OTS approval of any capital distribution.  At June 30, 2001, approximately $133,000 of the Association's retained earnings was potentially available for distribution to the Company, without obtaining prior regulatory approval.

NOTE 10 -  REGULATORY MATTERS (Continued)
The Association established a liquidation account which is equal to its total net worth as of the date of the latest audited balance sheet appearing in the final conversion prospectus for the Company's stock offering related to converting from a mutual to a stock ownership structure.  The liquidation account is maintained for the benefit of eligible depositors who continue to maintain their accounts at the Association after the conversion.  The liquidation account is reduced annually to the extent that eligible depositors have reduced their qualifying deposits.  Subsequent increases will not restore an eligible account holder's interest in the liquidation account.  In the event of a complete liquidation, each eligible depositor will be entitled to receive a distribution from the liquidation account in an amount proportionate to the current adjusted qualifying balances for accounts then held.  The Association may not pay dividends that reduce shareholders' equity below the required liquidation account balance.NOTE 11 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISKThe Company is a party to loan commitments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.  The loan commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition.
The Company's exposure to credit loss in the event of nonperformance by the parties to the loan commitments is represented by the contractual dollar amounts of those commitments ($10.8 million and $8.9 million at June 30, 2001 and 2000, respectively).  The Company uses the same credit policies in making loan commitments as it does for on-balance-sheet instruments.
Loan commitments are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  The Company evaluates each customer's creditworthiness on a case-by-case basis.  The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the borrower.  Collateral held consists primarily of the real estate being financed.

NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTSThe estimated fair values of Sobieski's financial instruments as of June 30, 2001 and 2000 are as follows:

|                                                            | 2 0 0 1        | 2 0 0 0            
|----------------------------------------------------------- | -------------- | -------------------
|                                                            | CarryingAmount | EstimatedFair Value
|Assets:                                                     |                |                    
|Cash and cash equivalents                                   | $   3,756,795  | $   3,756,795      
|Certificates of deposit in
    other financial institutions | 1,388,000      | 1,388,000          
|Securities available for sale                               | 23,536,227     | 23,536,227         
|Securities held to maturity                                 | 4,847,290      | 4,840,939          
|Loans held for sale                                         | 197,700        | 197,700            
|Loans, net                                                  | 88,500,704     | 88,523,000         
|Federal Home Loan                                           |                |                    
|Bank stock                                                  | 1,775,800      | 1,775,800          
|Accrued interest receivable                                 | 739,182        | 739,182            
|                                                            |                |                    
|Liabilities:                                                |                |                    
|Deposits                                                    | 78,995,030     | 80,385,000         
|Federal funds purchased                                     | -              | -                  
|Federal Home Loan                                           |                |                    
|Bank advances                                               | 34,000,000     | 34,887,000         
|Accrued interest payable                                    | 1,188,454      | 1,188,454          
|                                                            |                |                    
|                                                            |                |                    

The following methods and assumptions were used to estimate the fair value of Sobieski's financial instruments.Cash and Cash Equivalents, Certificates of Deposit in Other Financial Institutions, FederalHome Loan Bank Stock and Accrued Interest:  The carrying amounts of cash and cash equivalents, certificates of deposit in other financial institutions, Federal Home Loan Bank stock and accrued interest are reasonable estimates of their respective fair values.Securities Available for Sale and Securities Held to Maturity:  Estimated fair values of securities available for sale and securities held to maturity are based on quoted market prices, where available.  If quoted market prices are not available, fair values are estimated using quoted market prices for similar instruments.

NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)Loans Held For Sale:  The estimated fair value of loans held for sale is based on market quotes.Loans, Net:  Fair values are estimated for portfolios with similar financial characteristics. Loans are segregated by type, such as residential mortgages, nonresidential mortgages, commercial and consumer loans.  Each loan category is further segmented into fixed and variable interest categories, with residential mortgage loans (Sobieski's largest category) further segregated by similar note rates and maturities.  Future cash flows of these loans are discounted using the current rates at which similar loans would be made to borrowers with similar credit rating for the same remaining maturities.Deposits:  The estimated fair value of passbook, money market accounts and negotiable orders of withdrawal are based on their carrying amount.  Certificates of deposit and IRA accounts are segregated by original and remaining term and estimated future cash flows are discounted using rates currently offered for certificate and IRA accounts of similar remaining maturity.Federal Funds Purchased:  The carrying amounts of federal funds purchased are reasonable estimates of their fair values.Federal Home Loan Bank Advances:  The estimated fair values of Federal Home Loan Bank advances are determined by discounting the future cash flows of outstanding advances using rates currently available on advances from the Federal Home Loan Bank of Indianapolis with similar characteristics.Other Financial Instruments and Loan Commitments:  The estimated fair value of other financial instruments and off-balance sheet loan commitments approximate cost and are not considered significant for this presentation.
While these estimates of fair value are based on management's judgment of the most appropriate factors, there is no assurance that were the Company to have disposed of such items at June 30, 2001 and 2000, the estimated fair values would necessarily have been achieved at those dates, since market values may differ depending on various circumstances.  The estimated fair values at June 30, 2001 and 2000 should not necessarily be considered to apply at subsequent dates.
In addition, other assets and liabilities of Sobieski that are not defined as financial instruments are not included in the above disclosures, such as premises and equipment.  Also, non-financial instruments typically not recognized in financial statements nevertheless may have value but are not included in the above disclosures.  These include, among other items, the estimated earnings power of core deposit accounts, customer goodwill and similar items.

NOTE 13 - PARENT COMPANY FINANCIAL INFORMATIONSobieski Bancorp, Inc.'s statements of financial condition at June 30, 2001 and 2000, and its related statements of income and cash flows for the years ended June 30, 2001 and 2000 are as follows:

|STATEMENTS OF FINANCIAL CONDITIONJune 30, 2001 and 2000
|-------------------------------------------------------
|                                                       
|ASSETS                                                 
|Cash and cash equivalents                              
|Securities available for sale                          
|Loans                                                  
|Note receivable from subsidiary                        
|Investment in subsidiary                               
|Land held for sale                                     
|Other assets                                           
|                                                       
|Total assets                                           
|                                                       
|LIABILITIES AND STOCKHOLDERS' EQUITY                   
|Liabilities                                            
|Note payable to subsidiary                             
|Accrued expenses and other liabilities                 
|                                                       
|Stockholders' equity                                   
|                                                       
|Total liabilities and stockholders' equity             

NOTE 13 - PARENT COMPANY FINANCIAL INFORMATION (Continued)

|STATEMENTS OF INCOMEYears ended June 30, 2001 and 2000                         
|-------------------------------------------------------------------------------
|                                                                               
|Income                                                                         
|Interest income on loans                                                       
|Interest on investments                                                        
|Dividends received from subsidiary                                             
|Interest on note receivable from subsidiary                                    
|Total income                                                                   
|                                                                               
|Expenses                                                                       
|Compensation and benefits                                                      
|Occupancy and equipment                                                        
|Professional fees                                                              
|Interest on note payable to subsidiary                                         
|Other operating expenses                                                       
|Total expenses                                                                 
|                                                                               
|Income before income taxes and equity in
  undistributed earnings of subsidiary
|                                                                               
|Income taxes                                                                   
|                                                                               
|Income before equity in undistributed earnings
  of subsidiary                 
|                                                                               
|Equity in undistributed/ (excess distributed)
  earnings of subsidiary         
|                                                                               
|Net income                                                                     
|                                                                               
|Comprehensive income                                                           

NOTE 13 - PARENT COMPANY FINANCIAL INFORMATION (Continued)

|STATEMENTS OF CASH FLOWSYears ended June 30, 2001 and 2000                   
|-----------------------------------------------------------------------------
|Cash flows from operating activities                                         
|Net income                                                                   
|Adjustments to reconcile net income to net
    cash from operating activities
|Equity in undistributed/(excess) distributed
          income of subsidiary  
|Increase in cash value of life insurance                                     
|Decrease (increase) in other assets                                          
|Increase (decrease) in accrued expenses
          and other liabilities      
|Net cash from operating activities                                           
|                                                                             
|Cash flows from investing activities                                         
|Purchase of securities                                                       
|Payments received on note receivable from subsidiary                         
|Net (increase) decrease in loans purchased from subsidiary                   
|Net cash from investing activities                                           
|                                                                             
|Cash flows from financing activities                                         
|Proceeds from note payable to subsidiary                                     
|Payments on note payable to subsidiary                                       
|Purchase of treasury stock                                                   
|Cash dividends                                                               
|Net cash from financing activities                                           
|                                                                             
|Net change in cash and cash equivalents                                      
|                                                                             
|Cash and cash equivalents at beginning of year                               
|                                                                             
|Cash and cash equivalents at end of year                                     

ANNUAL MEETING
The Annual Meeting of Stockholders will be held at 2:00 p.m., South Bend, Indiana, time on October 22, 2001 at the office of Sobieski Bancorp Inc., 2930 W. Cleveland Road, South Bend, Indiana, 46628STOCK LISTINGSobieski Bancorp, Inc. common stock is traded on the NASDAQ System under the symbol "SOBI".MARKET AND DIVIDEND INFORMATIONSobieski's ability to pay dividends to its stockholders is substantially dependent upon the dividends it receives from the Association.  Under current regulations, the Association may generally pay dividends in any calendar year equal to net income for that year plus retained net income for the preceding two years.
The following table sets forth the per share price range of the Sobieski's common stock and dividends paid for each quarter of fiscal 2001 and 2000.  The prices reflect interdealer quotations without retail markup, markdown or commissions, and do not necessarily reflect actual transactions.

|               | 2 0 0 1   | 2 0 0 0  
|-------------- | --------- | ---------
|               | High      | Low      
|First Quarter  | $   12.50 | $   10.75
|Second Quarter | 12.63     | 11.50    
|Third Quarter  | 13.00     | 12.38    
|Fourth Quarter | 14.31     | 12.51    

At September 10, 2001, there were 671,962 shares of Sobieski Bancorp, Inc. common stock issued and outstanding and there were approximately 331 holders of record.

|STOCKHOLDER AND GENERAL INQUIRIES     | TRANSFER AGENT            
|------------------------------------- | --------------------------
|                                      |                           
|Thomas F. Gruber                      | Registrar and Transfer Co.
|President and Chief Executive Officer | 10 Commerce Drive         
|Sobieski Bancorp, Inc                 | Cranford, NJ 07016        
|2930 W. Cleveland Road                |                           
|South Bend, Indiana 46628             |                           
|(219) 271-8300                        |                           

ANNUAL AND OTHER REPORTSA copy of Sobieski Bancorp, Inc.'s Annual Report on Form 10-KSB for the year ended June 30, 2001, as filed with the Securities and Exchange Commission, may be obtained without charge by contacting Thomas F. Gruber, President and Chief Executive Officer, Sobieski Bancorp, Inc., 2930 W. Cleveland Road, South Bend, Indiana (219) 271-8300.

COMPANY AND BANK ADDRESS2930 W. Cleveland Road
South Bend, Indiana  46628
Telephone:  (219) 271-8300
Fax:  (219) 271-3269

|BOARD OF DIRECTORS                                                                                                                |                                                                                                                                                         
|--------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|Thomas F. GruberPresident and Chief Executive Officer
of Sobieski Bancorp, Inc. and Sobieski
Federal Savings and Loan Association | Robert J. UrbanskiPresident
TransTech Electric Co. and Chairman of the
Board of Sobieski Bancorp, Inc. and Sobieski
Federal Savings and Loan Association
|                                                                                                                                  |                                                                                                                                                         
|Joseph F. NagyAuditor, St. Joseph County                                                                                          | George J. Aranowski (deceased)Public Accountant                                                                                                         
|                                                                                                                                  |                                                                                                                                                         
|Joseph A. GornyBusiness Owner                                                                                                     | Richard J. CullarCertified Public Accountant                                                                                                            
|                                                                                                                                  |                                                                                                                                                         
|Leonard J. DobosiewiczMaintenance Professional                                                                                    |                                                                                                                                                         
|                                                                                                                                  |                                                                                                                                                         
|EXECUTIVE OFFICERS                                                                                                                |                                                                                                                                                         
|Thomas F. GruberPresident and Chief Executive Officer                                                                             | Marsha NafradySecretary and Treasurer                                                                                                                   
|                                                                                                                                  |                                                                                                                                                         
|Arthur SkaleChief Financial Officer                                                                                               | Gregory J. MatthewsVice President of Operations                                                                                                         
|                                                                                                                                  |                                                                                                                                                         
|INDEPENDENT AUDITORS                                                                                                              | GENERAL COUNSEL                                                                                                                                         
|Crowe, Chizek and Company LLP 
330 East Jefferson Blvd.
South Bend, Indiana 46624                                                 | Kenneth Fedder, Esq.
53600 N. Ironwood
South Bend, Indiana 46635                                                                                        

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

|Parent                 | Subsidiary    | State ofIncorporation | Percentageof Ownership
|---------------------- | ------------- | --------------------- | ----------------------
|Sobieski Bancorp, Inc. | Sobieski Bank | United States         | 100%                  

Exhibit 23



CONSENT OF INDEPENDENT AUDITORS





We hereby consent to the incorporation by reference in the Registration Statements of Sobieski Bancorp, Inc. on Forms S-8 (Registration No. 333-40983 and Registration No. 333-40985), of our report dated August 16, 2001 on the consolidated financial statements of Sobieski Bancorp, Inc., which report is included in the 2001 Annual Report on Form 10-KSB of Sobieski Bancorp, Inc.





/s/Crowe, Chizek and Company LLP

South Bend, Indiana

November 26, 2001